<PAGE>
Registration No. 33-21844
811-5555
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No.
Post-Effective Amendment No. 16
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 18 /X/
Sanford C. Bernstein Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
767 Fifth Avenue, New York, New York 10153-0185
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 486-5800
Jean Margo Reid, Esq.
767 Fifth Avenue
New York, New York 10153-0185
(Name and Address of Agent for Service)
---------------------------------------------
Copies to:
Joel H. Goldberg, Esq.
Shereff, Friedman, Hoffman & Goodman LLP
919 Third Avenue
New York, New York 10022
--------------------------------------------
Approximate Date of Proposed Public Offering: Continuous.
--------------------------------------------
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b), or
X on January 30, 1998 pursuant to paragraph (b), or
___ 75 days after filing pursuant to paragraph (a), or
___ on (date) pursuant to paragraph (a), of Rule 485.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered its Common Stock $.001 par value under the Securities Act of 1933,
and has filed a Rule 24f-2 Notice for the most recent fiscal year on December
12, 1997.
<PAGE>
This filing contains three (3) Prospectuses, a regular Prospectus (the "Regular
Prospectus") covering all eleven series of shares of the Sanford C. Bernstein
Fund, Inc. (see Cross-Reference Sheet Part A-1) and two Institutional Services
Prospectuses, one covering the Intermediate Duration and Short Duration Plus
Portfolios of the Sanford C. Bernstein Fund, Inc. (see Cross-Reference Sheet
Part A-2) (the "Fixed-Income Institutional Services Prospectus") and the second
one covering the International Value Portfolio of the Sanford C. Bernstein Fund,
Inc. (See Cross-Reference Sheet Part A-3) (the "International Institutional
Services Prospectus"), and together with the Fixed-Income Institutional Services
Prospectus known as the "Institutional Prospectuses" and one Statement of
Additional Information ("SAI") which is common to all three Prospectuses.
2
<PAGE>
SANFORD C. BERNSTEIN FUND, INC.
CROSS-REFERENCE SHEET
(as required by Rule 481(a))
N-1A Item No.
- -------------
Location in Regular
-------------------
Part A-1 Prospectus
- -------- ----------
Item 1. Cover Page................................Cover Page
Item 2. Synopsis..................................Fee Table
Item 3. Condensed Financial
Information...............................Financial Highlights
Item 4. General Description of
Registrant................................The Fund; Investment
Objectives and
Policies of the
Portfolios;
Investments; Special
Investment
Techniques
Item 5. Management of the Fund....................Management of the
Portfolios
Item 5A. Management's Discussion
of Fund Performance.......................Not Applicable
Item 6. Capital Stock and Other
Securities................................The Fund; Dividends,
Distributions and
Taxes; Description
of Shares
Item 7. Purchase of Securities
Being Offered.............................Purchase of Shares;
Exchanges of Shares
Item 8. Redemption or Repurchase..................Redemption of Shares
Item 9. Pending Legal Proceedings.................Not Applicable
3
<PAGE>
SANFORD C. BERNSTEIN FUND, INC.
CROSS-REFERENCE SHEET
(as required by Rule 481(a))
N-1A Item No.
- -------------
Location in Fixed-Income
------------------------
Institutional Services
----------------------
Part A-2 Prospectus
- -------- ----------
Item 1. Cover Page................................Cover Page
Item 2. Synopsis..................................Fee Table
Item 3. Condensed Financial
Information...............................Financial Highlights
Item 4. General Description of
Registrant................................The Fund; Investment
Objectives and
Policies of the
Portfolios;
Investments; Special
Investment
Techniques
Item 5. Management of the Fund....................Management of the
Portfolios
Item 5A. Management's Discussion
of Fund Performance.......................Not Applicable
Item 6. Capital Stock and Other
Securities................................The Fund; Dividends,
Distributions and
Taxes; Description
of Shares
Item 7. Purchase of Securities
Being Offered.............................Participating in
Your Plan
Item 8. Redemption or Repurchase..................Participating in
Your Plan
Item 9. Pending Legal Proceedings.................Not Applicable
4
<PAGE>
SANFORD C. BERNSTEIN FUND, INC.
CROSS-REFERENCE SHEET
(as required by Rule 481(a))
N-1A Item No.
- -------------
Location in International
-------------------------
Institutional Services
----------------------
Part A-3 Prospectus
- -------- ----------
Item 1. Cover Page................................Cover Page
Item 2. Synopsis..................................Fee Table
Item 3. Condensed Financial
Information...............................Financial Highlights
Item 4. General Description of
Registrant................................The Fund; Investment
Objectives and
Policies of the
Portfolios;
Investments; Special
Investment
Techniques
Item 5. Management of the Fund....................Management of the
Portfolios
Item 5A. Management's Discussion
of Fund Performance.......................Not Applicable
Item 6. Capital Stock and Other
Securities................................The Fund; Dividends,
Distributions and
Taxes; Description
of Shares
Item 7. Purchase of Securities
Being Offered.............................Participating in
Your Plan
Item 8. Redemption or Repurchase..................Participating in
Your Plan
Item 9. Pending Legal Proceedings.................Not Applicable
5
<PAGE>
Location in Statement of
------------------------
of Additional Information
-------------------------
Part B
- ------
Item 10. Cover Page................................Cover Page
Item 11. Table of Contents.........................Table of Contents
Item 12. General Information
and History...............................Not Applicable
Item 13. Investment Objectives
and Policies..............................Investment Objectives
and Policies;
Investment
Restrictions
Item 14. Management of the Fund....................Manager and
Distributor
Item 15. Control Persons and
Principal Holders of
Securities................................Directors and
Officers and
Principal Holders
of Securities
Item 16. Investment Advisory and
Other Services............................Directors and
Officers and
Principal Holders
of Securities and
Manager and
Distributor
Item 17. Brokerage Allocation and
Other Practices...........................Portfolio
Transactions
and Brokerage
Item 18. Capital Stock and Other
Securities................................Not Applicable
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered.............................Net Asset Value;
Purchase and
Redemption of Shares
Item 20. Tax Status................................Taxes
6
<PAGE>
Location in Statement of
------------------------
Additional Information
----------------------
Part B
- ------
Item 21. Underwriters..............................Manager and
Distributor
Item 22. Calculation of
Performance Data..........................Performance
Item 23. Financial Statements......................Custodian, Transfer
Agent, Independent
Accountants and
Financial Statements
7
<PAGE>
Part C
- ------
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
8
<PAGE>
JANUARY 30, 1998 PROSPECTUS
Sanford C. Bernstein Fund, Inc.
767 FIFTH AVENUE
NEW YORK, NY 10153
212-756-4097
Sanford C. Bernstein Fund, Inc. (the "Fund") is an open-end management
investment company. This type of company is commonly referred to as a mutual
fund. This Prospectus relates to 11 of the Fund's series of shares, each
representing a separate portfolio of securities and each having its own
investment objectives. Sanford C. Bernstein & Co., Inc. ("Bernstein," or the
"Manager") serves as Investment Manager to each series.
The Bernstein Fixed-Income Portfolios aim to generate the highest total
return consistent with safety of principal and the financial objectives of the
Portfolios.
The Bernstein International Value Portfolio and the Bernstein Emerging
Markets Value Portfolio seek long-term capital growth on a total-return basis
(capital appreciation or depreciation plus dividends and interest) principally,
in the case of the Bernstein International Value Portfolio, through investment
in equity securities of established non-U.S. companies, and, in the case of the
Bernstein Emerging Markets Value Portfolio, through investment in equity
securities of companies in emerging-market countries. Investments in either
Portfolio may be made solely for capital appreciation, solely for income or any
combination of the two for the purpose of achieving a higher overall return.
Investments in emerging-market countries are more volatile and less liquid than
investments in developed countries and involve exposure to a greater degree of
risk due to increased social, political and economic instability. This
Prospectus discusses in more detail these as well as other risks of investing in
emerging-market countries.
This Prospectus sets forth information you ought to know before investing in
the Fund. You should read it carefully and retain it for future reference. You
can find more information about the Fund in the Statement of Additional
Information (the "SAI") dated January 30, 1998, which has been filed with the
Securities and Exchange Commission (the "Commission") and is incorporated herein
by reference. You may obtain a copy of the SAI without charge by calling or
writing the Fund at the above telephone number or address.
The minimum initial investment in any Portfolio is generally $25,000, except
that the minimum initial investment in the Bernstein Emerging Markets Value
Portfolio is $10,000 for discretionary investment management clients of
Bernstein whose investment in the Bernstein Emerging Markets Value Portfolio
constitutes a portion of a balanced account. Different minimums are applicable
with respect to subsequent investments. The Fund may change the provisions
concerning minimum investments at any time.
Bernstein Fixed-Income Portfolio Objectives/Policies
SHORT-DURATION PORTFOLIOS
Bernstein Government Short Duration ......................................24
o Limit state and local taxation; and
o Invest largely in U.S. government and agency securities.
Bernstein Short Duration Plus ............................................24
o Choose primarily from a broad universe of
high-grade fixed-income instruments.
Bernstein Short Duration New York Municipal ..............................25
o Provide income while limiting federal, state and local
taxation for New York residents.
Bernstein Short Duration California Municipal ............................27
o Provide income while limiting federal and California personal income
taxation for state residents.
Bernstein Short Duration Diversified Municipal ...........................28
o Provide income while limiting federal taxation.
INTERMEDIATE-DURATION PORTFOLIOS
Bernstein New York Municipal. ............................................25
o Maximize total after-tax return for New York State residents, taking into
account the taxable nature of interest on taxable bonds and capital gains.
Bernstein California Municipal. ..........................................27
o Maximize total after-tax return for California residents, taking into
account the taxable nature of interest on taxable bonds and capital gains.
Bernstein Diversified Municipal ..........................................28
o Maximize total after-tax return, taking into account the taxable nature of
interest on taxable bonds and capital gains.
Bernstein Intermediate Duration ..........................................25
o Choose primarily from a broad universe of high-grade
fixed-income instruments.
BERNSTEIN INTERNATIONAL EQUITY PORTFOLIO OBJECTIVES
Bernstein International Value ............................................29
o Invest primarily in equity securities of established foreign companies in
the countries comprising the EAFE index, plus Canada.
BERNSTEIN EMERGING MARKETS VALUE PORTFOLIO OBJECTIVES
Bernstein Emerging Markets Value .........................................29
o Invest primarily in equity securities of companies in emerging-market
countries.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
<TABLE>
<CAPTION>
FEE TABLE
BERNSTEIN BERNSTEIN BERNSTEIN
SHORT DURATION SHORT DURATION SHORT DURATION BERNSTEIN
CALIFORNIA DIVERSIFIED NEW YORK GOVERNMENT
MUNICIPAL MUNICIPAL MUNICIPAL SHORT DURATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
............................................................................................................................
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases
(as a percentage of offering price) None None None None
Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None None None None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds) None None None None
Redemption Fees
(as a percentage of amount redeemed) None None None None
Exchange Fees None None None None
ANNUAL PORTFOLIO OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 0.50% 0.50% 0.50% 0.50%
12b-1 Fees None None None None
Other Expenses
Shareholder Servicing and Administrative Fees 0.10% 0.10% 0.10% 0.10%
All Other Expenses 0.14% 0.12% 0.16% 0.09%
Total Portfolio Operating Expenses 0.74% 0.72% 0.76% 0.69%
EXAMPLE
A Portfolio would pay the following expenses on a
$1,000 investment, assuming 5% annual return:
1 Yr. $8 $7 $8 $7
3 Yrs. (cum.) $24 $23 $24 $22
5 Yrs. (cum.) $41 $40 $42 $38
10 Yrs. (cum.) $92 $89 $94 $86
</TABLE>
The purpose of the fee table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. The Fund is no-load, and, except in the case of the Bernstein
Emerging Markets Value Portfolio, there are no redemption fees, and there are no
charges for shareholders on monthly payment plans.
The Bernstein Emerging Markets Value Portfolio assesses a portfolio
transaction fee on purchases of Portfolio shares equal to 2% of the dollar
amount invested in the Portfolio (including purchases made by exchanging shares
of other Fund Portfolios for shares of the Bernstein Emerging Markets Value
Portfolio). The portfolio transaction fee on purchases applies to an initial
investment in the Bernstein Emerging Markets Value Portfolio and to all
subsequent purchases, but not to reinvested dividends or capital gains
distributions. The portfolio transaction fee on purchases is deducted
automatically from the amount invested; it cannot be paid separately. The
Bernstein Emerging Markets Value Portfolio also assesses a portfolio transaction
fee on
- --------------------------------------------------------------------------------
2 Sanford C. Bernstein Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
BERNSTEIN BERNSTEIN BERNSTEIN
SHORT DURATION NEW YORK CALIFORNIA
PLUS MUNICIPAL MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO
....................................................................................................................
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases
(as a percentage of offering price) None None None
Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None None None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds) None None None
Redemption Fees
(as a percentage of amount redeemed) None None None
Exchange Fees None None None
ANNUAL PORTFOLIO OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 0.50% 0.50% 0.50%
12b-1 Fees None None None
Other Expenses
Shareholder Servicing and Administrative Fees 0.10% 0.10% 0.10%
All Other Expenses 0.05% 0.05% 0.07%
Total Portfolio Operating Expenses 0.65% 0.65% 0.67%
EXAMPLE
A Portfolio would pay the following expenses on a
$1,000 investment, assuming 5% annual return:
1 Yr. $7 $7 $7
3 Yrs. (cum.) $21 $21 $21
5 Yrs. (cum.) $36 $36 $37
10 Yrs. (cum.) $81 $81 $83
</TABLE>
<TABLE>
<CAPTION>
BERNSTEIN BERNSTEIN BERNSTEIN
DIVERSIFIED INTERMEDIATE INTERNATIONAL
MUNICIPAL DURATION VALUE
PORTFOLIO PORTFOLIO PORTFOLIO
...................................................................................................................
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases
(as a percentage of offering price) None None None
Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None None None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds) None None None
Redemption Fees
(as a percentage of amount redeemed) None None None
Exchange Fees None None None
ANNUAL PORTFOLIO OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 0.50% 0.48% 0.95%
12b-1 Fees None None None
Other Expenses
Shareholder Servicing and Administrative Fees 0.10% 0.10% 0.25%
All Other Expenses 0.05% 0.04% 0.07%
Total Portfolio Operating Expenses 0.65% 0.62% 1.27%
EXAMPLE
A Portfolio would pay the following expenses on a
$1,000 investment, assuming 5% annual return:
1 Yr. $7 $6 $13
3 Yrs. (cum.) $21 $20 $40
5 Yrs. (cum.) $36 $35 $70
10 Yrs. (cum.) $81 $77 $153
</TABLE>
redemptions of Portfolio shares equal to 2% of the dollar amount redeemed from
the Portfolio (including redemptions made by exchanging shares of the Bernstein
Emerging Markets Value Portfolio for shares of other Fund Portfolios). The
portfolio transaction fee on redemptions is deducted from redemption or exchange
proceeds. The portfolio transaction fees on purchases and redemptions are
received by the Bernstein Emerging Markets Value Portfolio, not by Bernstein,
and are neither sales loads nor contingent deferred sales loads.
The purpose of the portfolio transaction fees is to allocate transaction
costs associated with purchases and redemptions to the investors making those
purchases and redemptions, not to other shareholders. The Bernstein Emerging
Markets Value Portfolio, unlike the other Portfolios of the Fund, imposes
transaction fees because transaction costs incurred when purchasing or selling
stocks of companies in emerging-market countries are considerably higher than
those incurred in either the United States or other developed countries. The
portfolio transaction fees reflect Bernstein's
- --------------------------------------------------------------------------------
Prospectus--January 30, 1998 3
<PAGE>
FEE TABLE
<TABLE>
<CAPTION>
BERNSTEIN
EMERGING MARKETS
VALUE PORTFOLIO
...........................................................................................................................
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
PAID TO MANAGER
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable) None
SHAREHOLDER TRANSACTION EXPENSES
PAID TO PORTFOLIO
Portfolio Transaction Fee upon Purchase of Shares
(as a percentage of amount invested)* 2.00%
Portfolio Transaction Fee upon Redemption of Shares
(as a percentage of amount redeemed)** 2.00%
Portfolio Transaction Fee upon Exchange of Shares ***
ANNUAL PORTFOLIO OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 1.25%
12b-1 Fees None
Other Expenses
Shareholder Servicing and Administrative Fees 0.25%
All Other Expenses 0.25%
Total Portfolio Operating Expenses 1.75%
EXAMPLE 1 Year 3 Years 5 Years 10 Years
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of each $58 $96 $136 $249
time period.
You would pay the following expenses on the same investment,
assuming no redemption++ $37 $74 $113 $222
</TABLE>
* The portfolio transaction fee on purchases is deducted automatically from
the amount invested.
** The portfolio transaction fee upon redemption is withheld from redemption
proceeds by the Portfolio.
*** Exchanges will be treated as purchases or redemptions for purposes of
imposing the portfolio transaction fee on purchases or redemptions.
+ The expenses include the portfolio transaction fee on purchases and
redemptions.
++ The expenses include the portfolio transaction fee on purchases.
estimate of the brokerage and other transaction costs that the Bernstein
Emerging Markets Value Portfolio incurs as a result of purchases or redemptions.
Without the fees, the Bernstein Emerging Markets Value Portfolio would not be
reimbursed for these transaction costs, resulting in reduced investment
performance for all shareholders of the Portfolio. With the fees, the
transaction costs occasioned by purchases or sales of shares of the Bernstein
Emerging Markets Value Portfolio are borne not by existing shareholders, but by
the investors making the purchases and redemptions.
"Other Expenses" for all Portfolios are based on amounts for the fiscal year
ended September 30, 1997. The example should not be considered a representation
of future expenses; actual expenses may be greater or less than those shown. For
the period through and including December 31, 1997, Bernstein has agreed to
assume the Bernstein Emerging Markets Value Portfolio's expenses to the extent
aggregate operating expenses (excluding interest, taxes, brokerage and
other transaction costs and extraordinary expenses) exceed 2% per annum of the
Portfolio's average daily net assets.
- --------------------------------------------------------------------------------
4 Sanford C. Bernstein Fund, Inc.
<PAGE>
Portfolio transaction fees on purchases and redemptions are not operating
expenses; no portion of the portfolio transaction fees will be assumed
by Bernstein. A more complete description of the various costs and expenses
can be found under "Management of the Portfolios" on page 39. Shareholders
of the Fund do not need to open a brokerage account with Bernstein;
shareholders may elect to take delivery of the shares or to make alternate
arrangements for custodying them. If a shareholder holds Fund shares in
a Bernstein brokerage account, Bernstein (not the Fund) will charge an annual
maintenance fee of $100 for accounts with assets of less than $400,000 under the
management of Bernstein's Equity and/or Fixed-Income Investment Policy Groups.
This fee is deducted from cash held in the brokerage account or, if insufficient
cash is maintained in the brokerage account, by selling securities. Bernstein
does not charge this fee on accounts that are included in a group of related
accounts as defined by Bernstein with combined assets of $400,000 or more.
Shares of the Fund purchased or redeemed through broker-dealers, banks and other
financial institutions may be subject to fees imposed by those institutions.
- --------------------------------------------------------------------------------
Prospectus--January 30, 1998 5
<PAGE>
FINANCIAL HIGHLIGHTS
Set forth below is a table containing information as to the income and operating
performance of a share of each Portfolio of the Fund for the periods indicated.
The financial statements, which contain this information for each year in the
five-year period ended September 30, 1997, have been audited by Price Waterhouse
LLP. The related financial statements and the reports of independent accountants
are incorporated by reference in the Fund's SAI. Additional performance
information with respect to all Portfolios is contained in the Fund's annual
report to shareholders dated September 30, 1997, which is available upon request
and without charge. These financial highlights should be read in conjunction
with the financial statements incorporated by reference in the Fund's SAI.
<TABLE>
<CAPTION>
BERNSTEIN INTERNATIONAL VALUE PORTFOLIO
---------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/97 9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 (a)
---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.14 $16.08 $16.57 $15.39 $11.98 $12.50
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.26 0.23 0.18 0.19 0.05 0.02
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies 3.73 2.26 0.07 1.13 3.54 (0.54)
------ ------ ------ ------ ------ ------
Total from investment operations 3.99 2.49 0.25 1.32 3.59 (0.52)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.99) (0.10) (0.11) (0.02) (0.05) 0
Dividends from tax-exempt net investment income 0 0 0 0 0 0
Distributions from net realized gains (0.22) (0.33) (0.63) (0.12) (0.13) 0
Distributions in excess of net investment income
due to timing differences 0 0 0 0 0 0
Distributions in excess of net realized gains
due to timing differences 0 0 0 0 0 0
------ ------ ------ ------ ------ ------
Total distributions (1.21) (0.43) (0.74) (0.14) (0.18) 0
Portfolio transaction fee 0 0 0 0 0 0
------ ------ ------ ------ ------ ------
Net asset value, end of period $20.92 $18.14 $16.08 $16.57 $15.39 $11.98
====== ====== ====== ====== ====== ======
Total return 23.25% 15.83% 1.84% 8.55% 30.45% (4.16)%
------ ------ ------ ------ ------ ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $4,965,998 $3,131,258 $1,996,112 $1,343,266 $539,936 $75,255
Average net assets (000 omitted) $3,977,823 $2,569,586 $1,591,703 $948,563 $235,839 $41,234
Ratio of expenses to average net assets 1.27% 1.31% 1.35% 1.39% 1.53% 2.00%*
Ratio of net investment income to 1.37% 1.37% 1.17% 1.13% 1.27% 0.59%*
average net assets
Portfolio turnover rate 26.24% 21.89% 29.53% 23.78% 21.22% 1.12%
Average commission rate per share 0.0247 0.0234 N/A N/A N/A N/A
</TABLE>
* Annualized
(a) Commenced operations June 22, 1992
- --------------------------------------------------------------------------------
6 Sanford C. Bernstein Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
BERNSTEIN
EMERGING MARKETS
VALUE PORTFOLIO BERNSTEIN INTERMEDIATE DURATION PORTFOLIO
----------------------- --------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/97 9/30/96 (b) 9/30/97 9/30/96 9/30/95 9/30/94
---------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $21.82 $20.00 $13.08 $13.30 $12.54 $13.92
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.14 0.18 0.75 0.80 0.78 0.68
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies 0.44 0.83 0.35 (0.14) 0.77 (1.15)
------ ------ ------ ------ ------ ------
Total from investment operations 0.58 1.01 1.10 0.66 1.55 (0.47)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.08) 0 (0.80) (0.80) (0.76) (0.70)
Dividends from tax-exempt net investment income 0 0 0 0 0 0
Distributions from net realized gains (0.02) 0 0 (0.08) 0 (0.08)
Distributions in excess of net investment income
due to timing differences 0 0 0 0 (0.03) 0
Distributions in excess of net realized gains
due to timing differences 0 0 0 0 0 (0.13)
------ ------ ------ ------ ------ ------
Total distributions (0.10) 0 (0.80) (0.88) (0.79) (0.91)
Portfolio transaction fee 0.24 0.81 0 0 0 0
------ ------ ------ ------ ------ ------
Net asset value, end of period $22.54 $21.82 $13.38 $13.08 $13.30 $12.54
====== ====== ====== ====== ====== ======
Total return (0.32)%+ 4.80%+ 8.66% 5.05% 12.82% (3.54)%
------ ------ ------ ------ ------ ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $438,305 $273,924 $2,058,220 $1,451,776 $1,142,768 $848,529
Average net assets (000 omitted) $379,351 $165,362 $1,745,554 $1,310,208 $957,247 $764,519
Ratio of expenses to average net assets 1.75% 1.92%* 0.62% 0.63% 0.64% 0.65%
Ratio of net investment income to
average net assets 0.58% 1.01%* 5.61% 5.99% 6.11% 5.14%
Portfolio turnover rate 32.45% 9.81% 238.04% 141.04% 212.40% 203.73%
Average commission rate per share 0.0022 0.0027 N/A N/A N/A N/A
<CAPTION>
BERNSTEIN INTERMEDIATE DURATION PORTFOLIO
---------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 (c)
---------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.82 $13.19 $12.36 $12.82 $12.50
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.76 0.90 1.00 0.98 0.69
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies 0.68 0.79 0.85 (0.25) 0.32
------ ------ ------ ------ ------
Total from investment operations 1.44 1.69 1.85 0.73 1.01
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.76) (0.90) (1.00) (0.98) (0.69)
Dividends from tax-exempt net investment income 0 0 0 0 0
Distributions from net realized gains (0.58) (0.16) (0.02) (0.21) 0
Distributions in excess of net investment income
due to timing differences 0 0 0 0 0
Distributions in excess of net realized gains
due to timing differences 0 0 0 0 0
------ ------ ------ ------ ------
Total distributions (1.34) (1.06) (1.02) (1.19) (0.69)
Portfolio transaction fee 0 0 0 0 0
------ ------ ------ ------ ------
Net asset value, end of period $13.92 $13.82 $13.19 $12.36 $12.82
====== ====== ====== ====== ======
Total return 11.30% 13.32% 15.54% 5.90% 8.25%
------ ------ ------ ------ ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $693,772 $524,301 $375,345 $240,779 $183,480
Average net assets (000 omitted) $595,273 $444,750 $304,034 $218,760 $135,549
Ratio of expenses to average net assets 0.66% 0.67% 0.68% 0.71% 0.83%*
Ratio of net investment income to
average net assets 5.59% 6.64% 7.80% 7.77% 7.74%*
Portfolio turnover rate 60.77% 149.71% 81.04% 119.09% 121.11%
Average commission rate per share N/A N/A N/A N/A N/A
</TABLE>
+ This reflects the return to a shareholder who purchased shares of the
Portfolio at the beginning of the period and redeemed them at the end of the
period, paying, in each case, the 2.00% portfolio transaction fee. Total
return to a shareholder for the periods ending September 30, 1997 and
September 30, 1996 without taking account of these transaction fees would
have been 3.79% and 9.10%, respectively.
* Annualized
(b) Commenced operations December 15, 1995
(c) Commenced operations January 17, 1989
- --------------------------------------------------------------------------------
Prospectus -- January 30, 1998 7
<PAGE>
FINANCIAL HIGHLIGHTS
Set forth below is a table containing information as to the income and operating
performance of a share of each Portfolio of the Fund for the periods indicated.
The financial statements, which contain this information for each year in the
five-year period ended September 30, 1997, have been audited by Price Waterhouse
LLP. The related financial statements and the reports of independent accountants
are incorporated by reference in the Fund's SAI. Additional performance
information with respect to all Portfolios is contained in the Fund's annual
report to shareholders dated September 30, 1997, which is available upon request
and without charge. These financial highlights should be read in conjunction
with the financial statements incorporated by reference in the Fund's SAI.
<TABLE>
<CAPTION>
BERNSTEIN SHORT DURATION PLUS PORTFOLIO
---------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/97 9/30/96 9/30/95 9/30/94 9/30/93 9/30/92
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.48 $12.49 $12.32 $12.89 $13.14 $12.84
------ ------- ------- ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.67 0.69 0.70 0.55 0.59 0.75
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies 0.08 (0.01) 0.18 (0.40) 0.10 0.44
------ ------- ------- ------ ------ ------
Total from investment operations 0.75 0.68 0.88 0.15 0.69 1.19
------ ------- ------- ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.70) (0.69) (0.69) (0.56) (0.59) (0.75)
Dividends from tax-exempt net investment income 0 0 0 0 0 0
Distributions from net realized gains 0 0 0 0 (0.35) (0.14)
Distributions in excess of net investment income
due to timing differences 0 0 (0.02) 0 0 0
Distributions in excess of net realized gains
due to timing differences 0 0 0 (0.16) 0 0
------ ------- ------- ------ ------ ------
Total distributions (0.70) (0.69) (0.71) (0.72) (0.94) (0.89)
Portfolio transaction fee 0 0 0 0 0 0
------ ------- ------- ------ ------ ------
Net asset value, end of period $12.53 $12.48 $12.49 $12.32 $12.89 $13.14
====== ======= ======= ====== ====== ======
Total return 6.21% 5.54% 7.36% 1.14% 5.49% 9.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $612,744 $538,248 $534,462 $550,415 $508,959 $535,980
Average net assets (000 omitted) $583,003 $532,094 $536,042 $529,892 $535,889 $482,467
Ratio of expenses to average net assets 0.65% 0.65% 0.65% 0.65% 0.66% 0.66%
Ratio of net investment income to
average net assets 5.38% 5.47% 5.69% 4.30% 4.52% 5.75%
Portfolio turnover rate 118.58% 169.96% 61.03% 285.80% 112.87% 169.60%
Average commission rate per share N/A N/A N/A N/A N/A N/A
</TABLE>
- -------------------------------------------------------------------------------
8 Sanford C. Bernstein Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
BERNSTEIN SHORT BERNSTEIN GOVERNMENT SHORT
DURATION PLUS PORTFOLIO DURATION PORTFOLIO
--------------------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/91 9/30/90 9/30/89 (d) 9/30/97 9/30/96
---------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.50 $12.62 $12.50 $12.48 $12.55
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.94 0.97 0.78 0.67 0.65
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies 0.41 (0.01) 0.12 0.05 (0.07)
------- ------- ------- ------- -------
Total from investment operations 1.35 0.96 0.90 0.72 0.58
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.94) (0.97) (0.78) (0.67) (0.65)
Dividends from tax-exempt net investment income 0 0 0 0 0
Distributions from net realized gains (0.07) (0.11) 0 0 0
Distributions in excess of net investment income
due to timing differences 0 0 0 0 0
Distributions in excess of net realized gains
due to timing differences 0 0 0 0 0
------- ------- ------- ------- -------
Total distributions (1.01) (1.08) (0.78) (0.67) (0.65)
Portfolio transaction fee 0 0 0 0 0
------- ------- ------- ------- -------
Net asset value, end of period $12.84 $12.50 $12.62 $12.53 $12.48
======= ======= ======= ======= =======
Total return 11.26% 7.88% 7.41% 5.88% 4.76%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $435,334 $391,131 $335,310 $142,081 $139,802
Average net assets (000 omitted) $405,457 $374,101 $263,899 $136,888 $145,268
Ratio of expenses to average net assets 0.67% 0.68% 0.75%* 0.69% 0.69%
Ratio of net investment income to average net assets 7.42% 7.67% 7.91%* 5.32% 5.21%
Portfolio turnover rate 140.03% 155.21% 132.82% 80.11% 155.29%
Average commission rate per share N/A N/A N/A N/A N/A
<CAPTION>
BERNSTEIN GOVERNMENT SHORT DURATION PORTFOLIO
------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/95 9/30/94 9/30/93 9/30/92
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.34 $12.87 $13.14 $12.93
------------ ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.69 0.49 0.44 0.66
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies 0.21 (0.38) 0.20 0.41
------- ------- ------- -------
Total from investment operations 0.90 0.11 0.64 1.07
------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.69) (0.49) (0.44) (0.66)
Dividends from tax-exempt net investment income 0 0 0 0
Distributions from net realized gains 0 0 (0.47) (0.20)
Distributions in excess of net investment income
due to timing differences 0 0 0 0
Distributions in excess of net realized gains
due to timing differences 0 (0.15) 0 0
------- ------- ------- -------
Total distributions (0.69) (0.64) (0.91) (0.86)
Portfolio transaction fee 0 0 0 0
------- ------- ------- -------
Net asset value, end of period $12.55 $12.34 $12.87 $13.14
======= ======= ======= =======
Total return 7.55% 0.85% 5.11% 8.57%
======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $143,723 $185,028 $212,531 $254,950
Average net assets (000 omitted) $145,710 $188,013 $239,462 $238,381
Ratio of expenses to average net assets 0.69% 0.68% 0.68% 0.68%
Ratio of net investment income to
average net assets 5.58% 3.85% 3.40% 5.02%
Portfolio turnover rate 49.34% 213.02% 130.40% 220.86%
Average commission rate per share N/A N/A N/A N/A
</TABLE>
*Annualized
(d) Commenced operations December 12, 1988
- --------------------------------------------------------------------------------
Prospectus -- January 30, 1998 9
<PAGE>
FINANCIAL HIGHLIGHTS
Set forth below is a table containing information as to the income and operating
performance of a share of each Portfolio of the Fund for the periods indicated.
The financial statements, which contain this information for each year in the
five-year period ended September 30, 1997, have been audited by Price Waterhouse
LLP. The related financial statements and the reports of independent accountants
are incorporated by reference in the Fund's SAI. Additional performance
information with respect to all Portfolios is contained in the Fund's annual
report to shareholders dated
<TABLE>
<CAPTION>
BERNSTEIN GOVERNMENT BERNSTEIN DIVERSIFIED
SHORT DURATION PORTFOLIO MUNICIPAL PORTOLIO
------------------------------------ -------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/91 9/30/90 9/30/89 (e) 9/30/97 9/30/96 9/30/95
---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.58 $12.61 $12.50 $13.44 $13.50 $12.99
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.86 0.95 0.72 0.60 0.63 0.65
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies 0.41 0.05 0.11 0.31 (0.04) 0.51
------ ------ ------ ------ ------ ------
Total from investment operations 1.27 1.00 0.83 0.91 0.59 1.16
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.86) (0.95) (0.72) (0.02) (0.01) (0.02)
Dividends from tax-exempt net investment income 0 0 0 (0.58) (0.62) (0.63)
Distributions from net realized gains (0.06) (0.08) 0 (0.01) (0.02) 0
Distributions in excess of net investment income
due to timing differences 0 0 0 0 0 0
Distributions in excess of net realized gains
due to timing differences 0 0 0 0 0 0
------ ------ ------ ------ ------ ------
Total distributions (0.92) (1.03) (0.72) (0.61) (0.65) (0.65)
Portfolio transaction fee 0 0 0 0 0 0
------ ------ ------ ------ ------ ------
Net asset value, end of period $12.93 $12.58 $12.61 $13.74 $13.44 $13.50
------ ------ ------ ------ ------ ------
Total return 10.47% 8.29% 6.77% 6.95% 4.38% 9.16%
====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $211,566 $159,490 $138,052 $1,114,374 $820,395 $660,814
Average net assets (000 omitted) $184,175 $159,170 $107,512 $965,455 $744,452 $572,769
Ratio of expenses to average net assets 0.70% 0.72% 0.85%* 0.65% 0.66% 0.66%
Ratio of net investment income to
average net assets 6.67% 7.52% 7.82%* 4.43% 4.61% 4.89%
Portfolio turnover rate 175.87% 171.41% 141.20% 24.65% 25.22% 42.55%
Average commission rate per share N/A N/A N/A N/A N/A N/A
</TABLE>
*Annualized
(e) Commenced operations January 3, 1989
- -------------------------------------------------------------------------------
10 Sanford C. Bernstein Fund, Inc.
<PAGE>
September 30, 1997, which is available upon request and without charge. These
financial highlights should be read in conjunction with the financial statements
incorporated by reference in the Fund's SAI.
<TABLE>
<CAPTION>
BERNSTEIN DIVERSIFIED
MUNICIPAL PORTFOLIO
---------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 (f)
---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.78 $13.40 $13.01 $12.51 $12.52 $12.50
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.61 0.63 0.71 0.73 0.74 0.52
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies (0.72) 0.49 0.42 0.51 0.04 0.02
------ ------ ------ ------ ------ ------
Total from investment operations (0.11) 1.12 1.13 1.24 0.78 0.54
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.01) (0.01) (0.11) (0.06) (0.03) (0.03)
Dividends from tax-exempt net investment income (0.60) (0.62) (0.60) (0.67) (0.71) (0.49)
Distributions from net realized gains (0.03) (0.11) (0.03) (0.01) (0.05) 0
Distributions in excess of net investment income
due to timing differences 0 0 0 0 0 0
Distributions in excess of net realized gains
due to timing differences (0.04) 0 0 0 0 0
------ ------ ------ ------ ------ ------
Total distributions (0.68) (0.74) (0.74) (0.74) (0.79) (0.52)
Portfolio transaction fee 0 0 0 0 0 0
------ ------ ------ ------ ------ ------
Net asset value, end of period $12.99 $13.78 $13.40 $13.01 $12.51 $12.52
====== ====== ====== ====== ====== ======
Total return (0.80)% 8.61% 8.91% 10.21% 6.35% 4.41%
------ ------ ------ ------ ------ ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $552,134 $449,668 $301,746 $210,417 $157,730 $108,653
Average net assets (000 omitted) $509,380 $375,576 $256,850 $179,375 $142,712 $87,945
Ratio of expenses to average net assets 0.67% 0.69% 0.69% 0.71% 0.75% 0.91%*
Ratio of net investment income to average
net assets 4.57% 4.64% 5.33% 5.69% 5.83% 5.75%*
Portfolio turnover rate 34.45% 34.74% 48.22% 33.91% 47.25% 19.52%
Average commission rate per share N/A N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
BERNSTEIN CALIFORNIA
MUNICIPAL PORTFOLIO
-------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/97 9/30/96 9/30/95 9/30/94
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $13.58 $13.58 $13.06 $13.83
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.59 0.61 0.64 0.61
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies 0.32 0 0.52 (0.74)
------ ------ ------ ------
Total from investment operations 0.91 0.61 1.16 (0.13)
------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.03) (0.03) (0.05) (0.02)
Dividends from tax-exempt net investment income (0.56) (0.58) (0.59) (0.59)
Distributions from net realized gains 0 0 0 0
Distributions in excess of net investment income
due to timing differences 0 0 0 0
Distributions in excess of net realized gains
due to timing differences 0 0 0 (0.03)
------ ------ ------ ------
Total distributions (0.59) (0.61) (0.64) (0.64)
Portfolio transaction fee 0 0 0 0
------ ------ ------ ------
Net asset value, end of period $13.90 $13.58 $13.58 $13.06
====== ====== ====== ======
Total return 6.82% 4.60% 9.11% (0.98)%
------ ------ ------ ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $411,384 $285,758 $213,951 $192,993
Average net assets (000 omitted) $339,514 $246,410 $185,990 $168,797
Ratio of expenses to average net assets 0.67% 0.68% 0.69% 0.70%
Ratio of net investment income to average
net assets 4.26% 4.48% 4.78% 4.51%
Portfolio turnover rate 41.32% 23.87% 63.89% 24.55%
Average commission rate per share N/A N/A N/A N/A
</TABLE>
* Annualized
(f) Commenced operations January 9, 1989
- --------------------------------------------------------------------------------
Prospectus--January 30, 1998 11
<PAGE>
FINANCIAL HIGHLIGHTS
Set forth below is a table containing information as to the income and operating
performance of a share of each Portfolio of the Fund for the periods indicated.
The financial statements, which contain this information for each year in the
five-year period ended September 30, 1997, have been audited by Price Waterhouse
LLP. The related financial statements and the reports of independent accountants
are incorporated by reference in the Fund's SAI. Additional performance
information with respect to all Portfolios is contained in the Fund's annual
report to shareholders dated
<TABLE>
<CAPTION>
BERNSTEIN CALIFORNIA BERNSTEIN NEW YORK
MUNICIPAL PORTFOLIO MUNICIPAL PORTFOLIO
-------------------------------------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/93 9/30/92 9/30/91 9/30/90 (g) 9/30/97 9/30/96
---------- ---------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.38 $12.94 $12.42 $12.50 $13.35 $13.48
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.60 0.66 0.70 0.13 0.61 0.64
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies 0.52 0.45 0.52 (0.08) 0.27 (0.07)
------ ------ ------ ------ ------ ------
Total from investment operations 1.12 1.11 1.22 0.05 0.88 0.57
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.02) (0.07) (0.11) (0.09) (0.01) (0.02)
Dividends from tax-exempt net investment income (0.58) (0.59) (0.59) (0.04) (0.60) (0.62)
Distributions from net realized gains (0.07) (0.01) 0 0 0 (0.06)
Distributions in excess of net investment income
due to timing differences 0 0 0 0 0 0
Distributions in excess of net realized gains
due to timing differences 0 0 0 0 0 0
------ ------ ------ ------ ------ ------
Total distributions (0.67) (0.67) (0.70) (0.13) (0.61) (0.70)
Portfolio transaction fee 0 0 0 0 0 0
------ ------ ------ ------ ------ ------
Net asset value, end of period $13.83 $13.38 $12.94 $12.42 $13.62 $13.35
====== ====== ====== ====== ====== ======
Total return 8.60% 8.76% 10.06% 0.40% 6.73% 4.31%
------ ------ ------ ------ ------ ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $150,115 $83,043 $50,356 $22,828 $671,700 $539,217
Average net assets (000 omitted) $116,301 $65,492 $35,005 $21,481 $603,119 $497,391
Ratio of expenses to average net assets 0.73% 0.77% 0.79% 0.79%* 0.65% 0.66%
Ratio of net investment income to average
net assets 4.36% 4.96% 5.40% 6.73%* 4.51% 4.73%
Portfolio turnover rate 23.79% 53.08% 48.91% 113.25% 25.94% 26.19%
Average commission rate per share N/A N/A N/A N/A N/A N/A
</TABLE>
*Annualized
(g) Commenced operations August 6, 1990
- -------------------------------------------------------------------------------
12 Sandford C. Bernstein Fund, Inc.
<PAGE>
September 30, 1997, which is available upon request and without charge. These
financial highlights should be read in conjunction with the financial statements
incorporated by reference in the Fund's SAI.
<TABLE>
<CAPTION>
BERNSTEIN NEW YORK MUNICIPAL PORTFOLIO
-------------------------------------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.98 $13.80 $13.47 $13.05 $12.54 $12.59
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.65 0.64 0.67 0.74 0.74 0.76
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies 0.50 (0.75) 0.46 0.44 0.52 0
------ ------- ------ ------ ------ ------
Total from investment operations 1.15 (0.11) 1.13 1.18 1.26 0.76
------ ------- ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.02) (0.02) (0.01) (0.11) (0.09) (0.08)
Dividends from tax-exempt net investment income (0.63) (0.62) (0.66) (0.63) (0.65) (0.68)
Distributions from net realized gains 0 (0.03) (0.13) (0.02) (0.01) (0.05)
Distributions in excess of net investment income
due to timing differences 0 0 0 0 0 0
Distributions in excess of net realized gains
due to timing differences 0 (0.04) 0 0 0 0
------ ------- ------ ------ ------ ------
Total distributions (0.65) (0.71) (0.80) (0.76) (0.75) (0.81)
Portfolio transaction fee 0 0 0 0 0 0
------ ------ ------ ------ ------ ------
Net asset value, end of period $13.48 $12.98 $13.80 $13.47 $13.05 $12.54
====== ====== ====== ====== ====== ======
Total return 9.14% (0.81)% 8.68% 9.31% 10.34% 6.12%
------ ------ ------ ------ ------ ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $458,543 $408,021 $336,101 $238,871 $190,776 $158,292
Average net assets (000 omitted) $413,892 $381,144 $277,930 $210,474 $172,633 $129,347
Ratio of expenses to average net assets 0.66% 0.67% 0.69% 0.69% 0.70% 0.74%
Ratio of net investment income to average
net assets 4.95% 4.78% 4.91% 5.55% 5.79% 5.94%
Portfolio turnover rate 44.84% 22.45% 34.58% 42.53% 29.79% 36.10%
Average commission rate per share N/A N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
BERNSTEIN
NEW YORK BERNSTEIN SHORT
MUNICIPAL DURATION DIVERSIFIED
PORTFOLIO MUNICIPAL PORTFOLIO
----------- -------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/89 (h) 9/30/97 9/30/96 9/30/95 (i)
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.50 $12.52 $12.63 $12.50
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.53 0.46 0.52 0.55
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies 0.09 0.05 (0.06) 0.13
---- ---- ------ ----
Total from investment operations 0.62 0.51 0.46 0.68
---- ---- ------ ----
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.07) (0.02) (0.02) (0.04)
Dividends from tax-exempt net investment income (0.46) (0.44) (0.50) (0.51)
Distributions from net realized gains 0 (0.01) (0.05) 0
Distributions in excess of net investment income
due to timing differences 0 0 0 0
Distributions in excess of net realized gains
due to timing differences 0 0 0 0
----- ----- ------ -----
Total distributions (0.53) (0.47) (0.57) (0.55)
Portfolio transaction fee 0 0 0 0
----- ----- ------ -----
Net asset value, end of period $12.59 $12.56 $12.52 $12.63
====== ====== ====== ======
Total return 5.04% 4.17% 3.68% 5.55%
------ ------ ------ ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $98,299 $151,821 $119,096 $101,325
Average net assets (000 omitted) $83,529 $135,288 $105,467 $85,893
Ratio of expenses to average net assets 0.89%* 0.72% 0.71% 0.72%*
Ratio of net investment income to average
net assets 5.84%* 3.66% 4.07% 4.32%*
Portfolio turnover rate 10.12% 68.25% 63.40% 73.50%
Average commission rate per share N/A N/A N/A N/A
</TABLE>
*Annualized
(h) Commenced operations January 9, 1989
(i) Commenced operations October 3, 1994
- -------------------------------------------------------------------------------
Prospectus--January 30, 1998 13
<PAGE>
FINANCIAL HIGHLIGHTS
Set forth below is a table containing information as to the income and
operating performance of a share of each Portfolio of the Fund for the periods
indicated. The financial statements, which contain this information for each
year in the five-year period ended September 30, 1997, have been audited by
Price Waterhouse LLP. The related financial statements and the reports of
independent accountants are incorporated by reference in the Fund's SAI.
Additional performance information with respect to all Portfolios is contained
in the Fund's annual report to shareholders dated September 30, 1997, which is
available upon request and without charge. These financial highlights should be
read in conjunction with the financial statements incorporated by reference in
the Fund's SAI.
<TABLE>
<CAPTION>
BERNSTEIN SHORT BERNSTEIN SHORT
DURATION CALIFORNIA DURATION NEW YORK
MUNICIPAL PORTFOLIO MUNICIPAL PORTFOLIO
------------------------------------ ------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/97 9/30/96 9/30/95 (j) 9/30/97 9/30/96 9/30/95 (j)
---------- ---------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.53 $12.65 $12.50 $12.52 $12.60 $12.50
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.45 0.50 0.53 0.50 0.51 0.54
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies 0.03 (0.07) 0.15 (0.01) (0.07) 0.10
------ ------ ------ ------ ------ ------
Total from investment operations 0.48 0.43 0.68 0.49 0.44 0.64
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.04) (0.05) (0.06) (0.08) (0.02) (0.05)
Dividends from tax-exempt net investment income (0.41) (0.45) (0.47) (0.42) (0.49) (0.49)
Distributions from net realized gains (0.01) (0.05) 0 (0.04) (0.01) 0
Distributions in excess of net investment income
due to timing differences 0 0 0 0 0 0
Distributions in excess of net realized gains
due to timing differences 0 0 0 0 0 0
------ ------ ------ ------ ------ ------
Total distributions (0.46) (0.55) (0.53) (0.54) (0.52) (0.54)
Portfolio transaction fee 0 0 0 0 0 0
------ ------ ------ ------ ------ ------
Net asset value, end of period $12.55 $12.53 $12.65 $12.47 $12.52 $12.60
====== ====== ====== ====== ====== ======
Total return 3.89% 3.50% 5.58% 3.99% 3.53% 5.24%
------ ------ ------ ------ ------ ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $86,311 $72,925 $63,530 $76,142 $58,750 $55,221
Average net assets (000 omitted) $76,339 $68,060 $49,944 $69,567 $54,087 $50,642
Ratio of expenses to average net assets 0.74% 0.72% 0.73%* 0.76% 0.74% 0.73%*
Ratio of net investment income to average
net assets 3.56% 3.96% 4.12%* 3.97% 4.02% 4.23%*
Portfolio turnover rate 75.36% 60.76% 89.33% 98.01% 55.81% 112.15%
Average commission rate per share N/A N/A N/A N/A N/A N/A
</TABLE>
* Annualized
(j) Commenced operations October 3, 1994
- -------------------------------------------------------------------------------
14 Sanford C. Bernstein Fund, Inc.
<PAGE>
THE FUND
The Fund was incorporated on May 4, 1988 under the laws of Maryland as an
open-end management investment company. This Prospectus relates to the Fund's 11
series of shares (the "Portfolios"). Shares of each series represent an interest
in a separate portfolio of securities. At September 30, 1997, the Portfolios of
the Fund had net assets totaling $10.729 billion. Bernstein, with offices at 767
Fifth Avenue, New York, New York 10153; 1999 Avenue of the Stars, Los Angeles,
California 90067; 777 South Flagler Drive, West Palm Beach, Florida 33401; 227
West Monroe Street, Chicago, Illinois 60606; 300 Crescent Court, Suite 950,
Dallas, Texas 75201; and 555 California Street, Suite 4300, San Francisco,
California 94104, serves as Investment Manager to each Portfolio. Each Portfolio
has its own investment objectives.
WHY BERNSTEIN?
- --------------------------------
Research Strength
Bernstein's business is investment research and management. For more than a
quarter-century we have been developing proprietary and innovative means of
improving investment decision-making. In the increasingly complex financial
markets, we believe Bernstein's analytic strength is a significant advantage.
Disciplined, Consistent Decision-Making
Bernstein research is applied within a value-oriented framework backed by
extensive research capability. Investment decision-making is disciplined,
centralized and highly systematic.
Bernstein Philosophy
We believe opportunity in the fixed-income and international markets is
primarily the result of complexity and emotion. To solve the complex problems of
bond and stock valuation, we devote considerable resources to research. To
minimize the emotional aspects of decision-making under uncertainty, we strive
to apply our valuation tools in a consistent and disciplined fashion.
BERNSTEIN FIXED-INCOME PROCESS
The management of Bernstein Fixed-Income Portfolios reflects three principal
elements:
1. Security and sector evaluation to identify the most attractive securities
in the market at a given time--those offering the highest expected return
in relation to their risks;
2. Interest-rate forecasting to determine the best level of interest-rate
risk at a given time, within specified limits for each Portfolio; and
3. Yield-curve analysis to determine the optimum combination of maturities
for given degrees of interest-rate risk.
To identify attractive bonds, we use proprietary valuation techniques that
seek to quantify the incremental return we should demand to compensate for the
various risks that bonds entail. We perform these analyses on all Treasury
securities; virtually all federal agency securities; representative samples of
municipal, mortgage-related, corporate and foreign bonds; and virtually all
financial futures and options.
We use our forecast of interest rates to set the target level of
interest-rate risk for each of the Fixed-Income Portfolios. When we expect
interest rates to rise, we modestly shorten average maturities; when we expect
rates to fall, we modestly lengthen.
Finally, given our interest-rate risk target, we analyze the yield curve to
determine the best combination of maturities. In some environments it is best to
concentrate a Portfolio's maturities near the interest-rate risk target, while
at other times a higher expected return may be achieved by using a mix of short-
and long-term bonds that have, on average, the same risk as the target.
The Advantage of Short and Intermediate Bonds
Over the short run, fixed-income returns tend to be dominated by cyclical
swings in interest rates. The longer the maturity, the more the individual
security benefits from a decline, or is hurt by a rise, in interest rates.
Inasmuch as it is difficult to forecast consistently the direction of interest
rates accurately, it is important for an investor to weigh the risks and returns
offered by any specific maturity strategy.
- --------------------------------------------------------------------------------
Prospectus -- January 30, 1998 15
<PAGE>
The Normal Yield Curve
[GRAPH]
Maturity Yield
0.2400 4.9800
0.9600 5.4500
1.8600 5.8300
2.7100 6.0200
3.5000 6.1700
4.2400 6.2800
4.9400 6.3800
5.5900 6.4600
7.1900 6.5500
10.8700 6.7700
11.9800 6.7600
Source: Street Software Technology and Bernstein estimates
As the chart above suggests, the yield on bonds normally increases with
maturity.
But notice that the path is not a straight line: nearly 50% of the rise
typically occurs within the first two years; 80% occurs within six years. In our
view, the reason the yield curve is generally so steep at the short maturities
is that investors are willing to forgo considerable return in exchange for the
knowledge that their investments will mature within the next few months. This
preference for liquidity is most striking between three months and two years.
The yield curve is dependent upon the period of time analyzed, and there may
be periods of time during which longer-term maturities provide substantially
higher yields and other times when shorter-term securities offer higher yields.
Because of the characteristic shape of the yield curve, a disproportionate
share of the extra return that normally stems from lengthening the maturity of
fixed-income investments is expected to be earned in the first few years of the
lengthening process.
The relevance of this yield chart for the Bernstein Fixed-Income
Portfolios--both taxable and municipal--is that the Portfolios are relatively
short or intermediate in average duration. We believe the risk/reward tradeoff
at those average durations is more advantageous than at the two extremes--i.e.,
money-market instruments or long-term bonds.*
The table below shows the rates of return of Treasuries of varying maturities
over two time periods: a nearly 28-year period that included both rising and
falling interest-rate cycles, and the most recent 14 3/4 years, which was a
period of generally declining interest rates. Note that in both the broader and
the narrower time periods (1) short-term bonds (i.e., with two-year maturities)
outperformed Treasury bills, and (2) intermediate bonds provided rates of return
competitive with 30-year bonds, despite having a maturity only one-fifth as
long.
The other side of the investment equation is risk. As our earlier remarks
suggested, the principal source of risk in bond investing is interest-rate
change. The market value of a bond falls when interest rates rise and vice
versa. While maturity is somewhat indicative of interest-rate risk, duration is
a more accurate measure. The duration of a bond is defined to be the effect on
price of a rise (or fall) of 1% in interest rates. The Bernstein short duration
Portfolios generally have durations around 2.0 years and thus will lose about 2%
in principal should interest rates rise 1%. The Bernstein intermediate duration
Portfolios (the municipal Portfolios as well as Intermediate Duration) generally
have durations of about 5.0 years and would lose about 5% should interest
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Treasury Total Returns (Annualized)
TREASURY BILLS SHORT-TERM INTERMEDIATE-TERM LONG-TERM
(3 MOS.) BONDS (2 YRS.) BONDS (6 YRS.) BONDS (30 YRS.)
<S> <C> <C> <C> <C>
Jan 1970-Sep 1997 7.2% 8.2% 9.0% 9.1%
Jan 1983-Sep 1997 6.5 8.1 10.0 10.9
</TABLE>
Note: The returns in this table were calculated by adding monthly income to the
month-end price and dividing this sum by the previous month-end price.
Source: Center for Research in Security Prices, Federal Reserve Board, The Wall
Street Journal, Salomon Brothers, Street Pricing Services and Bernstein
*In the examples that follow on this and the facing page, Treasury bills are
90-day bills, short-term bonds are two-year bonds, intermediate-term bonds are
six-year bonds and long-term bonds are 30-year bonds. The 90-day maturity has
been chosen for Treasury bills because it is representative of the interest-rate
risk offered by money-market instruments. The two-year and six-year maturities
have been chosen for short- and intermediate-term bonds because their
interest-rate risk resembles that of the Bernstein short-duration and
intermediate-duration Portfolios. The 30-year maturity was selected because it
is widely used by market participants to represent the long end of the bond
market.
- --------------------------------------------------------------------------------
16 Sanford C. Bernstein Fund, Inc.
<PAGE>
rates rise 1%. In contrast, long-term bonds typically have durations of greater
than 10 years and would thus lose more than 10% if interest rates were to rise
1%. As the first table below illustrates, the longer the bond's duration,
whether it is a Treasury, corporate or municipal bond, the greater its
vulnerability to these fluctuations.
Treasury securities always produce a positive return if held to maturity.
However, when interest rates rise sufficiently, the market value of a bond can
drop in a given year by more than the annual interest received. When this
happens, the total return is negative.
As the bottom table below indicates, Treasury bills and short-term bonds have
not experienced a single negative total return over any 12-month period since
1970. Intermediate-term bonds have been profitable more than 91% of the time,
over both the 1970-97 and 1983-97 periods. But long bonds declined in value by
more than their interest payments 21% of the time during the 1983-97 period and
24% of the time during the 1970-97 period. During those periods when the return
on these securities was negative, the average loss on intermediate bonds was
2.7% and the average loss on long-term bonds was 4.8%.
Our goal is to optimize the tradeoff between risk and return. For the reasons
detailed above, we believe that short duration bonds will provide superior
returns to money-market instruments with only a slight increase in risk. We
also believe that intermediate bonds will produce virtually the same returns as
long bonds with less than half the risk. Bernstein's Fixed-Income Portfolios
are, accordingly, targeted to the short and intermediate durations that maximize
reward in relation to risk.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bond Risk: Change in Value Due to Interest-Rate Fluctuations
VALUE OF $100 BOND VALUE OF $100 BOND
IF RATES RISE 1% IF RATES FALL 1%
<S> <C> <C>
Short-term bond (duration 1.8 yrs.) $98.16 $101.88
Intermediate-term bond (duration 5.0 yrs.) 95.17 105.13
Long-term bond (duration 13.8 yrs.) 87.53 115.45
Note: Assumes initial yield and coupon of 6%
<CAPTION>
- -------------------------------------------------------------------------------
Frequency of Loss:
Percent of 12-Month Periods When Treasuries Had Negative Total Return (Jan 1970-Sep 1997)
TREASURY BILLS SHORT-TERM INTERMEDIATE-TERM LONG-TERM
(3 MOS.) BONDS (2 YRS.) BONDS (6 YRS.) BONDS (30 YRS.)
<S> <C> <C> <C> <C>
Jan 1970-Sep 1997* 0.0% 0.0% 8.1% 23.6%
Jan 1983-Sep 1997** 0.0 0.0 8.4 21.1
</TABLE>
*Based on 322 overlapping 12-month periods
**Based on 166 overlapping 12-month periods
Source: Center for Research in Security Prices, Federal Reserve Board,
The Wall Street Journal, Salomon Brothers, Street Pricing Service and
Bernstein
- --------------------------------------------------------------------------------
Prospectus -- January 30, 1998 17
<PAGE>
<TABLE>
<CAPTION>
Bernstein Fixed-Income Portfolios
FREQUENCY OF
NEGATIVE ANNUAL
PORTFOLIO PRINCIPAL HOLDINGS* TOTAL RETURN RATE OF INCOME
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bernstein High-grade, short-term, Extremely low Moderate,
Short Duration tax-exempt, depending on
California Municipal California municipals tax bracket
Bernstein High-grade, short-term, Extremely low Moderate,
Short Duration tax-exempt, geographically depending on
Diversified Municipal diversified municipals tax bracket
Bernstein High-grade, short-term, Extremely low Moderate,
Short Duration tax-exempt, depending on
New York Municipal New York municipals tax bracket
Bernstein Short-term Extremely low Moderate
Government U.S. Treasury and
Short Duration agency securities
Bernstein High-grade, Extremely low Moderate
Short Duration Plus short-term securities
Bernstein High-grade, intermediate, Low Moderate to high,
New York tax-exempt depending on
Municipal New York municipals tax bracket
Bernstein High-grade, intermediate, Low Moderate to high,
California tax-exempt depending on
Municipal California municipals tax bracket
Bernstein High-grade, intermediate, Low Moderate to high,
Diversified geographically diversified, depending on
Municipal tax-exempt municipals tax bracket
Bernstein High-grade, Low Moderate/high
Intermediate Duration intermediate bonds
</TABLE>
* "Short-term" and "intermediate" refer to effective duration of the
Portfolios as described on pages 24-28.
- --------------------------------------------------------------------------------
18 Sanford C. Bernstein Fund, Inc.
<PAGE>
BERNSTEIN INTERNATIONAL VALUE AND
EMERGING MARKETS VALUE PROCESS
WHY INVEST IN FOREIGN STOCKS?
Americans' recognition of the opportunities available in developed and
emerging foreign stock markets has increased dramatically in recent years for
obvious reasons. Whereas in 1982 U.S. stocks represented 55% of the value of
common stocks around the world, by 1996 that percentage was a little over 40%;
the foreign markets accounted for almost 60% of the world's stock market value
in 1996 with the developed foreign markets making up approximately 47% and the
emerging markets making up 11% (Display 1). Moreover, the large public companies
with which we're most familiar are no longer American only. Toyota and Honda
loom as large in our consciousness today as Ford or Chrysler; Nestle is as
familiar as Hershey. And important global companies such as DeBeers, Samsung and
Posco are domiciled in emerging nations. Investing in the companies we know
best--and whose products fill our lives--now entails a certain commitment to
non-U.S. stocks.
But the most important reason to expand one's stock investment horizon, in
Bernstein's judgment, is the opportunity to broaden portfolio diversification.
The stock markets of many developed and emerging foreign countries have
outperformed the S&P 500 over the last 12 years, while others have
underperformed (Display 2). Yet--and this is the key point--different countries'
stock markets don't necessarily follow the same rhythm. Developed foreign
markets don't move in the same direction at the same time, nor do developed
foreign stocks as a group mirror U.S.-market movements. Likewise, emerging
foreign markets have followed different performance rhythms from one another,
and as a group, a different performance rhythm from the stock markets of the
industrialized world. This is not to overlook the extraordinary volatility of
emerging markets over the historical record available to us--or the brevity of
that record. Nonetheless, because the correlations among returns in the various
markets are modest, adding an
Display 1
World Stock Capitalization
1982
U.S. 55.7%
Developed Foreign Markets 41.6%
Emerging Markets 2.6%
1996
Developed Foreign Markets 46.9%
U.S. 42.0%
Emerging Markets 11.0%
Source: International Finance Corporation
- --------------------------------------------------------------------------------
Display 2
Compound Annual Rates of Returns: 1985-97
(in U.S. dollars)
Mexico 30.1%
Argentina 29.0%
Switzerland 22.2%
Hong Kong 21.9%
Taiwan 19.6%
U.K. 19.1%
Germany 18.1%
S&P 500* 18.1%
Brazil 16.4%
Australia 12.3%
India 10.5%
Canada 10.1%
Singapore 9.3%
Japan 8.9%
Thailand 5.9%
Korea 2.3%
Malaysia 2.2%
* The Standard & Poor's 500 is a widely recognized index of large cap stocks
traded on U.S. exchanges.
Source: Datastream, International Finance Corporation, Morgan Stanley Capital
International, Standard & Poor's and Bernstein.
- --------------------------------------------------------------------------------
Prospectus -- January 30, 1998 19
<PAGE>
<TABLE>
<CAPTION>
Display 3
Total Annual Returns (in U.S. dollars)
x.xx Best Performing Country for Each Year
====
xx.x Worst Performing Country for Each Year
- ----
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
...........................................................................................................................
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INDICES
S&P 500* 5.3% 16.6% 31.7% (3.1)% 30.5% 7.6% 10.1% 1.3% 37.6% 23.0% 33.4%
EAFE Index+ (0.8) 31.3 23.6 (22.2) 8.2 (8.7) 32.0 2.6 11.0 11.8 14.3
IFCG Index++ 13.5 58.2 54.7 (29.9) 17.6 0.3 67.5 (0.5) (12.3) 7.9 (14.4)
DEVELOPED MARKETS
Australia 9.3 36.4 9.3 (17.5) 33.6 (10.8) 35.2 5.4 11.2 16.5 (10.4)
====
Canada 13.9 17.1 24.3 (13.0) 11.1 (12.2) 17.6 (3.0) 18.3 28.5 12.8
----
Germany (24.7) 20.6 46.3 (9.4) 8.2 (10.3) 35.6 4.7 16.4 13.6 24.6
------ ==== ----
Hong Kong (4.1) 28.1 8.4 9.2 49.5 32.3 116.7 (28.9) 22.6 33.1 (23.3)
==== ==== ===== ------ ====
Japan 43.0 35.4 1.7 (36.1) 8.9 (21.5) 25.5 21.4 0.7 (15.5) (23.7)
==== ---- ------ ------ ==== ---- -----
Singapore 2.3 33.3 42.3 (11.7) 25.0 6.3 68.0 6.7 6.5 (6.9) (30.0)
-----
Switzerland (9.5) 6.2 26.2 (6.2) 15.8 17.2 45.8 3.5 44.1 2.3 44.2
==== =====
United
Kingdom 35.1 6.0 21.9 10.3 16.0 (3.7) 24.4 (1.6) 21.3 27.4 22.6
---- ====
EMERGING MARKETS
Argentina 9.8 38.8 175.9 (36.6) 396.9 (26.5) 72.7 (23.3) 12.7 22.3 19.9
===== ====
Brazil (63.1) 125.6 39.9 (65.7) 170.4 0.3 99.4 69.8 (20.2) 34.4 24.9
------ ===== ------ ====
India (15.6) 37.3 4.3 18.8 18.4 22.9 18.8 7.4 (34.2) (2.1) 7.1
----- ----- ------
Korea 36.5 112.8 7.0 (25.4) (15.9) 3.6 20.9 19.1 (6.9) (38.2) (68.7)
------
Malaysia 0.9 27.7 44.0 (11.2) 12.1 27.9 102.9 (21.5) 3.6 24.5 (71.7)
Mexico (4.8) 108.3 73.4 29.7 106.8 21.2 49.9 (40.6) (26.0) 17.8 50.4
==== ------
Taiwan 120.8 93.3 100.0 (50.9) (0.6) (26.6) 89.0 22.5 (30.7) 37.4 (7.7)
Thailand 37.5 40.7 100.8 (20.7) 19.2 40.3 103.0 (11.3) (1.4) (36.6) (79.3)
==== ------
Turkey 262.1 (61.1) 502.4 (2.8) (41.8) (52.8) 234.3 (40.2) (11.4) 49.0 117.1
===== ===== ------ ------ ===== ===== =====
</TABLE>
Note: All countries and indices are net dividend returns, except for the
International Finance Corporation Global (IFCG) Index, which is gross
dividend returns.
* The Standard & Poor's 500 is a widely recognized index of large-cap stocks
traded on U.S. exchanges.
+ EAFE index, half-hedged, GDP-weighted, includes developed stock markets in
Europe, Australia and the Far East. Prior to July 1992, the EAFE Index was
calculated by Bernstein following MSCI methodology based on data from
Datastream, International Financial Statistics (IFS), Morgan Stanley
Capital International (MSCI), Organization for Economic Cooperation and
Development (OECD) and Bernstein estimates; since July 1992, the EAFE index
was calculated by MSCI.
++ The IFCG Index is an unhedged index of emerging stock markets.
Source: International Finance Corporation, IFS, MSCI, OECD, Standard & Poor's
and Bernstein
international component to a domestic stock portfolio has provided the
risk-reduction benefits of diversification.
Display 3 illustrates just how unrelated the returns of the world's developed
and emerging foreign stock markets have been in recent years. With respect to
developed foreign markets, notice that since 1987, Japan came in first two
times--and last five times. German stocks scored highest once and lowest twice;
the United Kingdom, first once, worst once. With respect to emerging foreign
markets, performance in 1997 ranged from 117% in Turkey to minus 79% in
Thailand--and that was not extreme. The 1991 gap extended from the 397% gain in
Argentina to the 42% loss in Turkey. And in 1989, there were almost 500
percentage points of return between the return of the Turkish market and that of
the Indian market.
Yet observe in Display 4, on the facing page, what happened when the stocks
of the major developed markets of the world were combined into one portfolio.
The horizontal axis here measures volatility of returns for the period; the
vertical axis here measures return. The better the investment, the higher and
farther to the left it appears on the chart. Clearly, most developed foreign
markets by themselves were extremely volatile during this period. If you
invested 20% in a mixed basket of developed foreign market stocks and the
remaining 80% in domestic stocks--the spot marked "80% U.S./20% EAFE" on the
chart in Display 4--your risk/
- --------------------------------------------------------------------------------
20 Sanford C. Bernstein Fund, Inc.
<PAGE>
Display 4
Risk/Reward Positions: Jan 1976-Dec 1997
Based on Monthly Returns
[Plotted Points Chart]
Jan 76-Dec 97 Return Risk
------------- ------- ----
Australia 10.4% 26%
Canada 10 18.8
Germany 13 20.4
Japan 12 23.1
Singapore 11.1 25.9
Switzerland 15.3 18
U.K. 17.3 20.5
S&P 500 15.4 14.5
EAFE 13.7 13.9
80% U.S./20% EAFE 15.2 13.4
* The Standard & Poor's 500 is a widely recognized index of large-cap stocks
traded on U.S. exchanges.
+ EAFE index, half-hedged, GDP-weighted, includes developed stock markets in
Europe, Australia and the Far East. Prior to July 1992, the EAFE Index was
calculated by Bernstein following MSCI methodology based on data from
Datastream, International Financial Statistics (IFS), Morgan Stanley
Capital International (MSCI), Organization for Economic Cooperation and
Development (OECD) and Bernstein estimates; since July 1992, the EAFE index
was calculated by MSCI.
Source: Datastream, Ibbotson, IFS, MSCI, OECD and Bernstein
Display 5
Risk/Reward Positions: 1985-97
Based on Monthly Returns
[Plotted Points Chart]
1985-97 Return Risk
------------- ------ ----
India 10.6% 32.3%
Korea 2.3 32.5
Malaysia 2.2 29.9
Mexico 30.5 48.2
Taiwan 19.9 46.2
Thailand 6 35.7
IFCG 12.4 22.3
80% U.S./20% EAFE 17.7 13.8
95% Dev./5% Emerg. 17.4 13.5
+ Note: EAFE index, half-hedged, GDP-weighted, includes developed stock
markets in Europe, Australia and the Far East. Prior to July 1992, the EAFE
Index was calculated by Bernstein following MSCI methodology based on data
from Datastream, International Financial Statistics (IFS), Morgan Stanley
Capital International (MSCI), Organization for Economic Cooperation and
Development (OECD) and Bernstein estimates; since July 1992, the EAFE index
was calculated by MSCI. All countries and indices are net dividend returns,
except for the IFCG Index, which is gross dividend returns.
Source: Datastream, IFC, IFS, MSCI, OECD and Bernstein
reward profile was superior to that of any of these countries by themselves, the
U.S. included.
Likewise Display 5 depicts the result of combining the stocks of the various
emerging markets in a single portfolio. If you had invested just 5% of your
equity portfolio in the emerging-market stocks represented in the International
Finance Corporation Global Index (the "IFCG Index")--a widely recognized index
of emerging-market performance--and the rest in the stocks of the U.S. and other
major developed nations, you'd have further diversified your portfolio and
modestly reduced its risk.
Whether correlations among these markets will remain low is impossible to
predict based on so short a history, particularly given the variability of the
market correlations. Furthermore, the effect on smaller stock markets of a
severe downturn in U.S. stocks or a market dislocation elsewhere in the
developed world has not yet been tested. It's also important to understand that
the risk-reducing property of broad diversification is most manifest in the long
run; in any single year, global diversification may result in higher volatility
than a U.S.-only portfolio, and possibly lower return as well. But, over time,
there has clearly been advantage in spreading one's eggs among many baskets, and
in accessing a broad universe of opportunity.
The above displays on U.S., developed foreign and emerging stock market
returns should not be viewed as representations of future returns from these
stock markets, the Bernstein International Value Portfolio or the Bernstein
Emerging Markets Value Portfolio. The illustrated returns represent historical
investment performance and relative volatilities, which may not be
representative of future returns and volatilities. Moreover, stock market
indexes are based on unmanaged portfolios of securities before transaction costs
and other expenses; managed portfolios will incur these costs. Finally, each of
the Bernstein International Value Portfolio and the Bernstein Emerging Markets
Value Portfolio is likely to differ in composition from broad stock market
indexes, and so each Portfolio's performance should not be expected to mirror
the returns provided by any specific index.
THE BERNSTEIN PROCESS
The return of an international portfolio to a U.S. investor depends on three
factors: (1) how the various foreign markets perform in a given period, (2) what
happens to foreign currencies in relation to the dollar during the period and
(3) what strategies the investment manager may employ in an attempt to control
risk and increase return. We at Bernstein employ active management in all three
areas, following a value-oriented investment approach backed by extensive
research capability.
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Prospectus -- January 30, 1998 21
<PAGE>
Value-Based Stock Selection
The bulk of our efforts is directed to stock selection. Our value-oriented
approach in foreign markets rests on our understanding that:
o Stock markets around the world are inefficient. Stocks often sell for more
or less than their intrinsic value because of emotional overreactions
among investors.
o Investment value depends on price. It's not just what you get when you
invest, but what you pay for it, that determines your return.
o High-quality research is required. It takes rigorous research to
capitalize on market inefficiencies-- research focused on estimating
intrinsic value for a broad universe of companies, using the same tools,
techniques and economic assumptions in forecasting for each company so
that comparisons within and across markets will be sound.
o Value investing is a long-term pursuit. Around the world, as in the U.S.,
stock prices are unpredictable in the short term; the benefits of stock
investing are captured more reliably over longer periods. As master
investor Benjamin Graham put it, the stock market is a voting machine in
the short run, a weighing machine in the long run.
Research-Backed Decision-Making
The research analyses supporting buy and sell decisions are fundamental and
bottom-up, based largely on specific company and industry findings rather than
on broad economic forecasts. Bernstein studies and experience suggest that
underpriced stocks as a class--those with low price/earnings ratios, low
price/book-value ratios and high dividend yields--have outperformed their peers
in the U.S., the developed foreign market countries and the emerging-market
countries. On reflection, this seems logical: American investors have no
monopoly on emotional overreaction to short-term difficulties in companies and
industries--the overreactions that depress and elevate particular stocks and
create investment value.
In addition to specific stock selection, we employ country-allocation and
currency-management techniques:
Country allocation: In order to attempt to capture the return potential and
diversification benefits of foreign markets, Bernstein's International Value
Portfolio concentrates in the most established companies of the major European
and Far Eastern nations plus Australia--the countries of the Morgan Stanley
Capital International "EAFE" index--and Canada, although this Portfolio may also
invest in less developed countries or emerging equity markets. Investment
decision-making for the Portfolio is systematic and centralized, pursued by an
investment policy group working in concert, and guided by the findings of our
global equity research staff.
Under most conditions, the Bernstein Emerging Markets Value Portfolio intends
to have its assets diversified among emerging-market countries. In allocating
the Portfolio's assets among emerging-market countries, Bernstein will consider
such factors as the geographical distribution of the Portfolio, the sizes of the
stock markets represented and the proportion of the oil importing and exporting
countries--factors which, in Bernstein's opinion, have the most impact on
portfolio risk. However, the Portfolio may not necessarily be diversified on a
geographical basis. Bernstein will also consider the transaction costs and
volatility of each individual market.
We monitor the levels of stock prices in relation to local market conditions
in the major foreign markets, seeking out instances when relationships deviate
from normal. When and where stock prices are abnormally low in our view in
relation to local conditions, we may overweight a country's stocks in our
Portfolios relative to our usual system of apportioning investment. When
opportunities appear smaller than usual--when stock prices are abnormally
high--we may underweight a country's stocks.
Currency management: In the case of the Bernstein International Value
Portfolio, we seek to control risk through currency-management techniques. We
monitor factors including the balance of trade flows and interest-rate
differentials in all the nations in which the Bernstein International Value
Portfolio invests to determine the fair values of the various currencies and
identify under- and overvaluations as they occur. The findings are accounted for
in our investment decisions. In the case of the Bernstein Emerging Markets Value
Portfolio, although we will hedge opportunistically when we believe there is
potential to enhance risk-adjusted returns, the exposures of this Portfolio will
generally be unhedged because currency hedging in emerging market countries is
often either subject to legal and regulatory controls or prohibitively
expensive.
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22 Sanford C. Bernstein Fund, Inc.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
OF THE PORTFOLIOS
INVESTMENT OBJECTIVES AND POLICIES
OF THE FIXED-INCOME PORTFOLIOS
- ------------------------------------
General Investment Policies
Each Fixed-Income Portfolio evaluates a wide variety of instruments and
issuers, utilizing a variety of internally developed, quantitatively based
valuation techniques. Each of the Fixed-Income Portfolios may invest in any of
the securities detailed on pages 32-36. In addition, each of the Fixed-Income
Portfolios may use any of the special investment techniques, some of which are
commonly called derivatives, described on pages 36-38 to hedge various market
risks (such as interest rates, currency exchange rates and broad or
security-specific changes in the prices of fixed-income securities), to manage
the effective maturity or duration of fixed-income securities, to exploit
mispricings in the securities markets, or as an alternative to activities in the
underlying cash markets. Except for those policies and objectives of each
Portfolio that are described in the Prospectus or SAI as fundamental, the
investment policies and objectives of each Portfolio may be changed by the
Fund's Board of Directors without shareholder approval. If there is a change in
investment policy or objective, shareholders should consider whether the
Portfolio remains an appropriate investment in light of their then-current
financial position and needs. There is no assurance that any Portfolio will
achieve its investment objective.
None of the Fixed-Income Portfolios will purchase any security if immediately
after that purchase less than 80% of the Portfolio's total assets would consist
of securities or commercial paper rated A or higher by Standard & Poor's
Corporation ("Standard & Poor's"), Fitch Investors Service, Inc. ("Fitch") or
Moody's Investors Service, Inc. ("Moody's"); SP-1 by Standard & Poor's, F-1 by
Fitch, or MIG 1 or VMIG 1 by Moody's; A-1 by Standard & Poor's, or P-1 by
Moody's; or of securities and commercial paper that are not rated but that are
determined by the Manager to be of comparable quality. In addition, none of the
Fixed-Income Portfolios will purchase a security or commercial paper rated less
than B by Standard & Poor's, Fitch or Moody's; less than A-2 or SP-2 by Standard
& Poor's, less than F-2 by Fitch, or less than P-2, MIG 2 or VMIG 2 by Moody's;
or securities and commercial paper that are not rated but that are determined by
the Manager to be of comparably poor quality. In the event of differing ratings,
the higher rating shall apply. The impact of changing economic conditions,
investment risk and changing interest rates is increased by investing in
securities rated below A by Standard & Poor's, Fitch or Moody's; below SP-1 or
A-1 by Standard & Poor's, below F-1 by Fitch, or below MIG 1, VMIG 1 or P-1 by
Moody's. In addition, the secondary trading market for lower-rated bonds may be
less liquid than the market for higher-grade bonds. Accordingly, lower-rated
bonds may be difficult to value accurately. Securities rated BBB by Standard &
Poor's and Fitch or Baa by Moody's are investment grade. Securities that are
rated BB or B by Standard & Poor's and Fitch, or Ba or B by Moody's are
considered to be speculative with regard to the payment of interest and
principal. Each Fixed-Income Portfolio, at the time of purchase, may invest as
much as 20% of its total assets in securities of foreign issuers, including
Eurobonds, Yankees (other than Yankees included in the Lehman Brothers Aggregate
Bond Index which are considered to be issued by domestic issuers for this
purpose) and obligations of foreign banks that are securities of foreign
issuers, including foreign governments.
No Fixed-Income Portfolio (other than the Short Duration Municipal
Portfolios) will invest in an illiquid security if, at the time of purchase, the
value of such illiquid security together with other securities that are not
readily marketable would exceed 10% of the net assets of the Portfolio. No Short
Duration Municipal Portfolio will invest in an illiquid security if, at the time
of purchase, the value of such illiquid security together with other securities
that are not readily marketable would exceed 15% of the net assets of the
Portfolio.
In addition to these policies, which govern all Fixed-Income Portfolios,
individual Portfolios have individual policies, discussed hereafter, pertaining
to the minimum ratings and types of investments permitted, as well as the
effective duration and average maturity of the Portfolio. Effective duration, a
statistic that is expressed in time periods, is a measure of the exposure of the
Portfolio to changes in interest rates. Unlike maturity, which is the latest
possible date for the final payment to be received from a bond, effective
duration is a measure of the timing of all the expected interest and principal
payments. The actual duration of each of the Fixed-Income Portfolios may vary,
depending on the Manager's interest-rate forecast. When interest rates are
expected to rise, the duration is shortened. When interest rates are expected to
fall, the duration is lengthened.
The maturity composition of each of the Fixed-Income Portfolios may also
vary, depending upon the shape of the yield curve and opportunities in the bond
market, at times being concentrated in the middle part of the targeted range,
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Prospectus -- January 30, 1998 23
<PAGE>
while at other times consisting of a greater amount of securities with
maturities that are shorter and others that are longer than the targeted range.
Generally, the value of debt securities changes as the general level of
interest rates fluctuates. During periods of rising interest rates, the values
of fixed-income securities generally decline. Conversely, during periods of
falling interest rates, the values of these securities nearly always increase.
Generally, the longer the maturity or effective duration, the greater the
sensitivity of the price of a fixed-income security to any given change in
interest rates. The value of each Portfolio's shares fluctuates with the value
of its investments.
Individual Portfolios' Policies
The Short Duration Taxable Portfolios
The Bernstein Government Short Duration Portfolio invests in a diversified
portfolio of securities that it believes offer the highest expected returns to
investors consistent with a prudent level of credit risk. This Portfolio intends
to invest, under normal market conditions, at least 65% of its total assets in
U.S. government and agency securities. In addition, the Portfolio intends to
invest, under normal market conditions, at least 90% of its total assets in U.S.
government and agency securities and high-quality money-market securities--i.e.,
securities with remaining maturities of one year or less that have been rated AA
or better by Standard & Poor's or Aa by Moody's, or that are not rated but that
are determined by the Manager to be of comparable quality. Shareholders'
investments in this Portfolio are not insured by the U.S. government. To the
extent that this Portfolio is invested in government securities, its income is
generally not subject to state and local income taxation. Certain states allow a
pass through to the individual shareholders of the tax-exempt character of this
income for purposes of those states' taxes.
The Bernstein Government Short Duration Portfolio will purchase only
securities rated A or better by Standard & Poor's, Fitch or Moody's; commercial
paper rated A-1 by Standard & Poor's, F-2 by Fitch or P-1 by Moody's; or
securities and commercial paper that are not rated but that are determined by
the Manager to be of comparable quality.
Since this Portfolio is invested in securities with longer maturities than
the assets of the type of mutual fund known as a money-market mutual fund, its
expected return is somewhat higher. However, since its effective duration is
longer, and the quality of the portfolio securities may be lower, the risk of a
decline in the market value of the Portfolio is also greater than for a
money-market fund that seeks to maintain a stable net asset value.
Although the actual maturities of the securities in the Portfolio may vary
widely, the Portfolio intends to maintain an effective duration of one to three
years under normal market conditions. The average dollar-weighted maturity of
the Portfolio may range from one to 20 years while maintaining the required
duration. The relatively short-term nature of the Portfolio makes it appropriate
for consideration as an alternative for defensive investments maintained in cash
equivalents.
The pretax returns on the Bernstein Government Short Duration Portfolio are
likely to be lower than those on the Bernstein Short Duration Plus Portfolio.
Since the income earned by the Bernstein Government Short Duration Portfolio is
generally exempt from state and local taxes, it may not be appropriate for
investors, such as pension plans and IRAs, that are not subject to current state
or local income taxation. Shareholders may wish to consult a tax advisor about
the status of distributions from the Portfolios in their individual states or
localities.
The Bernstein Short Duration Plus Portfolio invests in a diversified
portfolio of securities that it believes offer the highest expected returns to
investors consistent with a prudent level of credit risk. The Bernstein Short
Duration Plus Portfolio should produce higher returns than the Bernstein
Government Short Duration Portfolio because it will normally own a much higher
percentage of securities that are not U.S. government securities. Because the
Bernstein Short Duration Plus Portfolio is managed without regard to potential
tax consequences, it may be particularly appropriate for investors, such as
pension plans and IRAs, that are not subject to current income taxation, as well
as individuals who reside in states with low or no state taxes or who reside in
high-tax states that do not permit a pass-through to the individual shareholder
of the tax-exempt character of this income.
Like the Government Short Duration Portfolio, the Short Duration Plus
Portfolio is invested in securities with longer maturities than the assets of
the type of mutual fund known as a money-market mutual fund, and its expected
return is somewhat higher. Although the actual maturities of the securities in
the Portfolio may vary widely, the effective duration of this Portfolio--which
is expected to be one to three years under normal market conditions--is longer
than the effective duration of money markets. The average dollar-weighted
maturity of the Portfolio may range from one to 25 years while maintaining the
required duration. Since the effective duration of this Portfolio is longer, and
the quality of the portfolio securities may be lower, the risk of a decline in
the market value of the Portfolio is greater than for a
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24 Sanford C. Bernstein Fund, Inc.
<PAGE>
money-market fund that seeks to maintain a stable net asset value. The
relatively short-term nature of the Portfolio makes it appropriate for
consideration as a temporary investment.
The Intermediate Duration Taxable Portfolio
The Bernstein Intermediate Duration Portfolio invests in a diversified
portfolio of securities that it believes offer the highest expected return
consistent with a prudent level of risk. While the actual maturities of the
securities in the Portfolio may vary widely, the Portfolio intends to maintain
an effective duration of three to six years under normal market conditions. The
average dollar-weighted maturity of the Portfolio may range from two to 25 years
while maintaining the required duration. The Portfolio will not purchase any
security if immediately after that purchase less than 65% of the Portfolio's
total assets would consist of securities rated AA or higher by Standard & Poor's
or Aa or higher by Moody's or of securities that are not rated but that are
determined by the Manager to be of comparable quality.
Because the Bernstein Intermediate Duration Portfolio is managed without
regard to potential tax consequences to the shareholder, it may be particularly
appropriate for investors, such as pension plans and IRAs, not subject to
current federal income taxation.
The Municipal Portfolios
As a fundamental policy, each of the six municipal Portfolios will invest,
under normal market conditions, at least 80% of its net assets in Municipal
Securities. "Municipal Securities" are securities issued by states and their
various political subdivisions along with agencies and instrumentalities of
states and their various political subdivisions and by possessions and
territories of the United States, such as Puerto Rico, the Virgin Islands and
Guam and their various political subdivisions. The income from these securities
is exempt from federal taxation or, in certain instances, may be includable in
income subject to the alternative minimum tax.
In addition to Municipal Securities, each municipal Portfolio may invest in
non-municipal securities when, in the opinion of the Manager, the inclusion of
the non-municipal security will enhance the expected after-tax return of the
Portfolio in accordance with the Portfolio's objectives.
The Short Duration Municipal Portfolios. Since the Short Duration Municipal
Portfolios are invested in securities with longer maturities than the assets of
the type of mutual fund known as a municipal money-market mutual fund, their
expected return is somewhat higher. However, since their effective duration is
longer, and the quality of the Portfolio securities may be lower, the risk of a
decline in the market value of the Portfolio is also greater than for a
municipal money-market fund that seeks to maintain a stable net asset value.
While the maturities of the securities in each Short Duration Municipal
Portfolio may vary widely, each Portfolio is designed generally to maintain an
effective duration of one-half year to two and one-half years under normal
market conditions. The average dollar-weighted maturity of each Short Duration
Municipal Portfolio may range from six months to seven years while maintaining
the required duration. The relatively short-term nature of the Portfolios makes
them appropriate for consideration as an alternative for defensive investments
maintained in cash equivalents.
The Intermediate Duration Municipal Portfolios. While the maturities of the
securities in each of the Bernstein New York Municipal Portfolio, the Bernstein
California Municipal Portfolio and the Bernstein Diversified Municipal Portfolio
(the "Intermediate Duration Municipal Portfolios") may vary widely, each
Intermediate Duration Municipal Portfolio is designed generally to maintain a
level of risk comparable to that of an intermediate portfolio of securities with
an average effective duration of three and one-half to seven years. The average
dollar-weighted maturity of each municipal Portfolio may range from two to 25
years while maintaining the required duration.
The New York Municipal Portfolios
The Bernstein Short Duration New York Municipal Portfolio and the Bernstein
New York Municipal Portfolio. Each of the Bernstein Short Duration New York
Municipal Portfolio and the Bernstein New York Municipal Portfolio (the "New
York Municipal Portfolios") invests in those securities which it believes offer
the highest after-tax returns for New York residents (without regard to any
alternative minimum tax) consistent with a prudent level of credit risk. Each
New York Municipal Portfolio will invest, under normal market conditions, at
least 65% of its total assets in securities issued by New York State and its
various political subdivisions along with agencies and instrumentalities of New
York State and its various political subdivisions ("New York Municipal
Securities"). The income from these securities is exempt from federal, New York
State and local taxes or, in certain instances, may be includable in income
subject to the alternative minimum tax.
Each New York Municipal Portfolio is a non-diversified portfolio under the
Investment Company Act of 1940 (the "1940 Act"). Nonetheless, the Fund intends
to qualify each New York Municipal Portfolio, like each of the other Portfolios,
as a "regulated investment company" for purposes of the Internal Revenue Code of
1986, as amended. This will require, at the close of each quarter of each
fiscal year, that at least 50% of the market value of each New York Municipal
Portfolio's total assets be represented by cash, cash items,
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Prospectus -- January 30, 1998 25
<PAGE>
U.S. government securities and other securities limited, in respect to any one
issuer, to an amount no greater than 5% of such Portfolio's total assets, and
that each New York Municipal Portfolio invest no more than 25% of the value of
its total assets in the securities of any one issuer (other than the U.S.
government). If either New York Municipal Portfolio's assets consist of the
securities of a small number of issuers, any change in the market's assessment,
or in the financial condition, of any one of those issuers could have a
significant impact on the performance of such Portfolio.
Because each New York Municipal Portfolio invests primarily in New York
Municipal Securities, each Portfolio's performance is closely tied to economic
conditions within the State of New York and the financial condition of the State
and its agencies and municipalities. The following information concerning the
State's economic background is contained in the Annual Information Statement of
the State of New York dated August 15, 1997 and the Update to the Annual
Information Statement dated November 5, 1997 issued by the State of New York.
New York is the third most populous state in the nation and has a relatively
high level of personal wealth. In the calendar years 1987 through 1996, the
State's rate of economic growth was somewhat slower than that of the nation. In
particular, during the 1990-91 recession and post-recession period, the economy
of the State, and that of the rest of the Northeast, was more heavily damaged
than that of the nation as a whole and has been slower to recover. The total
employment growth rate in the State has been below the national average since
1987. The unemployment rate in the State dipped below the national rate in the
second half of 1981 and remained lower until 1991. According to data published
by the U.S. Bureau of Economic Analysis, total personal income in the State has
risen more slowly than the national average since 1988.
In recent years, State actions affecting the level of receipts and
disbursements, the relative strength of the State and regional economy, actions
of the federal government and other factors have created structural budget gaps
for the State. These gaps resulted from a significant disparity between
recurring revenues and the costs of maintaining or increasing the level of
support for State programs. To address a potential imbalance in any given fiscal
year, the State would be required to take actions to increase receipts and/or
reduce disbursements as it enacts the budget for that year, and under the State
Constitution, the Governor is required to propose a balanced budget each year.
There can be no assurance, however, that the Legislature will enact the
Governor's proposals or that the State's actions will be sufficient to preserve
budgetary balance in a given fiscal year or to align recurring receipts and
disbursements in future fiscal years.
The 1997-98 State Financial Plan was projected to be balanced on a cash
basis. On September 11, 1997, the State Comptroller released a report entitled
"The 1997-98 Budget: Fiscal Review and Analysis" in which he identified several
risks to the State Financial Plan and estimated that the State faces a potential
imbalance in receipts and disbursements of approximately $1.5 billion for the
State's 1998-99 fiscal year and approximately $3.4 billion for the State's
1999-00 fiscal year. Any increase in the 1997-98 reserve for future needs would
reduce this imbalance further and, based upon results to date, such an outcome
is considered possible. In addition, the Comptroller identified risks in future
years from an economic slowdown and from spending and revenue actions enacted as
a part of the 1997-98 budget that will add pressure to future budget balance.
Uncertainties with regard to the economy, as well as the outcome of certain
litigation and federal disallowances now pending against the State, could
produce adverse effects on the State's projections of receipts and
disbursements. For example, larger-than-expected changes to current levels of
interest rates or a significant decline in world financial markets could have an
adverse effect on the State economy and produce results in the current fiscal
year that are worse than predicted. Similarly, adverse judgments in legal
proceedings against the State could exceed amounts reserved in the 1997-98
Financial Plan for payment of such judgments and produce additional unbudgeted
costs to the State. However, the availability of a reserve for future needs and
positive year-to-date results make it unlikely that such costs would exceed
total available resources and present a risk to budget balance for the current
fiscal year.
The economic and financial condition of the State may be affected by various
financial, social, economic and political factors. Those factors can be very
complex, may vary from fiscal year to fiscal year, and are frequently the result
of actions taken not only by the State and its agencies and instrumentalities,
but also by entities, such as the federal government, that are not under the
control of the State. In addition, the State Financial Plan is based upon
forecasts of national and State economic activity. Economic forecasts have
frequently failed to predict accurately the timing and magnitude of changes in
the national and the State economies. The Division of Budget has stated that
its projections of receipts and disbursements relating to the current State
Financial Plan, and the assumptions on which they are based, are reasonable.
Actual results, however, could differ materially and adversely from the
projections set forth
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26 Sanford C. Bernstein Fund, Inc.
<PAGE>
in the Annual Information Statement, and those projections may be changed
materially and adversely from time to time.
The fiscal health of the State may also be affected by the fiscal health of
New York City (the "City"), which continues to require significant financial
assistance from the State. The City depends on State aid both to enable the City
to balance its budget and to meet its cash requirements. The City's projections
set forth in the Financial Plan are based on various assumptions and
contingencies, some of which are uncertain and may not materialize. Unforeseen
developments and changes in major assumptions could significantly affect the
City's ability to balance its budget as required by State law and to meet its
annual cash flow and financing requirements. Implementation of the Financial
Plan is also dependent upon the ability of the City and certain entities issuing
debt for the benefit of the City to market their securities successfully. The
City issues securities to finance, refinance and rehabilitate infrastructure and
other capital needs, as well as for seasonal financing needs. The State created
the New York City Transitional Finance Authority to finance a portion of the
City's capital program. Despite this additional financing mechanism, the City
currently projects that, if no further action is taken, it will reach its debt
limit in City fiscal year 1999-00. On June 2, 1997, an action was commenced
seeking a declaratory judgment declaring the legislation establishing the
Transitional Finance Authority to be unconstitutional. If such legislation were
voided, projected contracts for City capital projects would exceed the City's
debt limit during fiscal year 1997-98. Future developments concerning the City
or entities issuing debt for the benefit of the City, and public discussion of
such developments, as well as prevailing market conditions and securities credit
ratings, may affect the ability or cost to sell securities issued by the City or
such entities and may also affect the market for their outstanding securities.
Further discussion of the risks associated with the purchase of New York
issues is contained in the SAI.
The New York Municipal Portfolios are not appropriate for tax-exempt
investors. Moreover, because the New York Municipal Portfolios seek income
exempt from New York State and local taxes as well as federal income tax, such
Portfolios may not be appropriate for taxable investors, such as non-New York
State residents, who are not subject to New York State income taxes.
Shareholders may wish to consult a tax advisor about the status of distributions
from the Portfolios in their individual states or localities.
The California Municipal Portfolios
The Bernstein Short Duration California Municipal Portfolio and the Bernstein
California Municipal Portfolio. Each of the Bernstein Short Duration California
Municipal Portfolio and the Bernstein California Municipal Portfolio (the
"California Municipal Portfolios") invests in those securities which it believes
offer the highest after-tax returns for California residents (without regard to
any alternative minimum tax) consistent with a prudent level of credit risk.
Each California Municipal Portfolio will invest, under normal market conditions,
at least 65% of its total assets in securities issued by the State of California
and its various political subdivisions, along with agencies and
instrumentalities of the State of California and its various political
subdivisions ("California Municipal Securities"). The income from these
securities is exempt from federal and California personal income taxes but, in
certain instances, may be includable in income subject to the alternative
minimum tax.
Each California Municipal Portfolio is a non-diversified portfolio under the
1940 Act. Nonetheless, the Fund intends to qualify each California Municipal
Portfolio as a "regulated investment company" for purposes of the Internal
Revenue Code of 1986, as amended. This will require, at the close of each
quarter of each fiscal year, that at least 50% of the market value of each
California Municipal Portfolio's total assets be represented by cash, cash
items, U.S. government securities and other securities limited, in respect to
any one issuer, to an amount no greater than 5% of such Portfolio's total
assets, and that each California Municipal Portfolio invest no more than 25% of
the value of its total assets in the securities of any one issuer (other than
the U.S. government). If either California Municipal Portfolio's assets consist
of the securities of a small number of issuers, any change in the market's
assessment, or in the financial condition, of any one of those issuers could
have a significant impact on the performance of such Portfolio.
Because each California Municipal Portfolio invests primarily in California
Municipal Securities, each such Portfolio's performance is closely tied to
economic conditions within the State of California and the financial condition
of the State and its agencies and municipalities. The following information
regarding the State is contained in an Official Statement dated October 1, 1997,
issued in connection with the sale of $1 billion of California General
Obligation Bonds.
California's economy is the largest among the 50 states and one of the
largest in the world. Pressures on the State's budget in the late 1980's and
early 1990's were caused by a combination of external economic conditions and
growth of the largest General Fund Programs--K-14 education, health, welfare and
corrections--at rates faster than the revenue base. These pressures could
continue as the State's overall
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Prospectus -- January 30, 1998 27
<PAGE>
population and school age population continue to grow, and as the State's
corrections program responds to a "Three Strikes" law enacted in 1994, which
requires mandatory life prison terms for certain third-time felony offenders. In
addition, the State's health and welfare programs are in a transition period as
a result of recent federal and State welfare reform initiatives.
As a result of these factors and others, and especially because a severe
recession between 1990-94 reduced revenues and increased expenditures for social
welfare programs, from the late 1980's until 1992-93, the State had a period of
budget imbalance. During this period, the State accumulated and sustained a
budget deficit in its budget reserve, the SFEU, approaching $2.8 billion at its
peak at June 30, 1993.
For several fiscal years during the recession, the State was forced to rely
on external debt markets to meet its cash needs, as a succession of notes and
revenue anticipation warrants were issued in the period from June 1992 to July
1994, often needed to pay previously maturing notes or warrants. The last and
largest of these borrowings was $4.0 billion of revenue anticipation warrants
which were issued in July, 1994 and matured on April 25, 1996.
With the end of the recession, and a growing economy starting in 1994, the
State's financial condition improved in the last two fiscal years, with a
combination of better than expected revenues, slowdown in growth of social
welfare programs, and continued spending restraint based on the actions taken in
earlier years.
In May, 1997, action was taken by the California Supreme Court in an ongoing
lawsuit, PERS v. Wilson, which made final a judgment against the State requiring
an immediate payment of $1.235 billion from the General Fund to the Public
Employees Retirement Fund ("PERF") to make up certain deferrals in annual
retirement fund contributions which had been legislated in earlier years for
budget savings, and which the courts found to be unconstitutional.
The 1997-98 Budget Act anticipates General Fund revenues and transfers of
$52.5 billion (a 6.8 percent increase over the final 1996-97 amount), and
expenditures of $52.8 billion (an 8.0 percent increase from the 1996-97 levels).
On a budgetary basis, the budget reserve (SFEU) is projected to decrease from
$408 million at June 30, 1997 to $112 million at June 30, 1998. The Budget Act
also includes Special Fund expenditures of $14.4 billion (as against estimated
Special Fund revenues of $14.0 billion), and $2.1 billion of expenditures from
various Bond Funds. Following enactment of the Budget Act, the State implemented
its normal annual cash flow borrowing program, issuing $3 billion of notes which
mature on June 30, 1998.
On November 5, 1996, voters approved Proposition 218, entitled the "Right to
Vote on Taxes Act", which limits the ability of local government agencies to
impose or raise various taxes, fees, charges and assessments without voter
approval. Certain "general taxes" imposed after January 1, 1995 must be approved
by voters in order to remain in effect and local voters have the right to reduce
taxes, fees, assessments or charges through local initiatives.
There are a number of ambiguities concerning the Proposition and its impact
on local governments and their bonded debt which will require interpretation by
the courts or the Legislature. The Legislative Analyst estimated that enactment
of Proposition 218 would reduce local government revenues statewide by over $100
million a year, and that over time, annual revenues to local government would be
reduced by several hundred million dollars.
Further discussion of the risks associated with the purchase of California
Municipal Securities is contained in the SAI.
The California Municipal Portfolios are not appropriate for tax-exempt
investors. Moreover, because the California Municipal Portfolios seek income
exempt from California personal income taxes as well as federal income tax, the
California Municipal Portfolios may not be appropriate for taxable investors,
such as non-California residents, who are not subject to California personal
income taxes. Shareholders may wish to consult a tax advisor about the status of
distributions from the Portfolio in their individual states or localities.
The Diversified Municipal Portfolios
The Bernstein Short Duration Diversified Municipal Portfolio and the
Bernstein Diversified Municipal Portfolio. Each of the Bernstein Short Duration
Diversified Municipal Portfolio and the Bernstein Diversified Municipal
Portfolio (the "Diversified Municipal Portfolios") invests in a diversified
portfolio of securities which it believes offers the highest after-tax returns
(without regard to any alternative minimum tax) to investors consistent with a
prudent level of credit risk. No Diversified Municipal Portfolio will purchase a
security if such purchase would result in the Portfolio, at the time of such
purchase, having more than 25% of its total assets in Municipal Securities of
issuers located in any one state. Neither Diversified Municipal Portfolio is
appropriate for tax-exempt investors under normal market conditions.
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28 Sanford C. Bernstein Fund, Inc.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES OF THE
INTERNATIONAL VALUE PORTFOLIO AND THE
EMERGING MARKETS VALUE PORTFOLIO
The Bernstein International Value Portfolio and the Bernstein Emerging
Markets Value Portfolio seek long-term capital growth on a total-return basis
(capital appreciation or depreciation plus dividends and interest). The
International Value Portfolio will invest primarily in equity securities of
established foreign companies as described on page 36, and the Emerging Markets
Value Portfolio will invest primarily in equity securities of both large and
small companies domiciled, or with primary operations in, emerging-market
countries.
The International Value Portfolio will invest in a diversified portfolio of
securities that the Manager considers most undervalued. The Portfolio intends to
diversify investments among many foreign countries; it will generally be
invested in countries that comprise the EAFE index (Europe, Australia and the
Far East) and Canada. EAFE countries currently include Australia, Austria,
Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan,
Malaysia, the Netherlands, New Zealand, Norway, Singapore, Spain, Sweden,
Switzerland and the United Kingdom. The Portfolio may also make investments in
less developed or emerging equity markets.
The Emerging Markets Value Portfolio will invest in a diversified portfolio
of securities that the Manager considers most undervalued. As used in this
prospectus, emerging-market countries are those countries that, in the opinion
of Bernstein, are considered to be developing countries by the international
financial community, and will include those countries considered by the
International Finance Corporation ("IFC"), a subsidiary of the World Bank, to
have an "emerging stock market." Examples of emerging-market countries are
Argentina, Brazil, Chile, Greece, India, Indonesia, Israel, Malaysia, Mexico,
the People's Republic of China, the Philippines, Portugal, South Africa, South
Korea, Taiwan, Thailand and Turkey.
Shareholders of the Bernstein International Value Portfolio and the Bernstein
Emerging Markets Value Portfolio should be aware that investments in foreign
securities entail significant risks in addition to those customarily associated
with investing in U.S. equities; moreover, certain of the risks associated with
international investing are heightened with respect to investments in
emerging-market countries. Investing in less developed or emerging-market
countries involves exposure to economic structures that are generally less
diverse and mature, and to political systems that can be expected to have less
stability than those of developed countries. The Bernstein Emerging Markets
Value Portfolio is intended for long-term investors who can accept the risks
associated with the Portfolio's investments and is not appropriate for
individuals with limited investment resources or who are unable to tolerate
significant fluctuations in the value of their investment. The Portfolio should
be considered as a vehicle for diversification and not as a balanced investment
program. See "Investment Risks of the Bernstein International Value Portfolio
and the Bernstein Emerging Markets Value Portfolio," on page 30.
Under normal market conditions, at least 65% of the Bernstein International
Value Portfolio's total assets will be invested in at least three foreign
countries and at least 65% of the Bernstein Emerging Markets Value Portfolio's
total assets will be invested in at least three emerging-market countries. Under
exceptional conditions abroad or when the Manager believes that economic or
market conditions warrant, either Portfolio may temporarily, for defensive
purposes, invest part or all of its portfolio in U.S. government obligations or
investment grade debt or equity securities of U.S. issuers. Either Portfolio may
invest in fixed-income securities and enter into foreign currency exchange
contracts and options on foreign currencies and it may utilize options on
securities and securities indexes and futures contracts and options on futures.
See the sections on "Investments" and "Special Investment Techniques" on pages
32-38. Neither Portfolio will invest in an illiquid security if, at the time of
purchase, the value of such illiquid security together with other securities
that are not readily marketable would exceed 15% of the net assets of the
Portfolio.
The above policies and objectives are not fundamental and may be changed by
the Fund's Board of Directors without shareholder approval. If there is a change
in investment policy or objective, shareholders should consider whether the
Portfolio remains an appropriate investment in light of their then current
financial position and needs.
Both the Bernstein International Value Portfolio and the Bernstein Emerging
Markets Value Portfolio have adopted certain fundamental investment limitations.
As a fundamental policy, neither Portfolio will:
(a) with respect to 75% of its total assets, invest more than 5% of its total
assets in the securities of any one issuer if, as a result of the
purchase, less than 75% of the Portfolio's assets consists of cash and
cash items, Government securities, securities of other investment
companies and other securities, limited, in respect of any one issuer, to
an amount not greater in value than 5% of the value of the Portfolio's
total assets and to not
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Prospectus -- January 30, 1998 29
<PAGE>
more than 10% of the outstanding voting securities
of such issuer;
(b) invest more than 25% of its total assets in any one industry; or
(c) borrow money except that either Portfolio may borrow money for temporary
or emergency purposes in an amount not exceeding 33 1/3% of its total
assets. As an operating (not a fundamental) policy, neither Portfolio will
borrow except from a bank for temporary or emergency purposes in amounts
in excess of 5% of its total assets.
The SAI contains certain investment restrictions pertaining to the Bernstein
International Value Portfolio, the Bernstein Emerging Markets Value Portfolio
and the Bernstein Fixed-Income Portfolios.
The Bernstein International Value Portfolio and the Bernstein Emerging
Markets Value Portfolio may invest uncommitted cash balances in fixed-income
securities. Fixed-Income securities may also be held to maintain liquidity to
meet shareholder redemptions, and, although the situation occurs infrequently,
these securities may be held in place of equities when the Manager believes that
fixed-income securities will provide total returns comparable to or better than
those of equity securities.
With respect to the Bernstein International Value Portfolio, fixed-income
securities include obligations of the U.S. or foreign governments and their
political subdivisions; obligations of agencies and instrumentalities of the
U.S. government; and bonds, debentures, notes, commercial paper, bank
certificates of deposit, repurchase agreements and other similar corporate debt
instruments of U.S. or foreign issuers that at the time of purchase are rated
BBB, A-2, SP-2 or higher by S&P, or Baa, P-2 or higher by Moody's; or, if
unrated, are in the Manager's opinion comparable in quality. Securities that are
rated BBB, A-2 or SP-2 by S&P or Baa or P-2 by Moody's are investment grade (for
a description of these rating categories, see the Appendix to the SAI). These
securities may have speculative characteristics, and changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make principal and interest payments than is the case with higher-rated
securities. Bonds with investment grade ratings at time of purchase may be
retained, in the Manager's discretion, in the event of a rating reduction. Under
exceptional conditions abroad, or when it is believed that economic or market
conditions warrant, the Portfolio may temporarily, for defensive purposes,
invest all of its portfolio in fixed-income obligations of the U.S. government
or fixed-income or equity securities of U.S. issuers.
With respect to the Bernstein Emerging Markets Value Portfolio, fixed-income
securities include obligations of the U.S. or foreign governments and their
political subdivisions; obligations of agencies and instrumentalities of the
U.S. government; and bonds, debentures, notes, commercial paper, bank
certificates of deposit, repurchase agreements and other similar corporate debt
instruments of U.S. or foreign issuers. Most fixed-income instruments of
emerging-market companies and countries are rated below investment grade or are
unrated but equivalent to those rated below investment grade by internationally
recognized rating agencies such as Standard & Poor's and Moody's. Securities
that are rated BBB, A-2, or SP-2 by S&P or Baa or P-2 by Moody's are investment
grade (for a description of these ratings categories, see the Appendix to the
SAI). The Portfolio will generally invest less than 35% of its total assets in
fixed-income securities. Securities rated in the medium- to lower-rating
categories of nationally recognized statistical rating organizations and unrated
securities of comparable quality are predominately speculative with respect to
the capacity to pay interest and repay principal in accordance with the terms of
the security and generally involve a greater volatility of price than securities
in higher rating categories. The Portfolio does not intend to purchase debt
securities that are in default.
Investment Risks of the Bernstein International Value Portfolio and the
Bernstein Emerging Markets Value Portfolio
Market risk: Since each of the Bernstein International Value Portfolio and the
Bernstein Emerging Markets Value Portfolio invests primarily in equity
securities, each Portfolio, like any equity portfolio, is vulnerable to market
risk--the possibility that stock prices in general will decline over short or
even extended periods. Moreover, each Portfolio's composition is likely to
differ from that of broad market indexes, and its performance should not be
expected to mirror the returns provided by a specific index. Stock prices are
volatile from year to year; accordingly, these Portfolios are suited to
investors who are willing to hold their investment over a long horizon.
The securities markets in many emerging-market countries are substantially
smaller, less developed, less liquid and more volatile than the securities
markets of developed countries. In addition, to take advantage of potential
value opportunities, the Bernstein Emerging Markets Value Portfolio may invest
in relatively small companies. Securities of smaller companies may be subject to
more abrupt or erratic market movements than the securities of larger, more
established companies, both because the securities are typically traded in lower
volume and because the companies are subject to greater business risk.
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30 Sanford C. Bernstein Fund, Inc.
<PAGE>
In certain emerging-market countries, volatility may be heightened by actions
of a few major investors. For example, substantial increases or decreases in
cash flows of mutual funds investing in these markets could significantly affect
local stock prices and, therefore, share prices of the Bernstein Emerging
Markets Value Portfolio. Moreover, some emerging-market securities may be listed
on foreign exchanges that are open on days (such as Saturdays) when the
Portfolio does not calculate a net asset value. As a result, the Bernstein
Emerging Markets Value Portfolio's net asset value may be significantly affected
by trading on days when shareholders cannot make transactions. In addition,
trading in emerging markets can be more difficult; thus, there is a risk that an
investor in the Bernstein Emerging Markets Value Portfolio may not be able to
readily redeem his or her shares in the Portfolio.
Foreign currency risk: Returns on foreign securities are influenced by
currency risk as well as equity risk. Foreign securities are denominated in
foreign currencies, which may change in value in relation to the U.S. dollar,
possibly for protracted periods of time. When a foreign currency rises against
the U.S. dollar, the returns on foreign stocks for a U.S. investor will also
rise; when a foreign currency declines in value in relation to the U.S. dollar,
the returns on foreign stocks for a U.S. investor will also fall. Many
emerging-market countries have experienced substantial, and in some cases
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had, and may continue to have, negative
effects on the economies and securities markets of certain emerging-market
countries. In addition, it is possible that foreign governments will impose
currency exchange control regulations or other restrictions that would prevent
cash from being brought back to the U.S. Emerging-market governments may also
intervene in currency markets or interpose registration/approval processes,
which could adversely affect the Portfolio.
Other risks: Other risks and considerations of international investing
include the availability of less public information with respect to issuers of
securities; less governmental supervision of brokers and issuers of securities;
lack of uniform accounting, auditing and financial reporting standards; a
generally lower degree of market volume and liquidity than that available in
U.S. markets, which may result in greater price volatility; settlement practices
that may include delays and otherwise differ from those in U.S. markets; the
possibility of expropriation or confiscatory taxation; the imposition of foreign
taxes; and possible political instability in some countries, which could affect
U.S. investment in these countries. Investments in foreign securities will also
result in generally higher expenses due to the costs of currency exchange;
payment of fixed brokerage commissions in certain foreign markets, which
generally are higher than commissions on U.S. exchanges; and the expense of
maintaining securities with foreign custodians.
In addition to the foregoing, other risks and considerations of investing in
companies in emerging markets include:
Social, political and economic instability: Investments in emerging-market
countries involve exposure to a greater degree of risk due to increased
political and economic instability. Instability may result from, among other
factors: (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; (iii) internal insurgencies;
(iv) hostile relations with neighboring countries; (v) ethnic, religious and
racial disaffection; and (vi) changes in trading status.
Certain emerging-market countries have histories of instability and upheaval
with respect to their internal politics that could cause their governments to
act in a detrimental or hostile manner toward private enterprise or foreign
investment. Such actions--for example, nationalizing a company or industry,
expropriating assets, or imposing punitive taxes--could have a severe effect on
security prices and impair the Bernstein Emerging Markets Value Portfolio's
ability to repatriate capital or income. The possibility exists that economic
development in certain emerging-market countries may be suddenly slowed or
reversed by unanticipated political or social events in those countries, and
that economic, political and social instability could disrupt the financial
markets in which the Portfolio invests and adversely affect the value of the
Portfolio's assets.
Additional risks: Additional risks and considerations of investing in
emerging-market countries include overburdened infrastructure, obsolete
financial systems and security settlement and clearance procedures that may
result in delays and which may not fully protect the Portfolio against loss or
theft of its assets; national policies which may restrict the Portfolio's
investment opportunities, including restrictions on investment in issuers or
industries deemed sensitive to national interests; and less developed legal
structures governing private or foreign investment or allowing for judicial
redress for injury to private property.
Further discussion of the risks relating to the Bernstein International Value
Portfolio and the Bernstein Emerging Markets Value Portfolio is contained in the
SAI.
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Prospectus -- January 30, 1998 31
<PAGE>
INVESTMENTS
The Fixed-Income Portfolios will primarily be invested in debt securities,
including, subject to each Portfolio's general investment policies described on
pages 23-31, but not limited to: (i) obligations issued or guaranteed as to
principal and interest by the U.S. government or the agencies or
instrumentalities thereof; (ii) obligations of Supranational Agencies; (iii)
straight and convertible corporate bonds and notes, including securities of
foreign and U.S. issuers payable in U.S. dollars and issued outside the U.S.
("Eurobonds") or securities of foreign issuers payable in U.S. dollars issued
inside the U.S. ("Yankees"); (iv) loan participations; (v) commercial paper;
(vi) obligations (including certificates of deposit, time deposits and bankers'
acceptances) of U.S. thrift institutions, U.S. commercial banks (including
foreign branches of such banks), and foreign banks (including U.S. branches of
such banks); (vii) mortgage-related securities; (viii) asset-backed securities;
(ix) Municipal Securities, or other securities issued by state and local
government agencies, the income on which may or may not be tax-exempt; (x)
guaranteed investment contracts and bank investment contracts; (xi) variable and
floating rate securities; (xii) private placements; (xiii) preferred stock; and
(xiv) foreign securities. From time to time, additional fixed-income securities
are developed. They will be considered for purchase by the Portfolios. The
Bernstein International Value Portfolio and the Bernstein Emerging Markets Value
Portfolio will invest primarily in foreign equity securities, but may, under the
circumstances described in "Investment Objectives and Policies" (pages 29-30),
invest in fixed-income securities. Of course, the extent to which each of the
Portfolios emphasizes each of the categories of investment described depends
upon the investment objectives and restrictions of that Portfolio.
Obligations Of the U.S. Government and
Its Agencies and Instrumentalities
The types of U.S. government and agency securities in which the Portfolios
may invest include bills, notes and bonds, including inflation-protected
securities, issued by the U.S. Treasury, as well as securities issued by other
U.S. government agencies and instrumentalities, including bills, notes, bonds,
mortgage-backed securities and other fixed-income securities. However, certain
types of mortgage-backed securities, known as "Interest Only" (or "IO") and
"Principal Only" (or "PO") securities, which are based on government securities
but "stripped" by third parties, are not government securities.
The Portfolios may purchase securities issued or guaranteed by the Government
National Mortgage Association and other agencies and instrumentalities, the
securities or guarantees of which are backed by the full faith and credit of the
United States. The Portfolios may also purchase securities issued by the United
States Postal Service and other agencies and instrumentalities that have the
right to borrow from the United States Treasury to meet their obligations. The
Portfolios may also purchase securities issued or guaranteed by U.S. government
agencies and instrumentalities, including the Federal Farm Credit Banks, the
Federal Home Loan Bank, the Financing Corporation ("FICO"), the Tennessee Valley
Authority, the Federal National Mortgage Association ("FNMA"), the Federal Home
Loan Mortgage Corporation ("FHLMC") and the Resolution Funding Corporation
("Refcorp"), the obligations of which are backed only by the credit of the
issuing agency.
Obligations of Supranational Agencies
The Portfolios may invest in the obligations of supranational agencies.
Supranational agencies rely for funds on participating countries, often
including the United States. Some supranationals, such as the International Bank
for Reconstruction and Development (the "World Bank"), have the right to borrow
from participating countries, including the United States. Other supranationals
must request funds from participating countries; such requests may not always be
honored. Moreover, the securities of supranational agencies, depending on where
and how they are issued, may be subject to some of the risks discussed on page
35 with respect to foreign securities.
Corporate Bonds, Notes and Commercial Paper
The Portfolios may invest in straight and convertible corporate bonds, notes
and commercial paper, including inflation-protected securities. The value of the
Portfolios' investment in corporate bonds and notes will change in response to
changes in interest rates and the relative financial strength of each issuer. In
general, lower-rated bonds, notes and commercial paper tend to have higher
yields but are subject to greater market fluctuations and risk of loss than
higher-rated bonds, notes and commercial paper of similar maturity.
Loan Participations
The Portfolios may also invest in participating interests ("participations")
in obligations, including variable-rate tax-exempt obligations, mortgages and
other loans, held by financial institutions. A participation provides the
Portfolio with a specified-percentage undivided interest in the underlying
obligation. The Portfolio may have the right to demand payment of the unpaid
principal balance plus accrued interest upon a specified number of days' notice.
The obligation may also be backed by a letter of credit or guarantee of the
institution. The Portfolio participates on the
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32 Sanford C. Bernstein Fund, Inc.
<PAGE>
same basis as the institution in the obligation, except that the institution may
retain a service fee out of the interest paid on the obligation. Loan
participations are considered illiquid securities.
Mortgage-Related Securities
Mortgage loans made on residential or commercial property by banks, savings and
loan institutions and other lenders are often assembled into pools, and
interests in the pools are sold to investors. Interests in such pools are
referred to in this Prospectus as "mortgage-related securities." Payments of
mortgage-related securities are backed by the property mortgaged. In addition,
some mortgage-related securities are guaranteed as to payment of principal and
interest by an agency or instrumentality of the U.S. government. In the case of
mortgage-related and asset-backed securities that are not backed by the United
States government or one of its agencies, a loss could be incurred if the
collateral backing these securities is insufficient. This may occur even though
the collateral is government-backed.
One type of mortgage-related security is a Government National Mortgage
Association ("GNMA") Certificate. GNMA Certificates are backed as to principal
and interest by the full faith and credit of the U.S. government. Another type
is a FNMA Certificate. Principal and interest payments of FNMA Certificates are
guaranteed only by FNMA itself, not by the full faith and credit of the U.S.
government. A third type of mortgage-related security in which one or more of
the Portfolios might invest is a FHLMC Participation Certificate. This type of
security is backed by FHLMC as to payment of principal and interest but, like a
FNMA security, it is not backed by the full faith and credit of the U.S.
government.
The Portfolios may also invest in both residential and commercial mortgage
pools originated by investment banking firms and builders. Rather than being
guaranteed by an agency or instrumentality of the U.S. government, these pools
are usually backed by subordinated interests or mortgage insurance. The Manager
of the Portfolios will take such insurance into account in determining whether
to invest in such pools.
The Portfolios may invest in Real Estate Mortgage Investment Conduits
("REMICs") and collateralized mortgage obligations ("CMOs"). REMICs include
governmental and/or private entities that issue a fixed pool of mortgages
secured by an interest in real property, and CMOs are debt obligations
collateralized by mortgage loans or mortgage pass-through securities.
Since the borrower is typically obligated to make monthly payments of
principal and interest, most mortgage-related securities pass these payments
through to the holder after deduction of a servicing fee. However, other payment
arrangements are possible. Payments may be made to the holder on a different
schedule than that on which payments are received from the borrower, including,
but not limited to, weekly, biweekly and semiannually.
Furthermore, the monthly principal and interest payments are not always
passed through to the holder on a pro rata basis. In the case of REMICs and
CMOs, the pool is divided into two or more tranches, and special rules for the
disbursement of principal and interest payments are established. The
Fixed-Income Portfolios may invest in debt obligations that are REMICs or CMOs;
provided that in the case of the Fixed-Income Portfolios other than the Short
Duration Municipal Portfolios, the entity issuing the REMIC or CMO is not a
registered investment company.
In another version of mortgage-related securities, all interest payments go
to one class of holders--"Interest Only" or "IO"--and all of the principal goes
to a second class of holders--"Principal Only" or "PO". The market values of
both IOs and POs are sensitive to prepayment rates; the value of POs varies
directly with prepayment rates, while the value of IOs varies inversely with
prepayment rates. If prepayment rates are high, investors may actually receive
less cash from the IO than was initially invested. IOs and POs issued by the
U.S. government or its agencies and instrumentalities that are backed by
fixed-rate mortgages may be considered liquid securities under guidelines
established by the Fund's Board of Directors; all other IOs and POs will be
considered illiquid.
Payments to the Portfolios from mortgage-related securities generally
represent both principal and interest. Although the underlying mortgage loans
are for specified periods of time, such as 15 or 30 years, borrowers can, and
often do, pay them off sooner. Thus, the Portfolios generally receive
prepayments of principal in addition to the principal that is part of the
regular monthly payments.
A borrower is more likely to prepay a mortgage that bears a relatively high
rate of interest. Thus, the value of the securities may not increase as much as
other debt securities when interest rates fall. However, when interest rates
rise, the rate of prepayments may slow and the value of the mortgage-related and
asset-backed securities may decrease like other debt securities. The Portfolios
normally do not distribute principal payments (whether regular or prepaid) to
their shareholders. Rather, they invest such payments in additional securities,
which may not be mortgage-related. Interest received by the Portfolios is,
however, reflected in dividends to shareholders.
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Prospectus -- January 30, 1998 33
<PAGE>
A Portfolio's investments in mortgage derivative securities also subjects the
Portfolio to extension risk. Extension risk is the possibility that rising
interest rates may cause prepayments to occur at a slower-than-expected rate.
This particular risk may effectively change a security which was considered
short- or intermediate-term at the time of purchase into a long-term security.
Long-term securities generally fluctuate more widely in response to changes in
interest rates than short- or intermediate-term securities.
Asset-Backed Securities
Asset-backed securities are debt instruments that are backed by pools of
loans, leases, accounts receivable or other debt obligations of consumers or
commercial entities. Examples of collateral include consumer loans to purchase
automobiles, credit card balances due, and loans to purchase manufactured
housing. The cash flow that is generated by payments on these instruments is
used to pay interest and principal to the asset-backed noteholders, as well as
any fees for the servicing and administration of the assets, and in some
circumstances, may be
used to purchase additional collateral. Asset-backed securities may also be
credit enhanced by one or more methods. These include overcollateralization,
subordination, reserve accounts, issuer guarantees and insurance provided by
third-party bond insurance companies. Issuer guarantees and bond insurance may
cover part or all of the principal and/or interest owed to noteholders.
In the case of securities backed by automobile receivables, the issuers of
such securities typically file financing statements, and the servicers of such
obligations take custody of such obligations. Therefore, if the servicers, in
contravention of their duty, were to sell such obligations, the third-party
purchasers would possibly acquire an interest superior to the holder of the
securitized assets. Also, most states require that a security interest in a
vehicle be noted on the certificate of title, and the certificate of title may
not be amended to reflect the assignment of the seller's security interest.
Therefore, the recovery of the collateral in some cases may not be available to
support payments on the securities. In the case of credit-card receivables, both
federal and state consumer protection laws may allow setoffs against certain
amounts owed against balances of the credit cards.
Municipal Securities
Municipal Securities are debt obligations issued by or on behalf of states,
territories or possessions of the United States or their political subdivisions,
agencies or instrumentalities, the District of Columbia or Puerto Rico, where
the interest from such securities is, according to information reasonably
available to the Manager, in the opinion of bond counsel at the time of
issuance, exempt from federal income tax. Although the Fund may invest, from
time to time, in securities issued by or on behalf of states, territories or
possessions of the United States or their political subdivisions, agencies or
instrumentalities, the District of Columbia or Puerto Rico, where the interest
from such securities is not exempt from federal income tax, these securities
will not be considered Municipal Securities for the purpose of determining the
portions of the municipal Portfolios' assets that are invested in Municipal
Securities.
Municipal Securities include "private activity bonds," such as industrial
revenue bonds, the interest income from which is subject to the alternative
minimum tax. See "Dividends, Distributions and Taxes" on pages 44-45.
The two principal classifications of Municipal Securities are general
obligation and revenue or special obligation securities. General obligation
securities are secured by the issuer's pledge of its faith, credit and taxing
power for the payment of principal and interest. The term "issuer" means the
agency, authority, instrumentality or other political subdivision, the assets
and revenues of which are available for the payment of the principal of and
interest on the securities. Revenue or special obligation securities are payable
only from the revenue derived from a particular facility or class of facilities
or, in some cases, from the proceeds of a special tax or other specific revenue
source and generally are not payable from the unrestricted revenues of the
issuer. Some Municipal Securities are municipal lease obligations. Lease
obligations usually do not constitute general obligations of the municipality
for which the municipality's taxing power is pledged, although the lease
obligation is ordinarily backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation. However,
certain lease obligations contain non-appropriation clauses that provide that
the municipality has no obligation to make lease payments in future years unless
money is appropriated for such purpose on a yearly basis. Pursuant to procedures
established by the Fund Board, the Manager will be responsible for determining
the credit quality of unrated municipal lease obligations on an ongoing basis,
including an assessment of the likelihood that the lease will not be canceled.
Some municipal lease obligations may be illiquid. Municipal Securities include
certain asset-backed certificates representing interests in trusts that include
pools of installment payment agreements, leases, or other debt obligations of
state or local governmental entities. Some Municipal Securities are covered by
insurance or other credit enhancements procured by the issuer or underwriter
guaranteeing timely payment of principal and interest.
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34 Sanford C. Bernstein Fund, Inc.
<PAGE>
Guaranteed Investment Contracts and Bank Investment Contracts
The Portfolios may purchase guaranteed investment contracts ("GICs") and bank
investment contracts ("BICs"). A GIC is a contract issued by an insurance
company that guarantees payment of interest and repayment of principal, and a
BIC is a contract issued by a bank that guarantees payment of interest and
repayment of principal. GICs and BICs are considered illiquid securities.
Variable and Floating Rate Securities and
Inflation-Protected Securities
Each Portfolio may purchase variable and floating rate securities. The terms
of variable and floating rate instruments provide for the interest rate to be
adjusted according to a formula on certain predetermined dates.
Variable and floating rate instruments that are repayable on demand at a
future date are deemed to have a maturity equal to the time remaining until the
principal will be received on the assumption that the demand feature is
exercised on the earliest possible date. For the purposes of evaluating the
interest-rate sensitivity of the Portfolio, variable and floating rate
instruments are deemed to have a maturity equal to the period remaining until
the next interest-rate readjustment. For the purposes of evaluating the credit
risks of variable and floating rate instruments, these instruments are deemed to
have a maturity equal to the time remaining until the earliest date the
Portfolio is entitled to demand repayment of principal.
The terms of inflation-protected securities provide for the coupon and/or
maturity value to be adjusted based on changes in inflation. Decreases in the
inflation rate or in investors' expectations about inflation could cause these
securities to underperform non-inflation-adjusted securities on a total-return
basis. In addition, these securities may have limited liquidity in the secondary
market.
Private Placements
The Portfolios may invest in privately placed securities that, in the absence
of an exemption, would be required to be registered under the Securities Act of
1933 so as to permit their sale to the public ("restricted securities").
Restricted securities may be sold only in privately negotiated transactions.
These securities, excluding restricted securities eligible for resale pursuant
to Rule 144A under the Securities Act of 1933 that have been determined to be
liquid in the trading market for the security under procedures adopted by the
Board of Directors of the Fund, are considered to be illiquid. The Board is
responsible for monitoring the implementation of the procedures on the liquidity
of Rule 144A securities in the Portfolio.
Illiquid Securities
Within the limits set forth in "Investment Objectives and Policies" (pages
23-31), the Portfolios may invest in illiquid securities--securities that are
not readily marketable. The Board of Directors of the Fund has determined that
any or all of the following factors may be relevant to determining the liquidity
of a security: the amount of the issue outstanding; the complexity of the issue;
the bid/ask spread; the number and identity of market makers or dealers in or
other buyers of the security; the existence of put features and other rights;
the term of the security; the visibility of the issuer in the marketplace; the
method of soliciting offers and the mechanics of completing transfers; the
average trading volume for the issue; and, with respect to foreign securities,
the amount of such securities that can be owned by investors who are not
residents of the country where such securities were issued and the amount of
such securities owned by the controlling interests. The factors to be considered
in the case of the analysis of unrated municipal lease obligations will include
an analysis of credit factors. Purchased dealer options, private placements
(excluding securities eligible for resale under Rule 144A that have been
determined to be liquid as set forth in the preceding section), guaranteed
investment contracts, bank investment contracts, repurchase agreements for
periods longer than seven days, time deposits maturing in more than seven days
and loan participations are considered to be illiquid securities for the
purposes of this restriction. In addition, the staff of the Securities and
Exchange Commission currently takes the position that all options traded in the
over-the-counter market are illiquid; if the staff amends its position, the Fund
may, in accordance with the amended position, consider such options to be
liquid.
Preferred Stock
The Portfolios may invest in preferred stock. Preferred stock is subordinated
to any debt the issuer has outstanding. Accordingly, preferred stock dividends
are not paid until all debt obligations are first met. Preferred stock may be
more subject to fluctuations in market value, due to changes in market
participants' perceptions of the issuer's ability to continue to pay dividends,
than debt of the same issuer.
Foreign Securities
While the Fixed-Income Portfolios generally invest in domestic securities,
each may also invest up to 20% of its total assets in foreign securities of the
same types and quality as the domestic securities in which it invests when the
anticipated performance of the foreign securities is believed by the advisor to
offer more potential than domestic alternatives in keeping with the investment
objectives of the Portfolios. The Portfolios may invest in foreign fixed-income
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Prospectus -- January 30, 1998 35
<PAGE>
securities that may involve risks in addition to those normally associated
with domestic securities. These risks include currency risks and other risks
described on pages 30-31.
Warrants
The Portfolios may have investments in warrants. Warrants are securities that
give the Portfolio the right to purchase securities from the issuer at a
specific price (the strike price) for a limited period of time. The strike price
of warrants sometimes is much lower than the current market price of the
underlying securities, yet they are subject to similar price fluctuations. As a
result, warrants may be more volatile investments than the underlying securities
and may offer greater potential for capital appreciation as well as capital
loss. Warrants do not entitle a holder to dividends, interest payments or voting
rights with respect to the underlying securities and do not represent any rights
in the assets of the issuing company. Also, the value of the warrant does not
necessarily change with the value of the underlying securities, and a warrant
ceases to have value if it is not exercised prior to the expiration date. These
factors can make warrants more speculative than other types of investments.
Equity Securities
The equity securities in which the Bernstein International Value Portfolio
and the Bernstein Emerging Markets Value Portfolio may invest include common and
preferred stocks, warrants and convertible securities. These Portfolios may
invest in foreign securities directly or in the form of sponsored or unsponsored
American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs), or other
similar securities convertible into securities of foreign issuers without
limitation. ADRs are receipts typically issued by a U.S. bank or trust company
that evidence ownership of the underlying securities. GDRs are receipts
typically issued by a non-U.S. bank or trust company evidencing a similar
arrangement. The issuers of unsponsored ADRs are not obligated to disclose
material information in the United States and, therefore, there may not be a
correlation between such information and the market value of the ADR. In some
circumstances--e.g., when a direct investment in securities in a particular
country cannot be made--the Bernstein International Value Portfolio and the
Bernstein Emerging Markets Value Portfolio, in compliance with provisions of the
Investment Company Act of 1940, as amended (the "1940 Act"), may invest in the
securities of investment companies that invest in foreign securities. As a
shareholder in any mutual fund, each of these Portfolios will bear its ratable
share of the mutual fund's management fees and other expenses, and will remain
subject to payment of the Portfolio's management and other fees with respect to
assets so invested.
SPECIAL INVESTMENT TECHNIQUES
In seeking to achieve its investment objectives, each of the Portfolios may
employ the following special investment techniques, among others. These
techniques may be used to hedge various market risks (such as interest rates,
currency exchange rates and broad or security-specific changes in the prices of
equity or fixed-income securities), to manage the effective maturity or duration
of fixed-income securities, to exploit mispricings in the securities markets, or
as an alternative to activities in the underlying cash markets. They may include
the use of exchange-traded derivatives such as futures and options--financial
products which are standardized by size, maturity, and delivery, and are sold on
organized exchanges. Furthermore, over-the-counter derivatives such as swaps or
other hybrid instruments, which are individually tailored to meet the needs of a
specific client, may also be used.
Foreign Currency Transactions
A Portfolio may enter into foreign currency exchange contracts on a spot
(i.e., cash) basis at the rate then prevailing in the currency exchange market
or through entering into forward contracts, which obligate the contracting
parties to purchase or sell a specific currency at a specified future date at a
specified price. The Portfolios will generally not enter into a forward contract
with a term greater than one year.
The Portfolios will generally enter into forward contracts under two
circumstances. First, a Portfolio may enter into a forward contract when it
enters into a contract for the purchase or sale of a security denominated in a
foreign currency in order to lock in the price in dollars of the security.
Second, when the Manager believes that the currency of a particular foreign
country may experience an adverse movement against another currency, a Portfolio
may enter into a forward contract to sell an amount of the foreign currency (or
another currency that acts as a proxy for that currency) approximating the value
of some or all of a Portfolio's securities denominated in such foreign currency.
Under certain circumstances, the Bernstein International Value Portfolio and the
Bernstein Emerging Markets Value Portfolio may commit a substantial portion or
the entire value of their portfolios to the consummation of these contracts. The
Manager will consider the effect that a substantial commitment of assets to
forward contracts would have on the investment program of these Portfolios and
the flexibility of these Portfolios to purchase additional securities. Although
forward contracts will be used primarily to protect the Portfolios from adverse
currency movements, they involve the risk that anticipated currency movements
will not be accurately predicted and the Portfolios' total return could be
adversely affected as a result.
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36 Sanford C. Bernstein Fund, Inc.
<PAGE>
Futures Contracts and Options
The Portfolios may enter into financial futures contracts, including bond,
bond index, Eurodeposit, stock index or currency futures contracts and options
thereon. In addition, the Portfolios may each purchase and write (i.e., sell)
put and call options on securities, on securities indexes based on securities in
which the Portfolio may invest, on foreign currencies traded on U.S. or foreign
exchanges or over-the-counter and on futures contracts. The securities for
which a Portfolio writes put or call options will be Portfolio securities, and
the Portfolios will write only covered options.
The Portfolios may also enter into options on the yield "spread" or yield
differential between two securities. In contrast to other types of options, this
option is based on the difference between the yields of designated securities,
currencies, futures or other instruments. In addition, the Portfolios may write
covered straddles. A straddle is a combination of a call and a put written on
the same underlying security.
In accordance with the current rules and regulations of the Commodity Futures
Trading Commission (the "CFTC"), the aggregate initial margins and premiums
required from the Portfolio in connection with commodity futures and options
positions used for purposes other than "bona fide hedging" will not exceed 5% of
the liquidation value of the Portfolio; provided, however, in the case of an
option that is in the money at the time of the purchase, that the in-the-money
portion of the premium is excluded in calculating the 5% limitation. No
Portfolio will write any option if, immediately thereafter, the aggregate value
of the Portfolio's securities subject to outstanding options would exceed 25% of
its net assets.
Futures contracts and options can be highly volatile and could reduce a
Portfolio's total returns, and attempts to use such investments for hedging or
other purposes may not be successful. Successful futures and options strategies
require the ability to predict future movements in securities prices, interest
rates and other economic factors. Each Portfolio's potential losses from the use
of futures extend beyond its initial investment in such contracts and are
potentially unlimited. Also, losses from futures and options could be
significant if a Portfolio is unable to close out its position due to
disruptions in the market or lack of liquidity.
Swaps and Hybrid Investments
As part of its investment program and to maintain greater flexibility, each
Portfolio may invest in hybrid instruments (a type of potentially high-risk
derivative) that have the characteristics of futures, options, currencies and
securities. Such instruments may take a variety of forms, such as a security
with the principal amount, redemption or conversion terms related to the market
price of some commodity, currency or securities index; or debt instruments with
interest or principal payments determined by reference to the value of
commodities, currencies, fixed-income instruments, financial indexes or other
financial or economic indicators, data or events; or the differences between the
value of commodities, currencies, fixed-income instruments, financial indexes or
other financial or economic indicators, data or events; or the rate of change of
the value of commodities, currencies, fixed-income instruments, financial
indexes, or other financial or economic indicators, data or events. Hybrids can
have volatile prices and limited liquidity and their use by the Portfolio may
not be successful. The risk of these investments can be substantial; possibly
all of the principal is at risk. No Portfolio will invest more than 20% of its
total assets in these investments.
Swap agreements are contracts between parties in which one party agrees to
make payments to the other party based on the change in the market value of a
specified index or asset. In return, the other party agrees to make payments to
the first party based on the return of a different specified index or asset.
Swap agreements entail the risk that a party will default on its payment
obligations thereunder. Swap agreements also bear the risk that the Portfolio
will not be able to meet its obligation to the counterparty.
A Portfolio may enter into interest-rate or foreign currency swaps and
purchase and sell interest-rate caps and floors. No Portfolio will use swaps to
leverage the Portfolio. A Portfolio will maintain in a segregated account with
the Fund's custodian an amount having an aggregate net asset value at least
equal to the net amount of the excess, if any, of the Portfolio's obligations
over its entitlements with respect to each swap. The Portfolios expect to enter
into these transactions to exploit mispricings in the bond or currency markets
or to preserve a return or spread on a particular investment or portion of its
portfolio, as a duration management technique, or to protect against any
increase in the price of securities that the Portfolios anticipate purchasing at
a later date.
Interest-rate swaps involve the exchange by a Portfolio with another party of
their respective commitments to pay or receive interest, e.g., an exchange of
fixed-rate payments for floating-rate payments. Such an exchange would allow the
Portfolio to alter its exposure to interest-rate market risk without changing
the composition of the Portfolio. The purchase of an interest-rate floor or cap
entitles the purchaser to receive payments of interest on a notional principal
amount from the seller, to the extent that the specified index falls below
(floor) or exceeds (cap) a predetermined interest rate. Currency swaps are
similar to interest-rate swaps, except that they involve currencies instead of
interest rates. The Portfolios will enter interest-rate swaps only on a net
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Prospectus -- January 30, 1998 37
<PAGE>
basis (i.e., the two payment streams are netted out) with the Portfolios
receiving or paying, as the case may be, only the net amount of the two
payments.
Repurchase Agreements
In a repurchase transaction, a Portfolio purchases a security from a bank or
a securities dealer and simultaneously agrees to resell that security to the
bank or broker-dealer at an agreed-upon price on an agreed upon date. The resale
price reflects the purchase price and an agreed-upon rate of interest. In
effect, the obligation of the seller to repay the agreed-upon price is secured
by the value of the underlying security, which must at least equal the
repurchase price. Repurchase agreements could involve certain risks in the event
of default or insolvency of the other party, including possible delays or
restrictions on the Portfolio's ability to dispose of the underlying securities.
The Board of Directors has established guidelines to be used by the Manager in
repurchase transactions and regularly monitors the Portfolios' use of repurchase
agreements.
Reverse Repurchase Agreements
The Portfolios may enter into reverse repurchase agreements with banks and
broker-dealers from time to time. In a reverse repurchase transaction, it is the
Portfolio, rather than the other party to the transaction, that sells the
securities and simultaneously agrees to repurchase them at a price reflecting an
agreed-upon rate of interest. A Portfolio's obligations under reverse repurchase
agreements will not exceed one-third of the Portfolio's total assets, less
liabilities other than obligations under such reverse repurchase agreements.
During the time a reverse repurchase agreement is outstanding, each Portfolio
that has entered into such an agreement maintains liquid assets in a segregated
account with its Custodian having a value at least equal to the repurchase price
under the reverse repurchase agreement. The use of reverse repurchase agreements
is included in the Portfolios' borrowing policy and is subject to the limit of
Section 18(f)(1) of the 1940 Act. Reverse repurchase agreements may create
leverage, increasing a Portfolio's opportunity for gain and risk of loss for a
given fluctuation in the value of the Portfolio's assets. There may also be
risks of delay in recovery and, in some cases, even loss of rights in the
underlying securities, should the opposite party fail financially.
Lending Portfolio Securities
Each Portfolio may, from time to time, lend portfolio securities having, in
the case of the Fixed-Income Portfolios (other than the Short Duration Municipal
Portfolios), a market value of no more than 30% of its total assets and, in the
case of the Bernstein International Value Portfolio, Bernstein Emerging Markets
Value Portfolio and the Short Duration Municipal Portfolios, having a market
value of no more than one-third of its total assets, to qualified broker-
dealers, banks or other financial institutions. By lending its portfolio
securities, a Portfolio attempts to increase its income through the receipt of
interest on the loan. Any such loan of portfolio securities will be marked to
the market daily and secured by collateral consisting of cash or U.S. government
securities in an amount at least equal to the value of the securities loaned.
The Manager believes that the risk of loss on such a transaction is slight
because, if the borrower were to default, the collateral would be available to
satisfy the obligation. However, as with other extensions of secured credit,
loans of portfolio securities involve some risk of loss of rights in the
collateral should the borrower fail financially. The Manager carefully evaluates
the creditworthiness of any potential borrower of securities. A Portfolio may
not have the right to vote securities on loan, but it will call a loaned
security in anticipation of an important vote.
When-Issued and Delayed-Delivery Transactions
The Portfolios may purchase securities on a "when-issued" or
"delayed-delivery" basis. In a when-issued or delayed-delivery transaction, a
Portfolio purchases a security with delivery to take place at a later date,
usually within three months from the date the transaction is entered into. The
market value of the security at delivery may be more or less than the purchase
price. The Fund's
Custodian is to maintain liquid assets in segregated accounts having a value
equal to or greater than each Portfolio's purchase commitments; likewise, the
Custodian is to segregate securities sold by each Portfolio on a
delayed-delivery basis.
Further information about the Portfolios' use of Special Investment
Techniques and their associated risks is contained in the SAI.
Future Developments
The Portfolios expect to discover additional opportunities in the areas of
options, futures contracts, options on futures contracts and other derivative
instruments. These opportunities will become available as the Manager develops
new strategies, as regulatory authorities broaden the range of transactions that
are permitted and as new options and futures are developed. To the extent such
opportunities are both consistent with the Portfolio's investment objectives and
legally permissible for that Portfolio, the Manager may utilize the strategies
that do not conflict with the Portfolio's investment restrictions. These
opportunities may involve risks that differ from those described above.
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38 Sanford C. Bernstein Fund, Inc.
<PAGE>
MANAGEMENT OF THE PORTFOLIOS
DIRECTORS AND OFFICERS
The Board of Directors of the Fund is responsible for the overall supervision
of the management of the Fund. The directors also perform various duties imposed
on directors of investment companies by the 1940 Act and by the State of
Maryland. Officers of the Fund conduct and supervise the daily operations of the
Portfolios.
The following table lists the directors and executive officers of the Fund,
their business addresses and their principal occupations during the past five
years.
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE FUND DURING PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Roger Hertog* President, President, Chief Operating Officer
767 Fifth Avenue Treasurer, and Director--Bernstein
New York, NY 10153 Director
Andrew S. Adelson* Senior Vice President, Senior Vice President, Chief Investment Officer--International
767 Fifth Avenue Director and Director--Bernstein
New York, NY 10153
Arthur Aeder Director 1987-Present: Consultant; Formerly Senior Partner of
20 West 55th Street Oppenheim, Appel, Dixon & Co. (subsequently Spicer
New York, NY 10019 & Oppenheim) Certified Public Accountants, and Chairman
of Spicer & Oppenheim International
Peter L. Bernstein** Director President and Chief Executive Officer of Peter L. Bernstein,
575 Madison Avenue Inc., Economic Consultants
Suite 1006
New York, NY 10022
William Kristol Director 6/95-Present: Editor and Publisher, The Weekly Standard
1150 17th Street, N.W. 11/93-5/95: Chairman, Project for the Republican Future
5th Floor 1/93-11/93: Director, The Bradley Project on the 90s
Washington, D.C. 20036
Theodore Levitt Director Professor Emeritus of Business Administration,
Harvard Business School Harvard University
Cumnock 300 1985-89: Editor, Harvard Business Review
Boston, MA 02163
Francis H. Trainer, Jr. Senior Vice President Senior Vice President, Director--Fixed-Income Investments
767 Fifth Avenue and Director--Bernstein
New York, NY 10153
Jean Margo Reid Secretary 1997-Present: Vice President and General Counsel--Bernstein
767 Fifth Avenue Previously: Vice President and Associate General
New York, NY 10153 Counsel--Bernstein
</TABLE>
* An "interested person" of the Fund, as defined in the 1940 Act.
** Not related to Zalman C. Bernstein, Chairman of the Executive
Committee--Bernstein.
- --------------------------------------------------------------------------------
Prospectus -- January 30, 1998 39
<PAGE>
THE MANAGER
Bernstein is a closely held corporation, organized under the laws of the
State of New York on January 20, 1969, which succeeded to the business of
Sanford C. Bernstein & Co., a partnership, on February 1, 1969. Bernstein is a
registered investment advisor that manages some $69.2 billion, as of September
30, 1997, for individuals, endowments, trusts and estates, charitable
foundations, partnerships, corporations, the Portfolios of the Fund and
tax-exempt funds such as pension and profit-sharing plans. Of that amount, some
$18.1 billion was invested in fixed-income securities and $51.1 billion in
equities as of September 30, 1997. Pursuant to contracts with the Fund,
Bernstein provides the following types of services: Investment Management,
Shareholder Servicing and Administration and Distribution.
Investment Management
Bernstein has entered into Investment Management Agreements (the "Management
Agreements") with the Fund, on behalf of the Portfolios, under which the
Manager, subject to the supervision of the Board of Directors and in conformity
with the stated policies of the Portfolios, manages each Portfolio's assets.
Investment Policy Groups created by the Manager and comprised of the Manager's
employees make all investment decisions for the Portfolios, and no one person is
primarily responsible for making recommendations to these groups.
Each Portfolio pays the Manager for the services performed on behalf of that
Portfolio, as well as for the services performed on behalf of the Fund as a
whole. The fee paid by each Fixed-Income Portfolio (other than the Short
Duration Municipal Portfolios) is at an annual rate of 0.50% of each such
Portfolio's average daily net assets up to and including $1 billion and at an
annual rate of 0.45% of each such Portfolio's average daily net assets in excess
of $1 billion. The fee paid by each of the Short Duration Municipal Portfolios
is at an annual rate of 0.50% of each such Portfolio's average daily net assets.
The fees are computed daily and payable monthly.
The fee paid by the International Value Portfolio is at an annual rate of
1.00% of that Portfolio's average daily net assets up to but not exceeding $2
billion and at an annual rate of 0.90 of 1% of that Portfolio's average daily
net assets that exceed $2 billion. Because the investment programs of
international asset management are costly to implement and maintain, this fee is
higher than that paid by most investment companies that invest in U.S. equity
securities. The fee is computed daily and payable monthly.
The fee paid by the Emerging Markets Value Portfolio is at an annual rate of
1.25% of the Portfolio's average daily net assets. Portfolio transaction fees on
purchases and redemptions are not operating expenses; no portion of these
portfolio transaction fees will be assumed by Bernstein. Because the investment
programs of emerging markets asset management are costly to implement and
maintain, this fee is higher than that paid by most investment companies that
invest in U.S. equity securities. The fee is computed daily and payable monthly.
Shareholder Servicing and Administration
Bernstein has also entered into Shareholder Servicing and Administrative
Agreements with the Fund on behalf of the Portfolios. Pursuant to these
Agreements, Bernstein pays all expenses incurred by it in connection with
administering the ordinary course of the Fund's and each Portfolio's business.
Bernstein also pays the costs of office facilities and of clerical and
administrative services not provided by State Street Bank and Trust Company, the
Fund's Custodian and Transfer Agent. Bernstein serves as Shareholder Servicing
Agent and in such capacity may enter into agreements with other organizations
whereby some or all of Bernstein's duties in this regard may be delegated. The
shareholder servicing that will be provided by Bernstein or other organizations
might include, among other things, proxy solicitations and providing information
to shareholders concerning their mutual fund investments, systematic withdrawal
plans, dividend payments, reinvestments, and other matters. The fee paid by each
Fixed-Income Portfolio for these services is at an annual rate of 0.10% of that
Portfolio's average daily net assets, and the fees paid by the International
Value Portfolio and the Emerging Markets Value Portfolio are at an annual rate
of 0.25% of each Portfolio's average daily net assets.
Each Portfolio is responsible for the payment of all of its expenses other
than those expressly stated to be payable by Bernstein under the Management
Agreements and the Shareholder Servicing and Administrative Agreements.
Distribution
Bernstein acts as Distributor of each Portfolio's shares pursuant to
Distribution Agreements with the Fund.
PURCHASE OF SHARES
Shares of the Portfolios are sold at a price based on the net asset value
next calculated after receipt of a purchase order in good form. If an order is
placed at or prior to the close of regular trading of the New York Stock
Exchange (the "Exchange") (normally 4:00 p.m. New York time) on any business
day, the purchase of shares is executed at the offering price determined as of
the closing time that day. If the order is placed after that time, it will be
effected on the next business day. The Emerging Markets Value Portfolio
assesses
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40 Sanford C. Bernstein Fund, Inc.
<PAGE>
a portfolio transaction fee of 2% of the amount invested. See "Fee Table" on
page 4 for additional information.
The Fund, on behalf of any Fixed-Income Portfolio, may, at its own option,
accept securities in payment for shares. The securities delivered in are valued
by the method described herein under "Net Asset Value" (page 43) as of the day
the Portfolio receives the securities, including such certificates and any other
documentation necessary for the Custodian to transfer the securities to the
Portfolio's account. This is a taxable transaction to the shareholder.
Securities may be accepted in payment for a Portfolio's shares only if they are,
in the judgment of the Manager, appropriate investments for that Portfolio. The
Fund reserves the right to accept or reject at its own option any and all
securities offered in payment for the shares of any Portfolio.
If shares of the Fund are purchased through broker-dealers, banks and other
financial institutions, these entities may impose service fees and conditions on
the shareholders that may be different from those described in this Prospectus.
The Fund has arrangements with certain broker-dealers, banks and other financial
institutions such that orders through these entities are considered received
when the entity receives the order in good form together with the purchase price
of the shares ordered. The order will be priced at the Fund's net asset value
computed after acceptance by these entities. The entity is responsible for
transmitting the order to the Fund.
In order to purchase shares, an investor must fill out an application form.
All purchases are confirmed to the investor in writing. If no indication is made
on the application form, dividends and distributions payable by each Portfolio
are automatically reinvested in additional shares of that Portfolio at the net
asset value on the reinvestment date.
Shareholders are sent a confirmation of all purchases. The Fund reserves the
right to reject any purchase order. The Fund may at any time stop selling shares
of any of the Portfolios. Except as otherwise provided, the minimum initial
investment in any Portfolio is $25,000 and the minimum subsequent investment in
the same Portfolio is $5,000. The minimum initial investment in any Portfolio
for Uniform Gifts to Minors Act/Uniform Transfers to Minors Act accounts is
$20,000 and the minimum subsequent investment in the same Portfolio is $5,000.
For shareholders who have met the initial minimum investment requirement in a
Fixed-Income Portfolio, the minimum subsequent investment in any other
Fixed-Income Portfolio is also $5,000.
There is no minimum amount for reinvestment of dividends and distributions
declared by a Portfolio in the shares of that Portfolio. Share certificates are
issued only upon written request, but no certificates are issued for fractional
shares. The minimum initial investment in any Portfolio for employees of
Bernstein and their immediate families is $5,000; Bernstein does not charge an
account maintenance fee on these accounts.
Bernstein effects a purchase order on behalf of a client who has an
investment advisory account with Bernstein upon confirmation of a verified
credit balance at least equal to the amount of the purchase order (subject to
the minimum investment requirements set forth above).
Bernstein may advise some of the clients of its asset-management services to
invest a certain percentage of their assets in one or more of the Portfolios. If
such a client wishes to invest such assets in one or more of the Portfolios of
the Fund, the client may, on receiving this Prospectus, instruct Bernstein to
maintain a percentage of the client's account assets invested in one or more of
the Portfolios or to vary the percentage based on Bernstein's opinion of the
relative allocation of fixed-income investments versus international investments
or domestic stock. As the asset values of the client's various investments
fluctuate, in order to maintain approximately the same percentage(s) or to vary
the percentage(s) of the account assets invested in the Portfolio(s) or for tax
considerations, Bernstein may, from time to time, without additional
instructions from the client, purchase or redeem shares of any Portfolio in
which such a client had elected to invest. With respect to purchases or sales of
shares effected by Bernstein pursuant to the foregoing: (i) initial purchases of
shares of the Portfolios (other than the Bernstein Emerging Markets Value
Portfolio) will be subject to the initial minimum investment requirements, but
the subsequent minimum investment requirements may be waived; (ii) initial
purchases of shares of the Bernstein Emerging Markets Value Portfolio will be
subject to a minimum investment requirement of $10,000, but subsequent minimum
investment requirements may be waived; and (iii) any purchases and sales of
shares of the Bernstein Emerging Markets Value Portfolio will incur the
portfolio transaction fees on purchases and redemptions described in the Fee
Table on page 4. The Manager may, in its discretion, waive initial and
subsequent minimum investment requirements for any participant-directed defined
contribution plan. In January and June of each year, Bernstein will
automatically, without regard to the minimum investment requirement, invest the
cash balances held in any Bernstein account that is otherwise invested solely in
a single Fund Portfolio in that Portfolio.
Purchase orders must be submitted to Bernstein together with payment for the
purchase price of the shares ordered and, in the case of a new account, a
completed application
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Prospectus -- January 30, 1998 41
<PAGE>
form. Payment may be made by check or wire transfer. Checks should be made
payable to the particular Portfolio. Checks from persons who are not advisory
clients of Bernstein must be bank or certified checks. Bernstein, at its option,
may accept a check that is not a bank or certified check. There are restrictions
on the redemption of shares purchased by check for which the funds are being
collected. See "Redemption of Shares" on this page.
Shares of the Fund will not be offered in any state where the Fund or a
Portfolio of the Fund is not registered.
EXCHANGES OF SHARES
Shares of each Portfolio may be exchanged for shares of each of the other
Portfolios of the Fund. After proper receipt of the exchange request in good
order, exchanges of shares are made at the next determined respective net asset
values of the shares of each Portfolio. On any exchanges of other Fund shares
for shares of the Bernstein Emerging Markets Value Portfolio, shareholders will
be charged the portfolio transaction fee of 2% of the dollar amount exchanged;
on any exchanges of shares of the Bernstein Emerging Markets Value Portfolio for
other Fund shares, shareholders will be charged the 2% redemption fee. See "Fee
Table" on page 4 for additional information. Shares purchased through
broker-dealers, banks or other financial institutions may be exchanged through
such broker-dealers, banks and other financial institutions. Exchanges are
subject to the minimum investment requirements of the Portfolio into which the
exchange is being made, and the Fund, on behalf of such Portfolio, at its sole
discretion, may reject any exchange for its shares. The exchange privilege is
available only in states where the exchange may legally be made. The Fund plans
to maintain this exchange privilege. However, in the event of a change in this
policy, the Fund will provide 90-day notice to shareholders. For federal income
tax purposes, any such exchange constitutes a taxable transaction for
shareholders subject to taxation upon which a gain or loss may be realized. See
"Dividends, Distributions and Taxes" on pages 44-45.
REDEMPTION OF SHARES
General
Redemption orders received by Bernstein are effected at the net asset value
next determined after receipt of the order in proper form. If a redemption order
is placed at or prior to the close of regular trading of the Exchange (normally
4:00 p.m. New York time) on any business day, the redemption of shares is
executed at the offering price determined as of the close of trading that day.
If the redemption order is placed after the close of regular trading, it will be
effected on the next business day. Any capital gain or loss realized by a
shareholder upon any redemption of Portfolio shares must be recognized for
federal income tax purposes by shareholders subject to such taxes. See
"Dividends, Distributions and Taxes" on pages 44-45. There is a redemption fee
of 2% of the amount redeemed for the Emerging Markets Value Portfolio.
See "Fee Table" on page 4 for additional information.
Shareholders may redeem their shares by sending to Bernstein a written
request, accompanied by duly endorsed share certificates, if issued. Orders for
redemption through certain banks, broker-dealers or financial institutions with
whom the Fund has arrangements are considered received when the bank,
broker-dealer or other financial institution receives a written request,
accompanied by duly endorsed share certificates, if issued. The order will be
priced at the Fund's net asset value computed after acceptance by these
entities. The bank, broker-dealer or other financial institution is responsible
for transmitting the order to the Fund. In this case, all share certificates and
all written requests for redemption must be endorsed by the shareholder(s) with
signature(s) guaranteed by an eligible guarantor institution that meets the
Fund's standards for the acceptance of guarantees (such an institution may be a
commercial bank that is a member of the Federal Deposit Insurance Corporation, a
trust company, a member firm of a domestic securities exchange or other
institution). Guarantees must be signed by an authorized signatory of the
eligible guarantor institution, and "Signature Guaranteed" should appear with
the signature. Signature guarantees by notaries or institutions that do not
provide reimbursement in the case of fraud are not accepted. Signature
guarantees may be waived by the Fund in certain instances. The Fund may waive
the requirement that a redemption request must be in writing. Bernstein may
request further documentation from corporations, executors, administrators,
trustees or guardians. Where the shareholder is an advisory client of Bernstein,
proceeds are retained in the client's account with Bernstein unless other prior
instructions are on file. With respect to redemption orders received through
other dealers, proceeds are sent to the customer's account with the dealer
unless prior instructions are on file. Proceeds of all other redemptions are
sent to the shareholder's address by check unless prior instructions are on
file. No interest will accumulate on amounts represented by uncashed
distribution or redemption checks. The cost of wire transfers will be borne by
the shareholder.
Systematic Withdrawal Plan
A shareholder may set up a plan for redemptions to be made automatically at
regular monthly intervals and payments sent directly to the shareholder or to
persons designated by the shareholder. The use of this service will be at the
Fund's discretion and, in general, a shareholder must own shares
- --------------------------------------------------------------------------------
42 Sanford C. Bernstein Fund, Inc.
<PAGE>
worth $25,000 or more, and he or she must own them as book-entry shares. For
further information, call Bernstein at (212) 756-4097.
Additional Redemption Information
Payment is made by check within seven days after receipt by the
shareholder-servicing agent of share certificates (if issued) and a redemption
request in proper form. Under the 1940 Act, the Fund, on behalf of any
Portfolio, may suspend the right of redemption or postpone the day of payment
for more than seven days (i) for any periods during which the Exchange is closed
(other than for customary weekend or holiday closings); (ii) for any periods
when trading in the markets that the Portfolio normally uses is closed or
restricted or an emergency exists as determined by the Commission so that
disposal of the Portfolio's investments or determination of its net asset value
is not reasonably practicable; or (iii) during any other period when the
Commission, by order, so permits, provided that applicable rules and regulations
of the Commission shall govern as to whether the condition described in (ii)
exists.
In addition, if the shares being redeemed were purchased by check, payment
may be delayed for up to 15 days in order to verify that the purchase check has
been honored. Any such delay may be avoided if the shares were originally
purchased by certified or bank check or by wire transfer.
Because of the high cost of maintaining smaller shareholder accounts, the
Fund may redeem without shareholder consent, on at least 60 days' written
notice, the account of any shareholder of any Portfolio whose account has a net
asset value of less than $1,000 due to redemptions determined as of the close of
business on the day preceding such notice, unless such shareholder increases the
account balance to $1,000 during such 60-day period.
PORTFOLIO TRANSACTIONS
AND BROKERAGE
The Manager is responsible for decisions to buy and sell securities for each
of the Portfolios and for broker-dealer selection. In general, the securities in
which the Fixed-Income Portfolios invest are traded on a "net" rather than a
transaction-charge basis (as securities in which the Bernstein International
Value Portfolio and the Bernstein Emerging Markets Value Portfolio invest are
generally traded), with dealers acting as principal for their own accounts
without a stated transaction charge. Accordingly, the price of the security may
reflect an increase or decrease from the price paid by the dealer together with
a spread between the bid and asked prices, which provides the opportunity for a
profit or loss to the dealer. Portfolio transactions that are effected on a
transaction-charge basis may be effected through Bernstein, acting as agent and
not as principal, provided, among other things, that any transaction charges,
fees or other remuneration received by Bernstein are reasonable and fair
compared to the transaction charges, fees or other remuneration paid to other
brokers in connection with comparable transactions involving similar securities
during a comparable period of time. In some cases, a Portfolio might engage in
purchase or sale transactions with another Portfolio of the Fund, subject to
conditions specified under the 1940 Act. There might also be occasions when a
Portfolio engages in purchase or sale transactions with another mutual fund.
Although the objectives of the other accounts to which the Manager provides
investment advice may differ from those of each of the Portfolios, it is
possible that, at times, identical securities are acceptable for one or more of
the Portfolios and one or more of such accounts. If the purchase or sale of
securities is consistent with the investment policies of one or more of the
Portfolios and one or more of the accounts of the Manager is considered at or
about the same time, transactions in such securities will be allocated among the
accounts and the Portfolios in a manner deemed equitable by the Manager. Where
securities are allocated among Fund Portfolios and private accounts, the Manager
may use the average price at which the securities were purchased or sold.
None of the Fixed-Income Portfolios anticipates a portfolio turnover rate in
excess of 300%. Each of the Bernstein International Value Portfolio and the
Bernstein Emerging Markets Value Portfolio anticipates a portfolio turnover rate
of less than 100%. A turnover rate of 100% would occur, for example, if all the
securities held by a Portfolio were replaced in a period of one year. A
portfolio's turnover rate is the percentage computed by dividing the lesser of
portfolio purchases or sales (excluding all securities whose maturities at
acquisition were one year or less) by the average value of the portfolio. High
portfolio turnover involves correspondingly greater transaction costs, which are
borne directly by the Portfolio, and may also result in the realization of
substantial net short-term capital gains, taxable at ordinary income tax rates
to non-tax-exempt investors.
NET ASSET VALUE
The net asset value of each Portfolio is computed as of the close of regular
trading of the Exchange (normally 4:00 p.m. New York time). Purchase and
redemption orders are accepted by the Fund on each business day, with the
exception of Exchange and national bank holidays, as determined from time to
time. Currently, these holidays are: New Year's Day, Martin Luther King Jr. Day,
Presidents'
- --------------------------------------------------------------------------------
Prospectus -- January 30, 1998 43
<PAGE>
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans Day, Thanksgiving Day and Christmas Day. The net asset value per share
of each Portfolio is the net worth of the Portfolio (assets, including
securities at market value, minus liabilities) divided by the number of shares
outstanding. The value of each security for which readily available market
quotations exist is based on the most recent sale, the most recent available bid
price or the mean between the most recent available bid and asked prices in the
broadest and most representative market for that security as determined by the
Manager. Debt instruments with remaining maturities of 60 days or less may be
valued at amortized cost. If quotations are not readily available, or if the
values have been materially affected by events occurring after the closing of a
foreign market, securities or other assets may be valued by appraisal at their
fair value as determined in good faith under procedures established by and under
the general supervision of the Board of Directors. The Fund may use an
independent pricing service to value the Portfolios' assets at such times and to
such extent as the Manager deems appropriate. All assets and liabilities
initially expressed in foreign currencies will be translated into U.S. dollars.
Dividends on foreign securities are accrued and reflected in net asset value
either on the date the security goes ex- dividend or the date the Manager
becomes aware of them, whichever is later; corporate actions of foreign issuers
are reflected in net asset value on the date on which they become effective, or
the date the Manager becomes aware of them, whichever is later.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends each Portfolio to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). While so qualified, the Portfolios are not subject to federal income
taxes on net income and capital gains, if any, realized during any fiscal year
and distributed to shareholders. All taxable dividends out of net investment
income, together with distributions of net short-term capital gains and certain
foreign currency gains, are taxable as ordinary income to shareholders who are
subject to federal income taxes, whether or not reinvested. Dividends derived
from the interest earned on municipal securities constitute "tax-exempt interest
dividends" and are not subject to federal income taxes, provided that the
relevant Portfolio meets the requirements of Section 852(b)(5) of the Code. In
general, the dividends of the Bernstein International Value Portfolio and the
Bernstein Emerging Markets Value Portfolio will not qualify for the
dividends-received deduction for corporations since they are not derived from
dividends paid by U.S. corporations. Any net long-term capital gains distributed
to shareholders are taxable as such to the shareholders who are subject to
federal income taxes, whether or not reinvested, and regardless of the length of
time shareholders have owned their shares. Share purchases made shortly before a
dividend of the Bernstein International Value Portfolio or the Bernstein
Emerging Markets Value Portfolio or a capital gains distribution of any of the
Portfolios include in the purchase price the amount of the distribution; on the
record date for the distribution, the Portfolio's share value drops by the
amount of the distribution.
The Fixed-Income Portfolios intend to declare dividends daily and to pay them
monthly. Each of the Bernstein International Value Portfolio and the Bernstein
Emerging Markets Value Portfolio intends to declare and pay dividends at least
annually, generally in December. Capital-gains distributions are made at least
annually, generally in December. Dividends and distributions are generally
taxable to shareholders in the year in which received, except that dividends
declared in October, November and December and paid prior to February 1 of the
following year are taxable to shareholders in the year in which declared. Each
Portfolio's distributions and dividends are paid in additional shares of that
Portfolio based on the Portfolio's net asset value at the close of business on
the record date, unless the shareholder elects in writing not less than five
business days prior to the record date to receive such distributions in cash.
A shareholder's gain or loss upon the redemption, repurchase or exchange of
his or her shares in a portfolio is generally capital gain or loss and is a
long-term capital gain or loss if the shares were held for more than 12 months;
if the shares were held for more than 18 months, a lower long-term capital gains
tax rate may apply. Any loss realized on a redemption, repurchase or exchange is
disallowed to the extent that the shares disposed of are replaced within a
period of 61 days beginning 30 days before and ending 30 days after the shares
are disposed of. However, any loss incurred by shareholders who held their
shares for six months or less is treated as long-term capital loss to the extent
of any dividends that are treated as long-term capital gains by such
shareholders. In addition, such a loss is disallowed to the extent of any
tax-exempt interest dividends received by the shareholders.
It is anticipated that the dividends of the New York Municipal Portfolios,
the California Municipal Portfolios and the Diversified Municipal Portfolios
will be generally exempt from federal income taxes. It should be noted, however,
that under the Code, interest on certain "private activity bonds" issued after
August 7, 1986, is an item of tax preference for purposes of the alternative
minimum tax. The Portfolios anticipate that a portion of their investments may
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44 Sanford C. Bernstein Fund, Inc.
<PAGE>
be made in "private activity bonds," with the result that a portion of the
exempt-interest dividends paid by the Portfolios would be an item of tax
preference to shareholders subject to the alternative minimum tax. In addition,
tax-exempt income constitutes "adjusted current earnings" ("ACE") for purposes
of calculating the ACE adjustment for the corporate alternative minimum tax. It
is intended that within 60 days after the end of each year, each Portfolio will
mail information to shareholders on the tax status of dividends and
distributions, except that such mailing will be made within 45 days for the
Bernstein Government Short Duration Portfolio. If any dividends are not exempt
from federal income taxes, the annual tax information will indicate the
percentages of tax-exempt and taxable income.
It is anticipated that each of the New York Municipal Portfolios will provide
income that is generally tax-free for federal and New York State and local
individual income tax purposes to the extent that the income is derived from New
York State Municipal Securities or securities issued by possessions of the
United States, and that each of the California Municipal Portfolios will provide
income that is generally tax-free for federal and California personal income
taxes to the extent that the income is derived from California Municipal
Securities or securities issued by possessions of the United States. A portion
of the income of the other Portfolios may be exempt from state and local income
taxes in certain states to the extent of the Portfolio's income derived from
securities on which the interest is exempt from income taxes in that state.
Dividends and interest received by the Fixed-Income Portfolios that invest in
foreign securities, the Bernstein International Value Portfolio and the
Bernstein Emerging Markets Value Portfolio may be subject to foreign tax and
withholding. In addition, some emerging-market countries may impose taxes on
capital gains earned by a Portfolio in that country. However, tax conventions
between certain countries and the United States may reduce or eliminate such
taxes. Shareholders may be entitled to claim foreign tax credits or deductions
on their own federal income tax returns with respect to such taxes paid by a
Portfolio.
With respect to the Bernstein International Value Portfolio and the Bernstein
Emerging Markets Value Portfolio, if any such Portfolio qualifies as a regulated
investment company, if certain asset and distribution requirements are satisfied
and if more than 50% of the Portfolio's total assets at the close of its fiscal
year consist of stocks or securities of foreign corporations, the Portfolio may
elect for United States income tax purposes to treat foreign income taxes paid
by it as paid by its shareholders. Such Portfolio will make such an election
only if it deems it to be in the best interests of its shareholders. If the
election is made, shareholders of such Portfolio would be required to include
their pro rata portions of such foreign taxes in computing their taxable incomes
and then treat an amount equal to those foreign taxes as a United States federal
income tax deduction or as foreign tax credits against their U.S. federal income
taxes. Shortly after any year for which it makes such an election, the Fund will
report to the Portfolio's shareholders the amount per share of such foreign tax
that must be included in each shareholder's gross income and the amount that
will be available for the deduction or credit. No deduction for foreign taxes
may be claimed by a shareholder who does not itemize deductions. Certain
limitations will be imposed on the extent to which the credit and the deduction
for foreign taxes may be claimed.
Capital gains on the securities of certain foreign corporations that are
considered to be passive foreign investment companies under the Internal Revenue
Code will be deemed to be ordinary income regardless of how long the Bernstein
International Value Portfolio or the Bernstein Emerging Markets Value Portfolio
holds such investments. In addition, such Portfolios may be subject to corporate
income taxes and interest charges on certain dividends and capital gains earned
from these investments, regardless of whether such income and gains are
distributed to shareholders.
Statements as to the tax status of dividends and distributions to
shareholders of each Portfolio are mailed annually. Shareholders are urged to
consult their own tax advisors regarding specific questions as to federal,
state, local or foreign taxes. See "Taxes" in the SAI.
DESCRIPTION OF SHARES
The shares of each Portfolio have no preemptive or conversion rights. Shares are
fully paid and nonassessable and redeemable at the option of the shareholder and
have a par value of $0.001. Shares are also redeemable at the option of the
Fund, if the net asset value of a shareholder's account is less than $1,000, as
previously discussed in "Redemption of Shares" on pages 42-43.
Pursuant to the Articles of Incorporation, the Board of Directors may also
authorize the creation of additional series of shares (the proceeds of which may
be invested in separate, independently managed portfolios) with such
preferences, privileges, limitations and voting and dividend rights as the Board
may determine.
Shareholders have certain rights, including the right to call a meeting of
shareholders for the purpose of voting on the removal of one or more Directors.
Such removal can be effected upon the action of two-thirds of the outstanding
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Prospectus -- January 30, 1998 45
<PAGE>
shares of all of the Portfolios of the Fund, voting as a single class. The
shareholders of each Portfolio are entitled to a full vote for each full share
held and to the appropriate fractional vote for each fractional share. A matter
that affects a Portfolio of the Fund will not be deemed to have been effectively
acted upon unless approved by the holders of a majority of the outstanding
voting securities of that Portfolio. The voting rights of the shareholders are
not cumulative. The Directors have been elected at the initial meeting of the
public shareholders of the Fund, except for Mr. Kristol and Mr. Adelson, who
were elected by the other Directors. In order to avoid unnecessary expenses, the
Fund does not intend to hold annual meetings of shareholders.
PERFORMANCE
Each of the Portfolios may, from time to time, advertise yield, average
annual total return and unannualized average total return. In addition, the
Bernstein New York Municipal Portfolio, the Bernstein California Municipal
Portfolio, the Bernstein Diversified Municipal Portfolio, the Bernstein
Government Short Duration Portfolio and the Short Duration Municipal Portfolios
may advertise tax-equivalent yield. Yield is a measure of a Portfolio's income;
it does not measure changes in the net asset value of the Portfolio's shares.
Average annual total return reflects all elements of return, including income,
expenses and changes in the value of the principal. Yield and average annual
total return do not reflect any tax consequences to an investor. Tax-equivalent
yield is the taxable yield that would be necessary to produce an equivalent
yield after taxes to a hypothetical investor in the highest applicable tax
bracket. Yield, tax-equivalent yield and average annual total return are based
on historical results and are not intended to indicate future performance.
The yield of a Portfolio is calculated by dividing the Portfolio's net
investment income per share during a specified month by the maximum offering
price per share on the last day of the month and annualizing it. Yield is
calculated in accordance with accounting methods prescribed by the Commission.
Because the yield accounting methods differ from the methods used for tax and
financial accounting purposes, a Portfolio's yield may not be comparable to the
dividends paid to a shareholder or the net investment income reported in the
Portfolio's financial statements. The calculation of yield takes into account
all fees and expenses. The calculation of tax-equivalent yield is based on yield
and, for the New York Municipal Portfolios and the California Municipal
Portfolios, assumes that the hypothetical investor is subject, respectively, to
the highest bracket of New York State and City or California, as well as
federal, taxes. The calculation of tax-equivalent yield for the Diversified
Municipal Portfolios assumes that the hypothetical investor is subject to the
highest bracket of only federal taxes. The calculation of tax-equivalent yield
for the Bernstein Government Short Duration Portfolio assumes that the
hypothetical investor is subject to a stated bracket of state and/or state and
local taxes. The average annual total return of a Portfolio is computed by
finding the average annual compounded rate of return since the commencement of
the Portfolio's operations based on an initial investment of $1,000 as compared
to the ending redeemable value, assuming that all dividends and distributions
were reinvested. The calculation of average annual total return takes into
account all fees and expenses. The unannualized average total return of a
Portfolio for a period is calculated by dividing the value of an investment at
the end of the period, assuming all dividends and distributions were reinvested,
by the value of the investment at the beginning of the period. The Fund may use
an independent service to calculate yield and/or performance data of any or all
Portfolios at such times and to such extent as the Manager deems appropriate.
For further information and a description of the method by which yield,
tax-equivalent yield, average annual total return and unannualized average total
return are calculated, see "Performance" in the SAI.
REPORTS TO SHAREHOLDERS
The Fund sends the shareholders of each Portfolio annual and semiannual
reports. The financial statements appearing in annual reports are audited by
independent accountants, whose report is included thereon. In addition, each
shareholder having an account directly with the Fund is sent a statement
confirming each transaction in the account.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, serves as Custodian for the Fund and in that capacity holds
the cash and other assets for each Portfolio in the Fund and maintains certain
financial and accounting books and records pursuant to an agreement with the
Fund. Foreign securities and foreign currency owned by the Fund may be held by
foreign subcustodians of State Street Bank and Trust Company retained for such
purpose in accordance with the 1940 Act. State Street Bank and Trust Company
also serves as Transfer Agent for the Portfolios and in that capacity maintains
certain records pursuant to an agreement with the Fund.
- --------------------------------------------------------------------------------
46 Sanford C. Bernstein Fund, Inc.
<PAGE>
SHAREHOLDER INQUIRIES
All inquiries regarding each Portfolio should be directed to the Fund at the
telephone number or address on the cover page of this Prospectus. Questions
concerning dividends or share ownership, transfer or redemption should be
directed to Bernstein at the same address; at 1999 Avenue of the Stars, Los
Angeles, California 90067; at 777 South Flagler Drive, West Palm Beach, Florida
33401; at 227 West Monroe Street, Chicago, Illinois 60606; at 300 Crescent
Court, Suite 950, Dallas, Texas 75201; or at 555 California Street, San
Francisco, California 94104.
INDEPENDENT ACCOUNTANTS
AND LEGAL COUNSEL
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036, has
been selected as the independent accountants to audit the annual financial
statements of each Portfolio of the Fund. Price Waterhouse LLP also has been the
independent accountants of the investment performance statistics of certain of
Bernstein's separately managed accounts since 1978.
Shereff, Friedman, Hoffman & Goodman LLP, 919 Third Avenue, New York, New
York 10022, has been selected as legal counsel to the Fund. Shereff, Friedman,
Hoffman & Goodman LLP and partners of that firm have been legal counsel to
Bernstein since 1967, when Bernstein was organized.
- --------------------------------------------------------------------------------
Prospectus -- January 30, 1998 47
<PAGE>
January 30, 1998
BERNSTEIN GOVERNMENT
SHORT DURATION
BERNSTEIN SHORT DURATION PLUS
BERNSTEIN INTERMEDIATE DURATION
BERNSTEIN SHORT DURATION
NEW YORK MUNICIPAL
BERNSTEIN NEW YORK MUNICIPAL
BERNSTEIN SHORT DURATION
CALIFORNIA MUNICIPAL
BERNSTEIN CALIFORNIA MUNICIPAL
BERNSTEIN SHORT DURATION
DIVERSIFIED MUNICIPAL
BERNSTEIN DIVERSIFIED MUNICIPAL
BERNSTEIN INTERNATIONAL VALUE
BERNSTEIN EMERGING MARKETS VALUE
PROSPECTUS
Sanford C. Bernstein Fund, Inc.
767 FIFTH AVENUE
NEW YORK, NY 10153
212-756-4097
TABLE OF CONTENTS
FEE TABLE ...............................................................2
FINANCIAL HIGHLIGHTS ....................................................6
THE FUND ...............................................................15
BERNSTEIN FIXED-INCOME PROCESS .........................................15
BERNSTEIN FIXED-INCOME PORTFOLIOS ......................................18
BERNSTEIN INTERNATIONAL VALUE AND
EMERGING MARKETS VALUE PROCESS .........................................19
INVESTMENT OBJECTIVES AND POLICIES
OF THE PORTFOLIOS ......................................................23
Investment Objectives and Policies Of the
Fixed-Income Portfolios ..............................................23
The Short Duration Taxable Portfolios
o Bernstein Government Short Duration Portfolio .....................24
o Bernstein Short Duration Plus Portfolio ...........................24
The Intermediate Duration Taxable Portfolio
o Bernstein Intermediate Duration Portfolio .........................25
The Municipal Portfolios
o The Short Duration Municipal Portfolios ...........................25
o The Intermediate Duration Municipal Portfolios ....................25
o The New York Municipal Portfolios:
oBernstein Short Duration New York Municipal Portfolio ............25
oBernstein New York Municipal Portfolio ...........................25
o The California Municipal Portfolios:
oBernstein Short Duration California Municipal Portfolio ..........27
oBernstein California Municipal Portfolio .........................27
o The Diversified Municipal Portfolios:
oBernstein Short Duration Diversified Municipal Portfolio .........28
oBernstein Diversified Municipal Portfolio ........................28
Investment Objectives and Policies Of the International
Value Portfolio And the Emerging Markets Value Portfolio .............29
INVESTMENTS .............................................................32
Special Investment Techniques ........................................36
MANAGEMENT OF THE PORTFOLIOS ...........................................39
Directors and Officers ...............................................39
The Manager ..........................................................40
Purchase of Shares ...................................................40
Exchanges of Shares ..................................................42
Redemption of Shares .................................................42
Portfolio Transactions and Brokerage .................................43
Net Asset Value ......................................................43
Dividends, Distributions and Taxes ...................................44
Description of Shares ................................................45
Performance ..........................................................46
Reports to Shareholders ..............................................46
Custodian and Transfer Agent .........................................46
Shareholder Inquiries ................................................47
Independent Accountants and Legal Counsel ............................47
<PAGE>
JANUARY 30, 1998 PROSPECTUS
Sanford C. Bernstein Fund, Inc.
767 FIFTH AVENUE
NEW YORK, NY 10153
212-756-4097
Sanford C. Bernstein Fund, Inc. (the "Fund") is an open-end management
investment company. This type of company is commonly referred to as a mutual
fund. The Fund is currently comprised of 11 series of shares, each representing
a separate portfolio of securities and each having its own investment
objectives. Sanford C. Bernstein & Co., Inc. ("Bernstein," or the "Manager")
serves as Investment Manager to each series.
IMPORTANT NOTE: This prospectus is intended exclusively for participants in
employer-sponsored retirement or savings plans, such as tax-qualified pension
and profit-sharing plans and 401(k) thrift plans, and offers shares of only two
of the Fund's Portfolios--the Bernstein Short Duration Plus Portfolio and the
Bernstein Intermediate Duration Portfolio. Prospectuses containing information
on the 11 Fund Portfolios and on how to open a personal account are available
for individual investors, and may be obtained by writing to the address or
calling the telephone number listed above.
The Bernstein Short Duration Plus Portfolio and the Bernstein Intermediate
Duration Portfolio (each a "Portfolio") aim to generate the highest total return
consistent with safety of principal and the financial objectives of the
Portfolios.
This Prospectus sets forth information you ought to know before investing in
any Portfolio. You should read it carefully and retain it for future reference.
You can find more information about the Fund in the Statement of Additional
Information (the "SAI") dated January 30, 1998, which has been filed with the
Securities and Exchange Commission (the "Commission") and is incorporated herein
by reference. You may obtain a copy of the SAI without charge by calling or
writing the Fund at the above telephone number or address.
BERNSTEIN PORTFOLIO OBJECTIVES
SHORT-DURATION PORTFOLIO
Bernstein Short Duration Plus ............................... 7
o Choose primarily from a broad universe of high-grade
fixed-income instruments.
INTERMEDIATE-DURATION PORTFOLIO
Bernstein Intermediate Duration ............................. 7
o Choose primarily from a broad universe of high-grade
fixed-income instruments.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
FEE TABLE
<TABLE>
<CAPTION>
BERNSTEIN BERNSTEIN
SHORT DURATION PLUS INTERMEDIATE DURATION
PORTFOLIO PORTFOLIO
.....................................................................................................
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases
(as a percentage of offering price) None None
Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds) None None
Redemption Fees
(as a percentage of amount redeemed) None None
Exchange Fees None None
ANNUAL PORTFOLIO OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 0.50% 0.48%
12b-1 Fees None None
Other Expenses
Shareholder Servicing and Administrative Fees 0.10% 0.10%
All Other Expenses 0.05% 0.04%
Total Portfolio Operating Expenses 0.65% 0.62%
EXAMPLE
A Portfolio would pay the following expenses on
a $1,000 investment, assuming 5% annual return:
1 Yr. $7 $6
3 Yrs. (cum.) $21 $20
5 Yrs. (cum.) $36 $35
10 Yrs. (cum.) $81 $77
</TABLE>
The purpose of the fee table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. The Portfolios of the Fund covered by this Prospectus are no-load,
have no redemption fees and have no charges for shareholders on monthly payment
plans. "Other Expenses" for each Portfolio are based on amounts for the fiscal
year ended September 30, 1997. The example should not be considered a
representation of future expenses; actual expenses may be greater or less than
those shown. A more complete description of the various costs and expenses can
be found under "Management of the Portfolios" on page 15. Shareholders of the
Fund do not need to open a brokerage account with Bernstein; shareholders may
elect to take delivery of the shares or to make alternate arrangements for
custodying them. If a shareholder holds Fund shares in a Bernstein brokerage
account, Bernstein (not the Fund) will charge an annual maintenance fee of $100
for accounts with assets of less than $400,000 under the management of
Bernstein's Equity and/or Fixed-Income Investment Policy Groups. This fee is
deducted from cash held in the brokerage account or, if insufficient cash is
maintained in the brokerage account, by selling securities. Bernstein does not
charge this fee on accounts that are included in a group of related accounts as
defined by Bernstein with combined assets of $400,000 or more. Shares of the
Fund purchased or redeemed through broker-dealers, banks and other financial
institutions may be subject to fees imposed by those institutions.
2 Sanford C. Bernstein Fund, Inc.
<PAGE>
FINANCIAL HIGHLIGHTS
Set forth below is a table containing information as to the income and operating
performance of a share of each Portfolio for the periods indicated. The
financial statements, which contain this information for each year in the
five-year period ended September 30, 1997, have been audited by Price Waterhouse
LLP. The related financial statements and the report of independent accountants
are incorporated by reference in the Fund's SAI. Additional performance
information is contained in the Fund's annual report to shareholders dated
September 30, 1997, which is available upon request and without charge. These
financial highlights should be read in conjunction with the financial statements
incorporated by reference in the Fund's SAI.
<TABLE>
<CAPTION>
BERNSTEIN SHORT DURATION PLUS PORTFOLIO
-----------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/97 9/30/96 9/30/95 9/30/94 9/30/93 9/30/92
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.48 $ 12.49 $ 12.32 $ 12.89 $ 13.14 $ 12.84
---------- -------- -------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.67 0.69 0.70 0.55 0.59 0.75
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies 0.08 (0.01) 0.18 (0.40) 0.10 0.44
---------- -------- -------- --------- --------- ---------
Total from investment operations 0.75 0.68 0.88 0.15 0.69 1.19
---------- -------- -------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.70) (0.69) (0.69) (0.56) (0.59) (0.75)
Dividends from tax-exempt net investment income 0 0 0 0 0 0
Distributions from net realized gains 0 0 0 0 (0.35) (0.14)
Distributions in excess of net investment income
due to timing differences 0 0 (0.02) 0 0 0
Distributions in excess of net realized gains
due to timing differences 0 0 0 (0.16) 0 0
---------- -------- -------- --------- --------- ---------
Total distributions (0.70) (0.69) (0.71) (0.72) (0.94) (0.89)
Portfolio transaction fee 0 0 0 0 0 0
---------- -------- -------- --------- --------- ---------
Net asset value, end of period $12.53 $12.48 $12.49 $12.32 $12.89 $13.14
========== ======== ======== ========= ========= =========
Total return 6.21% 5.54% 7.36% 1.14% 5.49% 9.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $612,744 $538,248 $534,462 $550,415 $508,959 $535,980
Average net assets (000 omitted) $583,003 $532,094 $536,042 $529,892 $535,889 $482,467
Ratio of expenses to average net assets 0.65% 0.65% 0.65% 0.65% 0.66% 0.66%
Ratio of net investment income to average net
assets 5.38% 5.47% 5.69% 4.30% 4.52% 5.75%
Portfolio turnover rate 118.58% 169.96% 61.03% 285.80% 112.87% 169.60%
Average commission rate per share N/A N/A N/A N/A N/A N/A
</TABLE>
- --------------------------------------------------------------------------------
Prospectus--January 30, 1998 3
<PAGE>
FINANCIAL HIGHLIGHTS
Set forth below is a table containing information as to the income and operating
performance of a share of each Portfolio for the periods indicated. The
financial statements, which contain this information for each year in the
five-year period ended September 30, 1997, have been audited by Price Waterhouse
LLP. The related financial statements and the report of independent accountants
are incorporated by reference in the Fund's SAI. Additional performance
information is contained in the Fund's annual report to shareholders dated
September 30, 1997, which is available upon request and without charge. These
financial highlights should be read in conjunction with the financial statements
incorporated by reference in the Fund's SAI.
<TABLE>
<CAPTION>
BERNSTEIN SHORT DURATION
PLUS PORTFOLIO
-------------------------------------------- -----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/91 9/30/90 9/30/89(a) 9/30/97 9/30/96
---------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.50 $12.62 $12.50 $13.08 $13.30
---------- ---------- ------------ ---------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.94 0.97 0.78 0.75 0.80
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies 0.41 (0.01) 0.12 0.35 (0.14)
---------- ---------- ------------ ---------- -----------
Total from investment operations 1.35 0.96 0.90 1.10 0.66
---------- ---------- ------------ ---------- -----------
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.94) (0.97) (0.78) (0.80) (0.80)
Dividends from tax-exempt net investment income 0 0 0 0 0
Distributions from net realized gains (0.07) (0.11) 0 0 (0.08)
Distributions in excess of net investment income
due to timing differences 0 0 0 0 0
Distributions in excess of net realized gains
due to timing differences 0 0 0 0 0
---------- ---------- ------------ ---------- -----------
Total distributions (1.01) (1.08) (0.78) (0.80) (0.88)
Portfolio transaction fee 0 0 0 0 0
========== ========== ========== =========== ==========
Net asset value, end of period $12.84 $12.50 $12.62 $13.38 $13.08
Total return 11.26% 7.88% 7.41% 8.66% 5.05%
---------- ---------- ------------ ---------- ---------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $435,334 $391,131 $335,310 $2,058,220 $1,451,776
Average net assets (000 omitted) $405,457 $374,101 $263,899 $1,745,554 $1,310,208
Ratio of expenses to average net assets 0.67% 0.68% 0.75%* 0.62% 0.63%
Ratio of net investment income to average net assets 7.42% 7.67% 7.91%* 5.61% 5.99%
Portfolio turnover rate 140.03% 155.21% 132.82% 238.04% 141.04%
Average commission rate per share N/A N/A N/A N/A N/A
</TABLE>
* Annualized
(a) Commenced operations December 12, 1988
- --------------------------------------------------------------------------------
4 Sanford C. Bernstein Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
BERNSTEIN INTERMEDIATE DURATION PORTFOLIO
----------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89(b)
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.54 $13.92 $13.82 $13.19 $12.36 $12.82 $12.50
------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.78 0.68 0.76 0.90 1.00 0.98 0.69
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies 0.77 (1.15) 0.68 0.79 0.85 (0.25) 0.32
------ ------ ------ ------ ------ ------ ------
Total from investment operations 1.55 (0.47) 1.44 1.69 1.85 0.73 1.01
------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.76) (0.70) (0.76) (0.90) (1.00) (0.98) (0.69)
Dividends from tax-exempt net investment income 0 0 0 0 0 0 0
Distributions from net realized gains 0 (0.08) (0.58) (0.16) (0.02) (0.21) 0
Distributions in excess of net investment income
due to timing differences (0.03) 0 0 0 0 0 0
Distributions in excess of net realized gains
due to timing differences 0 (0.13) 0 0 0 0 0
------ ------ ------ ------ ------ ------ ------
Total distributions (0.79) (0.91) (1.34) (1.06) (1.02) (1.19) (0.69)
Portfolio transaction fee 0 0 0 0 0 0 0
====== ====== ====== ====== ====== ====== ======
Net asset value, end of period $13.30 $12.54 $13.92 $13.82 $13.19 $12.36 $12.82
Total return 12.82% (3.54)% 11.30% 13.32% 15.54% 5.90% 8.25%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $1,142,768 $848,529 $693,772 $524,301 $375,345 $240,779 $183,480
Average net assets (000 omitted) $957,247 $764,519 $595,273 $444,750 $304,034 $218,760 $135,549
Ratio of expenses to average net assets 0.64% 0.65% 0.66% 0.67% 0.68% 0.71% 0.83%*
Ratio of net investment income to average net assets 6.11% 5.14% 5.59% 6.64% 7.80% 7.77% 7.74%*
Portfolio turnover rate 212.40% 203.73% 60.77% 149.71% 81.04% 119.09% 121.11%
Average commission rate per share N/A N/A N/A N/A N/A N/A N/A
</TABLE>
* Annualized
(b) Commenced operations January 17, 1989
- -------------------------------------------------------------------------------
Prospectus--January 30, 1998 5
<PAGE>
THE FUND
The Fund was incorporated on May 4, 1988, under the laws of Maryland as an
open-end management investment company. This Prospectus relates to two of the
Fund's series of shares. Shares of each series represent an interest in a
separate portfolio of securities. At September 30, 1997, the 11 portfolios of
the Fund (including the Bernstein Short Duration Plus Portfolio and the
Bernstein Intermediate Duration Portfolio) had net assets totaling $10.729
billion. Bernstein, with offices at 767 Fifth Avenue, New York, New York 10153;
1999 Avenue of the Stars, Los Angeles, California 90067; 777 South Flagler
Drive, West Palm Beach, Florida 33401; 227 West Monroe Street, Chicago, Illinois
60606; 300 Crescent Court, Suite 950, Dallas, Texas 75201; and 555 California
Street, Suite 4300, San Francisco, California 94104, serves as Investment
Manager to each Portfolio. Each Portfolio has its own investment objectives.
INVESTMENT OBJECTIVES AND POLICIES
OF THE PORTFOLIOS
General Investment Policies
Each Portfolio evaluates a wide variety of instruments and issuers, utilizing a
variety of internally developed, quantitatively based valuation techniques. Each
Portfolio may invest in any of the securities detailed on pages 8-12. In
addition, each Portfolio may use any of the special investment techniques, some
of which are commonly called derivatives, described on pages 12-14 to hedge
various market risks (such as interest rates, currency exchange rates and broad
or security-specific changes in the prices of fixed-income securities), to
manage the effective maturity or duration of fixed-income securities, to exploit
mispricings in the securities markets or as an alternative to activities in the
underlying cash markets. Except for those policies and objectives of each
Portfolio that are described in the Prospectus or SAI as fundamental, the
investment policies and objectives of each Portfolio may be changed by the
Fund's Board of Directors without shareholder approval. If there is a change in
investment policy or objective, shareholders should consider whether the
Portfolio remains an appropriate investment in light of their then-current
financial position and needs. There is no assurance that any Portfolio will
achieve its investment objective.
Neither Portfolio will purchase any security if immediately after that
purchase less than 80% of the Portfolio's total assets would consist of
securities or commercial paper rated A or higher by Standard & Poor's
Corporation ("Standard & Poor's"), Fitch Investors Service, Inc. ("Fitch") or
Moody's Investors Service, Inc. ("Moody's"); SP-1 by Standard & Poor's, F-1 by
Fitch or MIG 1 or VMIG 1 by Moody's; A-1 by Standard & Poor's or P-1 by Moody's;
or of securities and commercial paper that are not rated but that are determined
by the Manager to be of comparable quality. In addition, neither of the
Portfolios will purchase a security or commercial paper rated less than B by
Standard & Poor's, Fitch or Moody's; less than A-2 or SP-2 by Standard & Poor's,
less than F-2 by Fitch or less than P-2, MIG 2 or VMIG 2 by Moody's; or
securities and commercial paper that are not rated but that are determined by
the Manager to be of comparably poor quality. In the event of differing ratings,
the higher rating shall apply. The impact of changing economic conditions,
investment risk and changing interest rates is increased by investing in
securities rated below A by Standard & Poor's, Fitch or Moody's; or below SP-1
or A-1 by Standard & Poor's, below F-1 by Fitch or below MIG 1, VMIG 1 or P-1 by
Moody's. In addition, the secondary trading market for lower-rated bonds may be
less liquid than the market for higher-grade bonds. Accordingly, lower-rated
bonds may be difficult to value accurately. Securities rated BBB by Standard &
Poor's and Fitch or Baa by Moody's are investment grade. Securities that are
rated BB or B by Standard & Poor's and Fitch or Ba or B by Moody's are
considered to be speculative with regard to the payment of interest and
principal. Each Portfolio, at the time of purchase, may invest as much as 20% of
its total assets in securities of foreign issuers, including Eurobonds, Yankees
(other than Yankees included in the Lehman Brothers Aggregate Bond Index which
are considered to be issued by domestic issuers for this purpose) and
obligations of foreign banks that are securities of foreign issuers, including
foreign governments.
Neither Portfolio will invest in an illiquid security if, at the time of
purchase, the value of such illiquid security together with other securities
that are not readily marketable would exceed 10% of the net assets of the
Portfolio.
In addition to these policies, which govern both Portfolios, each Portfolio
has individual policies, discussed hereafter,
- -------------------------------------------------------------------------------
6 Sanford C. Bernstein Fund, Inc.
<PAGE>
pertaining to the minimum ratings and types of investments permitted, as well as
the effective duration and average maturity of the Portfolio. Effective
duration, a statistic that is expressed in time periods, is a measure of the
exposure of the Portfolio to changes in interest rates. Unlike maturity, which
is the latest possible date for the final payment to be received from a bond,
effective duration is a measure of the timing of all the expected interest and
principal payments. While maturity is somewhat indicative of interest-rate risk,
duration is a more accurate measure. The duration of a bond is defined to be the
effect on price of a rise (or fall) of 1% in interest rates. The Bernstein Short
Duration Plus Portfolio generally has a duration around 2.0 years and thus will
lose about 2% in principal should interest rates rise 1%. The Bernstein
Intermediate Duration Portfolio generally has a duration of about 5.0 years and
would lose about 5% should interest rates rise 1%. In contrast, long-term bonds
typically have durations of greater than 10 years and would thus lose more than
10% if interest rates were to rise 1%. The longer the bond's duration, whether
it is a Treasury, corporate or municipal bond, the greater its vulnerability to
these fluctuations.
The actual duration of each Portfolio may vary, depending on the Manager's
interest-rate forecast. When interest rates are expected to rise, the duration
is shortened. When interest rates are expected to fall, the duration is
lengthened.
The maturity composition of each Portfolio may also vary, depending upon the
shape of the yield curve and opportunities in the bond market, at times being
concentrated in the middle part of the targeted range, while at other times
consisting of a greater amount of securities with maturities that are shorter
and others that are longer than the targeted range.
Generally, the value of debt securities changes as the general level of
interest rates fluctuates. During periods of rising interest rates, the values
of fixed-income securities generally decline. Conversely, during periods of
falling interest rates, the values of these securities nearly always increase.
Generally, the longer the maturity or effective duration, the greater the
sensitivity of the price of a fixed-income security to any given change in
interest rates. The value of each Portfolio's shares fluctuates with the value
of its investments.
Individual Portfolios' Policies
The Bernstein Short Duration Plus Portfolio invests in a diversified portfolio
of securities that it believes offer the highest expected returns to investors
consistent with a prudent level of credit risk. Because the Bernstein Short
Duration Plus Portfolio is managed without regard to potential tax consequences,
it may be particularly appropriate for investors, such as pension plans and
IRAs, that are not subject to current income taxation, as well as individuals
who reside in states with low or no state taxes or who reside in high-tax states
that do not permit a pass-through to the individual shareholder of the
tax-exempt character of this income.
The Short Duration Plus Portfolio is invested in securities with longer
maturities than the assets of the type of mutual fund known as a money-market
mutual fund, and its expected return is somewhat higher. Although the actual
maturities of the securities in the Portfolio may vary widely, the effective
duration of this Portfolio--which is expected to be one to three years under
normal market conditions--is longer than the effective duration of money
markets. The average dollar-weighted maturity of the Portfolio may range from
one to 25 years while maintaining the required duration. Since the effective
duration of this Portfolio is longer, and the quality of the portfolio
securities may be lower, the risk of a decline in the market value of the
Portfolio is greater than for a money-market fund that seeks to maintain a
stable net asset value. The relatively short-term nature of the Portfolio makes
it appropriate for consideration as a temporary investment.
The Bernstein Intermediate Duration Portfolio invests in a diversified
portfolio of securities that it believes offer the highest expected return
consistent with a prudent level of risk. While the actual maturities of the
securities in the Portfolio may vary widely, the Portfolio intends to maintain
an effective duration of three to six years under normal market conditions. The
average dollar-weighted maturity of the Portfolio may range from two to 25 years
while maintaining the required duration. The Portfolio will not purchase any
security if immediately after that purchase less than 65% of the Portfolio's
total assets would consist of securities rated AA or higher by Standard & Poor's
or Aa or higher by Moody's, or of securities that are not rated but that are
determined by the Manager to be of comparable quality.
Because the Bernstein Intermediate Duration Portfolio is managed without
regard to potential tax consequences to the shareholder, it may be particularly
appropriate for investors, such as pension plans and IRAs, not subject to
current federal income taxation.
- --------------------------------------------------------------------------------
Prospectus--January 30, 1998 7
<PAGE>
INVESTMENTS
The Portfolios will primarily be invested in debt securities, including, subject
to each Portfolio's general investment policies described on pages 6-7, but not
limited to: (i) obligations issued or guaranteed as to principal and interest by
the U.S. government or the agencies or instrumentalities thereof; (ii)
obligations of Supranational Agencies; (iii) straight and convertible corporate
bonds and notes, including securities of foreign and U.S. issuers payable in
U.S. dollars and issued outside the U.S. ("Eurobonds") or securities of foreign
issuers payable in U.S. dollars issued inside the U.S. ("Yankees"); (iv) loan
participations; (v) commercial paper; (vi) obligations (including certificates
of deposit, time deposits and bankers' acceptances) of U.S. thrift institutions,
U.S. commercial banks (including foreign branches of such banks) and foreign
banks (including U.S. branches of such banks); (vii) mortgage-related
securities; (viii) asset-backed securities; (ix) Municipal Securities, or other
securities issued by state and local government agencies, the income on which
may or may not be tax-exempt; (x) guaranteed investment contracts and bank
investment contracts; (xi) variable and floating rate securities; (xii) private
placements; (xiii) preferred stock; and (xiv) foreign securities. From time to
time, additional fixed-income securities are developed. They will be considered
for purchase by the Portfolios. Of course, the extent to which each Portfolio
emphasizes each category of investment described depends upon the investment
objectives and restrictions of that Portfolio.
Obligations Of the U.S. Government and
Its Agencies and Instrumentalities
The types of U.S. government and agency securities in which the Portfolios may
invest include bills, notes and bonds, including inflation-protected securities,
issued by the U.S. Treasury, as well as securities issued by other U.S.
government agencies and instrumentalities, including bills, notes, bonds,
mortgage-backed securities and other fixed-income securities. However, certain
types of mortgage-backed securities, known as "Interest Only" (or "IO") and
"Principal Only" (or "PO") securities, which are based on government securities
but "stripped" by third parties, are not government securities.
The Portfolios may purchase securities issued or guaranteed by the Government
National Mortgage Association and other agencies and instrumentalities, the
securities or guarantees of which are backed by the full faith and credit of the
United States. The Portfolios may also purchase securities issued by the United
States Postal Service and other agencies and instrumentalities that have the
right to borrow from the United States Treasury to meet their obligations. The
Portfolios may also purchase securities issued or guaranteed by U.S. government
agencies and instrumentalities, including the Federal Farm Credit Banks, the
Federal Home Loan Bank, the Financing Corporation ("FICO"), the Tennessee Valley
Authority, the Federal National Mortgage Association ("FNMA"), the Federal Home
Loan Mortgage Corporation ("FHLMC") and the Resolution Funding Corporation
("Refcorp"), the obligations of which are backed only by the credit of the
issuing agency.
Obligations of Supranational Agencies
The Portfolios may invest in the obligations of supranational agencies.
Supranational agencies rely for funds on participating countries, often
including the United States. Some supranationals, such as the International Bank
for Reconstruction and Development (the "World Bank"), have the right to borrow
from participating countries, including the United States. Other supranationals
must request funds from participating countries; such requests may not always be
honored. Moreover, the securities of supranational agencies, depending on where
and how they are issued, may be subject to some of the risks discussed on page
11 with respect to foreign securities.
Corporate Bonds, Notes and Commercial Paper
The Portfolios may invest in straight and convertible corporate bonds, notes and
commercial paper, including inflation-protected securities. The value of the
Portfolios' investment in corporate bonds and notes will change in response to
changes in interest rates and the relative financial strength of each issuer. In
general, lower-rated bonds, notes and commercial paper tend to have higher
yields but are subject to greater market fluctuations and risk of loss than
higher-rated bonds, notes and commercial paper of similar maturity.
Loan Participations
The Portfolios may also invest in participating interests ("participations") in
obligations, including variable-rate tax-exempt obligations, mortgages and other
loans, held by financial institutions. A participation provides the Portfolio
with a specified-percentage undivided interest in the underlying obligation. The
Portfolio may have the right to demand payment of the unpaid principal balance
plus accrued interest upon a specified number of days' notice. The obligation
may also be backed by a letter of credit or guarantee of the institution. The
Portfolio participates on the same basis as the institution in the obligation,
except that the institution may retain a service fee out of the interest paid on
the obligation. Loan participations are considered illiquid securities.
Mortgage-Related Securities
Mortgage loans made on residential or commercial property by banks, savings and
loan institutions and other lenders are often assembled into pools, and
interests in the pools are sold to
- --------------------------------------------------------------------------------
8 Sanford C. Bernstein Fund, Inc.
<PAGE>
investors. Interests in such pools are referred to in this Prospectus as
"mortgage-related securities." Payments of mortgage-related securities are
backed by the property mortgaged. In addition, some mortgage-related securities
are guaranteed as to payment of principal and interest by an agency or
instrumentality of the U.S. government. In the case of mortgage-related and
asset-backed securities that are not backed by the United States government or
one of its agencies, a loss could be incurred if the collateral backing these
securities is insufficient. This may occur even though the collateral is
government-backed.
One type of mortgage-related security is a Government National Mortgage
Association ("GNMA") Certificate. GNMA Certificates are backed as to principal
and interest by the full faith and credit of the U.S. government. Another type
is a FNMA Certificate. Principal and interest payments of FNMA Certificates are
guaranteed only by FNMA itself, not by the full faith and credit of the U.S.
government. A third type of mortgage-related security in which one or more of
the Portfolios might invest is a FHLMC Participation Certificate. This type of
security is backed by FHLMC as to payment of principal and interest but, like a
FNMA security, it is not backed by the full faith and credit of the U.S.
government.
The Portfolios may also invest in both residential and commercial mortgage
pools originated by investment banking firms and builders. Rather than being
guaranteed by an agency or instrumentality of the U.S. government, these pools
are usually backed by subordinated interests or mortgage insurance. The Manager
of the Portfolios will take such insurance into account in determining whether
to invest in such pools.
The Portfolios may invest in Real Estate Mortgage Investment Conduits
("REMICs") and collateralized mortgage obligations ("CMOs"). REMICs include
governmental and/or private entities that issue a fixed pool of mortgages
secured by an interest in real property, and CMOs are debt obligations
collateralized by mortgage loans or mortgage pass-through securities.
Since the borrower is typically obligated to make monthly payments of
principal and interest, most mortgage-related securities pass these payments
through to the holder after deduction of a servicing fee. However, other payment
arrangements are possible. Payments may be made to the holder on a different
schedule than that on which payments are received from the borrower, including,
but not limited to, weekly, biweekly and semiannually.
Furthermore, the monthly principal and interest payments are not always passed
through to the holder on a pro rata basis. In the case of REMICs and CMOs, the
pool is divided into two or more tranches, and special rules for the
disbursement of principal and interest payments are established. The Portfolios
may invest in debt obligations that are REMICs or CMOs; provided that the entity
issuing the REMIC or CMO is not a registered investment company.
In another version of mortgage-related securities, all interest payments go to
one class of holders--"Interest Only" or "IO"--and all of the principal goes to
a second class of holders--"Principal Only" or "PO". The market values of both
IOs and POs are sensitive to prepayment rates; the value of POs varies directly
with prepayment rates, while the value of IOs varies inversely with prepayment
rates. If prepayment rates are high, investors may actually receive less cash
from the IO than was initially invested. IOs and POs issued by the U.S.
government or its agencies and instrumentalities that are backed by fixed-rate
mortgages may be considered liquid securities under guidelines established by
the Fund's Board of Directors; all other IOs and POs will be considered
illiquid.
Payments to the Portfolios from mortgage-related securities generally
represent both principal and interest. Although the underlying mortgage loans
are for specified periods of time, such as 15 or 30 years, borrowers can, and
often do, pay them off sooner. Thus, the Portfolios generally receive
prepayments of principal in addition to the principal that is part of the
regular monthly payments.
A borrower is more likely to prepay a mortgage that bears a relatively high
rate of interest. Thus, the value of the securities may not increase as much as
other debt securities when interest rates fall. However, when interest rates
rise, the rate of prepayments may slow and the value of the mortgage-related and
asset-backed securities may decrease like other debt securities. The Portfolios
normally do not distribute principal payments (whether regular or prepaid) to
their shareholders. Rather, they invest such payments in additional securities,
which may not be mortgage-related. Interest received by the Portfolios is,
however, reflected in dividends to shareholders.
A Portfolio's investments in mortgage derivative securities also subjects the
Portfolio to extension risk. Extension risk is the possibility that rising
interest rates may cause prepayments to occur at a slower-than-expected rate.
This particular risk may effectively change a security which was considered
short- or intermediate-term at the time of purchase into a long-term security.
Long-term securities generally fluctuate more widely in response to changes in
interest rates than short- or intermediate-term securities.
Asset-Backed Securities
Asset-backed securities are debt instruments that are backed by pools of loans,
leases, accounts receivable or other debt obligations of consumers or commercial
entities. Examples of
- --------------------------------------------------------------------------------
Prospectus--January 30, 1998 9
<PAGE>
collateral include consumer loans to purchase automobiles, credit card balances
due, and loans to purchase manufactured housing. The cash flow that is generated
by payments on these instruments is used to pay interest and principal to the
asset-backed noteholders, as well as any fees for the servicing and
administration of the assets, and in some circumstances, may be used to purchase
additional collateral. Asset-backed securities may also be credit enhanced by
one or more methods. These include overcollateralization, subordination, reserve
accounts, issuer guarantees and insurance provided by third-party bond
insurance companies. Issuer guarantees and bond insurance may cover part or all
of the principal and/or interest owed to noteholders.
In the case of securities backed by automobile receivables, the issuers of
such securities typically file financing statements, and the servicers of such
obligations take custody of such obligations. Therefore, if the servicers, in
contravention of their duty, were to sell such obligations, the third-party
purchasers would possibly acquire an interest superior to the holder of the
securitized assets. Also, most states require that a security interest in a
vehicle be noted on the certificate of title, and the certificate of title may
not be amended to reflect the assignment of the seller's security interest.
Therefore, the recovery of the collateral in some cases may not be available to
support payments on the securities. In the case of credit-card receivables, both
federal and state consumer protection laws may allow setoffs against certain
amounts owed against balances of the credit cards.
Municipal Securities
Municipal Securities are debt obligations issued by or on behalf of states,
territories or possessions of the United States or their political subdivisions,
agencies or instrumentalities, the District of Columbia or Puerto Rico, where
the interest from such securities is, according to information reasonably
available to the Manager, in the opinion of bond counsel at the time of
issuance, exempt from federal income tax. The Fund may also invest, from time to
time, in securities issued by or on behalf of states, territories or possessions
of the United States or their political subdivisions, agencies or
instrumentalities, the District of Columbia or Puerto Rico, where the interest
from such securities is not exempt from federal income tax. Municipal Securities
include "private activity bonds," such as industrial revenue bonds.
The two principal classifications of Municipal Securities are general
obligation and revenue or special obligation securities. General obligation
securities are secured by the issuer's pledge of its faith, credit and taxing
power for the payment of principal and interest. The term "issuer" means the
agency, authority, instrumentality or other political subdivision, the assets
and revenues of which are available for the payment of the principal of and
interest on the securities. Revenue or special obligation securities are payable
only from the revenue derived from a particular facility or class of facilities
or, in some cases, from the proceeds of a special tax or other specific revenue
source and generally are not payable from the unrestricted revenues of the
issuer. Some Municipal Securities are municipal lease obligations. Lease
obligations usually do not constitute general obligations of the municipality
for which the municipality's taxing power is pledged, although the lease
obligation is ordinarily backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation. However,
certain lease obligations contain non-appropriation clauses that provide that
the municipality has no obligation to make lease payments in future years unless
money is appropriated for such purpose on a yearly basis. Pursuant to procedures
established by the Fund Board, the Manager will be responsible for determining
the credit quality of unrated municipal lease obligations on an ongoing basis,
including an assessment of the likelihood that the lease will not be canceled.
Some municipal lease obligations may be illiquid. Municipal Securities include
certain asset-backed certificates representing interests in trusts that include
pools of installment payment agreements, leases or other debt obligations of
state or local governmental entities. Some Municipal Securities are covered by
insurance or other credit enhancements procured by the issuer or underwriter
guaranteeing timely payment of principal and interest.
Guaranteed Investment Contracts
And Bank Investment Contracts
The Portfolios may purchase guaranteed investment contracts ("GICs") and bank
investment contracts ("BICs"). A GIC is a contract issued by an insurance
company that guarantees payment of interest and repayment of principal, and a
BIC is a contract issued by a bank that guarantees payment of interest and
repayment of principal. GICs and BICs are considered illiquid securities.
Variable and Floating Rate Securities
And Inflation-Protected Securities
Each Portfolio may purchase variable and floating rate securities. The terms of
variable and floating rate instruments provide for the interest rate to be
adjusted according to a formula on certain predetermined dates.
Variable and floating rate instruments that are repayable on demand at a
future date are deemed to have a maturity equal to the time remaining until the
principal will be received on the assumption that the demand feature is
exercised on the earliest possible date. For the purposes of evaluating the
interest-rate sensitivity of the Portfolio, variable and floating rate
instruments are deemed to have a maturity equal to the period remaining until
the next interest-rate readjustment. For the purposes of evaluating the credit
risks of variable and floating rate instruments, these instruments are deemed to
have a
- --------------------------------------------------------------------------------
10 Sanford C. Bernstein Fund, Inc.
<PAGE>
maturity equal to the time remaining until the earliest date the Portfolio is
entitled to demand repayment of principal.
The terms of inflation-protected securities provide for the coupon and/or
maturity value to be adjusted based on changes in inflation. Decreases in the
inflation rate or in investors' expectations about inflation could cause these
securities to underperform non-inflation-adjusted securities on a total-return
basis. In addition, these securities may have limited liquidity in the secondary
market.
Private Placements
The Portfolios may invest in privately placed securities that, in the absence of
an exemption, would be required to be registered under the Securities Act of
1933 so as to permit their sale to the public ("restricted securities").
Restricted securities may be sold only in privately negotiated transactions.
These securities, excluding restricted securities eligible for resale pursuant
to Rule 144A under the Securities Act of 1933 that have been determined to be
liquid in the trading market for the security under procedures adopted by the
Board of Directors of the Fund, are considered to be illiquid. The Board is
responsible for monitoring the implementation of the procedures on the liquidity
of Rule 144A securities in the Portfolio.
Illiquid Securities
Within the limits set forth in "Investment Objectives and Policies" (pages 6-7),
the Portfolios may invest in illiquid securities--securities that are not
readily marketable. The Board of Directors of the Fund has determined that any
or all of the following factors may be relevant to determining the liquidity of
a security: the amount of the issue outstanding; the complexity of the issue;
the bid/ask spread; the number and identity of market makers or dealers in or
other buyers of the security; the existence of put features and other rights;
the term of the security; the visibility of the issuer in the marketplace; the
method of soliciting offers and the mechanics of completing transfers; the
average trading volume for the issue; and, with respect to foreign securities,
the amount of such securities that can be owned by investors who are not
residents of the country where such securities were issued and the amount of
such securities owned by the controlling interests. The factors to be considered
in the case of the analysis of unrated municipal lease obligations will include
an analysis of credit factors. Purchased dealer options, private placements
(excluding securities eligible for resale under Rule 144A that have been
determined to be liquid as set forth in the preceding section), guaranteed
investment contracts, bank investment contracts, repurchase agreements for
periods longer than seven days, time deposits maturing in more than seven days
and loan participations are considered to be illiquid securities for the
purposes of this restriction. In addition, the staff of the Securities and
Exchange Commission currently takes the position that all options traded in the
over-the-counter market are illiquid; if the staff amends its position, the Fund
may, in accordance with the amended position, consider such options to be
liquid.
Preferred Stock
The Portfolios may invest in preferred stock. Preferred stock is subordinated to
any debt the issuer has outstanding. Accordingly, preferred stock dividends are
not paid until all debt obligations are first met. Preferred stock may be more
subject to fluctuations in market value, due to changes in market participants'
perceptions of the issuer's ability to continue to pay dividends, than debt of
the same issuer.
Foreign Securities
While the Portfolios generally invest in domestic securities, each may also
invest up to 20% of its total assets in foreign securities of the same types and
quality as the domestic securities in which it invests when the anticipated
performance of the foreign securities is believed by the advisor to offer more
potential than domestic alternatives in keeping with the investment objectives
of the Portfolios. The Portfolios may invest in foreign fixed-income securities
that may involve risks in addition to those normally associated with domestic
securities. These risks include currency risks and other risks described below.
Market risk: The securities markets in many emerging-market countries are
substantially smaller, less developed, less liquid and more volatile than the
securities markets of developed countries. In certain emerging-market countries,
volatility may be heightened by actions of a few major investors. For example,
substantial increases or decreases in cash flows of mutual funds investing in
these markets could significantly affect local stock prices and, therefore,
share prices of the Portfolios. Moreover, some emerging-market securities may be
listed on foreign exchanges that are open on days (such as Saturdays) when the
Portfolios do not calculate a net asset value. As a result, the Portfolios' net
asset value may be significantly affected by trading on days when shareholders
cannot make transactions. In addition, trading in emerging markets can be more
difficult.
Foreign currency risk: Returns on foreign securities are influenced by
currency risk as well as equity risk. Foreign securities are denominated in
foreign currencies, which may change in value in relation to the U.S. dollar,
possibly for protracted periods of time. When a foreign currency rises against
the U.S. dollar, the returns on foreign securities for a U.S. investor will also
rise; when a foreign currency declines in value in relation to the U.S. dollar,
the returns on foreign securities for a U.S. investor will also fall. Many
emerging-market countries have experienced substantial, and in some
- --------------------------------------------------------------------------------
Prospectus--January 30, 1998 11
<PAGE>
cases extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had, and may continue to have, negative
effects on the economies and securities markets of certain emerging-market
countries. In addition, it is possible that foreign governments will impose
currency exchange control regulations or other restrictions that would prevent
cash from being brought back to the U.S. Emerging-market governments may also
intervene in currency markets or interpose registration/approval processes,
which could adversely affect a Portfolio.
Other risks: Other risks and considerations of international investing include
the availability of less public information with respect to issuers of
securities; less governmental supervision of brokers and issuers of securities;
lack of uniform accounting, auditing and financial reporting standards; a
generally lower degree of market volume and liquidity than that available in
U.S. markets, which may result in greater price volatility; settlement practices
that may include delays and otherwise differ from those in U.S. markets; the
possibility of expropriation or confiscatory taxation; the imposition of foreign
taxes; and possible political instability in some countries, which could affect
U.S. investment in these countries. Investments in foreign securities will also
result in generally higher expenses due to the costs of currency exchange;
payment of fixed brokerage commissions in certain foreign markets, which
generally are higher than commissions on U.S. exchanges; and the expense of
maintaining securities with foreign custodians.
In addition to the foregoing, other risks and considerations of investing in
companies in emerging markets include:
Social, political and economic instability: Investments in emerging-market
countries involve exposure to a greater degree of risk due to increased
political and economic instability. Instability may result from, among other
factors: (i) authoritarian governments or military involvement in political and
economic decision-making, including changes in government through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic and social conditions; (iii) internal insurgencies;
(iv) hostile relations with neighboring countries; (v) ethnic, religious and
racial disaffection; and (vi) changes in trading status.
Certain emerging-market countries have histories of instability and upheaval
with respect to their internal politics that could cause their governments to
act in a detrimental or hostile manner toward private enterprise or foreign
investment. Such actions--for example, nationalizing a company or industry,
expropriating assets or imposing punitive taxes--could have a severe effect on
security prices and impair a Portfolio's ability to repatriate capital or
income. The possibility exists that economic development in certain
emerging-market countries may be suddenly slowed or reversed by unanticipated
political or social events in those countries, and that economic, political and
social instability could disrupt the financial markets in which a Portfolio
invests and adversely affect the value of a Portfolio's assets.
Additional risks: Additional risks and considerations of investing in
emerging-market countries include overburdened infrastructure, obsolete
financial systems and security settlement and clearance procedures that may
result in delays and which may not fully protect a Portfolio against loss or
theft of its assets; national policies which may restrict a Portfolio's
investment opportunities, including restrictions on investment in issuers or
industries deemed sensitive to national interests; and less developed legal
structures governing private or foreign investment or allowing for judicial
redress for injury to private property.
Warrants
The Portfolios may have investments in warrants. Warrants are securities that
give the Portfolio the right to purchase securities from the issuer at a
specific price (the strike price) for a limited period of time. The strike price
of warrants sometimes is much lower than the current market price of the
underlying securities, yet they are subject to similar price fluctuations. As a
result, warrants may be more volatile investments than the underlying securities
and may offer greater potential for capital appreciation as well as capital
loss. Warrants do not entitle a holder to dividends, interest payments or voting
rights with respect to the underlying securities and do not represent any rights
in the assets of the issuing company. Also, the value of the warrant does not
necessarily change with the value of the underlying securities, and a warrant
ceases to have value if it is not exercised prior to the expiration date. These
factors can make warrants more speculative than other types of investments.
SPECIAL INVESTMENT TECHNIQUES
In seeking to achieve its investment objectives, each Portfolio may employ the
following special investment techniques, among others. These techniques may be
used to hedge various market risks (such as interest rates, currency exchange
rates and broad or security-specific changes in the prices of equity or
fixed-income securities), to manage the effective maturity or duration of
fixed-income securities, to exploit mispricings in the securities markets, or as
an alternative to activities in the underlying cash markets. They may include
the use of exchange-traded derivatives such as futures and options--financial
products which are standardized by size, maturity, and delivery, and are sold on
organized exchanges. Furthermore, over-the-counter derivatives such as swaps or
- --------------------------------------------------------------------------------
12 Sanford C. Bernstein Fund, Inc.
<PAGE>
other hybrid instruments, which are individually tailored to meet the needs of a
specific client, may also be used.
Foreign Currency Transactions
A Portfolio may enter into foreign currency exchange contracts on a spot (i.e.,
cash) basis at the rate then prevailing in the currency exchange market or
through entering into forward contracts, which obligate the contracting parties
to purchase or sell a specific currency at a specified future date at a
specified price. The Portfolios will generally not enter into a forward contract
with a term greater than one year.
The Portfolios will generally enter into forward contracts under two
circumstances. First, a Portfolio may enter into a forward contract when it
enters into a contract for the purchase or sale of a security denominated in a
foreign currency in order to lock in the price in dollars of the security.
Second, when the Manager believes that the currency of a particular foreign
country may experience an adverse movement against another currency, a Portfolio
may enter into a forward contract to sell an amount of the foreign currency (or
another currency that acts as a proxy for that currency) approximating the value
of some or all of a Portfolio's securities denominated in such foreign currency.
Although forward contracts will be used primarily to protect the Portfolios from
adverse currency movements, they involve the risk that anticipated currency
movements will not be accurately predicted and the Portfolios' total return
could be adversely affected as a result.
Futures Contracts and Options
The Portfolios may enter into financial futures contracts, including bond, bond
index, Eurodeposit, stock index or currency futures contracts and options
thereon. In addition, the Portfolios may each purchase and write (i.e., sell)
put and call options on securities, on securities indexes based on securities in
which the Portfolio may invest, on foreign currencies traded on U.S. or foreign
exchanges or over-the-counter and on futures contracts. The securities for
which a Portfolio writes put or call options will be Portfolio securities, and
the Portfolios will write only covered options.
The Portfolios may also enter into options on the yield "spread" or yield
differential between two securities. In contrast to other types of options, this
option is based on the difference between the yields of designated securities,
currencies, futures or other instruments. In addition, the Portfolios may write
covered straddles. A straddle is a combination of a call and a put written on
the same underlying security.
In accordance with the current rules and regulations of the Commodity Futures
Trading Commission (the "CFTC"), the aggregate initial margins and premiums
required from the Portfolio in connection with commodity futures and options
positions used for purposes other than "bona fide hedging" will not exceed 5% of
the liquidation value of the Portfolio; provided, however, in the case of an
option that is in the money at the time of the purchase, that the in-the-money
portion of the premium is excluded in calculating the 5% limitation. No
Portfolio will write any option if, immediately thereafter, the aggregate value
of the Portfolio's securities subject to outstanding options would exceed 25% of
its net assets.
Futures contracts and options can be highly volatile and could reduce a
Portfolio's total returns, and attempts to use such investments for hedging or
other purposes may not be successful. Successful futures and options strategies
require the ability to predict future movements in securities prices, interest
rates and other economic factors. Each Portfolio's potential losses from the use
of futures extend beyond its initial investment in such contracts and are
potentially unlimited. Also, losses from futures and options could be
significant if a Portfolio is unable to close out its position due to
disruptions in the market or lack of liquidity.
Swaps and Hybrid Investments
As part of its investment program and to maintain greater flexibility, each
Portfolio may invest in hybrid instruments (a type of potentially high-risk
derivative) that have the characteristics of futures, options, currencies and
securities. Such instruments may take a variety of forms, such as a security
with the principal amount, redemption or conversion terms related to the market
price of some commodity, currency or securities index; or debt instruments with
interest or principal payments determined by reference to the value of
commodities, currencies, fixed-income instruments, financial indexes or other
financial or economic indicators, data or events; or the differences between the
value of commodities, currencies, fixed-income instruments, financial indexes or
other financial or economic indicators, data or events; or the rate of change of
the value of commodities, currencies, fixed-income instruments, financial
indexes, or other financial or economic indicators, data or events. Hybrids can
have volatile prices and limited liquidity and their use by a Portfolio may not
be successful. The risk of these investments can be substantial; possibly all of
the principal is at risk. No Portfolio will invest more than 20% of its total
assets in these investments.
Swap agreements are contracts between parties in which one party agrees to
make payments to the other party based on the change in the market value of a
specified index or asset. In return, the other party agrees to make payments to
the first party based on the return of a different specified index or asset.
Swap agreements entail the risk that a party will default on its payment
obligations thereunder. Swap agreements also bear the risk that the Portfolio
will not be able to meet its obligation to the counterparty.
- --------------------------------------------------------------------------------
Prospectus--January 30, 1998 13
<PAGE>
A Portfolio may enter into interest-rate or foreign currency swaps and
purchase and sell interest-rate caps and floors. No Portfolio will use swaps to
leverage the Portfolio. A Portfolio will maintain in a segregated account with
the Fund's custodian an amount having an aggregate net asset value at least
equal to the net amount of the excess, if any, of the Portfolio's obligations
over its entitlements with respect to each swap. The Portfolios expect to enter
into these transactions to exploit mispricings in the bond or currency markets
or to preserve a return or spread on a particular investment or portion of its
portfolio, as a duration management technique, or to protect against any
increase in the price of securities that the Portfolios anticipate purchasing at
a later date.
Interest-rate swaps involve the exchange by a Portfolio with another party of
their respective commitments to pay or receive interest, e.g., an exchange of
fixed-rate payments for floating-rate payments. Such an exchange would allow the
Portfolio to alter its exposure to interest-rate market risk without changing
the composition of the Portfolio. The purchase of an interest-rate floor or cap
entitles the purchaser to receive payments of interest on a notional principal
amount from the seller, to the extent that the specified index falls below
(floor) or exceeds (cap) a predetermined interest rate. Currency swaps are
similar to interest-rate swaps, except that they involve currencies instead of
interest rates. The Portfolios will enter interest-rate swaps only on a net
basis (i.e., the two payment streams are netted out) with the Portfolios
receiving or paying, as the case may be, only the net amount of the two
payments.
Repurchase Agreements
In a repurchase transaction, a Portfolio purchases a security from a bank or a
securities dealer and simultaneously agrees to resell that security to the bank
or broker-dealer at an agreed-upon price on an agreed-upon date. The resale
price reflects the purchase price and an agreed-upon rate of interest. In
effect, the obligation of the seller to repay the agreed-upon price is secured
by the value of the underlying security, which must at least equal the
repurchase price. Repurchase agreements could involve certain risks in the event
of default or insolvency of the other party, including possible delays or
restrictions on the Portfolio's ability to dispose of the underlying securities.
The Board of Directors has established guidelines to be used by the Manager in
repurchase transactions and regularly monitors the Portfolios' use of repurchase
agreements.
Reverse Repurchase Agreements
The Portfolios may enter into reverse repurchase agreements with banks and
broker-dealers from time to time. In a reverse repurchase transaction, it is the
Portfolio, rather than the other party to the transaction, that sells the
securities and simultaneously agrees to repurchase them at a price reflecting an
agreed-upon rate of interest. A Portfolio's obligations under reverse repurchase
agreements will not exceed one-third of the Portfolio's total assets, less
liabilities other than obligations under such reverse repurchase agreements.
During the time a reverse repurchase agreement is outstanding, each Portfolio
that has entered into such an agreement maintains liquid assets in a segregated
account with its Custodian having a value at least equal to the repurchase price
under the reverse repurchase agreement. The use of reverse repurchase agreements
is included in the Portfolios' borrowing policy and is subject to the limit of
Section 18(f)(1) of the 1940 Act. Reverse repurchase agreements may create
leverage, increasing a Portfolio's opportunity for gain and risk of loss for a
given fluctuation in the value of the Portfolio's assets. There may also be
risks of delay in recovery and, in some cases, even loss of rights in the
underlying securities, should the opposite party fail financially.
Lending Portfolio Securities
Each Portfolio may, from time to time, lend portfolio securities having a market
value of no more than 30% of its total assets to qualified broker-dealers, banks
or other financial institutions. By lending its portfolio securities, a
Portfolio attempts to increase its income through the receipt of interest on the
loan. Any such loan of portfolio securities will be marked to the market daily
and secured by collateral consisting of cash or U.S. government securities in an
amount at least equal to the value of the securities loaned. The Manager
believes that the risk of loss on such a transaction is slight because, if the
borrower were to default, the collateral would be available to satisfy the
obligation. However, as with other extensions of secured credit, loans of
portfolio securities involve some risk of loss of rights in the collateral
should the borrower fail financially. The Manager carefully evaluates the
creditworthiness of any potential borrower of securities. A Portfolio may not
have the right to vote securities on loan, but it will call a loaned security in
anticipation of an important vote.
When-Issued and Delayed-Delivery Transactions
The Portfolios may purchase securities on a "when-issued" or "delayed-delivery"
basis. In a when-issued or delayed-delivery transaction, a Portfolio purchases a
security with delivery to take place at a later date, usually within three
months from the date the transaction is entered into. The market value of the
security at delivery may be more or less than the purchase price. The Fund's
Custodian is to maintain liquid assets in segregated accounts having a value
equal to or greater than each Portfolio's purchase commitments; likewise, the
Custodian is to segregate securities sold by each Portfolio on a
delayed-delivery basis.
Further information about the Portfolios' use of Special Investment Techniques
and their associated risks is contained in the SAI.
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14 Sanford C. Bernstein Fund, Inc.
<PAGE>
Future Developments
The Portfolios expect to discover additional opportunities in the areas of
options, futures contracts, options on futures contracts and other derivative
instruments. These opportunities will become available as the Manager develops
new strategies, as regulatory authorities broaden the range of transactions that
are permitted and as new options and futures are developed. To the extent such
opportunities are both consistent with the Portfolio's investment objectives and
legally permissible for that Portfolio, the Manager may utilize the strategies
that do not conflict with the Portfolio's investment restrictions. These
opportunities may involve risks that differ from those described above.
MANAGEMENT OF THE PORTFOLIOS
DIRECTORS AND OFFICERS
The Board of Directors of the Fund is responsible for the overall supervision of
the management of the Fund. The directors also perform various duties imposed on
directors of investment companies by the 1940 Act and by the State of Maryland.
Officers of the Fund conduct and supervise the daily operations of the
Portfolios.
The following table lists the directors and executive officers of the Fund,
their business addresses and their principal occupations during the past five
years.
<TABLE>
<CAPTION>
POSITION(S) WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE FUND DURING PAST FIVE YEARS
- ---------------- ----------------- ----------------------
<S> <C> <C>
Roger Hertog* President, President, Chief Operating Officer
767 Fifth Avenue Treasurer, and Director--Bernstein
New York, NY 10153 Director
Andrew S. Adelson* Senior Vice President, Senior Vice President, Chief Investment Officer--International
767 Fifth Avenue Director and Director--Bernstein
New York, NY 10153
Arthur Aeder Director 1987-Present: Consultant; Formerly Senior Partner of
20 West 55th Street Oppenheim, Appel, Dixon & Co. (subsequently Spicer
New York, NY 10019 & Oppenheim) Certified Public Accountants, and Chairman
of Spicer & Oppenheim International
Peter L. Bernstein** Director President and Chief Executive Officer of Peter L. Bernstein,
575 Madison Avenue Inc., Economic Consultants
Suite 1006
New York, NY 10022
William Kristol Director 6/95-Present: Editor and Publisher, The Weekly Standard
1150 17th Street, N.W. 11/93-5/95: Chairman, Project for the Republican Future
5th Floor 1/93-11/93: Director, The Bradley Project on the 90s
Washington, D.C. 20036
Theodore Levitt Director Professor Emeritus of Business Administration,
Harvard Business School Harvard University
Cumnock 300 1985-89: Editor, Harvard Business Review
Boston, MA 02163
Francis H. Trainer, Jr. Senior Vice President Senior Vice President, Director--Fixed-Income Investments
767 Fifth Avenue and Director--Bernstein
New York, NY 10153
Jean Margo Reid Secretary 1997-Present: Vice President and General Counsel--Bernstein
767 Fifth Avenue Previously: Vice President and Associate General
New York, NY 10153 Counsel--Bernstein
</TABLE>
*An "interested person" of the Fund, as defined in the 1940 Act.
**Not related to Zalman C. Bernstein, Chairman of the Executive Committee--
Bernstein.
- --------------------------------------------------------------------------------
Prospectus--January 30, 1998 15
<PAGE>
THE MANAGER
- -------------------------------------------------------------------------------
Bernstein is a closely held corporation, organized under the laws of the State
of New York on January 20, 1969, which succeeded to the business of Sanford C.
Bernstein & Co., a partnership, on February 1, 1969. Bernstein is a registered
investment advisor that manages some $69.2 billion, as of September 30, 1997,
for individuals, endowments, trusts and estates, charitable foundations,
partnerships, corporations, the Portfolios of the Fund and tax-exempt funds such
as pension and profit-sharing plans. Of that amount, some $18.1 billion was
invested in fixed-income securities and $51.1 billion in equities as of
September 30, 1997. Pursuant to contracts with the Fund, Bernstein provides the
following types of services: Investment Management, Shareholder Servicing and
Administration and Distribution.
Investment Management
Bernstein has entered into Investment Management Agreements (the "Management
Agreements") with the Fund, on behalf of the Portfolios, under which the
Manager, subject to the supervision of the Board of Directors and in conformity
with the stated policies of the Portfolios, manages each Portfolio's assets.
Investment Policy Groups created by the Manager and comprised of the Manager's
employees make all investment decisions for the Portfolios, and no one person is
primarily responsible for making recommendations to these groups.
Each Portfolio pays the Manager for the services performed on behalf of that
Portfolio, as well as for the services performed on behalf of the Fund as a
whole. The fee paid by each Portfolio is at an annual rate of 0.50% of each such
Portfolio's average daily net assets up to and including $1 billion and at an
annual rate of 0.45% of each such Portfolio's average daily net assets in excess
of $1 billion. The fee is computed daily and payable monthly.
Shareholder Servicing and Administration
Bernstein has also entered into Shareholder Servicing and Administrative
Agreements with the Fund on behalf of the Portfolios. Pursuant to these
Agreements, Bernstein pays all expenses incurred by it in connection with
administering the ordinary course of the Fund's and each Portfolio's business.
Bernstein also pays the costs of office facilities and of clerical and
administrative services not provided by State Street Bank and Trust Company, the
Fund's Custodian and Transfer Agent. Bernstein serves as Shareholder Servicing
Agent and in such capacity may enter into agreements with other organizations
whereby some or all of Bernstein's duties in this regard may be delegated. The
shareholder servicing that will be provided by Bernstein or other organizations
might include, among other things, proxy solicitations and providing information
to shareholders concerning their mutual fund investments, systematic withdrawal
plans, dividend payments, reinvestments and other matters. The fee paid by each
Portfolio for these services is at an annual rate of 0.10% of that Portfolio's
average daily net assets.
Each Portfolio is responsible for the payment of all of its expenses other
than those expressly stated to be payable by Bernstein under the Management
Agreements and the Shareholder Servicing and Administrative Agreements.
Distribution
Bernstein acts as Distributor of each Portfolio's shares pursuant to
Distribution Agreements with the Fund.
PARTICIPATING IN YOUR PLAN
- -------------------------------------------------------------------------------
The Fund is available as an investment option in your retirement or savings
plan. The administrator of your plan or your employee benefits office can
provide you with detailed information on how to participate in your plan and how
to elect the Fund as an investment option.
You may be permitted to elect different investment options, alter the amounts
contributed to your plan or change how contributions are allocated among your
investment options in accordance with your plan's specific provisions. See your
plan administrator or employee benefits office for more details.
Contributions, exchanges or distributions of the Fund's shares are effective
when received in "good order" by Bernstein or its agents. "Good order" means
that complete information on the purchase, exchange or redemption and the
appropriate monies have been received by Bernstein or its agents.
Your plan may allow you to exchange monies from one investment option to
another. Check with your plan administrator for details on the rules governing
exchanges in your plan. Certain investment options may be subject to unique
restrictions.
Before making an exchange, you should consider the following:
o If you are making an exchange to another Bernstein Fund option, please read
the Fund's prospectus. Write to the address or call the number which
appears on the cover of this Prospectus for a copy.
o Exchanges are accepted by Bernstein only as permitted by your plan. Your
plan administrator can explain how frequently exchanges are allowed.
- --------------------------------------------------------------------------------
16 Sanford C. Bernstein Fund, Inc.
<PAGE>
If you have questions about your account, contact your plan administrator or
the organization that provides record-keeping services for your plan.
PORTFOLIO TRANSACTIONS
AND BROKERAGE
- -------------------------------------------------------------------------------
The Manager is responsible for decisions to buy and sell securities for each of
the Portfolios and for broker-dealer selection. In general, the securities in
which the Portfolios invest are traded on a "net" rather than a
transaction-charge basis, with dealers acting as principal for their own
accounts without a stated transaction charge. Accordingly, the price of the
security may reflect an increase or decrease from the price paid by the dealer
together with a spread between the bid and asked prices, which provides the
opportunity for a profit or loss to the dealer. Portfolio transactions that are
effected on a transaction-charge basis may be effected through Bernstein, acting
as agent and not as principal, provided, among other things, that any
transaction charges, fees or other remuneration received by Bernstein are
reasonable and fair compared to the transaction charges, fees or other
remuneration paid to other brokers in connection with comparable transactions
involving similar securities during a comparable period of time. In some cases,
a Portfolio might engage in purchase or sale transactions with another Portfolio
of the Fund, subject to conditions specified under the 1940 Act. There might
also be occasions when a Portfolio engages in purchase or sale transactions with
another mutual fund.
Although the objectives of the other accounts to which the Manager provides
investment advice may differ from those of each of the Portfolios, it is
possible that, at times, identical securities are acceptable for one or more of
the Portfolios and one or more of such accounts. If the purchase or sale of
securities is consistent with the investment policies of one or more of the
Portfolios and one or more of the accounts of the Manager is considered at or
about the same time, transactions in such securities will be allocated among the
accounts and the Portfolios in a manner deemed equitable by the Manager. Where
securities are allocated among Fund Portfolios and private accounts, the Manager
may use the average price at which the securities were purchased or sold.
Neither Portfolio anticipates a portfolio turnover rate in excess of 300%. A
turnover rate of 100% would occur, for example, if all the securities held by a
Portfolio were replaced in a period of one year. A portfolio's turnover rate is
the percentage computed by dividing the lesser of portfolio purchases or sales
(excluding all securities whose maturities at acquisition were one year or less)
by the average value of the portfolio. High portfolio turnover involves
correspondingly greater transaction costs, which are borne directly by the
Portfolio, and may also result in the realization of substantial net short-term
capital gains, taxable at ordinary income tax rates to non-tax-exempt investors.
NET ASSET VALUE
- -------------------------------------------------------------------------------
The net asset value of each Portfolio is computed as of the close of regular
trading of the New York Stock Exchange (the "Exchange") (normally 4:00 p.m. New
York time). Purchase and redemption orders are accepted by the Fund on each
business day, with the exception of Exchange and national bank holidays, as
determined from time to time. Currently, these holidays are: New Year's Day,
Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and
Christmas Day. The net asset value per share of each Portfolio is the net worth
of the Portfolio (assets, including securities at market value, minus
liabilities) divided by the number of shares outstanding. The value of each
security for which readily available market quotations exist is based on the
most recent sale, the most recent available bid price or the mean between the
most recent available bid and asked prices in the broadest and most
representative market for that security as determined by the Manager. Debt
instruments with remaining maturities of 60 days or less may be valued at
amortized cost. If quotations are not readily available, or if the values have
been materially affected by events occurring after the closing of a foreign
market, securities or other assets may be valued by appraisal at their fair
value as determined in good faith under procedures established by and under the
general supervision of the Board of Directors. The Fund may use an independent
pricing service to value the Portfolios' assets at such times and to such extent
as the Manager deems appropriate. All assets and liabilities initially expressed
in foreign currencies will be translated into U.S. dollars. Dividends on foreign
securities are accrued and reflected in net asset value either on the date the
security goes ex-dividend or the date the Manager becomes aware of them,
whichever is later; corporate actions of foreign issuers are reflected in net
asset value on the date on which they become effective, or the date the Manager
becomes aware of them, whichever is later.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- -------------------------------------------------------------------------------
The Portfolios intend to declare dividends daily and to pay them monthly.
Capital-gains distributions are made at least annually, generally in December.
Each Portfolio's distributions and dividends are paid in additional shares of
that Portfolio based on the Portfolio's net asset value at the close of business
on the record date.
- --------------------------------------------------------------------------------
Prospectus--January 30, 1998 17
<PAGE>
Each Portfolio intends to continue to qualify for taxation as a "regulated
investment company" under the Internal Revenue Code so that it will not be
subject to federal income tax to the extent that its income is distributed to
shareholders.
If you utilize the Fund as an investment option in an employer-sponsored
retirement or savings plan, dividend and capital gains distributions from the
Fund will generally not be subject to current taxation, but will accumulate on a
tax-deferred basis. In general, employer-sponsored retirement and savings plans
are governed by a complex set of tax rules. If you participate in such a plan,
consult your plan administrator, your plan's Summary Plan Description or a
professional tax advisor regarding the tax consequences of your participation in
the plan and of any plan contributions or withdrawals.
Dividends and interest received by the Portfolios may be subject to foreign
tax and withholding. However, tax conventions between certain countries and the
United States may reduce or eliminate such taxes. Shareholders may be entitled
to claim foreign tax credits or deductions on their own federal income tax
returns with respect to such taxes paid by a Portfolio.
DESCRIPTION OF SHARES
- -------------------------------------------------------------------------------
The shares of each Portfolio have no preemptive or conversion rights. Shares are
fully paid and nonassessable and redeemable at the option of the shareholder and
have a par value of $0.001. Shares are also redeemable at the option of the
Fund, if the net asset value of a shareholder's account is less than $1,000.
Pursuant to the Articles of Incorporation, the Board of Directors may also
authorize the creation of additional series of shares (the proceeds of which may
be invested in separate, independently managed portfolios) with such
preferences, privileges, limitations and voting and dividend rights as the Board
may determine.
Shareholders have certain rights, including the right to call a meeting of
shareholders for the purpose of voting on the removal of one or more Directors.
Such removal can be effected upon the action of two-thirds of the outstanding
shares of all of the Portfolios of the Fund, voting as a single class. The
shareholders of each Portfolio are entitled to a full vote for each full share
held and to the appropriate fractional vote for each fractional share. A matter
that affects a Portfolio of the Fund will not be deemed to have been effectively
acted upon unless approved by the holders of a majority of the outstanding
voting securities of that Portfolio. The voting rights of the shareholders are
not cumulative. The Directors have been elected at the initial meeting of the
public shareholders of the Fund, except for Mr. Kristol and Mr. Adelson, who
were elected by the other Directors. In order to avoid unnecessary expenses, the
Fund does not intend to hold annual meetings of shareholders.
PERFORMANCE
- -------------------------------------------------------------------------------
Each Portfolio may, from time to time, advertise yield, average annual total
return and unannualized average total return. Yield is a measure of a
Portfolio's income; it does not measure changes in the net asset value of the
Portfolio's shares. Average annual total return reflects all elements of return,
including income, expenses and changes in the value of the principal. Yield and
average annual total return are based on historical results and are not intended
to indicate future performance.
The yield of a Portfolio is calculated by dividing the Portfolio's net
investment income per share during a specified month by the maximum offering
price per share on the last day of the month and annualizing it. Yield is
calculated in accordance with accounting methods prescribed by the Commission.
Because the yield accounting methods differ from the methods used for tax and
financial accounting purposes, a Portfolio's yield may not be comparable to the
dividends paid to a shareholder or the net investment income reported in the
Portfolio's financial statements. The calculation of yield takes into account
all fees and expenses. The average annual total return of a Portfolio is
computed by finding the average annual compounded rate of return since the
commencement of the Portfolio's operations based on an initial investment of
$1,000 as compared to the ending redeemable value, assuming that all dividends
and distributions were reinvested. The calculation of average annual total
return takes into account all fees and expenses. The unannualized average total
return of a Portfolio for a period is calculated by dividing the value of an
investment at the end of the period, assuming all dividends and distributions
were reinvested, by the value of the investment at the beginning of the period.
The Fund may use an independent service to calculate yield and/or performance
data of any or all Portfolios at such times and to such extent as the Manager
deems appropriate. For further information and a description of the method by
which yield, average annual total return and unannualized average total return
are calculated, see "Performance" in the SAI.
CUSTODIAN AND TRANSFER AGENT
- -------------------------------------------------------------------------------
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, serves as Custodian for the Fund and in that capacity holds the cash and
other assets for each Portfolio in the Fund and maintains certain financial and
accounting books and records pursuant to an agreement
- --------------------------------------------------------------------------------
18 Sanford C. Bernstein Fund, Inc.
<PAGE>
with the Fund. Foreign securities and foreign currency owned by the Fund may be
held by foreign subcustodians of State Street Bank and Trust Company retained
for such purpose in accordance with the 1940 Act. State Street Bank and Trust
Company also serves as Transfer Agent for the Portfolios and in that capacity
maintains certain records pursuant to an agreement with the Fund.
INDEPENDENT ACCOUNTANTS
AND LEGAL COUNSEL
- -------------------------------------------------------------------------------
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036, has
been selected as the independent accountants to audit the annual financial
statements of each Portfolio of the Fund. Price Waterhouse LLP also has been the
auditor of the investment performance statistics of Bernstein's separately
managed accounts since 1978.
Shereff, Friedman, Hoffman & Goodman LLP, 919 Third Avenue, New York, New York
10022, has been selected as legal counsel to the Fund. Shereff, Friedman,
Hoffman & Goodman LLP and partners of that firm have been legal counsel to
Bernstein since 1967, when Bernstein was organized.
- --------------------------------------------------------------------------------
Prospectus--January 30, 1998 19
<PAGE>
JANUARY 30, 1998
- -------------------------------------------------------------------------------
BERNSTEIN SHORT DURATION PLUS
- --------------------------------------------------------------------------------
BERNSTEIN INTERMEDIATE DURATION
PROSPECTUS
Sanford C. Bernstein Fund, Inc.
767 Fifth Avenue
New York, NY 10153
212-756-4097
TABLE OF CONTENTS
===============================================================================
FEE TABLE .................................................. 2
FINANCIAL HIGHLIGHTS ....................................... 3
THE FUND ................................................... 6
INVESTMENT OBJECTIVES AND POLICIES
OF THE PORTFOLIOS .......................................... 6
o Bernstein Short Duration Plus Portfolio ................ 7
o Bernstein Intermediate Duration Portfolio .............. 7
INVESTMENTS ................................................ 8
Special Investment Techniques ............................. 12
MANAGEMENT OF THE PORTFOLIOS ............................... 15
Directors and Officers .................................... 15
The Manager ............................................... 16
Participating in Your Plan ................................ 16
Portfolio Transactions and Brokerage ...................... 17
Net Asset Value ........................................... 17
Dividends, Distributions and Taxes ........................ 17
Description of Shares ..................................... 18
Performance ............................................... 18
Custodian and Transfer Agent .............................. 18
Independent Accountants and Legal Counsel ................. 19
<PAGE>
JANUARY 30, 1998 PROSPECTUS
Sanford C. Bernstein Fund, Inc.
767 FIFTH AVENUE
NEW YORK, NY 10153
212-756-4097
Sanford C. Bernstein Fund, Inc. (the "Fund") is an open-end management
investment company. This type of company is commonly referred to as a mutual
fund. The Fund is currently comprised of 11 series of shares, each
representing a separate portfolio of securities and each having its own
investment objectives. Sanford C. Bernstein & Co., Inc. ("Bernstein," or
the "Manager") serves as Investment Manager to each series.
IMPORTANT NOTE: This prospectus is intended exclusively for participants in
employer-sponsored retirement or savings plans, such as tax-qualified pension
and profit-sharing plans and 401(k) thrift plans, and offers shares of only one
of the Fund's Portfolios--the Bernstein International Value Portfolio.
Prospectuses containing information on the 11 Fund Portfolios and on how to open
a personal account are available for individual investors, and may be obtained
by writing to the address or calling the telephone number listed above.
The Bernstein International Value Portfolio (the "Portfolio") seeks long-term
capital growth on a total-return basis (capital appreciation or depreciation
plus dividends and interest) principally through investment in equity securities
of established non-U.S. companies. Investments may be made solely for capital
appreciation, solely for income or any combination of the two for the purpose of
achieving a higher overall return.
This Prospectus sets forth information you ought to know before investing in
the Portfolio. You should read it carefully and retain it for future reference.
You can find more information about the Fund in the Statement of Additional
Information (the "SAI") dated January 30, 1998, which has been filed with the
Securities and Exchange Commission (the "Commission") and is incorporated herein
by reference. You may obtain a copy of the SAI without charge by calling or
writing the Fund at the above telephone number or address.
BERNSTEIN PORTFOLIO OBJECTIVES
INTERNATIONAL EQUITY PORTFOLIO
Bernstein International Value.................................................4
o Invest primarily in equity securities of established foreign companies in the
countries comprising the EAFE index, plus Canada.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
FEE TABLE
BERNSTEIN
INTERNATIONAL VALUE
PORTFOLIO
..............................................................................
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases
(as a percentage of offering price) None
Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds) None
Redemption Fees
(as a percentage of amount redeemed) None
Exchange Fees None
ANNUAL PORTFOLIO OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 0.95%
12b-1 Fees None
Other Expenses
Shareholder Servicing and Administrative Fees 0.25%
All Other Expenses 0.07%
Total Portfolio Operating Expenses 1.27%
EXAMPLE
A Portfolio would pay the following expenses on
a $1,000 investment, assuming 5% annual return:
1 Yr. $13
3 Yrs. (cum.) $40
5 Yrs. (cum.) $70
10 Yrs. (cum.) $153
The purpose of the fee table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. The Portfolio of the Fund covered by this Prospectus is no-load, has
no redemption fees and has no charges for shareholders on monthly payment plans.
"Other Expenses" for this Portfolio are based on amounts for the fiscal year
ended September 30, 1997. The example should not be considered a representation
of future expenses; actual expenses may be greater or less than those shown. A
more complete description of the various costs and expenses can be found under
"Management of the Portfolio" on page 10. Shareholders of the Fund do not need
to open a brokerage account with Bernstein; shareholders may elect to take
delivery of the shares or to make alternate arrangements for custodying them. If
a shareholder holds Fund shares in a Bernstein brokerage account, Bernstein (not
the Fund) will charge an annual maintenance fee of $100 for accounts with assets
of less than $400,000 under the management of Bernstein's Equity and/or
Fixed-Income Investment Policy Groups. This fee is deducted from cash held in
the brokerage account or, if insufficient cash is maintained in the brokerage
account, by selling securities. Bernstein does not charge this fee on accounts
that are included in a group of related accounts as defined by Bernstein with
combined assets of $400,000 or more. Shares of the Fund purchased or redeemed
through broker-dealers, banks and other financial institutions may be subject to
fees imposed by those institutions.
- --------------------------------------------------------------------------------
2 Sanford C. Bernstein Fund, Inc.
<PAGE>
FINANCIAL HIGHLIGHTS
Set forth below is a table containing information as to the income and operating
performance of a share of the Portfolio for the periods indicated. The financial
statements, which contain this information for each year in the five-year period
ended September 30, 1997, have been audited by Price Waterhouse LLP. The related
financial statements and the report of independent accountants are incorporated
by reference in the Fund's SAI. Additional performance information is contained
in the Fund's annual report to shareholders dated September 30, 1997, which is
available upon request and without charge. These financial highlights should be
read in conjunction with the financial statements incorporated by reference in
the Fund's SAI.
<TABLE>
<CAPTION>
BERNSTEIN INTERNATIONAL VALUE PORTFOLIO
----------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/97 9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 (a)
---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.14 $16.08 $16.57 $15.39 $11.98 $12.50
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment income, net 0.26 0.23 0.18 0.19 0.05 0.02
Net realized and unrealized gain (loss) on
investments, futures and foreign currencies 3.73 2.26 0.07 1.13 3.54 (0.54)
Total from investment operations 3.99 2.49 0.25 1.32 3.59 (0.52)
------ ----- ------ ------ ----- ------
LESS DISTRIBUTIONS:
Dividends from taxable net investment income (0.99) (0.10) (0.11) (0.02) (0.05) 0
Dividends from tax-exempt net investment income 0 0 0 0 0 0
Distributions from net realized gains (0.22) (0.33) (0.63) (0.12) (0.13) 0
Distributions in excess of net investment income
due to timing differences 0 0 0 0 0 0
Distributions in excess of net realized gains
due to timing differences 0 0 0 0 0 0
------ ------ ------ ------ ------- ------
Total distributions (1.21) (0.43) (0.74) (0.14) (0.18) 0
Portfolio transaction fee 0 0 0 0 0 0
Net asset value, end of period $20.92 $18.14 $16.08 $16.57 $15.39 $11.98
Total return 23.25% 15.83% 1.84% 8.55% 30.45% (4.16)%
------ ----- ------ ------ ------ ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $4,965,998 $3,131,258 $1,996,112 $1,343,266 $539,936 $75,255
Average net assets (000 omitted) $3,977,823 $2,569,586 $1,591,703 $948,563 $235,839 $41,234
Ratio of expenses to average net assets 1.27% 1.31% 1.35% 1.39% 1.53% 2.00%*
Ratio of net investment income to average net assets 1.37% 1.37% 1.17% 1.13% 1.27% 0.59%*
Portfolio turnover rate 26.24% 21.89% 29.53% 23.78% 21.22% 1.12%
Average commission rate per share 0.0247 0.0234 N/A N/A N/A N/A
</TABLE>
*Annualized
(a) Commenced operations June 22, 1992
- --------------------------------------------------------------------------------
Prospectus--January 30, 1998 3
<PAGE>
THE FUND
The Fund was incorporated on May 4, 1988, under the laws of Maryland as an
open-end management investment company. This Prospectus relates to one of the
Fund's series of shares. Shares of each series represent an interest in a
separate portfolio of securities. At September 30, 1997, the 11 portfolios of
the Fund (including the Bernstein International Value Portfolio) had net assets
totaling $10.729 billion. Bernstein, with offices at 767 Fifth Avenue, New York,
New York 10153; 1999 Avenue of the Stars, Los Angeles, California 90067; 777
South Flagler Drive, West Palm Beach, Florida 33401; 227 West Monroe Street,
Chicago, Illinois 60606; 300 Crescent Court, Suite 950, Dallas, Texas 75201; and
555 California Street, Suite 4300, San Francisco, California 94104, serves as
Investment Manager to each Portfolio. Each Portfolio has its own investment
objectives.
INVESTMENT OBJECTIVES AND POLICIES
OF THE PORTFOLIO
The Bernstein International Value Portfolio seeks long-term capital growth on a
total-return basis (capital appreciation or depreciation plus dividends and
interest). The Portfolio will invest primarily in equity securities of
established foreign companies as described on page 5.
The Portfolio will invest in a diversified portfolio of securities that the
Manager considers most undervalued. The Portfolio intends to diversify
investments among many foreign countries; it will generally be invested in
countries that comprise the EAFE index (Europe, Australia and the Far East) and
Canada. EAFE countries currently include Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia, the
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and the
United Kingdom. The Portfolio may also make investments in less developed or
emerging equity markets. Shareholders should be aware that investments in
foreign securities entail significant risks in addition to those customarily
associated with investing in U.S. equities; investing in less developed or
emerging-market countries involves exposure to economic structures that are
generally less diverse and mature, and to political systems that can be expected
to have less stability than those of developed countries.
Under normal market conditions, at least 65% of the Portfolio's total assets
will be invested in at least three foreign countries. Under exceptional
conditions abroad or when the Manager believes that economic or market
conditions warrant, the Portfolio may temporarily, for defensive purposes,
invest part or all of its portfolio in U.S. government obligations or investment
grade debt or equity securities of U.S. issuers. The Portfolio may invest in
fixed-income securities and enter into foreign currency exchange contracts and
options on foreign currencies and it may utilize options on securities and
securities indexes and futures contracts and options on futures. See the
sections on "Investments" and "Special Investment Techniques" on pages 5-9. The
International Value Portfolio will not invest in an illiquid security if, at the
time of purchase, the value of such illiquid security together with other
securities that are not readily marketable would exceed 15% of the net assets of
the Portfolio.
The above policies and objectives are not fundamental and may be changed by
the Fund's Board of Directors without shareholder approval. If there is a change
in investment policy or objective, shareholders should consider whether the
Portfolio remains an appropriate investment in light of their then-current
financial position and needs.
The Portfolio has adopted certain fundamental investment limitations. As a
fundamental policy, the International Value Portfolio will not:
(a)with respect to 75% of its total assets, invest more than 5% of its total
assets in the securities of any one issuer if, as a result of the
purchase, less than 75% of the International Value Portfolio's assets
consists of cash and cash items, Government securities, securities of
other investment companies and other securities, limited, in respect of
any one issuer, to an amount not greater in value than 5% of the value of
the International Value Portfolio's total assets and to not more than 10%
of the outstanding voting securities of such issuer;
(b) invest more than 25% of its total assets in any one industry; or
(c) borrow money except that the International Value Portfolio may borrow
money for temporary or emergency purposes in an amount not exceeding
33 1/3% of its total
- -------------------------------------------------------------------------------
4 Sanford C. Bernstein Fund, Inc.
<PAGE>
assets. As an operating (not a fundamental) policy, the Portfolio will not
borrow except from a bank for temporary or emergency purposes in amounts
in excess of 5% of its total assets.
The SAI contains certain investment restrictions pertaining to the
International Value Portfolio.
Investment Risks Of the Bernstein
International Value Portfolio
Market risk: Since it invests primarily in equity securities, the Portfolio,
like any equity portfolio, is vulnerable to market risk--the possibility that
stock prices in general will decline over short or even extended periods.
Moreover, the Portfolio's composition is likely to differ from that of broad
market indexes, and its performance should not be expected to mirror the returns
provided by a specific index. Stock prices are volatile from year to year;
accordingly, the Portfolio is suited to investors who are willing to hold their
investment over a long horizon.
Foreign currency risk: Returns on foreign securities are influenced by
currency risk as well as equity risk. Foreign securities are denominated in
foreign currencies, which may change in value in relation to the U.S. dollar,
possibly for protracted periods of time. When a foreign currency rises against
the U.S. dollar, the returns on foreign stocks for a U.S. investor will also
rise; when a foreign currency declines in value in relation to the U.S. dollar,
the returns on foreign stocks for a U.S. investor will also fall. In addition,
it is possible that foreign governments will impose currency exchange control
regulations or other restrictions that would prevent cash from being brought
back to the U.S.
Other risks: Other risks and considerations of international investing
include the availability of less public information with respect to issuers of
securities; less governmental supervision of foreign brokers and issuers of
securities; lack of uniform accounting, auditing and financial reporting
standards; a generally lower degree of market volume and liquidity than that
available in U.S. markets, which may result in greater price volatility;
settlement practices that may include delays and otherwise differ from those in
U.S. markets; the possibility of expropriation or confiscatory taxation; the
imposition of foreign taxes; and possible political instability in some
countries, which could affect U.S. investment in these countries. Investments in
foreign securities will also result in generally higher expenses due to the
costs of currency exchange; payment of fixed brokerage commissions in certain
foreign markets, which generally are higher than commissions on U.S. exchanges;
and the expense of maintaining securities with foreign custodians.
Further discussion of the risks relating to the Portfolio is contained in the
SAI.
INVESTMENTS
The Bernstein International Value Portfolio will invest primarily in foreign
equity securities, but may, under the circumstances described below, invest in
fixed-income securities. The equity securities in which the Portfolio may invest
include common and preferred stocks, warrants and convertible securities. The
Portfolio may invest in foreign securities directly or in the form of sponsored
or unsponsored American Depositary Receipts (ADRs), Global Depositary Receipts
(GDRs) or other similar securities convertible into securities of foreign
issuers without limitation. ADRs are receipts typically issued by a U.S. bank or
trust company that evidence ownership of the underlying securities. GDRs are
receipts typically issued by a non-U.S. bank or trust company evidencing a
similar arrangement. The issuers of unsponsored ADRs are not obligated to
disclose material information in the United States and, therefore, there may not
be a correlation between such information and the market value of the ADR. In
some circumstances--e.g., when a direct investment in securities in a particular
country cannot be made--the Portfolio, in compliance with provisions of the
Investment Company Act of 1940, as amended (the "1940 Act"), may invest in the
securities of investment companies that invest in foreign securities. As a
shareholder in any mutual fund, the Portfolio will bear its ratable share of the
mutual fund's management fees and other expenses, and will remain subject to
payment of the Portfolio's management and other fees with respect to assets so
invested.
The Portfolio may invest in privately placed securities that, in the absence
of an exemption, would be required to be registered under the Securities Act of
1933 so as to permit their sale to the public ("restricted securities").
Restricted securities may be sold only in privately negotiated transactions.
These securities, excluding restricted securities eligible for resale pursuant
to Rule 144A under the Securities Act of 1933 that have been determined to be
liquid in the trading market for the security under procedures adopted by the
Board of Directors of the Fund, are considered to be illiquid. The Board is
responsible for monitoring the implementation of the procedures on the liquidity
of Rule 144A securities in the Portfolio.
- --------------------------------------------------------------------------------
Prospectus--January 30, 1998 5
<PAGE>
Within the limits set forth in "Investment Objectives and Policies" (pages
4-5), the Portfolio may invest in illiquid securities--securities that are not
readily marketable. The Board of Directors of the Fund has determined that any
or all of the following factors may be relevant to determining the liquidity of
a security: the amount of the issue outstanding; the complexity of the issue;
the bid/ask spread; the number and identity of market makers or dealers in or
other buyers of the security; the existence of put features and other rights;
the term of the security; the visibility of the issuer in the marketplace; the
method of soliciting offers and the mechanics of completing transfers; the
average trading volume for the issue; and, with respect to foreign securities,
the amount of such securities that can be owned by investors who are not
residents of the country where such securities were issued and the amount of
such securities owned by the controlling interests. Purchased dealer options,
private placements (excluding securities eligible for resale under Rule 144A
that have been determined to be liquid as set forth in the preceding section),
guaranteed investment contracts, bank investment contracts, repurchase
agreements for periods longer than seven days, time deposits maturing in more
than seven days and loan participations are considered to be illiquid securities
for the purposes of this restriction. In addition, the staff of the Securities
and Exchange Commission currently takes the position that all options traded in
the over-the-counter market are illiquid; if the staff amends its position, the
Fund may, in accordance with the amended position, consider such options to be
liquid.
The Portfolio may invest in preferred stock. Preferred stock is subordinated
to any debt the issuer has outstanding. Accordingly, preferred stock dividends
are not paid until all debt obligations are first met. Preferred stock may be
more subject to fluctuations in market value, due to changes in market
participants' perceptions of the issuer's ability to continue to pay dividends,
than debt of the same issuer.
The Portfolio may have investments in warrants. Warrants are securities that
give the Portfolio the right to purchase securities from the issuer at a
specific price (the strike price) for a limited period of time. The strike price
of warrants sometimes is much lower than the current market price of the
underlying securities, yet they are subject to similar price fluctuations. As a
result, warrants may be more volatile investments than the underlying securities
and may offer greater potential for capital appreciation as well as capital
loss. Warrants do not entitle a holder to dividends, interest payments or voting
rights with respect to the underlying securities and do not represent any rights
in the assets of the issuing company. Also, the value of the warrant does not
necessarily change with the value of the underlying securities, and a warrant
ceases to have value if it is not exercised prior to the expiration date. These
factors can make warrants more speculative than other types of investments.
The Portfolio may invest uncommitted cash balances in fixed-income
securities. Fixed-income securities may also be held to maintain liquidity to
meet shareholder redemptions, and, although the situation occurs infrequently,
these securities may be held in place of equities when the Manager believes that
fixed-income securities will provide total returns comparable to or better than
those of equity securities. Fixed-income securities include obligations of the
U.S. or foreign governments and their political subdivisions; obligations of
agencies and instrumentalities of the U.S. government; and bonds, debentures,
notes, commercial paper, bank certificates of deposit, repurchase agreements and
other similar corporate debt instruments of U.S. or foreign issuers that at the
time of purchase are rated BBB, A-2, SP-2 or higher by S&P or Baa, P-2 or higher
by Moody's, or, if unrated, are in the Manager's opinion comparable in quality.
Securities that are rated BBB, A-2 or SP-2 by S&P or Baa or P-2 by Moody's are
investment grade (for a description of these rating categories, see the Appendix
to the SAI). These securities may have speculative characteristics, and changes
in economic conditions or other circumstances are more likely to lead to a
weakened capacity to make principal and interest payments than is the case with
higher-rated securities. Bonds with investment grade ratings at time of purchase
may be retained, in the Manager's discretion, in the event of a rating
reduction. Under exceptional conditions abroad, or when it is believed that
economic or market conditions warrant, the Portfolio may temporarily, for
defensive purposes, invest all of its portfolio in fixed-income obligations of
the U.S. government or fixed-income or equity securities of U.S. issuers.
SPECIAL INVESTMENT TECHNIQUES
- ---------------------------------------------------------------------------
In seeking to achieve its investment objectives, the Portfolio may employ the
following special investment techniques, among others. These techniques may be
used to hedge various market risks (such as interest rates, currency exchange
rates and broad or security-specific changes in the prices of equity or
fixed-income securities), to manage the effective maturity or duration of
fixed-income securities, to exploit mispricings in the securities markets, or as
an alternative to activities in the underlying cash markets. They may include
the use of exchange-traded derivatives such as futures and options--financial
products which are standardized by size, maturity, and delivery, and are sold on
organized exchanges. Furthermore, over-the-counter derivatives such as swaps or
other hybrid instruments, which
- -------------------------------------------------------------------------------
6 Sanford C. Bernstein Fund, Inc.
<PAGE>
are individually tailored to meet the needs of a specific client, may also be
used.
Foreign Currency Transactions
The Portfolio may enter into foreign currency exchange contracts on a spot
(i.e., cash) basis at the rate then prevailing in the currency exchange market
or through entering into forward contracts, which obligate the contracting
parties to purchase or sell a specific currency at a specified future date at a
specified price. The Portfolio will generally not enter into a forward contract
with a term greater than one year.
The Portfolio will generally enter into forward contracts under two
circumstances. First, the Portfolio may enter into a forward contract when it
enters into a contract for the purchase or sale of a security denominated in a
foreign currency in order to lock in the price in dollars of the security.
Second, when the Manager believes that the currency of a particular foreign
country may experience an adverse movement against another currency, the
Portfolio may enter into a forward contract to sell an amount of the foreign
currency (or another currency that acts as a proxy for that currency)
approximating the value of some or all of the Portfolio's securities denominated
in such foreign currency. Under certain circumstances, the Portfolio may commit
a substantial portion or the entire value of its portfolio to the consummation
of these contracts. The Manager will consider the effect that a substantial
commitment of assets to forward contracts would have on the investment program
of the Portfolio and the flexibility of the Portfolio to purchase additional
securities. Although forward contracts will be used primarily to protect the
Portfolio from adverse currency movements, they involve the risk that
anticipated currency movements will not be accurately predicted and the
Portfolio's total return could be adversely affected as a result.
Futures Contracts and Options
The Portfolio may enter into financial futures contracts, including bond, bond
index, Eurodeposit, stock index or currency futures contracts and options
thereon. In addition, the Portfolio may purchase and write (i.e., sell) put and
call options on securities, on securities indexes based on securities in which
the Portfolio may invest, on foreign currencies traded on U.S. or foreign
exchanges or over-the-counter and on futures contracts. The securities for
which the Portfolio writes put or call options will be Portfolio securities, and
the Portfolio will write only covered options.
The Portfolio may also enter into options on the yield "spread" or yield
differential between two securities. In contrast to other types of options, this
option is based on the difference between the yields of designated securities,
currencies, futures or other instruments. In addition, the Portfolio may write
covered straddles. A straddle is a combination of a call and a put written on
the same underlying security.
In accordance with the current rules and regulations of the Commodity Futures
Trading Commission (the "CFTC"), the aggregate initial margins and premiums
required from the Portfolio in connection with commodity futures and options
positions used for purposes other than "bona fide hedging" will not exceed 5% of
the liquidation value of the Portfolio; provided, however, in the case of an
option that is in the money at the time of the purchase, that the in-the-money
portion of the premium is excluded in calculating the 5% limitation. The
Portfolio will not write any option if, immediately thereafter, the aggregate
value of the Portfolio's securities subject to outstanding options would exceed
25% of its net assets.
Futures contracts and options can be highly volatile and could reduce the
Portfolio's total returns, and attempts to use such investments for hedging or
other purposes may not be successful. Successful futures and options strategies
require the ability to predict future movements in securities prices, interest
rates and other economic factors. The Portfolio's potential losses from the use
of futures extend beyond its initial investment in such contracts and are
potentially unlimited. Also, losses from futures and options could be
significant if the Portfolio is unable to close out its position due to
disruptions in the market or lack of liquidity.
Swaps and Hybrid Investments
As part of its investment program and to maintain greater flexibility, the
Portfolio may invest in hybrid instruments (a type of potentially high-risk
derivative) that have the characteristics of futures, options, currencies and
securities. Such instruments may take a variety of forms, such as a security
with the principal amount, redemption or conversion terms related to the market
price of some commodity, currency or securities index; or debt instruments with
interest or principal payments determined by reference to the value of
commodities, currencies, fixed-income instruments, financial indexes or other
financial or economic indicators, data or events; or the differences between the
value of commodities, currencies, fixed-income instruments, financial indexes or
other financial or economic indicators, data or events; or the rate of change of
the value of commodities, currencies, fixed-income instruments, financial
indexes, or other financial or economic indicators, data or events. Hybrids can
have volatile prices and limited liquidity and their use by the Portfolio may
not be successful. The risk of these investments can be substantial; possibly
all of the principal is at risk. The Portfolio will not invest more than 20% of
its total assets in these investments.
- -------------------------------------------------------------------------------
Prospectus--January 30, 1998 7
<PAGE>
Swap agreements are contracts between parties in which one party agrees to
make payments to the other party based on the change in the market value of a
specified index or asset. In return, the other party agrees to make payments to
the first party based on the return of a different specified index or asset.
Swap agreements entail the risk that a party will default on its payment
obligations thereunder. Swap agreements also bear the risk that the Portfolio
will not be able to meet its obligation to the counterparty.
The Portfolio may enter into interest-rate or foreign currency swaps and
purchase and sell interest-rate caps and floors. The Portfolio will not use
swaps to leverage the Portfolio. The Portfolio will maintain in a segregated
account with the Fund's custodian an amount having an aggregate net asset value
at least equal to the net amount of the excess, if any, of the Portfolio's
obligations over its entitlements with respect to each swap. The Portfolio
expects to enter into these transactions to exploit mispricings in the bond or
currency markets or to preserve a return or spread on a particular investment or
portion of its portfolio, as a duration management technique, or to protect
against any increase in the price of securities that the Portfolio anticipates
purchasing at a later date.
Interest-rate swaps involve the exchange by the Portfolio with another party
of their respective commitments to pay or receive interest, e.g., an exchange of
fixed-rate payments for floating-rate payments. Such an exchange would allow the
Portfolio to alter its exposure to interest-rate market risk without changing
the composition of the Portfolio. The purchase of an interest-rate floor or cap
entitles the purchaser to receive payments of interest on a notional principal
amount from the seller, to the extent that the specified index falls below
(floor) or exceeds (cap) a predetermined interest rate. Currency swaps are
similar to interest-rate swaps, except that they involve currencies instead of
interest rates. The Portfolio will enter interest-rate swaps only on a net basis
(i.e., the two payment streams are netted out) with the Portfolio receiving or
paying, as the case may be, only the net amount of the two payments.
Repurchase Agreements
In a repurchase transaction, the Portfolio purchases a security from a bank or a
securities dealer and simultaneously agrees to resell that security to the bank
or broker-dealer at an agreed-upon price on an agreed-upon date. The resale
price reflects the purchase price and an agreed-upon rate of interest. In
effect, the obligation of the seller to repay the agreed-upon price is secured
by the value of the underlying security, which must at least equal the
repurchase price. Repurchase agreements could involve certain risks in the event
of default or insolvency of the other party, including possible delays or
restrictions on the Portfolio's ability to dispose of the underlying securities.
The Board of Directors has established guidelines to be used by the Manager in
repurchase transactions and regularly monitors the Portfolio's use of repurchase
agreements.
Reverse Repurchase Agreements
The Portfolio may enter into reverse repurchase agreements with banks and
broker-dealers from time to time. In a reverse repurchase transaction, it is the
Portfolio, rather than the other party to the transaction, that sells the
securities and simultaneously agrees to repurchase them at a price reflecting an
agreed-upon rate of interest. The Portfolio's obligations under reverse
repurchase agreements will not exceed one-third of the Portfolio's total assets,
less liabilities other than obligations under such reverse repurchase
agreements. During the time a reverse repurchase agreement is outstanding, the
Portfolio maintains liquid assets in a segregated account with its Custodian
having a value at least equal to the repurchase price under the reverse
repurchase agreement. The use of reverse repurchase agreements is included in
the Portfolio's borrowing policy and is subject to the limit of Section 18(f)(1)
of the 1940 Act. Reverse repurchase agreements may create leverage, increasing
the Portfolio's opportunity for gain and risk of loss for a given fluctuation in
the value of the Portfolio's assets. There may also be risks of delay in
recovery and, in some cases, even loss of rights in the underlying securities,
should the opposite party fail financially.
Lending Portfolio Securities
The Portfolio may, from time to time, lend portfolio securities having a market
value of no more than one-third of its total assets to qualified broker-dealers,
banks or other financial institutions. By lending its portfolio securities, the
Portfolio attempts to increase its income through the receipt of interest on the
loan. Any such loan of portfolio securities will be marked to the market daily
and secured by collateral consisting of cash or U.S. government securities in an
amount at least equal to the value of the securities loaned. The Manager
believes that the risk of loss on such a transaction is slight because, if the
borrower were to default, the collateral would be available to satisfy the
obligation. However, as with other extensions of secured credit, loans of
portfolio securities involve some risk of loss of rights in the collateral
should the borrower fail financially. The Manager carefully evaluates the
creditworthiness of any potential borrower of securities. The Portfolio may not
have the right to vote securities on loan, but it will call a loaned security in
anticipation of an important vote.
- --------------------------------------------------------------------------------
8 Sanford C. Bernstein Fund, Inc.
<PAGE>
When-Issued and Delayed-Delivery Transactions
The Portfolio may purchase securities on a "when-issued" or "delayed-delivery"
basis. In a when-issued or delayed-delivery transaction, the Portfolio
purchases a security with delivery to take place at a later date, usually within
three months from the date the transaction is entered into. The market value of
the security at delivery may be more or less than the purchase price. The Fund's
Custodian is to maintain liquid assets in segregated accounts having a value
equal to or greater than the Portfolio's purchase commitments; likewise, the
Custodian is to segregate securities sold by the Portfolio on a delayed-delivery
basis.
Further information about the Portfolio's use of Special Investment
Techniques and their associated risks is contained in the SAI.
Future Developments
The Portfolio expects to discover additional opportunities in the areas of
options, futures contracts, options on futures contracts and other derivative
instruments. These opportunities will become available as the Manager develops
new strategies, as regulatory authorities broaden the range of transactions that
are permitted and as new options and futures are developed. To the extent such
opportunities are both consistent with the Portfolio's investment objectives and
legally permissible for the Portfolio, the Manager may utilize the strategies
that do not conflict with the Portfolio's investment restrictions. These
opportunities may involve risks that differ from those described above.
- --------------------------------------------------------------------------------
Prospectus--January 30, 1998 9
<PAGE>
MANAGEMENT OF THE PORTFOLIO
10
DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
The Board of Directors of the Fund is responsible for the overall supervision of
the management of the Fund. The directors also perform various duties imposed on
directors of investment companies by the 1940 Act and by the State of Maryland.
Officers of the Fund conduct and supervise the daily operations of the
Portfolio.
The following table lists the directors and executive officers of the Fund,
their business addresses and their principal occupations during the past five
years.
<TABLE>
<CAPTION>
POSITION(S) WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE FUND DURING PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Roger Hertog* President, President, Chief Operating Officer
767 Fifth Avenue Treasurer, and Director--Bernstein
New York, NY 10153 Director
...........................................................................................................................
Andrew S. Adelson* Senior Vice President, Senior Vice President, Chief Investment Officer--International
767 Fifth Avenue Director and Director--Bernstein
New York, NY 10153
...........................................................................................................................
Arthur Aeder Director 1987-Present: Consultant; Formerly Senior Partner of
20 West 55th Street Oppenheim, Appel, Dixon & Co. (subsequently Spicer
New York, NY 10019 & Oppenheim) Certified Public Accountants, and Chairman
of Spicer & Oppenheim International
...........................................................................................................................
Peter L. Bernstein** Director President and Chief Executive Officer of Peter L. Bernstein,
575 Madison Avenue Inc., Economic Consultants
Suite 1006
New York, NY 10022
...........................................................................................................................
William Kristol Director 6/95-Present: Editor and Publisher, The Weekly Standard
1150 17th Street, N.W. 11/93-5/95: Chairman, Project for the Republican Future
5th Floor 1/93-11/93: Director, The Bradley Project on the 90s
Washington, D.C. 20036
...........................................................................................................................
Theodore Levitt Director Professor Emeritus of Business Administration,
Harvard Business School Harvard University
Cumnock 300 1985-89: Editor, Harvard Business Review
Boston, MA 02163
...........................................................................................................................
Francis H. Trainer, Jr. Senior Vice President Senior Vice President, Director--Fixed-Income Investments
767 Fifth Avenue and Director--Bernstein
New York, NY 10153
...........................................................................................................................
Jean Margo Reid Secretary 1997-Present: Vice President and General Counsel--Bernstein
767 Fifth Avenue Previously: Vice President and Associate General
New York, NY 10153 Counsel--Bernstein
...........................................................................................................................
</TABLE>
*An "interested person" of the Fund, as defined in the 1940 Act.
**Not related to Zalman C. Bernstein, Chairman of the Executive Committee--
Bernstein.
- ------------------------------------------------------------------------------
10 Sanford C. Bernstein Fund, Inc.
<PAGE>
THE MANAGER
- ------------------------------------------------------------------------------
Bernstein is a closely held corporation, organized under the laws of the State
of New York on January 20, 1969, which succeeded to the business of Sanford C.
Bernstein & Co., a partnership, on February 1, 1969. Bernstein is a registered
investment advisor that manages some $69.2 billion, as of September 30, 1997,
for individuals, endowments, trusts and estates, charitable foundations,
partnerships, corporations, the Portfolios of the Fund and tax-exempt funds such
as pension and profit-sharing plans. Of that amount, some $18.1 billion was
invested in fixed-income securities and $51.1 billion in equities as of
September 30, 1997. Pursuant to contracts with the Fund, Bernstein provides the
following types of services: Investment Management, Shareholder Servicing and
Administration and Distribution.
Investment Management
Bernstein has entered into an Investment Management Agreement (the "Management
Agreement") with the Fund, on behalf of the Portfolio, under which the Manager,
subject to the supervision of the Board of Directors and in conformity with the
stated policies of the Portfolio, manages the Portfolio's assets. Investment
Policy Groups created by the Manager and comprised of the Manager's employees
make all investment decisions for the Portfolio, and no one person is primarily
responsible for making recommendations to these groups.
The fee paid by the Portfolio is at an annual rate of 1.00% of the
Portfolio's average daily net assets up to but not exceeding $2 billion and at
an annual rate of .90 of 1% of the Portfolio's average daily net assets that
exceed $2 billion. Because the investment programs of international asset
management are costly to implement and maintain, this fee is higher than that
paid by most investment companies that invest in U.S. equity securities. The fee
is computed daily and payable monthly.
Shareholder Servicing and Administration
Bernstein has also entered into a Shareholder Servicing and Administrative
Agreement with the Fund on behalf of the Portfolio. Pursuant to this Agreement,
Bernstein pays all expenses incurred by it in connection with administering the
ordinary course of the Fund's and the Portfolio's business. Bernstein also pays
the costs of office facilities and of clerical and administrative services not
provided by State Street Bank and Trust Company, the Fund's Custodian and
Transfer Agent. Bernstein serves as Shareholder Servicing Agent and in such
capacity may enter into agreements with other organizations whereby some or all
of Bernstein's duties in this regard may be delegated. The shareholder servicing
that will be provided by Bernstein or other organizations might include, among
other things, proxy solicitations and providing information to shareholders
concerning their mutual fund investments, systematic withdrawal plans, dividend
payments, reinvestments and other matters. The fee paid by the International
Value Portfolio is at an annual rate of 0.25% of the Portfolio's average daily
net assets.
The Portfolio is responsible for the payment of all of its expenses other
than those expressly stated to be payable by Bernstein under the Management
Agreement and the Shareholder Servicing and Administrative Agreement.
Distribution
Bernstein acts as Distributor of the Portfolio's shares pursuant to a
Distribution Agreement with the Fund.
PARTICIPATING IN YOUR PLAN
- ---------------------------------------------------------------------------
The Fund is available as an investment option in your retirement or savings
plan. The administrator of your plan or your employee benefits office can
provide you with detailed information on how to participate in your plan and how
to elect the Fund as an investment option.
You may be permitted to elect different investment options, alter the amounts
contributed to your plan or change how contributions are allocated among your
investment options in accordance with your plan's specific provisions. See your
plan administrator or employee benefits office for more details.
Contributions, exchanges or distributions of the Fund's shares are effective
when received in "good order" by Bernstein or its agents. "Good order" means
that complete information on the purchase, exchange or redemption and the
appropriate monies have been received by Bernstein or its agents.
Your plan may allow you to exchange monies from one investment option to
another. Check with your plan administrator for details on the rules governing
exchanges in your plan. Certain investment options may be subject to unique
restrictions.
Before making an exchange, you should consider the following:
o If you are making an exchange to another Bernstein Fund option, please
read the Fund's prospectus. Write to the address or call the number which
appears on the cover of this Prospectus for a copy.
o Exchanges are accepted by Bernstein only as permitted by your plan. Your
plan administrator can explain how frequently exchanges are allowed.
- -------------------------------------------------------------------------------
Prospectus--January 30, 1998 11
<PAGE>
If you have questions about your account, contact your plan administrator or
the organization that provides record-keeping services for your plan.
PORTFOLIO TRANSACTIONS
AND BROKERAGE
- ---------------------------------------------------------------------------
The Manager is responsible for decisions to buy and sell securities for the
Portfolio and for broker-dealer selection. Portfolio transactions that are
effected on a transaction-charge basis may be effected through Bernstein, acting
as agent and not as principal, provided, among other things, that any
transaction charges, fees or other remuneration received by Bernstein are
reasonable and fair compared to the transaction charges, fees or other
remuneration paid to other brokers in connection with comparable transactions
involving similar securities during a comparable period of time. In some cases,
the Portfolio might engage in purchase or sale transactions with another
Portfolio of the Fund, subject to conditions specified under the 1940 Act. There
might also be occasions when the Portfolio engages in purchase or sale
transactions with another mutual fund.
Although the objectives of the other accounts to which the Manager provides
investment advice may differ from those of the Portfolio, it is possible that,
at times, identical securities are acceptable for the Portfolio and one or more
of such accounts. If the purchase or sale of securities is consistent with the
investment policies of the Portfolio and one or more of the accounts of the
Manager is considered at or about the same time, transactions in such securities
will be allocated among the accounts and the Portfolio in a manner deemed
equitable by the Manager. Where securities are allocated among the Portfolio and
private accounts, the Manager may use the average price at which the securities
were purchased or sold.
The International Value Portfolio anticipates a portfolio turnover rate of
less than 100%. A turnover rate of 100% would occur, for example, if all the
securities held by the Portfolio were replaced in a period of one year. A
portfolio's turnover rate is the percentage computed by dividing the lesser of
portfolio purchases or sales (excluding all securities whose maturities at
acquisition were one year or less) by the average value of the portfolio. High
portfolio turnover involves correspondingly greater transaction costs, which are
borne directly by the Portfolio, and may also result in the realization of
substantial net short-term capital gains, taxable at ordinary income tax rates
to non-tax-exempt investors.
NET ASSET VALUE
- ---------------------------------------------------------------------------
The net asset value of the Portfolio is computed as of the close of regular
trading of the New York Stock Exchange (the "Exchange") (normally 4:00 p.m. New
York time). Purchase and redemption orders are accepted by the Fund on each
business day, with the exception of Exchange and national bank holidays, as
determined from time to time. Currently, these holidays are: New Year's Day,
Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and
Christmas Day. The net asset value per share of the Portfolio is the net worth
of the Portfolio (assets, including securities at market value, minus
liabilities) divided by the number of shares outstanding. The value of each
security for which readily available market quotations exist is based on the
most recent sale, the most recent available bid price or the mean between the
most recent available bid and asked prices in the broadest and most
representative market for that security as determined by the Manager. Debt
instruments with remaining maturities of 60 days or less may be valued at
amortized cost. If quotations are not readily available, or if the values have
been materially affected by events occurring after the closing of a foreign
market, securities or other assets may be valued by appraisal at their fair
value as determined in good faith under procedures established by and under the
general supervision of the Board of Directors. The Fund may use an independent
pricing service to value the Portfolio's assets at such times and to such extent
as the Manager deems appropriate. All assets and liabilities initially expressed
in foreign currencies will be translated into U.S. dollars. Dividends on foreign
securities are accrued and reflected in net asset value on either the date the
security goes ex-dividend or the date the Manager becomes aware of them,
whichever is later; corporate actions of foreign issuers are reflected in net
asset value on the date on which they become effective, or the date the Manager
becomes aware of them, whichever is later.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- -------------------------------------------------------------------------------
The International Value Portfolio intends to declare and pay dividends at least
annually, generally in December. Capital-gains distributions are made at least
annually, generally in December. The Portfolio's distributions and dividends are
paid in additional shares of the Portfolio based on the Portfolio's net asset
value at the close of business on the record date.
The Portfolio intends to continue to qualify for taxation as a "regulated
investment company" under the Internal Revenue Code so that it will not be
subject to federal income tax to the extent that its income is distributed to
shareholders.
- ------------------------------------------------------------------------------
12 Sanford C. Bernstein Fund, Inc.
<PAGE>
If you utilize the Fund as an investment option in an employer-sponsored
retirement or savings plan, dividend and capital gains distributions from the
Fund will generally not be subject to current taxation, but will accumulate on a
tax-deferred basis. In general, employer-sponsored retirement and savings plans
are governed by a complex set of tax rules. If you participate in such a plan,
consult your plan administrator, your plan's Summary Plan Description or a
professional tax adviser regarding the tax consequences of your participation in
the plan and of any plan contributions or withdrawals.
Dividends and interest received by the Portfolio may be subject to foreign
tax and withholding. However, tax conventions between certain countries and the
United States may reduce or eliminate such taxes. Shareholders may be entitled
to claim foreign tax credits or deductions on their own federal income tax
returns with respect to such taxes paid by the Portfolio.
If the Portfolio qualifies as a regulated investment company, if certain
asset and distribution requirements are satisfied and if more than 50% of the
Portfolio's total assets at the close of its fiscal year consist of stock or
securities of foreign corporations, the Portfolio may elect for United States
income tax purposes to treat foreign income taxes paid by it as paid by its
shareholders. The Portfolio will make such an election only if it deems it to be
in the best interests of its shareholders.
DESCRIPTION OF SHARES
- -------------------------------------------------------------------------------
The shares of the Portfolio have no preemptive or conversion rights. Shares are
fully paid and nonassessable and redeemable at the option of the shareholder and
have a par value of $0.001. Shares are also redeemable at the option of the
Fund, if the net asset value of a shareholder's account is less than $1,000.
Pursuant to the Articles of Incorporation, the Board of Directors may also
authorize the creation of additional series of shares (the proceeds of which may
be invested in separate, independently managed portfolios) with such
preferences, privileges, limitations and voting and dividend rights as the Board
may determine.
Shareholders have certain rights, including the right to call a meeting of
shareholders for the purpose of voting on the removal of one or more Directors.
Such removal can be effected upon the action of two-thirds of the outstanding
shares of all of the Portfolios of the Fund, voting as a single class. The
shareholders of each Portfolio are entitled to a full vote for each full share
held and to the appropriate fractional vote for each fractional share. A matter
that affects the Portfolio of the Fund will not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding voting securities of the Portfolio. The voting rights of the
shareholders are not cumulative. The Directors have been elected at the initial
meeting of the public shareholders of the Fund, except for Mr. Kristol and Mr.
Adelson, who were elected by the other Directors. In order to avoid unnecessary
expenses, the Fund does not intend to hold annual meetings of shareholders.
PERFORMANCE
- ---------------------------------------------------------------------------
The Portfolio may, from time to time, advertise yield, average annual total
return and unannualized average total return. Yield is a measure of the
Portfolio's income; it does not measure changes in the net asset value of the
Portfolio's shares. Average annual total return reflects all elements of return,
including income, expenses and changes in the value of the principal. Yield and
average annual total return are based on historical results and are not intended
to indicate future performance.
The yield of the Portfolio is calculated by dividing the Portfolio's net
investment income per share during a specified month by the maximum offering
price per share on the last day of the month and annualizing it. Yield is
calculated in accordance with accounting methods prescribed by the Commission.
Because the yield accounting methods differ from the methods used for tax and
financial accounting purposes, the Portfolio's yield may not be comparable to
the dividends paid to a shareholder or the net investment income reported in the
Portfolio's financial statements. The calculation of yield takes into account
all fees and expenses. The average annual total return of the Portfolio is
computed by finding the average annual compounded rate of return since the
commencement of the Portfolio's operations based on an initial investment of
$1,000 as compared to the ending redeemable value, assuming that all dividends
and distributions were reinvested. The calculation of average annual total
return takes into account all fees and expenses. The unannualized average total
return of the Portfolio for a period is calculated by dividing the value of an
investment at the end of the period, assuming all dividends and distributions
were reinvested, by the value of the investment at the beginning of the period.
The Fund may use an independent service to calculate yield and/or performance
data of the Portfolio at such times and to such extent as the Manager deems
appropriate. For further information and a description of the method by which
yield, average annual total return and unannualized average total return are
calculated, see "Performance" in the SAI.
- -----------------------------------------------------------------------------
Prospectus--January 30, 1998 13
<PAGE>
CUSTODIAN AND TRANSFER AGENT
- -------------------------------------------------------------------------------
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, serves as Custodian for the Fund and in that capacity holds the cash and
other assets for each Portfolio in the Fund and maintains certain financial and
accounting books and records pursuant to an agreement with the Fund. Foreign
securities and foreign currency owned by the Fund may be held by foreign
subcustodians of State Street Bank and Trust Company retained for such purpose
in accordance with the 1940 Act. State Street Bank and Trust Company also serves
as Transfer Agent for the Portfolios and in that capacity maintains certain
records pursuant to an agreement with the Fund.
INDEPENDENT ACCOUNTANTS
AND LEGAL COUNSEL
- -------------------------------------------------------------------------------
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036, has
been selected as the independent accountants to audit the annual financial
statements of each Portfolio of the Fund. Price Waterhouse LLP also has been the
auditor of the investment performance statistics of Bernstein's separately
managed accounts since 1978.
Shereff, Friedman, Hoffman & Goodman LLP, 919 Third Avenue, New York, New
York 10022, has been selected as legal counsel to the Fund. Shereff, Friedman,
Hoffman & Goodman LLP and partners of that firm have been legal counsel to
Bernstein since 1967, when Bernstein was organized.
- --------------------------------------------------------------------------------
14 Sanford C. Bernstein Fund, Inc.
<PAGE>
This page is intentionally left blank.
- --------------------------------------------------------------------------------
Prospectus--January 30, 1998 15
<PAGE>
JANUARY 30, 1998 PROSPECTUS
Sanford C. Bernstein Fund, Inc.
767 FIFTH AVENUE
NEW YORK, NY 10153
212-756-4097
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
BERNSTEIN INTERNATIONAL VALUE TABLE OF CONTENTS
FEE TABLE...................................2
FINANCIAL HIGHLIGHTS........................3
THE FUND....................................4
INVESTMENT OBJECTIVES AND POLICIES
OF THE PORTFOLIO............................4
INVESTMENTS.................................5
Special Investment Techniques.............6
MANAGEMENT OF THE PORTFOLIO................10
Directors and Officers...................10
The Manager..............................11
Participating in Your Plan...............11
Portfolio Transactions and Brokerage.....12
Net Asset Value..........................12
Dividends, Distributions and Taxes.......12
Description of Shares ...................13
Performance..............................13
Custodian and Transfer Agent.............14
Independent Accountants and
Legal Counsel..........................14
</TABLE>
<PAGE>
SANFORD C. BERNSTEIN FUND, INC.
767 Fifth Avenue
New York, New York 10153
(212) 756-4097
Statement of Additional Information
January 30, 1998
Sanford C. Bernstein Fund, Inc. (the "Fund") is an open-end management
investment company. This Statement of Additional Information relates to eleven
of the Fund's series of shares (the "Portfolios"), each with its own investment
objectives.
This Statement of Additional Information is not a prospectus, and should
be read in conjunction with the Fund's Prospectus, dated January 30, 1998, which
may be obtained by writing to or telephoning the Fund at the above address or
telephone number.
<TABLE>
<CAPTION>
Cross Reference to Cross Reference to Cross Reference to
Page in Page in International Page in Fixed-Income
Regular Institutional Institutional
Page Prospectus Services Prospectus Services Prospectus
------ ------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Investment Objectives and Policies
Investment Restrictions
Directors and Officers and
Principal Holders of Securities
Manager and Distributor
Net Asset Value
Portfolio Transactions and Brokerage
Purchase and Redemption of Shares
Taxes
Custodian, Transfer Agent,
Independent Accountants and Financial Statements
Performance
Appendix
</TABLE>
<PAGE>
B-2
INVESTMENT OBJECTIVES AND POLICIES
For a description of the objectives and policies of the Portfolios, see
"Investment Objectives and Policies of the Portfolios" in the Fund's Prospectus.
The following information is provided for those investors desiring information
in addition to that contained in the Prospectus. This Statement of Additional
Information relates to the Fund's nine fixed-income Portfolios -- the Bernstein
Short Duration California Municipal Portfolio, Bernstein Short Duration
Diversified Municipal Portfolio, Bernstein Short Duration New York Municipal
Portfolio, Bernstein Government Short Duration Portfolio, Bernstein Short
Duration Plus Portfolio, Bernstein Intermediate Duration Portfolio, Bernstein
Diversified Municipal Portfolio, Bernstein New York Municipal Portfolio and
Bernstein California Municipal Portfolio (the "Fixed-Income Portfolios") -- and
the Fund's international equity Portfolios -- the Bernstein International Value
Portfolio and the Bernstein Emerging Markets Value Portfolio.
Bank Obligations
The Portfolios may invest in fixed-income obligations (including, but not
limited to, certificates of deposit, time deposits and bankers' acceptances) of
U.S. thrift institutions, U.S. commercial banks (including foreign branches of
such banks) and foreign banks (including U.S. branches of such banks).
Time deposits are non-negotiable obligations of banks or thrift
institutions with specified maturities and interest rates. Time deposits with
maturities of more than seven days are considered illiquid securities.
Certificates of deposit are negotiable obligations issued by commercial
banks or thrift institutions. Certificates of deposit may bear a fixed rate of
interest or a variable rate of interest based upon a specified market rate.
A banker's acceptance is a time draft drawn on a commercial bank, often in
connection with the movement, sale or storage of goods.
The Portfolios expect to invest no more than 5% of any Portfolio's net
assets in fixed-income investments of non-insured U.S. banks and U.S. thrift
institutions. The risks of investments in non-insured banks and thrifts are
individually evaluated since non-insured banks and thrifts are not subject to
supervision and examination by the FDIC or a similar regulatory authority. The
Portfolios limit their purchases to fixed-income obligations issued by insured
U.S. banks and U.S. thrift institutions which are rated B or higher by Standard
& Poor's or Moody's or which are not rated but which are determined by the
Manager to be of comparable quality. For investments in non-insured foreign
banks, the Fixed-Income Portfolios limit their purchases to fixed-income
obligations issued by foreign banks with a rating of B or higher by Standard &
Poor's or Moody's or of securities which are not rated but which are determined
by the Manager to be of comparable quality.
<PAGE>
B-3
Zero Coupon Securities
The Portfolios may purchase zero coupon debt securities. A zero coupon
security pays no cash interest during its stated term. Its value lies in the
difference between the principal value to the holder at maturity and the
purchase price. Zero coupon securities are sold at a discount to principal
value, and their market values nearly always fluctuate more widely than do the
market values of similar-maturity debt securities which pay interest.
Asset-Backed Securities
The Portfolios may purchase securities backed by financial assets such
as loans or leases for various assets including automobiles, recreational
vehicles, computers and receivables on pools of consumer debt, most commonly
credit cards. Two examples of such asset-backed securities are CARS and CARDS.
CARS are securities, representing either ownership interests in fixed pools of
automobile receivables, or debt instruments supported by the cash flows from
such a pool. CARDS are participations in revolving pools of credit card
accounts. These securities have varying terms and degrees of liquidity.
Asset-backed securities may be pass-through, representing actual equity
ownership of the underlying assets, or pay-through, representing debt
instruments supported by cash flows from the underlying assets. Pay-through
asset-backed securities may pay all interest and principal to the holder, or
they may pay a fixed rate of interest, with any excess over that required to pay
interest going either into a reserve account or to a subordinate class of
securities, which may be retained by the originator. Credit enhancement of
asset-backed securities may take a variety of forms, including but not limited
to overcollateralizing the securities, subordinating other tranches of an
asset-backed issue to the securities, or by maintaining a reserve account for
payment of the securities. In addition, part or all of the principal and/or
interest payments on the securities may be guaranteed by the originator or a
third party insurer. The Manager takes all relevant credit enhancements into
account in making investment decisions on behalf of the Portfolios.
Convertible Securities
The Portfolios may purchase convertible corporate bonds and preferred
stock. These securities may be converted at a stated price (the "conversion
price") into underlying shares of preferred or common stock. Convertible debt
securities are typically subordinated to non-convertible securities of the same
issuer and are usually callable. Convertible bonds and preferred stocks have
many characteristics of non-convertible fixed-income securities. For example,
the price of convertible securities tends to decline as interest rates increase
and increase as interest rates decline. In addition, holders of convertibles
usually have a claim on the assets of the issuer prior to the holders of common
stock in case of liquidation.
The unusual feature of a convertible security is that changes in its price
can be closely related to changes in the market price of the underlying stock.
As the market price of the underlying stock falls below the conversion price,
the convertible security tends to trade increasingly like a non-convertible
bond. As the market price of the underlying common stock rises above the
conversion price, the price of the convertible security may rise accordingly.
<PAGE>
B-4
Other Securities
It is anticipated that, from time to time, other securities will be
developed, and they will be considered as potential investments for the
Portfolios, subject to Board guidelines.
Special Investment Techniques
Options
The Portfolios may each purchase put and call options on securities. A
Portfolio would normally purchase call options to hedge against an increase in
the market value of the securities in which the Portfolio may invest and put
options to hedge against a decline in market value of its portfolio securities.
Options may also be purchased to alter the effective duration of the
Fixed-Income Portfolios.
If a put is purchased for a Portfolio, the Portfolio may profit from a
decline in the market value of the underlying security. If a call is purchased,
a Portfolio may profit from a rise in the market value of the underlying
security. To realize these profits, the purchased put or call must be sold prior
to expiration or exercised. A Portfolio may also profit from an increase in the
volatility assumption implicit in the market price of the purchased put or call.
To realize this profit, the option must be sold prior to expiration. Any profit
or loss realized from the sale of an option is equal to the sale price less the
purchase cost and any transaction costs. Any profit or loss from the exercise of
a call option is equal to the market value of the underlying security at the
time of exercise less (i) the exercise price, (ii) the purchase cost of the
option, and (iii) any transaction costs. Any profit or loss from the exercise of
a put option is equal to the exercise price less (i) the market value of the
underlying security at the time of exercise, (ii) the purchase cost of the
option, and (iii) any transaction costs.
Each Portfolio may write (i.e., sell short) covered put and call options
on its portfolio securities. These options will generally be sold when the
Manager perceives the options to be overpriced. They may also be sold to alter
the effective duration of the Fixed-Income Portfolios. When a Portfolio writes
an option, it receives a premium which it retains whether or not the option is
exercised. If the option is not exercised, this premium represents a profit on
the transaction (less any transaction costs).
By writing a call option, a Portfolio becomes obligated during the term of
the option to deliver the underlying securities, upon exercise of the option, to
the purchaser of the option at a specified price (the "exercise price"). The
purchaser of a call option has, for a specified period of time, the right, but
not the obligation, to purchase the securities subject to the option at the
exercise price. When a Portfolio writes a call option, the Portfolio loses the
opportunity for gain from an increase in the price of the underlying securities
beyond the exercise price of the option during the period that the option is
open, but retains the risk that the price of the securities may decrease.
By writing a put option, a Portfolio becomes obligated during the term of
the option to purchase the underlying securities from the option purchaser, upon
exercise of the option, at the exercise price.
<PAGE>
B-5
The purchaser of a put option has, for a specified period of time, the right,
but not the obligation, to sell the securities subject to the option to the
writer of the put at the exercise price. A Portfolio might, therefore, be
obligated to purchase the underlying securities for more than the market price
prevailing at the time of exercise.
The Portfolios write only "covered" options. This means that so long as a
Portfolio is obligated as the writer of a call option, it will (i) own the
securities subject to the option; (ii) have an absolute and immediate right to
acquire those securities without additional cash consideration upon conversion
or exchange of other securities held in its portfolio; (iii) hold a call option
on the same security with an exercise price no higher than the exercise price of
the call sold or, if higher, deposit and maintain the differential in cash, U.S.
government securities or other liquid high-grade debt obligations ("liquid
assets") in a segregated account with its Custodian; or (iv) deposit and
maintain with its Custodian in a segregated account liquid assets having a value
that, when added to any amounts deposited with, or on behalf of, a broker as
margin, equals the market value of the instruments underlying the call. A
Portfolio is considered "covered" with respect to a put it writes if, so long as
it is obligated as the writer of a put, it (i) deposits and maintains with its
Custodian in a segregated account liquid assets having a value equal to or
greater than the exercise price of the option; (ii) holds a put on the same
security with an exercise price no lower than the exercise price of the put sold
or, if lower, the Portfolio deposits and maintains the differential in liquid
assets in a segregated account with its Custodian; or (iii) owns a short
position in the instrument underlying the put option, (or, if an index, a
portfolio representative of the index) at the same or a higher price than the
strike price of the put or, if lower, the Portfolio deposits and maintains the
differential in liquid assets in a segregated account with its Custodian.
A Portfolio may also write and purchase put and call options on any
securities index based on securities in which the Portfolio may invest for the
same purposes as it may write and purchase options on securities. Options on
securities indexes are similar to options on securities, except that the
exercise of securities index options requires cash payments and does not involve
the actual purchase or sale of securities. In addition, options are designed to
reflect price fluctuations in a group of securities or segment of the securities
market rather than price fluctuations in a single security. A Portfolio, in
purchasing or selling securities index options, is subject to the risk that the
value of its portfolio securities may not change as much as an index because the
Portfolio's investments generally cannot match the composition of an index.
In addition, a Portfolio may purchase and write put and call options on
foreign currencies for the purpose of protecting against declines in the dollar
value of its portfolio securities and against increases in the U.S. dollar cost
of foreign securities to be acquired. The writing of an option on foreign
currency will constitute only a partial hedge, up to the amount of the premium
received, and the Portfolio could be required to purchase or sell foreign
currencies at disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on foreign currency may constitute an effective hedge
against exchange rate fluctuations. However, in the event of unanticipated rate
movements adverse to the Portfolio's option position, the Portfolio may forfeit
the entire amount of the premium plus related transaction costs. Options on
foreign currencies to be written or purchased by the Portfolios will be traded
on U.S. and foreign exchanges or over-the-counter. The staff of the Securities
and Exchange Commission currently
<PAGE>
B-6
takes the position that all options which are traded in the over-the-counter
market are illiquid; if the staff amends its position, the Fund may, in
accordance with the amended position, consider such options to be liquid.
The Portfolios may write covered straddles. A straddle is a combination of
a call and a put written on the same underlying security. A straddle will be
covered when sufficient assets are deposited to meet the requirements, as
defined above with respect to covered options. In accordance with the terms of a
no-action position from the staff of the Securities and Exchange Commission, the
Fund may use the same liquid assets to cover both the call and put options where
the exercise price of the call and put are the same, or the exercise price of
the call is higher than that of the put. In such cases, the Portfolios will also
segregate liquid assets equivalent to the amount, if any, by which the put is
"in the money."
The staff of the Securities and Exchange Commission has taken the position
that, in general, purchased dealer options and the assets used as cover for
written dealer options are illiquid securities. However, a Portfolio may treat
the securities it uses as cover for written dealer options as liquid, provided
it has arrangements with certain qualified dealers who agree that the Portfolio
may repurchase any option it writes for a maximum price to be calculated by a
predetermined formula. In these cases, the dealer option would be considered
illiquid to the extent that the maximum repurchase price under the formula
exceeds the intrinsic value of the option.
Possible Risks Associated with Options Transactions. In considering the
use of options, particular note should be taken of the following:
(1) The value of an option position will reflect, among other things, the
current market price of the underlying security, the time remaining until
expiration, the relationship of the exercise price to the market price, the
expected price volatility of the underlying security and general market
conditions.
(2) A position in an exchange-traded option may be closed out only on an
exchange which provides a market for options of the same series. The ability to
establish and close out positions on the options exchanges is subject to the
maintenance of a liquid market. There can be no assurance that a liquid market
will exist for any option at any specific time. Although the Manager intends to
purchase or write only those exchange-traded options for which there appears to
be an active market, there is no assurance that a liquid market will exist for
any particular option and it is possible that, for some options, no market may
exist. In such event, it might not be possible to effect closing transactions
with respect to certain options, with the result that the Portfolio would have
to exercise those options which it has purchased in order to realize any profit.
With respect to options written by a Portfolio, the inability to enter into
closing transactions may result in losses.
(3) Exchange-traded options generally have a continuous liquid market
while dealer options do not. Consequently, the Portfolio will generally be able
to realize the value of a dealer option it has purchased only by exercising it
or reselling it to the issuing dealer. Similarly, when the Portfolio writes a
dealer option, it generally will be able to close out the option prior to its
expiration only by entering into a closing purchase transaction with the dealer
which originally purchased the option. While the Portfolio
<PAGE>
B-7
will enter into dealer options only with dealers who are expected to be capable
of entering into closing transactions with the Portfolio, there can be no
assurance that the Portfolio will be able to liquidate a dealer option at a
favorable price at any time prior to its expiration. Until the Portfolio, as the
writer of a covered dealer option, is able to effect a closing purchase
transaction, it will not be able to liquidate securities used as cover until the
option expires, is exercised or the Portfolio provides substitute cover. In the
event of insolvency of the dealer, the Portfolio may be unable to liquidate a
dealer option and thereby release the securities used as cover for the option
until expiration of the option.
(4) A Portfolio's activities in the options markets may result in a higher
portfolio turnover rate and additional brokerage costs; however, the Portfolio
may also save on transaction costs by purchasing such contracts rather than
buying or selling individual securities.
(5) All options purchased or sold by the Portfolios will be traded on a
securities exchange or will be purchased or sold by securities dealers ("dealer
options") meeting creditworthiness standards approved by the Fund's Board of
Directors. While exchange-traded options are, in effect, guaranteed by the
Options Clearing Corporation, in the case of dealer options, a Portfolio relies
on the dealer from which it purchases a dealer option to perform if the option
is exercised. Thus, when a Portfolio purchases a dealer option, it relies on the
dealer from which it purchases the option to make or take delivery of the
underlying securities. Failure by the dealer to do so would result in the loss
of the premium paid by the Portfolio as well as loss of the expected benefit of
the transaction.
Futures Contracts and Options on Futures.
The Portfolios may purchase or sell financial futures contracts ("futures
contracts") and options thereon. Financial futures are commodity futures
contracts which obligate the buyer to take and the seller to make delivery at a
future date of a specified quantity of a financial instrument or an amount of
cash based on the value of a securities index or the market value in U.S.
dollars of a foreign currency. Currently, futures contracts are available on
various types of fixed-income securities and indexes, including but not limited
to U.S. Treasury bonds, notes, and bills, foreign government bonds, Eurodollar
certificates of deposit, municipal bonds, foreign exchange, and various domestic
and foreign stock indexes.
In connection with transactions in futures contracts and related short
options, the Portfolio is required to deposit with its Custodian in a segregated
account in the name of its futures commission merchant ("FCM") as "initial
margin" a specified amount of cash and/or short-term U.S. government securities.
Thereafter, subsequent payments (referred to as "variation margin") are made to
and from the FCM to reflect changes in the value of the futures contract or
short option positions. In accordance with the current rules and regulations of
the Commodity Futures Trading Commission (the "CFTC"), the aggregate initial
margins and premiums required from a Portfolio in connection with commodity
futures and options positions used for purposes other than "bona fide hedging"
will not exceed five percent of the liquidation value of the Portfolio.
If the Manager wishes to shorten the effective duration of a Fixed-Income
Portfolio, the Manager may sell a futures contract or a call option thereon, or
purchase a put option on that futures contract. If
<PAGE>
B-8
the Manager wishes to lengthen the effective duration of a Fixed-Income
Portfolio, the Manager may buy a futures contract or a call option thereon, or
sell a put option.
The Portfolios' use of futures contracts will not result in leverage. The
Portfolio will segregate liquid assets to cover its performance under such
contracts, or will employ alternative cover (such as owning an offsetting
position). Although the terms of futures contracts specify actual delivery or
receipt of securities or cash, in most instances the contracts are closed out
before the settlement date without the making or taking of delivery. Closing out
of a futures contract is effected by entering into an offsetting purchase or
sale transaction.
Unlike a futures contract, which requires the parties to buy and sell a
security or currency or make a cash settlement based on changes in a securities
index on an agreed date, an option on a futures contract entitles its holder to
decide on or before a future date whether to enter into such a contract. If the
holder decides not to exercise its option, the holder may sell the option or may
decide to let the option expire and forfeit the premium thereon. The purchaser
of an option on a futures contract makes no daily payments of cash in the nature
of "variation" margin payments to reflect the change in the value of the
underlying contract as does a purchaser or seller of a futures contract. The
value of the option changes and is thus reflected in the net asset value of the
Portfolio.
Amounts equal to the initial margin and variation margin on any options on
futures contracts sold by the Portfolios are paid by the Portfolio directly to
the FCM or placed in a segregated account, in the name of the FCM; in the future
all such payments may be made directly to the FCM in accordance with recent
Commission interpretations.
A Portfolio may write (i.e., sell short) only covered put and call options
on futures contracts. A Portfolio is considered "covered" with respect to a call
option it writes on a futures contract if the Portfolio (i) owns a long position
in the underlying futures contract; (ii) segregates and maintains with its
Custodian liquid assets equal in value to the exercise price of the call (less
any initial margin deposited); (iii) owns a security or currency which is
deliverable under the futures contract; or (iv) owns an option to purchase the
security, currency or securities index, which is deliverable under the futures
contract or owns a call option to purchase the underlying futures contract, in
each case at a price no higher than the exercise price of the call option
written by the Portfolio, or if higher, the Portfolio deposits and maintains the
differential between the two exercise prices in liquid assets in a segregated
account with its Custodian. A Portfolio is considered "covered" with respect to
a put option it writes on a futures contract if it (i) segregates and maintains
with its Custodian liquid assets equal in value to the exercise price of the put
(less any initial and variation margin deposited); (ii) owns a put option on the
security, currency or securities index which is the subject of the futures
contract or owns a put option on the futures contract underlying the option, in
each case at an exercise price as high as or higher than the price of the
contract held by the Portfolio or, if lower, the Portfolio deposits and
maintains the differential between the two exercise prices in liquid assets in a
segregated account with its Custodian; or (iii) owns a short position in the
underlying futures contract.
<PAGE>
B-9
The Portfolios may write covered straddles of options on futures. A
straddle is a combination of a call and a put written on the same underlying
futures contract. A straddle will be covered when sufficient assets are
deposited to meet the requirements, as defined in the preceding paragraph. A
Portfolio may use the same liquid assets to cover both the call and put options
where the exercise price of the call and put are the same, or the exercise price
of the call is higher than that of the put. In such cases, the Portfolios will
also segregate liquid assets equivalent to the amount, if any, by which the put
is "in the money."
Possible Risks Associated with Futures Transactions. In considering the
proposed use of futures contracts and related options, particular note should be
taken of the following:
(1) Successful use by the Portfolios of futures contracts and related
options will depend in part upon the Manager's ability to assess the market's
valuation of these instruments. There is, in addition, the risk that the
movements in the price of a futures contract will not correlate with the
movement in prices of any securities being hedged. If the price of the futures
contract moves less than the price of the securities which are the subject of
the hedge, the hedge will not be fully effective, but if the price of the
securities being hedged has moved in an unfavorable direction, the Portfolio
would be in a better position than if it had not hedged at all. If the price of
the securities being hedged has moved in a favorable direction, this advantage
may be partially offset by losses in the futures position. If the price of the
futures contract moves more than the price of the underlying securities, the
Portfolio will experience either a loss or a gain on the futures contract which
may or may not be completely offset by movements in the price of the securities
which are the subject of the hedge.
(2) The price of the futures contracts may not correlate perfectly with
movements in the prices of any hedged securities. There may be several reasons
unrelated to the value of the underlying securities which causes this situation
to occur. First, all the participants in the futures market are subject to
initial and variation margin deposit requirements. If, to avoid meeting
additional margin deposit requirements or for other reasons, investors choose to
close a significant number of futures contracts through offsetting transactions,
distortions in the normal price relationship between the securities and the
futures market may occur. Second, because the deposit requirements in the
futures market are less onerous than margin requirements in the securities
market, there may be increased participation by speculators in the futures
market; this speculative activity in the futures market may also cause temporary
price distortions. As a result, a correct evaluation of futures prices and
trends may still not result in successful transactions through the use of
futures contracts and options thereon over the short-term.
(3) The Portfolios purchase and sell futures contracts only on exchanges
where there appears to be a market in the futures sufficiently active to
accommodate the volume of trading activity. There can be no assurance that a
liquid market will always exist for any particular contract at any particular
time. Accordingly, there can be no assurance that it will always be possible to
close a futures position when desired. In the event of adverse price movements,
the Portfolios would be required to continue to make daily cash payments of
variation margin, except in the case of purchased options on futures contracts.
(4) The hours of trading of financial futures contracts may not conform to
the hours during which the Portfolios may trade securities. To the extent that
one market closes before the other market,
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significant price and rate movements can take place that cannot be reflected in
the correlating market on a day-to-day basis.
(5) Futures exchanges may establish daily limits in the amount that the
price of a futures contract or related options contract may vary either up or
down from the previous day's settlement price. Once the daily limit has been
reached in a particular contract, no trades may be made that day at a price
beyond the limit. The daily limit governs only price movements during a
particular trading day and therefore does not limit potential losses because the
limit may prevent the liquidation of unfavorable positions. Futures or options
contract prices could move to the daily limit for several consecutive trading
days with little or no trading and thereby prevent prompt liquidations of
positions and subject some traders to substantial losses. In such event, it may
not be possible for a Portfolio to close a position, and in the event of adverse
price movements, the Portfolio would have to make daily cash payments of
variation margin (except in the case of purchased options).
(6) Purchasers of options on futures contracts pay a premium in cash at
the time of purchase. This amount, and the transaction costs, is all that is at
risk. Sellers of options on futures contracts, however, must post an initial
margin and are subject to additional margin calls which could be substantial in
the event of adverse price movements.
Foreign Currency Transactions
The Portfolios may employ certain risk management techniques to attempt to
protect against some or all effects of adverse changes in foreign currency
exchange rates, including foreign currency exchange contracts ("forward
contracts"). A forward contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of the contract. These contracts are principally traded in the interbank market
conducted directly between currency traders (usually large, commercial banks)
and their customers. A forward contract generally has no deposit requirement and
no commissions are charged at any stage for trades.
Each Portfolio may enter into forward contracts for any lawful and
appropriate purpose in light of its activities, including the following two
circumstances. First, when a Portfolio purchases or sells a security denominated
in a foreign currency, or has been notified of a dividend or interest payment,
it may desire to "lock in" the U.S. dollar price of the security or the amount
of the payment. By entering into a forward contract for the purchase or sale,
for a fixed amount of dollars, of the amount of foreign currency involved in the
underlying transactions, the Portfolio should be able to protect itself against
a possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the subject foreign currency during the period between the date
the security is purchased or sold and the date on which payment is made or
received or when the dividend or interest is actually received.
Second, when the Manager believes that the currency of a particular
foreign country may suffer or enjoy a substantial movement against another
currency, including the U.S. dollar, a Portfolio may enter into a forward
contract to sell or buy the amount of currency approximating the value of some
or all of its
<PAGE>
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portfolio securities denominated in the latter foreign currency or the U.S.
dollar. Alternatively, where appropriate, the Portfolio may hedge all or part of
its foreign currency exposure through the use of a basket of currencies or a
proxy currency where such currencies or currency act as an effective proxy for
other currencies. In such a case, the Portfolio may enter into a forward
contract where the amount of the foreign currency to be sold exceeds the value
of the securities denominated in such currency. The use of this basket hedging
technique may be more efficient and economical than entering into separate
forward contracts for each currency held in the Portfolio. The precise matching
of the forward contract amounts and the value of the securities involved will
not generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered into and the
date it matures. The projection of short-term currency market movement is
extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. Under certain circumstances, each of the Bernstein
International Value Portfolio and the Bernstein Emerging Markets Value Portfolio
may commit substantial portions or the entire value of its assets to the
consummation of these contracts. The Manager will consider the effect a
substantial commitment of its assets to forward contracts would have on the
investment program of the Portfolio and the flexibility of the Portfolio to
purchase additional securities. Other than as set forth above, a Portfolio will
also not enter into such forward contracts or maintain a net exposure to such
contracts where the consummation of the contracts would obligate the Portfolio
to deliver an amount of currency in excess of the value of the Portfolio's
securities and, if applicable, the interest thereon, and other assets
denominated in that currency.
At the maturity of a forward contract, a Portfolio may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an offsetting contract obligating it to purchase, on the
same maturity date, the same amount of the foreign currency. Alternatively, a
Portfolio may enter into a forward contract which provides for settlement by one
party making a single one-way payment to the other party in the amount of the
difference between the contracted forward rate and the current spot reference
rate. The currency used for settlement may be one of the transaction currencies
or a base currency, such as U.S. dollars.
As indicated above, it is impossible to forecast with absolute precision
the market value of portfolio securities at the expiration of the forward
contract. Accordingly, it may be necessary for a Portfolio to purchase
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security is less than the amount of foreign
currency the Portfolio is obligated to deliver and if a decision is made to sell
the security and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received upon
the sale of the portfolio security if its market value exceeds the amount of
foreign currency the Portfolio is obligated to deliver.
If a Portfolio retains the portfolio security and engages in an offsetting
transaction, the Portfolio will incur a gain or a loss (as described below) to
the extent that there has been movement in forward contract prices. If the
Portfolio engages in an offsetting transaction, it may subsequently enter into a
new
<PAGE>
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forward contract to sell the foreign currency. Should forward prices decline
during the period between the Portfolio's entering into a forward contract for
the sale of a foreign currency and the date it enters into an offsetting
contract for the purchase of the foreign security, the Portfolio will realize a
gain to the extent the price at which it has agreed to sell exceeds the price at
which it has agreed to purchase. Should forward prices increase, the Portfolio
will suffer a loss to the extent of the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell.
The Portfolios reserve the right to enter into forward foreign currency
contracts for different purposes and under different circumstances than those
described above. Of course, the Portfolios are not required to enter into
forward contracts with regard to their foreign currency-denominated securities
and will not do so unless deemed appropriate by the Manager. It also should be
realized that this method of hedging against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices of the
securities. It simply establishes a rate of exchange at a future date.
Additionally, although such contracts tend to minimize the risk of loss due to a
decline in the value of the hedged currency, at the same time, they tend to
limit any potential gain which might result from an increase in the value of
that currency.
The Portfolios do not intend to convert any holdings of foreign currencies
into U.S. dollars on a daily basis. A Portfolio may do so from time to time, and
investors should be aware of the costs of currency conversion. Although foreign
exchange dealers do not charge a fee for conversion, they do realize a profit
based on the difference (the "spread") between the prices at which they are
buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to a Portfolio at one rate, while offering a lesser rate of
exchange should the Portfolio desire to resell that currency to the dealer.
There is no assurance that a forward contract counterparty will be able to
meet its obligations under the forward contract or that, in the event of default
by the counterparty a Portfolio will succeed in pursuing contractual remedies.
The Portfolios assume the risk that they may be delayed in or prevented from
obtaining payments owed to them pursuant to the contractual agreements entered
into in connection with a forward contract.
Repurchase Agreements. The Portfolios may enter into repurchase agreements
with banks, brokers or securities dealers. In such agreements, the Portfolio
purchases a security, and the seller agrees to repurchase that security from a
Portfolio at a mutually agreed-upon time and price. The period of maturity is
usually quite short, either overnight or a few days, although it may extend over
a number of months. The resale price reflects an agreed-upon rate of interest.
Whenever a Portfolio enters into a repurchase agreement, the Portfolio's
custodian obtains collateral having a value at least equal to the amount of the
repurchase price, which includes accrued interest. The instruments held subject
to repurchase are valued daily, and if the value of the instruments declines,
the Portfolio will be entitled to additional collateral. If the seller defaults
and the value of the collateral securing the repurchase agreements declines, the
Portfolio may incur a loss. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the security, realization of the collateral by the
Portfolio may be delayed or limited.
<PAGE>
B-13
Equities and Warrants. The equity securities in which the Bernstein
International Value Portfolio and the Bernstein Emerging Markets Value Portfolio
may invest include common and preferred stocks, warrants and convertible
securities. Each such Portfolio may also invest in foreign securities directly
or in the form of American Depositary Receipts (ADRs), Global Depositary
Receipts (GDRs) or other similar securities convertible into securities of
foreign issuers without limitation. In some circumstances, the Bernstein
International Value Portfolio and the Bernstein Emerging Markets Value Portfolio
may, in compliance with provisions of the Investment Company Act of 1940 ("1940
Act"), invest in the securities of investment companies that invest in foreign
securities. Equity securities of non-U.S. issuers may have somewhat different
features than those of U.S. equities. To illustrate, the Portfolios may purchase
"Savings Shares," which are equity securities which have priority rights
(compared with preferred or ordinary common shares) to dividends and on any
liquidation of the issuer but which carry no voting rights.
Restricted Securities. Restricted securities can generally be sold in the
U.S. in privately negotiated transactions or pursuant to some other exemption
from registration under the Securities Act of 1933 or in a registered public
offering. Where registration is required, the Portfolios may be obligated to pay
all or part of the registration expenses and a considerable period may elapse
between the time of the decision to sell and the time the Portfolio may be
permitted to sell a security under an effective registration statement. If,
during such a period, adverse market conditions were to develop, the Portfolio
might obtain a less favorable price than prevailed when it decided to sell.
Restricted securities will be priced at fair value under policies established by
and under supervision of the Board of Directors.
The SEC has adopted Rule 144A to facilitate resales of restricted
securities in the U.S. by "qualified institutional buyers," including the
Portfolios. Provided that a dealer or institutional trading market in such
securities exists, these restricted securities are treated as exempt from the
Portfolios' limit on investments in illiquid securities. Because institutional
trading in restricted securities is relatively new, it is not possible to
predict how these institutional markets will develop. If institutional trading
in restricted securities were to decline to limited levels, the liquidity of the
Portfolios' securities could be adversely affected.
Industry Classification. In determining industry classifications, for each
Portfolio other than the Bernstein Emerging Markets Value Portfolio, the Fund
uses the current Directory of Companies Filing Annual Reports with the
Securities and Exchange Commission, (the "Directory"). Where a company is not
listed in the Directory, the Fund makes a reasonable determination as to the
industry classification, which determination may be made by using (1) the
classification of the company's parent corporation; or (2) the classification
the Fund reasonably believes the parent corporation would have if it were listed
in the Directory; or (3) the industry classification the Fund reasonably
believes the company would have if it were listed in the Directory. In the case
of the Bernstein Emerging Markets Value Portfolio, the Portfolio relies
primarily on the Morgan Stanley Capital International ("MSCI") industry
classification.
Portfolio Turnover. The portfolio turnover rate for the Bernstein
Intermediate Duration Portfolio increased from 141.04% for the fiscal year ended
September 30, 1996 to 238.04% for the
<PAGE>
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fiscal year ended September 30, 1997. This increase was due to additional
opportunities in the mortgage and corporate sectors of the market; in fiscal
year 1997, the Manager was very active in selling U.S. Treasury securities to
purchase corporate and mortgage-related securities, while in fiscal year 1996,
the Manager was less active in selling out of one sector to purchase another.
Furthermore, in fiscal year 1997, the Manager was involved in an increased
amount of intra-sector trading. Finally, in fiscal year 1997 the Manager sold a
significant portion of conventional U.S. Treasury securities in order take a
large position in U.S. Treasury inflation-protected bonds.
The portfolio turnover rate for the Bernstein Government Short Duration
Portfolio decreased from 155.29% for the fiscal year ended September 30, 1996 to
80.11% for the fiscal year ended September 30, 1997; and the Bernstein Short
Duration Plus Portfolio decreased from 169.96% to 118.58% for the same period.
The portfolio turnover rate for these Portfolios decreased mainly because the
Manager's yield curve strategy was quite stable throughout the year. For the
majority of fiscal year 1997, these Portfolios were concentrated in one- to
two-year securities, just as they had been at the close of fiscal year 1996.
This was primarily due to the yield curve being relatively normally shaped in
fiscal year 1997. Furthermore, the Manager's duration targets were less volatile
in fiscal year 1997 than in fiscal year 1996, and this resulted in much less
duration-related trading in these Portfolios.
During the one-year period ended September 30, 1997, the portfolio
turnover rates for three of the municipal Fixed-Income Portfolios increased as
compared to the prior fiscal year. The turnover rate for the Bernstein
California Municipal Portfolio increased from 23.87% for the year ended
September 30, 1996 to 41.32% for the year ended September 30, 1997; the
Bernstein Short Duration New York Municipal Portfolio increased from 55.81% to
98.01% over the same period; and the Bernstein Short Duration California
Municipal Portfolio increased from 60.76% to 75.36% over the same period. The
increase in the portfolio turnover rate in the Bernstein California Municipal
Portfolio was due to sales of: (a) prerefunded bonds as they became money market
instruments with the proceeds being re-invested in securities maturing in
two-to-three years, (b) insured bonds with generally longer maturities to
improve the call protection of the Portfolio and (c) U.S. Treasury securities
which had been purchased as a result of former limited opportunities in the
California municipal market at various times during the year. The increased
turnover in the Bernstein Short Duration California Municipal Portfolio and the
Bernstein Short Duration New York Municipal Portfolio were due to increased
sales of short-term bonds as they became money market instruments and increased
activity in U.S. Treasury securities purchased at times when short-term
California bonds were at very expensive levels.
During the one-year period ended September 30, 1997, the portfolio
turnover rate for the Bernstein Emerging Markets Value Portfolio increased from
9.81% for the year ended September 30, 1996 to 32.45% for the year ended
September 30, 1997. Since the Portfolio commenced operations in fiscal year
1996, the portfolio turnover ratio was abnormally low as cash from new investors
was used for the initial investment of the Portfolio. The Bernstein Emerging
Markets Value Portfolio anticipates that its portfolio turnover rate will
increase in fiscal year 1998 due to the continued stabilization of cash flows
into the Portfolio. In addition, volatility in emerging market securities may
result in an increase in the
<PAGE>
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portfolio turnover rate in fiscal year 1998 in order to keep the investments of
the Portfolio allocated among the emerging markets countries in accordance with
guidelines established by the Manager.
Special Considerations Relating to Investment in New York Municipal
Securities
Because the Bernstein Short Duration New York Municipal Portfolio and the
Bernstein New York Municipal Portfolio invest primarily in New York Municipal
Securities, the Portfolios' performance is closely tied to economic conditions
within the State of New York and the financial condition of the State and its
agencies and municipalities. The following information concerning the State's
economic background is contained in an Annual Information Statement of the State
of New York dated August 15, 1997 and the Update to the Annual Information
Statement of the State of New York dated November 5, 1997. The Annual
Information Statement is furnished by the State of New York and includes
official information regarding the State for investors, bondholders and other
market participants.
New York is the third most populous state in the nation and has a
relatively high level of personal wealth. The State's economy is diverse, with a
comparatively large share of the nation's finance, insurance, transportation,
communications and services employment, and a very small share of the nation's
farming and mining activity. The State's location and its excellent air
transport facilities and natural harbors have made it an important link in
international commerce. Travel and tourism constitute an important part of the
economy. Like the rest of the nation, New York has a declining proportion of its
workforce engaged in manufacturing, and an increasing proportion engaged in
service industries.
In the calendar years 1987 through 1996, the State's rate of economic
growth was somewhat slower than that of the nation. In particular, during the
1990-91 recession and post-recession period, the economy of the State, and that
of the rest of the Northeast, was more heavily damaged than that of the nation
as a whole and has been slower to recover. The total employment growth rate in
the State has been below the national average since 1987. The unemployment rate
in the State dipped below the national rate in the second half of 1981 and
remained lower until 1991. According to data published by the US Bureau of
Economic Analysis, total personal income in the State has risen more slowly than
the national average since 1988. Although the State has added approximately
300,000 jobs since late 1992, employment growth in the State has been hindered
during recent years by significant cutbacks in the computer and instrument
manufacturing, utility, defense, and banking industries. Government downsizing
has also moderated these job gains.
In recent years, State actions affecting the level of receipts and
disbursements, the relative strength of the State and regional economy, actions
of the federal government and other factors have created structural budget gaps
for the State. These gaps resulted from a significant disparity between
recurring revenues and the costs of maintaining or increasing the level of
support for State programs. To address a potential imbalance in any given fiscal
year, the State would be required to take actions to increase receipts and/or
reduce disbursements as it enacts the budget for that year, and under the State
Constitution, the Governor is required to propose a balanced budget each year.
There can be no assurance, however, that the Legislature will enact the
Governor's proposals or that the State's actions will
<PAGE>
B-16
be sufficient to preserve budgetary balance in a given fiscal year or to align
recurring receipts and disbursements in future fiscal years.
The State Financial Plan is based upon forecasts of national and State
economic activity developed through both internal analysis and review of State
and national economic forecasts prepared by commercial forecasting services and
other public and private forecasters. Economic forecasts have frequently failed
to predict accurately the timing and magnitude of changes in the national and
the State economies. Many uncertainties exist in forecasts of both the national
and State economies, including consumer attitudes toward spending, the extent of
corporate and governmental restructuring, federal fiscal and monetary policies,
the level of interest rates, and the condition of the world economy, which could
have an adverse effect on the State. There can be no assurance that the State
economy will not experience results in the current fiscal year that are worse
than predicted, with corresponding material and adverse effects on the State's
projections of receipts and disbursements.
The 1997-98 State Financial Plan was projected to be balanced on a cash
basis. As compared to the Governor's Executive Budget as amended in February
1997, the State's adopted budget for 1997-98 increases General Fund spending by
$1.7 billion, primarily from increases for local assistance ($1.3 billion).
Other actions taken in the 1997-98 adopted budget add further pressure to future
budget balance in New York State. For example, the fiscal effects of tax
reductions adopted in the 1997-98 budget are projected to grow more
substantially beyond the 1998-99 fiscal year, with incremental costs averaging
in excess of $1.3 billion annually over the last three years of the tax
reduction program. These incremental costs reflect the phase-in of State-funded
school property tax and local income tax relief, the phase-out of the
assessments on medical providers, and reductions in estate and gift levies,
utility gross receipts taxes, and the State sales tax on clothing. The full
annual cost of the enacted tax reduction package is estimated at approximately
$4.8 billion when fully effective in State fiscal year 2001-02. In addition, the
1997-98 budget included multi-year commitments for school aid and
pre-kindergarten early learning programs which could add as much as $1.4 billion
in costs when fully annualized in fiscal year 2001-02. These spending
commitments are subject to annual appropriation.
On September 11, 1997, the State Comptroller released a report entitled
"The 1997-98 Budget: Fiscal Review and Analysis" in which he identified several
risks to the State Financial Plan and estimated that the State faces a potential
imbalance in receipts and disbursements of approximately $1.5 billion for the
State's 1998-99 fiscal year and approximately $3.4 billion for the State's
1999-00 fiscal year. Any increase in the 1997-98 reserve for future needs would
reduce this imbalance further and, based upon results to date, such an outcome
is considered possible. In addition, the Comptroller identified risks in future
years from an economic slowdown and from spending and revenue actions enacted as
a part of the 1997-98 budget that will add pressure to future budget balance.
Uncertainties with regard to the economy, as well as the outcome of
certain litigation and federal disallowances now pending against the State,
could produce adverse effects on the State's projections of receipts and
disbursements. For example, larger-than-expected changes to current levels of
interest rates or a significant decline in world financial markets could have an
adverse effect on the State economy and produce results in the current fiscal
year that are worse than predicted. Similarly, adverse judgments in
<PAGE>
B-17
legal proceedings against the State could exceed amounts reserved in the 1997-98
Financial Plan for payment of such judgments and produce additional unbudgeted
costs to the State. However, the availability of a reserve for future needs and
positive year-to-date results make it unlikely that such costs would exceed
total available resources and present a risk to budget balance for the current
fiscal year.
The fiscal stability of the State is related, in part, to the fiscal
stability of its public authorities. For purposes hereof, public authorities
refer to public benefit corporations, created pursuant to State law, other than
local authorities. Public authorities are not subject to the constitutional
restrictions on the incurrence of debt which apply to the State itself and may
issue bonds and notes within the amounts and restrictions set forth in
legislative authorization. The State's access to the public credit markets could
be impaired and the market price of its outstanding debt may be materially
adversely affected, if any of its public authorities were to default on their
respective obligations. As of September 30, 1996, there were 17 public
authorities that had outstanding debt of $100 million or more, and the aggregate
outstanding debt, including refunding bonds, of all State public authorities was
$75.4 billion.
There are numerous public authorities, with various responsibilities,
including those which finance, construct and/or operate revenue producing public
facilities. Public authority operating expenses and debt service costs are
generally paid by revenues generated by the projects financed or operated, such
as tolls charged for the use of highways, bridges or tunnels, rentals charged
for housing units, and charges for occupancy at medical care facilities.
In addition, State legislation authorizes several financing techniques for
public authorities and there are statutory arrangements providing for State
local assistance payments otherwise payable to localities to be made under
certain circumstances to public authorities. Although the State has no
obligation to provide additional assistance to localities whose local assistance
payments have been paid to public authorities under these arrangements, if local
assistance payments are diverted the affected localities could seek additional
State assistance.
Some authorities also receive moneys from State appropriations to pay for
the operating costs of certain of their programs. The Mass Transit Authority
(the "MTA") receives the bulk of this money in order to provide transit and
commuter services. State legislation accompanying the 1996-97 adopted State
budget authorized the MTA, Triborough Bridge and Tunnel Authority (the "TBTA"),
the New York City Transit Authority and the Manhattan and Bronx Surface Transit
Operating Authority (collectively, the "TA") to issue an aggregate of $6.5
billion in bonds to finance a portion of the $12.17 billion MTA capital plan for
the 1995 through 1999 calendar years (the "1995-99 Capital Program"). In July
1997, the Capital Program Review Board ("CPRB") approved the 1995-99 Capital
Program, which supersedes the overlapping portion of the MTA's 1992-96 Capital
Program. The 1995-99 Capital Program is the fourth capital plan since the
Legislature authorized procedures for the adoption, approval and amendment of
MTA capital programs and is designed to upgrade the performance of the MTA's
transportation systems by investing in new rolling stock, maintaining
replacement schedules for existing assets and bringing the MTA system into a
state of good repair. The 1995-99 Capital Program assumes the issuance of an
estimated $5.1 billion in bonds under this $6.5 billion aggregate bonding
authority. The remainder of the plan is projected to be financed through
assistance from the State, the federal
<PAGE>
B-18
government, and the City of New York, and from various other revenues generated
from actions taken by the MTA.
There can be no assurance that all the necessary governmental actions for
the 1995-99 Capital Program or future capital programs will be taken, that
funding sources currently identified will not be decreased or eliminated, or
that the 1995-99 Capital Program, or parts thereof, will not be delayed or
reduced. Should funding levels fall below current projections, the MTA would
have to revise its 1995-99 Capital Program accordingly. If the 1995-99 Capital
Program is delayed or reduced, ridership and fare revenues may decline, which
could, among other things, impair the MTA's ability to meet its operating
expenses without additional assistance.
The fiscal health of the State may also be affected by the fiscal health
of New York City (the "City"), which continues to require significant financial
assistance from the State. The City depends on State aid both to enable the City
to balance its budget and to meet its cash requirements. The City's projections
set forth in the Financial Plan are based on various assumptions and
contingencies, some of which are uncertain and may not materialize. Unforeseen
developments and changes in major assumptions could significantly affect the
City's ability to balance its budget as required by State law and to meet its
annual cash flow and financing requirements. Implementation of the Financial
Plan is also dependent upon the ability of the City and certain entities issuing
debt for the benefit of the City to market their securities successfully. The
City issues securities to finance, refinance and rehabilitate infrastructure and
other capital needs, as well as for seasonal financing needs. The State created
the New York City Transitional Finance Authority to finance a portion of the
City's capital program. Despite this additional financing mechanism, the City
currently projects that, if no further action is taken, it will reach its debt
limit in City fiscal year 1999-2000. On June 2, 1997, an action was commenced
seeking a declaratory judgment declaring the legislation establishing the
Transitional Finance Authority to be unconstitutional. If such legislation were
voided, projected contracts for City capital projects would exceed the City's
debt limit during fiscal year 1997-98. Future developments concerning the City
or entities issuing debt for the benefit of the City, and public discussion of
such developments, as well as prevailing market conditions and securities credit
ratings, may affect the ability or cost to sell securities issued by the City or
such entities and may also affect the market for their outstanding securities.
In response to the City's fiscal crisis in 1975, the State took action to
assist the City in returning to fiscal stability. Among those actions, the State
established NYC MAC to provide financing assistance to the City; the New York
State Financial Control Board (the "Control Board") to oversee the City's
financial affairs; and the Office of the State Deputy Comptroller for the City
of New York ("OSDC") to assist the Control Board in exercising its powers and
responsibilities. A "Control Period" existed from 1975 to 1986 during which the
City was subject to certain statutorily-prescribed fiscal controls. Although the
Control Board terminated the Control Period in 1986 when certain statutory
conditions were met and suspended certain Control Board powers, upon the
occurrence or "substantial likelihood and imminence" of the occurrence of
certain events, including (but not limited to) a City operating budget deficit
of more than $100 million or impaired access to the public credit markets, the
Control Board is required by law to reimpose a Control Period. Currently, the
City and its Covered Organizations (i.e., those which receive or
<PAGE>
B-19
may receive moneys from the City directly, indirectly or contingently) operate
under a four-year financial plan (the "Financial Plan") which the City prepares
annually and periodically updates.
The staffs of the Control Board, OSDC and the City Comptroller issue
periodic reports on the City's Financial Plans which analyze the City's
forecasts of revenues and expenditures, cash flow, and debt service requirements
for, and Financial Plan compliance by, the City and its Covered Organizations.
According to recent staff reports, while economic recovery in the City has been
slower than in other regions of the country, a surge in Wall Street
profitability resulted in increased tax revenues and generated a substantial
surplus for the City in fiscal year 1996-97. Although several sectors of the
City's economy have expanded recently, especially tourism and business and
professional services, City tax revenues remain heavily dependent on the
continued profitability of the securities industries and the course of the
national economy. These reports have indicated that recent City budgets have
been balanced in part through the use of non-recurring resources; that the
City's Financial Plan tends to rely on actions outside its direct control; that
the City has not yet brought its long-term expenditure growth in line with
recurring revenue growth; and that the City is therefore likely to continue to
face substantial gaps between forecast revenues and expenditures in future years
that must be closed with reduced expenditures and/or increased revenues.
Certain localities outside New York City have experienced financial
problems and have requested and received additional State assistance during the
last several State fiscal years. The potential impact on the State of any future
requests by localities for additional assistance is not included in the
projections of the State's receipts and disbursements for the State's 1997-98
fiscal year.
From time to time, Federal expenditure reductions could reduce, or in some
cases eliminate, federal funding of some local programs and accordingly might
impose substantial increased expenditure requirements on affected localities. If
the State, the City or any of the public authorities were to suffer serious
financial difficulties jeopardizing their respective access to the public credit
markets, the marketability of notes and bonds issued by localities within the
State could be adversely affected. Localities also face anticipated and
potential problems resulting from certain pending litigation, judicial decisions
and long-range economic trends. Long-range potential problems of declining urban
population, increasing expenditures and other economic trends could adversely
affect localities and require increasing State assistance in the future.
Special Considerations Relating to Investment in California Municipal
Securities
Because the Bernstein Short Duration California Municipal Portfolio and
the Bernstein California Municipal Portfolio invest primarily in California
Municipal Securities, the performance of these Portfolios is closely tied to
economic conditions within the State of California and the financial condition
of the State and its agencies and municipalities. Certain California
constitutional amendments, legislative measures, executive orders,
administrative regulations and voter initiatives could adversely affect the
ability of issuers of California Municipal Securities to pay interest and
principal on municipal securities. The following information concerning the
State's economic background is contained in an official statement dated October
1, 1997, which was issued in connection with the sale of $1 billion of
California
<PAGE>
B-20
General Obligation Bonds.
California's economy is the largest among the 50 states and one of the
largest in the world. The State's August 1, 1996 population of 32.4 million
represented over 12 percent of the total United States population.
STATE FINANCES
The Budget Process. The annual budget is proposed by the Governor by
January 10 of each year for the next fiscal year (the "Governor's Budget").
Under State law, the annual proposed Governor's Budget cannot provide for
projected expenditures in excess of projected revenues and balances available
from prior fiscal years. Following the submission of the Governor's Budget, the
Legislature takes up the proposal. Under the State Constitution, money may be
drawn from the Treasury only through an appropriation made by law. The primary
source of the annual expenditure authorization is the Budget Act as approved by
the Legislature and signed by the Governor.
The General Fund. The General Fund is the principal operating fund for the
majority of governmental activities and is the depository of most of the major
revenue sources of the State. The General Fund may be expended as a consequence
of appropriation measures enacted by the Legislature and approved by the
Governor, as well as appropriations pursuant to various constitutional
authorizations and initiative statues.
The Special Fund for Economic Uncertainties ("SFEU"). The SFEU is funded
with General Fund revenues and was established to protect the State from
unforeseen revenue reductions and/or unanticipated expenditure increases.
Amounts in the SFEU may be transferred by the State Controller as necessary to
meet cash needs of the General Fund. The State Controller is required to return
moneys so transferred without payment of interest as soon as there are
sufficient moneys in the General Fund.
Inter-Fund Borrowings. Inter-fund borrowing has been used for many years
to meet temporary imbalances of receipts and disbursements in the General Fund.
As of June 30, 1997, the General Fund had outstanding loans from the SFEU and
Special Funds in the amount of $1.190 billion.
Local Governments. The primary units of local government in California are
the counties, which are responsible for the provision of many basic services,
including indigent health care, welfare, courts, jails and public safety in
unincorporated areas. The fiscal condition of local governments has been
constrained since the enactment of "Proposition 13" in 1978, which reduced and
limited the future growth of property taxes, and limited the ability of local
governments to impose "special taxes" (those devoted to a specific purpose)
without two-thirds voter approval.
In the aftermath of Proposition 13, the State provided aid from the
General Fund to make up some of the loss of property tax moneys, including
taking over the principal responsibility for funding local K-12 schools and
community colleges. Under the pressure of the recent recession, the Legislature
has eliminated the remnants of this post-Proposition 13 aid to entities other
than K-14 education districts,
<PAGE>
B-21
although it has also provided additional funding sources (such as sales taxes)
and reduced mandates for local services. Many counties continue to be under
severe fiscal stress. While such stress has in recent years most often been
experienced by smaller, rural counties, larger urban counties, such as Los
Angeles, have also been affected. Orange County implemented significant
reductions in services and personnel, and continues to face fiscal constraints
in the aftermath of its bankruptcy, which had been caused by large investment
losses in its pooled investment funds.
On November 5, 1996, voters approved Proposition 218, entitled the "Right
to Vote on Taxes Act", which limits the ability of local government agencies to
impose or raise various taxes, fees, charges and assessments without voter
approval. Certain "general taxes" imposed after January 1, 1995 must be approved
by voters in order to remain in effect and local voters have the right to reduce
taxes, fees, assessments or charges through local initiatives.
There are a number of ambiguities concerning the Proposition and its
impact on local governments and their bonded debt which will require
interpretation by the courts or the Legislature. The Legislative Analyst
estimated that enactment of Proposition 218 would reduce local government
revenues statewide by over $100 million a year, and that over time, annual
revenues to local government would be reduced by several hundred million
dollars.
State Appropriations Limit. The State is subject to an annual
appropriations limit imposed by Article XIII B of State Constitution (the
"Appropriations Limit"). Article XIII B prohibits the State from spending
"appropriations subject to limitation" in excess of the Appropriations Limit. No
limit is imposed on appropriations or funds which are not "proceeds of taxes,"
such as reasonable user charges or fees, and certain other non-tax funds. Not
included in the Appropriations Limit are appropriations for the debt service
costs of bonds existing or authorized by January 1, 1979, or subsequently
authorized by the voters, appropriations required to comply with mandates of
courts or the federal government, appropriations for qualified capital outlay
projects, appropriations of revenues derived from any increase in gasoline taxes
and motor vehicle weight fees above January 1, 1990 levels, and appropriation of
certain special taxes imposed by initiative (e.g., cigarette and tobacco taxes).
The Appropriations Limit may also be exceeded in cases of emergency.
Proposition 98. On November 8, 1988, voters of the State approved
Proposition 98, a combined initiative constitutional amendment and statute
called the "Classroom Instructional Improvement and Accountability Act".
Proposition 98 changed State funding of public education below the university
level, and the operation of the State Appropriations Limit, primarily by
guaranteeing K-14 schools a minimum share of General Fund revenues. Under
Proposition 98 (as modified by Proposition 111, which was enacted on June 5,
1990), K-14 schools are guaranteed the greater of (a) in general, a fixed
percent of General Fund revenues ("Test 1"), (b) the amount appropriated to K-14
schools in the prior year, adjusted for changes in the cost of living (measured
as in Article XIII B by reference to California per capita personal income) and
enrollment ("Test 2"), or (c) a third test, which would replace the Test 2 in
any year when the percentage growth in per capita General Fund revenues from the
prior year plus one half of one percent is less than the percentage growth in
State per capita personal income ("Test 3"). Under Test 3, schools would receive
the amount appropriated in the prior year adjusted for changes in enrollment and
<PAGE>
B-22
per capita General Fund revenues, plus an additional small adjustment factor. If
Test 3 is used in any year, the difference between Test 3 and Test 2 would
become a "credit" to schools which would be the basis of payments in future
years when per capita General Fund revenue growth exceeds per capita personal
income growth. Proposition 98 permits the Legislature by two-thirds vote of both
houses, with the Governor's concurrence, to suspend the K-14 schools' minimum
funding formula for a one-year period.
Recent Fiscal Year Financial Results
Fiscal Years Prior to 1995-96
Pressures on the State's budget in the late 1980's and early 1990's were
caused by a combination of external economic conditions and growth of the
largest General Fund Programs -- K-14 education, health, welfare and corrections
- -- at rates faster than the revenue base. These pressures could continue as the
State's overall population and school age population continue to grow, and as
the State's corrections program responds to a "Three Strikes" law enacted in
1994, which requires mandatory life prison terms for certain third-time felony
offenders. In addition, the State's health and welfare programs are in a
transition period as a result of recent federal and State welfare reform
initiatives.
As a result of these factors and others, and especially because a severe
recession between 1990-94 reduced revenues and increased expenditures for social
welfare programs, from the late 1980's until 1992-93, the State had a period of
budget imbalance. During this period, the State accumulated and sustained a
budget deficit in its budget reserve, the SFEU, approaching $2.8 billion at its
peak at June 30, 1993. Between the 1991-92 and 1994-95 Fiscal Years, each budget
required multibillion dollar actions to bring projected revenues and
expenditures into balance, including significant cuts in health and welfare
program expenditures; transfers of program responsibilities and funding from the
State to local governments; transfer of about $3.6 billion in annual local
property tax revenues from other local governments to local school districts,
thereby reducing State funding for schools under Proposition 98; and revenue
increases (particularly in the 1991-92 Fiscal Year budget), most of which were
for a short duration.
Despite these budget actions, as noted, the effects of the recession led
to large, unanticipated deficits in the budget reserve, the SFEU, as compared to
projected positive balances. By the 1993-94 Fiscal Year, the accumulated deficit
was so large that it was impractical to budget to retire it in one year, so a
two-year program was implemented, using the issuance of revenue anticipation
warrants to carry a portion of the deficit over the end of the fiscal year. When
the economy failed to recover sufficiently in 1993-94, a second two-year plan
was implemented in 1994-95, again using cross-fiscal year revenue anticipation
warrants to partly finance the deficit into the 1995-96 fiscal year.
Another consequence of the accumulated budget deficits, together with
other factors such as disbursement of funds to local school districts "borrowed"
from future fiscal years and hence not shown in the annual budget, was to
significantly reduce the State's cash resources available to pay its ongoing
obligations. When the Legislature and the Governor failed to adopt a budget for
the 1992-93 Fiscal Year
<PAGE>
B-23
by July 1, 1992, which would have allowed the State to carry out its normal
annual cash flow borrowing to replenish its cash reserves, the State Controller
issued registered warrants to pay a variety of obligations representing prior
years' or continuing appropriations, and mandates from court orders. Available
funds were used to make constitutionally-mandated payments, such as debt service
on bonds and warrants. Between July 1 and September 4, 1992, when the budget was
adopted, the State Controller issued a total of approximately $3.8 billion of
registered warrants.
For several fiscal years during the recession, the State was forced to
rely on external debt markets to meet its cash needs, as a succession of notes
and revenue anticipation warrants were issued in the period from June 1992 to
July 1994, often needed to pay previously maturing notes or warrants. The last
and largest of these borrowings was $4.0 billion of revenue anticipation
warrants which were issued in July, 1994 and matured on April 25, 1996.
1995-96 and 1996-97 Fiscal Years
With the end of the recession, and a growing economy starting in 1994, the
State's financial condition improved markedly in the last two fiscal years, with
a combination of better than expected revenues, slowdown in growth of social
welfare programs, and continued spending restraint based on the actions taken in
earlier years. The last of the recession-induced budget deficits was repaid,
allowing the State's budget reserve (the SFEU) to post a positive cash balance
for only the second time in the 1990's, totaling $281 million as of June 30,
1997. The State's cash position also returned to health, as cash flow borrowing
was limited to $3 billion in 1996-97, and no deficit borrowing has occurred over
the end of these last two fiscal years.
Because of the growth in the economy during these fiscal years, the
General Fund took in substantially greater tax revenues (around $2.2 billion in
1995-96 and $1.6 billion in 1996-97) than were initially planned when the
budgets were enacted. These additional funds were largely directed to school
spending as mandated by Proposition 98, and to make up shortfalls from reduced
federal health and welfare aid. As a result, there was not any dramatic increase
in budget reserves, although the accumulated budget deficit from the recession
years was finally eliminated in the past fiscal year.
1997-98 Fiscal Year
On January 9, 1997, the Governor released his proposed budget for the
1997-98 Fiscal Year (the "Proposed Budget"). The Proposed Budget estimated
General Fund revenues and transfers of about $50.7 billion, and proposed
expenditures of $50.3 billion, which would leave a budget reserve in the SFEU of
about $550 million.
In May, 1997, action was taken by the California Supreme Court in an
ongoing lawsuit, PERS v. Wilson, which made final a judgment against the State
requiring an immediate payment of $1.235 billion from the General Fund to the
Public Employees Retirement Fund ("PERF") to make up certain deferrals in annual
retirement fund contributions which had been legislated in earlier years for
budget savings, and which the courts found to be unconstitutional.
<PAGE>
B-24
Once the pension payment eliminated essentially all the "increased"
revenue in the budget, final agreement was reached within a few weeks on the
welfare package and the remainder of the budget. The Legislature passed the
Budget Bill on August 11, 1997, along with numerous related bills to implement
its provisions. On August 18, 1997, the Governor signed the Budget Act, but
vetoed about $314 million of specific spending items, primarily health and
welfare and education areas from both the General Fund and Special Funds.
The 1997-98 Budget Act anticipates General Fund revenues and transfers of
$52.5 billion (a 6.8 percent increase over the final 1996-97 amount), and
expenditures of $52.8 billion (an 8.0 percent increase from the 1996-97 levels).
On a budgetary basis, the budget reserve (SFEU) is projected to decrease from
$408 million at June 30, 1997 to $112 million at June 30, 1998. The Budget Act
also includes Special Fund expenditures of $14.4 billion (as against estimated
Special Fund revenues of $14.0 billion), and $2.1 billion of expenditures from
various Bond Funds.
Prior to the end of the Legislative Session on September 13, 1997, the
Legislature passed a bill restoring $203 million of education-related
expenditures which the Governor had vetoed in the original Budget Act, based on
agreement with the Governor on an education testing program. The Governor signed
several bills implementing a new education testing program, and is expected to
sign the bill to restore the funding. The Legislature also passed a bill to
restore $48 million of welfare cost savings which had been part of earlier
legislation vetoed by the Governor. This bill was signed by the Governor in
early October.
Special Considerations Relating to Risk Factors for the Bernstein Emerging
Markets Value Portfolio
Investing in securities of companies in emerging markets countries entails
greater risks than investing in equity securities in developed markets. The
risks include but are not limited to the following:
Investment restrictions. Some emerging markets countries prohibit or
impose substantial restrictions on investments in their capital markets,
particularly their equity markets, by foreign entities such as the Portfolio.
For example, certain emerging markets countries may require governmental
approval prior to investments by foreign persons, or limit the amount of
investment by foreign persons in the country, or limit the investment by foreign
persons to only specific class of securities of a company which may have less
advantageous terms (including price) than securities of the company available
for purchase by nationals. Certain emerging markets countries may restrict
investment opportunities in issuers or industries deemed important to national
interests. The manner in which foreign investors may invest in companies in
these emerging markets countries, as well as limitations on such investments,
may have an adverse impact on the operations of the Portfolio.
Theft or loss of assets. Security settlement and clearance procedures in
some emerging markets countries may not fully protect the Portfolio against loss
or theft of its assets. By way of example and without limitation, the Portfolio
could suffer losses in the event of a fraudulent or otherwise deficient
<PAGE>
B-25
security settlement, or theft or default by a broker, dealer, or other
intermediary. The existence of overburdened infrastructure and obsolete
financial systems exacerbate the risks in certain emerging markets countries.
The Fund's Custodial Agreement provides that the custodian will not be liable to
the Portfolio or its shareholders for such losses incurred by the Portfolio in
connection with any action taken by the Custodian in the performance of its
duties in good faith without negligence. The Management Agreement provides that
the Manager shall not be liable to the Fund or the Portfolio for any error of
judgment by the Manager or for any loss sustained by the Fund or the Portfolio
except in the case of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations and duties under the Management Agreement.
Settlement and Brokerage Practices: Brokerage commissions, custodial
services, and other costs relating to investment in emerging markets countries
are generally more expensive than in the United States. For example, one
securities broker may represent all or a significant part of the trading volume
in a particular country, resulting in higher trading costs and decreased
liquidity due to a lack of alternative trading partners. Emerging markets also
have different clearance and settlement procedures, and in certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct such transactions.
Delays in settlement could result in temporary periods when assets of the
Portfolio are uninvested and no return is earned thereon. The inability of the
Portfolio to make intended security purchases due to settlement problems could
cause the Portfolio to miss attractive investment opportunities. Inability to
dispose of Portfolio securities due to settlement problems could result either
in losses to the Portfolio due to subsequent declines in value of the Portfolio
security or, if the Portfolio has entered into a contract to sell the security,
could result in possible liability to the purchaser.
Less sophisticated regulatory and legal framework. In emerging markets
countries, there is generally less government supervision and regulation of
business and industry practices, stock exchanges, brokers and listed companies
than in the U.S., and capital requirements for brokerage firms are generally
lower. There may also be a lower level of monitoring of activities of investors
in emerging securities markets, and enforcement of existing regulations may be
limited or inconsistent. The prices at which the Portfolio may acquire
investments may be affected by trading by persons with material non-public
information and by securities transactions by brokers in anticipation of
transactions by the Portfolio in particular securities.
The sophisticated legal systems necessary for the proper and efficient
functioning of modern capital markets have yet to be developed in most emerging
markets countries, although many of these countries have made significant
strides in this area in the past few years. A high degree of legal uncertainty
may therefore exist as to the nature and extent of investors' rights and the
ability to enforce those rights in the courts. Many advanced legal concepts
which now form significant elements of mature legal systems are not yet in place
or, if they are in place, have yet to be tested in the courts. It is difficult
to predict with any degree of certainty the outcome of judicial proceedings
(often because the judges themselves have little or no experience with complex
business transactions), or even the measure of damages which may be awarded
following a successful claim.
<PAGE>
B-26
Less accurate information on companies and markets. Most of the foreign
securities held by the Portfolio will not be registered with the U.S. Securities
and Exchange Commission ("SEC"), nor will the issuers thereof be subject to SEC
or other U.S. reporting requirements. Accordingly, there will generally be less
publicly available information concerning foreign issuers of securities held by
the Portfolio than will be available concerning U.S. companies. Foreign
companies, and in particular companies in emerging markets countries, are not
generally subject to uniform accounting, auditing and financial reporting
standards or to other regulatory requirements comparable to those applicable to
U.S. companies.
Below Investment-Grade Bonds. Much emerging markets debt is rated below
investment-grade, or unrated but comparable to that rated below investment-grade
by internationally recognized rating agencies such as Standard & Poor's
Corporation ("S&P") or Moody's Investors Service ("Moody's"). Securities that
are rated BBB, A-2, or SP-2 by S&P or Baa or P-2 by Moody's are investment grade
(for a description of these rating categories, see Appendix). Lower-quality debt
securities, also known as "junk bonds," are often considered to be speculative
and involve greater risk of default or price change due to changes in the
issuer's creditworthiness. The market prices of these securities may fluctuate
more than those of higher quality securities and may decline significantly in
periods of general economic difficulty, which may follow periods of rising
interest rates. Securities in the lowest quality category may present the risk
of default, or may be in default.
While Bernstein may refer to ratings issued by internationally recognized
rating agencies, when available, Bernstein may choose to rely upon, or to
supplement such ratings with, its own independent and ongoing review of credit
quality. The Portfolio's achievement of its investment objective may, to the
extent of its investment in medium- to lower-rated bonds, be more dependent upon
Bernstein's credit analysis than would be the case if the Portfolio were to
invest in higher quality bonds.
The secondary market on which medium- to lower-rated bonds are traded may
be less liquid than the market for higher grade bonds. Less liquidity in the
secondary trading market could adversely affect the price at which the Portfolio
could sell medium- to lower-rated bonds and could cause large fluctuations in
the daily net asset value of the Portfolio's shares. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may decrease
the values and liquidity of medium- to lower-rated bonds, especially in a thinly
traded market. When secondary markets for medium- to lower-rated securities are
less liquid than markets for higher grade securities, it may be more difficult
to value the securities because such valuation may require more research, and
elements of judgment may play a greater role in the valuation because there is
less reliable, objective data available. Furthermore, prices for medium- to
lower-rated bonds may be affected by legislative and regulatory developments.
The foregoing is not intended to be exhaustive and there may be other risk
factors to take into account in relation to a particular investment. In
addition, investors should be aware that the Portfolio may invest in foreign
countries or in companies in which foreign investors, including the Manager,
have had no or limited prior experience. Investors should also note that a
feature of emerging markets is that they are subject to rapid change and the
information set out above may become outdated relatively quickly.
<PAGE>
B-27
INVESTMENT RESTRICTIONS
All of the Portfolios are subject to fundamental investment restrictions.
The fundamental restrictions applicable to any one of the Portfolios may not be
changed without the approval of the holders of at least a majority of the
outstanding securities of that Portfolio, voting separately from any other
series of the Fund. "A majority of the outstanding securities" of a Portfolio
means the lesser of (i) 67% or more of the shares represented at a meeting at
which more than 50% of the outstanding shares are present in person or
represented by proxy or (ii) more than 50% of the outstanding shares. A vote by
the shareholders of a single Portfolio to modify or eliminate one or more of the
restrictions has no effect on the restrictions as applied to the other
Portfolios.
SHORT DURATION MUNICIPAL PORTFOLIOS' INVESTMENT RESTRICTIONS
None of the Bernstein Short Duration California Municipal Portfolio, the
Bernstein Short Duration Diversified Municipal Portfolio or the Bernstein Short
Duration New York Municipal Portfolio may, except as otherwise provided herein:
1) Purchase securities on margin, but the Portfolio may obtain such
short-term credits as may be necessary for the clearance of transactions;
2) Make short sales of securities or maintain a short position, unless at
all times when a short position is open the Portfolio owns or has the right to
obtain at no added cost securities identical to those sold short;
3) Borrow money including pursuant to reverse repurchase agreements except
that the Portfolio may borrow money for temporary or emergency purposes (not for
leveraging or investment) in an amount not exceeding 33 1/3% of its total assets
(including the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed 33 1/3% of the Portfolio's total assets by reason
of a decline in net assets will be reduced within three days (not including
Saturdays, Sundays and holidays) to the extent necessary to comply with the 33
1/3% limitation. The Portfolio may not enter into reverse repurchase agreements
if the Portfolio's obligations thereunder would be in excess of one-third of the
Portfolio's total assets, less liabilities other than obligations under such
reverse repurchase agreements.
4) Issue senior securities, except as permitted under the 1940 Act;
5) Purchase or sell commodities or commodity contracts, except financial
futures and currency futures and options thereon;
<PAGE>
B-28
6) Purchase or sell real estate or interests in real estate, although the
Portfolio may purchase and sell securities which are secured by real estate, and
securities of companies which invest and deal in real estate;
7) Purchase oil, gas or other mineral interests;
8) Make loans although the Portfolio may (i) purchase fixed-income
securities and enter into repurchase agreements, or (ii) lend portfolio
securities provided that no more than 33 1/3% of the Portfolio's total assets
will be lent to other parties;
9) Act as an underwriter, except to the extent that, in connection with
the disposition of certain portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws;
10) Purchase any security if, as a result, more than 25% of the
Portfolio's total assets (taken at current value) would be invested in a single
industry. (For purposes of this restriction, assets invested in obligations
issued or guaranteed by the U.S. Government and its agencies or
instrumentalities or tax-exempt securities issued by governments or political
subdivisions of states, possessions or territories of the U.S. are not
considered to be invested in any industry);
11) Invest more than 5% of its total assets in the securities of any one
issuer if as a result of the purchase less than 75% of the Portfolio's total
assets is represented by cash and cash items (including receivables), Government
securities, securities of other investment companies, and other securities for
the purposes of this calculation limited in respect of any one issuer to an
amount not greater in value than 5% of the value of the total assets of the
Portfolio determined at the time of investment and to not more than 10% of the
outstanding voting securities of such issuer. This restriction does not apply to
the Bernstein Short Duration California Municipal Portfolio and the Bernstein
Short Duration New York Municipal Portfolio;
12) Make investments for the purpose of exercising control or management.
The following investment limitations are not fundamental, and may be
changed without shareholder approval. None of the Short Duration Municipal
Portfolios has or currently intends to:
1) Issue senior securities, borrow money or pledge its assets except to
the extent that forward commitments and securities loans may be considered loans
and except that the Portfolio may borrow from a bank for temporary or emergency
purposes in amounts not exceeding 5% (taken at the lower of cost or current
value) of its total assets (not including the amount borrowed) and pledge its
assets to secure such borrowings. The Portfolio does not intend to purchase a
security while borrowings exceed 5% of its total assets.
2) Purchase any security if, as a result, the Portfolio would then have
more than 15% of its net assets (at current value) invested in securities
restricted as to disposition under federal securities laws (excluding restricted
securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933
<PAGE>
B-29
("144A securities") that have been determined to be liquid under procedures
adopted by the Board of Directors based on the trading market for the security)
or otherwise illiquid or not readily marketable, including repurchase agreements
with maturities of more than 7 days;
3) Invest in securities of other investment companies except in the open
market where no commission other than the ordinary broker's commission is paid
or except when the purchase is part of a plan of merger, consolidation,
reorganization or acquisition; any such purchase will be in compliance with the
1940 Act; and
4) Invest in any securities of any issuer if, to the knowledge of the
Fund, any officer or director of the Fund or of the Manager owns more than 1/2
of 1% of the securities of the issuer, and such officers or directors who own
more than 1/2 of 1% own in the aggregate more than 5% of the outstanding
securities of such issuer.
5) Invest in a reverse repurchase agreement if the amount received by the
Portfolio through such an agreement, together with all other borrowings, will
exceed 5% of the Portfolio's total assets.
FIXED-INCOME PORTFOLIOS' (OTHER THAN THE SHORT DURATION MUNICIPAL
PORTFOLIOS') INVESTMENT RESTRICTIONS
None of the Bernstein Government Short Duration Portfolio, the Bernstein
Short Duration Plus Portfolio, the Bernstein New York Municipal Portfolio, the
Bernstein Diversified Municipal Portfolio, the Bernstein California Municipal
Portfolio, or the Bernstein Intermediate Duration Portfolio, will, except as
otherwise provided herein:
1) Purchase securities on margin, but any Portfolio may obtain such
short-term credits as may be necessary for the clearance of transactions;
2) Make short sales of securities or maintain a short position;
3) Issue senior securities, borrow money or pledge its assets except to
the extent that forward commitments and reverse repurchase agreements may be
considered senior securities or loans and except that any Portfolio may borrow
from a bank for temporary or emergency purposes in amounts not exceeding 5%
(taken at the lower of cost or current value) of its total assets (not including
the amount borrowed) and pledge its assets to secure such borrowings. A
Portfolio may not purchase a security while borrowings (other than forward
commitments and reverse repurchase agreements which may be considered loans)
exceed 5% of its total assets. A Portfolio may not enter into reverse repurchase
agreements if the Portfolio's obligations thereunder would be in excess of
one-third of the Portfolio's total assets, less liabilities other than
obligations under such reverse repurchase agreements;
4) Purchase or sell commodities or commodity contracts, except financial
futures and options thereon;
<PAGE>
B-30
5) Purchase or sell real estate or interests in real estate, although each
Portfolio may purchase and sell securities which are secured by real estate, and
securities of companies which invest and deal in real estate;
6) Purchase oil, gas or other mineral interests;
7) Lend money, except to the extent that repurchase agreements or the
purchase of fixed-income securities may be considered loans of money or loan
participations;
8) Lend securities if, as a result, the total current value of the loaned
securities is equal to more than 30% of the Portfolio's total assets;
9) Act as an underwriter, except to the extent that, in connection with
the disposition of certain portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws;
10) Invest in any securities of any issuer if, to the knowledge of the
Fund, any officer or director of the Fund or of the Manager owns more than 1/2
of 1% of the securities of the issuer, and such officers or directors who own
more than 1/2 of 1% own in the aggregate more than 5% of the outstanding
securities of such issuer;
11) Purchase any security if, as a result, the Portfolio would then have
more than 10% of its net assets (at current value) invested in securities
restricted as to disposition under federal securities laws or otherwise illiquid
or not readily marketable, including repurchase agreements with maturities of
more than 7 days;
12) Purchase any security if, as a result, the Portfolio would then have
more than 5% of its total assets (taken at current value) invested in securities
of companies (including predecessors) less than three years old;
13) Purchase any security if, as a result, more than 25% of the
Portfolio's total assets (taken at current value) would be invested in a single
industry. (For purposes of this restriction as applied to all Portfolios but the
Bernstein California Municipal Portfolio, assets invested in obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities or
securities issued by governments or political subdivisions of governments of
states, possessions, or territories of the U.S. are not considered to be
invested in any industry. For purposes of this restriction as applied to the
Bernstein California Municipal Portfolio, assets invested in obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities or
tax-exempt securities issued by governments or political subdivisions of
governments of states, possessions, or territories of the U.S. are not
considered to be invested in any industry.);
14) Invest more than 5% of its total assets in the securities of any one
issuer other than obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities if as a result of the purchase less than 75% of
the Portfolio's total assets is represented by cash and cash items (including
<PAGE>
B-31
receivables), Government securities, and other securities for the purposes of
this calculation limited in respect of any one issuer to an amount not greater
in value than 5% of the value of the total assets of such Portfolio determined
at the time of investment. (This restriction does not apply to the Bernstein New
York Municipal Portfolio or the Bernstein California Municipal Portfolio.);
15) Purchase any security if, as a result, it would hold more than 10% of
the voting securities of any issuer;
16) Make investments for the purpose of exercising control or management;
17) Invest in securities of other registered investment companies;
18) Purchase warrants if as a result the Fund would then have more than 5%
of its total assets (determined at the time of investment) invested in warrants.
In addition, as a non-fundamental policy, no Fixed-Income Portfolio (other
than the Short Duration Municipal Portfolios) of the Fund will invest in a
reverse repurchase agreement if the amount received by the Portfolio through
such an agreement, together with all other borrowings, will exceed 5% of the
Portfolio's total assets.
INTERNATIONAL VALUE PORTFOLIO'S INVESTMENT RESTRICTIONS
The International Value Portfolio may not, except as otherwise provided
herein:
1) Purchase securities on margin, but the Portfolio may obtain such
short-term credits as may be necessary for the clearance of transactions;
2) Make short sales of securities or maintain a short position, unless at
all times when a short position is open the Portfolio owns or has the right to
obtain at no added cost securities identical to those sold short;
3) Borrow money except that the Portfolio may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed 33 1/3%
of the Portfolio's total assets by reason of a decline in net assets will be
reduced within three days (not including Saturdays, Sundays and holidays) to the
extent necessary to comply with the 33 1/3% limitation. The Portfolio may not
enter into reverse repurchase agreements if the Portfolio's obligations
thereunder would be in excess of one-third of the Portfolio's total assets, less
liabilities other than obligations under such reverse repurchase agreements.
4) Issue senior securities, except as permitted under the 1940 Act;
<PAGE>
B-32
5) Purchase or sell commodities or commodity contracts, except financial
futures and currency futures and options thereon;
6) Purchase or sell real estate or interests in real estate, although the
Portfolio may purchase and sell securities which are secured by real estate, and
securities of companies which invest and deal in real estate;
7) Purchase oil, gas or other mineral interests;
8) Make loans although the Portfolio may (i) purchase fixed-income
securities and enter into repurchase agreements, or (ii) lend portfolio
securities provided that no more than 33 1/3% of the Portfolio's total assets
will be lent to other parties;
9) Act as an underwriter, except to the extent that, in connection with
the disposition of certain portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws;
10) Purchase any security if, as a result, more than 25% of the
Portfolio's total assets (taken at current value) would be invested in a single
industry. (For purposes of this restriction, assets invested in obligations
issued or guaranteed by the U.S. Government and its agencies or
instrumentalities, are not considered to be invested in any industry);
11) Invest more than 5% of its total assets in the securities of any one
issuer if as a result of the purchase less than 75% of the Portfolio's total
assets is represented by cash and cash items (including receivables), Government
securities, securities of other investment companies, and other securities for
the purposes of this calculation limited in respect of any one issuer to an
amount not greater in value than 5% of the value of the total assets of the
Portfolio determined at the time of investment and to not more than 10% of the
outstanding voting securities of such issuer;
12) Make investments for the purpose of exercising control or management;
The following investment limitations are not fundamental, and may be
changed without shareholder approval. The International Value Portfolio has not
and currently does not intend to:
1) Issue senior securities, borrow money or pledge its assets except to
the extent that forward commitments and securities loans may be considered loans
and except that the Portfolio may borrow from a bank for temporary or emergency
purposes in amounts not exceeding 5% (taken at the lower of cost or current
value) of its total assets (not including the amount borrowed) and pledge its
assets to secure such borrowings. The Portfolio does not intend to purchase a
security while borrowings exceed 5% of its total assets. The Portfolio will not
enter into reverse repurchase agreements and securities loans if the Portfolio's
obligations thereunder would be in excess of one-third of the Portfolio's total
assets, less liabilities other than obligations under such reverse repurchase
agreements and securities loans;
<PAGE>
B-33
2) Purchase any security if, as a result, the Portfolio would then have
more than 15% of its net assets (at current value) invested in securities
restricted as to disposition under federal securities laws (excluding restricted
securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933 ("144A Securities") that have been determined to be liquid under procedures
adopted by the Board of Directors based on the trading market for the security)
or otherwise illiquid or not readily marketable, including repurchase agreements
with maturities of more than 7 days;
3) Invest in securities of other investment companies except in the open
market where no commission other than the ordinary broker's commission is paid
or except when the purchase is part of a plan of merger, consolidation,
reorganization or acquisition; any such purchase will be in compliance with the
1940 Act;
4) Invest in any securities of any issuer if, to the knowledge of the
Fund, any officer or director of the Fund or of the Manager owns more than 1/2
of 1% of the securities of the issuer, and such officers or directors who own
more than 1/2 of 1% own in the aggregate more than 5% of the outstanding
securities of such issuer.
BERNSTEIN EMERGING MARKETS VALUE PORTFOLIO'S INVESTMENT RESTRICTIONS
The Bernstein Emerging Markets Value Portfolio may not, except as
otherwise provided herein:
1) Purchase securities on margin, but the Portfolio may obtain such
short-term credits as may be necessary for the clearance of
transaction;
2) Make short sales of securities or maintain a short position, unless
at all times when a short position is open the Portfolio owns or has
the right to obtain at no added cost securities identical to those
sold short;
3) Borrow money except that the Portfolio may borrow money for
temporary or emergency purposes (not for leveraging or investment)
in an amount not exceeding 33 1/3% of its total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed 33 1/3% of the Portfolio's total
assets by reason of a decline in net assets will be reduced within
three days (not including Saturdays, Sundays and holidays) to the
extent necessary to comply with the 33 1/3 % limitation. Borrowings,
including reverse repurchase agreements, will not exceed 33 1/3%.
4) Issue senior securities, except as permitted under the 1940 Act;
5) Purchase or sell commodities or commodity contracts, except
financial futures and currency futures and options thereon;
<PAGE>
B-34
6) Purchase or sell real estate or interests in real estate, although
the Portfolio may purchase and sell securities which are secured by
real estate, and securities of companies which invest and deal in
real estate;
7) Purchase oil, gas or other mineral interests;
8) Make loans although the Portfolio may (i) purchase fixed-income
securities and enter into repurchase agreements, or (ii) lend
portfolio securities provided that no more than 33 1/3% of the
Portfolio's total assets will be lent to other parties;
9) Act as an underwriter, except to the extent that, in connection with
the disposition of certain portfolio securities, it may be deemed to
be an underwriter under certain federal securities laws;
10) Purchase any security if, as a result, more than 25% of the
Portfolio's total assets (taken at current value) would be invested
in a single industry. (For purposes of this restriction, assets
invested in obligations issued or guaranteed by the U.S. Government
and its agencies or instrumentalities, are not considered to be
invested in any industry);
11) Invest more than 5% of its total assets in the securities of any one
issuer if as a result of the purchase less than 75% of the
Portfolio's total assets is represented by cash and cash items
(including receivables), Government securities, securities of other
investment companies, and other securities for the purposes of this
calculation limited in respect of any one issuer to an amount not
greater in value than 5% of the value of the total assets of the
Portfolio determined at the time of investment and to not more than
10% of the outstanding voting securities of such issuer;
12) Make investments for the purpose of exercising control or
management;
The following investment limitations are not fundamental, and may be
changed without shareholder approval. The Emerging Markets Value portfolio
currently does not intend to:
1) Issue senior securities, borrow money or pledge its assets except to
the extent that forward commitments and securities loans may be
considered loans and except that the Portfolio may borrow from a
bank for temporary or emergency purposes in amounts not exceeding 5%
(taken at the lower of cost or current value) of its total assets
(not including the amount borrowed) and pledge its assets to secure
such borrowings. The Portfolio does not intend to purchase a
security while borrowings exceed 5% of its total assets. The
Portfolio will not enter into reverse repurchase agreements and
securities loans if the Portfolio's obligations thereunder would be
in excess of one-third of the Portfolio's total assets, less
liabilities other than obligations under such reverse repurchase
agreements and securities loans;
<PAGE>
B-35
2) Purchase any security if, as a result, the Portfolio would then have
more than 15% of its net assets (at current value) invested in
securities restricted as to disposition under federal securities
laws (excluding restricted securities eligible for resale pursuant
to Rule 144A under the Securities Act of 1933 ("144A Securities")
that have been determined to be liquid under procedures adopted by
the Board of Directors based on the trading market for the security)
or otherwise illiquid or not readily marketable, including
repurchase agreements with maturities of more than 7 days;
3) Invest in securities of other investment companies except in the
open market where no commission other than the ordinary broker's
commission is paid or except when the purchase is part of a plan of
merger, consolidation, reorganization or acquisition; any such
purchase will be in compliance with the 1940 Act;
4) Invest in any securities of any issuer if, to the knowledge of the
Fund, any officer or director of the Fund or if the Manager owns
more than 1/2 of 1% of the securities of the issuer, and such
officers or directors who own more than 1/2 of 1% own in the
aggregate more than 5% of the outstanding securities of such issuer.
With respect to any Portfolio of the Fund, for purposes of determining the
amount of portfolio securities that may be lent by the Portfolio to other
parties in accordance with the investment restrictions set forth above, "total
assets" of the Portfolio shall be determined in accordance with SEC
interpretations issued from time to time.
DIRECTORS AND OFFICERS AND
PRINCIPAL HOLDERS OF SECURITIES
The following table lists the directors and executive officers of the
Fund, their business addresses and their principal occupations during the past
five years.
<TABLE>
<CAPTION>
NAME POSITION WITH PRINCIPAL OCCUPATION
AND ADDRESS THE FUND DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Roger Hertog* President, President, Chief Operating Officer and
767 Fifth Avenue Treasurer, Director-Bernstein
New York, NY 10153 Director
- -------------------------------------------------------------------------------------------------------------
Andrew S. Adelson* Senior Vice Senior Vice President, Chief Investment Officer -
767 Fifth Avenue President, Director International and Director - Bernstein
</TABLE>
<PAGE>
B-36
<TABLE>
<S> <C> <C>
New York, NY 10153
- -------------------------------------------------------------------------------------------------------------
Arthur Aeder Director 1987-Present: Consultant;
20 West 55th Street Formerly Senior Partner of Oppenheim, Appel, Dixon
New York, NY 10019 & Co.
(subsequently Spicer & Oppenheim) Certified Public
Accountants, and Chairman of Spicer & Oppenheim
International
- -------------------------------------------------------------------------------------------------------------
Peter L. Bernstein** Director President & Chief Executive Officer of Peter L.
575 Madison Avenue Bernstein, Inc.,
Suite 1006 Economic Consultants
New York, NY 10022
- -------------------------------------------------------------------------------------------------------------
William Kristol Director 6/95-Present: Editor and Publisher, The Weekly
1150 17th Street, N.W. Standard
5th Floor 11/93-5/95: Chairman, Project for the Republican
Washington, D.C. 20036 Future
1/93-11/93: Director, The Bradley Project on the 90s
- -------------------------------------------------------------------------------------------------------------
Theodore Levitt Director Professor Emeritus of Business Administration,
Harvard Business School Harvard University
Cumnock 300 1985-1989: Editor, Harvard Business Review
Boston, MA 02163
- -------------------------------------------------------------------------------------------------------------
Francis H. Trainer, Jr. Senior Vice President Senior Vice President, Director-Fixed Income
767 Fifth Avenue Investments
New York, NY 10153 and Director-Bernstein
- -------------------------------------------------------------------------------------------------------------
Jean Margo Reid Secretary 1997-Present: Vice President and General Counsel -
767 Fifth Avenue Bernstein
New York, NY 10153 Previously: Vice President and Associate General
Counsel - Bernstein
- -------------------------------------------------------------------------------------------------------------
</TABLE>
*An "interested person" of the Fund, as defined in the 1940 Act.
**Not related to Zalman C. Bernstein, Chairman of the Executive Committee-
Bernstein.
<PAGE>
B-37
The officers conduct and supervise the daily business operations of the
Portfolios, while the directors exercise general oversight over these actions
and decide on general policy. The directors have designated Mr. Hertog and Mr.
Adelson to be the Executive Committee of the Fund. Between meetings of the Board
of Directors, the Executive Committee may exercise all the powers of the Board
of Directors except the power to (1) declare dividends or distributions on
stock; (2) issue stock except pursuant to a method specified by the Board of
Directors; (3) recommend to the stockholders any action which requires
stockholder approval; (4) amend the bylaws; (5) approve any merger or share
exchange which does not require stockholder approval; or (6) approve any matter
which, pursuant to the 1940 Act, must be approved by the Board of Directors,
including those matters which must be approved by a majority of the directors
who are not interested persons of the Fund.
The Fund paid each of the four directors who is not an affiliated person
of Bernstein, in addition to reimbursement of out-of-pocket expenses in
connection with attendance at meetings of the Board of Directors, annual
compensation of $35,000 for the fiscal year ended September 30, 1997. Officers
receive no direct remuneration in such capacity from the Fund. The directors may
also appoint committees of directors. Directors who are not affiliated persons
of Bernstein serving on such committees may receive additional compensation as
well as reimbursement of their out-of-pocket expenses.
The directors have been elected by the public shareholders of the Fund,
except for Mr. Kristol and Mr. Adelson, who were elected by the other Directors.
In order to avoid unnecessary expenses, the Fund does not normally intend to
hold annual meetings of shareholders. The Board of Directors or the shareholders
may call Special Meetings of Shareholders for the removal of directors or for
other actions for which a shareholder vote may be required by the 1940 Act (such
as a change in fundamental policies or diversified status) or the Fund's
Articles of Incorporation or By-Laws.
On January 5, 1998, directors and officers of the Fund, as a group, owned
beneficially 145,580 shares of the Bernstein Government Short Duration
Portfolio, being 1.26% of such Portfolio and 226,876 shares of the Bernstein
Intermediate Duration Portfolio, being 1.40% of such Portfolio. On January 5,
1998, directors and officers of the Fund, as a group, owned less than one
percent of the outstanding shares of Bernstein Short Duration California
Municipal Portfolio, Bernstein Short Duration New York Municipal Portfolio,
Bernstein Short Duration Diversified Municipal Portfolio, Bernstein Short
Duration Plus Portfolio, Bernstein New York Municipal Portfolio, Bernstein
California Municipal Portfolio, Bernstein Diversified Municipal Portfolio,
Bernstein International Value Portfolio and Bernstein Emerging Markets Value
Portfolio.
MANAGER AND DISTRIBUTOR
Manager. Bernstein, 767 Fifth Avenue, New York, New York 10153, has
entered into Management Agreements with the Fund, on behalf of each of the
Portfolios, under which Bernstein acts as investment adviser for each of the
Portfolios. Bernstein is controlled by Board of Directors which consists of the
following individuals: Andrew S. Adelson, Zalman C. Bernstein, Kevin R. Brine,
Charles C. Cahn, Jr., Marilyn Goldstein Fedak, Michael L. Goldstein, Roger
Hertog, Lewis A. Sanders, and
<PAGE>
B-38
Francis H. Trainer, Jr. Subject to the general oversight of the Board of
Directors of the Fund, and in conformity with the stated policies of each of the
Portfolios, Bernstein manages the investment of each Portfolio's assets.
Bernstein makes investment decisions for each Portfolio and places purchase and
sale orders. The services of the Manager are not exclusive under the terms of
the Management Agreements. Bernstein is free to render similar services to
others.
Bernstein has authorized those of its directors, officers or employees who
are elected as directors or officers of the Fund to serve in the capacities in
which they are elected. All services furnished by Bernstein under the Management
Agreements may be furnished through the medium of any such directors, officers
or employees of Bernstein. In connection with the provision of its services
under the Management Agreements, the Manager bears various expenses, including
the salaries and expenses of all personnel, except the fees and expenses of
directors not affiliated with Bernstein.
Each Portfolio pays the Manager for the services performed on behalf of
that Portfolio, as well as for the services performed on behalf of the Fund as a
whole. The fee paid by each of the Fixed-Income Portfolios (other than the Short
Duration Municipal Portfolios) is at an annual rate of 0.50% of each such
Portfolio's average daily net assets up to and including $1 billion and at an
annual rate of 0.45% of each such Portfolio's average daily net assets in excess
of $1 billion. The fee paid by each of the Short Duration Municipal Portfolios
is at an annual rate of 0.50% of each such Portfolio's average daily net assets.
The fee paid by the International Value Portfolio is at an annual rate of 1.00%
of that Portfolio's average daily net assets up to but not exceeding $2 billion
and at an annual rate of .90 of 1% of that Portfolio's average daily net assets
that exceed $2 billion. The fee is computed daily and paid monthly. The fee paid
by the Bernstein Emerging Markets Value Portfolio is at an annual rate of 1.25%
of the Portfolio's average daily net assets. The fee is computed daily and paid
monthly. For the fiscal years ended September 30, 1995, 1996 and 1997, the
investment management fees accrued or paid to Bernstein pursuant to the
Management Agreements were, respectively, $30,738,193, $44,743,986 and
$65,345,690.
The Management Agreements provide that the Manager shall not be liable to
the Fund or the Portfolios for any error of judgment by the Manager or for any
loss sustained by the Fund or the Portfolios except in the case of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations
and duties under the Management Agreements.
In addition to the Management Agreements, the Fund, on behalf of each of
the Portfolios, has entered into Shareholder Servicing and Administrative
Agreements with Bernstein. Pursuant to these Agreements, Bernstein pays all
expenses incurred by it in connection with administering the ordinary course of
the Fund's and each Portfolio's business. Bernstein also pays the costs of
office facilities and of clerical and administrative services which are not
provided by State Street Bank and Trust Company, the Fund's Custodian and
Transfer Agent. Bernstein serves as Shareholder Servicing Agent and in such
capacity may enter into agreements with other organizations whereby some or all
of Bernstein's duties in this regard may be delegated. The shareholder servicing
that will be provided by Bernstein or other organizations might include, among
other things, proxy solicitations and providing information to shareholders
concerning their mutual fund investments, systematic withdrawal plans, dividend
payments, reinvestments, and other matters. The fee paid by each of the
Fixed-Income Portfolios for shareholder
<PAGE>
B-39
servicing and administration is 0.10% of each Portfolio's average daily net
assets and the fee paid by the Bernstein International Value Portfolio and the
Bernstein Emerging Markets Value Portfolio for these services is 0.25% of that
Portfolio's average daily net assets. For the fiscal years ended September 30,
1995, 1996 and 1997, the fees accrued or paid to Bernstein pursuant to the
Shareholder Servicing and Administrative Agreements were $6,964,714, $10,438,251
and $15,530,342 respectively.
Except as indicated above, each Portfolio is responsible for the payment
of its expenses and an allocable share of the common expenses of the Fund,
including: (i) the fees payable to Bernstein under the Management Agreements and
the Shareholder Servicing and Administrative Agreements; (ii) the fees and
expenses of Directors who are not affiliated with Bernstein; (iii) the fees and
expenses of the Custodian and Transfer Agent, including but not limited to fees
and expenses relating to fund accounting, pricing of fund shares, and
computation of net asset value; (iv) the fees and expenses of calculating yield
and/or performance pursuant to any independent servicing agreement; (v) the
charges and expenses of legal counsel and independent accountants; (vi) all
taxes and corporate fees payable to governmental agencies; (vii) the fees of any
trade association of which the Fund is a member; (viii) reimbursement of each
Portfolio's share of the organization expenses of the Fund; (ix) the fees and
expenses involved in registering and maintaining registration of the Fund and
the Portfolios' shares with the Securities and Exchange Commission, registering
the Fund as a broker or dealer and qualifying the shares of the Portfolios under
state securities laws, including the preparation and printing of the
registration statements and prospectuses for such purposes, allocable
communications expenses with respect to investor services, all expenses of
shareholders' and Board of Directors' meetings and preparing, printing and
mailing proxies, prospectuses and reports to shareholders; (x) brokers'
commissions, dealers' markups, and any issue or transfer taxes chargeable in
connection with the Portfolios' securities transactions; (xi) the cost of stock
certificates representing shares of the Portfolios; (xii) insurance expenses,
including but not limited to, the cost of a fidelity bond, directors' and
officers insurance, and errors and omissions insurance; and (xiii) litigation
and indemnification expenses, expenses incurred in connection with mergers, and
other extraordinary expenses not incurred in the ordinary course of the
Portfolios' business.
The Management Agreements provide that if at any time the Manager shall
cease to act as investment adviser to any Portfolio or to the Fund, or if the
Manager shall change its name to delete the reference to Sanford C. Bernstein,
the Fund shall take all steps necessary under corporate law to change its
corporate name to delete the reference to Sanford C. Bernstein or to delete the
reference to Bernstein as to any such Portfolio and shall thereafter refrain
from using such name with reference to any such Portfolio and, if applicable,
the Fund.
The Management Agreements provide that they will terminate automatically
if assigned and that they may be terminated without penalty by any Portfolio (by
vote of the directors or by a vote of a majority of the outstanding voting
securities of the Portfolio voting separately from any other Portfolio of the
Fund) on not less than 30 days' written notice. The Management Agreements also
provide that they will continue for more than two years only if such continuance
is annually approved in the manner required by the 1940 Act and the Manager
shall not have notified the Fund that it does not desire such continuance.
<PAGE>
B-40
Distributor. Bernstein acts as Distributor of each Portfolio's shares
pursuant to Distribution Agreements.
NET ASSET VALUE
The Fund computes the net asset value of each Portfolio once daily as of
the close of regular trading of the New York Stock Exchange (normally 4:00 p.m.,
New York time), each business day, except for New York Stock Exchange and
national bank holidays, as determined from time to time. Currently, these
holidays are: New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving Day, and Christmas Day.
Portfolio securities are valued by various methods depending on the
primary market or exchange on which they trade. Fixed-income securities and
other assets for which market quotations are readily available may be valued at
market values determined by such securities' most recent bid prices or the mean
between the most recent available bid and asked prices in the broadest and most
representative market for that security as determined by the Manager (market
value will be determined by sales prices if the principal market is an exchange)
in the broadest and most representative market for that security as determined
by the Manager.
Fixed-income securities and convertible securities may also be valued on
the basis of information furnished by a pricing service that uses a valuation
matrix which incorporates both dealer-supplied valuations and electronic data
processing techniques. Use of pricing services has been approved by the Board of
Directors of the Fund. A number of pricing services are available, and the Fund
may use various pricing services or discontinue the use of any pricing service.
Futures contracts and options are valued on the basis of market
quotations, if available.
Most equity securities for which the primary market is outside the United
States are valued using the official closing price or the last sale price in the
principal market in which they are traded. If the last sale price (on the local
exchange) is unavailable, the last evaluated quote or last bid price normally is
used.
Because the investment securities of the Bernstein International Value
Portfolio, the Bernstein Emerging Markets Value Portfolio and certain
Fixed-Income Portfolios are traded on foreign markets that may be open when the
New York Stock Exchange is closed, the value of the net assets of the Bernstein
International Value Portfolio, the Bernstein Emerging Markets Value Portfolio
and certain Fixed-Income Portfolios may be significantly affected on days when
no net asset values are calculated. If the primary market in which a portfolio
security is traded is not open for trading on a day which the Fund computes net
asset value, then the security's valuation will be valued as of the last
preceding trading date in its primary market, unless, under procedures
established by the Board of Directors, it is determined that such price does not
reflect the security's fair value. Foreign securities are valued based on prices
furnished by
<PAGE>
B-41
independent brokers or quotation services which express the value
of securities in their local currency.
If an extraordinary event that is expected to materially affect the value
of a portfolio security occurs after the close of an exchange on which that
security is traded, then that security may be valued as determined in good faith
under procedures adopted by the Board of Directors of the Fund.
Securities and other assets for which there is no readily available market
value may be valued in good faith pursuant to procedures adopted by the Board of
Directors of the Fund. The procedures set forth above need not be used to
determine the value of the securities owned by the Fund if, under procedures
adopted by the Board of Directors of the Fund, some other method would more
accurately reflect the fair market value of such securities.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Manager is responsible for decisions to buy and sell securities for
each of the Portfolios and for broker-dealer selection. In general, securities
in which the Fixed-Income Portfolios invest are traded on a "net" rather than a
transaction-charge basis with dealers acting as principals for their own
accounts without a stated transaction charge. Accordingly, the price of the
security may reflect an increase or decrease from the price paid by the dealer
together with a spread between the bid and asked price, which provides the
opportunity for a profit or loss to the dealer. Both the International Value
Portfolio and the Bernstein Emerging Markets Value Portfolio generally effect
transactions on stock exchanges and markets which involve the payment of
brokerage commissions. In transactions on stock exchanges in the United States,
these commissions are negotiated. Traditionally, commission rates have generally
not been negotiated on stock markets outside the United States. In recent years,
however, an increasing number of developed foreign stock markets have adopted a
system of negotiated rates, although a few developed foreign markets and most
emerging foreign markets continue to be subject to an established schedule of
minimum commission rates. Each Portfolio may purchase securities from
underwriters at prices which include a concession paid by the issuer to the
underwriter. On occasion, certain money market instruments may be purchased
directly from an issuer, in which case no commissions or discounts are paid. In
some cases, the Portfolios might engage in purchase or sale transactions with
another Portfolio of the Fund, subject to conditions specified under the 1940
Act. There might also be occasions where the Portfolios engage in purchase or
sale transactions with another mutual fund.
For the fiscal year ended September 30, 1997, the Fund paid total
brokerage commissions of $7,778,946, of which $83,553 or 1.0741% was paid to
Bernstein for effecting 1.5781% of the aggregate dollar amount of transactions
on which the Fund paid brokerage commissions. The increase in transaction
charges in 1997 was primarily attributable to the growth in net assets of the
Bernstein International Value Portfolio and the Bernstein Emerging Markets Value
Portfolio; the net assets for the Bernstein International Value Portfolio went
from $3,131,258,261 at the end of fiscal year 1996 to $4,965,997,868 at the end
of fiscal year 1997 and the net assets for the Bernstein Emerging Markets Value
Portfolio went up from $273,924,132 at the end of fiscal year 1996 to
$438,305,048 at the end of fiscal year 1997. The Fund paid aggregate brokerage
commissions of $3,587,366 and $6,044,134 during the fiscal years ended September
30, 1995 and 1996, respectively. Of the $3,587,366 in brokerage commissions paid
by the
<PAGE>
B-42
Fund in fiscal year 1995, none was paid to Bernstein for effecting
transactions. Of the $6,044,134 in brokerage commissions paid by the Fund in
fiscal year 1996, $56,956 or .9423% was paid to Bernstein for effecting
transactions.
At September 30, 1997, the Bernstein Government Short Duration Portfolio
owned $1,721,000 of commercial paper issued by Prudential Funding Corp. The
Bernstein Short Duration Plus Portfolio owned $13,993,000 of commercial paper
issued by Prudential Funding Corp.; $6,951,818 of mortgage pass-through and
derivative securities issued by Federal Home Loan Mortgage Corp. ("FHLMC");
$4,515,226 of notes issued by Lehman Brothers Holdings, Inc.; and $2,771,010 of
notes issued by Salomon, Inc. The Bernstein Intermediate Duration Portfolio
owned $70,641,000 of commercial paper issued by Prudential Funding Corp.;
$167,242,248 of mortgage pass-through securities issued by FHLMC; $2,253,726 of
notes issued by Lehman Brothers Holdings, Inc.; $7,440,932 of notes issued by
Lehman Brothers Inc.; and $7,461,574 of notes issued by Salomon Inc. Lehman
Brothers Holdings, Inc. is the parent corporation of Lehman Brothers, Inc.,
which is the parent corporation of Lehman Commercial Paper Inc., which is the
parent corporation of Lehman Government Securities, Inc. Salomon Smith Barney
Holdings Inc. (successor to Salomon, Inc.) is the parent corporation of Salomon
Brothers, Inc. Lehman Government Securities, Inc., Prudential Funding Corp.,
FHLMC, and Salomon Brothers, Inc. are regular brokers or dealers of the Fund as
defined in Rule 10b-1 under the 1940 Act.
Effecting Transactions for the Fixed-Income Portfolios
The Manager's primary consideration in effecting a security transaction
for the Fixed-Income Portfolios is to obtain the best net price and the most
favorable execution of the order. To the extent that the executions and prices
offered by more than one dealer are comparable, the Manager may, in its
discretion, effect transactions with dealers that furnish statistical, research
or other information or services, which are deemed by the Manager to be
beneficial to one or more of the Fixed-Income Portfolios or any other investment
companies or other accounts managed by the Manager.
Effecting Transactions for the Bernstein International Value Portfolio and the
Bernstein Emerging Markets Value Portfolio
In effecting a security transaction for the Bernstein International Value
Portfolio and the Bernstein Emerging Markets Value Portfolio, the Manager seeks
to obtain best execution at the most favorable prices through responsible
broker-dealers; however, under certain conditions the Fund may pay higher
brokerage commissions in return for brokerage and research services. The factors
that the Manager may consider are: price, rate of commission, the broker's
trading expertise, stature in the industry, execution ability, facilities,
clearing capabilities and financial services offered, long-term relations with
the Manager, reliability and financial responsibility, integrity, timing and
size of order and execution, difficulty of execution, current market conditions,
depth of the market, and the broker's ability and willingness to commit capital
in over-the-counter transactions by taking positions in order to effect
executions. While the Manager considers commissions, which are a component of
price, in making broker selections the Manager does not obligate itself to seek
the lowest commissions except to the extent that it contributes to the overall
goal of obtaining the most favorable execution of the order. In accordance with
Section 28(e)
<PAGE>
B-43
of the Securities Exchange Act of 1934, a higher commission may be determined
reasonable in light of the value of the brokerage and research services
provided.
Brokerage and research services provided by brokers and dealers are of the
type described in Section 28(e) of the Securities Exchange Act of 1934. These
services may include pricing data, statistical information and analyses and
reports regarding issuers, industries, securities, economic factors and trends
from both a domestic and international perspective. Research services may be
received in the form of written reports, computer generated services, telephone
contacts and personal meetings with security analysts, conferences and seminars
and meetings arranged with corporate and industry representatives, economists,
academicians and government representatives. Research services may be generated
by the broker itself or by third parties, in which case the research would be
provided to the Manager by or through the broker. Some of the third party
products or research services received by the Manager may have more than one
function; such services may be used to make investment decisions for investment
management clients, to prepare research reports that are provided to
institutional brokerage clients for which Bernstein executes trades and for
non-research purposes. If this is the case, the Manager makes a good faith
determination of the anticipated use of the product or service for its
investment management clients and for its institutional brokerage clients and/or
for non-research purposes, as the case may be, and allocates brokerage only with
respect to the portion of the cost of such research that is attributable to use
for its investment management clients. The Manager pays with its own funds the
portion of the cost of such research attributable to use for its institutional
brokerage clients and for non-research purposes.
The research services described above are designed to augment the
Manager's internal research and investment-strategy capabilities. As a practical
matter, the Manager could not generate all of the information currently provided
by broker-dealers and its expenses would be increased if it attempted to
generate such information through its own efforts. The Manager pays for certain
of the research services that it obtains from external sources but also
allocates brokerage for research services which are available for cash;
accordingly, the Manager may be relieved of expenses that it might otherwise
bear.
Annually, the Manager assesses the contribution of the brokerage and
research services provided by broker-dealers, and attempts to allocate a portion
of its brokerage business in response to these assessments. Research analysts,
members of the investment policy groups and the Trading Department each seek to
evaluate the brokerage and research services they receive from broker-dealers
and make judgments as to the level of business which would recognize such
services. The Manager doesn't commit a specific amount of business to any
broker-dealer over any specific time period. Broker-dealers sometimes suggest a
level of business they would like to receive in return for the various brokerage
and research services they provide. However, since the total business is
allocated to a broker-dealer on the basis of all the considerations described
above, the actual brokerage received by a broker-dealer may be more or less than
the suggested allocations. Virtually all of the brokerage is allocated to
broker-dealers who provide research services.
Research services furnished by broker-dealers through whom the Fund
effects securities transactions may be used by the Manager in servicing all of
its accounts and not all such services may be used by the Manager in connection
with the Fund. Similarly, research services furnished by broker-
<PAGE>
B-44
dealers who effect securities transactions for the Manager's other managed
accounts may be used by the Manager to benefit the Fund.
PURCHASE AND REDEMPTION OF SHARES
Shares of each Portfolio are sold at the net asset value next calculated
after receipt of a purchase order. In order to purchase shares, an investor must
fill out an application. A confirmation of each capital-share transaction is
sent to the shareholder. The methods of purchase and redemption of shares and
the methods used to value the Fund's assets are more fully set forth in the
Prospectus. The Fund may enter into arrangements with the broker-dealers, banks
and other financial institutions permitted to accept purchase and redemption
orders to allow these entities to designate other intermediaries to accept
purchase and redemption orders. The Bernstein Emerging Markets Value Portfolio
assesses a portfolio transaction fee on purchases of Portfolio shares equal to
2% of the dollar amount invested in the Portfolio (including purchases made by
exchanging shares of other Fund portfolios for shares of the Bernstein Emerging
Markets Value Portfolio) and a portfolio transaction fee on redemptions of 2% of
the dollar amount redeemed from the Portfolio (including redemptions made by
exchanging shares of the Bernstein Emerging Markets Value Portfolio for shares
of other Fund portfolios).
The Portfolios, having filed with the SEC a notification of election
pursuant to Rule 18f-1 under the 1940 Act, may pay the redemption price in whole
or in part by a distribution in kind of securities held by the Portfolio, in
lieu of cash. In conformity with applicable rules of the SEC, the Portfolios are
each committed to pay in cash all requests for redemption by any shareholder of
record, limited in amount with respect to each shareholder during any 90-day
period to the lesser of (i) $250,000, or (ii) 1% of the net asset value of the
Portfolio at the beginning of such period. If shares are redeemed in kind, the
redeeming shareholder might incur brokerage costs in converting the assets into
cash. The method of valuing portfolio securities is described under "Net Asset
Value," and this valuation is made as of the same time the redemption price is
determined.
TAXES
Each Portfolio intends to distribute to the registered holders of its
shares all of its net investment income, which includes dividends and interest
as well as net short-term capital gains, if any, in excess of any net long-term
capital losses and any net long-term capital gains, if any, in excess of any net
short-term capital losses. The Internal Revenue Code of 1986, as amended (the
"Code") requires all regulated investment companies (such as the Portfolios) to
pay a nondeductible 4% excise tax to the extent the registered investment
company does not distribute 98% of its ordinary income, determined on a
calendar-year basis, and 98% of its capital and foreign currency gains,
determined, in general, on an October 31 year-end. Each Portfolio intends to
distribute its income and capital gains in the manner necessary to avoid
imposition of the 4% excise tax. The current policy of each Fixed-Income
Portfolio is to declare investment income dividends daily and pay them monthly
and to pay capital gains distributions annually. The policy for both the
Bernstein International Value Portfolio and the Bernstein Emerging Markets Value
Portfolio is to declare and pay investment income dividends and capital gains
distributions at least
<PAGE>
B-45
annually. In determining amounts of capital gains to be
distributed, any capital loss carryovers from prior periods are offset against
capital gains.
Gains or losses on sales of securities by a Portfolio are long-term
capital gains or losses to the Portfolio if the securities have been held for
more than 12 months; if the securities have been held for more than 18 months, a
lower long-term capital gains tax rate may apply. Other gains or losses on the
sale of securities are short-term capital gains or losses. Special rules
applicable to gains and losses on futures and options are discussed below.
The Portfolios each intend to qualify as a regulated investment company
under the requirements of the Code for each taxable year. Currently, in order to
qualify as a regulated investment company, a Portfolio must generally, among
other things, (i) derive at least 90% of its gross income from dividends,
interest, gains from the sale of securities (excluding losses), or foreign
currencies, and certain other related income (the "90% test"); and (ii)
diversify its holdings so that, at the end of each fiscal quarter, (a) 50% of
the market value of the Portfolio's total assets is represented by cash, U.S.
Government securities and other securities limited, in respect of any one
issuer, to an amount no greater than 5% of the Portfolio's assets and not
greater than 10% of the outstanding voting securities of such issuer, and (b)
not more than 25% of the value of its assets is invested in such securities of
any one issuer other than U.S. Government securities or the securities of other
regulated investment companies (the "diversification requirements").
Prior to the amendments to the Code in 1997, in order to qualify as a
regulated investment company, a Portfolio would, in addition to the
diversification requirements above, have to derive less than 30% of its gross
income from the sale of certain assets held less than three months (the "30%
test"). Although the 30% test was repealed by the 1997 Code amendments, the test
is still in effect in certain states. Until these state laws are amended, the
Portfolios may be required to comply with the 30% test.
Currently, distributions of net investment income and net capital gains
are taxable to the shareholder, subject to federal income tax regardless of
whether the shareholder receives such distributions in additional shares or in
cash. Distributions of net long-term capital gains, if any, are taxable as
long-term capital gains, regardless of whether the shareholder receives such
distributions in additional shares or in cash or how long the investor has held
his shares.
The Bernstein Short Duration New York Municipal Portfolio and the
Bernstein New York Municipal Portfolio provide income which is tax-free (except
for alternative minimum taxes) for federal and New York State and local
individual income tax purposes to the extent that their income is derived from
New York State Municipal Securities or securities issued by possessions of the
United States. The Bernstein Short Duration California Municipal Portfolio and
the Bernstein California Municipal Portfolio provide income which is tax-free
(except for alternative minimum taxes) for federal and California personal
income tax purposes to the extent that their income is derived from California
Municipal Securities or securities issued by possessions of the United States.
The Bernstein Short Duration Diversified Municipal Portfolio and the Bernstein
Diversified Municipal Portfolio provide income which is tax-free for federal
individual income tax purposes (except for the alternative minimum tax) and
which may be partially tax-free for state tax purposes, to the extent of their
income derived from municipal
<PAGE>
B-46
securities. For this purpose, gains on transactions in options, futures
contracts and options on futures contracts as well as gains on municipal
securities are not tax-exempt. In addition, the Bernstein Short Duration New
York Municipal Portfolio, the Bernstein New York Municipal Portfolio, the
Bernstein Short Duration California Municipal Portfolio, the Bernstein
California Municipal Portfolio, the Bernstein Short Duration Diversified
Municipal Portfolio, and the Bernstein Diversified Municipal Portfolio will
comply with the requirement of Code Section 852(b)(5) that at least 50% of each
Portfolio's total assets consist of municipal securities. This requirement may
limit these Portfolios' ability to engage in transactions in options, futures
contracts and options on futures contracts or in certain other transactions. A
portion of the income of these Portfolios may be exempt from state income taxes
in certain states to the extent the Portfolio's income is derived from
securities the interest on which is exempt from income taxes in that state.
Shareholders may wish to consult a tax adviser about the status of distributions
from the Portfolios in their individual states or localities.
The Code includes special rules applicable to forward contracts and to
certain exchange-listed options, futures contracts and options on futures
contracts which the Portfolios may write, purchase or sell. Such forward
contracts, options and futures contracts are classified as Section 1256
contracts under the Code. The character of gain or loss resulting from the sale,
disposition, closing out, expiration or other termination of Section 1256
contracts, other than certain foreign currency forward contracts, options, or
futures contracts (discussed below), is generally treated as long-term capital
gain or loss (at the lower long-term capital gains tax rate) to the extent of
60% thereof and short-term capital gain or loss to the extent of 40% thereof.
These contracts, when held by a Portfolio at the end of a fiscal year (or, for
purposes of the excise tax, at the end of a period ending October 31) generally
are required to be treated as sold at market value on the last day of such
fiscal year for federal income tax purposes ("marked to market").
Certain Section 1256 contracts undertaken by a Portfolio may result in
"straddles" for federal income tax purposes. The straddle rules may affect the
character of gains (or losses) realized by the Portfolios. In addition, losses
realized by the Portfolios on positions that are part of a straddle may be
deferred under the straddle rules, rather than being taken into account in
calculating the taxable income for the taxable year in which such losses are
realized. Further, the Portfolios may be required to capitalize, rather than
deduct currently, any interest expense on indebtedness incurred to purchase or
carry any positions that are part of a straddle. Because only a few regulations
implementing the straddle rules have been promulgated, the tax consequences of
straddle transactions to the Portfolios are not entirely clear. The straddle
transactions may increase the amount of short-term capital gain recognized by
the Portfolios.
The Portfolios may make one or more of the elections available under the
Code which are applicable to straddles. If a Portfolio makes any of the
elections, the amount, character and timing of the recognition of gains or
losses from the affected straddle positions will be determined under rules that
vary according to the election(s) made. The rules applicable under certain of
the elections may accelerate the recognition of gains or losses from the
affected straddle positions.
Because application of the straddle rules may affect the character of
gains or losses, defer and/or accelerate the recognition of gains or losses from
the affected straddle positions and require the
<PAGE>
B-47
capitalization of interest expense, the amount which must be distributed to
shareholders as ordinary income or long-term capital gain by a Portfolio, may be
increased or decreased substantially as compared to a portfolio that did not
engage in such hedging transactions.
The Fund, on behalf of the Bernstein Government Short Duration Portfolio,
the Bernstein Short Duration Plus Portfolio, the Bernstein New York Municipal
Portfolio, the Bernstein Diversified Municipal Portfolio and the Bernstein
Intermediate Duration Portfolio requested a private-letter ruling from the
Internal Revenue Service which provided, among other things, that (i) gains
realized upon the sale or other disposition of options, futures contracts or
options on futures contracts, on securities or on certain securities indices,
including gains which are recognized as the result of a Section 1256 contract
being marked to market, are treated as gains from the sale or other disposition
of securities for purposes of the 90% test; (ii) for purposes of the
diversification requirements, (a) options, futures contracts and options on
futures contracts on U.S. Government securities are treated as issued by the
issuer of the securities and (b) options, futures contracts and options on
futures contracts on a securities index, including a municipal bond index, will
be treated as issued proportionately by the issuers of the securities underlying
the securities index irrespective of whether the index is broadly based or
narrowly based. The Fund received the ruling requested as to (i) above; there
can be no assurance that the requested private-letter ruling as to item (ii)
will be obtained. In the event that the Fund does not receive the private-letter
ruling, the Portfolios' ability to engage in the latter described transactions
may be limited.
The Fund, on behalf of the Bernstein Government Short Duration Portfolio,
the Bernstein Short Duration Plus Portfolio, the Bernstein New York Municipal
Portfolio, the Bernstein Diversified Municipal Portfolio and the Bernstein
Intermediate Duration Portfolio, has also requested a private-letter ruling from
the Internal Revenue Service to the effect that certain securities, including
GNMA Certificates and FNMA Certificates are treated as government securities for
purposes of the diversification requirements under Section 851(b)(4) of the
Internal Revenue Code of 1986. The Fund received the requested ruling, except as
to FHLMC Participation Certificates and securities of the Financing Corporation;
there can be no assurance that the requested private-letter ruling will be
obtained as to these securities. In the event the Fund receives an adverse
ruling, the Portfolios' investment in the latter securities may have to be
limited because of the diversification requirements under Section 851 of the
Internal Revenue Code.
The diversification requirements applicable to the Portfolio's assets and
other restrictions imposed on the Portfolio by the Code may limit the extent to
which the Portfolio will be able to engage in transactions in forward contracts,
options, futures contracts or options on futures contracts.
Under Code Section 988, foreign currency gains or losses from forward
contracts and futures contracts that are not "regulated futures contracts", and
from unlisted options will generally be treated as ordinary income or ordinary
loss. In addition, gains or losses on the disposition of debt securities
denominated in a foreign currency attributable to fluctuations in the value of
the foreign currency between the date of acquisition of the security and the
date of disposition are generally treated as ordinary income or loss. Also,
gains or losses attributable to fluctuations in foreign currency exchange rates
which occur between the time the Portfolio accrues interest or other receivables
or accrues expenses or other
<PAGE>
B-48
liabilities denominated in a foreign currency and the time the Portfolio
actually collects such receivables or pays such liabilities generally are
treated as ordinary income or ordinary loss. These gains or losses may increase
or decrease the amount of the Portfolio's investment company taxable income to
be distributed to its stockholders as ordinary income, rather than increasing or
decreasing the amount of the Portfolio's capital gains or losses. Additionally,
if Code Section 988 losses exceed other investment company taxable income during
a taxable year, the Portfolio would not be able to make any ordinary dividend
distributions, and any distributions made before the losses were realized but in
the same taxable year would be recharacterized as a return of capital to
shareholders, thereby reducing each shareholder's basis in the shares.
If the Bernstein International Value Portfolio and the Bernstein Emerging
Markets Value Portfolio qualify as a regulated investment company, if certain
asset and distribution requirements are satisfied and if more than 50% of each
of the Portfolio's total assets at the close of its fiscal year consist of
stocks or securities of foreign corporations, the Portfolios may elect for
United States income tax purposes to treat foreign income taxes paid by each as
paid by their shareholders. The Portfolios will make such an election only if
they deem it to be in the best interests of their shareholders. As a result of
making such an election, shareholders of the Portfolios would be required to
include their pro rata portions of such foreign taxes in computing their taxable
incomes and then treat an amount equal to those foreign taxes as a United States
federal income tax deduction or as foreign tax credits against their United
States federal income taxes. Within 60 days after the close of each taxable year
of the Portfolios, the Fund will notify shareholders if the foreign taxes paid
by the Portfolios will pass through for that year, and, if so, the amount of
each shareholder's pro rata share of (i) the foreign taxes paid and (ii) the
Portfolios' gross income from foreign sources. Shareholders who are not liable
for federal income taxes will not benefit from any such pass through of foreign
tax credits. No deduction for foreign taxes may be claimed by a shareholder who
does not itemize deductions. Certain limitations will be imposed on the extent
to which the credit and the deduction for foreign taxes may be claimed.
Generally, a credit for foreign taxes may not exceed the United States
shareholder's U.S. tax attributable to its foreign source taxable income.
Generally, also, the source of the Portfolio's income flows through to its
holders. Thus, dividends and interest received by the Portfolio in respect of
foreign securities will give rise to foreign source income to the shareholders.
The overall limitation on a foreign tax credit is also applied separately to
specific categories of foreign source income, among which is "passive income,"
which includes foreign source dividends, interest and capital gains. As a result
of these rules, certain United States shareholders may be unable to claim a
credit for the full amount of their proportionate share of the foreign taxes
paid by the Portfolio.
The Bernstein International Value Portfolio and the Bernstein Emerging
Markets Value Portfolio may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is a foreign corporation that, in general, meets
either of the following tests: (1) at least 75% of its gross income is passive
or (2) an average of at least 50% of its assets produce, or are held for the
production of, passive income. Under the PFIC rules, an "excess distribution"
received with respect to PFIC stock is treated as having been realized ratably
over the period during which the Portfolios held the PFIC stock. The Portfolios
themselves will be subject to tax on the portion, if any, of the excess
distribution that is
<PAGE>
B-49
allocated to the Portfolios' holding period in prior taxable years (and an
interest factor will be added to the tax, as if the tax had actually been
payable in such prior taxable years) even though the Portfolios distribute the
corresponding income to shareholders. Excess distributions include any gain from
the sale of PFIC stock as well as certain distributions from a PFIC. All excess
distributions are taxable as ordinary income. The balance of the PFIC income
will be included in the Portfolios' investment company taxable income and,
accordingly, will not be taxable to it to the extent that income is distributed
to its shareholders.
The PFIC rules were amended pursuant to the 1997 amendments to the
Internal Revenue Code; however, these amendments are not effective until taxable
years beginning after December 31, 1997 and thus will not apply to the Fund
until fiscal year 1999. Under the amended PFIC rules, the Portfolios holding
shares of marketable PFICs can elect to mark those shares to market at the close
of the Fund's taxable year and at October 31 for purposes of the excise tax
minimum distribution requirements. PFIC mark-to-market gains are treated as
ordinary income, as are any gains realized on the ultimate sale of the PFIC
stock. Mark-to-market losses and losses on the ultimate disposition of the stock
are ordinary losses to the extent of net mark-to-market gains included in
previous tax years with respect to that stock (but not other stocks). Excess
losses on the ultimate disposition of PFIC stock cannot be recognized.
Under Treasury Regulations, the Portfolio is required to withhold and
remit to the U.S. Treasury 31% of dividend and capital gains income from the
accounts of certain shareholders who provide either an incorrect tax
identification number or no number at all or who do not provide certain required
certifications.
A foreign shareholder may be subject to dividend tax withholding at the
30% rate or at a lower applicable treaty rate on certain dividends from the
Portfolio. Foreign shareholders should consult their tax advisers regarding
application of these withholding rules.
The discussion in the Prospectus, together with the foregoing, is a
general summary of the tax consequences of investments in the Portfolios.
Investors are urged to consult their own tax advisers to determine the effect of
investments in the Portfolios upon their individual tax situations.
CUSTODIAN, TRANSFER AGENT, INDEPENDENT ACCOUNTANTS AND
FINANCIAL STATEMENTS
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is the Custodian for the Fund. Foreign securities and
currency owned by the Fund may be held by foreign subcustodians of State Street
Bank and Trust Company retained for such purpose in accordance with the 1940
Act. State Street Bank and Trust Company also serves as Transfer Agent, and in
that capacity maintains certain books and records pursuant to an agreement
within the Fund.
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York
10036, has been selected as the Fund's independent accountants to audit the
annual financial statements of each Portfolio.
<PAGE>
B-50
Shareholders are sent audited annual and unaudited semiannual reports that
include financial statements, including a schedule of investments. A copy of the
Annual Report and the Schedules of Investments with respect to each Portfolio
accompany this Statement of Additional Information. The following financial
statements and the report of the independent accountants with respect to each
Portfolio are incorporated by reference into this Statement of Additional
Information:
<TABLE>
<CAPTION>
Annual Report Page
------------------
<S> <C>
Statement of Assets and Liabilities, September 30, 1997 12-13
Statements of Operations for the Year Ended September 30, 1997 14-16
Statements of Changes in Net Assets, Year Ended September 30, 1997
and Year Ended September 30, 1996 17-19
Financial Highlights for the periods ended September 30, 1997;
September 30, 1996; September 30, 1995; September 30, 1994;
and September 30, 1993(or as applicable) 20-27
Notes to Financial Statements, September 30, 1997 28-36
Schedule of Investments-Taxable Bond Portfolios, dated September 30,
1997 and Report of Independent Accountants with respect to such Separate Insert
to Portfolios dated November 18, 1997 Annual Report
Schedule of Investments-Municipal Bond Portfolios, dated September 30,
1997 and Report of Independent Accountants with respect to such Separate Insert
to Portfolios dated November 18, 1997 Annual Report
Schedule of Investments - Stock Portfolios, dated September 30, 1997
and Report of Independent Accountants with respect to such Portfolios Separate Insert
dated November 18, 1997 Annual Report
</TABLE>
PERFORMANCE
Each of the Portfolios may, from time to time, advertise yield, average
annual total return, and aggregate total return. (See "Performance" in the
Prospectus.)
For the thirty-day period ending September 30, 1997, yields for the
Fixed-Income Portfolios were as follows: Government Short Duration Portfolio -
4.88%; Short Duration Plus Portfolio - 4.99%; Intermediate Duration Portfolio -
5.02%; New York Municipal Portfolio - 3.93%; California Municipal Portfolio -
3.74%; Diversified Municipal Portfolio - 3.89%; Short Duration California
Municipal - 3.23%;
<PAGE>
B-51
Short Duration Diversified Portfolio - 3.60%; Short Duration New York Municipal
Portfolio - 3.36%; International Value Portfolio - 1.02%; and Emerging Markets
Value Portfolio - 1.56%.
Yields are calculated based on a rolling 30-day average. Yield quotations
are based on each Portfolio's income and expenses for a given month. Expenses
are subtracted from the total interest and dividends for the month; the result
is divided by the Portfolio's average daily market capitalization -- the product
of the average daily number of shares outstanding and the net asset value of the
last day of the month, to give the monthly yield, which is compounded over six
months and then multiplied by two so as to compute the "bond-equivalent yield."
The calculation may be expressed in the following formula:
6
Yield = 2 [( a-b + 1) - 1]
----
cd
Where:
a = total interest and dividends earned during the month;
b = total expenses accrued during the month (net of reimbursements);
c = the average daily number of shares outstanding during
the month that were entitled to receive dividends; and
d = the maximum offering price per share on the last day of the month.
The total of interest and dividends earned during the month is calculated
by adding together the interest and dividends earned per day on each security
held during the month (30 days). Solely for the purpose of computing yield,
dividend income is recognized by accruing 1/360th of the stated dividend rate of
the security each day that the security is in the Portfolio. For most debt
securities, the interest earned per day is determined by first computing the
security's yield to maturity on each day during the month. The yield to maturity
is divided by 360, and multiplied by the market value (including accrued
interest) of the security position each day. Each interest earned per day
calculation is added to all of the other such applicable calculations during the
month to determine the interest earned during the month. If a bond is callable,
yield to the appropriate call date is substituted for yield to maturity if, in
the opinion of the Manager, the bond is expected to be called. If a bond is
putable, yield to the appropriate put date is substituted for yield to maturity
if, in the opinion of the Manager, the put is expected to be exercised.
For tax-exempt obligations that are selling below $100 and were not issued
at original-issue discounts, the coupon rate is substituted for the yield to
maturity in the calculation described in the paragraph above, and the par value
of the bond is used in place of market value. For tax-exempt obligations that
are selling below $100 and that were issued at original-issue discounts, if the
yield to maturity, based upon the current market price, is higher than the yield
to maturity at the time of issuance, the yield to maturity at the time of
issuance is used in the interest-earned calculation. Otherwise, the yield to
maturity based upon the current market price is used.
<PAGE>
B-52
For receivable-backed obligations (such as mortgage pass-throughs), which
are expected to be subject to periodic payments of principal as well as
interest, the interest earned is the income based on the coupon rate and
outstanding principal balance. This income is adjusted by adding or subtracting
the gain or loss attributable to actual monthly paydowns based upon the historic
cost. For purposes of the yield calculation, the Portfolios do not amortize
premium or discount on interest-bearing mortgage-backed securities.
Expenses accrued include all expenses and all fees that are charged to all
shareholder accounts. The maximum offering price reflects the subtraction of any
undeclared earned income, which is the net investment income earned by the
Portfolio that is reasonably expected to be declared as a dividend within a
reasonable time from the end of the month.
For the thirty-day period ending September 30, 1997, tax-equivalent yield
for the Government Short Duration Portfolio was 5.4%, assuming a combined state
and local tax of 10% and reflecting that 0.7% of the income was estimated to be
subject to state and local taxes. Tax-equivalent yield for the New York
Municipal Portfolio at September 30, 1997 was 7.3%, assuming an investor was
subject to a combined federal, state and New York City tax rate of 46.4% and
reflecting that 1.5% of the income was estimated to be subject to federal taxes
and 2.3% to be subject to state and local taxes. Tax-equivalent yield for the
California Municipal Portfolio at September 30, 1997 was 6.7%, assuming an
investor was subject to a combined federal and state tax rate of 45.2% and
reflecting that 5.3% of the income was estimated to be subject to federal taxes
and 2.1% to be subject to state taxes. Tax-equivalent yield for the Diversified
Municipal Portfolio at September 30, 1997 was 6.4%, assuming an investor was
subject to federal tax rate of 39.6% and reflecting that 1.9% of the income was
estimated to be subject to federal taxes.
Tax-equivalent yield for the Short Duration New York Municipal Portfolio
at September 30, 1997 was 6.8%, assuming an investor was subject to a combined
federal, state and New York City tax rate of 46.4% and reflecting that 7.6% of
the income was estimated to be subject to federal taxes and 0.1% to be subject
to state and local taxes. Tax-equivalent yield for the Short Duration California
Municipal Portfolio at September 30, 1997 was 5.9%, assuming an investor was
subject to a combined federal and state tax rate of 45.2% and reflecting that
0.8% of the income was estimated to be subject to federal taxes and 0.8% to be
subject to state taxes. Tax-equivalent yield for the Short Duration Diversified
Municipal Portfolio at September 30, 1997 was 5.7%, assuming an investor was
subject to federal tax rate of 39.6% and reflecting that 10.7% of the income was
estimated to be subject to federal taxes.
Tax-equivalent yield for the Bernstein Short Duration New York Municipal
Portfolio and the Bernstein New York Municipal Portfolio is computed by first
determining the portion of the yield (calculated as set forth above) for the
respective Portfolio that is exempt from (i) federal and New York State and
local taxation; (ii) federal taxation only; (iii) New York State and local
taxation only and (iv) neither New York State and local nor federal income
taxation; dividing each portion of the yield by one minus the relevant combined
tax rate, and adding the quotients together as expressed in the following
formula:
<PAGE>
B-53
Tax-equivalent Yield = a + c + e + g
----- ------ -----
1-b 1-d 1-f
Where:
a = the portion of the yield which is exempt from federal and New York
State and local income taxation;
b = the highest combined marginal income tax rate imposed
on an individual's unearned ordinary income subject to
federal, state and local income taxation;
c = the portion of the yield which is exempt from federal,
but not New York State and local income taxation;
d = the highest marginal income tax imposed on an
individual's unearned ordinary income subject to federal
income taxation;
e = the portion of the yield which is exempt from New York
State and local, but not federal, income taxation;
f = the highest marginal income tax imposed on an
individual's unearned ordinary income subject to New
York State and local, but not federal, income taxation;
and
g = the portion of the yield which is not exempt from
federal, New York State or local income taxation.
Tax-equivalent yield for the Bernstein Short Duration California Municipal
Portfolio and the Bernstein California Municipal Portfolio is computed by first
determining the portion of the yield (calculated as set forth above) for the
respective Portfolio that is exempt from (i) federal and California personal
income taxation; (ii) federal taxation only; (iii) California personal income
taxation only and (iv) neither California personal nor federal income taxation;
dividing each portion of the yield by one minus the relevant combined tax rate,
and adding the quotients together as expressed in the following formula:
Tax-equivalent Yield = a + c + e + g
----- ----- -----
1-b 1-d 1-f
Where:
a = the portion of the yield which is exempt from federal and California
personal income taxation;
b = the highest combined marginal income tax rate imposed
on an individual's unearned ordinary income subject to
federal and California personal income taxation;
<PAGE>
B-54
c = the portion of the yield which is exempt from federal, but not
California personal income taxation;
d = the highest marginal income tax imposed on an
individual's unearned ordinary income subject to federal
income taxation;
e = the portion of the yield which is exempt from California personal,
but not federal, income taxation;
f = the highest marginal income tax imposed on an
individual's unearned ordinary income subject to
California personal, but not federal, income taxation;
and
g = the portion of the yield which is not exempt from
federal or California personal income taxation.
Tax-equivalent yield for the Bernstein Short Duration Diversified
Municipal Portfolio and the Bernstein Diversified Municipal Portfolio is
computed by first determining the fraction of the yield calculated as set forth
above for the respective Portfolio (i) that is exempt from federal taxation and
(ii) that is not exempt from federal taxation, then dividing that portion of the
yield which is exempt from federal taxation by one minus the highest marginal
federal individual income taxation and adding the quotient to that portion, if
any, of the yield which is not exempt from federal income taxation, as expressed
in the following formula:
Tax-equivalent Yield = h + j
-----
1-I
Where:
h = the portion of the yield which is exempt from federal taxes;
i = the highest marginal tax rate imposed on individual income subject
to federal income taxation; and
j = the portion of the yield which is not exempt from federal income
taxation.
Tax-equivalent yield for the Bernstein Government Short Duration Portfolio
is computed by first determining the portion of the yield that is (i) exempt
from state and local, but not federal, income taxation and (ii) not exempt from
state and local or federal income taxation; dividing each portion of the yield
by one minus the relevant combined tax rate, and adding the quotients together
as expressed in the following formula:
Tax-equivalent Yield = a + c
-----
1-b
Where:
<PAGE>
B-55
a = the portion of the yield which is exempt from state and local, but
not federal, income taxation;
b = the highest marginal income tax imposed on an individual's unearned
ordinary income subject to state and local, but not federal, income
taxation; and
c = the portion of the yield which is not exempt from federal or state
and local income taxation.
The average annual total returns for (1) the Portfolios from their
inception until September 30, 1997; (2) the Portfolios for the one year period
ended September 30, 1997; and (3) the International Value Portfolio and the
Fixed-Income Portfolios (other than the Short Duration Municipal Portfolios) for
the five year period ended September 30, 1997, were as follows:
<TABLE>
<CAPTION>
Period Average Annual
Since Total Return One Year Five Year
Portfolio Inception Since Inception Total Return Total Return
- --------- --------- --------------- ------------ ------------
<S> <C> <C> <C> <C>
% % %
Government Short Duration Portfolio 8.74 years 6.63 5.88 4.80
Short Duration Plus Portfolio 8.80 years 7.00 6.21 5.13
Intermediate Duration Portfolio 8.70 years 8.75 8.66 6.70
New York Municipal Portfolio 8.72 years 6.70 6.73 5.55
California Municipal Portfolio 7.15 years 6.56 6.82 5.57
Diversified Municipal Portfolio 8.72 years 6.62 6.95 5.60
International Value Portfolio 5.27 years 13.74 23.25 15.53
Short Duration New York Municipal 3.16 years 4.26 3.99 N/A
Short Duration California Municipal 3.16 years 4.33 3.89 N/A
Short Duration Diversified Municipal 3.16 years 4.47 4.17 N/A
Emerging Markets Value Portfolio 1.79 years 4.79 (0.32) N/A
</TABLE>
The average annual total return for each Portfolio is calculated by
finding the average annual percentage rate of return that would, compounded and
multiplied by the initial amount invested (less any applicable sales load),
result in the ending redeemable value, as expressed in the following formula:
1/n
Average Annual Total Return = ERV - 1
-----
P
Where:
P = a hypothetical initial investment of $1,000 on beginning date less
any charges deducted from the amount invested;
ERV = ending redeemable value of the hypothetical account on the date of
the balance sheet assuming a complete redemption and deduction of all
nonrecurring charges deducted at the end of the period; and
<PAGE>
B-56
n = number of years (1, 5, 10 or the life of the Fund).
The above calculations reflect all fees and expenses charged to the
Portfolios.
The Portfolios may advertise aggregate total return, also called
unannualized total return, in addition to average annual total return. The
aggregate total return of each Portfolio from its inception until September 30,
1997 was as follows:
<TABLE>
<CAPTION>
Period Aggregate
Since Total
Portfolio Inception Return
- --------- ---------- --------
<S> <C> <C>
Government Short Duration Portfolio 8.74 years 75.33
Short Duration Plus Portfolio 8.80 years 81.41
Intermediate Duration Portfolio 8.70 years 107.55
New York Municipal Portfolio 8.72 years 76.10
California Municipal Portfolio 7.15 years 57.56
Diversified Municipal Portfolio 8.72 years 75.00
International Value Portfolio 5.27 years 97.27
Short Duration New York Municipal Portfolio 3.16 years 13.31
Short Duration California Municipal Portfolio 3.16 years 13.54
Short Duration Diversified Municipal Portfolio 3.16 years 14.00
Emerging Markets Value Portfolio 1.79 years 8.75
</TABLE>
The aggregate total return for each Portfolio is calculated by dividing
the ending value of an investment by the beginning value of this investment, as
expressed in the following formula:
Aggregate Total Return = ERV - P
----------
P
Where:
P = a hypothetical initial investment of $1,000 on beginning date, less
any charges deducted from the amount invested; and
ERV = ending redeemable value of the hypothetical account on the date of
the balance sheet assuming a complete redemption and the deduction
of all non-recurring charges deducted at the end of the period.
From time to time, in reports and promotional literature, the Portfolios'
total return or other performance data may be compared to one or more relevant
market indices, including but not limited to (1) Lehman Brothers Aggregate Bond
Index; (2) Lehman Brothers Government Corporate Bond Index; (3) Merrill Lynch
1-3 Year Treasury Index; (4) Lehman Brothers One Year Municipal Index; (5)
Lehman
<PAGE>
B-57
Brothers 3-5-7 year Laddered G/O Index; (6) Lehman Brothers 1-10 year
Municipal Bond Index Blend; (7) the Standard & Poor's 500 Stock Index so that
shareholders may compare the Portfolio's results with those of a group of
unmanaged securities widely regarded by investors as representative of the U.S.
stock market in general; (8) with other groups of mutual funds tracked by (A)
Lipper Analytical Services, Inc., a widely used independent research firm which
ranks mutual funds by overall performance, investment objectives, and assets; or
(B) Morningstar, Inc., another widely used independent research firm which rates
mutual funds; or (C) by other financial business publications, including, but
not limited to, Business Week, Money Magazine, Forbes and Barron's, which
provide similar information; (9) Morgan Stanley Capital International ("MSCI")
Indices, including the EAFE index, the EAFE GDP 50%-Hedged Index, the MSCI
Emerging Markets Global Index and the MSCI Emerging Markets Free Index, which
are widely recognized indices in international market performance; (10) the
International Finance Corporation (an affiliate of the World Bank established to
encourage economic development in less developed countries), World Bank,
Organization for Economic Co-Operation and Development and International
Monetary Fund as a source of economic statistics; and (11) the International
Finance Corporation Global Index ("IFCG Index") and International Finance
Corporation Investable Index ("IFCI Index"), which are widely recognized indices
of emerging markets performance.
<PAGE>
B-58
APPENDIX
Description of Corporate and Municipal Bond Ratings
The following descriptions of Standard & Poor's Corporation ("Standard &
Poor's"), Fitch Investors Service, Inc. ("Fitch") and Moody's Investors Service,
Inc. ("Moody's") corporate and municipal bond ratings have been published by
Standard & Poor's, Fitch and Moody's, respectively.
Standard & Poor's(1)
AAA Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.
BBB Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.
BB, B, CCC, CC, C Debt rated BB, B, CCC, CC and C is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
debt will likely have some quality and protective characteristics, they are
outweighed by large uncertainties or major risk exposure to adverse conditions.
CI The rating CI is reserved for income bonds on which no interest is being
paid.
D Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
Plus (+) or Minus (-) The ratings from "AA" to "CCC" may be modified by the
additions of a plus or minus sign to show relative standing within the major
rating categories.
- -----------------------------------
(1) Reprinted from Standard & Poor's Bond Guide
<PAGE>
B-59
Fitch(2)
A Fitch bond rating represents an assessment of the issuer's ability to meet its
debt obligations in a timely manner. The rating is not a recommendation to buy,
sell or hold any security. It does not comment on the adequacy of market price,
investor suitability or the taxability of interest.
Ratings are based on information obtained from issuers or sources believed to be
reliable. Fitch does not audit or verify the accuracy of the information.
Ratings may be changed, suspended or withdrawn to changes in or unavailability
of information.
AAA Highest credit quality, obligor has exceptionally strong ability to pay
interest and repay principal.
AA Very high credit quality, obligor's ability to pay interest and repay
principal is very strong, although not as strong as AAA.
A High credit quality, obligor's ability to pay interest and repay principal
is strong, but more vulnerable to adverse economic conditions than higher rated
bonds.
BBB Satisfactory credit quality, obligor's ability to pay interest and repay
principal is adequate, adverse economic conditions could impair timely payment.
BB Speculative, obligor's ability to pay interest and repay principal may be
affected by adverse economic conditions.
B Highly speculative, obligor has a limited margin of safety to make timely
payments of principal and interest.
CCC Identifiable characteristics which, if not remedied, may lead to default.
CC Minimal protection, default in payment of interest and or principal seems
probable over time.
C Bonds are in imminent default in payment of interest or principal.
DDD Bonds are in default on interest and or principal and are extremely
speculative.
DD represents highest potential for recovery and
D the lowest potential for recovery.
Plus(+) Minus (-) Plus and minus signs are used to indicate relative position
of a credit within the rating category and only apply to AA to CCC categories.
- ------------------------------------
(2) As provided by Fitch Investors Service, Inc.
<PAGE>
B-60
Moody's(3)
Aaa Bonds which are rated Aaa by Moody's are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt-edged." Interest payments are protected by a large or by an
exceptionally stable margin, and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations or
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A Bonds which are rated A possess many favorable attributes and are
considered upper-medium-grade obligations. Factors giving security to principal
and interest are considered adequate but susceptible to impairment some time in
the future.
Baa Bonds which are rated Baa are considered medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and have
speculative characteristics as well.
Ba Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
- -------------------------------------
(3) Reprinted from Moody's Bond Record and Short Term Market Record
<PAGE>
B-61
C Bonds which are rated C are the lowest-rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Note: Moody's applies numerical modifiers, 1, 2, and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
Description of Corporate and Municipal Commercial Paper Ratings.
The following descriptions of commercial paper ratings have been published
by Standard & Poor's, Fitch and Moody's, respectively.
Standard & Poor's(4)
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. Ratings are graded into several categories, ranging from "A-1" for the
highest quality obligations to "D" for the lowest. These categories are as
follows:
A-1 This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1."
A-3 Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B Issues rated "B" are regarded as having only speculative capacity for
timely payment.
C This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D Debt rated "D" is in payment default. The "D" rating category is used when
interest payments are not made on the date due even if the applicable grace
period has not expired, unless Standard & Poor's believes that such payments
will be made during such grace period.
- ---------------------------------------
(4) Reprinted from Standard & Poor's Bond Guide
<PAGE>
B-62
Fitch(5)
Short term ratings apply to obligations payable on demand or with original
maturities of up to three years. The rating emphasizes the existence of
liquidity required for timely payment of the obligation.
F-1+ Exceptionally Strong Credit Quality, strongest degree of assurance for
timely payment.
F-1 Very Strong Credit Quality, assurance of timely payment only slightly less
than F-1+.
F-2 Good Credit Quality, satisfactory degree of assurance for timely payment.
F-3 Fair Credit Quality, degree for assurance of timely repayment is adequate,
however, near term adverse changes could put rating below investment grade.
F-S Weak Credit Quality, minimal degree of assurance for timely repayment and
vulnerable to near adverse changes in economic and financial conditions.
D Default, actual or imminent payment default.
Moody's(6)
Moody's employs the following three designations, all judged to be
investment-grade, to indicate the relative repayment ability of rated issuers:
P-1 Issuers rated Prime-1 (or supporting institutions) have a superior ability
for repayment of senior short-term debt obligations. Prime-1 repayment ability
will often be evidenced by many of the following characteristics:
* Leading market positions in well-established industries.
* High rates of return on funds employed.
* Conservative capitalization structures with moderate
reliance on debt and ample asset protection.
* Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.
* Well-established access to a range of financial markets
and assured sources of alternate liquidity.
- ----------------------------------------
(5) As provided by Fitch Investors Service Inc.
(6) Reprinted from Moody's Bond Record and Short Term Market Record
<PAGE>
B-63
P-2 Issuers rated Prime-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
P-3 Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term debt obligations. The effect of
industry characteristics and market composition may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
Not Prime Issuers rated Not Prime do not fall within any of the Prime rating
categories.
Description of Municipal Note Ratings
The following descriptions of municipal bond ratings have been published
by Standard & Poor's, Fitch and Moody's, respectively.
Standard & Poor's(7)
SP-1 Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
(+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
Moody's
MIG 1/VMIG 1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
MIG 2/VMIG 2 This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3/VMIG 3 This designation denotes favorable quality. All security elements
are accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
- ------------------------------------------
(7) Reprinted from Standard & Poor's Bond Guide
<PAGE>
B-64
MIG 4/VMIG 4 This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
SG This designation denotes speculative quality. Debt instruments in this
category lack margins of protection.
Fitch(8)
Short term ratings apply to obligations payable on demand or with original
maturities of up to three years. The rating emphasizes the existence of
liquidity required for timely payment of the obligation.
F-1+ Exceptionally Strong Credit Quality, strongest degree of assurance for
timely payment.
F-1 Very Strong Credit Quality, assurance of timely payment only slightly less
than F-1+.
F-2 Good Credit Quality, satisfactory degree of assurance for timely payment.
F-3 Fair Credit Quality, degree for assurance of timely repayment is adequate,
however, near term adverse changes could put rating below investment grade.
F-S Weak Credit Quality, minimal degree of assurance for timely repayment and
vulnerable to near adverse changes in economic and financial conditions.
D Default, actual or imminent payment default.
- ---------------------------------
(8) As provided by Fitch Investors Services, Inc.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements: See "Custodian, Transfer Agent, Independent
Accountants and Financial Statements", Regular and Institutional Services
Statement of Additional Information, Part B pages B-49 - B-50.
(b) Exhibits:
(1)(a) Articles of Incorporation of the Registrant dated May 3, 1988
(supplied by Pre-Effective Amendment No. 1 and submitted
electronically by Post-Effective Amendment No. 15).
(1)(b) Articles Supplementary of the Registrant dated October 14,
1988 (supplied by Pre-Effective Amendment No. 2 and submitted
electronically by Post-Effective Amendment No. 15).
(1)(c) Articles Supplementary of the Registrant dated April 25, 1990
(supplied by Post-Effective Amendment No. 4 and submitted
electronically by Post-Effective Amendment No. 15).
(1)(d) Articles Supplementary of the Registrant dated March 16, 1992
(supplied by Post-Effective Amendment No. 7 and submitted
electronically by Post-Effective Amendment No. 15).
(1)(e) Articles Supplementary of the Registrant undated, filed with
State of Maryland May 11, 1994 (supplied by Post-Effective
Amendment No. 10 and submitted electronically by
Post-Effective Amendment No. 15).
(1)(f) Articles Supplementary of the Registrant dated October 10,
1994 (supplied by Post-Effective Amendment No. 11 and
submitted electronically by Post-Effective Amendment No. 15).
(1)(g) Articles Supplementary of the Registrant dated August 29, 1995
(supplied by Post-Effective Amendment No. 12 and submitted
electronically by Post-Effective Amendment No. 15).
(1)(h) Articles Supplementary of the Registrant dated February 26,
1996 (submitted electronically by Post-Effective Amendment No.
15).
9
<PAGE>
(2)(a) By-Laws of the Registrant as Revised and Restated October 4,
1988 (supplied by Pre-Effective Amendment No. 2 and submitted
electronically herewith).
(2)(b) Amendment to Article I, Section 2 of the By-Laws of Registrant
dated January 30, 1992 (supplied by Post-Effective Amendment
No. 7 and submitted electronically herewith).
(3) Not Applicable.
(4)(a) Specimen Share Certificates - Government Short Duration; Short
Duration Plus; New York Municipal; Diversified Municipal;
Intermediate Duration (supplied by Pre-Effective Amendment No.
2).
(4)(b) Specimen Share Certificate - California Municipal Portfolio
(supplied by Post-Effective Amendment No. 4).
(4)(c) Specimen Share Certificate - International Value Portfolio
(supplied by Post-Effective Amendment No. 7).
(4)(d) Specimen Share Certificates - Short Duration California
Municipal Portfolio; Short Duration Diversified Municipal
Portfolio; Short Duration New York Municipal Portfolio
(supplied by Post-Effective Amendment No. 10).
(4)(e) Specimen Share Certificate - Emerging Markets Value Portfolio
(supplied by Post-Effective Amendment No. 12).
(5)(a) Investment Management Agreement dated October 12, 1988 between
the Registrant on behalf of Government Short Duration; Short
Duration Plus; New York Municipal; Diversified Municipal;
Intermediate Duration and Sanford C. Bernstein & Co., Inc.
("Bernstein") (supplied by Pre-Effective Amendment No. 2 and
submitted electronically herewith).
(5)(a)(1) Investment Management Agreement dated May 1, 1990 between the
Registrant on behalf of California Municipal Portfolio and
Bernstein (supplied by Post-Effective Amendment No. 4 and
submitted electronically herewith).
10
<PAGE>
(5)(a)(2) Investment Management Agreement dated March 18, 1992 between
the Registrant on behalf of International Value Portfolio and
Bernstein (supplied by Post-Effective Amendment No. 7 and
submitted electronically herewith).
(5)(a)(3) Investment Management Agreement dated May 2, 1994 between the
Registrant on behalf of the Short Duration California
Municipal Portfolio; Short Duration Diversified Municipal
Portfolio; Short Duration New York Municipal Portfolio and
Bernstein (supplied by Post-Effective Amendment No. 10 and
submitted electronically herewith).
(5)(a)(4) Amendment to Investment Management Agreement dated October 5,
1994 between the Registrant on behalf of Government Short
Duration; Short Duration Plus; New York Municipal;
Diversified Municipal; and Intermediate Duration Portfolios
and Bernstein (supplied by Post-Effective Amendment No. 11
and submitted electronically herewith).
(5)(a)(5) Amendment to Investment Management Agreement dated October 5,
1994 between the Registrant on behalf of the California
Municipal Portfolio and Bernstein (supplied by Post-Effective
Amendment No. 11 and submitted electronically herewith).
(5)(a)(6) Investment Management Agreement dated October 11, 1995
between the Registrant on behalf of the Emerging Markets
Value Portfolio and Bernstein (supplied by Post-Effective
Amendment No. 12 and submitted electronically by Post-
Effective Amendment No. 15).
(5)(a)(7) Amendment No. 1 to Investment Management Agreement dated
October 11, 1995 between the Registrant on behalf of the
International Value Portfolio and Bernstein (submitted
electronically by Post-Effective Amendment No. 13).
(5)(b) Shareholder Servicing and Administrative Agreement dated
October 12, 1988 between the Registrant on behalf of
Government Short Duration; Short Duration Plus; New York
Municipal; Diversified Municipal; Intermediate Duration and
Bernstein (supplied by Post Effective Amendment No. 3 and
submitted electronically herewith).
11
<PAGE>
(5)(b)(1) Shareholder Servicing and Administrative Agreement dated May
1, 1990 between the Registrant on behalf of California
Municipal Portfolio and Bernstein (supplied by Post-Effective
Amendment No. 4 and submitted electronically herewith)
(5)(b)(2) Shareholder Servicing and Administrative Agreement dated
March 18, 1992 between the Registrant on behalf of
International Value Portfolio and Bernstein (supplied by
Post-Effective Amendment No. 7 and submitted electronically
herewith).
(5)(b)(3) Shareholder Servicing and Administrative Agreement dated
May 2, 1994 between the Registrant on behalf of the Short
Duration California Municipal Portfolio; Short Duration
Diversified Municipal Portfolio; Short Duration New York
Municipal Portfolio and Bernstein (supplied by Post-Effective
Amendment No. 10 and submitted electronically herewith).
(5)(b)(4) Shareholder Servicing and Administrative Agreement dated
October 11, 1995 between the Registrant on behalf of the
Emerging Markets Value Portfolio and Bernstein (supplied by
Post-Effective Amendment No. 12 and submitted electronically
by Post-Effective Amendment No. 15).
(6)(a) Distribution Agreement dated October 12, 1988 between the
Registrant on behalf of Government Short Duration; Short
Duration Plus; New York Municipal; Diversified Municipal;
Intermediate Duration and Bernstein (supplied by Pre-Effective
Amendment No. 2 and submitted electronically herewith).
(6)(b) Distribution Agreement dated May 1, 1990 between the
Registrant on behalf of California Municipal Portfolio and
Bernstein (supplied by Post-Effective Amendment No. 4 and
submitted electronically herewith).
(6)(c) Distribution Agreement dated March 18, 1992 between the
Registrant on behalf of International Value Portfolio and
Bernstein (supplied by Post-Effective Amendment No. 7 and
submitted electronically herewith).
12
<PAGE>
(6)(d) Distribution Agreement dated May 2, 1994 between the
Registrant on behalf of the Short Duration California
Municipal Portfolio; Short Duration Diversified Municipal
Portfolio; Short Duration New York Municipal Portfolio and
Bernstein (supplied by Post-Effective Amendment No. 10 and
submitted electronically herewith).
(6)(e) Distribution Agreement dated October 11, 1995 between the
Registrant on behalf of the Emerging Markets Value Portfolio
and Bernstein (supplied by Post-Effective Amendment No. 12 and
submitted electronically by Post-Effective Amendment No. 15).
(7) Not applicable.
(8)(a) Custodian Contract dated October 12, 1988 between the
Registrant and State Street Bank and Trust Company (supplied
by Pre-Effective Amendment No. 2 and submitted electronically
herewith).
(8)(b) Custodian Contract Fee Schedule dated October 12, 1988
(supplied by Post-Effective Amendment No. 2).
(8)(c) Fee Information for Automated Securities Pricing dated
October 12, 1988 (supplied by Post-Effective Amendment No. 2).
(8)(d) Amendment to the Custodian Contract dated May 8, 1989
(supplied by Post-Effective Amendment No. 2 and submitted
electronically herewith).
(8)(e) Second Amendment to the Custodian Contract dated July 24, 1989
(supplied by Post-Effective Amendment No. 3 and submitted
electronically herewith).
(8)(f) Third Amendment to the Custodian Contract dated April 30, 1990
(supplied by Post-Effective Amendment No. 4 and submitted
electronically herewith).
(8)(g) Custodian Contract Fee Schedule dated October 1, 1991
(supplied by Post-Effective Amendment No. 6).
13
<PAGE>
(8)(h) Fourth Amendment to the Custodian Contract dated March 18,
1992 (supplied by Post-Effective Amendment No. 7 and submitted
electronically herewith).
(8)(i) Custodian Fee Schedule dated August 20, 1993 - International
Value Portfolio (supplied by Post-Effective Amendment No. 9).
(8)(j) Fifth Amendment to the Custodian Contract dated April 19, 1994
(supplied by Post-Effective Amendment No. 10 and submitted
electronically herewith).
(8)(k) Custodian Fee Schedule dated May 20, 1994 - Short Duration
California Municipal Portfolio; Short Duration Diversified
Municipal Portfolio and Short Duration New York Municipal
Portfolio (supplied by Post-Effective Amendment No. 10).
(8)(l) Sixth Amendment to the Custodian Contract dated August 21,
1995 (supplied by Post-Effective Amendment No. 12 and
submitted electronically herewith).
(8)(m) Custodian Fee Schedule dated July 27, 1995 - International
Value Portfolio (submitted electronically by Post-Effective
Amendment No. 13).
(8)(n) Custodian Fee Schedule dated August 21, 1995 - Emerging
Markets Value Portfolio (submitted electronically by
Post-Effective Amendment No. 13).
(8)(o) Custodian Fee Schedule Amendment dated December 8, 1995 -
International Value Portfolio (submitted electronically by
Post-Effective Amendment No. 13).
(8)(p) Custodian Fee Schedule Amendment dated December 8, 1995 -
Government Short Duration, Short Duration Plus, New York
Municipal, Diversified Municipal, Intermediate Duration,
California Municipal, Short Duration New York Municipal, Short
Duration California Municipal and Short Duration Diversified
Municipal Portfolios (submitted electronically by
Post-Effective Amendment No. 13).
14
<PAGE>
(8)(q) Seventh Amendment to the Custodian Contract dated May 6, 1996
(submitted electronically by Post-Effective Amendment No. 15).
(8)(r) Custodian Fee Schedule dated July 9, 1996 - Government Short
Duration, Short Duration Plus, New York Municipal, Diversified
Municipal Portfolio, Intermediate Duration, California
Municipal, Short Duration New York Municipal, Short Duration
California Municipal and Short Duration Diversified Municipal
Portfolios (submitted electronically by Post-Effective
Amendment No. 15).
(8)(s) Custodian Fee Schedule dated July 9, 1996 - International
Value and Emerging Markets Value Portfolios (submitted
electronically by Post-Effective Amendment No. 15).
(8)(t) Eighth Amendment to the Custodian Contract dated September 25,
1996 (submitted electronically by Post-Effective Amendment No.
15).
(9)(a) Transfer Agency Agreement dated October 12, 1988 between the
Registrant and State Street Bank and Trust Company (supplied
by Pre-Effective Amendment No. 2 and submitted electronically
herewith).
(9)(b) Fee Schedule for Services under Transfer Agency Agreement,
dated December 22, 1992 (supplied by Post-Effective Amendment
No. 9 to this registration statement).
(9)(c) Amendment to the Transfer Agency Agreement dated April 30,
1990 (supplied by Post-Effective Amendment No. 4 and submitted
electronically herewith).
(9)(d) Second Amendment to the Transfer Agency Agreement dated March
18, 1992 (supplied by Post-Effective Amendment No. 7 and
submitted electronically herewith).
(9)(e) Third Amendment to the Transfer Agency Agreement dated April
19, 1994 (supplied by Post-Effective Amendment No. 10 and
submitted electronically herewith).
15
<PAGE>
(9)(f) Fee Schedule for Services under Transfer Agency Agreement,
dated May 20, 1994 (supplied by Post-Effective Amendment No.
10).
(9)(g) Fourth Amendment to Transfer Agency Agreement dated
August 21, 1995 (supplied by Post-Effective Amendment No. 12
and submitted electronically herewith).
(9)(h) Fifth Amendment to Transfer Agency Agreement dated July 18,
1996 (submitted electronically by Post-Effective Amendment
No. 15).
(9)(i) Fee Schedule for Fee Information Services under Transfer
Agency Agreement, dated July 18, 1996 - Government Short
Duration, Short Duration Plus, Diversified Municipal,
Intermediate Duration, New York Municipal, California
Municipal, International Value, Short Duration California
Municipal, Short Duration Diversified Municipal, Short
Duration New York Municipal and Emerging Markets Value
Portfolios (submitted electronically by Post-Effective
Amendment No. 15).
(9)(j) Securities Lending Agreement dated July 17, 1996 between the
Registrant, on behalf of the International Value Portfolio
and State Street Bank and Trust Company and Amendment dated
September 30, 1996 (submitted electronically by Post-
Effective Amendment No. 15).
(9)(j)(1) Second Amendment to Securities Lending Agreement dated
May 29, 1997 (submitted electronically herewith).
(10)(a) Opinion of Counsel dated October 13, 1988 - Government Short
Duration, Short Duration Plus, New York Municipal,
Diversified Municipal and Intermediate Duration Portfolios
(supplied by Pre-Effective Amendment No. 2 and submitted
electronically herewith).
(10)(b) Opinion of Counsel dated May 2, 1990 - California Municipal
Portfolio (supplied Post-Effective Amendment No. 4 and
submitted electronically herewith).
16
<PAGE>
(10)(c) Opinion of Counsel dated March 30, 1992 - International Value
Portfolio (supplied by Post-Effective Amendment No. 7 and
submitted electronically herewith).
(10)(d) Opinion of Counsel dated May 23, 1994 - Short Duration
California Municipal Portfolio; Short Duration Diversified
Municipal Portfolio; Short Duration New York Municipal
Portfolio (supplied by Post-Effective Amendment No. 10 and
submitted electronically herewith).
(10)(e) Opinion of Counsel dated September 25, 1995 - Emerging Markets
Value Portfolio (supplied by Post-Effective Amendment No. 12
and submitted electronically herewith).
(11) Consent of Independent Accountants (submitted electronically
herewith).
(12) Not applicable.
(13) Purchase Agreement dated October 12, 1988 (supplied by
Pre-Effective Amendment No. 2 and submitted electronically
herewith).
(14) Not applicable.
(15) Not applicable.
(16)(a) Schedules of Computation of Performance Quotations -
Government Short Duration Portfolio; Short Duration Plus
Portfolio; New York Municipal Portfolio; Diversified Municipal
Portfolio; Intermediate Duration Portfolio (supplied by
Post-Effective Amendment No. 2 and submitted electronically
herewith).
(16)(b) Schedule of Computation of Performance Quotations - California
Municipal Portfolio (supplied by Post-Effective Amendment No.
5 and submitted electronically herewith).
(16)(c) Schedule of Computation of Performance Quotations - Government
Short Duration Portfolio; New York Municipal Portfolio,
Diversified Municipal Portfolio; California Municipal
Portfolio (supplied by Post-Effective Amendment No. 6 and
submitted electronically herewith).
17
<PAGE>
(16)(d) Schedule of Computation of Performance Quotations -
International Value Portfolio (supplied by Post-Effective
Amendment No. 8 and submitted electronically herewith).
(16)(e) Schedules of Computation of Performance Quotations - Short
Duration California Municipal Portfolio; Short Duration
Diversified Municipal Portfolio; Short Duration New York
Municipal Portfolio (supplied by Post-Effective Amendment No.
11 and submitted electronically herewith).
(16)(f) Schedule of Computation of Performance Quotations - Emerging
Markets Value Portfolio (submitted electronically by
Post-Effective Amendment No. 15).
(17) Financial Data Schedules for 12 Months Ending September 30,
1997 - Government Short Duration, Short Duration Plus, New
York Municipal, Diversified Municipal, Intermediate Duration,
California Municipal, International Value, Short Duration New
York Municipal, Short Duration Diversified Municipal, Short
Duration California Municipal and Emerging Markets Value
Portfolios (submitted electronically herewith).
(18) Not applicable.
Item 25. Persons Controlled By or Under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities.
Title of Class Number of Record Holders
-------------- ------------------------
Bernstein Government
Short Duration Portfolio 740 (As of December 10,
(Par value .001 per share) 1997)
Bernstein Short Duration
Plus Portfolio 2,716 (As of December 10,
(Par value .001 per share) 1997)
Bernstein New York
Municipal Portfolio 2,234 (As of December 10,
(Par value .001 per share) 1997)
Bernstein Diversified
Municipal Portfolio 3,433 (As of December 10,
(Par value .001 per share) 1997)
18
<PAGE>
Bernstein Intermediate
Duration Portfolio 6,483 (As of December 10,
(Par value .001 per share) 1997)
Bernstein California
Municipal Portfolio 1,188 (As of December 10,
(Par Value .001 per share) 1997)
Bernstein International 21,236 (As of December
Value Portfolio 10, 1997)
(Par Value .001 per share)
Bernstein Short Duration
California Municipal Portfolio 310 (As of December 10,
(Par Value .001 per share) 1997)
Bernstein Short Duration
Diversified Municipal Portfolio 663 (As of December 10,
(Par Value .001 per share) 1997)
Bernstein Short Duration
New York Municipal Portfolio 414 (As of December 10,
(Par Value .001 per share) 1997)
Bernstein Emerging Markets 9,499 (As of December 10,
Value Portfolio 1997)
(Par Value .001 per share)
Item 27. Indemnification.
As permitted by Section 17(h) and (i) of the Investment Company Act of
1940 (the "1940 Act") and pursuant to Article VII of the Fund's By-Laws (Exhibit
2 to this Registration Statement), directors, officers and employees of the Fund
will be indemnified to the maximum extent permitted by Maryland General
Corporation Law. Article VII provides that nothing therein contained protects
any director or officer of the Fund against any liability to the Fund or its
stockholders to which the director or officer would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office. Maryland General
Corporation Law permits a corporation to indemnify any director, officer,
employee or agent made a party to any threatened, pending or completed action,
suit or proceeding by reason of service in that capacity, against, judgments,
penalties, fines, settlements and reasonable expenses actually incurred in
connection with the proceeding, unless it is proved that: (i) an act or omission
by the director, officer, employee or agent that was material to the cause of
action adjudicated in the proceeding was committed in bad faith or the result of
active and deliberate dishonesty; (ii) the director,
19
<PAGE>
employee, or agent actually received an improper personal benefit in money,
property, or services; or (iii) in the case of any criminal proceeding, the
director, employee or agent had reasonable cause to believe that the act or
omission was unlawful. Maryland law does not permit indemnification in respect
of any proceeding by or in the right of the corporation in which the director
shall have been held liable to the corporation.
As permitted by Section 17(i) of the 1940 Act, pursuant to Section 3 of
the respective Investment Management Agreements, Section 3 of the respective
Shareholder Servicing and Administrative Agreements, and Section 8 of the
respective Distribution Agreements between the Registrant on behalf of its
various Portfolios and Bernstein, Bernstein may be indemnified against certain
liabilities which it may incur.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
As permitted by Article VII, Section 2 of the Bylaws, the Registrant
has purchased an insurance policy insuring its officers and directors against
certain liabilities, and certain costs of defending claims against such officers
and directors, to the extent such officers and directors are not found to have
omitted conduct constituting conflict of interest, intentional non-compliance
with statutes or regulations or dishonest, fraudulent or criminal acts or
omissions. The insurance policy also insures the Registrant against the cost of
indemnification payments to officers and directors under certain circumstances.
Insurance will not be purchased that protects, or purports to protect, any
officer or director from liability to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of duty.
20
<PAGE>
Section 2 of the respective Investment Management Agreements limits the
liability of Bernstein to loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for service (in which case any award of
damages shall be limited to the period and the amount set forth in Section
36(b)(3) of the 1940 Act) or loss resulting from willful misfeasance, bad faith
or gross negligence in the performance of its duties or from reckless disregard
by Bernstein of its obligations and duties under the Management Agreements.
Section 2 of the respective Shareholder Servicing and Administrative
Agreements and Section 9 of the respective Distribution Agreements limit the
liability of Bernstein to loss resulting from willful misfeasance, bad faith or
gross negligence in the performance of its duties or from reckless disregard by
Bernstein of its obligations and duties under those Agreements.
The Registrant hereby undertakes that it will apply the indemnification
provisions of its By-Laws, and the respective Investment Management Agreements,
Shareholder Servicing and Administrative Agreements, and Distribution Agreements
in a manner consistent with Release No. 11330 of the Securities and Exchange
Commission under the 1940 Act so long as the interpretation of Sections 17(h)
and 17(i) of such Act remain in effect and are consistently applied.
Item 28. Business and Other Connections of Investment Adviser.
See "Manager and Distributor" in the Statement of Additional
Information constituting Part B of this Registration Statement and incorporated
herein by reference and "Management of the Portfolios" in the Regular and
Institutional Services Prospectuses constituting Parts A-1, A-2 and A-3 of this
Registration Statement, respectively, and incorporated herein by reference.
Item 29. Principal Underwriters
(a) Sanford C. Bernstein & Co., Inc. is the Distributor for no
investment company other than the Registrant.
21
<PAGE>
(b)
Name and Positions and Positions and
Principal Business Offices with Offices with
Address Underwriter Registrant
- ------------------ ------------- -------------
Zalman C. Bernstein* Chairman of the
Executive Committee
Lewis A. Sanders* Chairman of the
Board, Chief Executive
Officer and Chief
Financial Officer
Roger Hertog* President and Chief President,
Operating Officer Treasurer and
Director
Andrew S. Adelson* Senior Vice President Senior Vice
President &
Director
Kevin R. Brine* Senior Vice President
Charles C. Cahn, Jr.* Senior Vice President
Marilyn Goldstein Fedak* Chief Investment
Officer - Large
Capitalization Equities
Michael L. Goldstein* Investment Strategist -
Institutional Services
Francis H. Trainer, Jr.* Senior Vice President Senior Vice
President
- -------------------
* Business Address is 767 Fifth Avenue
New York, New York 10153
(c) Registrant has no principal underwriter who is not an affiliated
person of the Registrant.
22
<PAGE>
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by
Rules 31a-1 through 31a-3 pursuant to the Investment Company Act are maintained
at the offices of Bernstein, One State Street Plaza, New York, NY 10004 and 767
Fifth Avenue, New York, New York 10153, except that some records pursuant to
Rule 31a-1(b)are maintained at the offices of State Street Bank and Trust
Company, 1776 Heritage Drive and 2 Heritage Drive, North Quincy, Massachusetts
02171, the Registrant's Transfer Agent, and some records pursuant to Rule
31a-1(b)(4) are maintained at the offices of Shereff, Friedman, Hoffman &
Goodman LLP, 919 Third Avenue, New York, New York 10022, counsel to the
Registrant.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
23
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this amended registration statement pursuant
to rule 485(b) under the Securities Act of 1933 and has duly caused this
registration statement to be signed on its behalf by the undersigned, hereto
duly authorized in the City and State of New York on the 28th day of January,
1998.
Sanford C. Bernstein Fund, Inc.
By: Roger Hertog, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following in the capacity
and on the date indicated.
Signature Title Date
- --------- ----- ----
Roger Hertog President January 28, 1998
(Principal
Executive
Officer),
Treasurer,
(Principal
Financial and
Accounting
Officer) and
Director
Andrew S. Adelson Senior Vice January 28, 1998
President
and Director
Arthur Aeder Director January 28, 1998
Peter L. Bernstein Director January 28, 1998
Theodore Levitt Director January 28, 1998
William Kristol Director January 28, 1998
<PAGE>
Index to Exhibits
-----------------
Exhibit No. Description
- ----------- -----------
(2)(a) By-Laws of the Registrant as Revised and Restated October 4, 1988.
(2)(b) Amendment to Article I, Section 2 of the By-Laws of Registrant dated
January 30, 1992.
(5)(a) Investment Management Agreement dated October 12, 1988 between the
Registrant on behalf of Government Short Duration; Short Duration
Plus; New York Municipal; Diversified Municipal; Intermediate Duration
and Bernstein
(5)(a)(1) Investment Management Agreement dated May 1, 1990 between the
Registrant on behalf of California Municipal Portfolio and Bernstein
(5)(a)(2) Investment Management Agreement dated March 18, 1992 between the
Registrant on behalf of International Value Portfolio and Bernstein
(5)(a)(3) Investment Management Agreement dated May 2, 1994 between the
Registrant on behalf of the Short Duration California Municipal
Portfolio; Short Duration Diversified Municipal Portfolio; Short
Duration New York Municipal Portfolio and Bernstein
(5)(a)(4) Amendment to Investment Management Agreement dated October 5, 1994
between the Registrant on behalf of Government Short Duration; Short
Duration Plus; New York Municipal; Diversified Municipal; and
Intermediate Duration Portfolios and Bernstein
(5)(a)(5) Amendment to Investment Management Agreement dated October 5, 1994
between the Registrant on behalf of California Municipal Portfolio and
Bernstein
(5)(b) Shareholder Servicing and Administrative Agreement dated October 12,
1988 between the Registrant on behalf of Government Short Duration;
Short Duration Plus; New York Municipal; Diversified Municipal;
Intermediate Duration Portfolios and Bernstein
(5)(b)(1) Shareholder Servicing and Administrative Agreement dated May 1, 1990
between the Registrant on behalf of California Municipal Portfolio and
Bernstein
<PAGE>
(5)(b)(2) Shareholder Servicing and Administrative Agreement dated March 18,
1992 between the Registrant on behalf of International Value Portfolio
and Bernstein
(5)(b)(3) Shareholder Servicing and Administrative Agreement dated May 2, 1994
between the Registrant on behalf of the Short Duration California
Municipal Portfolio; Short Duration Diversified Municipal Portfolio;
Short Duration New York Municipal Portfolio and Bernstein
(6)(a) Distribution Agreement dated October 12, 1988 between the Registrant
on behalf of Government Short Duration; Short Duration Plus; New York
Municipal; Diversified Municipal; Intermediate Duration and Bernstein
(6)(b) Distribution Agreement dated May 1, 1990 between the Registrant on
behalf of California Municipal Portfolio and Bernstein
(6)(c) Distribution Agreement dated March 18, 1992 between the Registrant on
behalf of International Value Portfolio and Bernstein
(6)(d) Distribution Agreement dated May 2, 1994 between the Registrant on
behalf of the Short Duration California Municipal Portfolio; Short
Duration Diversified Municipal Portfolio; Short Duration New York
Municipal Portfolio and Bernstein
(8)(a) Custodian Contract dated October 12, 1988 between the Registrant and
State Street Bank and Trust Company
(8)(d) Amendment to the Custodian Contract dated May 8, 1989
(8)(e) Second Amendment to the Custodian Contract dated July 24, 1989
(8)(f) Third Amendment to the Custodian Contract dated April 30, 1990
(8)(h) Fourth Amendment to the Custodian Contract dated March 18, 1992
(8)(j) Fifth Amendment to the Custodian Contract dated April 19, 1994
(8)(l) Sixth Amendment to the Custodian Contract dated August 21, 1995
<PAGE>
(9)(a) Transfer Agency Agreement dated October 12, 1988 between the
Registrant and State Street Bank and Trust Company
(9)(c) Amendment to the Transfer Agency Agreement dated April 30, 1990
(9)(d) Second Amendment to the Transfer Agency Agreement dated March 18, 1992
(9)(e) Third Amendment to the Transfer Agency Agreement dated April 19, 1994
(9)(g) Fourth Amendment to the Transfer Agency Agreement dated August 21,
1995
(9)(j)(1) Second Amendment to Securities Lending Agreement dated May 29, 1997
(10)(a) Opinion of Counsel dated October 13, 1988 - Government Short Duration,
Short Duration Plus, New York Municipal, Diversified Municipal and
Intermediate Duration Portfolios
(10)(b) Opinion of Counsel dated May 2, 1990 - California Municipal Portfolio
(10)(c) Opinion of Counsel dated March 30, 1992 - International Value
Portfolio
(10)(d) Opinion of Counsel dated May 23, 1994 - Short Duration California
Municipal Portfolio; Short Duration Diversified Municipal Portfolio;
Short Duration New York Municipal Portfolio
(10)(e) Opinion of Counsel dated September 25, 1995 - Emerging Markets Value
Portfolio
(11) Consent of Independent Accountants
(13) Purchase Agreement dated October 12, 1988
(16)(a) Schedules of Computation of Performance Quotations - Government Short
Duration Portfolio; Short Duration Plus Portfolio; New York Municipal
Portfolio; Diversified Municipal Portfolio; Intermediate Duration
Portfolio
(16)(b) Schedule of Computation of Performance Quotations - California
Municipal Portfolio
<PAGE>
(16)(c) Schedule of Computation of Performance Quotations - Government short
Duration Portfolio; New York Municipal Portfolio; Diversified
Municipal; California Municipal Portfolio
(16)(d) Schedule of Computation of Performance Quotations - International
Value Portfolio
(16)(e) Schedules of Computation of Performance Quotations - Short Duration
California Municipal Portfolio; Short Duration Diversified Municipal
Portfolio; Short Duration New York Municipal Portfolio
(17) Financial Data Schedules for 12 Months Ending September 30, 1997 -
Government Short Duration, Short Duration Plus, New York Municipal,
Diversified Municipal, Intermediate Duration, California Municipal,
International Value, Short Duration New York Municipal, Short Duration
Diversified Municipal, Short Duration California Municipal and
Emerging Markets Value Portfolios.
<PAGE>
Exhibit 2(a) By-Laws
SANFORD C. BERNSTEIN FUND, INC.
A Maryland Corporation
BY-LAWS
As Revised and Restated October 4, 1988
ARTICLE I
Stockholders
Section 1. Place of Meeting. All meetings of the stockholders shall be held at
the principal office of the Corporation in the State of Maryland or at such
other place within the United States as may from time to time be designated by
the Board of Directors and stated in the notice of such meeting.
Section 2. Annual Meetings. The annual meeting of the stockholders of the
Corporation shall be held in the month of January of each year on such date
and at such hour as may be from time to time designated by the Board of
Directors and stated in the notice of such meeting, for the purpose of
electing directors and for the transaction of such other business as may
properly be brought before the meeting; provided, however, that an annual
meeting of stockholders shall not be required to be held in any year in which
none of the following is required, under the Investment Company Act of 1940,
to be acted on by the stockholders: election of directors; approval of the
investment advisory agreement; ratification of independent public accountants
or approval of a distribution agreement.
Section 3. Special Meetings. Special meetings of the stockholders for any
purpose or purposes may be called by the Chairman of the Board, the President
or a majority of the Board of Directors, and shall be called by the Secretary
upon receipt of the request in writing signed by stockholders holding not less
than 25% of the common stock issued and outstanding and entitled to vote
thereat, except that a meeting for the purpose of considering the removal of
one or more directors shall be called by the Secretary upon receipt of a
request in writing signed by stockholders holding not less than 10% of the
common stock issued and outstanding and entitled to vote thereat. The
Secretary shall assist shareholder communication for the purpose of obtaining
signatures to a request for a meeting for the purpose of considering the
removal of one or more directors, essentially as set forth in Section 16(c) of
the Investment Company Act of 1940, as amended. A stockholders' request that
the Secretary call a meeting shall state the purpose or purposes of the
proposed meeting. The Secretary shall inform such stockholders of the
reasonably estimated costs of preparing and mailing notice of the requested
meeting. Upon payment to the Corporation of such costs by such stockholders,
the Secretary shall give notice, stating the purpose or purposes of the
meeting as required in these By-Laws, to all stockholders entitled to notice
of the meeting. No meeting need be called upon the request of the holders of
shares entitled to cast less than a majority of all votes entitled to be cast
at that meeting to consider any matter which is substantially the same as a
matter voted upon at any meeting of stockholders held during the preceding
twelve months.
Section 4. Notice of Meetings of Stockholders. Not less than ten days' and not
more than ninety days' written or printed notice of every meeting of
stockholders, stating the time and place thereof and the general nature of the
business proposed to be transacted thereat, shall be given to each stockholder
entitled to vote thereat by leaving the name with such stockholder or at such
stockholder's residence or usual place of business or by mailing it, postage
prepaid, and addressed to such stockholder at such stockholder's address as it
appears upon the books of the Corporation. If mailed, notice shall be deemed
to be given when deposited in the United States mail addressed to the
stockholder as aforesaid. No notice of the time, place or purpose of any
meeting of stockholders need be given to any stockholder who attends in person
or by proxy or to any stockholder who, in writing executed and filed with the
records of the meeting, either before or after the holding thereof, waives
such notice.
Section 5. Record Dates. The Board of Directors may fix, in advance, a date
not exceeding sixty days preceding the date of any meeting of stockholders,
any dividend payment date or any date for the allotment
<PAGE>
of rights, as a record date for the determination of the stockholders entitled
to notice of and to vote at such meeting or entitled to receive such dividends
or rights and only stockholders of record on that date shall be entitled to
notice of and to vote at that meeting or to receive such dividends or rights. In
the case of a meeting of stockholders, such date shall not be less than ten days
prior to the date fixed for such meeting.
Section 6. Quorum, Adjournment of Meetings. The presence in person or by proxy
of the holders of record of one-third of the shares of the common stock of the
Corporation issued and outstanding and entitled to vote thereat shall
constitute a quorum at all meetings of the stockholders except as otherwise
provided in the Articles of Incorporation. If, however, a quorum shall not be
present at any meeting of the stockholders, the holders of a majority of the
stock present in person or by proxy shall have power to adjourn the meeting
from time to time (but not more than 120 days after the original record date
for the meeting) without notice other than announcement at the meeting, until
a quorum shall be present. At such adjourned meeting at which a quorum shall
be present, any business may be transacted which might have been transacted at
the meeting as originally notified.
Section 7. Voting and Inspectors. At all meetings, each stockholder of record
entitled to vote thereat shall have one vote for each share of common stock
standing in that stockholder's name on the books of the Corporation (and
stockholders of record holding fractional shares, if any, shall have
proportionate voting rights) on the date for the determination of stockholders
entitled to vote at such meeting, either in person or by proxy appointed by
instrument in writing subscribed by such stockholder or the stockholder's duly
authorized attorney.
The chairman of the meeting may cause a vote by ballot to be taken upon any
election or matter, and such vote shall be taken upon the request of the
holders of ten percent (10%) of the stock entitled to vote on such election or
matter.
At any election of directors, the Board of Directors prior thereto may, or, if
they have not so acted, the chairman of the meeting may, and upon the request
of the holders of ten percent (10%) of the stock entitled to vote at such
election shall, appoint two inspectors of election who shall first subscribe
an oath or affirmation to execute faithfully the duties of inspectors at such
election with strict impartiality and according to the best of their ability,
and shall after the election make a certificate of the result of the vote
taken. No candidate for the office of director shall be appointed an inspector
of election.
Section 8. Conduct of Stockholders' Meetings. Each meeting of the stockholders
shall be presided over by the Chairman of the Board, or in the absence of the
Chairman of the Board (or, if there be no Chairman of the Board), by the
President, or in the absence of both the Chairman of the Board and the
President, by a Vice-President, or if none of them is present, by a chairman
to be elected at the meeting. The Secretary of the Corporation, if present,
shall act as secretary of the meeting. In the absence of the Secretary, an
Assistant Secretary shall so act; if neither the Secretary nor any Assistant
Secretary is present, then a secretary to be elected at the meeting shall so
act.
Section 9. Concerning Validity of Proxies, Ballots, etc. At every meeting of
the stockholders, all proxies shall be received and taken in charge of, and
all ballots shall be received and canvassed by, the secretary of the meeting,
who shall decide all questions concerning the qualification of voters, the
validity of the proxies and the acceptance or rejection of votes, unless
inspectors of election shall have been appointed by the chairman of the
meeting, in which event such inspectors of election shall decide all such
questions.
ARTICLE II
Board of Directors
Section 1. Number and Tenure of Office. The business and affairs of the
Corporation shall be conducted and managed by a Board of Directors of not less
than two nor more than twelve directors, as may be determined from time to
time by vote of a majority of the directors then in office. Each director
shall hold office until such time as less than a majority of the directors
then holding office have been elected by the
<PAGE>
stockholders or upon the occurrence of any of the conditions described under
Section 16 of the Investment Company Act of 1940 as amended. At such time, a
meeting of the stockholders shall be called for the purpose of electing the
Board of Directors and the terms of office of the directors then in office shall
terminate upon the election and qualification of such Board of Directors.
Directors need not be stockholders.
Section 2. Vacancies. Except as otherwise provided in Section 1, in case of
any vacancy in the Board of Directors through death, resignation or other
cause, other than an increase in the number of directors, a majority of the
remaining directors, although a majority is less than a quorum, may elect a
successor to hold office until the next meeting of stockholders or until his
successor is chosen and qualifies.
Section 3. Increase or Decrease in Number of Directors. Except as otherwise
provided in Section 1, the Board of Directors, by the vote of a majority of
the entire Board, may increase the number of directors and may elect directors
to fill the vacancies created by any such increase in the number of directors
until the next meeting of stockholders or until their successors are duly
chosen and qualified. The Board of Directors, by the vote of a majority of the
entire Board, may likewise decrease the number of directors to a number not
less than two but any such decrease shall not affect the term in office of any
director.
Section 4. Place of Meeting. The directors may hold their meetings, have one
or more offices, and keep the books of the Corporation outside the State of
Maryland, at any office or offices of the Corporation or at such other place
as they may from time to time determine by resolution, or in the case of
meetings, as shall be specified or fixed in the respective notices or waivers
of notice thereof.
Section 5. Regular Meetings. Regular meetings of the Board of Directors shall
be held at such time and on such notice as the directors may from time to time
determine.
Section 6. Special Meetings. Special meetings of the Board of Directors may be
held from time to time upon call of the Chairman of the Board, the President,
the Secretary or two or more of the directors, by oral or telegraphic or
written notice duly served on or sent or mailed to each director not less than
one day before the meeting. No notice need be given to any director who
attends in person or to any director who, in writing signed and filed with the
records of the meeting either before or after the holding thereof, waives
notice. Notice or waiver of notice need not state the purpose or purposes of
the meeting.
Section 7. Quorum. One-third of the directors then in office shall constitute
a quorum for the transaction of business, provided that a quorum shall in no
case be less than two directors. If at any meeting of the Board there shall be
less than a quorum present, a majority of those present may adjourn the
meeting from time to time until a quorum shall have been obtained. The act of
the majority of the directors present at any meeting at which there is a
quorum shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Articles of Incorporation or by
these By-Laws.
Section 8. Executive Committee. The Board of Directors may elect from the
directors an Executive Committee to consist of such number of directors (not
less than two) as the Board may from time to time determine. The Chairman of
the Committee shall be elected by the Board of Directors. The Board of
Directors shall have power at any time to change the members of such Committee
and may fill vacancies in the Committee by election from the directors.
Between meetings of the Board of Directors, the Executive Committee may
exercise all of the powers of the Board of Directors except those listed in
Section 10. The Executive Committee may fix its own rules of procedure, and
may meet when and as provided by such rules or by resolution of the Board of
Directors, but in every case the presence of a majority shall be necessary to
constitute a quorum. During the absence of a member of the Executive
Committee, the remaining members may appoint a member of the Board of
Directors to act in the place of the absent member.
Section 9. Other Committees. The Board of Directors may appoint from the
directors other committees which shall in each case consist of such number of
directors (not less than two) as the Board may from time to time determine and
which shall have and may exercise such powers as the Board may determine in
the resolution appointing them. A majority of all the members of any such
committee may determine its action
<PAGE>
and fix the time and place of its meetings, unless the Board of Directors shall
otherwise provide. The Board of Directors shall have power at any time to change
the members and powers of any such committee, to fill vacancies and to discharge
any such committee.
Section 10. Powers of Committees. The Board of Directors may delegate to any
of the Committees appointed under Sections 8 and 9 any of the powers of the
Board of Directors, except the power to: (1) declare dividends or
distributions on stock; (2) issue stock except pursuant to a general formula
or method specified by the Board of Directors by resolution or by adoption of
a stock option or other plan; (3) recommend to the stockholders any action
which requires stockholder approval; (4) amend the By-Laws; or (5) approve any
merger or share exchange which does not require stockholder approval.
Section 11. Telephone Meetings. Members of the Board of Directors or a
committee of the Board of Directors may participate in a meeting by means of a
conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time. Except to
the extent otherwise specifically provided by applicable law, participation in
a meeting by these means constitutes presence in person at the meeting.
Section 12. Action Without a Meeting. Except to the extent otherwise
specifically provided by applicable law, any action required or permitted to
be taken at any meeting of the Board of Directors or any committee thereof may
be taken without a meeting, if a written consent to such action is signed by
all members of the Board or of such committee, as the case may be, and such
written consent is filed with the minutes of the proceedings of the Board or
such committee.
Section 13. Compensation of Directors. No director shall receive any stated
salary or fees from the Corporation for services as such if such director is,
other than by reason of being a director, an interested person (as that term
is defined by the Investment Company Act of 1940) of the Corporation or of its
investment adviser or principal underwriter. Except as provided in the
preceding sentence, directors shall be entitled to receive such compensation
from the Corporation for their services as may from time to time be voted by
the Board of Directors.
ARTICLE III
Officers
Section 1. Executive Officers. The executive officers of the Corporation shall
be chosen by the Board of Directors. The officers, none of whom need be
directors, shall include a President, a Secretary and a Treasurer and may
include a Chairman of the Board, one or more Executive Vice-Presidents, one or
more Senior Vice-Presidents and one or more Vice-Presidents. The Board of
Directors or the Executive Committee may also in its discretion appoint
Assistant Secretaries, Assistant Treasurers and other officers, agents and
employees, who shall have such authority and perform such duties as the Board
of Directors or the Executive Committee may determine. The Board of Directors
may fill any vacancy which may occur in any office. Any two offices, except
those of President and Vice-President, may be held by the same person, but no
officer shall execute, acknowledge or verify any instrument in more than one
capacity, if such instrument is required by law or these By-Laws to be
executed, acknowledged or verified by two or more officers.
Section 2. Term of Office. The term of office of all officers shall be until
their respective successors are chosen and qualified, provided, however, that
such term of office shall not create any contract rights in the officer. Any
officer may be removed from office at any time with or without cause by the
vote of a majority of the whole Board of Directors.
Section 3. Powers and Duties. The officers of the Corporation shall have such
powers and duties as generally pertain to their respective offices, as well as
such powers and duties as may from time to time be conferred on them by the
Board of Directors or the Executive Committee.
<PAGE>
ARTICLE IV
Capital Stock
Section 1. Transfer of Shares. Shares of the Corporation shall be transferable
on the books of the Corporation by the holder thereof in person or by his duly
authorized attorney or legal representative, upon surrender and cancellation
of certificates, if any, for the same number of shares, duly endorsed or
accompanied by proper instruments of assignment and transfer, with such proof
of the authenticity of the signature as the Corporation or its agents may
reasonably require. In the case of shares not represented by certificates, the
same or similar requirements may be imposed by the Board of Directors.
Section 2. Stock Ledgers. The stock ledgers of the Corporation, containing the
names and addresses of the stockholders and the number of shares held by them
respectively, shall be kept at the principal office of the Corporation or, if
the Corporation employs a Transfer Agent, at the office of the Transfer Agent
of the Corporation.
Section 3. Lost, Stolen or Destroyed Certificates. The Board of Directors or
the Executive Committee may determine the conditions upon which a new
certificate of stock of the Corporation of any Class may be issued in place of
a certificate which is alleged to have been lost, stolen or destroyed; and
may, in its discretion, require the owner of such certificate to give bond,
with sufficient surety, to indemnify the Corporation against any loss or
claims which may arise as a result of the issue of a new certificate.
ARTICLE V
Corporate Seal
The Board of Directors may provide for a suitable corporate seal, in such form
and bearing such inscriptions as it may determine.
ARTICLE VI
Fiscal Year
The fiscal year of the Corporation shall end on September 30, unless otherwise
determined by resolution of the Board of Directors.
ARTICLE VII
Indemnification
Section 1. The Corporation shall indemnify any present or former director or
officer of the Corporation who, by reason of his service in that capacity, is
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter collectively referred to as a "Proceeding") against judgments,
penalties, fines, settlements, and reasonable expenses actually incurred by
such director or officer in connection with such Proceeding, to the fullest
extent that such indemnification may be lawful under the General Corporation
Law of Maryland, as amended. The Corporation may pay any reasonable expenses
so incurred by any director or officer in defending a Proceeding in advance of
the final disposition thereof to the fullest extent that such advance payment
may be lawful under the applicable Maryland statutory provision. Any payment
of indemnification or advance payment of expenses shall be made subject to and
in accordance with the procedures set forth in the applicable Maryland
statutory provision. However, nothing contained in this Section shall protect
or purport to protect any director or officer of the Corporation against any
liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office (any such conduct being hereinafter
called "Disabling Conduct").
<PAGE>
Section 2. Anything in Section 1 to the contrary notwithstanding, no
indemnification shall be paid by the Corporation to any director or officer
unless:
(a) there is a final decision on the merits by a court or other body before
whom the Proceeding was brought that the director or officer to be indemnified
was not liable by reason of Disabling Conduct; or
(b) in the absence of such a final decision, there is a reasonable
determination, based upon a review of the facts, that the director or officer
to be indemnified was not liable by reason of Disabling Conduct, which
determination shall be made by:
(i) the vote of a majority of a quorum of directors who are neither
"interested persons" of the Corporation as defined in section 2(a)(19) of the
Investment Company Act of 1940, nor parties to the Proceeding; or
(ii) an independent legal counsel in written opinion.
Section 3. Anything in Section 1 to the contrary notwithstanding, any advance
payment of expenses by the Corporation to any director or officer of the
Corporation shall be made only upon the undertaking by such director or
officer to repay the advance unless it is ultimately determined that he is
entitled to indemnification as above provided, and only if one of the
following conditions is met:
(a) the director or officer to be indemnified provides a security for his
undertaking, or
(b) the Corporation shall be insured against losses arising by reason of any
lawful advances; or
(c) there is a determination, based on a review of readily-available facts,
that there is reason to believe that the director or officer to be indemnified
ultimately will be entitled to indemnification, which determination shall be
made by:
(i) a majority of a quorum of directors who are neither "interested persons"
of the Corporation, as defined in section 2(a)(19) of the Investment Company
Act of 1940 nor parties to the Proceeding; or
(ii) an independent legal counsel in a written opinion.
ARTICLE VIII
Amendment of By-Laws
The By-Laws of the Corporation may be altered, amended, added to or repealed
by the stockholders or by majority vote of the Board of Directors.
<PAGE>
Exhibit (2)(b) Amendment to Article I, Section 2 of the By-Laws of Registrant
dated January 30, 1992
SANFORD C. BERNSTEIN FUND, INC.
By-Law Amendment - January 30, 1992
Article I, Section 2 of the Bylaws of the Fund was amended to read as follows
in its entirety:
"Annual Meeting. The annual meeting of the stockholders of the Corporation
shall be held in the month of January of each year on such date and at such
hour as may be from time to time designated by the Board of Directors and
stated in the notice of such meeting, for the purpose of electing directors
and for the transaction of such other business as may be properly brought
before the meeting; provided, however, that an annual meeting of stockholders
shall not be required to be held in any year in which the election of
directors is not required to be acted upon under the Investment Company Act of
1940, and, provided further, that if the Corporation is required to hold an
annual meeting of stockholders to elect directors, the meeting shall be held
no later than 120 days after the occurrence of the event requiring the
meeting."
<PAGE>
Exhibit 5(a) - Investment Management Agreement - Government Short Duration,
Short Duration Plus, Intermediate Duration, Diversified Municipal and New York
Municipal Portfolios
SANFORD C. BERNSTEIN FUND, INC.
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT, dated as of October 12, 1988, between SANFORD
C. BERNSTEIN FUND, INC., a Maryland Corporation (the "Fund"), on behalf of the
Portfolios listed in Appendix A hereto (the "Portfolios") and SANFORD C.
BERNSTEIN & CO., INC., a New York corporation (the "Adviser" or "Bernstein").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
l. Duties of the Adviser. The Adviser shall manage the investment operations
of the Portfolios and the Fund including, but not limited to, continuously
providing the Portfolios with investment management, including investment
research, advice and supervision, determining which securities or other
investments including, but not limited to, debt and equity securities,
futures, options and options on futures, shall be purchased or sold by the
Portfolios, making purchases and sales of securities and such other
investments on behalf of the Portfolios and determining how voting and other
rights with respect to securities and other investments owned by the Fund on
behalf of the Portfolios shall be exercised, subject in each case to oversight
by the Board of Directors of the Fund (the "Board") and in accordance with the
investment objectives and policies of the Fund and of each Portfolio set forth
in the Registration Statement and the current Prospectus and Statement of
Additional Information relating to the Fund or any of the Portfolios, as
amended from time to time, the requirements of the Investment Company Act of
1940, as amended (the "Act") and other applicable law. The Fund understands
that the Adviser may also act as the investment manager to other persons or
entities, including other investment companies.
2. Limitation of Liability. Subject to Section 36 of the Act, the Adviser, and
the directors, officers and employees of the Adviser, shall not be liable to
the Fund or the Portfolios for any error of judgment or mistake of law or for
any loss arising out of any investment or the performance or non-performance
of duties under this Agreement, except for willful misfeasance, bad faith or
gross negligence in the performance of, or by reason of reckless disregard of,
obligations and duties under this Agreement.
3. Indemnification. (a) The Fund, on behalf of the Portfolios, shall indemnify
and hold harmless the Adviser, and the directors, officers, and employees of
the Adviser, against any loss, liability, claim, damage or expense (including
the reasonable cost of investigating or defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the performance or non-performance of any duties
under this Agreement, provided, however, that nothing herein shall be deemed
to protect the Adviser or any director, officer or employee thereof against
any liability to the Fund or its stockholders, to which the Adviser or any
director, officer or employee thereof would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement.
4. Expenses. The Adviser shall pay all of its expenses arising from the
performance of its obligations under Section 1 of this Agreement and shall pay
any salaries, fees and expenses of the Directors who are employees of the
Adviser. The Adviser shall not be required to pay any other expenses of the
Fund or the Portfolios, including (a) the fees payable to Bernstein under this
Agreement and the Shareholder Servicing and Administrative Agreement; (b) the
fees and expenses of Directors who are not affiliated with Bernstein; (c) the
fees and expenses of the Custodian and Transfer Agent including but not
limited to fees and expenses relating to Fund accounting, pricing of Portfolio
shares, and computation of net asset value; (d) the fees and expenses of
calculating yield and/or performance of the Portfolios; (e) the charges and
expenses of legal counsel and independent accountants; (f) all taxes and
corporate fees payable to governmental agencies; (g) the fees of any trade
association of which the Fund is a member; (h) reimbursement of each
Portfolio's share of the organization expenses of the Fund; (i) the fees and
expenses involved in registering and maintaining registration of the Fund and
the Portfolios' shares with the Securities and Exchange Commission,
registering the Fund as a broker or dealer and qualifying the shares of the
Portfolios under state securities laws, including the preparation and printing
of the registration statements and prospectuses for such
<PAGE>
purposes, allocable communications expenses with respect to investor services,
all expenses of shareholders' and Board of Directors' meetings and preparing,
printing and mailing proxies, prospectuses and reports to shareholders; (j)
brokers' commissions, dealers' mark-ups and any issue or transfer taxes
chargeable in connection with the Portfolios' transactions; (k) the cost of
stock certificates representing shares of the Portfolios; (1) insurance
expenses, including, but not limited to, the cost of a fidelity bond, directors
and officers insurance and errors and omissions insurance; and (m) litigation
and indemnification expenses, expenses incurred in connection with mergers, and
other extraordinary expenses not incurred in the ordinary course of the
Portfolios' business.
5. Compensation. As compensation for the services performed and the facilities
and personnel provided by the Adviser pursuant to Section 1 of this Agreement,
the Fund, on behalf of each Portfolio, will pay to the Adviser, promptly after
the end of each month, a fee assessed at an annual rate of .50 of 1% of the
average daily net assets of each Portfolio during the month. If the Adviser
shall serve hereunder for less than the whole of any month, the fee hereunder
shall be prorated.
6. Purchase and Sale of Securities. The Adviser shall purchase securities from
or through and sell securities to or through such persons, brokers or dealers
as the Adviser shall deem appropriate in order to carry out the policy with
respect to portfolio transactions as set forth in the Registration Statement
and the current Prospectus or Statement of Additional Information of the Fund,
as amended from time to time, or as the Directors may direct from time to
time. Nothing herein shall prohibit the Directors from approving the payment
by the Fund of additional compensation to others for consulting services,
supplemental research and security and economic analysis.
7. Term of Agreement. This Agreement shall continue in effect with respect to
any Portfolio for a period of more than two years from the date hereof only so
long as such continuance is specifically approved at least annually in
conformity with the requirements of the Act with regard to investment advisory
contracts; provided, however, that this Agreement may be terminated at any
time without the payment of any penalty, on behalf of any or all of the
Portfolios, by the Fund, by the Board or, with respect to any Portfolio, by
vote of a majority of the outstanding voting securities (as defined in the
Act) of that Portfolio, or by the Adviser on not more than 60 days' nor less
than 30 days' written notice to the other party. This Agreement shall
terminate automatically in the event of its assignment (as defined in the
Act).
8. Miscellaneous. The Fund hereby agrees that if at any time the Adviser shall
cease to act as investment adviser to any Portfolio or to the Fund, or if at
any time during the continuation of this Agreement the Adviser shall change
its name to delete the reference to Sanford C. Bernstein, the Fund shall take
all steps necessary under law to change its corporate name to delete the
reference to Sanford C. Bernstein or to delete the reference to Bernstein from
the name of any such Portfolio, and shall thereafter refrain from using such
name with reference to any such Portfolio and, if applicable, the Fund.
This Agreement contains the entire agreement between the parties hereto and
supersedes all prior agreements, understandings and arrangements with respect
to the subject matter hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Anything
herein to the contrary notwithstanding, this Agreement shall not be construed
to require, or to impose any duty upon, either of the parties to do anything
in violation of any applicable laws or regulations.
IN WITNESS WHEREOF, the Fund, on behalf of each Portfolio, and the Adviser
have caused this Agreement to be executed by their duly authorized officers as
of the date first above written.
SANFORD C. BERNSTEIN & CO., INC.
By: Lewis A. Sanders, President
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson, Senior Vice President
Appendix A
As of October 12, 1988
BERNSTEIN GOVERNMENT SHORT DURATION PORTFOLIO
<PAGE>
BERNSTEIN SHORT DURATION PLUS PORTFOLIO
BERNSTEIN NEW YORK MUNICIPAL PORTFOLIO
BERNSTEIN DIVERSIFIED MUNICIPAL PORTFOLIO
BERNSTEIN INTERMEDIATE DURATION PORTFOLIO
<PAGE>
Exhibit 5(a)(1) Investment Management Agreement - California Municipal Portfolio
SANFORD C. BERNSTEIN FUND, INC.
BERNSTEIN CALIFORNIA MUNICIPAL PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT, dated as of May 1, 1990, between SANFORD C.
BERNSTEIN FUND, INC., a Maryland Corporation, (the "Fund"), on behalf of the
Bernstein California Municipal Portfolio (the "Portfolio") and SANFORD C.
BERNSTEIN & CO., INC., a New York Corporation (the "Adviser" or "Bernstein").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
1. Duties of the Adviser. The Adviser shall manage the investment operations
of the Portfolio and the Fund including, but not limited to, continuously
providing the Portfolio with investment management, including investment
research, advice and supervision, determining which securities or other
investments including, but not limited to, debt and equity securities,
futures, options and options on futures, shall be purchased or sold by the
Portfolio, making purchases and sales of securities and such other investments
on behalf of the Portfolio and determining how voting and other rights with
respect to securities and other investments owned by the Fund on behalf of the
Portfolio shall be exercised, subject in each case to oversight by the Board
of Directors of the Fund (the "Board") and in accordance with the investment
objectives and policies of the Fund and of the Portfolio set forth in the
Registration Statement and the current Prospectus and Statement of Additional
Information relating to the Fund and the Portfolio, as amended from time to
time, the requirements of the Investment Company Act of 1940, as amended (the
"Act") and other applicable law. The Fund understands that the Adviser may
also act as the investment manager to other Portfolios of the Fund and to
other persons or entities, including other investment companies.
2. Limitation of Liability. Subject to Section 36 of the Act, the Adviser, and
the directors, officers and employees of the Adviser, shall not be liable to
the Fund or the Portfolio for any error of judgment or mistake of law or for
any loss arising out of any investment or the performance or non-performance
of duties under this Agreement, except for willful misfeasance, bad faith or
gross negligence in the performance of, or by reason of reckless disregard of,
obligations and duties under this Agreement.
3. Indemnification.
(a) The Fund, on behalf of the Portfolio, shall indemnify and hold harmless
the Adviser, and the directors, officers, and employees of the Adviser,
against any loss, liability, claim, damage or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the performance or non-performance of any duties
under this Agreement, provided, however, that nothing herein shall be deemed
to protect the Adviser or any director, officer or employee thereof against
any liability to the Fund or its stockholders, to which the Adviser or any
director, officer or employee thereof would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement.
4. Expenses. The Adviser shall pay all of its expenses arising from the
performance of its obligations under Section 1 of this Agreement and shall pay
any salaries, fees and expenses of the Directors who are employees of the
Adviser. In addition, during the first two years of operation of the
Portfolio, the Adviser will pay any Portfolio operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses) which,
together with fees payable to Bernstein pursuant to the Shareholder Servicing
and Administrative Agreement entered into by the Fund on behalf of the
Portfolio and Adviser, exceed the rate of .79% per annum of the Portfolio's
average daily net assets. For the purposes of this Agreement, the term "the
first two years of operation" means the 24-month period commencing with the
first day of the first month after shares of the Portfolio are first issued to
the public. Except as provided above, the Adviser shall not be required to pay
any other expenses of the Fund or the Portfolio, including
<PAGE>
(a) the fees payable to Bernstein under this Agreement and the Shareholder
Servicing and Administrative Agreement; (b) the fees and expenses of Directors
who are not affiliated with Bernstein; (c) the fees and expenses of the
Custodian and Transfer Agent including but not limited to fees and expenses
relating to Fund accounting, pricing of Portfolio shares, and computation of net
asset value; (d) the fees and expenses of calculating yield and/or performance
of the Portfolio; (e) the charges and expenses of legal counsel and independent
accountants; (f) all taxes and corporate fees payable to governmental agencies;
(g) the fees of any trade association of which the Fund is a member; (h)
reimbursement of the organization expenses of the Portfolio or the Fund; (i) the
fees and expenses involved in registering and maintaining registration of the
Fund and the Portfolio's shares with the Securities and Exchange Commission,
registering the Fund as a broker or dealer and qualifying the shares of the
Portfolio under state securities laws, including the preparation and printing of
the registration statements and prospectuses for such purposes, allocable
communications expenses with respect to investor services, all expenses of
shareholders' and Board of Directors' meetings and preparing, printing and
mailing proxies, prospectuses and reports to shareholders; (j) brokers'
commissions, dealers' mark-ups and any issue or transfer taxes chargeable in
connection with the Portfolio's transactions; (k) the cost of stock certificates
representing shares of the Portfolio; (1) insurance expenses, including, but not
limited to, the cost of a fidelity bond, directors and officers insurance and
errors and omissions insurance; and (m) litigation and indemnification expenses,
expenses incurred in connection with mergers, and other extraordinary expenses
not incurred in the ordinary course of the Portfolio's business.
5. Compensation. As compensation for the services performed and the facilities
and personnel provided by the Adviser pursuant to Section 1 of this Agreement,
the Fund, on behalf of the Portfolio, will pay to the Adviser, promptly after
the end of each month, a fee assessed at an annual rate of .50 of 1% of the
average daily net assets of the Portfolio during the month, provided that,
during the first two years of operation of the Portfolio, the Fund will not
pay any portion of the fee that, together with the other operating expenses of
the Portfolio (excluding interest, taxes, brokerage commission and
extraordinary expenses but including fees payable to Bernstein under the
Shareholder Servicing and Administrative Agreement described in section 4
above), exceeds the rate of .79% per annum of the Portfolio's average daily
net assets. If the Adviser shall serve hereunder for less than the whole of
any month, the fee hereunder shall be prorated.
6. Purchase and Sale of Securities. The Adviser shall purchase securities from
or through and sell securities to or through such persons, brokers, or dealers
as the Adviser shall deem appropriate in order to carry out the policy with
respect to portfolio transactions as set forth in the Registration Statement
of the Fund and the current Prospectus or Statement of Additional Information
of the Portfolio, as amended from time to time, or as the Directors may direct
from time to time. Nothing herein shall prohibit the Directors from approving
the payment by the Fund on behalf of the Portfolio of additional compensation
to others for consulting services, supplemental research and security and
economic analysis.
7. Term of Agreement. This Agreement shall continue in effect for a period of
more than two years from the date hereof only so long as such continuance is
specifically approved at least annually in conformity with the requirements of
the Act with regard to investment advisory contracts; provided, however, that
this Agreement may be terminated at any time without the payment of any
penalty, on behalf of the Portfolio, by the Fund, by the Board or by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Portfolio, or by the Adviser on not more than 60 days' nor less than 30 days'
written notice to the other party. This Agreement shall terminate
automatically in the event of its assignment (as defined in the Act).
8. Miscellaneous. The Fund hereby agrees that if at any time the Adviser shall
cease to act as investment adviser to the Portfolio or to the Fund, or if at
any time during the continuation of this Agreement the Adviser shall change
its name to delete the reference to Sanford C. Bernstein, the Fund shall take
all steps necessary under law to change its corporate name to delete the
reference to Sanford C. Bernstein or to delete the reference to Bernstein from
the name of the Portfolio, and shall thereafter refrain from using such name
with reference to the Portfolio and, if applicable, the Fund.
This Agreement contains the entire agreement between the parties hereto and
supersedes all prior
<PAGE>
agreements, understandings and arrangements with respect to the subject matter
hereof. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York. Anything herein to the contrary notwithstanding,
this Agreement shall not be construed to require, or to impose any duty upon,
either of the parties to do anything in violation of any applicable laws or
regulations.
IN WITNESS WHEREOF, the Fund, on behalf of the Portfolio, and the Adviser have
caused this Agreement to be executed by their duly authorized officers as of
the date first above written.
SANFORD C. BERNSTEIN & CO., INC.
By: Lewis A. Sanders, President
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson, Senior Vice President
<PAGE>
Exhibit (5)(a)(2) Investment Management Agreement
Registrant, on behalf of International Value Portfolio, and Bernstein
SANFORD C. BERNSTEIN FUND, INC.
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT, dated as of March 18, 1992 between SANFORD C.
BERNSTEIN FUND, INC., a Maryland Corporation, (the "Fund"), on behalf of the
Bernstein International Value Portfolio (the "Portfolio"), and SANFORD C.
BERNSTEIN & CO., INC., a New York Corporation (the "Adviser" or "Bernstein").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
1. Duties of the Adviser. The Adviser shall manage the investment operations
of the Portfolio and the Fund including, but not limited to, continuously
providing the Portfolio with investment management, including investment
research, advice and supervision, determining which securities or other
investments including, but not limited to, debt and equity securities,
futures, options and options on futures, shall be purchased or sold by the
Portfolio, making purchases and sales of securities and such other investments
on behalf of the Portfolio and determining how voting and other rights with
respect to securities and other investments owned by the Fund on behalf of the
Portfolio shall be exercised, subject in each case to oversight by the Board
of Directors of the Fund (the "Directors" or the "Board") and in accordance
with the investment objectives and policies of the Fund and of the Portfolio
set forth in the Registration Statement and the current Prospectus and
Statement of Additional Information relating to the Fund or the Portfolio, as
amended from time to time, the requirements of the Investment Company Act of
1940, as amended (the "Act") and other applicable law. The Fund understands
that the Adviser may also act as the investment manager to other persons or
entities, including other investment companies.
2. Limitation of Liability. Subject to Section 36 of the Act, the Adviser, and
the directors, officers and employees of the Adviser, shall not be liable to
the Fund or the Portfolio for any error of judgment or mistake of law or for
any loss arising out of any investment or the performance or non-performance
of duties under this Agreement, except for willful misfeasance, bad faith or
gross negligence in the performance of, or by reason of reckless disregard of,
obligations and duties under this Agreement.
3. Indemnification.
(a) The Fund, on behalf of the Portfolio, shall indemnify and hold harmless
the Adviser, and the directors, officers, and employees of the Adviser,
against any loss, liability, claim, damage or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the performance or non-performance of any duties
under this Agreement, provided, however, that nothing herein shall be deemed
to protect the Adviser or any director, officer or employee thereof against
any liability to the Fund or its stockholders, to which the Adviser or any
director, officer or employee thereof would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement.
4. Expenses. The Adviser shall pay all of its expenses arising from the
performance of its obligations under Section 1 of this Agreement and shall pay
any salaries, fees and expenses of the Directors who are employees of the
Adviser. The Adviser shall not be required to pay any other expenses of the
Fund or the Portfolio, including (a) the fees payable to Bernstein under this
Agreement and the Shareholder Servicing and Administrative Agreement; (b) the
fees and expenses of Directors who are not affiliated with Bernstein; (c) the
fees and expenses of the Custodian and Transfer Agent including but not
limited to fees and expenses relating to Fund accounting, pricing of the
Portfolio's shares, and computation of net asset value; (d) the fees and
expenses of calculating yield and/or performance of the Portfolio; (e) the
charges and expenses of legal counsel and independent accountants; (f) all
taxes and corporate fees payable to governmental agencies; (g) the fees of any
trade association of which the Fund is a member; (h)
<PAGE>
reimbursement of the Portfolio's share of the organization expenses of the
Portfolio or the Fund; (i) the fees and expenses involved in registering and
maintaining registration of the Fund and the shares of the Portfolio with the
Securities and Exchange Commission, registering the Fund as a broker or dealer
and qualifying the shares of the Portfolio under state securities laws,
including the preparation and printing of the registration statements and
prospectuses for such purposes, allocable communications expenses with respect
to investor services, all expenses of shareholders' and Board of Directors'
meetings and preparing, printing and mailing proxies, prospectuses and reports
to shareholders; (j) brokers' commissions, dealers' mark-ups and any issue or
transfer taxes chargeable in connection with the Portfolio's transactions; (k)
the cost of stock certificates representing shares of the Portfolio; (l)
insurance expenses, including, but not limited to, the cost of a fidelity bond,
directors and officers insurance and errors and omissions insurance; and (m)
litigation and indemnification expenses, expenses incurred in connection with
mergers, and other extraordinary expenses not incurred in the ordinary course of
the Portfolio's business.
5. Compensation. As compensation for the services performed and the facilities
and personnel provided by the Adviser pursuant to Section 1 of this Agreement,
the Fund, on behalf of the Portfolio, will pay to the Adviser, promptly after
the end of each month, a fee assessed at an annual rate of 1.00 of 1% of the
average daily net assets of the Portfolio during the month. If the Adviser
shall serve hereunder for less than the whole of any month, the fee hereunder
shall be prorated.
6. Purchase and Sale of Securities. The Adviser shall purchase securities from
or through and sell securities to or through such persons, brokers, or dealers
as the Adviser shall deem appropriate in order to carry out the policy with
respect to portfolio transactions as set forth in the Registration Statement
and the current Prospectus or Statement of Additional Information covering the
Portfolio, as amended from time to time, or as the Directors may direct from
time to time. Nothing herein shall prohibit the Directors from approving the
payment by the Fund of additional compensation to others for consulting
services, supplemental research and security and economic analysis.
7. Term of Agreement. This Agreement shall continue in effect with respect to
the Portfolio for a period of more than two years from the date hereof only so
long as such continuance is specifically approved at least annually in
conformity with the requirements of the Act with regard to investment advisory
contracts; provided, however, that this Agreement may be terminated at any
time without the payment of any penalty, on behalf of the Portfolio, by the
Fund, by the Board or, with respect to the Portfolio, by vote of a majority of
the outstanding voting securities (as defined in the Act) of the Portfolio, or
by the Adviser on not more than 60 days' nor less than 30 days' written notice
to the other party. This Agreement shall terminate automatically in the event
of its assignment (as defined in the Act).
8. Miscellaneous. The Fund hereby agrees that if at any time the Adviser shall
cease to act as investment adviser to the Portfolio or to the Fund, or if at
any time during the continuation of this Agreement the Adviser shall change
its name to delete the reference to Sanford C. Bernstein, the Fund shall take
all steps necessary under law to change its corporate name to delete the
reference to Sanford C. Bernstein or to delete the reference to Bernstein from
the name of the Portfolio, and shall thereafter refrain from using such name
with reference to the Portfolio and, if applicable, the Fund.
This Agreement contains the entire agreement between the parties hereto and
supersedes all prior agreements, understandings and arrangements with respect
to the subject matter hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Anything
herein to the contrary notwithstanding, this Agreement shall not be construed
to require, or to impose any duty upon, either of the parties to do anything
in violation of any applicable laws or regulations.
IN WITNESS WHEREOF, the Fund, on behalf of the Portfolio, and the Adviser have
caused this Agreement to be executed by their duly authorized officers as of
the date first above written.
SANFORD C. BERNSTEIN & CO., INC.
By: Zalman C. Bernstein, Chairman
<PAGE>
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson, Senior Vice President
<PAGE>
Exhibit (5)(a)(3) Investment Management Agreement
Registrant, on behalf of Short Duration California Municipal, Short Duration
Diversified Municipal and Short Duration New York Municipal Portfolios
and Bernstein
SANFORD C. BERNSTEIN FUND, INC.
BERNSTEIN SHORT DURATION MUNICIPAL PORTFOLIOS
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT, dated as of May 2, 1994, between SANFORD C.
BERNSTEIN FUND, INC., a Maryland Corporation, (the "Fund"), on behalf of the
Bernstein Short Duration California Municipal Portfolio, the Bernstein Short
Duration Diversified Municipal Portfolio and the Bernstein Short Duration New
York Municipal Portfolio (individually a "Portfolio" and collectively the
"Portfolios") and SANFORD C. BERNSTEIN & CO., INC., a New York Corporation
(the "Adviser" or "Bernstein").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
1. Duties of the Adviser. The Adviser shall manage the investment operations
of the Portfolios and the Fund including, but not limited to, continuously
providing the Portfolios with investment management, including investment
research, advice and supervision, determining which securities or other
investments including, but not limited to, debt and equity securities,
futures, options and options on futures, shall be purchased or sold by the
Portfolios, making purchases and sales of securities and such other
investments on behalf of the Portfolios and determining how voting and other
rights with respect to securities and other investments owned by the Fund on
behalf of the Portfolios shall be exercised, subject in each case to oversight
by the Board of Directors of the Fund (the "Board") and in accordance with the
investment objectives and policies of the Fund and of the Portfolios set forth
in the Registration Statement and the current Prospectus and Statement of
Additional Information relating to the Fund and the Portfolios, as amended
from time to time, the requirements of the Investment Company Act of 1940, as
amended (the "Act") and other applicable law. The Fund understands that the
Adviser may also act as the investment manager to other Portfolios of the Fund
and to other persons or entities, including other investment companies.
2. Limitation of Liability. Subject to Section 36 of the Act, the Adviser, and
the directors, officers and employees of the Adviser, shall not be liable to
the Fund or the Portfolios for any error of judgment or mistake of law or for
any loss arising out of any investment or the performance or non-performance
of duties under this Agreement, except for willful misfeasance, bad faith or
gross negligence in the performance of, or by reason of reckless disregard of,
obligations and duties under this Agreement.
3. Indemnification.
(a) The Fund, on behalf of the Portfolios, shall indemnify and hold harmless
the Adviser, and the directors, officers, and employees of the Adviser,
against any loss, liability, claim, damage or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the performance or non-performance of any duties
under this Agreement, provided, however, that nothing herein shall be deemed
to protect the Adviser or any director, officer or employee thereof against
any liability to the Fund or its stockholders, to which the Adviser or any
director, officer or employee thereof would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement.
4. Expenses. The Adviser shall pay all of its expenses arising from the
performance of its obligations under Section 1 of this Agreement and shall pay
any salaries, fees and expenses of the Directors who are employees of the
Adviser. In addition, during the first two years of operation of each
Portfolio, the Adviser
<PAGE>
will pay any Portfolio operating expenses (excluding interest, taxes, brokerage
commissions and extraordinary expenses) which, together with fees payable to
Bernstein pursuant to the Shareholder Servicing and Administrative Agreement
entered into by the Fund on behalf of the Portfolios and Adviser, exceed the
rate of .79% per annum of the Portfolio's average daily net assets. For the
purposes of this Agreement, the term "the first two years of operation" means
the 24-month period commencing with the first day of the first month after
shares of the applicable Portfolio are first issued to the public. Except as
provided above, the Adviser shall not be required to pay any other expenses of
the Fund or the Portfolios, including (a) the fees payable to Bernstein under
this Agreement and the Shareholder Servicing and Administrative Agreement; (b)
the fees and expenses of Directors who are not affiliated with Bernstein; (c)
the fees and expenses of the Custodian and Transfer Agent including but not
limited to fees and expenses relating to Fund accounting, pricing of Portfolio
shares, and computation of net asset value; (d) the fees and expenses of
calculating yield and/or performance of the Portfolios; (e) the charges and
expenses of legal counsel and independent accountants; (f) all taxes and
corporate fees payable to governmental agencies; (g) the fees of any trade
association of which the Fund is a member; (h) reimbursement of the organization
expenses of the Portfolios or the Fund; (i) the fees and expenses involved in
registering and maintaining registration of the Fund and the Portfolios' shares
with the Securities and Exchange Commission, registering the Fund as a broker or
dealer and qualifying the shares of the Portfolios under state securities laws,
including the preparation and printing of the registration statements and
prospectuses for such purposes, allocable communications expenses with respect
to investor services, all expenses of shareholders' and Board of Directors'
meetings and preparing, printing and mailing proxies, prospectuses and reports
to shareholders; (j) brokers' commissions, dealers' mark-ups and any issue or
transfer taxes chargeable in connection with the Portfolios' transactions; (k)
the cost of stock certificates representing shares of the Portfolios; (l)
insurance expenses, including, but not limited to, the cost of a fidelity bond,
directors and officers insurance and errors and omissions insurance; and (m)
litigation and indemnification expenses, expenses incurred in connection with
mergers, and other extraordinary expenses not incurred in the ordinary course of
the Portfolios' business.
5. Compensation. As compensation for the services performed and the facilities
and personnel provided by the Adviser pursuant to Section 1 of this Agreement,
the Fund, on behalf of the Portfolios, will pay to the Adviser, promptly after
the end of each month, a fee assessed at an annual rate of .50 of 1% of the
average daily net assets of each Portfolio during the month, provided that,
during the first two years of operation of each Portfolio, the Fund will not
pay any portion of the fee that, together with the other operating expenses of
each Portfolio (excluding interest, taxes, brokerage commission and
extraordinary expenses but including fees payable to Bernstein under the
Shareholder Servicing and Administrative Agreement described in section 4
above), exceeds the rate of .79% per annum of the respective Portfolio's
average daily net assets. If the Adviser shall serve hereunder for less than
the whole of any month, the fee hereunder shall be prorated.
6. Purchase and Sale of Securities. The Adviser shall purchase securities from
or through and sell securities to or through such persons, brokers, or dealers
as the Adviser shall deem appropriate in order to carry out the policy with
respect to portfolio transactions as set forth in the Registration Statement
of the Fund and the current Prospectus or Statement of Additional Information
of the Portfolios, as amended from time to time, or as the Directors may
direct from time to time. Nothing herein shall prohibit the Directors from
approving the payment by the Fund on behalf of the Portfolios of additional
compensation to others for consulting services, supplemental research and
security and economic analysis.
7. Term of Agreement. This Agreement shall continue in effect for a period of
more than two years from the date hereof only so long as such continuance is
specifically approved at least annually in conformity with the requirements of
the Act with regard to investment advisory contracts; provided, however, that
this Agreement may be terminated at any time without the payment of any
penalty, on behalf of any Portfolio, by the Fund, by the Board or by vote of a
majority of the outstanding voting securities (as defined in the Act) of any
Portfolio, or by the Adviser on not more than 60 days' nor less than 30 days'
written notice to the other party. This Agreement shall terminate
automatically in the event of its assignment (as defined in the Act).
<PAGE>
8. Miscellaneous. The Fund hereby agrees that if at any time the Adviser shall
cease to act as investment adviser to the Portfolios or to the Fund, or if at
any time during the continuation of this Agreement the Adviser shall change
its name to delete the reference to Sanford C. Bernstein, the Fund shall take
all steps necessary under law to change its corporate name to delete the
reference to Sanford C. Bernstein or to delete the reference to Bernstein from
the name of the Portfolios, and shall thereafter refrain from using such name
with reference to the Portfolios and, if applicable, the Fund.
This Agreement contains the entire agreement between the parties hereto and
supersedes all prior agreements, understandings and arrangements with respect
to the subject matter hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Anything
herein to the contrary notwithstanding, this Agreement shall not be construed
to require, or to impose any duty upon, either of the parties to do anything
in violation of any applicable laws or regulations.
IN WITNESS WHEREOF, the Fund, on behalf of the Portfolios, and the Adviser
have caused this Agreement to be executed by their duly authorized officers as
of the date first above written.
SANFORD C. BERNSTEIN & CO., INC.
By: Lewis A. Sanders, Chairman
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson, Senior Vice President
<PAGE>
Exhibit 5(a)(4) - Amendment No. 1 to Investment Management Agreement -
Government Short Duration, Short Duration Plus, Intermediate Duration,
Diversified Municipal and New York Municipal Portfolios
SANFORD C. BERNSTEIN FUND, INC.
AMENDMENT NO. 1 TO INVESTMENT MANAGEMENT AGREEMENT
AMENDMENT NO. 1, dated as of October 5, 1994 between SANFORD C. BERNSTEIN
FUND, INC., a Maryland Corporation (the "Fund"), on behalf of the Bernstein
Government Short Duration Portfolio, Bernstein Short Duration Plus Portfolio,
the Bernstein Intermediate Duration Portfolio, the Bernstein New York
Municipal Portfolio and the Bernstein Diversified Municipal Portfolio (each a
"Portfolio" and collectively the "Portfolios"); and SANFORD C. BERNSTEIN &
CO., INC., a New York corporation (the "Adviser" or "Bernstein").
Pursuant to the Investment Management Agreement dated as of October 12, 1988
(the "Investment Management Agreement") between the Fund, on behalf of each
Portfolio, and the Adviser, the Fund, on behalf of each Portfolio, has agreed
to compensate the Adviser for the services it performs for, and the facilities
and personnel it provides to, each Portfolio. The Adviser and the Fund, on
behalf of each Portfolio, wish to amend the Investment Management Agreement to
modify such compensation. Accordingly, the parties hereto hereby agree as
follows:
1. Section 5 of the Investment Management Agreement is hereby amended in its
entirety to read as follows: "5. Compensation. As compensation for the
services performed and the facilities and personnel provided by the Adviser
pursuant to Section 1 of this Agreement, the Fund, on behalf of each
Portfolio, will pay to the Adviser, promptly after the end of each month:
(a) A fee assessed at annual rate of .50 of 1% of the amount of each
Portfolio's average daily net assets that is up to but not exceeding
$1,000,000,000; and
(b) A fee assessed at an annual rate of .45 of 1% of the amount of each
Portfolio's average daily net assets that exceeds $1,000,000,000.
If the Adviser shall serve hereunder for less than the whole of any month, the
fee hereunder shall be prorated."
2. Except as herein provided, the Investment Management Agreement shall remain
in full force and effect.
IN WITNESS WHEREOF, the Fund, on behalf of each Portfolio, and the Adviser
have caused this Amendment No. 1 to be executed by their duly authorized
officers as of the date first above written.
SANFORD C. BERNSTEIN & CO., INC.
By: Lewis A. Sanders, Chairman
SANFORD C. BERNSTEIN FUND, INC.
By: Roger Hertog, President
<PAGE>
Exhibit 5(a)(5) Amendment No. 1 to Investment Management Agreement -
California Municipal Portfolio
SANFORD C. BERNSTEIN FUND, INC.
AMENDMENT NO. 1 TO INVESTMENT MANAGEMENT AGREEMENT
AMENDMENT NO. 1, dated as of October 5, 1994, between SANFORD C. BERNSTEIN
FUND, INC., a Maryland Corporation (the "Fund"), on behalf of the Bernstein
California Municipal Portfolio (referred to herein as the "Portfolio"); and
SANFORD C. BERNSTEIN & CO., INC., a New York corporation (the "Adviser" or
"Bernstein").
Pursuant to the Investment Management Agreement dated as of May 1, 1990 (the
"Investment Management Agreement") between the Fund, on behalf of the
Portfolio, and the Adviser, the Fund, on behalf of the Portfolio, has agreed
to compensate the Adviser for the services it performs for, and the facilities
and personnel it provides to, the Portfolio. The Adviser and the Fund, on
behalf of the Portfolio, wish to amend the Investment Management Agreement to
modify such compensation. Accordingly, the parties hereto hereby agree as
follows:
1. Section 5 of the Investment Management Agreement is hereby amended in its
entirety to read as follows:
"5. Compensation. As compensation for the services performed and the
facilities and personnel provided by the Adviser pursuant to Section 1 of this
Agreement, the Fund, on behalf of the Portfolio, will pay to the Adviser,
promptly after the end of each month:
(a) A fee assessed at annual rate of .50 of 1% of the amount of the
Portfolio's average daily net assets that is up to but not exceeding
$1,000,000,000; and
(b) A fee assessed at an annual rate of .45 of 1% of the amount of the
Portfolio's average daily net assets that exceeds $1,000,000,000.
If the Adviser shall serve hereunder for less than the whole of any month, the
fee hereunder shall be prorated."
2. Except as herein provided, the Investment Management Agreement shall remain
in full force and effect.
IN WITNESS WHEREOF, the Fund, on behalf of the Portfolio, and the Adviser have
caused this Amendment No. 1 to be executed by their duly authorized officers
as of the date first above written.
SANFORD C. BERNSTEIN & CO., INC.
By: Lewis A. Sanders, Chairman
SANFORD C. BERNSTEIN FUND, INC.
By: Roger Hertog, President
<PAGE>
Exhibit 5(b) Shareholder Servicing and Administrative Agreement - Government
Short Duration, Short Duration Plus, Intermediate Duration, Diversified
Municipal and New York Municipal Portfolios.
SANFORD C. BERNSTEIN FUND, INC.
SHAREHOLDER SERVICING AND ADMINISTRATIVE AGREEMENT
SHAREHOLDER SERVICING AND ADMINISTRATIVE AGREEMENT, dated as of October 12,
1988, between SANFORD C. BERNSTEIN FUND, INC., a Maryland Corporation (the
"Fund"), on behalf of the Portfolios listed in Appendix A hereto (the
"Portfolios") and SANFORD C. BERNSTEIN & CO., INC., a New York corporation
("Bernstein").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
1. Duties of Bernstein.
a. Shareholder Servicing. Bernstein shall provide shareholder servicing to the
Fund, the Portfolios, or their shareholders, including, but not limited to:
(i) processing share purchase and redemption requests transmitted or delivered
to the office of Bernstein; (ii) proxy solicitations and providing information
to shareholders concerning their mutual fund investments, systematic
withdrawal plans, dividend payments and reinvestments, shareholder account or
transaction status, net asset value of shares, Portfolio performance, Fund
services, plans and options, investment policies, Portfolio holdings and
distributions and the taxation thereof; and (iii) dealing with shareholder
complaints and correspondence directed to or brought to the attention of
Bernstein. Bernstein may enter into agreements with other organizations
whereby some or all of Bernstein's duties in this regard may be delegated, and
such organizations will be compensated therefor by Bernstein.
b. Administration. Bernstein shall also manage the corporate affairs of the
Portfolios including, but not limited to (i) providing office space, clerical,
secretarial, and administrative services (exclusive of, and in addition to,
any such service provided by any others retained by the Fund on behalf of the
Portfolios) and executive and other personnel necessary for the operations of
the Fund and of the Portfolios, (ii) supervising those responsible for the
financial and accounting records required to be maintained by the Fund and
(iii) overseeing the performance of services provided to the Fund on behalf of
the Portfolios by others, including the Custodian and Transfer Agent.
Bernstein's performance of its duties under this Agreement shall be subject in
each case to oversight by the Board of Directors of the Fund (the "Board") and
in accordance with the objectives and policies set forth in the Registration
Statement and the current Prospectus and Statement of Additional Information
relating to the Fund or any of the Portfolios, as amended from time to time,
the requirements of the Investment Company Act of 1940, as amended (the "Act")
and other applicable law.
2. Limitation of Liability. Subject to Section 36 of the Act, Bernstein, and
the directors, officers and employees of Bernstein, shall not be liable to the
Fund or the Portfolios for any error of judgment or mistake of law or for any
loss arising out of the performance or non-performance of duties under this
Agreement, except for willful misfeasance, bad faith or gross negligence in
the performance of, or by reason of reckless disregard of, obligations and
duties under this Agreement.
3. Indemnification. The Fund, on behalf of the Portfolios, shall indemnify and
hold harmless Bernstein, and the directors, officers, and employees of
Bernstein, against any loss, liability, claim, damage or expense (including
the reasonable cost of investigating or defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the performance or non-performance of any duties
under this Agreement, provided, however, that nothing herein shall be deemed
to protect Bernstein or any director, officer or employee thereof against any
liability to the Fund or its stockholders, to which Bernstein or any director,
officer or employee thereof would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties under this Agreement.
4. Expenses. Bernstein shall pay all of its expenses arising from the
performance of its obligations under Section 1 of this Agreement and shall pay
any salaries, fees and expenses of the Directors who are employees of
Bernstein.
<PAGE>
Bernstein shall not be required to pay any other expenses of the Fund or the
Portfolios including (a) the fees payable to Bernstein under this Agreement and
the Investment Management Agreement; (b) the fees and expenses of Directors who
are not affiliated with Bernstein; (c) the fees and expenses of the Custodian
and Transfer Agent, including but not limited to fees and expenses relating to
Fund accounting, pricing of Portfolio shares, and computation of net asset
value: (d) the fees and expenses of calculating yield and/or performance of the
Portfolios; (e) the charges and expenses of legal counsel and independent
accountants; (f) all taxes and corporate fees payable to governmental agencies;
(g) the fees of any trade association of which the Fund is a member; (h)
reimbursement of each Portfolio's share of the organization expenses of the
Fund; (i) the fees and expenses involved in registering and maintaining
registration of the Fund and the Portfolios' shares with the Securities and
Exchange Commission, registering the Fund as a broker or dealer and qualifying
the shares of the Portfolios under state securities laws, including the
preparation and printing of the registration statements and prospectuses for
such purposes, allocable communications expenses with respect to investor
services, all expenses of shareholders' and Board of Directors' meetings and
preparing, printing and mailing proxies, prospectuses and reports to
shareholders; (j) brokers' commissions, dealers' mark-ups and any issue or
transfer taxes chargeable in connection with the Portfolios' transactions; (k)
the cost of stock certificates representing shares of the Portfolios; (1)
insurance expenses, including, but not limited to, the cost of a fidelity bond,
directors and officers insurance and errors and omissions insurance; and (m)
litigation and indemnification expenses, expenses incurred in connection with
mergers, and other extraordinary expenses not incurred in the ordinary course of
the Portfolios' business.
5. Compensation. As compensation for the services performed and the facilities
and personnel provided by Bernstein pursuant to Section 1 of this Agreement,
the Fund, on behalf of each Portfolio, will pay to Bernstein, promptly after
the end of each month, a fee assessed at an annual rate of 0.10 of 1% of the
average daily net assets of each Portfolio during the month. If Bernstein
shall serve hereunder for less than the whole of any month, the fee hereunder
shall be prorated. Nothing herein shall prohibit the Directors from approving
the payment by the Fund, or any of the Portfolios, of additional compensation
to others for consulting services, supplemental research and security and
economic analysis.
6. Term of Agreement. This Agreement shall continue in effect with respect to
any Portfolio for a period of more than two years from the date hereof only so
long as such continuance is specifically approved at least annually in
conformity with the requirements of the Act with regard to investment advisory
contracts; provided, however, that this Agreement may be terminated at any
time without the payment of any penalty, on behalf of any or all of the
Portfolios, by the Fund, by the Board or, with respect to any Portfolio, by
vote of a majority of the outstanding voting securities (as defined in the
Act) of that Portfolio, or by Bernstein, on not more than 60 days' nor less
than 30 days' written notice to the other party. This Agreement shall
terminate automatically in the event of its assignment (as defined in the
Act).
7. Miscellaneous. This Agreement may be amended by mutual written consent.
This Agreement contains the entire agreement between the parties hereto and
supersedes all prior agreements, understandings and arrangements with respect
to the subject matter hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Anything
herein to the contrary notwithstanding, this Agreement shall not be construed
to require, or to impose any duty upon, either of the parties to do anything
in violation of any applicable laws or regulations. Bernstein may perform the
same services for other persons or entities, including other investment
companies.
IN WITNESS WHEREOF, the Fund, on behalf of the Portfolios, and Bernstein have
caused this Agreement to be executed by their duly authorized officers as of
the date first above written.
SANFORD C. BERNSTEIN & CO., INC.
By: Lewis A. Sanders, President
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson, Senior Vice President
Appendix A
As of October 12, 1988
<PAGE>
BERNSTEIN GOVERNMENT SHORT DURATION PORTFOLIO
BERNSTEIN SHORT DURATION PLUS PORTFOLIO
BERNSTEIN NEW YORK MUNICIPAL PORTFOLIO
BERNSTEIN DIVERSIFIED MUNICIPAL PORTFOLIO
BERNSTEIN INTERMEDIATE DURATION PORTFOLIO
<PAGE>
Exhibit 5(b)(1) Shareholder Servicing and Administrative Agreement -
California Municipal Portfolio
SANFORD C. BERNSTEIN FUND, INC.
BERNSTEIN CALIFORNIA MUNICIPAL PORTFOLIO
SHAREHOLDER SERVICING AND ADMINISTRATIVE AGREEMENT
SHAREHOLDER SERVICING AND ADMINISTRATIVE AGREEMENT, dated as of May 1, 1990,
between SANFORD C. BERNSTEIN FUND, INC., a Maryland corporation (the "Fund"),
on behalf of the BERNSTEIN CALIFORNIA MUNICIPAL PORTFOLIO (the "Portfolio")
and SANFORD C. BERNSTEIN & CO., INC., a New York Corporation ("Bernstein").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
1. Duties of Bernstein.
a. Shareholder Servicing. Bernstein shall provide shareholder servicing to the
Fund, the Portfolio, or its shareholders, including, but not limited to: (i)
processing share purchase and redemption requests transmitted or delivered to
the office of Bernstein; (ii) proxy solicitations and providing information to
shareholders concerning their mutual fund investments, systematic withdrawal
plans, dividend payments and reinvestments, shareholder account or transaction
status, net asset value of shares, Portfolio performance, Fund services, plans
and options, investment policies, Portfolio holdings and distributions and the
taxation thereof; and (iii) dealing with shareholder complaints and
correspondence directed to or brought to the attention of Bernstein. Bernstein
may enter into agreements with other organizations whereby some or all of
Bernstein's duties in this regard may be delegated, and such organizations
will be compensated therefor by Bernstein.
b. Administration. Bernstein shall also manage the corporate affairs of the
Portfolio including, but not limited to (i) providing office space, clerical,
secretarial, and administrative services (exclusive of, and in addition to,
any such service provided by any others retained by the Fund on behalf of the
Portfolio) and executive and other personnel necessary for the operations of
the Fund and of the Portfolio, (ii) supervising those responsible for the
financial and accounting records required to be maintained by the Fund and
(iii) overseeing the performance of services provided to the Fund on behalf of
the Portfolio by others, including the Custodian and Transfer Agent.
Bernstein's performance of its duties under this Agreement shall be subject in
each case to oversight by the Board of Directors of the Fund (the "Board") and
in accordance with the objectives and policies set forth in the Registration
Statement and the current Prospectus and Statement of Additional Information
relating to the Fund or the Portfolio, as amended from time to time, the
requirements of the Investment Company Act of 1940, as amended (the "Act") and
other applicable law.
2. Limitation of Liability. Subject to Section 36 of the Act, Bernstein, and
the directors, officers and employees of Bernstein, shall not be liable to the
Fund or the Portfolio for any error of judgment or mistake of law or for any
loss arising out of the performance or non-performance of duties under this
Agreement, except for willful misfeasance, bad faith or gross negligence in
the performance of, or by reason of reckless disregard of, obligations and
duties under this Agreement.
3. Indemnification. The Fund, on behalf of the Portfolio, shall indemnify and
hold harmless Bernstein, and the directors, officers, and employees of
Bernstein, against any loss, liability, claim, damage or expense (including
the reasonable cost of investigating or defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the performance or non-performance of any duties
under this Agreement, provided, however, that nothing herein shall be deemed
to protect Bernstein or any director, officer or employee thereof against any
liability to the Fund or its stockholders, to which Bernstein or any director,
officer or employee thereof would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties under this Agreement.
4. Expenses. Bernstein shall pay all of its expenses arising from the
performance of its obligations under Section 1 of this Agreement and shall pay
any salaries, fees and expenses of the Directors who are employees of
Bernstein. Except as provided in the Investment Management Agreement entered
into by the Fund on behalf of the Portfolio and
<PAGE>
Bernstein, Bernstein shall not be required to pay any other expenses of the Fund
or the Portfolio, including (a) the fees payable to Bernstein under this
Agreement and the Investment Management Agreement; (b) the fees and expenses of
Directors who are not affiliated with Bernstein; (c) the fees and expenses of
the Custodian and Transfer Agent, including but not limited to fees and expenses
relating to Fund accounting, pricing of Portfolio shares and computation of net
asset value; (d) the fees and expenses of calculating yield and/or performance
of the Portfolio; (e) the charges and expenses of legal counsel and independent
accountants; (f) all taxes and corporate fees payable to governmental agencies;
(g) the fees of any trade association of which the Fund is a member; (h)
reimbursement of the Portfolio's share of the organization expenses of the
Portfolio or the Fund; (i) the fees and expenses involved in registering and
maintaining registration of the Fund and the Portfolio's shares with the
Securities and Exchange Commission, registering the Fund as a broker or dealer
and qualifying the shares of the Portfolio under state securities laws,
including the preparation and printing of the registration statements and
prospectuses for such purposes, allocable communications expenses with respect
to investor services, all expenses of shareholders' and Board of Directors'
meetings and preparing, printing and mailing proxies, prospectuses and reports
to shareholders; (j) brokers' commissions, dealers' mark-ups and any issue or
transfer taxes chargeable in connection with the Portfolio's transactions; (k)
the cost of stock certificates representing shares of the Portfolio; (l)
insurance expenses, including, but not limited to, the cost of a fidelity bond,
directors and officers insurance and errors and omissions insurance; and (m)
litigation and indemnification expenses, expenses incurred in connection with
mergers, and other extraordinary expenses not incurred in the ordinary course of
the Portfolio's business.
5. Compensation. As compensation for the services performed and the facilities
and personnel provided by Bernstein pursuant to Section 1 of this Agreement,
the Fund, on behalf of the Portfolio, will pay to Bernstein, promptly after
the end of each month, a fee assessed at an annual rate of 0.10 of 1% of the
average daily net assets of the Portfolio during the month. If Bernstein shall
serve hereunder for less than the whole of any month, the fee hereunder shall
be prorated. Nothing herein shall prohibit the Directors from approving the
payment by the Fund, or the Portfolio, of additional compensation to others
for consulting services, supplemental research and security and economic
analysis.
6. Term of Agreement. This Agreement shall continue in effect for a period of
more than two years from the date hereof only so long as such continuance is
specifically approved at least annually in conformity with the requirements of
the Act with regard to investment advisory contracts; provided, however, that
this Agreement may be terminated at any time without the payment of any
penalty, on behalf of the Portfolio, by the Fund, by the Board or by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Portfolio, or by Bernstein, on not more than 60 days' nor less than 30 days'
written notice to the other party. This Agreement shall terminate
automatically in the event of its assignment (as defined in the Act).
7. Miscellaneous. This Agreement may be amended by mutual written consent.
This Agreement contains the entire agreement between the parties hereto and
supersedes all prior agreements, understandings and arrangements with respect
to the subject matter hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Anything
herein to the contrary notwithstanding, this Agreement shall not be construed
to require, or to impose any duty upon, either parties to do anything in
violation of any applicable laws or regulations. Bernstein may perform the
same services for other Portfolios of the Fund and other persons or entities,
including other investment companies.
IN WITNESS WHEREOF, the Fund, on behalf of the Portfolio, and Bernstein have
caused this Agreement to be executed by their duly authorized officers as of
the date first above written.
SANFORD C. BERNSTEIN & CO., INC.
By: Lewis A. Sanders, President
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson, Senior Vice President
<PAGE>
Exhibit 5(b)(2) Shareholder Servicing and Administrative Agreement -
International Value Portfolio
SANFORD C. BERNSTEIN FUND, INC.
SHAREHOLDER SERVICING AND ADMINISTRATIVE AGREEMENT
SHAREHOLDER SERVICING AND ADMINISTRATIVE AGREEMENT, dated as of March 18,
1992, between SANFORD C. BERNSTEIN FUND, INC., a Maryland Corporation (the
"Fund"), on behalf of the Bernstein International Value Portfolio (the
"Portfolio"), and SANFORD C. BERNSTEIN & CO., INC., a New York Corporation
("Bernstein").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
1. Duties of Bernstein.
a. Shareholder Servicing. Bernstein shall provide shareholder servicing to the
Fund, the Portfolio, or its shareholders, including, but not limited to: (i)
processing share purchase and redemption requests transmitted or delivered to
the office of Bernstein; (ii) proxy solicitations and providing information to
shareholders concerning their mutual fund investments, systematic withdrawal
plans, dividend payments and reinvestments, shareholder account or transaction
status, net asset value of shares, Portfolio performance, Fund services, plans
and options, investment policies, Portfolio holdings and distributions and the
taxation thereof; and (iii) dealing with shareholder complaints and
correspondence directed to or brought to the attention of Bernstein. Bernstein
may enter into agreements with other organizations whereby some or all of
Bernstein's duties in this regard may be delegated, and such organizations
will be compensated therefor by Bernstein.
b. Administration. Bernstein shall also manage the corporate affairs of the
Portfolio including, but not limited to (i) providing office space, clerical,
secretarial, and administrative services (exclusive of, and in addition to,
any such service provided by any others retained by the Fund on behalf of the
Portfolio) and executive and other personnel necessary for the operations of
the Fund and of the Portfolio, (ii) supervising those responsible for the
financial and accounting records required to be maintained by the Fund and
(iii) overseeing the performance of services provided to the Fund on behalf of
the Portfolio by others, including the Custodian and Transfer Agent.
Bernstein's performance of its duties under this Agreement shall be subject in
each case to oversight by the Board of Directors of the Fund (the "Board") and
in accordance with the objectives and policies set forth in the Registration
Statement and the current Prospectus and Statement of Additional Information
relating to the Fund or the Portfolio, as amended from time to time, the
requirements of the Investment Company Act of 1940, as amended (the "Act") and
other applicable law.
2. Limitation of Liability. Subject to Section 36 of the Act, Bernstein, and
the directors, officers and employees of Bernstein, shall not be liable to the
Fund or the Portfolio for any error of judgment or mistake of law or for any
loss arising out of the performance or non-performance of duties under this
Agreement, except for willful misfeasance, bad faith or gross negligence in
the performance of, or by reason of reckless disregard of, obligations and
duties under this Agreement.
3. Indemnification. The Fund, on behalf of the Portfolio, shall indemnify and
hold harmless Bernstein, and the directors, officers, and employees of
Bernstein, against any loss, liability, claim, damage or expense (including
the reasonable cost of investigating or defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the performance or non-performance of any duties
under this Agreement, provided, however, that nothing herein shall be deemed
to protect Bernstein or any director, officer or employee thereof against any
liability to the Fund or its stockholders, to which Bernstein or any director,
officer or employee thereof would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties under this Agreement.
4. Expenses. Bernstein shall pay all of its expenses arising from the
performance of its obligations under Section 1 of this Agreement and shall pay
any salaries, fees and expenses of the Directors who are employees of
Bernstein. Bernstein shall not be required to pay any other expenses of the
Fund or the Portfolio, including (a) the fees payable to Bernstein under this
Agreement and the Investment Management Agreement; (b) the fees and expenses
of Directors who are not affiliated with Bernstein; (c) the fees and expenses
of the Custodian and Transfer Agent, including but not
<PAGE>
limited to fees and expenses relating to Fund accounting, pricing of the shares
of the Portfolio and computation of net asset value; (d) the fees and expenses
of calculating yield and/or performance of the Portfolio; (e) the charges and
expenses of legal counsel and independent accountants; (f) all taxes and
corporate fees payable to governmental agencies; (g) the fees of any trade
association of which the Fund is a member; (h) reimbursement of the Portfolio's
share of the organization expenses of the Portfolio or the Fund; (i) the fees
and expenses involved in registering and maintaining registration of the Fund
and the Portfolio's shares with the Securities and Exchange Commission,
registering the Fund as a broker or dealer and qualifying the shares of the
Portfolio under state securities laws, including the preparation and printing of
the registration statements and prospectuses for such purposes, allocable
communications expenses with respect to investor services, all expenses of
shareholders' and Board of Directors' meetings and preparing, printing and
mailing proxies, prospectuses and reports to shareholders; (j) brokers'
commissions, dealers' mark-ups and any issue or transfer taxes chargeable in
connection with the Portfolio's transactions; (k) the cost of stock certificates
representing shares of the Portfolio; (1) insurance expenses, including, but not
limited to, the cost of a fidelity bond, directors and officers insurance and
errors and omissions insurance; and (m) litigation and indemnification expenses,
expenses incurred in connection with mergers, and other extraordinary expenses
not incurred in the ordinary course of the Portfolio's business.
5. Compensation. As compensation for the services performed and the facilities
and personnel provided by Bernstein pursuant to Section 1 of this Agreement,
the Fund, on behalf of the Portfolio, will pay to Bernstein, promptly after
the end of each month, a fee assessed at an annual rate of 0.25 of 1% of the
average daily net assets of the Portfolio during the month. If Bernstein shall
serve hereunder for less than the whole of any month, the fee hereunder shall
be prorated. Nothing herein shall prohibit the Directors from approving the
payment by the Fund, or the Portfolio, of additional compensation to others
for consulting services, supplemental research and security and economic
analysis.
6. Term of Agreement. This Agreement shall continue in effect with respect to
the Portfolio for a period of more than two years from the date hereof only so
long as such continuance is specifically approved at least annually in
conformity with the requirements of the Act with regard to investment advisory
contracts; provided, however, that this Agreement may be terminated at any
time without the payment of any penalty, on behalf of the Portfolio, by the
Fund, by the Board or, with respect to the Portfolio, by vote of a majority of
the outstanding voting securities (as defined in the Act) of the Portfolio, or
by Bernstein, on not more than 60 days' nor less than 30 days' written notice
to the other party. This Agreement shall terminate automatically in the event
of its assignment (as defined in the Act).
7. Miscellaneous. This Agreement may be amended by mutual written consent.
This Agreement contains the entire agreement between the parties hereto and
supersedes all prior agreements, understandings and arrangements with respect
to the subject matter hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Anything
herein to the contrary notwithstanding, this Agreement shall not be construed
to require, or to impose any duty upon, either of the parties to do anything
in violation of any applicable laws or regulations. Bernstein may perform the
same services for other persons or entities, including other investment
companies.
IN WITNESS WHEREOF, the Fund, on behalf of the Portfolio, and Bernstein have
caused this Agreement to be executed by their duly authorized officers as of
the date first above written.
SANFORD C. BERNSTEIN & CO., INC.
By: Zalman C. Bernstein, Chairman
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson, Senior Vice President
Exhibit 5(b)(3) Shareholder Servicing and Administrative Agreement - Short
Duration California Municipal, Short Duration Diversified Municipal and Short
Duration New York Municipal Portfolios
SANFORD C. BERNSTEIN FUND, INC.
BERNSTEIN SHORT DURATION MUNICIPAL PORTFOLIOS
SHAREHOLDER SERVICING AND ADMINISTRATIVE AGREEMENT
SHAREHOLDER SERVICING AND ADMINISTRATIVE AGREEMENT, dated as of May 2, 1994,
between SANFORD C. BERNSTEIN FUND, INC., a Maryland Corporation (the "Fund"),
on behalf of the Bernstein Short Duration California Municipal Portfolio, the
Bernstein Short Duration Diversified Municipal Portfolio and the Bernstein
Short Duration New York Municipal Portfolio (individually a "Portfolio" and
collectively the "Portfolios") and SANFORD C. BERNSTEIN & CO., INC., a New
York Corporation ("Bernstein").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
1. Duties of Bernstein.
a. Shareholder Servicing. Bernstein shall provide shareholder servicing to the
Fund, the Portfolios, or their shareholders, including, but not limited to:
(i) processing share purchase and redemption requests transmitted or delivered
to the office of Bernstein; (ii) proxy solicitations and providing information
to shareholders concerning their mutual fund investments, systematic
withdrawal plans, dividend payments and reinvestments, shareholder account or
transaction status, net asset value of shares, Portfolio performance, Fund
services, plans and options, investment policies, Portfolio holdings and
distributions and the taxation thereof; and (iii) dealing with shareholder
complaints and correspondence directed to or brought to the attention of
Bernstein. Bernstein may enter into agreements with other organizations
whereby some or all of Bernstein's duties in this regard may be delegated, and
such organizations will be compensated therefor by Bernstein.
b. Administration. Bernstein shall also manage the corporate affairs of the
Portfolios including, but not limited to (i) providing office space, clerical,
secretarial, and administrative services (exclusive of, and in addition to,
any such service provided by any others retained by the Fund on behalf of the
Portfolios) and executive and other personnel necessary for the operations of
the Fund and of the Portfolios, (ii) supervising those responsible for the
financial and accounting records required to be maintained by the Fund and
(iii) overseeing the performance of services provided to the Fund on behalf of
the Portfolios by others, including the Custodian and Transfer Agent.
Bernstein's performance of its duties under this Agreement shall be subject in
each case to oversight by the Board of Directors of the Fund (the "Board") and
in accordance with the objectives and policies set forth in the Registration
Statement and the current Prospectus and Statement of Additional Information
relating to the Fund or the Portfolios, as amended from time to time, the
requirements of the Investment Company Act of 1940, as amended (the "Act") and
other applicable law.
2. Limitation of Liability. Subject to Section 36 of the Act, Bernstein, and
the directors, officers and employees of Bernstein, shall not be liable to the
Fund or the Portfolios for any error of judgment or mistake of law or for any
loss arising out of the performance or non-performance of duties under this
Agreement, except for willful misfeasance, bad faith or gross negligence in
the performance of, or by reason of reckless disregard of, obligations and
duties under this Agreement.
3. Indemnification. The Fund, on behalf of the Portfolios, shall indemnify and
hold harmless Bernstein, and the directors, officers, and employees of
Bernstein, against any loss, liability, claim, damage or expense (including
the reasonable cost of investigating or defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of the performance or non-performance of any duties
under this Agreement, provided, however, that nothing herein shall be deemed
to protect Bernstein or any director, officer or employee thereof against any
liability to the Fund or its stockholders, to which Bernstein or any director,
officer or employee thereof would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties under this Agreement.
4. Expenses. Bernstein shall pay all of its expenses arising from the
performance of its obligations under Section 1 of
<PAGE>
this Agreement and shall pay any salaries, fees and expenses of the Directors
who are employees of Bernstein. Except as provided in the Investment Management
Agreement entered into by the Fund on behalf of the Portfolios and Bernstein,
Bernstein shall not be required to pay any other expenses of the Fund or the
Portfolios, including (a) the fees payable to Bernstein under this Agreement and
the Investment Management Agreement; (b) the fees and expenses of Directors who
are not affiliated with Bernstein; (c) the fees and expenses of the Custodian
and Transfer Agent, including but not limited to fees and expenses relating to
Fund accounting, pricing of Portfolio shares and computation of net asset value;
(d) the fees and expenses of calculating yield and/or performance of the
Portfolios; (e) the charges and expenses of legal counsel and independent
accountants; (f) all taxes and corporate fees payable to governmental agencies;
(g) the fees of any trade association of which the Fund is a member; (h)
reimbursement of the Portfolios' share of the organization expenses of the
Portfolio or the Fund; (i) the fees and expenses involved in registering and
maintaining registration of the Fund and the Portfolios' shares with the
Securities and Exchange Commission, registering the Fund as a broker or dealer
and qualifying the shares of the Portfolios under state securities laws,
including the preparation and printing of the registration statements and
prospectuses for such purposes, allocable communications expenses with respect
to investor services, all expenses of shareholders' and Board of Directors'
meetings and preparing, printing and mailing proxies, prospectuses and reports
to shareholders; (j) brokers' commissions, dealers' mark-ups and any issue or
transfer taxes chargeable in connection with the Portfolios' transactions; (k)
the cost of stock certificates representing shares of the Portfolios; (l)
insurance expenses, including, but not limited to, the cost of a fidelity bond,
directors and officers insurance and errors and omissions insurance; and (m)
litigation and indemnification expenses, expenses incurred in connection with
mergers, and other extraordinary expenses not incurred in the ordinary course of
the Portfolios' business.
5. Compensation. As compensation for the services performed and the facilities
and personnel provided by Bernstein pursuant to Section 1 of this Agreement,
the Fund, on behalf of the Portfolios, will pay to Bernstein, promptly after
the end of each month, a fee assessed at an annual rate of 0.10 of 1% of the
average daily net assets of each Portfolio during the month. If Bernstein
shall serve hereunder for less than the whole of any month, the fee hereunder
shall be prorated. Nothing herein shall prohibit the Directors from approving
the payment by the Fund, or the Portfolios, of additional compensation to
others for consulting services, supplemental research and security and
economic analysis.
6. Term of Agreement. This Agreement shall continue in effect for a period of
more than two years from the date hereof only so long as such continuance is
specifically approved at least annually in conformity with the requirements of
the Act with regard to investment advisory contracts; provided, however, that
this Agreement may be terminated at any time without the payment of any
penalty, on behalf of any Portfolio, by the Fund, by the Board or by vote of a
majority of the outstanding voting securities (as defined in the Act) of any
Portfolio, or by Bernstein, on not more than 60 days' nor less than 30 days'
written notice to the other party. This Agreement shall terminate
automatically in the event of its assignment (as defined in the Act).
7. Miscellaneous. This Agreement may be amended by mutual written consent.
This Agreement contains the entire agreement between the parties hereto and
supersedes all prior agreements, understandings and arrangements with respect
to the subject matter hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Anything
herein to the contrary notwithstanding, this Agreement shall not be construed
to require, or to impose any duty upon, either of the parties to do anything
in violation of any applicable laws or regulations. Bernstein may perform the
same services for other Portfolios of the Fund and other persons or entities,
including other investment companies.
IN WITNESS WHEREOF, the Fund, on behalf of the Portfolios, and Bernstein have
caused this Agreement to be executed by their duly authorized officers as of
the date first above written.
SANFORD C. BERNSTEIN & CO., INC.
By: Lewis A. Sanders, Chairman
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson, Senior Vice President
<PAGE>
Exhibit 6(a) Distribution Agreement - Government Short Duration, Short
Duration Plus, Intermediate Duration, Diversified Municipal and New York
Municipal Portfolios
SANFORD C. BERNSTEIN FUND, INC.
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 12th day of October, 1988 between SANFORD C.
BERNSTEIN FUND, INC., a Maryland corporation (the "Fund"), on behalf of the
Portfolios listed in Appendix A hereto (the "Portfolios"), and SANFORD C.
BERNSTEIN & CO., INC., a New York corporation, 767 Fifth Avenue, New York, New
York 10153 (the "Distributor").
In consideration of the mutual covenants contained herein, the parties agree
as follows:
1. Appointment of the Distributor. The Fund, on behalf of the Portfolios,
hereby appoints the Distributor as its exclusive agent to sell the stock of
the Portfolios (the "Shares"), on a best efforts basis, and the Distributor
hereby accepts such appointment. All sales by the Distributor shall be subject
to acceptance by the Fund on behalf of the Portfolios. The Distributor shall
be the exclusive representative of the Fund to act as principal underwriter
and distributor, except that:
The exclusive rights granted to the Distributor to sell Shares on behalf of
the Fund shall not apply to Shares issued in connection with the merger or
consolidation of any other investment company or personal holding company with
the Fund or any Portfolio or the acquisition by purchase or otherwise of all
(or substantially all) the assets or the outstanding shares of any such
company by the Fund or any Portfolio. Such exclusive rights shall also not
apply to shares issued by the Fund or any Portfolio pursuant to reinvestment
of dividends or capital gains distributions.
2. Sale of Shares. The Distributor agrees that (i) all Shares sold by the
Distributor shall be sold at the net asset value thereof as described in
Section 3 hereof, and (ii) the Fund, on behalf of the Portfolios, shall
receive 100% of such net asset value.
The Distributor may enter into agreements, in form and substance satisfactory
to the Fund on behalf of the Portfolios, with dealers selected by the
Distributor, providing for l) the sale to such dealers and resale by such
dealers of Shares, or 2) the sale of Shares through such distributor acting as
agent, either to clients of the Distributor or other persons, in all cases at
the Shares' net asset value. The Fund shall have the right to suspend the sale
of Shares at times when redemption is suspended pursuant to the conditions set
forth in Section 4 hereof. The Fund, on behalf of the Portfolios, shall also
have the right to suspend the sale of Shares if trading on the New York Stock
Exchange shall have been suspended, if a banking moratorium shall have been
declared by Federal or New York authorities, or if there shall have been some
other event, which, in the judgment of the Fund, makes it impracticable or
inadvisable to sell the shares.
3. Net Asset Value. The Fund, on behalf of the Portfolios, agrees to supply to
the Distributor, promptly after the time or times at which the net asset value
for each Portfolio is determined, on each day on which the net asset value of
that Portfolio is determined as set forth in the then-current prospectus of
the Fund or that Portfolio, (each such day being hereinafter called a
"business day") a statement of the net asset value per share of that Portfolio
determined in the manner set forth in the then-current Prospectus and
Statement of Additional Information of the Fund or the Portfolio. Each
determination of net asset value per share shall take effect as of such time
or times on each business day as set forth in the then-current Prospectus of
the Fund or any Portfolio and shall prevail until the time as of which the
next determination is made.
The Distributor may reject any order for Shares. The Fund, on behalf of the
Portfolios, or any agent of the Fund designated in writing by the Fund, shall
be promptly advised of all purchase orders for Shares received by the
Distributor. Any order may be rejected by the Fund (or its agent) on behalf of
any Portfolio. The Fund (or its agent) will confirm orders upon their receipt,
will make appropriate book entries and upon receipt by the Fund (or its agent)
of payment therefor, will deliver any required certificates for such Shares
pursuant to the instructions of the Distributor. The Distributor agrees to
cause payment and such instructions to be delivered promptly to the Fund (or
its agent).
<PAGE>
4. Repurchase or Redemption of Shares by the Fund. Any of the outstanding
Shares may be tendered for redemption at any time, and the Fund, on behalf of
the Portfolios, agrees to repurchase or redeem the Shares so tendered on
behalf of the Portfolios in accordance with its obligations as set forth in
Article V of its Articles of Incorporation, as amended from time to time, and
in accordance with the applicable provisions set forth in the Prospectus. The
price to be paid to redeem or repurchase the Shares shall be equal to the net
asset value per share determined as set forth in the Prospectus. All payments
by the Fund on behalf of the Portfolios hereunder shall be made in the manner
set forth below.
The Fund, on behalf of the Portfolio, shall pay the total amount of the
redemption price as defined in the above paragraph pursuant to the
instructions of the Distributor on or before the seventh business day
subsequent to its having received the notice of redemption in proper form. The
proceeds of any redemption of Shares shall be paid by the Fund to or for the
account of the redeeming stockholder, in accordance with applicable provisions
of the then-current Prospectus of the Fund or any Portfolio.
Redemption of, or payment with regard to, the Shares of any Portfolio may be
suspended at times when the New York Stock Exchange is closed, when trading on
said Exchange is closed, when trading on said Exchange is restricted, when an
emergency exists as a result of which disposal by the Fund of securities owned
by it on behalf of any Portfolio is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of any
Portfolio's net assets, or during any other period when the Securities and
Exchange Commission, by order, so permits.
5. Sales Literature. The Fund, on behalf of the Portfolios, shall have the
right to review, to the extent it deems appropriate, all sales literature and
advertisements used by the Distributor in connection with sales of Shares. No
such sales literature or advertisements shall be used if the Fund objects
thereto. The Fund authorizes the Distributor, in connection with the sale or
arranging for the sale of Shares, to provide only such information and to make
only such statements or representations as are contained in the Fund's or any
Portfolio's then-current Prospectus or Statement of Additional Information,
sales literature or advertisements or in such financial and other statements
as are furnished to the Distributor pursuant to the next paragraph. Neither
the Fund nor any Portfolio shall be responsible in any way for any information
provided, or statements or representations made, by the Distributor or its
representatives or agents other than the information, statements and
representations described in the preceding sentence.
6. Expenses. The Distributor shall pay all of its expenses arising from the
performance of its obligations under Section 1 of this Agreement and shall pay
any salaries, fees and expenses of the Directors who are employees of the
Distributor. The Distributor shall not be required to pay any other expenses
of the Fund or the Portfolios, including (a) the fees payable to Bernstein
under the Investment Management Agreement and the Shareholder Servicing and
Administrative Agreement; (b) the fees and expenses of Directors who are not
affiliated with the Distributor; (c) the fees and expenses of the Custodian
and Transfer Agent, including but not limited to fees and expenses relating to
Fund accounting, pricing of Portfolio shares, and computation of net asset
value; (d) the fees and expenses of calculating yield and/or performance of
the Portfolios; (e) the charges and expenses of legal counsel and independent
accountants; (f) all taxes and corporate fees payable to governmental
agencies; (g) the fees of any trade association of which the Fund is a member;
(h) reimbursement of each Portfolio's share of the organization expenses of
the Fund; (i) the fees and expenses involved in registering and maintaining
registration of the Fund and the Portfolios' shares with the Securities and
Exchange Commission, registering the Fund as a broker or dealer and qualifying
the shares of the Portfolios under state securities laws, including the
preparation and printing of the registration statements and prospectuses for
such purposes, allocable communications expenses with respect to investor
services, all expenses of shareholders' and Board of Directors' meetings and
preparing, printing and mailing proxies, prospectuses and reports to
shareholders; (j) brokers' commissions, dealers' mark-ups and any issue or
transfer taxes chargeable in connection with the Portfolios' transactions; (k)
the cost of stock certificates representing shares of the Portfolios; (1)
insurance expenses, including, but not limited to, the cost of a fidelity
bond, directors and officers insurance and errors and omissions insurance; and
(m) litigation and indemnification expenses, expenses incurred in connection
with mergers, and other extraordinary expenses not incurred in the ordinary
course of the Portfolios' business.
<PAGE>
7. Duties of the Fund. The Fund shall maintain a currently effective
Registration Statement on the appropriate form and shall file with the
Securities and Exchange Commission ("SEC") such reports and other documents as
may be required under the Securities Act of 1933 as amended and the Investment
Company Act of 1940, as amended (the "1940 Act"), or by the rules and
regulations of the SEC thereunder. The Fund shall keep the Distributor fully
informed with regard to its affairs and the affairs of the Portfolios, shall
furnish the Distributor with a certified copy of all financial statements and
a signed copy of each report prepared by its independent auditors, and shall
cooperate fully in the efforts of the Distributor to negotiate and sell the
Shares and in the performance by the Distributor of all its duties under this
Agreement.
8. Indemnification.
(a) The Fund, on behalf of the Portfolios, shall indemnify and hold harmless
the Distributor, and the directors, officers and employees of the Distributor,
against any loss, liability, claim, damage or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damage or expenses and reasonable counsel fees incurred in connection
therewith) arising out of its activities as a Distributor to the Fund or any
Portfolio, provided, however, that nothing herein shall be deemed to protect
the Distributor or any director, officer, or employee thereof against any
liability to the Fund or its stockholders, to which the Distributor or any
director, officer, or employee thereof would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement.
9. Limitation of Liability. Subject to Section 36 of the Act, the Distributor,
and the directors, officers, and employees of the Distributor, shall not be
liable to the Fund or the Portfolios for any error of judgment or mistake of
law or for any loss arising out of the performance or non-performance of
duties under this Agreement, except for willful misfeasance, bad faith or
gross negligence in the performance of, or by reason of reckless disregard of,
obligations and duties under this Agreement.
10. Term of Agreement. This Agreement shall continue in effect with respect to
any Portfolio for a period of more than two years from the date hereof only so
long as such continuance is specifically approved at least annually in
conformity with the requirements of the Act; provided, however, that this
Agreement may be terminated at any time, without the payment of any penalty,
by the Fund on behalf of any or all of the Portfolios, by the Board of
Directors of the Fund or, with respect to any Portfolio, by vote of a majority
of the outstanding voting securities (as defined in the 1940 Act) of that
Portfolio, or by the Distributor, on not more than 60 days' nor less than 30
days' written notice to the other party.
11. Miscellaneous. This Agreement may be amended by mutual written consent.
This Agreement contains the entire agreement between the parties hereto and
supersedes all prior agreements, understandings and arrangements with respect
to the subject matter hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Anything
herein to the contrary notwithstanding, this Agreement shall not be construed
to require, or to impose any duty upon either of the parties, to do anything
in violation of any applicable laws or regulations. The Distributor may
perform the same services to other persons or other entities, including other
investment companies.
IN WITNESS WHEREOF, the Fund, on behalf of the Portfolios, and the Distributor
have caused this Agreement to be executed by their duly authorized officers as
of the date first above written.
SANFORD C. BERNSTEIN & CO., INC.
By: Lewis A. Sanders, President
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson, Senior Vice President
Appendix A
As of October 12, 1988
<PAGE>
BERNSTEIN GOVERNMENT SHORT DURATION PORTFOLIO
BERNSTEIN SHORT DURATION PLUS PORTFOLIO
BERNSTEIN NEW YORK MUNICIPAL PORTFOLIO
BERNSTEIN DIVERSIFIED MUNICIPAL PORTFOLIO
BERNSTEIN INTERMEDIATE DURATION PORTFOLIO
<PAGE>
Exhibit 6(b) Distribution Agreement - California Municipal Portfolio
SANFORD C. BERNSTEIN FUND, INC.
BERNSTEIN CALIFORNIA MUNICIPAL PORTFOLIO
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 1st day of May, 1990, between SANFORD C. BERNSTEIN
FUND, INC., a Maryland corporation (the "Fund"), on behalf of the BERNSTEIN
CALIFORNIA MUNICIPAL PORTFOLIO (the "Portfolio"), and SANFORD C. BERNSTEIN &
CO., INC., a New York corporation, 767 Fifth Avenue, New York, New York 10153
(the "Distributor").
In consideration of the mutual covenants contained herein, the parties agree as
follows:
1. Appointment of the Distributor. The Fund, on behalf of the Portfolio, hereby
appoints the Distributor as its exclusive agent to sell the stock of the
Portfolio (the "Shares"), on a best efforts basis, and the Distributor hereby
accepts such appointment. All sales by the Distributor shall be subject to
acceptance by the Fund on behalf of the Portfolio. The Distributor shall be the
exclusive representative of the Fund to act as principal underwriter and
distributor, except that:
The exclusive rights granted to the Distributor to sell Shares on behalf of the
Fund shall not apply to Shares issued in connection with the merger or
consolidation of any other investment company or personal holding company with
the Fund or any Portfolio of the Fund or the acquisition by purchase or
otherwise of all (or substantially all) the assets or the outstanding shares of
any such company by the Fund or any such Portfolio. Such exclusive rights shall
also not apply to shares issued by the Fund or the Portfolio pursuant to
reinvestment of dividends or capital gains distributions.
2. Sales of Shares. The Distributor agrees that (i) all Shares sold by the
Distributor shall be sold at the net asset value thereof as described in Section
3 hereof, and (ii) the Fund, on behalf of the Portfolio, shall receive 100% of
such net asset value.
The Distributor may enter into agreements, in form and substance satisfactory to
the Fund on behalf of the Portfolio, with dealers selected by the Distributor,
providing for 1) the sale to such dealers and resale by such dealers of Shares,
or 2) the sale of Shares through such Distributor acting as agent, either to
clients of the Distributor or other persons, in all cases at the Shares' net
asset value. The Fund shall have the right to suspend the sale of Shares at
times when redemption is suspended pursuant to the conditions set forth in
Section 4 hereof. The Fund, on behalf of the Portfolio, shall also have the
right to suspend the sale of Shares if trading on the New York Stock Exchange
shall have been suspended, if a banking moratorium shall have been declared by
Federal or New York authorities, or if there shall have been some other event,
which, in the judgment of the Fund, makes it impracticable or inadvisable to
sell the shares.
3. Net Asset Value. The Fund, on behalf of the Portfolio, agrees to supply to
the Distributor, promptly after the time or times at which the net asset value
for each Portfolio is determined, on each day on which the net asset value of
the Portfolio is determined as set forth in the then-current Prospectus of the
Fund or the Portfolio, (each such day being hereinafter called a "business day")
a statement of the net asset value per share of the Portfolio determined in the
manner set forth in the then-current Prospectus and Statement of Additional
Information of the Fund or the Portfolio. Each determination of net asset value
per share shall take effect as of such time or times on each business day as set
forth in the then-current Prospectus of the Fund or the Portfolio and shall
prevail until the time as of which the next determination is made.
The Distributor may reject any order for Shares. The Fund, on behalf of the
Portfolio, or any agent of the Fund designated in writing by the Fund, shall be
promptly advised of all purchase orders for Shares received by the Distributor.
Any order may be rejected by the Fund (or its agent) on behalf of the Portfolio.
The Fund (or its agent) will confirm orders upon their receipt, will make
appropriate book entries and upon receipt by the Fund (or its agent) of payment
therefor, will deliver any required certificates for such Shares pursuant to the
instructions of the Distributor. The Distributor agrees to cause payment and
such instructions to be delivered promptly to the Fund (or its agent).
4. Repurchase or Redemption of Shares by the Fund. Any of the outstanding Shares
may be tendered for redemption at any time, and the Fund, on behalf of the
Portfolio, agrees to repurchase or redeem the Shares so tendered on behalf of
the Portfolio in accordance with its obligations as set forth in Article V of
its Articles of Incorporation, as amended from time to time, and in accordance
with the applicable provisions set forth in the Prospectus. The price to be paid
to redeem or
<PAGE>
repurchase the Shares shall be equal to the net asset value per share determined
as set forth in the Prospectus. All payments by the Fund on behalf of the
Portfolio hereunder shall be made in the manner set forth below.
The Fund, on behalf of the Portfolio, shall pay the total amount of the
redemption price as defined in the above paragraph pursuant to the instructions
of the Distributor on or before the seventh day subsequent to its having
received the notice of redemption in proper form. The proceeds of any redemption
of Shares shall be paid by the Fund to or for the account of the redeeming
stockholder, in accordance with applicable provisions of the then-current
Prospectus of the Fund or the Portfolio.
Redemption of, or payment with regard to, the Shares of the Portfolio may be
suspended at times when the New York Stock Exchange is closed, when trading on
said Exchange is closed, when trading on said Exchange is restricted, when an
emergency exists as a result of which disposal by the Fund of securities owned
by it on behalf of the Portfolio is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of the
Portfolio's net assets, or during any other period when the Securities and
Exchange Commission, by order, so permits.
5. Sales Literature. The Fund, on behalf of the Portfolio, shall have the right
to review, to the extent it deems appropriate, all sales literature and
advertisements used by the Distributor in connection with sales of Shares. No
such sales literature or advertisements shall be used if the Fund objects
thereto. The Fund authorizes the Distributor, in connection with the sale or
arranging for the sale of Shares, to provide only such information and to make
only such statements or representations as are contained in the Fund's or the
Portfolio's then-current Prospectus or Statement of Additional Information,
sales literature or advertisements or in such financial and other statements as
are furnished to the Distributor pursuant to the next paragraph. Neither the
Fund nor the Portfolio shall be responsible in any way for any information
provided, or statements or representations made, by the Distributor or its
representatives or agents other than the information, statements and
representations described in the preceding sentence.
6. Expenses. The Distributor shall pay all of its expenses arising from the
performance of its obligations under Section 1 of this Agreement and shall pay
any salaries, fees and expenses of the Directors who are employees of the
Distributor. Except as provided in the Investment Management Agreement between
the Fund on behalf of the Portfolio and the Distributor, the Distributor shall
not be required to pay any other expenses of the Fund or the Portfolio,
including (a) the fees payable to Bernstein under the Investment Management
Agreement and the Shareholder Servicing and Administrative Agreement; (b) the
fees and expenses of Directors who are not affiliated with the Distributor; (c)
the fees and expenses of the Custodian and Transfer Agent, including but not
limited to fees and expenses relating to Fund accounting, pricing of Portfolio
shares, and computation of net asset value; (d) the fees and expenses of
calculating yield and/or performance of the Portfolio; (e) the charges and
expenses of legal counsel and independent accountants; (f) all taxes and
corporate fees payable to governmental agencies; (g) the fees of any trade
association of which the Fund is a member; (h) reimbursement of the Portfolio's
share of the organization expenses of the Fund; (i) the fees and expenses
involved in registering and maintaining registration of the Fund and the
Portfolio's shares with the Securities and Exchange Commission, registering the
Fund as a broker or dealer and qualifying the shares of the Portfolio under
state securities laws, including the preparation and printing of the
registration statements and prospectuses for such purposes, allocable
communications expenses with respect to investor services, all expenses of
shareholders' and Board of Directors' meetings and preparing, printing and
mailing proxies, prospectuses and reports to shareholders; (j) brokers'
commissions, dealers' mark-ups and any issue or transfer taxes chargeable in
connection with the Portfolio's transactions; (k) the cost of stock certificates
representing shares of the Portfolio; (l) insurance expenses, including, but not
limited to, the cost of a fidelity bond, directors and officers insurance and
errors and omissions insurance; and (m) litigation and indemnification expenses,
expenses incurred in connection with mergers, and other extraordinary expenses
not incurred in the ordinary course of the Portfolio's business.
7. Duties of the Fund. The Fund shall maintain a currently effective
Registration Statement on the appropriate form and shall file with the
Securities and Exchange Commission ("SEC") such reports and other documents as
may be required under the Securities Act of 1933 as amended and the Investment
Company Act of 1940, as amended (the "1940 Act"), or by the rules and
regulations of the SEC thereunder. The Fund shall keep the Distributor fully
informed with regard to its affairs and the affairs of the Portfolio, shall
furnish the Distributor with a certified copy of all financial statements and a
signed copy of each report prepared by its independent auditors, and shall
cooperate fully in the efforts of the Distributor to negotiate and sell the
Shares and in the performance by the Distributor of all its duties under this
Agreement.
8. Indemnification. The Fund, on behalf of the Portfolio, shall indemnify and
hold harmless the Distributor, against any loss, liability,
<PAGE>
claim, damage or expense (including the reasonable cost of investigating or
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of its activities as
a Distributor to the Fund or the Portfolio, provided, however, that nothing
herein shall be deemed to protect the Distributor or any director, officer, or
employee thereof against any liability to the Fund or its stockholders, to which
the Distributor or any director, officer, or employee thereof would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties under this Agreement.
9. Limitation of Liability. Subject to Section 36 of the Act, the Distributor,
and the directors, officers and employees of the Distributor, shall not be
liable to the Fund or the Portfolio for any error of judgment or mistake of law
or for any loss arising out of the performance or non-performance of duties
under this Agreement, except for willful misfeasance, bad faith or gross
negligence in the performance of, or by reason of reckless disregard of,
obligations and duties under this Agreement.
10. Term of Agreement. This Agreement shall continue in effect with respect to
the Portfolio for a period of more than two years from the date hereof only so
long as such continuance is specifically approved at least annually in
conformity with the requirements of the Act; provided, however, that this
Agreement may be terminated at any time, without the payment of any penalty by
the Fund on behalf of the Portfolio, by the Board of Directors of the Fund or,
with respect to the Portfolio, by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Portfolio, or by the Distributor,
on not more than 60 days' nor less than 30 days' written notice to the other
party.
11. Miscellaneous. This Agreement may be amended by mutual written consent. This
Agreement contains the entire agreement between the parties hereto and
supersedes all prior agreements, understandings and arrangements with respect to
the subject matter hereof. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations. The Distributor may perform the same
services to the Fund on behalf of other Portfolios, and to other persons or
other entities, including other investment companies.
IN WITNESS WHEREOF, the Fund, on behalf of the Portfolio, and the Distributor
have caused this Agreement to be executed by their duly authorized officers as
of the date first above written.
SANFORD C. BERNSTEIN & CO., INC.
By: Lewis A. Sanders, President
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson, Senior Vice President
<PAGE>
Exhibit 6(c) Distribution Agreement - International Value Portfolio
SANFORD C. BERNSTEIN FUND, INC.
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 18th day of March, 1992, between SANFORD C. BERNSTEIN
FUND, INC., a Maryland corporation (the "Fund"), on behalf of the Bernstein
International Value Portfolio (the "Portfolio"), and SANFORD C. BERNSTEIN &
CO., INC., a New York corporation, 767 Fifth Avenue, New York, New York 10153
(the "Distributor").
In consideration of the mutual covenants contained herein, the parties agree
as follows:
1. Appointment of the Distributor. The Fund, on behalf of the Portfolio,
hereby appoints the Distributor as its exclusive agent to sell the stock of
the Portfolio (the "Shares"), on a best efforts basis, and the Distributor
hereby accepts such appointment. All sales by the Distributor shall be subject
to acceptance by the Fund on behalf of the Portfolio. The Distributor shall be
the exclusive representative of the Fund to act as principal underwriter and
distributor, except that:
The exclusive rights granted to the Distributor to sell Shares on behalf of
the Fund shall not apply to Shares issued in connection with the merger or
consolidation of any other investment company or personal holding company with
the Fund or the Portfolio or the acquisition by purchase or otherwise of all
(or substantially all) the assets or the outstanding shares of any such
company by the Fund or the Portfolio. Such exclusive rights shall also not
apply to shares issued by the Fund or the Portfolio pursuant to reinvestment
of dividends or capital gains distributions.
2. Sales of Shares. The Distributor agrees that (i) all Shares sold by the
Distributor shall be sold at the net asset value thereof as described in
Section 3 hereof, and (ii) the Fund, on behalf of the Portfolio, shall receive
100% of such net asset value.
The Distributor may enter into agreements, in form and substance satisfactory
to the Fund on behalf of the Portfolio, with dealers selected by the
Distributor, providing for 1) the sale to such dealers and resale by such
dealers of Shares, or 2) the sale of Shares through such Distributor acting as
agent, either to clients of the Distributor or other persons, in all cases at
the Shares' net asset value. The Fund shall have the right to suspend the sale
of Shares at times when redemption is suspended pursuant to the conditions set
forth in Section 4 hereof. The Fund, on behalf of the Portfolio, shall also
have the right to suspend the sale of Shares if trading on the New York Stock
Exchange shall have been suspended, if a banking moratorium shall have been
declared by Federal or New York authorities, or if there shall have been some
other event, which, in the judgment of the Fund, makes it impracticable or
inadvisable to sell the shares.
3. Net Asset Value. The Fund, on behalf of the Portfolio, agrees to supply to
the Distributor, promptly after the time or times at which the net asset value
for the Portfolio is determined, on each day on which the net asset value of
the Portfolio is determined as set forth in the then-current Prospectus of the
Fund or the Portfolio, (each such day being hereinafter called a "business
day") a statement of the net asset value per share of the Portfolio determined
in the manner set forth in the then-current Prospectus and Statement of
Additional Information of the Fund or the Portfolio. Each determination of net
asset value per share shall take effect as of such time or times on each
business day as set forth in the then current Prospectus of the Fund or the
Portfolio and shall prevail until the time as of which the next determination
is made.
The Distributor may reject any order for Shares. The Fund, on behalf of the
Portfolio, or any agent of the Fund designated in writing by the Fund, shall
be promptly advised of all purchase orders for Shares received by the
Distributor. Any order may be rejected by the Fund (or its agent) on behalf of
the Portfolio. The Fund (or its agent) will confirm orders upon their receipt,
will make appropriate book entries and upon receipt by the Fund (or its agent)
of payment therefor, will deliver any required certificates for such Shares
pursuant to the instructions of the Distributor. The Distributor agrees to
cause payment and such instructions to be delivered promptly to the Fund (or
its agent).
<PAGE>
4. Repurchase or Redemption of Shares by the Fund. Any of the outstanding
Shares may be tendered for redemption at any time, and the Fund, on behalf of
the Portfolio, agrees to repurchase or redeem the Shares so tendered on behalf
of the Portfolio in accordance with its obligations as set forth in Article V
of its Articles of Incorporation, as amended from time to time, and in
accordance with the applicable provisions set forth in the Prospectus. The
price to be paid to redeem or repurchase the Shares shall be equal to the net
asset value per share determined as set forth in the Prospectus. All payments
by the Fund on behalf of the Portfolio hereunder shall be made in the manner
set forth below.
The Fund, on behalf of the Portfolio, shall pay the total amount of the
redemption price as defined in the above paragraph pursuant to the
instructions of the Distributor on or before the seventh day subsequent to its
having received the notice of redemption in proper form. The proceeds of any
redemption of Shares shall be paid by the Fund to or for the account of the
redeeming stockholder, in accordance with applicable provisions of the
then-current Prospectus of the Fund or the Portfolio.
Redemption of, or payment with regard to, the Shares of the Portfolio may be
suspended at times when the New York Stock Exchange is closed, when trading on
said Exchange is closed, when trading on said Exchange is restricted, when an
emergency exists as a result of which disposal by the Fund of securities owned
by it on behalf of the Portfolio is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of the
Portfolio's net assets, or during any other period when the Securities and
Exchange Commission, by order, so permits.
5. Sales Literature. The Fund, on behalf of the Portfolio, shall have the
right to review, to the extent it deems appropriate, all sales literature and
advertisements used by the Distributor in connection with sales of Shares. No
such sales literature or advertisements shall be used if the Fund objects
thereto. The Fund authorizes the Distributor, in connection with the sale or
arranging for the sale of Shares, to provide only such information and to make
only such statements or representations as are contained in the Fund's or the
Portfolio's then-current Prospectus or Statement of Additional Information,
sales literature or advertisements or in such financial and other statements
as are furnished to the Distributor pursuant to the next paragraph. Neither
the Fund nor the Portfolio shall be responsible in any way for any information
provided, or statements or representations made, by the Distributor or its
representatives or agents other than the information, statements and
representations described in the preceding sentence.
6. Expenses. The Distributor shall pay all of its expenses arising from the
performance of its obligations under Section 1 of this Agreement and shall pay
any salaries, fees and expenses of the Directors who are employees of the
Distributor. The Distributor shall not be required to pay any other expenses
of the Fund or the Portfolio, including (a) the fees payable to Bernstein
under the Investment Management Agreement and the Shareholder Servicing and
Administrative Agreement; (b) the fees and expenses of Directors who are not
affiliated with the Distributor; (c) the fees and expenses of the Custodian
and Transfer Agent, including but not limited to fees and expenses relating to
Fund accounting, pricing of Portfolio shares, and computation of net asset
value; (d) the fees and expenses of calculating yield and/or performance of
the Portfolio; (e) the charges and expenses of legal counsel and independent
accountants; (f) all taxes and corporate fees payable to governmental
agencies; (g) the fees of any trade association of which the Fund is a member;
(h) reimbursement of the Portfolio's share of the organization expenses of the
Portfolio or the Fund; (i) the fees and expenses involved in registering and
maintaining registration of the Fund and the Portfolio's shares with the
Securities and Exchange Commission, registering the Fund as a broker or dealer
and qualifying the shares of the Portfolio under state securities laws,
including the preparation and printing of the registration statements and
prospectuses for such purposes, allocable communications expenses with respect
to investor services, all expenses of shareholders' and Board of Directors'
meetings and preparing, printing and mailing proxies, prospectuses and reports
to shareholders; (j) brokers' commissions, dealers' mark-ups and any issue or
transfer taxes chargeable in connection with the Portfolio's transactions; (k)
the cost of stock certificates representing shares of the Portfolio; (1)
insurance expenses, including, but not limited to, the cost of a fidelity
bond, directors and officers insurance and errors and omissions insurance; and
(m) litigation and indemnification expenses, expenses incurred in connection
with mergers, and other extraordinary expenses not incurred in the ordinary
course of the Portfolio's business.
<PAGE>
7. Duties of the Fund. The Fund shall maintain a currently effective
Registration Statement on the appropriate form and shall file with the
Securities and Exchange Commission ("SEC") such reports and other documents as
may be required under the Securities Act of 1933 as amended and the Investment
Company Act of 1940, as amended (the "1940 Act"), or by the rules and
regulations of the SEC thereunder. The Fund shall keep the Distributor fully
informed with regard to its affairs and the affairs of the Portfolio, shall
furnish the Distributor with a certified copy of all financial statements and
a signed copy of each report prepared by its independent auditors, and shall
cooperate fully in the efforts of the Distributor to negotiate and sell the
Shares and in the performance by the Distributor of all its duties under this
Agreement.
8. Indemnification. The Fund, on behalf of the Portfolio, shall indemnify and
hold harmless the Distributor, against any loss, liability, claim, damage or
expense (including the reasonable cost of investigating or defending any
alleged loss, liability, claim, damage or expenses and reasonable counsel fees
incurred in connection therewith) arising out of its activities as a
Distributor to the Fund or the Portfolio, provided, however, that nothing
herein shall be deemed to protect the Distributor or any director, officer, or
employee thereof against any liability to the Fund or its stockholders, to
which the Distributor or any director, officer, or employee thereof would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement.
9. Limitation of Liability. Subject to Section 36 of the Act, the Distributor,
and the directors, officers and employees of the Distributor, shall not be
liable to the Fund or the Portfolio for any error of judgment or mistake of
law or for any loss arising out of the performance or non-performance of
duties under this Agreement, except for willful misfeasance, bad faith or
gross negligence in the performance of, or by reason of reckless disregard of,
obligations and duties under this Agreement.
10. Term of Agreement. This Agreement shall continue in effect with respect to
the Portfolio for a period of more than two years from the date hereof only so
long as such continuance is specifically approved at least annually in
conformity with the requirements of the Act; provided, however, that this
Agreement may be terminated at any time, without the payment of any penalty,
by the Fund on behalf of the Portfolio, by the Board of Directors of the Fund
or, with respect to the Portfolio, by vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Portfolio, or by the
Distributor, on not more than 60 days' nor less than 30 days' written notice
to the other party.
11. Miscellaneous. This Agreement may be amended by mutual written consent.
This Agreement contains the entire agreement between the parties hereto and
supersedes all prior agreements, understandings and arrangements with respect
to the subject matter hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Anything
herein to the contrary notwithstanding, this Agreement shall not be construed
to require, or to impose any duty upon either of the parties, to do anything
in violation of any applicable laws or regulations. The Distributor may
perform the same services to the Fund, on behalf of the Portfolio, and to
other persons or other entities, including other investment companies.
IN WITNESS WHEREOF, the Fund, on behalf of the Portfolio, and the Distributor
have caused this Agreement to be executed by their duly authorized officers as
of the date first above written.
SANFORD C. BERNSTEIN & CO., INC.
By: Zalman C. Bernstein, Chairman
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson, Senior Vice President
<PAGE>
Exhibit 6(d) Distribution Agreement - Short Duration California Municipal,
Short Duration Diversified Municipal and Short Duration New York Municipal
Portfolios
SANFORD C. BERNSTEIN FUND, INC.
BERNSTEIN SHORT DURATION MUNICIPAL PORTFOLIOS
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 2nd day of May, 1994, between SANFORD C. BERNSTEIN
FUND, INC., a Maryland corporation (the "Fund"), on behalf of the Bernstein
Short Duration California Municipal Portfolio, the Bernstein Short Duration
Diversified Municipal Portfolio and the Bernstein Short Duration New York
Municipal Portfolio (individually a "Portfolio" and collectively the
"Portfolios"), and SANFORD C. BERNSTEIN & CO., INC., a New York corporation,
767 Fifth Avenue, New York, New York 10153 (the "Distributor").
In consideration of the mutual covenants contained herein, the parties agree
as follows:
1. Appointment of the Distributor. The Fund, on behalf of the Portfolios,
hereby appoints the Distributor as its exclusive agent to sell the stock of
the Portfolios (the "Shares"), on a best efforts basis, and the Distributor
hereby accepts such appointment. All sales by the Distributor shall be subject
to acceptance by the Fund on behalf of the Portfolios. The Distributor shall
be the exclusive representative of the Fund to act as principal underwriter
and distributor, except that:
The exclusive rights granted to the Distributor to sell Shares on behalf of
the Fund shall not apply to Shares issued in connection with the merger or
consolidation of any other investment company or personal holding company with
the Fund or any Portfolio of the Fund or the acquisition by purchase or
otherwise of all (or substantially all) the assets or the outstanding shares
of any such company by the Fund or any such Portfolio. Such exclusive rights
shall also not apply to shares issued by the Fund or any Portfolio pursuant to
reinvestment of dividends or capital gains distributions.
2. Sales of Shares. The Distributor agrees that (i) all Shares sold by the
Distributor shall be sold at the net asset value thereof as described in
Section 3 hereof, and (ii) the Fund, on behalf of the Portfolios, shall
receive 100% of such net asset value.
The Distributor may enter into agreements, in form and substance satisfactory
to the Fund on behalf of the Portfolios, with dealers selected by the
Distributor, providing for 1) the sale to such dealers and resale by such
dealers of Shares, or 2) the sale of Shares through such Distributor acting as
agent, either to clients of the Distributor or other persons, in all cases at
the Shares' net asset value. The Fund shall have the right to suspend the sale
of Shares at times when redemption is suspended pursuant to the conditions set
forth in Section 4 hereof. The Fund, on behalf of the Portfolios, shall also
have the right to suspend the sale of Shares if trading on the New York Stock
Exchange shall have been suspended, if a banking moratorium shall have been
declared by Federal or New York authorities, or if there shall have been some
other event, which, in the judgment of the Fund, makes it impracticable or
inadvisable to sell the Shares.
3. Net Asset Value. The Fund, on behalf of the Portfolios, agrees to supply to
the Distributor, promptly after the time or times at which the net asset value
for each Portfolio is determined, on each day on which the net asset value of
the Portfolio is determined as set forth in the then-current Prospectus of the
Fund or the Portfolios, (each such day being hereinafter called a "business
day") a statement of the net asset value per share of the Portfolios
determined in the manner set forth in the then-current Prospectus and
Statement of Additional Information of the Fund or the Portfolios. Each
determination of net asset value per share shall take effect as of such time
or times on each business day as set forth in the then-current Prospectus of
the Fund or the Portfolios and shall prevail until the time as of which the
next determination is made.
The Distributor may reject any order for Shares. The Fund, on behalf of the
Portfolios, or any agent of the Fund designated in writing by the Fund, shall
be promptly advised of all purchase orders for Shares received by the
Distributor. Any order may be rejected by the Fund (or its agent) on behalf of
the Portfolios. The Fund (or its agent) will confirm orders upon their
receipt, will make appropriate book entries and upon receipt by the Fund (or
its
<PAGE>
agent) of payment therefor, will deliver any required certificates for such
Shares pursuant to the instructions of the Distributor. The Distributor agrees
to cause payment and such instructions to be delivered promptly to the Fund (or
its agent).
4. Repurchase or Redemption of Shares by the Fund. Any of the outstanding
Shares may be tendered for redemption at any time, and the Fund, on behalf of
the Portfolios, agrees to repurchase or redeem the Shares so tendered on
behalf of the Portfolios in accordance with its obligations as set forth in
Article V of its Articles of Incorporation, as amended from time to time, and
in accordance with the applicable provisions set forth in the Prospectus. The
price to be paid to redeem or repurchase the Shares shall be equal to the net
asset value per share determined as set forth in the Prospectus. All payments
by the Fund on behalf of the Portfolios hereunder shall be made in the manner
set forth below.
The Fund, on behalf of the Portfolios, shall pay the total amount of the
redemption price as defined in the above paragraph pursuant to the
instructions of the Distributor on or before the seventh day subsequent to its
having received the notice of redemption in proper form. The proceeds of any
redemption of Shares shall be paid by the Fund to or for the account of the
redeeming stockholder, in accordance with applicable provisions of the
then-current Prospectus of the Fund or any Portfolio.
Redemption of, or payment with regard to, the Shares of the Portfolios may be
suspended at times when the New York Stock Exchange is closed, when trading on
said Exchange is closed, when trading on said Exchange is restricted, when an
emergency exists as a result of which disposal by the Fund of securities owned
by it on behalf of any Portfolio is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of any
Portfolio's net assets, or during any other period when the Securities and
Exchange Commission, by order, so permits.
5. Sales Literature. The Fund, on behalf of the Portfolios, shall have the
right to review, to the extent it deems appropriate, all sales literature and
advertisements used by the Distributor in connection with sales of Shares. No
such sales literature or advertisements shall be used if the Fund objects
thereto. The Fund authorizes the Distributor, in connection with the sale or
arranging for the sale of Shares, to provide only such information and to make
only such statements or representations as are contained in the Fund's or any
Portfolio's then-current Prospectus or Statement of Additional Information,
sales literature or advertisements or in such financial and other statements
as are furnished to the Distributor pursuant to the next paragraph. Neither
the Fund nor any Portfolio shall be responsible in any way for any information
provided, or statements or representations made, by the Distributor or its
representatives or agents other than the information, statements and
representations described in the preceding sentence.
6. Expenses. The Distributor shall pay all of its expenses arising from the
performance of its obligations under Section 1 of this Agreement and shall pay
any salaries, fees and expenses of the Directors who are employees of the
Distributor. Except as provided in the Investment Management Agreement between
the Fund on behalf of the Portfolios and the Distributor, the Distributor
shall not be required to pay any other expenses of the Fund or the Portfolios,
including (a) the fees payable to Bernstein under the Investment Management
Agreement and the Shareholder Servicing and Administrative Agreement; (b) the
fees and expenses of Directors who are not affiliated with the Distributor;
(c) the fees and expenses of the Custodian and Transfer Agent, including but
not limited to fees and expenses relating to Fund accounting, pricing of
Portfolio shares, and computation of net asset value; (d) the fees and
expenses of calculating yield and/or performance of the Portfolios; (e) the
charges and expenses of legal counsel and independent accountants; (f) all
taxes and corporate fees payable to governmental agencies; (g) the fees of any
trade association of which the Fund is a member; (h) reimbursement of any
Portfolio's share of the organization expenses of the Fund; (i) the fees and
expenses involved in registering and maintaining registration of the Fund and
the Portfolios' shares with the Securities and Exchange Commission,
registering the Fund as a broker or dealer and qualifying the shares of the
Portfolios under state securities laws, including the preparation and printing
of the registration statements and prospectuses for such purposes, allocable
communications expenses with respect to investor services, all expenses of
shareholders' and Board of Directors' meetings and preparing, printing and
mailing proxies, prospectuses and reports to shareholders; (j) brokers'
commissions, dealers' mark-ups and any issue or transfer taxes chargeable in
connection with the Portfolios' transactions; (k) the cost of stock
certificates representing shares of the Portfolios; (1) insurance expenses,
including, but not limited to, the cost of a fidelity
<PAGE>
bond, directors and officers insurance and errors and omissions insurance; and
(m) litigation and indemnification expenses, expenses incurred in connection
with mergers, and other extraordinary expenses not incurred in the ordinary
course of the Portfolios' business.
7. Duties of the Fund. The Fund shall maintain a currently effective
Registration Statement on the appropriate form and shall file with the
Securities and Exchange Commission ("SEC") such reports and other documents as
may be required under the Securities Act of 1933 as amended and the Investment
Company Act of 1940, as amended (the "1940 Act"), or by the rules and
regulations of the SEC thereunder. The Fund shall keep the Distributor fully
informed with regard to its affairs and the affairs of the Portfolios, shall
furnish the Distributor with a certified copy of all financial statements and
a signed copy of each report prepared by its independent auditors, and shall
cooperate fully in the efforts of the Distributor to negotiate and sell the
Shares and in the performance by the Distributor of all its duties under this
Agreement.
8. Indemnification. The Fund, on behalf of the Portfolios, shall indemnify and
hold harmless the Distributor, against any loss, liability, claim, damage or
expense (including the reasonable cost of investigating or defending any
alleged loss, liability, claim, damage or expenses and reasonable counsel fees
incurred in connection therewith) arising out of its activities as a
Distributor to the Fund or the Portfolios, provided, however, that nothing
herein shall be deemed to protect the Distributor or any director, officer, or
employee thereof against any liability to the Fund or its stockholders, to
which the Distributor or any director, officer, or employee thereof would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement.
9. Limitation of Liability. Subject to Section 36 of the Act, the Distributor,
and the directors, officers and employees of the Distributor, shall not be
liable to the Fund or the Portfolios for any error of judgment or mistake of
law or for any loss arising out of the performance or non-performance of
duties under this Agreement, except for willful misfeasance, bad faith or
gross negligence in the performance of, or by reason of reckless disregard of,
obligations and duties under this Agreement.
10. Term of Agreement. This Agreement shall continue in effect with respect to
the Portfolios for a period of more than two years from the date hereof only
so long as such continuance is specifically approved at least annually in
conformity with the requirements of the Act; provided, however, that this
Agreement may be terminated at any time, without the payment of any penalty,
by the Fund on behalf of any Portfolio, by the Board of Directors of the Fund
or, with respect to any Portfolio, by vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Portfolio, or by the
Distributor, on not more than 60 days' nor less than 30 days' written notice
to the other party.
11. Miscellaneous. This Agreement may be amended by mutual written consent.
This Agreement contains the entire agreement between the parties hereto and
supersedes all prior agreements, understandings and arrangements with respect
to the subject matter hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Anything
herein to the contrary notwithstanding, this Agreement shall not be construed
to require, or to impose any duty upon either of the parties, to do anything
in violation of any applicable laws or regulations. The Distributor may
perform the same services to the Fund on behalf of other Portfolios, and to
other persons or other entities, including other investment companies.
IN WITNESS WHEREOF, the Fund, on behalf of the Portfolios, and the Distributor
have caused this Agreement to be executed by their duly authorized officers as
of the date first above written.
SANFORD C. BERNSTEIN & CO., INC.
By: Lewis A. Sanders, Chairman
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson, Senior Vice President
<PAGE>
Exhibit 8(a) Custodian Contract with State Street Bank and Trust Company
CUSTODIAN CONTRACT Between
SANFORD C. BERNSTEIN FUND, INC.
and STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
1. Employment of Custodian and Property to be Held By It
2. Duties of the Custodian with Respect to Property of the Fund
Held by the Custodian
2.1 Holding Securities
2.2 Delivery of Securities
2.3 Registration of Securities
2.4 Bank Accounts
2.5 Payments for Shares
2.6 Availability of Federal Funds
2.7 Collection of Income
2.8 Payment of Fund Monies
2.9 Liability for Payment in Advance of Receipt of Securities Purchased
2.10 Payments for Repurchase or Redemptions of Shares of the Fund
2.11 Appointment of Agents
2.12 Deposit of Fund Assets in Securities System
2.12A Fund Assets Held in the Custodian's Direct Paper System
2.13 Segregated Account
2.14 Ownership of Certificates for Tax Purposes
2.15 Proxies
2.16 Communications Relating to Portfolio Securities
2.17 Proper Instructions
2.18 Actions Permitted Without Express Authority
2.19 Evidence of Authority
3. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
4. Records
5. Opinion of Fund's Independent Accountant
6. Reports to Fund by Independent Public Accountants
7. Compensation of Custodian
8. Responsibility of Custodian
9. Effective Period, Termination and Amendment
10. Successor Custodian
11. Interpretive and Additional Provisions
12. Additional Funds
13. Massachusetts Law to Apply
14. Prior Contracts
CUSTODIAN CONTRACT
This Contract between Sanford C. Bernstein Fund, Inc., a corporation organized
and existing under the laws of Maryland, having its principal place of
business at 767 Fifth Avenue, New York, New York 10153 hereinafter called the
"Fund", and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street,
Boston, Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in
<PAGE>
a separate portfolio of securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in five series, the
Bernstein Government Short Duration Portfolio, Bernstein Short Duration Plus
Portfolio, Bernstein New York Municipal Portfolio, Bernstein Diversified
Municipal Portfolio, and Bernstein Intermediate Duration Portfolio (such
series together with all other series subsequently established by the Fund and
made subject to this Contract in accordance with paragraph 12, being herein
referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It. The Fund hereby
employs the Custodian as the custodian of the assets of the Portfolios of the
Fund. The Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of
income, payments of principal or capital distributions received by it with
respect to all securities owned by the Portfolio(s) from time to time, and the
cash consideration received by it for such new or treasury shares of common
stock of the Fund representing interests in the Portfolios, ("Shares") as may
be issued or sold from time to time. The Custodian shall not be responsible
for any property of a Portfolio held or received by the Portfolio and not
delivered to the Custodian. Upon receipt of "Proper Instructions" (within the
meaning of Section 2.17), the Custodian shall on behalf of the applicable
Portfolio(s) from time to time employ one or more sub-custodians, but only in
accordance with an applicable vote by the Board of Directors of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian.
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian.
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Portfolio all non-cash property, including all securities
owned by such Portfolio, other than (a) securities which are maintained
pursuant to Section 2.12 in a clearing agency which acts as a securities
depository or in a book-entry system authorized by the U.S. Department of the
Treasury, collectively referred to herein as "Securities System" and (b)
commercial paper of an issuer for which State Street Bank and Trust Company
acts as issuing and paying agent ("Direct Paper") which is deposited and/or
maintained in the Direct Paper System of the Custodian pursuant to Section
2.12A.
2.2 Delivery of Securities. The Custodian shall release and deliver securities
owned by a Portfolio held by the Custodian or in a Securities System account
of the Custodian or in the Custodian's Direct Paper book entry system account
("Direct Paper System Account") only upon receipt of Proper Instructions from
the Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, and only in the following
cases:
1) Upon sale of such securities for the account of the Portfolio and receipt
of payment therefor;
2) Upon the receipt of payment in connection with any repurchase agreement
related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a Securities System, in accordance
with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender or other similar offers
for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any such
case, the cash or other consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of the
Portfolio or into the name of any nominee or nominees of the Custodian or into
the name or nominee name of any agent appointed pursuant to Section 2.11 or
<PAGE>
into the name or nominee name of any sub-custodian appointed pursuant to
Article 1; or for exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be delivered to the
Custodian;
7) Upon the sale of such securities for the account of the Portfolio, to the
broker or its clearing agent, against a receipt, for examination in accordance
with "street delivery" custom; provided that in any such case, the Custodian
shall have no responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such securities
except as may arise from the Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger, consolidation,
recapitalization, reorganization or readjustment of the securities of the
issuer of such securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement; provided that, in
any such case, the new securities and cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities or the
surrender of interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new securities and cash, if
any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the
Portfolio, but only against receipt of adequate collateral as agreed upon from
time to time by the Custodian and the Fund on behalf of the Portfolio, which
may be in the form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in connection with
any loans for which collateral is to be credited to the Custodian's account in
the book-entry system authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the delivery of
securities owned by the Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the Fund on
behalf of the Portfolio requiring a pledge of assets by the Fund on behalf of
the Portfolio, but only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among the
Fund on behalf of the Portfolio, the Custodian and a broker-dealer registered
under the Securities Exchange Act of 1934 (the "Exchange Act") and a member of
the National Association of Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement among the
Fund on behalf of the Portfolio, the Custodian, and a Futures Commission
Merchant registered under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations, regarding account
deposits in connection with transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer Agent")
for the Fund, for delivery to such Transfer Agent or to the holders of shares
in connection with distributions in kind, as may be described from time to
time in the currently effective prospectus and statement of additional
information of the Fund, related to the Portfolio ("Prospectus"), in
satisfaction of requests by holders of Shares for repurchase or redemption;
and
15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the applicable
Portfolio, a certified copy of a resolution of the Board of Directors or of
the Executive Committee signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, specifying the securities of the
Portfolio to be delivered, setting forth the purpose for which such delivery
is to be made, declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of such securities shall be
made.
2.3 Registration of Securities. Securities held by the Custodian (other than
bearer securities) shall be registered in the name of the Portfolio or in the
name of any nominee of the Fund on behalf of the Portfolio or of any nominee
of
<PAGE>
the Custodian which nominee shall be assigned exclusively to the Portfolio,
unless the Fund has authorized in writing the appointment of a nominee to be
used in common with other registered investment companies having the same
investment adviser as the Portfolio, or in the name or nominee name of any agent
appointed pursuant to Section 2.11 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All securities accepted by the
Custodian on behalf of the Portfolio under the terms of this Contract shall be
in "street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of each Portfolio of the Fund, subject only to
draft or order by the Custodian acting pursuant to the terms of this Contract,
and shall hold in such account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of the Portfolio, other than
cash maintained by the Portfolio in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of 1940, as
amended. Funds held by the Custodian for a Portfolio may be deposited by it to
its credit as Custodian in the Banking Department of the Custodian or in such
other banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company shall be
qualified to act as a custodian under the Investment Company Act of 1940, as
amended and that each such bank or trust company and the funds to be deposited
with each such bank or trust company shall on behalf of each applicable
Portfolio be approved by vote of a majority of the Board of Directors of the
Fund. Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from the distributor for
the Shares or from the Transfer Agent of the Fund and deposit into the account
of the appropriate Portfolio such payments as are received for Shares of that
Portfolio issued or sold from time to time by the Fund. The Custodian will
provide timely notification to the Fund on behalf of each such Portfolio and
the Transfer Agent of any receipt by it of payments for Shares of such
Portfolio.
2.6 Availability of Federal Funds. The Custodian shall, upon the receipt of
Proper Instructions from the Fund on behalf of a Portfolio, make federal funds
available to such Portfolio as of specified times agreed upon from time to
time by the Fund and the Custodian in the amount of checks received in payment
for Shares of such Portfolio which are deposited into the Portfolio's account.
2.7 Collection of Income. The Custodian shall collect on a timely basis all
income and other payments with respect to registered securities held hereunder
to which each Portfolio shall be entitled either by law or pursuant to custom
in the securities business, and shall collect on a timely basis all income and
other payments with respect to bearer securities if, on the date of payment by
the issuer, such securities are held by the Custodian or its agent thereof and
shall credit such income, as collected, to such Portfolio's custodian account.
Without limiting the generality of the foregoing, the Custodian shall detach
and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when due
on securities held hereunder. Income due each Portfolio on securities loaned
pursuant to the provisions of Section 2.2 (10) shall be the responsibility of
the Fund. The Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or data as may
be necessary to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Portfolio is properly entitled.
2.8 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing instructions
when deemed appropriate by the parties, the Custodian shall pay out monies of
a Portfolio in the following cases only:
1) Upon the purchase of securities, options, futures contracts or options on
futures contracts for the account of the Portfolio but only (a) against the
delivery of such securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or any bank,
banking firm or trust company doing business in the United States or abroad
which is qualified under the Investment Company Act of 1940, as amended, to
act as a custodian and has been designated by the Custodian as its agent for
this purpose) registered in the name of the Portfolio or in the name of a
nominee of the Custodian referred to in Section 2.3 hereof or in proper form
for transfer; (b) in the case of a purchase effected through a Securities
System, in accordance with the conditions set forth in Section 2.12 hereof;
(c) in the case of a purchase involving the Direct Paper System, in accordance
with the
<PAGE>
conditions set forth in Section 2.12A; (d) in the case of repurchase agreements
entered into between the Fund on behalf of the Portfolio and the Custodian, or
another bank, or a broker-dealer which is a member of the NASD, (i) against
delivery of the securities either in certificate form or through an entry
crediting the Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing purchase by the
Portfolio of securities owned by the Custodian along with written evidence of
the agreement by the Custodian to repurchase such securities from the Portfolio
or (e) for transfer to a time deposit account of the Fund in any bank, whether
domestic or foreign; such transfer may be effected prior to receipt of a
confirmation from a broker and/or the applicable bank pursuant to Proper
Instructions from the Fund as defined in Section 2.17;
2) In connection with conversion, exchange or surrender of securities owned by
the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio as set
forth in Section 2.10 hereof;
4) For the payment of any expense or liability incurred by the Portfolio,
including but not limited to the following payments for the account of the
Portfolio: interest, taxes, management, accounting, transfer agent and legal
fees, and operating expenses of the Fund whether or not such expenses are to
be in whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio declared
pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of securities
sold short;
7) For any other proper purpose, but only upon receipt of, in addition to
Proper Instructions from the Fund on behalf of the Portfolio, a certified copy
of a resolution of the Board of Directors or of the Executive Committee of the
Fund signed by an officer of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose to be a
proper purpose, and naming the person or persons to whom such payment is to be
made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and every
case where payment for purchase of securities for the account of a Portfolio
is made by the Custodian in advance of receipt of the securities purchased in
the absence of specific written instructions from the Fund on behalf of such
Portfolio to so pay in advance, the Custodian shall be absolutely liable to
the Fund for such securities to the same extent as if the securities had been
received by the Custodian.
2.10 Payments for Repurchases or Redemptions of Shares of the Fund. From such
funds as may be available for the purpose but subject to the limitations of
any applicable votes of the Board of Directors of the Fund pursuant thereto,
the Custodian shall, upon receipt of instructions from the Transfer Agent,
make funds available for payment to holders of Shares who have delivered to
the Transfer Agent a request for redemption or repurchase of their Shares. In
connection with the redemption or repurchase of Shares of a Portfolio, the
Custodian is authorized upon receipt of instructions from the Transfer Agent
to wire funds to or through a commercial bank designated by the redeeming
shareholders. In connection with the redemption or repurchase of Shares of the
Fund, the Custodian shall honor checks drawn on the Custodian by a holder of
Shares, which checks have been furnished by the Fund to the holder of Shares,
when presented to the Custodian in accordance with such procedures and
controls as are mutually agreed upon from time to time between the Fund and
the Custodian.
2.11 Appointment of Agents. The Custodian may at any time or times appoint
(and may at any time remove) any other bank or trust company which is itself
qualified under the Investment Company Act of 1940, as amended, to act as a
custodian, as its agent to carry out such of the provisions of this Article 2
as the Custodian may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder. Such appointment shall not be made
without written prior approval of the Fund.
2.12 Deposit of Fund Assets in Securities Systems. The Custodian may deposit
and/or maintain securities owned by
<PAGE>
a Portfolio in a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934, as amended,
which acts as a securities depository, or in the book-entry system authorized by
the U.S. Department of the Treasury and certain federal agencies, collectively
referred to herein as "Securities System" in accordance with applicable Federal
Reserve Board and Securities and Exchange Commission rules and regulations, if
any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a Securities System
provided that such securities are represented in an account ("Account") of the
Custodian in the Securities System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to securities of the Portfolio
which are maintained in a Securities System shall identify by book-entry those
securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the account of the
Portfolio upon (i) receipt of advice from the Securities System that such
securities have been transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such payment and transfer for
the account of the Portfolio. The Custodian shall transfer securities sold for
the account of the Portfolio upon (i) receipt of advice from the Securities
System that payment for such securities has been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian to reflect
such transfer and payment for the account of the Portfolio. Copies of all
advices from the Securities System of transfers of securities for the account
of the Portfolio shall identify the Portfolio, be maintained for the Portfolio
by the Custodian and be provided to the Fund at its request. Upon request, the
Custodian shall furnish the Fund on behalf of the Portfolio confirmation of
each transfer to or from the account of the Portfolio in the form of a written
advice or notice and shall furnish to the Fund on behalf of the Portfolio
copies of daily transaction sheets reflecting each day's transactions in the
Securities System for the account of the Portfolio.
4) The Custodian shall provide the Fund for the Portfolio with any report
obtained by the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding securities
deposited in the Securities System;
5) The Custodian shall have received from the Fund on behalf of the Portfolio
the initial or annual certificate, as the case may be, required by Article 9
hereof;
6) Anything to the contrary in this Contract notwithstanding, the Custodian
shall be liable to the Fund for the benefit of the Portfolio for any loss or
damage to any Portfolio resulting from use of the Securities System by reason
of any negligence, misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of the Custodian or
any such agent to enforce effectively such rights as it may have against the
Securities System; at the election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with respect to any claim against
the Securities System or any other person which the Custodian may have as a
consequence of any such loss or damage if and to the extent that the Portfolio
has not been made whole for any such loss or damage.
2.12A Fund Assets Held in the Custodian's Direct Paper System. The Custodian
may deposit and/or maintain securities owned by a Portfolio in the Direct
Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will be
effected in the absence of Proper Instructions from the Fund on behalf of the
Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct Paper
System only if such securities are represented in an account ("Account") of
the Custodian in the Direct Paper System which shall not include any assets of
the Custodian other than assets held as a fiduciary, custodian or otherwise
for customers;
3) The records of the Custodian with respect to securities of the Portfolio
which are maintained in the Direct Paper System shall identify by book-entry
those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of the
Portfolio upon the making of an entry on
<PAGE>
the records of the Custodian to reflect such payment and transfer of securities
to the account of the Portfolio. The Custodian shall transfer securities sold
for the account of the Portfolio upon the making of an entry on the records of
the Custodian to reflect such transfer and receipt of payment for the account of
the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the Portfolio, in the
form of a written advice or notice, of Direct Paper on the next business day
following such transfer and shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets reflecting each day's transaction
in the Securities System for the account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio with any
report on its system of internal accounting control as the Fund may reasonably
request from time to time.
2.13 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio establish
and maintain a segregated account or accounts for and on behalf of each such
Portfolio, into which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by the Custodian
pursuant to Section 2.12 hereof, (i) in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Exchange Act and a member of the NASD (or
any futures commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing Corporation and
of any registered national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Portfolio, (ii) for purposes of
segregating cash or securities in connection with options purchased, sold or
written by the Portfolio or commodity futures contracts or options thereon
purchased or sold by the Portfolio, (iii) for the purposes of compliance by
the Portfolio with the procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate purposes,
but only, in the case of clause (iv), upon receipt of, in addition to Proper
Instructions from the Fund on behalf of the applicable Portfolio, a certified
copy of a resolution of the Board of Directors or of the Executive Committee
signed by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate purposes.
2.14 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state tax
purposes in connection with receipt of income or other payments with respect
to securities of each Portfolio held by it and in connection with transfers of
securities.
2.15 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of the
Portfolio or a nominee of the Portfolio, all proxies, without indication of
the manner in which such proxies are to be voted, and shall promptly deliver
to the Portfolio such proxies, all proxy soliciting materials and all notices
relating to such securities.
2.16 Communications Relating to Portfolio Securities. The Custodian shall
transmit promptly to the Fund for each Portfolio all written information
(including, without limitation, pendency of calls and maturities of securities
and expirations of rights in connection therewith and notices of exercise of
call and put options written by the Fund on behalf of the Portfolio and the
maturity of futures contracts purchased or sold by the Portfolio) received by
the Custodian from issuers of the securities being held for the Portfolio.
With respect to tender or exchange offers, the Custodian shall transmit
promptly to the Portfolio all written information received by the Custodian
from issuers of the securities whose tender or exchange is sought and from the
party (or his agents) making the tender or exchange offer. If the Portfolio
desires to take action with respect to any tender offer, exchange offer or any
other similar transaction, the Portfolio shall notify the Custodian at least
three business days prior to the date on which the Custodian is to take such
action.
2.17 Proper Instructions. Proper Instructions as used throughout this Article
2 means a writing signed or initialed by one or more person or persons as the
Board of Directors shall have from time to time authorized. Each such writing
shall set forth the specific transaction or type of transaction involved,
including a specific statement of the purpose
<PAGE>
for which such action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in writing.
Upon receipt of a certificate of the Secretary or an Assistant Secretary as to
the authorization by the Board of Directors of the Fund accompanied by a
detailed description of procedures approved by the Board of Directors, Proper
Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board of Directors
and the Custodian are satisfied that such procedures afford adequate safeguards
for the Portfolios' assets. For purposes of this Section, Proper Instructions
shall include instructions received by the Custodian pursuant to any three-party
agreement which requires a segregated asset account in accordance with Section
2.13.
2.18 Actions Permitted without Express Authority. The Custodian may in its
discretion, without express authority from the Fund on behalf of each
applicable Portfolio:
1) make payments to itself or others for minor expenses of handling securities
or other similar items relating to its duties under this Contract, provided
that all such payments shall be accounted for to the Fund on behalf of the
Portfolio;
2) surrender securities in temporary form for securities in definitive form;
3) endorse for collection, in the name of the Portfolio, checks, drafts and
other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with the
sale, exchange, substitution, purchase, transfer and other dealings with the
securities and property of the Portfolio except as otherwise directed by the
Board of Directors of the Fund.
2.19 Evidence of Authority. The Custodian shall be protected in acting upon
any instructions, notice, request, consent, certificate or other instrument or
paper believed by it to be genuine and to have been properly executed by or on
behalf of the Fund. The Custodian may receive and accept a certified copy of a
vote of the Board of Directors of the Fund as conclusive evidence (a) of the
authority of any person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Directors as described in such
vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
3. Duties of Custodian with Respect to the Books of Account and Calculation of
Net Asset Value and Net Income. The Custodian shall cooperate with and supply
necessary information to the entity or entities appointed by the Board of
Directors of the Fund to keep the books of account of each Portfolio and/or
compute the net asset value per share of the outstanding shares of each
Portfolio or, if directed in writing to do so by the Fund on behalf of the
Portfolio, shall itself keep such books of account and/or compute such net
asset value per share. If so directed, the Custodian shall also calculate
daily the net income of the Portfolio as described in the Fund's Prospectus
related to such Portfolio and shall advise the Fund and the Transfer Agent
daily of the total amounts of such net income and, if instructed in writing by
an officer of the Fund to do so, shall advise the Transfer Agent periodically
of the division of such net income among its various components. The
calculations of the net asset value per share and the daily income of each
Portfolio shall be made at the time or times described from time to time in
the Fund's Prospectus related to such Portfolio. If directed in writing to do
so by the Fund on behalf of the Portfolio, the Custodian will provide
automated securities pricing services from sources specified by the Fund for
fees as may be agreed upon from time to time by the Custodian and the Fund,
provided that the Custodian shall not be responsible for the accuracy of the
quotations provided by the sources but that the Custodian will, with the best
of its ability, determine their accuracy by performing reasonability tests
using the tolerance ranges and indices requested.
4. Records. The Custodian shall with respect to each Portfolio create and
maintain all records relating to its activities and obligations under this
Contract in such manner as will meet the obligations of the Fund under the
Investment Company Act of 1940, as amended, with particular attention to
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder, applicable federal
and state tax laws and any other law or administrative rules or procedures
which may be applicable to the Fund. All such records shall be the property of
the Fund and shall at all times during the regular business hours of the
Custodian be open for inspection by duly authorized officers, employees or
agents of the Fund and employees and agents of the Securities and Exchange
Commission. The Custodian shall, at the
<PAGE>
Fund's request, supply the Fund with a tabulation of securities owned by each
Portfolio and held by the Custodian and shall, when requested to do so by the
Fund and for such compensation as shall be agreed upon between the Fund and the
Custodian, include certificate numbers in such tabulations.
5. Opinion of Fund's Independent Accountant. The Custodian shall take all
reasonable action, as the Fund on behalf of each applicable Portfolio may from
time to time request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities hereunder in
connection with the preparation of the Fund's Form N-1A, and Form N-SAR (or
any successory form as the Securities and Exchange Commission may, from time
to time, adopt) and other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
6. Reports to Fund by Independent Public Accountants. The Custodian shall
provide the Fund, on behalf of each of the Portfolios at such times as the
Fund may reasonably require, with reports by independent public accountants on
the accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures contracts,
including securities deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian under this Contract; such
reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there
are no such inadequacies, the reports shall so state.
7. Compensation of Custodian. The Custodian shall be entitled to reasonable
compensation for its services and expenses as Custodian, as agreed upon from
time to time between the Fund on behalf of each applicable Portfolio and the
Custodian.
8. Responsibility of Custodian. So long as and to the extent that it is in the
exercise of reasonable care, the Custodian shall not be responsible for the
title, validity or genuineness of any property or evidence of title thereto
received by it or delivered by it pursuant to this Contract and shall be held
harmless in acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed by the
proper party or parties, including any futures commission merchant acting
pursuant to the terms of a three-party futures or options agreement. The
Custodian shall be held to the exercise of reasonable care in carrying out the
provisions of this Contract, but shall be kept indemnified by and shall be
without liability to the Fund for any action taken or omitted by it in good
faith without negligence. It shall be entitled to rely on and may act upon
advice of counsel for material legal matters and such counsel shall be subject
to reasonable approval of the Fund on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such advice.
Notwithstanding the foregoing, the responsibility of the Custodian with
respect to redemptions effected by check shall be in accordance with the
Transfer Agency Agreement entered into between the Custodian and the Fund.
If the Fund on behalf of a Portfolio requires the Custodian to take any action
with respect to securities, which action involves the payment of money (other
than for the payment for securities with Fund monies, Custodian fees and
compensation) or which action may, in the opinion of the Custodian, result in
the Custodian or its nominee assigned to the Fund or the Portfolio being
liable for the payment of money or incurring liability of some other form, the
Fund on behalf of the Portfolio, as a prerequisite to requiring the Custodian
to take such action, shall provide indemnity to the Custodian in an amount and
form satisfactory to it.
If the Fund requires the Custodian to advance cash or securities for any
purpose for the benefit of a Portfolio or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct, any property at any
time held for the account of the applicable Portfolio shall be security
therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
9. Effective Period, Termination and Amendment. This Contract shall become
effective as of its execution, shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by the Fund by an
instrument in writing delivered or mailed, postage prepaid to the other party,
such termination to take effect not sooner than sixty (60) days after the date
of
<PAGE>
such delivery or mailing and by the Custodian by an instrument in writing
delivered or mailed postage prepaid to the other party, such termination to take
effect not sooner than one hundred twenty (120) days after the date of each
delivery or mailing; provided, however that the Custodian shall not with respect
to a Portfolio act under Section 2.12 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant Secretary that the Board of
Directors of the Fund has approved the initial use of a particular Securities
System by such Portfolio and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of Directors has reviewed the
use by such Portfolio of such Securities System, as required in each case by
Rule 17f-4 under the Investment Company Act of 1940, as amended and that the
Custodian shall not with respect to a Portfolio act under Section 2.12A hereof
in the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Directors has approved the initial use of
the Direct Paper System by such Portfolio and the receipt of an annual
certificate of the Secretary or an Assistant Secretary that the Board of
Directors has reviewed the use by such Portfolio of the Direct Paper System;
provided further, however, that the Fund shall not amend or terminate this
Contract in contravention of any applicable federal or state regulations, and
further provided, that the Fund on behalf of one or more of the Portfolios may
at any time by action of its Board of Directors (i) substitute another bank or
trust company for the Custodian by giving notice as described above to the
Custodian, or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the Comptroller of
the Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination. Should the Fund exercise its right to terminate, all
reasonable out-of-pocket expenses associated with the movement of records and
material will be borne by the Fund on behalf of the applicable Portfolio(s).
Should the Custodian exercise its right to terminate, all reasonable
out-of-pocket expenses associated with the movement of records and materials
will be borne by the Custodian.
10. Successor Custodian. If a successor custodian for the Fund, of one or more
of the Portfolios shall be appointed by the Board of Directors of the Fund,
the Custodian shall, upon termination, deliver to such successor custodian at
the office of the Custodian, duly endorsed and in the form for transfer, all
securities of each applicable Portfolio then held by it hereunder and shall
transfer to an account of the successor custodian all of the securities, funds
and other property of each such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian and transfer
such securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered
to the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or
trust company, which is a "bank" as defined in the Investment Company Act of
1940, as amended, doing business in Boston, Massachusetts, of its own
selection, having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $250,000,000, all
securities, funds and other properties held by the Custodian on behalf of each
applicable Portfolio and all instruments held by the Custodian relative
thereto and all other property held by it under this Contract on behalf of
each applicable Portfolio and to transfer to an account of such successor
custodian all of the securities of each such Portfolio held in any Securities
System. Thereafter, such bank company shall be the successor of the Custodian
under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or
of the Board of Directors to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services during such period as
the Custodian retains possession of such securities, funds and other
properties and the provisions of this Contract relating to the duties and
obligations of the Custodian shall remain in full force and effect.
11. Interpretive and Additional Provisions. In connection with the operation of
this Contract, the Custodian and the Fund on behalf of Bernstein Government
Short Duration Portfolio, Bernstein Short Duration Plus Portfolio,
<PAGE>
Bernstein New York Municipal Portfolio, Bernstein Diversified Municipal
Portfolio, and Bernstein Intermediate Duration Portfolio, may from time to time
agree on such provisions interpretive of or in addition to the provisions of
this Contract as may in their joint opinion be consistent with the general tenor
of this Contract. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations. No interpretive or additional provisions made as
provided in the preceding sentence shall be deemed to be an amendment of this
Contract.
12. Additional Funds. In the event that the Fund establishes one or more
series of Shares in addition to Bernstein Government Short Duration Portfolio,
Bernstein Short Duration Plus Portfolio, Bernstein New York Municipal
Portfolio, Bernstein Diversified Municipal Portfolio, and Bernstein
Intermediate Duration Portfolio with respect to which it desires to have the
Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio
hereunder.
13. Massachusetts Law to Apply. This Contract shall be construed and the
provisions thereof interpreted under and in accordance with laws of The
Commonwealth of Massachusetts.
14. Prior Contracts. This Contract supersedes and terminates, as of the date
hereof, all prior contracts between the Fund on behalf of each of the
Portfolios and the Custodian relating to the custody of the Fund's assets.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 12th day of October, 1988.
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson, Senior Vice President
ATTEST:
Sarah J. Sturtevant, Secretary
STATE STREET BANK AND TRUST COMPANY
By: (Illegible), Vice President
ATTEST:
A. Siegel, Assistant Secretary
<PAGE>
Exhibit 8(d) - First Amendment to Custodian Contract
AMENDMENT TO THE CUSTODIAN CONTRACT
AGREEMENT made by and between State Street Bank and Trust Company (the
"Custodian") and the Sanford C. Bernstein Fund, Inc. (the "Fund"), on behalf
of the Portfolios listed in Schedule B (the "Portfolio(s)").
WHEREAS, the Custodian and the Fund are parties to a custodian contract dated
October 12, 1988 (the "Custodian Contract") governing the terms and conditions
under which the Custodian maintains custody of the securities and other assets
of the Portfolios of the Fund; and
WHEREAS, the Custodian and the Fund desire to amend the Custodian Contract to
provide for the maintenance of the Portfolios' foreign securities, cash and
cash equivalents incidental to transactions in such securities, in the custody
of certain foreign banking institutions and foreign securities depositories
acting as sub-custodians in conformity with the requirements of Rule 17f-5
under the Investment Company Act of 1940;
NOW THEREFORE, in consideration of the premises and contained herein, the
Custodian and the Fund hereby amend the Custodian Contract by the addition of
the following terms and conditions;
1. Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolios'
securities and other assets maintained outside the United States the foreign
banking institutions and foreign securities depositories designated on
Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper
Instructions", as defined in Section 2.17 of the Custodian Contract, together
with a certified resolution of the Fund's Board of Directors, the Custodian
and the Fund may agree to amend Schedule A hereto from time to time to
designate additional foreign banking institutions and foreign securities
depositories to act as sub-custodian. Upon receipt of Proper Instructions, the
Fund may instruct the Custodian to cease the employment of any one or more of
such sub-custodians for maintaining custody of the Portfolios' assets.
2. Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(l) of Rule 17f-5 under the
Investment Company Act of 1940, and (b) cash and cash equivalents in such
amounts as the Custodian or the Fund may determine to be reasonably necessary
to effect each Portfolio's foreign securities transactions.
3. Segregation of Securities. The Custodian shall identify on its books as
belonging to each Portfolio, the foreign securities of the Portfolio held by
each foreign sub-custodian. Each agreement pursuant to which the Custodian
employs a foreign banking institution shall require that such institution
establish a custody account for the Custodian on behalf of the Portfolio and
physically segregate in that account, securities and other assets of the
Portfolio.
4. Agreements with Foreign Banking Institutions. Each agreement with a foreign
banking institution approved by the Fund as a sub-custodian shall provide
that: (a) the Fund's assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking
institution or its creditors or agents, except claim of payment for their safe
custody or administration; (b) beneficial ownership for the Fund's assets will
be freely transferable without the payment of money or value other than for
custody or administration; (c) adequate records will be maintained identifying
the assets as belonging to the Fund; (d) officers of or auditors employed by,
or other representatives of the Custodian, including to the extent permitted
under applicable law the independent public accountants for the Fund, will be
given access to the books and records of the foreign banking institution
relating to its actions under its agreement with the Custodian; and (e) assets
of the Fund held by the foreign sub-custodian will be
<PAGE>
subject only to the instructions of the Custodian or its agents.
5. Access of Independent Accountants of the Fund. Upon request of the Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of any
foreign banking institution employed as a foreign sub-custodian insofar as
such books and records relate to the performance of such foreign banking
institution under its agreement with the Custodian.
6. Reports by Custodian. The Custodian will supply to the Fund at such times
reasonably requested by the Fund, statements in respect of the securities and
other assets of each Portfolio held by foreign sub-custodians, including but
not limited to an identification of entities having possession of the
Portfolio's securities and other assets and advices or notifications of any
transfers of securities to or from each custodial account maintained by a
foreign banking institution for the Custodian on behalf of the Portfolio
indicating, as to securities acquired for the Portfolio, the identity of the
entity having physical possession of such securities.
7. Transactions in Foreign Custody Account. (a) Except as otherwise provided
in paragraph (b) of this Section 8, the provisions of Sections 2.2 and 2.8 of
the Custodian Contract shall apply, mutatis mutandis (i.e., with the necessary
changes in point of detail) to the foreign securities of the Portfolios held
outside the United States by foreign sub-custodians.
(b) Notwithstanding any provision of the Custodian Contract to the contrary,
settlement and payment for securities received for the account of the
Portfolios and delivery of securities maintained for the account of the
Portfolios may be effected in accordance with the customary established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such purchaser
or dealer.
(c) Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as set
forth in Section 2.3 of the Custodian Contract and the Fund agrees to hold any
such nominee harmless to the same extent as provided in paragraph 8 of the
contract between the Custodian and the Fund.
8. Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the performance
of its duties and to indemnify, and hold harmless, the Custodian and each
Portfolio from and against any loss, damage, cost, expense, liability or claim
arising out of or in connection with the institution's performance of such
obligations. At the election of the Fund on behalf of any Portfolio, it shall
be entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any such
loss, damage, cost, expense, liability or claim if and to the extent that any
Portfolio has not been made whole for any such loss, damage, cost, expense,
liability or claim.
9. Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign custodian to the same extent as set forth with respect
to sub-custodians generally in the Custodian Contract and, regardless of
whether assets are maintained in the custody of a foreign banking institution,
a foreign securities depository or a branch of a U.S. bank as contemplated by
paragraph 13 hereof, the Custodian shall not be liable for any loss, damage,
cost, expense, liability or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war or terrorism or any loss
where the sub-custodian has otherwise exercised reasonable care.
Notwithstanding the foregoing provisions of this paragraph 10, in delegating
custody duties to State Street London Limited, the Custodian shall not be
relieved of any responsibility to any Portfolio for any loss due to such
delegation, except such loss as may result from (a) political risk, exchange
control restrictions, confiscation, expropriation, nationalization,
insurrection, civil
<PAGE>
strife or armed hostilities or (b) other losses (excluding a bankruptcy or
insolvency of State Street London Limited not caused by political risk) due to
Acts of God, nuclear incident or other losses under circumstances where the
Custodian and State Street London Limited have exercised reasonable care.
10. Reimbursement for Advances. If the Fund on behalf of a Portfolio requires
the Custodian to advance cash or securities for any purpose including the
purchase or sale of foreign exchange or of contracts for foreign exchange, or
in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection
with the performance of this Contract, except such as may arise from its or
its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall be
security therefor and should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to dispose of
the Fund assets to the extent necessary to obtain reimbursement up to the
amount of the Portfolio's individual assets.
11. Monitoring Responsibilities. The Custodian shall furnish annually to the
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian on behalf of the Fund. Such
information shall be similar in kind and scope to that furnished to the Fund
in connection with the initial approval of this amendment to the Custodian
Contract. It shall include the Custodian's current contract with each such
foreign sub-custodian, updated financial and other information about such
foreign sub-custodians, updated legal opinions regarding applicable foreign
law governing such foreign sub-custodians, and State Street's current foreign
sub-custodian selection criteria and operating procedures. In addition, the
Custodian will promptly inform the Fund in the event that the Custodian learns
of a material adverse change in the financial condition of a foreign
sub-custodian or any loss of the assets of the Portfolio or in the case of any
foreign sub-custodian not the subject of an exemptive order from the
Securities and Exchange Commission is notified by such foreign sub-custodian
that there appears to be a substantial likelihood that its shareholders'
equity will decline below $200 million (U.S. dollars or the equivalent
thereof) or that its shareholders' equity has declined below $200 million (in
each case computed in accordance with generally accepted U.S. accounting
principles). In addition the Custodian will promptly inform the Fund of any
material amendment in the terms of the Custodian's Contract with an approved
foreign sub-custodian.
12. Branches of U.S. Banks. (a) Except as otherwise set forth in this
amendment to the Custodian Contract, the provisions hereof shall not apply
where the custody of the Fund assets is maintained in a foreign branch of a
banking institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in Section
26(a) of said Act. The appointment of any such branch as a sub-custodian shall
be governed by paragraph 1 of the Custodian Contract.
(b) Cash held for a Portfolio in the United Kingdom shall be maintained in an
interest bearing account established for the Portfolio with the Custodian's
London Branch, which account shall be subject to the direction of the
Custodian, State Street London Limited or both.
13. Applicability of Custodian Contract. Except as specifically superseded or
modified herein, the terms and provisions of the Custodian Contract shall
continue to apply with full force and effect. The Custodian will receive no
additional compensation for its services under this amendment to the Custodian
Contract other than that provided in the Custodian fee schedule as agreed to
from time to time.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 8th day of May, 1989.
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson, Senior Vice President
ATTEST:
<PAGE>
Jean Margo Reid
STATE STREET BANK AND TRUST COMPANY
By: Thomas E. Swedlund, Vice President
ATTEST:
(Illegible) Assistant Secretary
Schedule A
The following foreign banking institutions and foreign securities depositories
have been approved by the Board of Directors of the Sanford C. Bernstein Fund,
Inc. for use as sub-custodians for the Fund's securities and other assets.
State Street London Limited
Euro-clear Clearance System Societe Cooperative
Schedule B
Bernstein Government Short Duration Portfolio
Bernstein Short Duration Plus Portfolio
Bernstein Intermediate Duration Portfolio
Bernstein New York Municipal Portfolio
Bernstein Diversified Municipal Portfolio
<PAGE>
Exhibit 8(e) - Second Amendment to Custodian Contract
SECOND AMENDMENT
TO THE CUSTODIAN CONTRACT
AGREEMENT made by and between State Street Bank and Trust Company (the
"Custodian") and the Sanford C. Bernstein Fund, Inc. (the "Fund"), on behalf of
the Portfolios listed in Schedule I (the "Portfolios").
WHEREAS the Custodian and the Fund are parties to a custodian contract
dated October 12, 1988 (the "Custodian Contract") as amended on May 8, 1989 (the
"Amendment to the Custodian Contract"); and
WHEREAS the Custodian and the Fund desire to further amend the Custodian
Contract to further provide for the maintenance of the Portfolios' foreign
securities in conformity with the requirements of Rule 17f-5 under the
Investment Company Act of 1940;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby further amend the Custodian Contract
by the addition of the following terms and conditions:
1. Assets of the Portfolios may be maintained in foreign securities depositories
designated on Schedule A to the Amendment to the Custodian Contract through
arrangements implemented by the foreign banking institutions serving as
subcustodians pursuant to the terms of the Amendment to the Custodian Contract.
State Street shall use its best efforts to have the foreign banking institutions
designated on Schedule A include in their arrangements with foreign securities
depositories the provisions set forth in section 4 of the Amendment to the
Custodian Contract.
2. Each agreement pursuant to which the Custodian employs a foreign banking
institution shall require that, in the event that the foreign banking
institution deposits the Portfolio's securities in a foreign securities
depository, that it shall identify on its books as belonging to the Custodian,
as agent for the Portfolio, the securities so deposited.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 24th day of July, 1989.
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson
ATTEST:
Jean Margo Reid
STATE STREET BANK AND TRUST COMPANY
By: Thomas E. Swedlund, Vice President
ATTEST:
(Illegible)
SCHEDULE I
Bernstein Government Short Duration Portfolio
Bernstein Short Duration Plus Portfolio
Bernstein Intermediate Duration Portfolio
Bernstein New York Municipal Portfolio
Bernstein Diversified Municipal Portfolio
<PAGE>
Exhibit 8(f) - Third Amendment to Custodian Contract
THIRD AMENDMENT TO THE CUSTODIAN CONTRACT
AGREEMENT made by and between State Street Bank and Trust Company (the
"Custodian") and the Sanford C. Bernstein Fund, Inc. (the "Fund").
WHEREAS the Custodian and the Fund are parties to a custodian contract
dated October 12, 1988, as amended to provide for foreign subcustodian
arrangements on May 8, 1989 and July 24, 1989 (the "Custodian Contract, as
amended"); and
WHEREAS the Custodian and Fund desire to amend the Custodian Contract by
adding the California Municipal Portfolio (the "Portfolio") to the list of
Portfolios on whose behalf the Custodian Contract, as amended, applies;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby agree as follows:
In accordance with paragraph 12 of the Custodian Contract, it is mutually
agreed that the Custodian shall render services under the Custodian Contract, as
amended, to an additional series of the Fund, the California Municipal
Portfolio.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 30th day of April, 1990.
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson
ATTEST:
Jean Margo Reid
STATE STREET BANK AND TRUST COMPANY
By: M. J. Hayes
ATTEST:
J. Riccuith
<PAGE>
Exhibit 8(h) - Fourth Amendment to Custodian Contract
FOURTH AMENDMENT TO THE CUSTODIAN CONTRACT
AGREEMENT made by and between State Street Bank and Trust Company (the
"Custodian") and the Sanford C. Bernstein Fund, Inc. (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated October 12, 1988, as amended on May 8, 1989 and July 24, 1989 to provide
for the maintenance of foreign securities, and April 30, 1990 to add the
California Municipal Portfolio (the "Custodian Contract, as amended"); and
WHEREAS, the Custodian and the Fund desire to further amend the Custodian
Contract by adding the Bernstein International Value Portfolio to the list of
Portfolios on whose behalf the Custodian Contract, as amended, applies and to
make certain other amendments;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby agree as follows:
1. In accordance with Paragraph 12 of the Custodian Contract, it is mutually
agreed that the Custodian shall render services under the Custodian Contract, as
amended, to an additional series of the Fund, the Bernstein International Value
Portfolio.
2. The following sentence in Paragraph 8 of the Custodian Contract is amended to
include the words indicated in bold letters:
The Custodian shall be held to the exercise of reasonable care in carrying
out the provisions of this Contract, (bolding begins) including but not limited
to the selection and monitoring of subcustodians in accordance with its
established standards, (bolding ends) but shall be kept indemnified by and shall
be without liability to the Fund for any action taken or omitted by it in good
faith without negligence.
3. The Fund hereby authorizes the Custodian to employ as subcustodians for the
securities and other assets of the Bernstein International Value Portfolio which
are maintained outside the United States the foreign banking institutions and
foreign securities depositories designated on Schedule A hereto in accordance
with the terms and provisions of the Custodian Contract, as amended to apply to
foreign custody.
4. Custodian agrees that each of its subcustodians holds the Fund's securities
in accordance with the terms of Custodian's individually negotiated contract and
operating standards. In Custodian's opinion, such contracts and operating
standards when taken together are at least equal to the level of protection
afforded similar securities held by Custodian in the United States.
5. Custodian agrees that the standard of care provided in the Custodian
Contract, as amended, as to the Custodian's responsibility for its or its
subcustodian's acts is equal to or greater than that of any of its custodian
contracts with domestic or global mutual funds; Custodian agrees that if, in the
future, it enters into a custodian contract with any mutual fund pursuant to
which it assumes a higher standard of care than provided in the Custodian
Contract, it shall promptly notify Client of the terms thereof and such terms
shall be subject to negotiation between the parties at that time.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 18th day of March, 1992.
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson
ATTEST:
<PAGE>
Jean Margo Reid
STATE STREET BANK AND TRUST COMPANY
By: Ronald E. Logue
ATTEST:
Lynn M. Mack
SCHEDULE A
Country Subcustodian(s)
- ----------------------------------------------------------------------------
Australia Bank: Australia and New Zealand Banking Group
Limited (ANZ)
Depository: Austraclear Limited
Austria Bank: Girozentrale und Bank der
oesterreichischen Sparkassen AG
(Girozentrale)
Austria Depository: Oesterreichische Kontrollbank AG
Belgium Bank: Banque Bruxelles Lambert (BBL)
Depository: Caisse Interprofessionelle de Depot et
de Virements de Titres (C.I.K.)
Canada Bank: Canada Trust Company (Canada Trust)
Depository: The Canadian Depository for Securities
Limited (CDS)
Denmark Bank: Den Danske Bank (Den Danske)
Depository: Vaerdipapircentralen (VP)
Finland Bank: Kansallis-Osake-Pankki (KOP)
France Bank: Credit Commercial De France (CCF)
Depository: Societe Interprofessionelle pour la
Compensation des Valeurs Mobilieres
(SICOVAM)
Germany Bank: Berliner Handels-und Frankfurter Bank (BHF)
Depository: The Deutscher Kassenverein AG
Hong Kong Bank: Standard Chartered Bank, Hong Kong
Italy Bank: Credito Italiano
Depository: Monte Titoli S.p.A.
Japan Bank: Sumitomo Trust & Banking Co., Ltd.
(Sumitomo)
Malaysia Bank: Standard Chartered Bank, Kuala Lumpur
Netherlands Bank: Bank Mees & Hope N.V. (BMH)
Depository: Necigef (Nederlands Centraal Instituut
voor Giraal Effectenverkeer B.V.)
New Zealand Bank: Westpac Banking Corporation (Westpac)
<PAGE>
Norway Bank: Christiania Bank OG Kreditkasse (Christiania)
Depository: The Norwegian Registry of
Securities Verdipapirsentralen (VPS)
Singapore Bank: The Development Bank of Singapore Ltd.
(DBS)
Spain Bank: Banco Hispano Americano (BHA)
Sweden Bank: Skandinaviska Enskilda Banken (SEB)
Depository: Vardepapperscentralen (VPC)
Switzerland Bank: Union Bank of Switzerland (UBS)
Depository: Schweizerische Effekten-Giro AG (SEGA)
United Kingdom Bank: State Street London Limited
Depository: The Central Gilts Office
General Depositories: Euroclear System (Euroclear)
Centrale de Livraison de Valeurs
Mobilieres S.A. (Cedel)
<PAGE>
Exhibit 8(j) - Fifth Amendment to Custodian Contract
FIFTH AMENDMENT TO THE CUSTODIAN CONTRACT
AGREEMENT made by and between State Street Bank and Trust Company (the
"Transfer Agent") and between the Sanford C. Bernstein Fund, Inc. (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated October 12, 1988 as amended on May 8, 1989 and July 24, 1989 to provide
for the maintenance of foreign securities, April 30, 1990 to add the California
Municipal Portfolio, and March 18, 1992 to add the Bernstein International Value
Portfolio (the "Custodian Contract, as amended"); and
WHEREAS, the Custodian and the Fund desire to further amend the Custodian
Contract by adding the Bernstein Short Duration California Municipal Portfolio,
the Bernstein Short Duration Diversified Municipal Portfolio, and the Bernstein
Short Duration New York Municipal Portfolio ("the Portfolios") to the list of
Portfolios on whose behalf the Custodian Contract, as amended, applies;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby agree as follows:
In accordance with Paragraph 12 of the Custodian Contract, it is mutually
agreed that the Custodian shall render services under the Custodian Contract, as
amended, to an additional series of the Fund, the Bernstein Short Duration
California Portfolio, the Bernstein Short Duration Diversified Municipal
Portfolio, and the Bernstein Short Duration New York Municipal Portfolio.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 19th day of April, 1994.
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson
ATTEST:
Jean Margo Reid
STATE STREET BANK AND TRUST COMPANY
By: (Illegible)
ATTEST:
Charles R. Whittemore, Jr.
<PAGE>
Exhibit 8(l) Sixth Amendment to Custodian Contract
SIXTH AMENDMENT TO THE CUSTODIAN CONTRACT
AGREEMENT made by and between State Street Bank and Trust Company (the
"Custodian") and the Sanford C. Bernstein Fund, Inc. (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated October 12, 1988, as amended May 8, 1989, July 24, 1989, April 30, 1990,
March 18, 1992, and April 19, 1994 (the "Custodian Contract, as amended"); and
WHEREAS, the Custodian and the Fund desire to amend the terms and conditions
under which the Custodian maintains the Fund's securities and other non-cash
property in the custody of certain foreign subcustodians in conformity with the
requirements of Rule 17f-5 under the Investment Company Act of 1940, as amended;
and
WHEREAS, the Custodian and the Fund desire to further amend the Custodian
Contract by adding the Bernstein Emerging Markets Value Portfolio (the
"Portfolio") to the list of Portfolios on whose behalf the Custodian Contract,
as amended, applies and to make certain other amendments;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby agree as follows:
1. In accordance with Paragraph 12 of the Custodian Contract, it is mutually
agreed that the Custodian shall render services under the Custodian Contract, as
amended, to an additional series of the Fund, the Bernstein Emerging Markets
Value Portfolio.
2. The Fund hereby authorizes the Custodian to employ as subcustodians for the
securities and other assets of the Portfolios of the Fund which are maintained
outside the United States the foreign banking institutions and foreign
securities depositories designated on Schedules A and B hereto in accordance
with the terms and provisions of the Custodian Contract. Schedules A and B
replace in their entirety all previously approved lists of entities eligible to
act as subcustodians for the Portfolios of the Fund.
3. Notwithstanding any provisions to the contrary set forth in the Custodian
Contract, the Custodian may hold securities and other non-cash property for all
of its customers, including the Fund, with a foreign subcustodian in a single
account that is identified as belonging to the Custodian for the benefit of its
customers, provided however, that (i) the records of the Custodian with respect
to securities and other non-cash property of the Fund which are maintained in
such account shall identify by book-entry those securities and other non-cash
property belonging to the Fund, and (ii) the Custodian shall require that
securities and other non-cash property so held by the foreign subcustodian be
held separately from any assets of the foreign subcustodian or of others.
4. Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force and
effect.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative as a
sealed instrument as of the 21st day of August, 1995.
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson
ATTEST:
Jean Margo Reid
STATE STREET BANK AND TRUST COMPANY
By: Ronald E. Logue
<PAGE>
ATTEST:
Francine S. Hayes
SCHEDULE A COVERING
BERNSTEIN GOVERNMENT SHORT DURATION PORTFOLIO
BERNSTEIN SHORT DURATION PLUS PORTFOLIO
BERNSTEIN INTERMEDIATE DURATION PORTFOLIO
BERNSTEIN DIVERSIFIED MUNICIPAL PORTFOLIO
BERNSTEIN NEW YORK MUNICIPAL PORTFOLIO
BERNSTEIN CALIFORNIA MUNICIPAL PORTFOLIO
BERNSTEIN SHORT DURATION CALIFORNIA MUNICIPAL PORTFOLIO
BERNSTEIN SHORT DURATION DIVERSIFIED MUNICIPAL PORTFOLIO
BERNSTEIN SHORT DURATION NEW YORK MUNICIPAL PORTFOLIO
BERNSTEIN INTERNATIONAL VALUE PORTFOLIO
BERNSTEIN EMERGING MARKETS VALUE PORTFOLIO
Country Subcustodian(s)
- --------------------------------------------------------------------------------
Australia Bank: Westpac Banking Corporation
Depository: Austraclear Limited
Austria Bank: GiroCredit Bank Aktiengesellschaft der
Sparkassen
Depository: Oesterreichische Kontrollbank AG
Belgium Bank: Generale Bank
Depository: Caisse Interprofessionelle de Depots et
de Virements de Titres S.A. (CIK)
Canada Bank: Canada Trustco Mortgage Company
Depository: The Canadian Depository for Securities
Limited (CDS)
Denmark Bank: Den Danske Bank
Depository: Vaerdipapircentralen - The Danish
Securities Center (VP)
Finland Bank: Merita Bank Limited
Depository: The Central Share Register of Finland
France Bank: Banque Paribas
Depository: Societe Interprofessionnelle pour la
Compensation des Valeurs Mobilieres
(SICOVAM)
Germany Bank: BHF - Bank Aktiengesellsehaft
Depository: The Deutscher Kassenverein AG
Hong Kong Bank: Standard Chartered Bank
Depository: The Central Clearing and Settlement
System (CCASS)
Ireland Bank: Bank of Ireland
Italy Bank: Morgan Guaranty Trust Company
Depository: Monte Titoli S.p.A.
Japan Banks: The Sumitomo Trust & Banking Co., Ltd.
The Daiwa Bank, Limited
<PAGE>
Depository: Japan Securities Depository Center (JASDEC)
(Use currently under review)
Malaysia Bank: Standard Chartered Bank Malaysia Berhad
Depository: Malaysia Central Depository Sdn. Bhd. (MCD)
Netherlands Bank: MeesPierson N.V.
Depository: Nederlands Centraal Instituut voor
Giraal Effectenverkeer B.V. (NECIGEF)
New Zealand Bank: ANZ Banking Group (New Zealand) Limited
Norway Bank: Christiania Bank og Kreditkasse
Depository: Verdipapirsentralen, The Norwegian
Registry of Securities (VPS)
Singapore Bank: The Development Bank of Singapore Ltd.
Depository: The Central Depository (Pte) Limited (CDP)
Spain Bank: Banco Santander, S.A.
Depository: Servicio de Compensaction y Liquidacion
de Valores (SCLV)
Sweden Bank: Skandinaviska Enskilda Banken (SEB)
Depository: Vardepapperscentralen VPC AB, The
Swedish Securities Register Center
Switzerland Bank: Union Bank of Switzerland
Depository: Schweizerische Effekten-Giro AG (SEGA)
United Kingdom Bank: State Street Bank and Trust Company
General Depositories: The Euroclear System (Euroclear)
Cedel Bank societe anonyme
SCHEDULE B COVERING
BERNSTEIN EMERGING MARKETS VALUE PORTFOLIO
Country Subcustodians
- --------------------------------------------------------------------------------
Argentina Bank: Citibank, N.A.
Depository: Caja de Valores S.A.
Brazil Bank: Citibank, N.A.
Depositories: Bolsa de Valores de Sao Paulo (Bovespa)
Banco Central do Brasil,
Systema Especial de Liquidacao e
Custodia (SELIC)
Chile Bank: Citibank, N.A.
People's
Republic
of China Bank: The Hong Kong and Shanghai Banking
Corporation Limited,
Shanghai and Shenzhen Branches
Depositories: Shanghai Securities Central Clearing and
Registration
Corporation (SSCCRC)
Shenzhen Securities Registrars Co., Ltd.
and its designated
<PAGE>
agent banks
Greece Bank: National Bank of Greece S.A.
Depository: The Central Securities Depository
(Apothetirion Titlon A.E.)
India Bank: Deutsche Bank AG
Indonesia Bank: Standard Chartered Bank
Israel Bank: Bank Hapoalim B.M.
Depository: The Clearing House of the Tel Aviv Stock
Exchange
Republic of
Korea Bank: SEOULBANK
Depository: Korea Securities Depository (KSD)
Malaysia Bank: Standard Chartered Bank Malaysia Berhad
Depository: Malaysian Central Depository Sdn. Bhd.
(MCD)
Mexico Bank: Citibank Mexico, S.A.
Depositories: S.D. INDEVAL, S.A. de C.V.(Instituto
para el Deposito de Valores)
Banco de Mexico
Philippines Bank: Standard Chartered Bank
Portugal Bank: Banco Comercial Portugues
Depository: Central de Valores Mobiliarios (Central)
South Africa Bank: Standard Bank of South Africa Limited
Taiwan - R.O.C. Bank: Central Trust of China
Depository: The Taiwan Securities Central Depository
Company, Ltd. (TSCD)
Thailand Bank: Standard Chartered Bank
Depository: Thailand Securities Depository Company
Limited (TSD)
Turkey Bank: Citibank, N.A.
Depository: Istanbul Stock Exchange Settlement and
Custody Co., Inc. (I.M.K.B. Takas
ve Saklama A.S.)
<PAGE>
Exhibit 9(a) - Transfer Agency Agreement with State Street Bank and Trust
Company
TRANSFER AGENCY AGREEMENT
between SANFORD C. BERNSTEIN FUND, INC.
and STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
Article 1 Terms of Appointment; Duties of the Bank
Article 2 Fees and Expenses
Article 3 Representations and Warranties of the Bank
Article 4 Representations and Warranties of the Fund
Article 5 Indemnification
Article 6 Covenants of the Fund and the Bank
Article 7 Termination of Agreement
Article 8 Additional Funds
Article 9 Assignment
Article 10 Amendment
Article 11 Massachusetts Law to Apply
Article 12 Merger of Agreement
TRANSFER AGENCY AGREEMENT
AGREEMENT made as of the 12th day of October, 1988, by and between SANFORD C.
BERNSTEIN FUND, INC., a Maryland corporation, having its principal office and
place of business at 767 Fifth Avenue, New York, New York 10153 (the "Fund"),
and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company having
its principal office and place of business at 225 Franklin Street, Boston,
Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund intends to initially offer shares in five series, the
Bernstein Government Short Duration Portfolio, Bernstein Short Duration Plus
Portfolio, Bernstein New York Municipal Portfolio, Bernstein Diversified
Municipal Portfolio, Bernstein Intermediate Duration Portfolio (each such
series, together with all other series subsequently established by the Fund and
made subject to this Agreement in accordance with Article 8, being herein
referred to as a Portfolio and collectively as the "Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank as
its transfer agent, dividend disbursing agent and agent in connection with
certain other activities, and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows: Article 1 Terms of Appointment; Duties of
the Bank
1.01 Subject to the terms and conditions set forth in this Agreement, the
Fund on behalf of the Portfolios hereby employs and appoints the Bank to act as,
and the Bank agrees to act as its transfer agent for the authorized and issued
shares of common stock of the Fund representing interests in each of the
respective Portfolios ("Shares"), dividend disbursing agent and agent in
connection with any accumulation, open-account or similar plans provided to the
shareholders of each of the respective Portfolios of the Fund ("Shareholders")
and set out in the prospectus and statement of additional information
("prospectus") of the Fund on behalf of the applicable Portfolio, including
without limitation any periodic investment plan or periodic withdrawal program.
1.02 The Bank agrees that it will perform the following services:
<PAGE>
(a) In accordance with procedures established from time to time by agreement
between the Fund on behalf of each of the Portfolios, as applicable and the
Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares, and promptly
deliver payment and appropriate documentation therefor to the Custodian of the
Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of Shares and
hold such Shares in the appropriate Shareholder account;
(iii) Receive for acceptance redemption requests and redemption directions and
deliver the appropriate documentation therefor to the Custodian;
(iv) At the appropriate time as and when it receives monies paid to it by the
Custodian with respect to any redemption, pay over or cause to be paid over in
the appropriate manner such monies as instructed by the redeeming Shareholders
and/or the Fund;
(v) Effect transfers of Shares by the registered owners thereof upon receipt of
appropriate instructions;
(vi) Prepare and transmit payments for dividends and distributions declared by
the Fund on behalf of the applicable Portfolio; and
(vii) Maintain records of account for and advise the Fund and its Shareholders
as to the foregoing; and
(viii) Report abandoned property to the various states as authorized by the
Fund per policies and principals agreed upon by the Fund and the Bank; and
(ix) Record the issuance of Shares and maintain pursuant to SEC Rule 17Ad-10(e)
a record of the total number of Shares which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. Bank shall also provide
the Fund on a regular basis with the total number of Shares which are
authorized and issued and outstanding and shall have no obligation, when
recording the issuance of Shares, to monitor the issuance of such Shares or to
take cognizance of any laws relating to the issue or
sale of such Shares, which functions shall be the sole responsibility of the
Fund.
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), the Bank shall: (i) perform all of the customary services of a
transfer agent, dividend disbursing agent and, as relevant, agent in connection
with accumulation, open-account or similar plans (including without limitation
any periodic investment plan or periodic withdrawal program), including but not
limited to: maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, receiving and tabulating proxies, mailing Shareholder
reports and prospectuses to current Shareholders, withholding taxes on U.S.
resident and non-resident alien accounts, preparing and filing U.S. Treasury
Department Forms 1099 and other appropriate forms required with respect to
dividends and distributions by federal authorities for all Shareholders,
preparing and mailing confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing and mailing activity statements
for Shareholders, and providing Shareholder account information and (ii)
provide a system which will enable the Fund to monitor the total number of
Shares sold in each State. From time to time by agreement between the Fund and
Bank the Fund may elect to perform or cause to be performed certain of the
above duties.
(c) In addition, the Fund shall (i) identify to the Bank in writing those
transactions and assets to be treated as exempt from blue sky reporting for
each State and (ii) verify the establishment of transactions for each State on
the system prior to activation and thereafter monitor the daily activity for
each State. The responsibility of the Bank for the Fund's blue sky State
registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the reporting of
such transactions to the Fund as provided above.
Procedures applicable to certain of these services may be established from time
to time by agreement between the Fund and the Bank.
<PAGE>
Article 2 Fees and Expenses
2.01 For performance by the Bank pursuant to this Agreement, the Fund agrees on
behalf of each of the Portfolios to pay the Bank an annual maintenance fee for
each Shareholder account as may be agreed upon from time to time. Such fees and
out-of-pocket expenses and advances identified under Section 2.02 below may be
changed from time to time subject to mutual written agreement between the Fund
and the Bank.
2.02 In addition to the fee paid under Section 2.01 above, the Fund agrees on
behalf of each of the Portfolios to reimburse the Bank for out-of-pocket
expenses or advances incurred by the Bank for the items set out in the fee
schedule attached hereto. In addition, any other expenses incurred by the Bank
at the written request or with the written consent of the Fund, will be
reimbursed by the Fund on behalf of the applicable Portfolio.
2.03 The Fund agrees on behalf of each of the Portfolios to pay all fees and
reimbursable expenses within five days following the mailing of the respective
billing notice. Postage for mailing of dividends, proxies, Fund reports and
other mailings to all Shareholder accounts shall be advanced to the Bank by the
Fund at least seven (7) days prior to the mailing date of such materials.
Article 3 Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
3.01 It is a trust company duly organized and existing and in good standing
under the laws of The Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in The Commonwealth of
Massachusetts.
3.03 It is empowered under applicable laws and by its charter and by-laws to
enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that:
4.01 It is a corporation duly organized and existing and in good standing under
the laws of Maryland.
4.02 It is empowered under applicable laws and by its Articles of Incorporation
and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Articles of Incorporation and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end management investment company registered under the
Investment Company Act of 1940.
4.05 A registration statement under the Securities Act of 1933 on behalf of
each of the Portfolios will become effective and will remain effective, and
appropriate state securities law filings have been made and will continue to be
made, with respect to all Shares being offered for sale.
Article 5 Indemnification
5.01 The Bank shall not be responsible for, and the Fund shall on behalf of the
applicable Portfolio indemnify and
<PAGE>
hold the Bank harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) All actions of the Bank or its agent or subcontractors required to be taken
pursuant to this Agreement, provided that such actions are taken in good faith
and without negligence or willful misconduct.
(b) The Fund's refusal or failure to comply with the terms of this Agreement,
or which arise out of the Fund's lack of good faith, negligence or willful
misconduct or which arise out of the breach of any representation or warranty
of the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or subcontractors of
information, records and documents which (i) are received by the Bank or its
agents or subcontractors and furnished to it by or on behalf of the Fund, and
(ii) have been prepared and/or maintained by the Fund or any other person or
firm on behalf of the Fund.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Fund on behalf of the
applicable Portfolio.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or regulations of
any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state unless the Bank
shall have received written notice of such stop order or other determination or
ruling.
5.02 The Bank shall indemnify and hold the Fund harmless from and against any
and all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any action or failure or omission
to act by the Bank as a result of the Bank's lack of good faith, negligence or
willful misconduct.
5.03 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with the Fund's legal counsel with respect to any
matter arising in connection with the services to be performed by the Bank
under this Agreement, and the Bank and its agents or subcontractors shall not
be liable and shall be indemnified by the Fund on behalf of the applicable
Portfolio for any action taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel. The Bank, its agents and
subcontractors shall be protected and indemnified in acting upon any paper or
document furnished by or on behalf of the Fund, reasonably believed to be
genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided the Bank or its
agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to have
notice of any change of authority of any person, until receipt of written
notice thereof from the Fund. The Bank, its agents and subcontractors shall
also be
protected and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officers of
the Fund, and the proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations under the
terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, such party shall
not be liable for damages to the other for any damages resulting from such
failure to perform or otherwise from such causes.
5.05 Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any act or
failure to act hereunder.
5.06 In order that the indemnification provisions contained in this Article 5
shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in
any case in which the other party may be required to indemnify it
<PAGE>
except with the other party's prior written consent.
Article 6 Covenants of the Fund and the Bank
6.01 The Fund shall on behalf of each of the Portfolios promptly furnish to the
Bank the following:
(a) A certified copy of the resolution of the Directors of the Fund authorizing
the appointment of the Bank and the execution and delivery of this Agreement.
(b) A copy of the Articles of Incorporation and By-Laws of the Fund and all
amendments thereto.
6.02 The Bank hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of stock certificates, check
forms and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates, forms and
devices.
6.03 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
6.04 The Bank and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.05 In case of any requests or demands for the inspection of the Shareholder
records of the Fund, the Bank will endeavor to notify the Fund and to secure
instructions from an authorized officer of the Fund as to such inspection. The
Bank reserves the right, however, to exhibit the Shareholder records to any
person whenever it is advised by its counsel that it may be held liable for the
failure to exhibit the Shareholder records to such person.
Article 7 Termination of Agreement
7.01 This Agreement may be terminated by the Fund upon sixty (60) days written
notice to the Bank. The Bank may terminate upon one hundred and twenty (120)
days written notice to the Fund.
7.02 Should the Fund exercise its right to terminate, all reasonable
out-of-pocket expenses associated with the movement of records and material
will be borne by the Fund on behalf of the applicable Portfolio(s).
7.03 Should the Bank exercise its right to terminate, all reasonable
out-of-pocket expenses associated with the movement of records and materials
will be borne by the Bank.
Article 8 Additional Funds
8.01 In the event that the Fund establishes one or more series of Shares in
addition to Bernstein Government Short Duration Portfolio, Bernstein Short
Duration Plus Portfolio, Bernstein New York Municipal Portfolio, Bernstein
Diversified Municipal Portfolio, and Bernstein Intermediate Duration Portfolio
with respect to which it desires to have the Bank render services as transfer
agent under the terms hereof, it shall so notify the Bank in writing, and if
the Bank agrees in writing to provide such services, such series of Shares
shall become a Portfolio hereunder.
Article 9 Assignment
9.01 Except as provided in Section 9.03 below, neither this Agreement nor any
rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
<PAGE>
9.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
9.03 The Bank may, without further consent on the part of the Fund, subcontract
for the performance hereof with (i) Boston Financial Data Services, Inc., a
Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A(c)(l) of the Securities Exchange Act of
1934 ("Section 17A(c)(l)"), (ii) a BFDS subsidiary duly registered as a transfer
agent pursuant to Section 17A(c)(l) or (iii) Support Resources, Inc. solely for
statement printing and mailing services; provided, however, that the Bank shall
be as fully responsible to the Fund for the acts and omissions of any
subcontractor as it is for its own acts and omissions.
Article 10 Amendment
10.01 This Agreement may be amended or modified by a written agreement executed
by both parties and authorized or approved by a resolution of the Directors of
the Fund.
Article 11 Massachusetts Law to Apply
11.01 This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts.
Article 12 Merger of Agreement
12.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
SANFORD C. BERNSTEIN FUND, INC.
BY: Stuart K. Nelson, Senior Vice President
ATTEST: Sarah J. Sturtevant, Secretary
STATE STREET BANK AND TRUST COMPANY
BY: T. E. Swedlund, Vice President
ATTEST: A. Siegel, Assistant Secretary
<PAGE>
Exhibit 9(c) - First Amendment to Transfer Agency Agreement
AMENDMENT TO THE TRANSFER AGENCY AGREEMENT
AGREEMENT made by and between State Street Bank and Trust Company (the
"Transfer Agent") and the Sanford C. Bernstein Fund, Inc. (the "Fund").
WHEREAS, the Transfer Agent and the Fund are parties to a Transfer Agency
Agreement dated October 12, 1988 (the "Transfer Agency Agreement"); and
WHEREAS, the Transfer Agent and the Fund desire to amend the Transfer Agency
Agreement by adding the California Municipal Portfolio (the "Portfolio") to the
list of Portfolios on whose behalf the Transfer Agency Agreement applies;
NOW THEREFORE, in consideration of the premises and covenants contained herein,
the Transfer Agent and the Fund hereby agree as follows:
In accordance with Article 8 of the Transfer Agency Agreement, it is mutually
agreed that the Transfer Agent shall render services under the Transfer Agency
Agreement to an additional series of the Fund, the California Municipal
Portfolio.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 30th day of April, 1990.
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson
ATTEST:
Jean Margo Reid
STATE STREET BANK AND TRUST COMPANY
By: W. J. Hayes
ATTEST:
J. Riccuith
<PAGE>
Exhibit 9(d) - Second Amendment to Transfer Agency Agreement
SECOND AMENDMENT TO THE TRANSFER AGENCY AGREEMENT
AGREEMENT made by and between State Street Bank and Trust Company (the
"Transfer Agent") and the Sanford C. Bernstein Fund, Inc. (the "Fund").
WHEREAS, the Transfer Agent and the Fund are parties to a Transfer Agency
Agreement dated October 12, 1988, as amended April 30, 1990, (the "Transfer
Agency Agreement"); and
WHEREAS, the Transfer Agent and the Fund desire to amend the Transfer Agency
Agreement by adding the Bernstein International Value Portfolio (the
"Portfolio") to the list of Portfolios on whose behalf the Transfer Agency
Agreement applies;
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, the Transfer Agent and the Fund hereby agree as follows:
In accordance with Article 8 of the Transfer Agency Agreement, it is mutually
agreed that the Transfer Agent shall render services under the Transfer Agency
Agreement to an additional series of the Fund, the Bernstein International
Value Portfolio.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 18th day of March, 1992.
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson
ATTEST:
Jean Margo Reid
STATE STREET BANK AND TRUST COMPANY
By: Ronald E. Logue
ATTEST:
Lynn M. Mack
<PAGE>
Exhibit 9(e) - Third Amendment to Transfer Agency Agreement
THIRD AMENDMENT TO THE TRANSFER AGENCY AGREEMENT
AGREEMENT made by and between State Street Bank and Trust Company (the
"Transfer Agent") and between the Sanford C. Bernstein Fund, Inc. (the "Fund").
WHEREAS, the Transfer Agent and the Fund are parties to a Transfer Agency
Agreement dated October 12, 1988 as amended on April 30, 1990 to add the
California Municipal Portfolio, and on March 18, 1992 to add the Bernstein
International Value Portfolio (the "Transfer Agency Agreement as amended"); and
WHEREAS, the Transfer Agent and the Fund desire to amend the Transfer Agency
Agreement by adding the Bernstein Short Duration California Municipal
Portfolio, the Bernstein Short Duration Diversified Municipal Portfolio, and
the Bernstein Short Duration New York Municipal Portfolio ("the Portfolios") to
the list of Portfolios on whose behalf the Transfer Agency Agreement applies;
NOW THEREFORE, in consideration of the premises and covenants contained herein,
the Transfer Agent and the Fund hereby agree as follows:
In accordance with Article 8 of the Transfer Agency Agreement, it is mutually
agreed that the Transfer Agent shall render services under the Transfer Agency
Agreement to an additional series of the Fund, the Bernstein Short Duration
California Municipal Portfolio, the Bernstein Short Duration Diversified
Municipal Portfolio, and the Bernstein Short Duration New York Municipal
Portfolio.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 19th day of April, 1994.
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson
ATTEST:
Jean Margo Reid
STATE STREET BANK AND TRUST COMPANY
By: (Illegible)
ATTEST:
Charles R. Whittemore Jr.
<PAGE>
Exhibit 9(g) - Fourth Amendment to Transfer Agency Agreement
FOURTH AMENDMENT TO THE TRANSFER AGENCY AGREEMENT
AGREEMENT made by and between State Street Bank and Trust Company (the
"Transfer Agent") and the Sanford C. Bernstein Fund, Inc. (the "Fund").
WHEREAS, the Transfer Agent and the Fund are parties to a Transfer Agency
Agreement dated October 12, 1988, as amended April 30, 1990, March 18, 1992 and
April 19, 1994 (the "Transfer Agency Agreement"); and
WHEREAS, the Transfer Agent and the Fund desire to amend the Transfer Agency
Agreement by adding the Bernstein Emerging Markets Value Portfolio (the
"Portfolio") to the list of Portfolios on whose behalf the Transfer Agency
Agreement applies;
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, the Transfer Agent and the Fund hereby agree as follows:
In accordance with Article 8 of the Transfer Agency Agreement, it is mutually
agreed that the Transfer Agent shall render services under the Transfer Agency
Agreement to an additional series of the Fund, the Bernstein Emerging Markets
Value Portfolio.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 21st day of August, 1995.
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson
ATTEST:
Jean Margo Reid
STATE STREET BANK AND TRUST COMPANY
By: Ronald E. Logue
ATTEST:
Francine L. Hayes
<PAGE>
Exhibit (9)(j)(1) Second Amendment to Securities Lending Agreement
SECOND AMENDMENT TO SECURITIES LENDING AUTHORIZATION AGREEMENT
SECOND AMENDMENT dated as of May 29, 1997 between STATE STREET BANK AND TRUST
COMPANY ("State Street") and SANFORD C. BERNSTEIN FUND, INC., on behalf of the
International Value Portfolio (in such capacity, the "Client").
WHEREAS, State Street and the Client are party to a Securities Lending
Authorization Agreement dated as of the 17th day of July, 1996 (as amended from
time to time, the "Agreement");
WHEREAS, Section 20 of the Agreement allows the Agreement to be modified at any
time by a writing signed by the party against whom enforcement is sought; and
WHEREAS, State Street and Client wish to amend Schedule 7.3-C to the Agreement,
which lists the Approved Time Deposit Counterparties and identifies which
Approved Time Deposit Counterparties are the Restricted Time Deposit
Counterparties;
NOW THEREFORE, the parties hereto hereby agree that Schedule 7.3-C to the
Agreement shall be amended in its entirety to read as set forth on Exhibit A
hereto. Capitalized terms used herein but not defined herein shall have the
meaning assigned thereto in the Agreement. Except as herein provided, the
Agreement shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be
duly executed and delivered as of the day and year first above written.
SANFORD C. BERNSTEIN FUND, INC., on
behalf of the International Value Portfolio
By: Jean Margo Reid, Secretary
STATE STREET BANK AND TRUST COMPANY
By: Donald Hodgman, Senior Vice President
EXHIBIT A
Schedule 7.3-C
APPROVED TIME DEPOSIT COUNTERPARTIES
Restricted Time Deposit Counterparties:
Cayman Branches:
ABN-AMRO Bank NV, Cayman Branch
Barclays Bank PLC, Cayman Branch
Bank of America National Trust & Savings Association, Cayman Branch
The Bank of New York, Cayman Branch
The Bank of Nova Scotia, Cayman Branch
The Chase Manhattan Bank, N.A., Cayman Branch
Commerzbank Aktiengesellschaft, Cayman Branch
CoreStates Bank, N.A., Cayman Branch
Deutsche Bank AG, Cayman Branch
The Northern Trust Company, Cayman Branch
Republic National Bank of New York, Cayman Branch
Royal Bank of Canada, Cayman Branch
Swiss Bank Corporation, Cayman Branch
<PAGE>
London Branches:
Commerzbank Aktiengesellschaft, London Branch
Credit Agricole S.A. (Caisse Nationale de Credit Agricole), London Branch
Bahamas Branches:
Canadian Imperial Bank of Commerce, Bahamas Branch
The Chase Manhattan Bank, N.A., Bahamas Branch
Citibank, N.A., Bahamas Branch
Morgan Guaranty Trust Company of New York, Bahamas Branch
National City Bank, Bahamas Branch
NationsBank, N.A., Bahamas Branch
Norwest Bank Minnesota, N.A., Bahamas Branch
The Toronto-Dominion Bank, Bahamas Branch
<PAGE>
Exhibit 10(a) Opinion of Counsel - Government Short Duration, Short Duration
Plus, Diversified Municipal, Intermediate Duration and New York Municipal
Portfolios
Shereff, Friedman, Hoffman & Goodman
919 Third Avenue
New York, N.Y. 10022
(212) 758-9500
October 13, 1988
Sanford C. Bernstein Fund, Inc.
767 Fifth Avenue
New York, NY 10153
Dear Sirs:
Sanford C. Bernstein Fund, Inc., which presently consists of five portfolios,
Bernstein Government Short Duration, Bernstein Short Duration Plus, Bernstein
New York Municipal, Bernstein Diversified Municipal and Bernstein Intermediate
Duration (the "Fund"), proposes to issue and sell an indefinite number of
shares (the "Shares") of its Common Stock, par value $.001 per share (the
"Common Stock"), in the manner and on the terms set forth in its Registration
Statement on Form N-1A filed with the Securities and Exchange Commission (File
No. 33-21844).
We have, as counsel, participated in various corporate and other proceedings
relating to the Fund and to the Shares. We have examined copies, either
certified or otherwise proved to our satisfaction to be genuine, of its Charter
and By-Laws, as currently in effect, a certificate of good standing issued by
the State Department of Assessments and Taxation of Maryland and other
documents relating to its organization and operation. We have also reviewed the
above-mentioned Registration Statement and all amendments filed as of the date
of this opinion and the documents filed as exhibits thereto. We are generally
familiar with the corporate affairs of the Fund.
Based upon the foregoing, it is our opinion that:
1. The Fund has been duly organized and is validly existing under the laws of
the State of Maryland.
2. The Fund is authorized to issue one billion (1,000,000,000) shares of
Common Stock. Under Maryland law, shares of Common Stock which are issued and
subsequently redeemed by the Fund will be, by virtue of such redemption,
restored to the status of authorized and unissued shares.
3. Subject to the effectiveness of the above-mentioned Registration Statement
and compliance with applicable state securities laws, upon the issuance of the
Shares for a consideration not less than the par value thereof as required by
the laws of Maryland, and not less than the net asset value
thereof as required by the Investment Company Act of 1940 and in accordance with
the terms of the Registration Statement, such shares will be legally issued and
outstanding and fully paid and non-assessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as a part of the above-mentioned Registration Statement and
with any state securities commission where such filing is required. We also
consent to the reference to our firm as counsel in the prospectus filed as a
part thereof. In giving this consent we do not admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended.
We are members of the Bar of the State of New York and do not hold ourselves
out as being conversant with the laws of any jurisdiction other than those of
the United States of America and the State of New York. We note that we are not
licensed to practice law in the State of Maryland, and to the extent that any
opinion
<PAGE>
expressed herein involves the law of Maryland, such opinion should be understood
to be based solely upon our review of the good standing certificate referred to
above, the published statutes of that State and, where applicable, published
cases, rules or regulations of regulatory bodies of that State.
Very truly yours,
Shereff, Friedman, Hoffman & Goodman
<PAGE>
Exhibit 10(b) Opinion of Counsel - California Municipal Portfolio
Shereff, Friedman, Hoffman & Goodman
919 Third Avenue
New York, N.Y. 10022-9998
(212) 758-9500
May 2, 1990
Sanford C. Bernstein Fund, Inc.
767 Fifth Avenue
New York, New York 10153
Dear Sirs:
Sanford C. Bernstein Fund, Inc., which presently consists of six portfolios,
Bernstein Government Short Duration, Bernstein Short Duration Plus, Bernstein
New York Municipal, Bernstein Diversified Municipal, Bernstein Intermediate
Duration, and Bernstein California Municipal (the "Fund"), is registered to
issue and sell an indefinite number of shares of its Common Stock, par value
$.001 per share (the "Common Stock"), in the manner and on the terms set forth
in its Registration Statement on Form N-1A filed with the Securities and
Exchange Commission (File No. 33-21844).
We have, as counsel, participated in various corporate and other proceedings
relating to the Fund and to its Common Stock. We have examined copies, either
certified or otherwise proved to our satisfaction to be genuine, of its Charter
and By-Laws, as currently in effect, a certificate of good standing issued by
the State Department of Assessments and Taxation of Maryland and other
documents relating to its organization and operation. We have also reviewed the
above-mentioned Registration Statement and all amendments filed as of the date
of this opinion and the documents filed as exhibits thereto. We are generally
familiar with the corporate affairs of the Fund.
Based upon the foregoing, it is our opinion that:
1. The Fund has been duly organized and is validly existing under the laws of
the State of Maryland.
2. The Fund is authorized to issue one billion (1,000,000,000) shares of
Common Stock. Under Maryland law, shares of Common Stock which are issued and
subsequently redeemed by the Fund will be, by virtue of such redemption,
restored to the status of authorized and unissued shares.
3. Subject to the effectiveness of the above-mentioned Registration Statement
and compliance with applicable state securities laws, upon the issuance of the
Shares for a consideration not less than the par value thereof as required by
the laws of Maryland, and not less than the net asset value thereof as required
by the Investment Company Act of 1940 and in accordance with the terms of the
Registration Statement, such shares will be legally issued and outstanding and
fully paid and non-assessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as a part of Post-Effective Amendment No. 4 to the
above-mentioned Registration Statement and with any state securities commission
where such filing is required.
We are members of the Bar of the State of New York and do not hold ourselves
out as being conversant with the laws of any jurisdiction other than those of
the United States of America and the State of New York. We note that we are not
licensed to practice law in the State of Maryland, and to the extent that any
opinion expressed herein involves the law of Maryland, such opinion should be
understood to be based solely upon our review of the good standing certificate
referred to above, the published statutes of that State and, where applicable,
published cases, rules or regulations of regulatory bodies of that State.
<PAGE>
Very truly yours,
Shereff, Friedman, Hoffman & Goodman
<PAGE>
Exhibit 10(c) Opinion of Counsel - Bernstein International Value Portfolio
Shereff, Friedman, Hoffman & Goodman
919 Third Avenue
New York, N.Y. 10022-9998
(212) 758-9500
March 30, 1992
Sanford C. Bernstein Fund, Inc.
767 Fifth Avenue
New York, New York 10153
Dear Sirs:
Sanford C. Bernstein Fund, Inc. (the "Fund"), which presently consists of seven
portfolios, Bernstein Government Short Duration, Bernstein Short Duration Plus,
Bernstein New York Municipal, Bernstein Diversified Municipal, Bernstein
Intermediate Duration, Bernstein California Municipal, and Bernstein
International Value, is registered to issue and sell an indefinite number of
shares of its Common Stock, par value $.001 per share (the "Common Stock"), in
the manner and on the terms set forth in its Registration Statement on Form
N-1A filed with the Securities and Exchange Commission (File No. 33-21844).
We have, as counsel, participated in various corporate and other proceedings
relating to the Fund and to its Common Stock. We have examined copies, either
certified or otherwise proved to our satisfaction to be genuine, of its Charter
and By-Laws, as currently in effect, a certificate of good standing issued by
the State Department of Assessments and Taxation of Maryland and other
documents relating to its organization and operation, including but without
limitation a copy of Articles Supplementary dated March 16, 1992, certified on
March 17, 1992 by the State Department of Assessments and Taxation. We have
also reviewed the above-mentioned Registration Statement and all amendments
filed as of the date of this opinion and the documents filed as exhibits
thereto. We are generally familiar with the corporate affairs of the Fund.
Based upon the foregoing, it is our opinion that:
1. The Fund has been duly organized and is validly existing under the laws of
the State of Maryland.
2. The Fund is authorized to issue one billion (1,000,000,000) shares of
Common Stock. Under Maryland law, shares of Common Stock which are issued and
subsequently redeemed by the Fund will be, by virtue of such redemption,
restored to the status of authorized and unissued shares.
3. Subject to the effectiveness of Post-Effective Amendment No. 7 to the
above-mentioned Registration Statement and compliance with applicable state
securities laws, upon the issuance of shares of the Bernstein International
Value Portfolio for a consideration not less than the par value thereof as
required by the laws of Maryland, and not less than the net asset value thereof
as required by the Investment Company Act of 1940 and in accordance with the
terms of the Registration Statement, such shares will be legally issued and
outstanding and fully paid and non-assessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as a part of Post-Effective Amendment No. 7 to the
above-mentioned Registration Statement and with any state securities commission
where such filing is required.
We are members of the Bar of the State of New York and do not hold ourselves
out as being conversant with the laws of any jurisdiction other than those of
the United States of America and the State of New York. We note that we are not
licensed to practice law in the State of Maryland, and to the extent that any
opinion expressed herein involves the law of Maryland, such opinion should be
understood to be based solely upon our
<PAGE>
review of the good standing certificate referred to above, the published
statutes of that State and, where applicable, published cases, rules or
regulations of regulatory bodies of that State.
Very truly yours,
Shereff, Friedman, Hoffman & Goodman
<PAGE>
Exhibit 10(d) Opinion of Counsel - Short Duration California Municipal, Short
Duration Diversified Municipal and Short Duration New York Municipal Portfolios
Shereff, Friedman, Hoffman & Goodman
919 Third Avenue
New York, N.Y. 10022-9998
(212) 758-9500
May 23, 1994
Sanford C. Bernstein Fund, Inc.
767 Fifth Avenue
New York, N.Y. 10153
Dear Sirs:
Sanford C. Bernstein Fund, Inc. (the "Fund"), which presently consists of ten
portfolios, Bernstein Short Duration California Municipal, Bernstein Short
Duration Diversified Municipal, Bernstein Short Duration New York Municipal,
Bernstein Government Short Duration, Bernstein Short Duration Plus, Bernstein
New York Municipal, Bernstein Diversified Municipal, Bernstein Intermediate
Duration, Bernstein California Municipal and Bernstein International Value, is
registered to issue and sell an indefinite number of shares of its Common
Stock, par value $.001 per share (the "Common Stock"), in the manner and on the
terms set forth in its Registration Statement on Form N-1A filed with the
Securities and Exchange Commission (File No. 33-21844).
We have, as counsel, participated in various corporate and other proceedings
relating to the Fund and to its Common Stock. We have examined copies, either
certified or otherwise proved to our satisfaction to be genuine, of its Charter
and By-Laws, as currently in effect, a certificate of good standing issued by
the State Department of Assessments and Taxation of Maryland and other
documents relating to its organization and operation, including but without
limitation a copy of Articles Supplementary dated May 1994, certified on May
11, 1994 by the State Department of Assessments and Taxation. We have also
reviewed the above-mentioned Registration Statement and all amendments filed as
of the date of this opinion and the documents filed as exhibits thereto. We are
generally familiar with the corporate affairs of the Fund.
Based upon the foregoing, it is our opinion that:
1. The Fund has been duly organized and is validly existing under the laws of
the State of Maryland.
2. The Fund is authorized to issue one billion (1,000,000,000) shares of
Common Stock. Under Maryland law, shares of Common Stock which are issued and
subsequently redeemed by the Fund will be, by virtue of such redemption,
restored to the status of authorized and unissued shares.
3. Subject to the effectiveness of Post-Effective Amendment No. 10 to the
above-mentioned Registration Statement and compliance with applicable state
securities laws, upon the issuance of shares of the Bernstein Short Duration
California Municipal Portfolio, Bernstein Short Duration Diversified Municipal
Portfolio and Bernstein Short Duration New York Municipal Portfolio for a
consideration not less than the par value thereof as required by the laws of
Maryland, and not less than the net asset value thereof as required by the
Investment Company Act of 1940, as amended, and in accordance with the terms of
the Registration Statement, such shares will be legally issued and outstanding
and fully paid and non-assessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as a part of Post-Effective Amendment No. 10 to the
above-mentioned Registration Statement and with any state securities commission
where such filing is required.
<PAGE>
We are members of the Bar of the State of New York and do not hold ourselves
out as being conversant with the laws of any jurisdiction other than those of
the United States of America and the State of New York. We note that we are not
licensed to practice law in the State of Maryland, and to the extent that any
opinion expressed herein involves the law of Maryland, such opinion should be
understood to be based solely upon our review of the documents referred to
above, the published statutes of that State and, where applicable, published
cases, rules or regulations of regulatory bodies of that State.
Very truly yours,
Shereff, Friedman, Hoffman & Goodman
<PAGE>
Exhibit 10(e) Opinion of Counsel - Emerging Markets Value
Shereff, Friedman, Hoffman & Goodman LLP
919 Third Avenue
New York, N.Y. 10022-9998
(212) 758-9500
September 25, 1995
Sanford C. Bernstein Fund, Inc.
767 Fifth Avenue
New York, New York 10153
Dear Sirs:
Sanford C. Bernstein Fund, Inc. (the "Fund"), which presently consists of
eleven portfolios, Bernstein Emerging Markets Value, Bernstein Short Duration
California Municipal, Bernstein Short Duration Diversified Municipal, Bernstein
Short Duration New York Municipal, Bernstein Government Short Duration,
Bernstein Short Duration Plus, Bernstein New York Municipal, Bernstein
Diversified Municipal, Bernstein Intermediate Duration, Bernstein California
Municipal and Bernstein International Value, is registered to issue and sell an
indefinite number of shares of its Common Stock, par value $.001 per share (the
"Common Stock"), in the manner and on the terms set forth in its Registration
Statement on Form N-1A filed with the Securities and Exchange Commission (File
No. 33-21844).
We have, as counsel, participated in various corporate and other proceedings
relating to the Fund and to its Common Stock. We have examined copies, either
certified or otherwise proved to our satisfaction to be genuine, of its Charter
and By-Laws, as currently in effect, a certificate of good standing issued by
the State Department of Assessments and Taxation of Maryland and other
documents relating to its organization and operation, including but without
limitation a copy of Articles Supplementary dated August 29, 1995, certified on
September 1, 1995 by the State Department of Assessments and Taxation. We have
also reviewed the above-mentioned Registration Statement and all amendments
filed as of the date of this opinion and the documents filed as exhibits
thereto. We are generally familiar with the corporate affairs of the Fund.
Based upon the foregoing, it is our opinion that:
The Fund has been duly organized and is validly existing under the laws of the
State of Maryland.
1. The Fund is authorized to issue two billion (2,000,000,000) shares of
Common Stock. Under Maryland law, shares of Common Stock which are issued and
subsequently redeemed by the Fund will be, by virtue of such redemption,
restored to the status of authorized and unissued shares.
2. Subject to the effectiveness of Post-Effective Amendment No. 12 to the
above-mentioned Registration Statement and compliance with applicable state
securities laws, upon the issuance of shares of the Bernstein Emerging Markets
Value Portfolio for a consideration not less than the par value thereof as
required by the laws of Maryland, and not less than the net asset value thereof
as required by the Investment Company Act of 1940, as amended, and in accordance
with the terms of the Registration Statement, such shares will be legally
issued and outstanding and fully paid and non-assessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as a part of Post-Effective Amendment No. 12 to the
above-mentioned Registration Statement and with any state securities commission
where such filing is required.
We are members of the Bar of the State of New York and do not hold ourselves
out as being conversant with the laws of any jurisdiction other than those of
the United States of America and the State of New York. We note that we are not
licensed to practice law in the State of Maryland, and to the extent that any
opinion
<PAGE>
expressed herein involves the law of Maryland, such opinion should be understood
to be based solely upon our review of the documents referred to above, the
published statutes of that State and, where applicable, published cases, rules
or regulations of regulatory bodies of that State.
Very truly yours,
Shereff, Friedman, Hoffman & Goodman LLP
<PAGE>
Exhibit 11 - Consent of Independent Accountants
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Regular and
Institutional Services Prospectuses and the Statement of Additional Information
constituting parts of this Post-Effective Amendment No. 16 to the registration
statement on Form N-1A (the "Registration Statement") of our reports dated
November 18, 1997, relating to the financial statements and financial highlights
of Bernstein International Value Portfolio, Bernstein Emerging Markets Value
Portfolio, Bernstein Intermediate Duration Portfolio, Bernstein Short Duration
Plus Portfolio, Bernstein Government Short Duration Portfolio, Bernstein
Diversified Municipal Portfolio, Bernstein California Municipal Portfolio,
Bernstein New York Municipal Portfolio, Bernstein Short Duration Diversified
Municipal Portfolio, Bernstein Short Duration California Municipal Portfolio,
Bernstein Short Duration New York Municipal Portfolio, constituting the eleven
portfolios of Sanford C. Bernstein Fund, Inc., appearing in the September 30,
1997 Annual Reports to Shareholders of Sanford C. Bernstein Fund, Inc., which
are also incorporated by reference into the Registration Statement. We also
consent to the references to us under the headings "Financial Highlights" and
"Independent Accountants and Legal Counsel" in such Prospectuses and under the
heading "Custodian, Transfer Agent, Independent Accountants and Financial
Statements" in the Statement of Additional Information.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036
January 21, 1998
<PAGE>
Exhibit 13 Initial Share Purchase Agreement - Government Short Duration, Short
Duration Plus, Intermediate Duration, Diversified Municipal and New York
Municipal Portfolios
SANFORD C. BERNSTEIN FUND, INC.
SHARE PURCHASE AGREEMENT
SANFORD C. BERNSTEIN FUND, INC., an open-end, management investment company
organized as a corporation under the laws of the State of Maryland (the "Fund")
on behalf of its separate, designated portfolios, Bernstein Government Short
Duration Portfolio, Bernstein Short Duration Plus Portfolio, Bernstein New York
Municipal Portfolio, Bernstein Diversified Municipal Portfolio and Bernstein
Intermediate Duration Portfolio (each a "Portfolio," collectively the
"Portfolios"), and Sanford C. Bernstein & Co., Inc., a New York corporation
("Purchaser"), hereby agree as follows:
1. In order to provide the Fund with its initial capital, the Fund hereby sells
to the Purchaser and the Purchaser hereby purchases from the Fund two thousand
(2,000) shares (the "Shares") of common stock, $.001 par value, of each
Portfolio at a purchase price of $12.50 per Share. The Fund on behalf of the
Portfolios hereby acknowledges receipt from the Purchaser of funds in the
amount of $125,000.00 (of which $25,000 shall be allocated to each Portfolio)
in full payment for the Shares.
2. The Purchaser represents and warrants to the Fund that the Shares are being
acquired for investment and not with a view to distribution thereof and that
the Purchaser has no present intention to dispose of the Shares.
3. The Purchaser hereby agrees that if any of the Shares are redeemed by the
Purchaser during the sixty (60) months after the Fund commences operations, the
Fund on behalf of the Portfolios will be reimbursed for any unamortized
organization or initial offering expenses in the same proportion as the number
of Shares being redeemed bears to the number of Shares outstanding at the time
of redemption.
4. This Agreement is made by the Fund pursuant to authority granted by the
Board of Directors, and the obligations created hereby are not binding on any
of the Directors or shareholders of the Fund individually, but bind only the
property of the Fund.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
12th day of October, 1988.
SANFORD C. BERNSTEIN FUND, INC.
By: Stuart K. Nelson, Senior Vice President
SANFORD C. BERNSTEIN & CO., INC.
By: Lewis A. Sanders, President
<PAGE>
Exhibit 16(a) Schedule of Performance Quotations - Government Short Duration,
Short Duration Plus, Intermediate Duration, New York Municipal and Diversified
Municipal Portfolios
SCHEDULE OF COMPUTATION OF PERFORMANCE QUOTATIONS
GOVERNMENT SHORT DURATION PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN CALCULATION
AS OF MARCH 31, 1989
1/n
Average Annual Total Return = (ERV/P) - 1
P = a hypothetical initial investment of $1,000 on
beginning date;
ERV = ending redeemable value of the hypothetical
account on the date of the balance sheet; and
n = number of years (1, 5, 10 or the life of the
Fund).
- --------------------------------------------------------------------------------
PERIOD SINCE INCEPTION
P = $1,000.00
n = .24
ERV = $1,011.71
ANNUALIZED RETURN = 4.97%
- --------------------------------------------------------------------------------
YIELD CALCULATION AS OF MARCH 31, 1989
6
YIELD = 2 x [([(a - b)/(c x d)] + 1) - 1]
a = dividends and interest earned during the period
b = expenses accrued for the period
c = average daily number of shares o/s during the period
entitled to receive dividends
d = last offering price during period
Base period = 30 days
- --------------------------------------------------------------------------------
a = 779,967.73
b = 73,805.92
c = 7,779,688.076
d = 12.45
YIELD = 8.91%
<PAGE>
- --------------------------------------------------------------------------------
AGGREGATE TOTAL RETURN CALCULATION
AS OF MARCH 31, 1989
Aggregate Total Return = ERV - P
------------
P
Where:
P = a hypothetical initial investment of $1,000;
ERV = ending redeemable value of the hypothetical account
on the date of the balance sheet.
PERIOD SINCE INCEPTION
P = $1,000.00
ERV = $1,011.71
AGGREGATE RETURN = 1.17%
- --------------------------------------------------------------------------------
SCHEDULE OF COMPUTATION OF PERFORMANCE QUOTATIONS
SHORT DURATION PLUS PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN CALCULATION
AS OF MARCH 31, 1989
1/n
Average Annual Total Return = (ERV/P) - 1
P = a hypothetical initial investment of $1,000 on
beginning date;
ERV = ending redeemable value of the hypothetical
account on the date of the balance sheet; and
n = number of years (1, 5, 10 or the life of the
Fund).
- --------------------------------------------------------------------------------
PERIOD SINCE INCEPTION
P = $1,000.00
n = .30
ERV = $1,015.92
ANNUALIZED RETURN = 5.40%
- --------------------------------------------------------------------------------
YIELD CALCULATION AS OF MARCH 31, 1989
6
YIELD = 2 x [([(a - b)/(c x d)] + 1) - 1]
<PAGE>
a = dividends and interest earned during the period
b = expenses accrued for the period
c = average daily number of shares o/s during the period
entitled to receive dividends
d = last offering price during period
Base period = 30 days
- --------------------------------------------------------------------------------
a = 2,008,641.79
b = 163,716.33
c = 20,234,888.632
d = 12.44
YIELD = 8.96%
- --------------------------------------------------------------------------------
AGGREGATE TOTAL RETURN CALCULATION
AS OF MARCH 31, 1989
Aggregate Total Return = ERV - P
-----------
P
Where:
P = a hypothetical initial investment of $1,000;
ERV = ending redeemable value of the hypothetical account
on the date of the balance sheet.
PERIOD SINCE INCEPTION
P = $1,000.00
ERV = $1,015.92
AGGREGATE RETURN = 1.59%
- --------------------------------------------------------------------------------
SCHEDULE OF COMPUTATION OF PERFORMANCE QUOTATIONS
INTERMEDIATE DURATION PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN CALCULATION
AS OF MARCH 31, 1989
1/n
Average Annual Total Return = (ERV/P) - 1
P = a hypothetical initial investment of $1,000 on
beginning date;
ERV = ending redeemable value of the hypothetical
<PAGE>
account on the date of the balance sheet; and
n = number of years (1, 5, 10 or the life of the
Fund).
- --------------------------------------------------------------------------------
PERIOD SINCE INCEPTION
P = $1,000.00
n = .20
ERV = $1,002.22
ANNUALIZED RETURN = 1.11%
- --------------------------------------------------------------------------------
YIELD CALCULATION AS OF MARCH 31, 1989
6
YIELD = 2 x [([(a - b)/(c x d)] + 1) - 1]
a = dividends and interest earned during the period
b = expenses accrued for the period
c = average daily number of shares o/s during the period
entitled to receive dividends
d = last offering price during period
Base period = 30 days
- --------------------------------------------------------------------------------
a = 844,849.08
b = 61,018.28
c = 8,744,050.092
d = 12.35
YIELD = 8.87%
- --------------------------------------------------------------------------------
AGGREGATE TOTAL RETURN CALCULATION
AS OF MARCH 31, 1989
Aggregate Total Return = ERV - P
------------
P
Where:
P = a hypothetical initial investment of $1,000;
ERV = ending redeemable value of the hypothetical account
on the date of the balance sheet.
PERIOD SINCE INCEPTION
<PAGE>
P = $1,000.00
ERV = $1,002.22
AGGREGATE RETURN = .22%
- --------------------------------------------------------------------------------
SCHEDULE OF COMPUTATION OF PERFORMANCE QUOTATIONS
NEW YORK MUNICIPAL PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN CALCULATION
AS OF MARCH 31, 1989
1/n
Average Annual Total Return = (ERV/P) - 1
P = a hypothetical initial investment of $1,000 on
beginning date;
ERV = ending redeemable value of the hypothetical
account on the date of the balance sheet; and
n = number of years (1, 5, 10 or the life of the
Fund).
- --------------------------------------------------------------------------------
PERIOD SINCE INCEPTION
P = $1,000.00
n = .22
ERV = $997.65
ANNUALIZED RETURN = (1.06%)
- --------------------------------------------------------------------------------
YIELD CALCULATION AS OF MARCH 31, 1989
6
YIELD = 2 x [([(a - b)/(c x d)] + 1) - 1]
a = dividends and interest earned during the period
b = expenses accrued for the period
c = average daily number of shares o/s during the period
entitled to receive dividends
d = last offering price during period
Base period = 30 days
- --------------------------------------------------------------------------------
a = 454,443.46
b = 56,286.27
c = 6,089,798.588
<PAGE>
d = 12.32
YIELD = 6.45%
- --------------------------------------------------------------------------------
AGGREGATE TOTAL RETURN CALCULATION
AS OF MARCH 31, 1989
Aggregate Total Return = ERV - P
-----------
P
Where:
P = a hypothetical initial investment of $1,000;
ERV = ending redeemable value of the hypothetical account
on the date of the balance sheet.
PERIOD SINCE INCEPTION
P = $1,000.00
ERV = $997.65
AGGREGATE RETURN = (.23%)
- --------------------------------------------------------------------------------
SCHEDULE OF COMPUTATION OF PERFORMANCE QUOTATIONS
DIVERSIFIED MUNICIPAL PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN CALCULATION
AS OF MARCH 31, 1989
1/n
Average Annual Total Return = (ERV/P) - 1
P = a hypothetical initial investment of $1,000 on
beginning date;
ERV = ending redeemable value of the hypothetical
account on the date of the balance sheet; and
n = number of years (1, 5, 10 or the life of the
Fund).
- --------------------------------------------------------------------------------
PERIOD SINCE INCEPTION
P = $1,000.00
n = .22
ERV = $994.43
ANNUALIZED RETURN = (2.51%)
- --------------------------------------------------------------------------------
YIELD CALCULATION AS OF MARCH 31, 1989
<PAGE>
6
YIELD = 2 x [([(a - b)/(c x d)] + 1) - 1]
a = dividends and interest earned during the period
b = expenses accrued for the period
c = average daily number of shares o/s during the period
entitled to receive dividends
d = last offering price during period
Base period = 30 days
- --------------------------------------------------------------------------------
a = 464,795.79
b = 60,122.70
c = 6,334,107.045
d = 12.28
YIELD = 6.32%
- --------------------------------------------------------------------------------
AGGREGATE TOTAL RETURN CALCULATION
AS OF MARCH 31, 1989
Aggregate Total Return = ERV - P
-----------
P
Where:
P = a hypothetical initial investment of $1,000;
ERV = ending redeemable value of the hypothetical account
on the date of the balance sheet.
PERIOD SINCE INCEPTION
P = $1,000.00
ERV = $994.43
AGGREGATE RETURN = (.56%)
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 16(b) Schedule of Computation of Performance Quotations - California
Municipal Portfolio
SCHEDULE OF COMPUTATION OF PERFORMANCE QUOTATIONS
BERNSTEIN CALIFORNIA MUNICIPAL PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN CALCULATION
AS OF SEPTEMBER 30, 1990
1/n
Average Annual Total Return = (ERV/P) - 1
P = a hypothetical initial investment of $1,000 on
beginning date;
ERV = ending redeemable value of the hypothetical
account on the date of the balance sheet; and
n = number of years (1, 5, 10 or the life of the
Fund).
- --------------------------------------------------------------------------------
PERIOD SINCE INCEPTION
P = $1,000.00
n = .15
ERV = $1,003.96
ANNUALIZED RETURN = 2.66%
- --------------------------------------------------------------------------------
YIELD CALCULATION AS OF SEPTEMBER 30, 1990
6
YIELD = 2 x [([(a - b)/(c x d)] + 1) - 1]
a = dividends and interest earned during the period
b = expenses accrued for the period
c = average daily number of shares o/s during the period entitled to
receive dividends
d = last offering price during period
Base period = 30 days
- --------------------------------------------------------------------------------
a = 136,253.36
b = 15,343.41
c = 1,766,909.918
d = 12.42
YIELD = 6.70%
- --------------------------------------------------------------------------------
<PAGE>
AGGREGATE TOTAL RETURN CALCULATION
AS OF SEPTEMBER 30, 1990
Aggregate Total Return = ERV - P
-----------
P
Where:
P = a hypothetical initial investment of $1,000;
ERV = ending redeemable value of the hypothetical account on the date of the
balance sheet.
PERIOD SINCE INCEPTION
P = $1,000.00
ERV = $1,003.96
AGGREGATE RETURN = .40%
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 16(c) - Schedule of Computation of Performance Quotations - Government
Short Duration, New York Municipal, California Municipal and Diversified
Municipal Portfolios
SCHEDULE OF COMPUTATION OF PERFORMANCE QUOTATIONS
BERNSTEIN GOVERNMENT SHORT DURATION PORTFOLIO
TAX-EQUIVALENT YIELD CALCULATION AS OF SEPTEMBER 30, 1991
Tax Equivalent Yield = a + c
---------
1-b
Where:
a = the portion of the yield which is exempt from state and local, but not
federal, income taxation.
b = the highest marginal income tax imposed on an individual's unearned
ordinary income subject to state and local, but not federal, income
taxation; and
c = the portion of the yield which is not exempt from federal or state and
local income taxation.
- --------------------------------------------------------------------------------
a = 98.9% x 5.8651 (yield)
b = 10%
c = 1.1% x 5.8651 (yield)
Tax-equivalent yield = 6.51%
- --------------------------------------------------------------------------------
BERNSTEIN NEW YORK MUNICIPAL PORTFOLIO
TAX-EQUIVALENT YIELD CALCULATION AS OF SEPTEMBER 30, 1991
Tax-Equivalent Yield = a + c + e + g
------ ------ -----
1-b 1-d 1-f
Where:
a = the portion of the yield which is exempt from federal and New York
State and local income taxation;
b = the highest combined marginal income tax rate imposed on an
individual's unearned ordinary income subject to federal, state and
local income taxation;
c = the portion of the yield which is exempt from federal,
<PAGE>
but not New York State and local income taxation;
d = the highest marginal income tax imposed on an individual's unearned
ordinary income subject to federal income taxation;
e = the portion of the yield which is exempt from New York State and
local, but not federal, income taxation;
f = the highest marginal income tax imposed on an individual's unearned
ordinary income subject to New York State and local, but not federal,
income taxation; and
g = the portion of the yield which is not exempt from federal, New York
State or local income taxation.
- --------------------------------------------------------------------------------
a = 86.2% x 5.0311 (yield)
b = 39.51%
c = 0.9% x 5.0311
d = 31%
e = 0 x 5.0311
f = 12.33%
g = 12.9% x 5.0311
Tax-Equivalent Yield = 7.88%
- --------------------------------------------------------------------------------
BERNSTEIN CALIFORNIA MUNICIPAL PORTFOLIO
TAX-EQUIVALENT YIELD CALCULATION AS OF SEPTEMBER 30, 1991
Tax-Equivalent Yield = a + c + e + g
------ ------ -----
1-b 1-d 1-f
Where:
a = the portion of the yield which is exempt from federal and
California personal income taxation;
b = the highest combined marginal income tax rate imposed on an
individual's unearned ordinary income subject to federal and California
personal income taxation;
c = the portion of the yield which is exempt from federal, but not
California personal income taxation;
<PAGE>
d = the highest marginal income tax imposed on an individual's unearned
ordinary income subject to federal income taxation;
e = the portion of the yield which is exempt from California personal, but
not federal, income taxation;
f = the highest marginal income tax imposed on an individual's unearned
ordinary income subject to California personal, but not federal, income
taxation; and
g = the portion of the yield which is not exempt from federal or
California personal income taxation.
- --------------------------------------------------------------------------------
a = 4.7554 x 90.0%
b = 38.59%
c = 4.7554 x 0.1%
d = 31.0%
e = 4.7554% x 1.9%
f = 11%
g = 4.7554 x 8.0%
Tax-Equivalent Yield = 7.46%
- --------------------------------------------------------------------------------
BERNSTEIN DIVERSIFIED MUNICIPAL PORTFOLIO
TAX-EQUIVALENT YIELD CALCULATION AS OF SEPTEMBER 30, 1991
Tax-equivalent Yield = h + j
----------
1-i
Where:
h = the portion of the yield which is exempt from federal taxes;
i = the highest marginal tax rate imposed on individual income subject to
federal income taxation; and
j = the portion of the yield which is not exempt from federal income
taxation.
- --------------------------------------------------------------------------------
<PAGE>
h = 4.8591 x 95.5%
i = 31%
j = 4.8591 x 4.5%
Tax-Equivalent Yield = 6.94%
<PAGE>
Exhibit 16(d) Schedule of Computation of Performance Quotations - International
Value Portfolio
SCHEDULE OF COMPUTATION OF PERFORMANCE QUOTATIONS
BERNSTEIN INTERNATIONAL VALUE PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN CALCULATION
AS OF SEPTEMBER 30, 1992
1/n
Average Annual Total Return = (ERV/P) - 1
P = a hypothetical initial investment of $1,000 on
beginning date;
ERV = ending redeemable value of the hypothetical
account on the date of the balance sheet; and
n = number of years (1, 5, 10 or the life of the
Fund).
- --------------------------------------------------------------------------------
PERIOD SINCE INCEPTION
P = $1,000.00
n = 0.27
ERV = $958.40
ANNUALIZED RETURN = (14.37%)
<PAGE>
Exhibit 16(e) Schedule of Computation of Performance Quotations - Short Duration
California Municipal, Short Duration Diversified Municipal and Short Duration
New York Municipal Portfolios
SCHEDULE OF COMPUTATION OF PERFORMANCE QUOTATIONS
SHORT DURATION CALIFORNIA MUNICIPAL PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN CALCULATION
AS OF NOVEMBER 30, 1994
1/n
Average Annual Total Return = (ERV/P) - 1
P = a hypothetical initial investment of $1,000 on beginning date;
ERV = ending redeemable value of the hypothetical account on the
date of the balance sheet; and
n = number of years (1, 5, 10 or the life of the Fund).
- --------------------------------------------------------------------------------
PERIOD SINCE INCEPTION
P = $1,000.00
n = .158904
ERV = $1,001.53
ANNUALIZED RETURN = 0.95%
- --------------------------------------------------------------------------------
YIELD CALCULATION AS OF NOVEMBER 30, 1994
6
YIELD = 2[([(a - b)/(c x d)] + 1) - 1]
a = dividends and interest earned during the period
b = expenses accrued for the period
c = average daily number of shares o/s during the period entitled to
receive dividends
d = last offering price during period
Base period = 30 days
- --------------------------------------------------------------------------------
a = 116,742.89
b = 16,259.68
<PAGE>
c = 1,992,703.906
d = 12.43
YIELD = 4.92%
- --------------------------------------------------------------------------------
SCHEDULE OF COMPUTATION OF PERFORMANCE QUOTATIONS
SHORT DURATION DIVERSIFIED MUNICIPAL PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN CALCULATION
AS OF NOVEMBER 30, 1994
1/n
Average Annual Total Return = (ERV/P) - 1
P = a hypothetical initial investment of $1,000 on beginning date;
ERV = ending redeemable value of the hypothetical account on the
date of the balance sheet; and
n = number of years (1, 5, 10 or the life of the Fund).
- --------------------------------------------------------------------------------
PERIOD SINCE INCEPTION
P = $1,000.00
n = .158904
ERV = $1,001.35
ANNUALIZED RETURN = 0.88%
- --------------------------------------------------------------------------------
YIELD CALCULATION AS OF NOVEMBER 30, 1994
6
YIELD = 2[([(a - b)/(c x d)] + 1) - 1]
a = dividends and interest earned during the period
b = expenses accrued for the period
c = average daily number of shares o/s during the period entitled to
receive dividends
d = last offering price during period
Base period = 30 days
- --------------------------------------------------------------------------------
<PAGE>
a = 196,289.83
b = 25,151.53
c = 3,118,215.800
d = 12.43
YIELD = 5.36%
- --------------------------------------------------------------------------------
SCHEDULE OF COMPUTATION OF PERFORMANCE QUOTATIONS
SHORT DURATION NEW YORK MUNICIPAL PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN CALCULATION
AS OF NOVEMBER 30, 1994
1/n
Average Annual Total Return = (ERV/P) - 1
P = a hypothetical initial investment of $1,000 on beginning date;
ERV = ending redeemable value of the hypothetical account on the
date of the balance sheet; and
n = number of years (1, 5, 10 or the life of the Fund).
- --------------------------------------------------------------------------------
PERIOD SINCE INCEPTION
P = $1,000.00
n = .158904
ERV = $999.78
ANNUALIZED RETURN = (0.13%)
- --------------------------------------------------------------------------------
YIELD CALCULATION AS OF NOVEMBER 30, 1994
6
YIELD = 2[([(a - b)/(c x d)] + 1) - 1]
a = dividends and interest earned during the period
b = expenses accrued for the period
c = average daily number of shares o/s during the period entitled to
receive dividends
d = last offering price during period
<PAGE>
Base period = 30 days
- --------------------------------------------------------------------------------
a = 166,596.54
b = 21,454.82
c = 2,641,172.119
d = 12.40
YIELD = 5.38%
- --------------------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Fund's
Annual Report for the one year ending September 30, 1997 and is qualified in its
entirety by reference to the Fund's Annual Report for the one year ending
September 30, 1997 for the Bernstein Government Short Duration Portfolio.
</LEGEND>
<SERIES>
<NUMBER> 01
<NAME> BERNSTEIN GOVERNMENT SHORT DURATION
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 142,953,104
<INVESTMENTS-AT-VALUE> 143,666,594
<RECEIVABLES> 1,939,972
<ASSETS-OTHER> 908
<OTHER-ITEMS-ASSETS> 3,270
<TOTAL-ASSETS> 145,610,744
<PAYABLE-FOR-SECURITIES> 3,073,387
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 456,087
<TOTAL-LIABILITIES> 3,529,474
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 143,279,584
<SHARES-COMMON-STOCK> 11,337,360
<SHARES-COMMON-PRIOR> 11,198,989
<ACCUMULATED-NII-CURRENT> 55,344
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,951,188)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 686,193
<NET-ASSETS> 142,081,270
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,230,292
<OTHER-INCOME> 0
<EXPENSES-NET> 951,212
<NET-INVESTMENT-INCOME> 7,279,080
<REALIZED-GAINS-CURRENT> 34,364
<APPREC-INCREASE-CURRENT> 525,741
<NET-CHANGE-FROM-OPS> 7,839,185
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,279,080
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,264,809
<NUMBER-OF-SHARES-REDEEMED> 4,381,871
<SHARES-REINVESTED> 255,433
<NET-CHANGE-IN-ASSETS> 2,279,132
<ACCUMULATED-NII-PRIOR> 55,344
<ACCUMULATED-GAINS-PRIOR> (1,985,552)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 684,405
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 951,212
<AVERAGE-NET-ASSETS> 137,264,014
<PER-SHARE-NAV-BEGIN> 12.48
<PER-SHARE-NII> 0.67
<PER-SHARE-GAIN-APPREC> 0.05
<PER-SHARE-DIVIDEND> 0.67
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.53
<EXPENSE-RATIO> 0.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Fund's
Annual Report for the one year ending September 30, 1997 and is qualified in its
entirety by reference to the Fund's Annual Report for the one year ending
September 30, 1997 for the Bernstein Short Duration Plus Portfolio.
</LEGEND>
<SERIES>
<NUMBER> 02
<NAME> BERNSTEIN SHORT DURATION PLUS
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 621,112,789
<INVESTMENTS-AT-VALUE> 621,008,343
<RECEIVABLES> 9,445,858
<ASSETS-OTHER> 6,251,208
<OTHER-ITEMS-ASSETS> 131,052
<TOTAL-ASSETS> 636,836,461
<PAYABLE-FOR-SECURITIES> 21,613,064
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,479,140
<TOTAL-LIABILITIES> 24,092,204
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 614,788,838
<SHARES-COMMON-STOCK> 48,893,478
<SHARES-COMMON-PRIOR> 43,129,203
<ACCUMULATED-NII-CURRENT> (4,051,268)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,342,722
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (384,929)
<NET-ASSETS> 612,744,257
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 35,118,392
<OTHER-INCOME> 0
<EXPENSES-NET> 3,768,415
<NET-INVESTMENT-INCOME> 31,349,977
<REALIZED-GAINS-CURRENT> 5,442,212
<APPREC-INCREASE-CURRENT> (1,707,292)
<NET-CHANGE-FROM-OPS> 35,084,897
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 32,676,633
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 201,114,755
<NUMBER-OF-SHARES-REDEEMED> 15,307,639
<SHARES-REINVESTED> 957,167
<NET-CHANGE-IN-ASSETS> 74,496,517
<ACCUMULATED-NII-PRIOR> 959,835
<ACCUMULATED-GAINS-PRIOR> (6,783,937)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,913,990
<INTEREST-EXPENSE> 2,530
<GROSS-EXPENSE> 3,768,415
<AVERAGE-NET-ASSETS> 583,059,215
<PER-SHARE-NAV-BEGIN> 12.48
<PER-SHARE-NII> 0.67
<PER-SHARE-GAIN-APPREC> 0.08
<PER-SHARE-DIVIDEND> 0.70
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.53
<EXPENSE-RATIO> 0.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Fund's
Annual Report for the one year ending September 30, 1997 and is qualified in its
entirety by reference to the Fund's Annual Report for the one year ending
September 30, 1997 for the Bernstein New York Municipal Portfolio.
</LEGEND>
<SERIES>
<NUMBER> 03
<NAME> BERNSTEIN NEW YORK MUNICIPAL
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 640,610,953
<INVESTMENTS-AT-VALUE> 660,777,165
<RECEIVABLES> 12,518,719
<ASSETS-OTHER> 827
<OTHER-ITEMS-ASSETS> 15,245
<TOTAL-ASSETS> 673,311,956
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,611,725
<TOTAL-LIABILITIES> 1,611,725
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 651,606,907
<SHARES-COMMON-STOCK> 49,309,430
<SHARES-COMMON-PRIOR> 40,396,394
<ACCUMULATED-NII-CURRENT> 9,519
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (131,717)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20,166,212
<NET-ASSETS> 671,700,231
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 31,136,224
<OTHER-INCOME> 0
<EXPENSES-NET> 3,919,506
<NET-INVESTMENT-INCOME> 27,216,718
<REALIZED-GAINS-CURRENT> 1,118,095
<APPREC-INCREASE-CURRENT> 11,126,668
<NET-CHANGE-FROM-OPS> 39,461,481
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 27,216,718
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15,729,863
<NUMBER-OF-SHARES-REDEEMED> 7,417,377
<SHARES-REINVESTED> 600,550
<NET-CHANGE-IN-ASSETS> 132,483,493
<ACCUMULATED-NII-PRIOR> 9,519
<ACCUMULATED-GAINS-PRIOR> (1,249,812)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,013,735
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,919,506
<AVERAGE-NET-ASSETS> 603,474,017
<PER-SHARE-NAV-BEGIN> 13.35
<PER-SHARE-NII> 0.61
<PER-SHARE-GAIN-APPREC> 0.27
<PER-SHARE-DIVIDEND> 0.61
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.62
<EXPENSE-RATIO> 0.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Fund's
Annual Report for the one year ending September 30, 1997 and is qualified in its
entirety by reference to the Fund's Annual Report for the one year ending
September 30, 1997 for the Bernstein Diversified Municipal Portfolio.
</LEGEND>
<SERIES>
<NUMBER> 04
<NAME> BERNSTEIN DIVERSIFIED MUNICIPAL
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 1,071,920,436
<INVESTMENTS-AT-VALUE> 1,106,723,788
<RECEIVABLES> 23,237,486
<ASSETS-OTHER> 90,940
<OTHER-ITEMS-ASSETS> 24,849
<TOTAL-ASSETS> 1,130,077,063
<PAYABLE-FOR-SECURITIES> 11,689,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,013,598
<TOTAL-LIABILITIES> 15,702,598
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,079,773,338
<SHARES-COMMON-STOCK> 81,114,898
<SHARES-COMMON-PRIOR> 61,061,135
<ACCUMULATED-NII-CURRENT> 72,588
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (355,930)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 34,803,353
<NET-ASSETS> 1,114,374,465
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 49,084,335
<OTHER-INCOME> 0
<EXPENSES-NET> 6,286,392
<NET-INVESTMENT-INCOME> 42,797,943
<REALIZED-GAINS-CURRENT> 921,074
<APPREC-INCREASE-CURRENT> 21,574,271
<NET-CHANGE-FROM-OPS> 65,293,288
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 42,797,943
<DISTRIBUTIONS-OF-GAINS> 787,195
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 30,378,901
<NUMBER-OF-SHARES-REDEEMED> 11,115,453
<SHARES-REINVESTED> 790,315
<NET-CHANGE-IN-ASSETS> 293,979,156
<ACCUMULATED-NII-PRIOR> 52,427
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (469,648)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,812,090
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,286,392
<AVERAGE-NET-ASSETS> 965,960,791
<PER-SHARE-NAV-BEGIN> 13.44
<PER-SHARE-NII> 0.60
<PER-SHARE-GAIN-APPREC> 0.31
<PER-SHARE-DIVIDEND> 0.60
<PER-SHARE-DISTRIBUTIONS> 0.01
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.74
<EXPENSE-RATIO> 0.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Fund's
Annual Report for the one year ending September 30, 1997 and is qualified in its
entirety by reference to the Fund's Annual Report for the one year ending
September 30, 1997 for the Bernstein Intermediate Duration Portfolio.
</LEGEND>
<SERIES>
<NUMBER> 05
<NAME> BERNSTEIN INTERMEDIATE DURATION
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 2,345,900,626
<INVESTMENTS-AT-VALUE> 2,358,685,754
<RECEIVABLES> 173,313,620
<ASSETS-OTHER> 28,401,176
<OTHER-ITEMS-ASSETS> 649,034
<TOTAL-ASSETS> 2,561,049,584
<PAYABLE-FOR-SECURITIES> 496,393,192
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,435,900
<TOTAL-LIABILITIES> 502,829,092
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,014,789,216
<SHARES-COMMON-STOCK> 153,832,223
<SHARES-COMMON-PRIOR> 11,005,316
<ACCUMULATED-NII-CURRENT> (14,679,196)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 448,894,656
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,067,174
<NET-ASSETS> 2,058,220,492
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 108,701,495
<OTHER-INCOME> 0
<EXPENSES-NET> 10,818,097
<NET-INVESTMENT-INCOME> 97,883,398
<REALIZED-GAINS-CURRENT> 37,496,139
<APPREC-INCREASE-CURRENT> 9,204,467
<NET-CHANGE-FROM-OPS> 144,584,004
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 104,555,087
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 62,200,789
<NUMBER-OF-SHARES-REDEEMED> 21,358,980
<SHARES-REINVESTED> 1,985,098
<NET-CHANGE-IN-ASSETS> 606,444,356
<ACCUMULATED-NII-PRIOR> 6,044,673
<ACCUMULATED-GAINS-PRIOR> (6,658,854)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,347,557
<INTEREST-EXPENSE> 13,606
<GROSS-EXPENSE> 10,818,097
<AVERAGE-NET-ASSETS> 1,746,099,119
<PER-SHARE-NAV-BEGIN> 13.08
<PER-SHARE-NII> 0.75
<PER-SHARE-GAIN-APPREC> 0.35
<PER-SHARE-DIVIDEND> 0.80
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.38
<EXPENSE-RATIO> 0.62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Fund's
Annual Report for the one year ending September 30, 1997 and is qualified in its
entirety by reference to the Fund's Annual Report for the one year ending
September 30, 1997 for the Bernstein California Municipal Portfolio.
</LEGEND>
<SERIES>
<NUMBER> 06
<NAME> BERNSTEIN CALIFORNIA MUNICIPAL
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 408,427,630
<INVESTMENTS-AT-VALUE> 420,721,799
<RECEIVABLES> 8,873,296
<ASSETS-OTHER> 71,113
<OTHER-ITEMS-ASSETS> 8,870
<TOTAL-ASSETS> 429,675,078
<PAYABLE-FOR-SECURITIES> 17,103,422
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,187,227
<TOTAL-LIABILITIES> 18,290,649
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 399,126,942
<SHARES-COMMON-STOCK> 29,590,176
<SHARES-COMMON-PRIOR> 21,046,745
<ACCUMULATED-NII-CURRENT> (31,860)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (34,413)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,294,169
<NET-ASSETS> 411,384,429
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 16,725,918
<OTHER-INCOME> 0
<EXPENSES-NET> 2,264,177
<NET-INVESTMENT-INCOME> 14,461,741
<REALIZED-GAINS-CURRENT> 672,821
<APPREC-INCREASE-CURRENT> 7,475,656
<NET-CHANGE-FROM-OPS> 22,610,218
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14,461,741
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13,046,313
<NUMBER-OF-SHARES-REDEEMED> 4,762,980
<SHARES-REINVESTED> 260,098
<NET-CHANGE-IN-ASSETS> 125,626,594
<ACCUMULATED-NII-PRIOR> (31,860)
<ACCUMULATED-GAINS-PRIOR> (707,234)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,695,825
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,264,177
<AVERAGE-NET-ASSETS> 340,783,391
<PER-SHARE-NAV-BEGIN> 13.58
<PER-SHARE-NII> 0.59
<PER-SHARE-GAIN-APPREC> 0.32
<PER-SHARE-DIVIDEND> 0.59
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.90
<EXPENSE-RATIO> 0.67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Fund's
Annual Report for the one year ending September 30, 1997 and is qualified in its
entirety by reference to the Fund's Annual Report for the one year ending
September 30, 1997 for the Bernstein International Value Portfolio.
</LEGEND>
<SERIES>
<NUMBER> 07
<NAME> BERNSTEIN INTERNATIONAL VALUE
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 4,315,130,556
<INVESTMENTS-AT-VALUE> 4,939,664,189
<RECEIVABLES> 42,019,025
<ASSETS-OTHER> 895,956,033
<OTHER-ITEMS-ASSETS> 44,911,664
<TOTAL-ASSETS> 5,922,550,911
<PAYABLE-FOR-SECURITIES> 41,021,365
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 915,531,678
<TOTAL-LIABILITIES> 956,553,043
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,925,784,801
<SHARES-COMMON-STOCK> 237,367,711
<SHARES-COMMON-PRIOR> 172,644,553
<ACCUMULATED-NII-CURRENT> (207,902,361)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 625,127,166
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 622,750,894
<NET-ASSETS> 4,965,997,868
<DIVIDEND-INCOME> 62,958,007
<INTEREST-INCOME> 42,007,713
<OTHER-INCOME> 0
<EXPENSES-NET> 50,611,294
<NET-INVESTMENT-INCOME> 54,354,426
<REALIZED-GAINS-CURRENT> 401,929,752
<APPREC-INCREASE-CURRENT> 389,153,860
<NET-CHANGE-FROM-OPS> 845,438,038
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 177,062,085
<DISTRIBUTIONS-OF-GAINS> 39,191,692
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 76,579,608
<NUMBER-OF-SHARES-REDEEMED> 23,582,282
<SHARES-REINVESTED> 11,725,832
<NET-CHANGE-IN-ASSETS> 1,834,739,607
<ACCUMULATED-NII-PRIOR> 145,202,508
<ACCUMULATED-GAINS-PRIOR> 31,991,896
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 37,754,997
<INTEREST-EXPENSE> 1,352
<GROSS-EXPENSE> 50,611,294
<AVERAGE-NET-ASSETS> 3,971,445,487
<PER-SHARE-NAV-BEGIN> 18.14
<PER-SHARE-NII> 0.26
<PER-SHARE-GAIN-APPREC> 3.73
<PER-SHARE-DIVIDEND> 0.99
<PER-SHARE-DISTRIBUTIONS> 0.22
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.92
<EXPENSE-RATIO> 1.27
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Fund's
Annual Report for the one year ending September 30, 1997 and is qualified in its
entirety by reference to the Fund's Annual Report for the one year ending
September 30, 1997 for the Bernstein Short Duration New York Municipal
Portfolio.
</LEGEND>
<SERIES>
<NUMBER> 08
<NAME> BERNSTEIN SHORT DURATION NEW YORK MUNICIPAL
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 75,119,064
<INVESTMENTS-AT-VALUE> 75,130,856
<RECEIVABLES> 1,187,410
<ASSETS-OTHER> 16,064
<OTHER-ITEMS-ASSETS> 4,928
<TOTAL-ASSETS> 76,339,258
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 197,495
<TOTAL-LIABILITIES> 197,495
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 76,035,519
<SHARES-COMMON-STOCK> 6,105,588
<SHARES-COMMON-PRIOR> 4,693,828
<ACCUMULATED-NII-CURRENT> 172
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 88,174
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,792
<NET-ASSETS> 76,141,763
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,291,349
<OTHER-INCOME> 0
<EXPENSES-NET> 526,143
<NET-INVESTMENT-INCOME> 2,765,206
<REALIZED-GAINS-CURRENT> 95,685
<APPREC-INCREASE-CURRENT> (167,004)
<NET-CHANGE-FROM-OPS> 2,693,887
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,765,206
<DISTRIBUTIONS-OF-GAINS> 201,609
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,862,743
<NUMBER-OF-SHARES-REDEEMED> 3,559,396
<SHARES-REINVESTED> 108,413
<NET-CHANGE-IN-ASSETS> 17,391,529
<ACCUMULATED-NII-PRIOR> 172
<ACCUMULATED-GAINS-PRIOR> 194,098
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 347,018
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 526,143
<AVERAGE-NET-ASSETS> 69,180,471
<PER-SHARE-NAV-BEGIN> 12.52
<PER-SHARE-NII> 0.50
<PER-SHARE-GAIN-APPREC> (0.01)
<PER-SHARE-DIVIDEND> 0.50
<PER-SHARE-DISTRIBUTIONS> 0.04
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.47
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Fund's
Annual Report for the one year ending September 30, 1997 and is qualified in its
entirety by reference to the Fund's Annual Report for the one year ending
September 30, 1997 for the Bernstein Short Duration Diversified Municipal
Portfolio.
</LEGEND>
<SERIES>
<NUMBER> 09
<NAME> BERNSTEIN SHORT DURATION DIVERSIFIED MUNICIPAL
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 151,608,540
<INVESTMENTS-AT-VALUE> 152,045,048
<RECEIVABLES> 3,535,412
<ASSETS-OTHER> 11,509
<OTHER-ITEMS-ASSETS> 451
<TOTAL-ASSETS> 155,592,420
<PAYABLE-FOR-SECURITIES> 3,217,297
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 553,711
<TOTAL-LIABILITIES> 3,771,008
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 151,021,152
<SHARES-COMMON-STOCK> 12,089,969
<SHARES-COMMON-PRIOR> 9,516,156
<ACCUMULATED-NII-CURRENT> (9,678)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 361,340
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 436,508
<NET-ASSETS> 151,821,412
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,922,097
<OTHER-INCOME> 0
<EXPENSES-NET> 972,030
<NET-INVESTMENT-INCOME> 4,950,067
<REALIZED-GAINS-CURRENT> 373,938
<APPREC-INCREASE-CURRENT> 105,400
<NET-CHANGE-FROM-OPS> 5,429,405
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,950,067
<DISTRIBUTIONS-OF-GAINS> 123,013
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,964,084
<NUMBER-OF-SHARES-REDEEMED> 7,527,905
<SHARES-REINVESTED> 137,634
<NET-CHANGE-IN-ASSETS> 32,725,450
<ACCUMULATED-NII-PRIOR> (9,678)
<ACCUMULATED-GAINS-PRIOR> 110,415
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 671,962
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 972,030
<AVERAGE-NET-ASSETS> 135,752,384
<PER-SHARE-NAV-BEGIN> 12.52
<PER-SHARE-NII> 0.46
<PER-SHARE-GAIN-APPREC> 0.05
<PER-SHARE-DIVIDEND> 0.46
<PER-SHARE-DISTRIBUTIONS> 0.01
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.56
<EXPENSE-RATIO> 0.72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Fund's
Annual Report for the one year ending September 30, 1997 and is qualified in its
entirety by reference to the Fund's Annual Report for the one year ending
September 30, 1997 for the Bernstein Short Duration California Municipal
Portfolio.
</LEGEND>
<SERIES>
<NUMBER> 10
<NAME> BERNSTEIN SHORT DURATION CALIFORNIA MUNICIPAL
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 80,977,355
<INVESTMENTS-AT-VALUE> 81,280,860
<RECEIVABLES> 7,946,586
<ASSETS-OTHER> 66,504
<OTHER-ITEMS-ASSETS> 4,698
<TOTAL-ASSETS> 89,298,648
<PAYABLE-FOR-SECURITIES> 2,108,381
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 879,416
<TOTAL-LIABILITIES> 2,987,797
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 85,981,094
<SHARES-COMMON-STOCK> 6,875,216
<SHARES-COMMON-PRIOR> 5,819,554
<ACCUMULATED-NII-CURRENT> (20,838)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 40,215
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 303,505
<NET-ASSETS> 86,310,851
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,277,115
<OTHER-INCOME> 0
<EXPENSES-NET> 561,259
<NET-INVESTMENT-INCOME> 2,715,856
<REALIZED-GAINS-CURRENT> 40,413
<APPREC-INCREASE-CURRENT> 133,566
<NET-CHANGE-FROM-OPS> 2,889,835
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,715,856
<DISTRIBUTIONS-OF-GAINS> 72,490
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,015,641
<NUMBER-OF-SHARES-REDEEMED> 4,047,977
<SHARES-REINVESTED> 87,998
<NET-CHANGE-IN-ASSETS> 13,385,583
<ACCUMULATED-NII-PRIOR> (20,838)
<ACCUMULATED-GAINS-PRIOR> 72,292
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 380,701
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 561,259
<AVERAGE-NET-ASSETS> 76,033,740
<PER-SHARE-NAV-BEGIN> 12.53
<PER-SHARE-NII> 0.45
<PER-SHARE-GAIN-APPREC> 0.03
<PER-SHARE-DIVIDEND> 0.45
<PER-SHARE-DISTRIBUTIONS> 0.01
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.55
<EXPENSE-RATIO> 0.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Fund's
Annual Report for the one year ending September 30, 1997 and is qualified in its
entirety by reference to the Fund's Annual Report for the one year ending
September 30, 1997 for the Bernstein Emerging Markets Value Portfolio.
</LEGEND>
<SERIES>
<NUMBER> 11
<NAME> BERNSTEIN EMERGING MARKETS VALUE
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 460,289,906
<INVESTMENTS-AT-VALUE> 431,297,699
<RECEIVABLES> 2,686,305
<ASSETS-OTHER> 47,440
<OTHER-ITEMS-ASSETS> 6,170,681
<TOTAL-ASSETS> 440,202,125
<PAYABLE-FOR-SECURITIES> 874,846
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,022,231
<TOTAL-LIABILITIES> 1,897,077
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 454,237,824
<SHARES-COMMON-STOCK> 19,447,363
<SHARES-COMMON-PRIOR> 12,554,385
<ACCUMULATED-NII-CURRENT> 3,061,030
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 10,077,702
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (29,090,955)
<NET-ASSETS> 438,285,601
<DIVIDEND-INCOME> 8,414,240
<INTEREST-INCOME> 419,888
<OTHER-INCOME> 0
<EXPENSES-NET> 6,623,824
<NET-INVESTMENT-INCOME> 2,210,304
<REALIZED-GAINS-CURRENT> 11,079,001
<APPREC-INCREASE-CURRENT> (10,830,999)
<NET-CHANGE-FROM-OPS> 2,458,306
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,152,059
<DISTRIBUTIONS-OF-GAINS> 290,473
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,748,663
<NUMBER-OF-SHARES-REDEEMED> 918,731
<SHARES-REINVESTED> 63,046
<NET-CHANGE-IN-ASSETS> 164,380,916
<ACCUMULATED-NII-PRIOR> 1,009,720
<ACCUMULATED-GAINS-PRIOR> 282,239
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,723,410
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,623,824
<AVERAGE-NET-ASSETS> 375,501,347
<PER-SHARE-NAV-BEGIN> 21.82
<PER-SHARE-NII> 0.14
<PER-SHARE-GAIN-APPREC> 0.68
<PER-SHARE-DIVIDEND> 0.08
<PER-SHARE-DISTRIBUTIONS> 0.02
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 22.54
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
