<PAGE>
Supplement dated as of October 2, 2000 filed pursuant to Rule 497(e) of the
Securities Exchange Act of 1933 to the Statement of Additional Information
dated February 1, 2000 pursuant to Post-Effective Amendment No. 21 (File
Nos. 33-21844; 811-5555), which was filed with the Securities and Exchange
Commission on January 28, 2000.
Effective October 2, 2000, the Fund's investment manager, Sanford C. Bernstein &
Co., Inc., was acquired by Alliance Capital Management L.P. Accordingly, all
references in this Statement of Additional Information to "Sanford C. Bernstein
& Co., Inc." shall be changed to "Alliance Capital Management L.P." or
"Alliance" except in the case of specific disclosure with respect to Bernstein
prior to October 2, 2000.
The section of the Statement of Additional Information entitled "Directors and
Officers and Principal Holders of Securities" shall be replaced in its entirety
by the following:
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>
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NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATION
ADDRESS, AND AGE FUND DURING PAST FIVE YEARS
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<S> <C> <C>
Roger Hertog* President, Currently: Vice Chairman and Director-Alliance
767 Fifth Avenue Treasurer, 1993-2000: President, Chief Operating Officer and
New York, NY 10153 Director Director-Bernstein
DOB: 11/4/41
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Andrew S. Adelson* Senior Vice President, Currently: Executive Vice President and Chief Investment
767 Fifth Avenue Director Officer International Value Equities-Alliance and
New York, NY 10153 Director-Sanford C. Bernstein Ltd
DOB: 5/31/55 1990-2000: Senior Vice President, Chief Investment Officer-
International Equities and Director-Bernstein
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Arthur Aeder Director 1987-Present: Consultant;
516 Fifth Avenue Formerly Senior Partner of Oppenheim, Appel, Dixon & Co.
New York, NY 10036 (subsequently Spicer & Oppenheim) Certified Public
DOB: 12/31/25 Accountants, and Chairman of Spicer & Oppenheim International
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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
DOB: 1/22/19
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</TABLE>
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<TABLE>
<CAPTION>
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NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATION
ADDRESS, AND AGE FUND DURING PAST FIVE YEARS
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Irwin Engelman Director 1998-Present: Vice Chairman and Chief Administrative
625 Madison Avenue Officer-Revlon Inc.
New York, NY 10022 2/92-1/99: Executive Vice President and Chief Financial
DOB: 5/9/34 Officer-MacAndrews & Forbes Holdings Inc.
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Peter W. Huber Director Partner-Kellogg Huber Hansen Todd & Evans (law firm); Senior
1301 K Street NW Fellow-Manhattan Institute for Policy Research; Chairman,
Washington, DC 20814 Telecom Policy and Analysis: a Kellog, Huber Consulting Group;
DOB: 11/3/52 Columnist-Forbes Magazine
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William Kristol Director 6/95-Present: Editor and Publisher, The Weekly Standard
1150 17th Street NW 7/95-12/99: Consultant, ABC News
5th Floor
Washington, DC 20036
DOB: 12/23/52
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Theodore Levitt Director Professor Emeritus of Business Administration,
Harvard Business School Harvard University; Director, Cordiant Communications Group
Cumnock 300 Ltd; 1985-1989: Editor, Harvard Business Review
Boston, MA 02163
DOB: 3/1/25
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Rosalie J. Wolf Director Currently: Managing Partner-Botanica Capital Partners LLC and
115 East 87th Street Director - Airbourne Freight Corp. and TIAA-CREF; 1994-2000:
New York, NY 10128 Treasurer and Chief Investment Officer, The Rockefeller
DOB: 5/8/41 Foundation
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Francis H. Trainer, Jr. Senior Vice President Currently: Chief Investment Officer Fixed-Income-Alliance
767 Fifth Avenue 1992-2000: Senior Vice President, Chief Investment
New York, NY 10153 Officer-Fixed Income and Director-Bernstein
DOB: 11/15/46
</TABLE>
2
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3
<TABLE>
<CAPTION>
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NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATION
ADDRESS, AND AGE FUND DURING PAST FIVE YEARS
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Jean Margo Reid Secretary Currently: Director-Sanford C. Bernstein & Co., LLC and
767 Fifth Avenue Director-Sanford C. Bernstein Ltd
New York, NY 10153 1999-2000: Senior Vice President, General Counsel and Director
DOB: 8/31/45 - Bernstein; 1997-99: General Counsel and Secretary -
Bernstein; 1993-96: Associate General Counsel and Vice
President-Bernstein
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</TABLE>
* An "interested person" of the Fund, as defined in the 1940 Act.
** Not related to any person formerly or currently associated with Bernstein.
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 also perform various duties imposed
on directors of investment companies by the 1940 Act and by the State of
Maryland. 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 directors who were not affiliated persons of
Bernstein and who were serving as directors at the time, 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, 1999. 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.
Irwin Engelman, Peter W. Huber and Rosalie J. Wolf were elected to the board of
directors on September 25, 2000. 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.
3
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4
As of October 6, 2000, directors and officers of the Fund, as a group,
owned less than one percent of the outstanding shares of the Bernstein
Government Short Duration Portfolio, Bernstein Intermediate Duration Portfolio,
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 Portfolios and
Bernstein Emerging Markets Value Portfolio.
As of January 24, 2000, the B. D. Shapiro Administrative Trust of Los
Angeles, CA owned 7.92% of the Bernstein Short Duration California Municipal
Portfolio and the New Mexico State Investment Council of Santa Fe, New Mexico
owned 13.03% of the Bernstein Emerging Markets Value Portfolio.
The section entitled "Manager and Distributor" in the Statement of Additional
Information is replaced in its entirety by the following:
MANAGER AND DISTRIBUTOR
Manager. Alliance Capital Management L.P. ("Alliance" or the
"Manager"), a Delaware limited partnership with principal offices at 1345 Avenue
of the Americas, New York, New York 10105, has entered into Management
Agreements with the Fund, on behalf of each of the Portfolios pursuant to which
the Bernstein Investment Research and Management unit of Alliance acts as
investment adviser for each of the Portfolios.
Alliance Capital Management Corporation ("ACMC") is the general partner
of the Adviser and a wholly-owned subsidiary of The Equitable Life Assurance
Society of the United States. Equitable, one of the largest life insurance
companies in the United States, is the beneficial owner of an approximately
55.4% partnership interest in the Adviser. Alliance Capital Management Holding
L.P. ("Alliance Holding") owns an approximately 41.9% partnership interest in
the Adviser. Equity interests in Alliance Holding are traded on the New York
Stock Exchange in the form of units. Approximately 98% of such interests are
owned by the public and management or employees of the Adviser and approximately
2% are owned by Equitable. Equitable is a wholly owned subsidiary of AXA
Financial, Inc. ("AXA Financial"), a Delaware corporation whose shares are
traded on the New York Stock Exchange. AXA Financial serves as the holding
company for the Adviser, Equitable and Donaldson, Lufkin & Jenrette, Inc., an
integrated investment and merchant bank. As of June 30, 1999, AXA, a French
insurance holding company, owned approximately 58.2% of the issued and
outstanding shares of common stock of AXA Financial.
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, Alliance
manages the investment of each Portfolio's assets. Alliance makes investment
decisions for each
4
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5
Portfolio and places purchase and sale orders. The services of the Manager are
not exclusive under the terms of the Management Agreements. Alliance is free to
render similar services to others.
Alliance 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 Alliance under the
Management Agreements may be furnished through the medium of any such directors,
officers or employees of Alliance. 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 Alliance.
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 each of the Bernstein International Value Portfolios is at an
annual rate of 1.00% of that Portfolio's average daily net assets up to but not
exceeding $1 billion; an annual rate of 0.90 of 1% of that Portfolio's average
daily net assets that is in excess of $1 billion up to, but not exceeding $4
billion; an annual rate of 0.875 of 1% of that Portfolio's average daily net
assets in excess of $4 billion up to, but not exceeding $6 billion; and 0.85 of
1% of that Portfolio's average daily net assets over $6 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, 1997, 1998, and 1999 the investment management fees accrued
or paid to Bernstein pursuant to the Management Agreements were, respectively,
$65,345,690, $83,314,803, and $91,558,133.
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 Alliance. Alliance serves as Shareholder Servicing Agent and in such
capacity may enter into agreements with other organizations whereby some or all
of Alliance's duties in this regard may be delegated. Alliance has delegated
such duties to Alliance Fund Services, Inc. ("AFS"). Pursuant to the Shareholder
Servicing and Administrative Agreements, AFS pays all expenses incurred by it in
connection with administering the ordinary course of the Fund's and each
Portfolio's business. AFS also pays the costs of office
5
<PAGE>
6
facilities and of clerical and administrative services that are not provided by
State Street Bank and Trust Company, the Fund's Custodian and Transfer Agent.
The shareholder servicing that will be provided by AFS 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 servicing and administration is
0.10% of each Portfolio's average daily net assets and the fee paid by the
Bernstein International Value Portfolios 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, 1997, 1998, and 1999, the
fees accrued or paid to Bernstein pursuant to the Shareholder Servicing and
Administrative Agreements were $15,530,342, $20,136,349, and $22,051,781,
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 Alliance under the Management
Agreements and AFS the Shareholder Servicing and Administrative Agreements; (ii)
the fees and expenses of Directors who are not affiliated with Alliance; (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
6
<PAGE>
7
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.
Distributor. Sanford C. Bernstein & Co., LLC, a wholly-owned subsidiary
of Alliance, acts as Distributor of each Portfolio's shares pursuant to
Distribution Agreements.
7
