Equity Decision in Wealth Management by tle11209


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       Global Wealth Management

Foreword ...........................................................................................................................................................................................................................1

Important Information on Changes in Asset Allocation and Account Closings............................................................................................................... 2

Investment-Management Services ................................................................................................................................................................................... 2

Investment-Management Decision Making ..................................................................................................................................................................... 3

Portfolio Construction and Your Asset Allocation ........................................................................................................................................................... 6

How to Open an Investment Account ............................................................................................................................................................................ 15

How to Open a Pension, Profit-Sharing, Endowment or Foundation Account ............................................................................................................... 15

Policies for Opening or Closing an Account and Communicating Instructions to Us................................................................................................... 16

Portfolio Information Systems and Review ................................................................................................................................................................... 17

Client Communications ................................................................................................................................................................................................. 18

Tax-Related Strategies and Communications ................................................................................................................................................................ 18

Proxy Voting................................................................................................................................................................................................................... 19

Execution and Allocation............................................................................................................................................................................................... 19

Investment-Management Fees and Transaction Charges .............................................................................................................................................. 22

Brokerage Placement Practices ................................................................................................................................................................................... 23

Policy Review ................................................................................................................................................................................................................ 24

Other Business Activities............................................................................................................................................................................................... 24

Business Continuity Statement...................................................................................................................................................................................... 26

Privacy Policy ................................................................................................................................................................................................................ 27

AllianceBernstein Corporation—Executive Committee ............................................................................................................................................... 28

Chief Investment Officers ............................................................................................................................................................................................ 30

Auditors ......................................................................................................................................................................................................................... 31

Bernstein does not provide tax, legal or accounting advice. You should discuss your individual circumstances with professionals in those areas
before making any decisions relating to your Bernstein account.
 FOREWORD                                                                              3. Combining domestic and foreign investments, and the
 Bernstein Global Wealth Management (“Bernstein”), a unit                                 value-based and growth-oriented approaches to stock
 of AllianceBernstein L.P. (“AllianceBernstein”),* provides                               investing, should further reduce your long-term risk and
 a variety of investment-management services for portfolios                               enhance your long-term return. The reason, again, is low
 consisting, in whole or part, of equity, fixed income, real estate                       correlations: Markets in different parts of the world tend
 investment trusts (“REITs”), and other securities—suitable                               to perform relatively independently of one another, and
 to individual risk/reward objectives. This Investment-                                   value stocks tend to have their best and worst periods
 Management Services and Policies manual describes our                                    at opposite times from growth stocks. It is also true
 investment-management philosophy and methods in detail.                                  that foreign securities carry risks of their own—that the
 For further information, clients should speak directly with                              currencies they are denominated in may decline against
 their Bernstein Advisor.                                                                 your home currency, hence lowering the value of your
                                                                                          foreign investments; that foreign governments may
 Investing is risky. It may involve fluctuations in the market                            impose currency-exchange-control or other regulations
 value of your invested capital, failure to meet your particular                          that would prevent you from cashing out; that investor
 objectives, permanent loss, and possibly even negative                                   safeguards of various other kinds may be inadequate, and
 effects on your lifestyle. Before offering you a particular                              that political, economic, regulatory, and similar concerns
 service, we consider all the relevant information we have                                (which can be more extreme outside than within the U.S.)
 about your circumstances, objectives, and constraints,                                   may affect you adversely. In any given year, international
 including your investment temperament and tax status, in                                 diversification may result in reduced portfolio returns
 addition to everything we’ve learned through decades of                                  and/or higher volatility. All these risks are heightened in
 research on and experience with capital-markets behavior.                                the emerging markets, as are general market volatility
 Nevertheless, we cannot ensure that your objectives will be                              and trading costs. Your returns abroad may also be
 attained or that you’ll suffer no adverse consequences.                                  affected by foreign taxes or withholdings on dividends
 With that in mind, our services are based on the                                         and interest. We take pains to guard against as many of
 following tenets:                                                                        these dangers as we can, through steps including locking
                                                                                          in exchange rates through currency hedging (using
 1. The most important determinant of your investment                                     foreign-currency forward contracts) where practicable
    results is your asset allocation, or how your capital is                              and advisable. But we cannot and do not claim to be able
    apportioned among stocks, bonds, REITs and other                                      to eliminate all the risks of foreign investing.
    securities. Stocks provide the best long-term growth
    potential, but their market value fluctuates widely.                               4. Finally, your returns will be affected not only by
    Bonds provide the best current investment income, but                                 movements of the capital markets in general but by our
    they hold little, if any, potential for capital growth.                               particular strategies in each market. Our value-oriented
    And REITs offer dividend income similar to that of                                    services concentrate in industries and companies that
    some bonds with modest dividend growth potential.                                     our research suggests are underpriced in the market,
                                                                                          but our research may be mistaken. Our growth-oriented
 2. Diversifying among the major asset classes should reap                                services concentrate in companies and industries that
    more long-term return for the risk you take, or a similar                             our research indicates have growing profits that will
    long-term return with less risk, than investing solely in                             grow faster than consensus estimates, but this research,
    any one market.                                                                       too, may be mistaken. The performance of your account
                                                                                          is likely to differ from that of broad market indexes.
       The reason is that stocks, bonds, and REITs tend to
                                                                                          Your account may even underperform such indexes,
       perform differently under similar circumstances—that
                                                                                          particularly when value-oriented investing falls out of
       is, they exhibit relatively low correlations of returns.
                                                                                          favor (if your account is concentrated in value-oriented
       For example, bonds often make money when stocks
                                                                                          services), or when growth-oriented investing falls
       are doing poorly, and REITs go through their own
                                                                                          out of favor (if your account is concentrated in the
       performance cycles, with low correlations against stocks
                                                                                          Strategic Growth service), although a combination of
       and bonds. With gains in one market offsetting losses
                                                                                          these services may tend to lessen volatility over time.
       in another, a portfolio diversified among a range of low-
                                                                                          Nonetheless, our active strategies have largely been
       correlated assets should grow more steadily than one
                                                                                          successful in the long run, and they’re balanced in our
       invested in a single asset class.
                                                                                          accounts with systematic risk controls, albeit not to a
                                                                                          degree that would neutralize all risk.

* AllianceBernstein L.P. is an investment adviser registered under the Investment Advisers Act of 1940 (SEC File #801-56720).

                                                                                                           Investment-Management Services and Policies   1
A client may change his or her asset allocation or instruct us to partially or completely liquidate his or her account at any time
by sending us written notice signed by all relevant parties. Prior to receiving written notice, if a client orally requests that
we discontinue management, we will do so and confirm these instructions to the client in writing. Notice becomes effective
upon our receipt if it is signed by all relevant account parties and sent by U.S. mail, certified mail, express mail or facsimile
transmission. However, we will not accept notice by electronic transmission over the Internet or some other electronic system
(other than facsimile transmission) or by messages left on our voice-mail system. We recommend that all transmissions
via facsimile be confirmed by a phone call to ensure adequate and timely delivery, since we will not be responsible for any
mechanical or other failure in transmission. A notice of discontinuance of management should specify whether you wish
securities and other positions that are in your account to be liquidated.
Under normal market conditions, a change in asset allocation or a partial or complete liquidation of your positions is
commenced by the close of business on the business day following our receipt of the notice. While this is our policy, there
are times when immediate accommodation of a client request may not be possible—notably, periods of high volatility and
extreme trading volume. During such periods, which can occur anywhere in the world, it may take longer for an asset-allocation
change or liquidation to be initiated, and the prices of securities may be significantly different at the time of liquidation than
at the time of notice. Our concern is that short-term tactical decision making based on current events or market extremes
can be difficult to implement—another reason that we advise clients to take a long-term approach to investing. When we
discontinue management of a client’s account, we will refund the portion of the fee that has not been earned.

    Further information on specific risk factors is contained      Series, Inc., AllianceBernstein Municipal Income Fund,
    in this brochure under the descriptions of the various         Inc., AllianceBernstein Municipal Income Fund II,
    services and products we offer. Depending on the type          AllianceBernstein Cap Fund, Inc. (each, a “Fund” and
    or types of portfolios a client selects, different types of    collectively with the Sanford C. Bernstein Fund, Inc., the
    risk/reward considerations will apply. Clients should          Sanford C. Bernstein Fund II, Inc., and the REIT Fund, the
    carefully consider the specific risk factors associated        “Funds”). The Funds’ prospectuses describe the investment
    with our different services when evaluating their              policies and procedures of the Funds. Finally, we offer
    investment objectives.                                         certain of our investment-management services in private-
                                                                   placement collective vehicles for eligible clients. These
INVESTMENT-MANAGEMENT SERVICES                                     are described in the private-placement memoranda. Our
                                                                   investment-management services are (1) discretionary, (2)
We manage investment portfolios for individuals,                   disciplined and (3) individualized. We create and maintain
endowments, trusts and estates, charitable foundations,            separate accounts tailored to the individual investment
partnerships, corporations, investment companies, and              needs and objectives of each of our clients.
tax-exempt funds such as pension and profit-sharing plans.
Portions of our clients’ accounts may be invested in
the portfolios of the Sanford C. Bernstein Fund, Inc.              USE OF DISCRETION
or the Sanford C. Bernstein Fund II, Inc., registered              Accounts are managed on a discretionary basis. This means
investment companies offering fixed-income portfolios,             we have the authority and responsibility to formulate
developed-markets international-equity portfolios and an           investment strategy on your behalf, including deciding
emerging-markets equity portfolio. We also offer REIT              which securities to buy and sell, when to buy and sell, and in
securities in our AllianceBernstein Real Estate Investment         what amounts, in accordance with agreed-upon objectives.
Institutional Fund (the “REIT Fund”). Portions of our
clients’ accounts may also be invested in the following            DISCIPLINED INVESTMENT DECISION MAKING
funds: AllianceBernstein Institutional Funds, Inc.,                Our investment decision making is systematic, disciplined,
AllianceBernstein Trust, The AllianceBernstein Portfolios,         and based on rigorous estimates of investment value. Our
AllianceBernstein Variable Products Series Fund, Inc.,             process and philosophy are described in the section entitled
AllianceBernstein Exchange Reserves, AllianceBernstein             “Investment-Management Decision Making” below.
Bond Fund, Inc., AllianceBernstein Blended Style

2      Bernstein Global Wealth Management
INDIVIDUAL TREATMENT AND INVESTMENT PLANNING                     with specific trust and estate vehicles and concentrated
Each account is maintained separately and invested               positions in low-basis stock. We provide tools to help such
according to your particular financial needs and goals,          clients compare the implications of holding a large position
tax situation, investment temperament, and tolerance             of a single equity versus selling all or a portion of that
for risk. We assist most clients in setting investment           position, as well as other strategies. However, before making
goals appropriate to their circumstances. The role of our        any decision about wealth-transfer or single-stock strategies,
Bernstein Advisors is to assist clients in determining the       including selling a concentrated position and options-based
appropriate mix of domestic and international stocks,            transactions, clients should review the implications of those
fixed-income securities, REITs, and other assets—your            strategies with their tax and legal advisors. For example,
asset allocation. We offer investment-management services        the disadvantages of selling a concentrated stock position
that span the world’s capital markets. With the limited          include the immediate recognition of taxable gain and the
exceptions described throughout this booklet, the equity         loss of any potential upside in the stock—both of which
portion of your account is managed and individual                may be considerable. Certain transactions used to deal with
security selections are made by or under the supervision         concentrated portfolios may give rise to substantial risk and
of teams of senior portfolio managers or our Investment          are not suitable for all clients.
Policy Groups. The fixed-income portion of your account
is supervised by portfolio management teams under the            INVESTMENT-MANAGEMENT DECISION MAKING
supervision of the Investment Strategy Committee chaired
                                                                 We base our investment-management activities on our
by the Chief Investment Officer of Fixed Income. For all
                                                                 investment-research findings as supplemented by third-
services, within the context of our investment approach,
                                                                 party research. In so doing, we follow the separate but
and supported by our in-house research and trading
                                                                 related disciplines described below.
departments, our Portfolio Management staff applies
disciplined money-management techniques in order to
maintain portfolios that we believe are appropriate to each      VALUE EQUITY ANALYSIS
client’s individual situation.                                   In our U.S. value portfolios, our goal is to purchase stocks
                                                                 that trade at a significant discount to their long-term
We provide global asset-allocation guidance through
                                                                 earnings power as determined by our investment research.
our investment-planning tools. We may utilize a wealth
                                                                 Accordingly, forecasting corporate earnings and cash flow is
forecasting analysis to illustrate a probable range of
                                                                 the heart of our value style equity-management process, and
outcomes for your asset values over time if invested with
                                                                 we employ a large staff of analysts devoted to this task.
different stock and fixed-income mixes. In these analyses,
we utilize assumptions about the risk and reward potential       Our forecasting method involves quantifying what we
of different categories of financial assets, and we illustrate   believe to be the critical variables that control business
a probable range of outcomes after your anticipated              performance and analyzing the results in order to forecast
withdrawals and after deduction of taxes at your tax rates       the long-term prospects of the companies we follow and to
to help you determine whether a particular asset allocation      develop expected returns for their securities.
is suitable to your financial requirements and tolerance for
                                                                 We employ industry and company specialists and general
risk. Although assumptions about risks and returns are
                                                                 analysts. Our analysts do fundamental market and company
necessary decision-making tools in these analyses, actual
                                                                 research and draw on such diverse sources of information
risks and returns may differ since they will be subject to
                                                                 as company reports, press releases, prospectuses, regulatory
a variety of economic, market, and other variables, and
                                                                 filings, financial and trade newspapers and magazines,
you should not construe these analyses as a promise of the
                                                                 corporate rating services, scholarly journals, on-line
actual future results you may receive. You should review
                                                                 quotation services and databases compiled by government
your asset-allocation decision with us at least annually,
                                                                 agencies and others, and conversations with managements,
so that any changes in our assumptions or your financial
                                                                 suppliers, clients, competitors, and industry consultants.
circumstances and objectives can be taken into account.
                                                                 Industry and company forecasts are made within the
As part of our asset-allocation guidance, we also provide
                                                                 framework of long-term economic settings. We typically
special resources through our Wealth Management Group,
                                                                 measure companies’ financial performance over a full
whose purpose is to counsel high net worth private clients
                                                                 economic cycle, including a trough and a peak, and
who may have special needs, such as strategies for dealing

                                                                                Investment-Management Services and Policies   3
forecast financial performance within the context of             In addition to the expected-return analysis, our assessment
our projections for real economic growth, inflation, and         of portfolio risk influences our portfolio-construction
interest-rate change.                                            decisions. To this end, we may consider aggregate portfolio
                                                                 characteristics (such as sector and security concentration,
GROWTH EQUITY ANALYSIS                                           price/book and price/earnings ratios, and dividend yields)
                                                                 when deciding how much of each security we wish to
Our approach to growth-oriented U.S. equity investing            purchase for each client. We also may monitor Wall Street
employs a systematic, disciplined, research-based process        analysts’ earnings-estimate revisions and relative return
to identify large-capitalization companies with superior         trends so as to better time new purchases and sales of
earnings growth that seems sustainable. Specifically, we seek    securities. Other client- or portfolio-specific considerations
those companies shown by our analysts’ research to have          may also influence our tactical decisions. For example, in
earnings growth potential greater than the market consensus.     global portfolios, country and currency risk are among
We seek to identify such companies before their stocks           the additional risk factors we consider. All our tools in
become overpriced in relation to their realistic earnings        selecting securities are regularly reevaluated for historical
prospects, attempting to avoid companies whose fast growth       efficacy. Our goal is always to refine an analytical process
seems likely to slow. The process focuses on the future rather   that, in disciplined fashion, synthesizes quantitative and
than the past, and conceives of growth broadly rather than       fundamental research. Account turnover will vary, as would
within any particular market segment or industry. Our            be expected under our account-by-account management
ability to predict superior earnings growth depends upon the     approach. For 2005 and 2004, historical turnover for
correctness of our views on company fundamentals.                Strategic Value accounts under the direction of the
With regard to our growth strategy, we rely on research          Investment Policy Group throughout the year, including
analysts in the U.S. and overseas who collectively cover         cash flow into these accounts, was approximately .24 and
roughly 500 large-capitalization stocks. These growth            .31, respectively, and for Diversified Value accounts was
analysts hold meetings with company management, key              approximately .26 and .27, respectively.
suppliers, competitors, customers, and Wall Street analysts      In the case of the Strategic Growth service, the portfolio seeks
following the stocks so as to increase their understanding of    long-term growth of capital by investing predominantly
business strategies and competitive responses.                   in the equity securities of a number of large, carefully
                                                                 selected, high-quality U.S. companies that are judged by
STOCK SELECTION AND PORTFOLIO CONSTRUCTION                       the investment professionals as likely to achieve superior
We use a variety of tools to evaluate stocks and portfolios      growth. This investment strategy emphasizes stock selection
in an attempt to maximize return, given the risk levels          and investment in the securities of a limited number of
appropriate to our clients. For our large-capitalization         issuers. We rely heavily on the fundamental analysis and
U.S. value services, we use an internal-rate-of-return           research of our large internal research staff, which generally
methodology—i.e., a dividend discount model—that links           follows a primary research universe of approximately 500
the present value of our analysts’ forecasts of company          of the largest capitalization growth stocks trading in the
cash flows to the current stock price in order to compute        U.S. From the research analysts’ list of approximately the
an “expected return” for each security in our universe of        most attractive 100 companies in the large capitalization
primarily U.S.-traded large-capitalization companies. We         universe, a team of investment professionals distills the
rank a large number of stocks based on this expected-            analysts’ list down to the Strategic Growth portfolio.
return measure. In addition, we rank a large number of           The research analyses supporting buy and sell decisions
stocks in our universe of U.S.-traded small-capitalization       for our International and Tax-Managed International
companies on the basis of price relative to forecasted average   Portfolios (benchmarked to a Morgan Stanley Capital
earnings power. Average earnings power for these small-          International (“MSCI”) EAFE Index) are based largely
capitalization companies is defined as the average earnings      on specific company and industry findings rather than
that we expect the company to generate over a full business      on broad economic forecasts. We diversify the portfolios
cycle. Rankings change continually as price and forecast         between growth and value equity investment styles,
information change. We may use a variety of valuation            drawing from our growth and value investment disciplines
techniques from multiple services before making decisions        to produce blended portfolios. Investment decision-
for a particular service.                                        making for these portfolios is systematic and centralized,

4      Bernstein Global Wealth Management
pursued by an investment policy group working in concert        pills”); and (iii) regulatory restrictions on ownership that
with, and guided by, the findings of our international          govern the issuer. We take precautions to comply with any
growth and value research teams.                                ownership limitations applicable to any specific security
                                                                as failure to monitor such levels could lead to adverse
The International portfolios’ international growth stocks
                                                                regulatory action or the dilution of our client holdings. In
are selected using AllianceBernstein’s research-driven
                                                                addition, we have adopted procedures whereby we restrict
international growth investment discipline, which relies
                                                                further purchases of equity securities when our aggregate
heavily upon our large international growth research
                                                                holdings of our client amounts (and those of our related
staff to follow non-U.S. companies. We seek to have an
                                                                persons) reaches 17.5% of the shares outstanding. At that
in-depth understanding of these companies’ products,
                                                                time, we determine if there are risk management or other
services, markets, and competition, as well as a good
                                                                concerns that would preclude further purchases. Moreover,
knowledge of the management of most of the companies.
                                                                our business activities (or those of a related person), such
International growth analysts prepare their own earnings
                                                                as the acquisition of a publicly traded company, could
estimates and financial models for each company followed,
                                                                prevent additional transactions in the securities of that
and place research emphasis on identifying companies
                                                                company. All of the above limitations may prevent us
whose strong management, superior industry positions and
                                                                from purchasing securities for our clients during periods in
excellent balance sheets may contribute to substantially
                                                                which it might otherwise be desirable to buy.
above-average future earnings growth. The international
growth investment team constructs a portfolio of equity
securities of a limited number of carefully selected,           FIXED-INCOME SECURITY SELECTION AND PORTFOLIO CONSTRUCTION
high-quality companies that are judged likely to achieve        We view fixed-income investments on a total-return basis,
superior earnings growth. The International portfolios’         considering capital appreciation or depreciation—that is,
international value stocks are chosen from stocks perceived     change in the securities’ market prices (including currency
to be underpriced —those with low price/earnings ratios,        exposure)—as well as interest income. We utilize a variety
low price/book-value ratios and high dividend yields.           of quantitatively and qualitatively based techniques to
Our international value analysts identify and quantify the      evaluate the relative attractiveness of government, mortgage-
critical variables that influence a business’s performance,     related, corporate fixed-income, and asset-backed securities
analyze the results in order to forecast each company’s         denominated in many currencies, along with futures and
long-term prospects and meet regularly with company             options on futures and other derivative instruments issued
management, suppliers, clients and competitors. As a            from developed and emerging markets. Utilizing similar
result, analysts have an in-depth understanding of the          techniques, we evaluate municipal securities that are
products, services, markets and competition of these            candidates for purchase or sale based upon their relative
companies in the research universe.                             expected returns. Our analysis includes callability, issuer,
As in the International Portfolios, the research analyses       quality and sector considerations. The effective duration
supporting buy and sell decisions in our Emerging               of an account may depend upon our sense of the general
Markets Portfolio (benchmarked to an “MSCI” Emerging            direction of interest rates, although it may be changed to
Markets Free Index) are based largely on specific company       facilitate other strategies. Effective duration, a statistic that
and industry findings rather than on broad economic             is expressed in time periods, is a measure of the exposure
forecasts. We diversify the portfolios between growth           of an account to changes in interest rates. While we do not
and value equity investment styles, drawing from our            respond actively to changes in interest rates, when we expect
growth and value investment disciplines to produce              interest rates to rise, we may shorten the effective duration
blended portfolios. Investment decision-making for these        of accounts. When we expect interest rates to fall, we may
portfolios is systematic and centralized, pursued by an         lengthen the effective duration. The maturity composition
investment policy group working in concert with, and            of these accounts may vary, depending upon the shape of
guided by, the findings of our emerging markets growth          the yield curve and opportunities in the bond market, at
and value research teams.                                       times being concentrated in the middle part of an account’s
                                                                targeted range while at other times consisting of a greater
We may from time to time invest in securities subject           number of securities with maturities that are shorter and
to various ownership limitations. These limitations             others that are longer than the targeted range.
include, but are not limited to: (i) charter provisions; (ii)
shareholder rights plans (commonly known as “poison

                                                                                Investment-Management Services and Policies    5
REIT SECURITY SELECTION AND PORTFOLIO CONSTRUCTION                role of this group is to oversee the investment of all private-
Our approach to REITs is to own a broadly diversified             client assets, especially with respect to asset allocation, tax
group of high-quality companies that appear poised to             management, rebalancing, and investment planning.
deliver superior earnings growth over time. This group            The Risk Advisory Group is chaired by our chief investment
includes shopping centers, office space, and profitable           officer of structured equities and includes the chief investment
industrial and health-care facilities, as well as investments     officer of global value equities, the chief investment officer
in hotel properties.                                              of style-blend equities, the director of quantitative research,
                                                                  the chief international economist, and senior portfolio
DECISION-MAKING RESPONSIBILITY                                    managers. The role of the Risk Advisory Group is to study
Investment decision-making responsibility lies with the           risk and to bring its views and conclusions to the various
following:                                                        product-level Investment Policy Groups so that they can
                                                                  incorporate them into their investment decision-making
Value Equity Services                                             process, evaluating risk versus return at the product level.
The Investment Policy Groups are responsible for the              Not all members of the Investment Policy Groups participate
investment strategies, individual security selections, and        in individual security selections or other portfolio strategy
target sector weightings, as well as general policies governing   or policy decisions.
asset allocation and portfolio construction for our value
equity services. The respective Value Equity Investment           Investment-Management Administration
Policy Groups are chaired by the co-chief investment              Approved investment decisions are implemented on an
officers of U.S. value equities, the chief investment officer     account-by-account basis by our managing director of global
of global equities, our chief investment officer of emerging      equity, managers of our Global Equity Portfolio Management
markets value equities, our chief investment officer of small-    Group, portfolio managers, associate portfolio managers, and
capitalization value equities, our chief investment officer of    members of our fixed-income portfolio-management teams.
structured equities, our chief investment officer of Canadian     This includes establishing positions in selected securities,
value equities and our chief investment officer of European       monitoring the tax implications of potential security sales
value equities. They may also include our chief executive         for each taxable client in most of our services, adjusting
officer, other chief investment officers, our director of U.S.    cash balances and/or investing cash balances according to
value equities research, our director of global value equities    investment policy, and all other matters relating to the
research, our chief international economist, our director of      implementation of investment strategy.
quantitative research, our director of global value equities,
other research directors, and senior portfolio managers.          In certain cases, clients may specify that portfolio decisions
                                                                  or recommendations be made by Stanley M. Bogen, whose
Growth Equity Service                                             security analysis is primarily fundamental and is not
The Strategic Growth equity service relies on a group of          determined by the methodology and investment disciplines
investment professionals, including portfolio managers and        set forth in this section or the procedures described in the
research analysts who confer on strategic decision making         section “Execution and Allocation” on page 19.
and stock selection.
                                                                  PORTFOLIO CONSTRUCTION AND YOUR ASSET ALLOCATION
Fixed-Income Services                                             We offer a variety of portfolio constructions—equity, fixed
Our fixed-income portfolio management teams are                   income, REIT, balanced and fully diversified (the later
responsible for investment strategies, target sector              two a mix of assets)—suitable to individual risk/reward
weightings, and duration structure strategy, as well              objectives, and we base the asset allocation for your account
as portfolio construction for the fixed-income services.          on our knowledge of your unique situation and objectives.
Relative sector views and our investment professionals’           Investing in securities can be risky—you can lose money
overall view of economic and market direction are discussed       on your investments. Investment strategies we utilize for
by the Investment Strategy Committee chaired by our co-           your account take into consideration the basic risk/reward
chief investment officers of fixed income.                        character of various financial assets, your own tolerance
The Private-Client Investment Policy Group is chaired by the      for risk, and your tax status. Nevertheless, there can be
senior investment officer of private-client investments. The      no assurance that your investment objectives will actually

6      Bernstein Global Wealth Management
be attained. Over time, investing in stocks has achieved          out of favor (if your account is concentrated in our growth
more long-term growth than investing in bonds or money-           services), although a combination of these services may
market securities, but there is a price for this greater growth   tend to lessen volatility over time. If our perception of a
potential: volatility of your portfolio’s market value, with      company’s intrinsic worth is not realized in the time frame
appreciable chance of loss along the way, which could             we expect, or, in the case of growth stocks, if a company’s
even extend for a number of years. As a result, individual        expected growth rate is overestimated, or if the market
retirement and spending plans may be adversely affected.          value of a company owned in your account declines, the
With this in mind, we believe that the most important             performance of your account may suffer.
determinant of investment returns is asset allocation—how
                                                                  Accounts with lower risk/reward orientations, with lesser
your invested capital is apportioned among stocks, bonds,
                                                                  commitment to stocks and more to fixed-income assets,
and other securities in a portfolio. No one investment or
                                                                  while designed to provide some protection against inflation,
market can always win; the best course almost always is
                                                                  generally emphasize capital preservation and/or income more
to be in many markets. Combining investments that often
                                                                  than high returns, and their value tends to fluctuate less in
behave differently from one another can reduce risk and
                                                                  rising and falling markets, although fixed-income assets
enhance long-term growth. For example, adding bonds
                                                                  also fall in value when interest rates rise, and are subject
to a stock portfolio reduces risk. In contrast to stocks,
                                                                  to credit risks of the issuers. We may use futures, options
generally, bonds pay interest regularly and fluctuate less in
                                                                  on futures, and other derivatives to manage equity and
market value—although bonds may also decline in market
                                                                  interest-rate exposure and to add to expected return where
value when interest rates rise or the real or perceived credit
                                                                  appropriate. Derivatives can be volatile and involve various
quality of an issuer deteriorates. But the relative stability
                                                                  types and degrees of risks, such as limited liquidity and the
of bonds also exacts a price: limited growth potential over
                                                                  risk that a party will default on payment obligations.
time, particularly after inflation.
There are no absolute answers in investing, only trade-           GLOBAL DIVERSIFICATION
offs. The risk tolerance and financial circumstances of each
client are unique—and hence his or her optimal risk/return        Our asset-management capabilities extend to the worldwide
trade-off is also unique. Our investment-planning process         stock and bond markets, and we believe that for most
is designed to identify a portfolio suitable to each client.      clients adding an international component to their
That is largely a task of determining an appropriate mix          domestic portfolios is a prudent strategy. For example, for
of stocks and fixed-income securities, since over time            a U.S. investor, casting one’s investment net to encompass
a portfolio’s asset allocation exerts the most important          many non-U.S. markets greatly expands the pool of
influence on investment results.                                  opportunities—many industries are now dominated by
                                                                  non-U.S. companies—and may confer a diversification
In general, our higher risk/reward accounts, with their           benefit as well. Because the non-U.S. markets do not march
larger commitment to stocks, are designed to earn                 in lockstep either with one another or the U.S. market,
higher cumulative returns over time and to beat inflation         investing globally tends to reduce fluctuations in returns
significantly over the long run; they are more likely to          over time.
appreciate or depreciate in market value than lower-
risk accounts, and they exhibit greater volatility—larger         International investing carries additional risks relative
fluctuations in value in rising and falling markets. Certain      to domestic investing: Foreign currencies may decline
of our stock accounts also tend to concentrate in sectors and     against a client’s base currency; foreign securities markets
securities that we believe are undervalued, and this may          may be more volatile and less liquid than the domestic
cause them to perform very differently than the broader           market, making trading more difficult; and foreign markets
market. Our growth-oriented accounts, on the other hand,          may experience political, economic, regulatory or other
concentrate in securities that we believe are likely to grow in   difficulties that can affect your account’s performance. These
price at an above-average rate, and they also may tend to be      risk factors mean that at some future date, an investor may
more volatile than the market as a whole. The performance         be unable to liquidate certain holdings in a foreign portfolio.
of your account is likely to differ from that of broad            Some countries, particularly in the emerging world, may
market indexes. Your account may even underperform such           even expropriate assets. We try to minimize these risks
indexes, particularly when value-oriented investing falls         by performing extensive research, focusing on established
out of favor (if your account is concentrated in our value-       companies and market sectors and, in our stock accounts,
oriented services), or when growth-oriented investing falls       always broadly diversifying by country and industry. While

                                                                                  Investment-Management Services and Policies   7
by definition global diversification means that you won’t        portfolio. Portions of your account may be invested in
capture all the benefits of the best performer in any year—      one or more of the portfolios of the Funds or in the REIT
whether it’s a developed market or an emerging market—           Fund or managed separately, depending on the structure
neither will you be solely exposed to the poorest performer.     and/or size of the account. Shares of funds or portfolios
On balance, we believe that this strategy may improve            of funds that we develop in the future may be purchased
your portfolio’s risk/reward profile. To limit currency risk     unless you advise us to the contrary. We manage and
in the developed markets, we may, but are not required           provide shareholder servicing and administrative services to
to, use forward contracts, which derive their value from         the Funds. The Funds' fixed-income, international-equity,
the underlying currencies, to manage or hedge currency           emerging markets equity and other portfolios are designed
exposure to the extent feasible and to the extent there is       to meet different client objectives and tax situations, as
opportunity to do so. Hedging mechanisms in the emerging         more fully described in the Funds’ prospectuses.
countries currently tend to be unavailable or too expensive,
although they may be used in the future if feasible.             INVESTMENT OBJECTIVES, RISK/REWARD CONSIDERATIONS
                                                                 We manage balanced portfolios along the following lines:
                                                                 Global Balanced Portfolios aim for long-term capital
Holdings                                                         growth on a total-return basis (the combination of capital
Balanced accounts hold stocks and fixed-income investments       appreciation and interest/dividends). A U.S. client’s account
in accordance with your individual objectives, risk/reward       benchmark would typically include a mix of indexes
orientation, tax status, and financial experience. The greater   covering U.S. and non-U.S. stocks and bonds. These
the commitment of a balanced account to a particular asset       accounts are typically invested in the U.S. and in developed
category, the more the account will take on the risk/reward      non-U.S. markets; a small portion of the account may also
orientation of that asset category, although diversification     be invested in emerging markets, if the client desires.
among asset categories may tend to reduce risk in some           Non-U.S. stock and bond markets often have higher
cases, since returns on certain asset categories may not move    volatilities than the U.S. markets and the additional risk
in tandem with returns on others.                                that comes from currency movements. But differences in
                                                                 the performance of individual markets can produce lower
In line with our clients’ increasingly global orientation        volatility across a globally diversified portfolio than for a
toward investing, we encourage the consideration of              U.S.-only portfolio—although all stock and bond portfolios
balanced global portfolios, which exploit opportunities in       are vulnerable to absolute-value declines. These accounts
stocks and bonds worldwide. Allocation among the assets          are typically rebalanced periodically to fixed proportions of
depends on each client’s financial objectives.                   U.S. and non-U.S. stocks and bonds.
Most balanced accounts are managed with a view to
maintaining the agreed-upon asset allocation. This is            EQUITY PORTFOLIOS
accomplished through investment of cash flows, dividends,
and interest and by reinvestment of funds generated by           Holdings
sales pursuant to the agreed-upon asset allocation. At times,    We invest U.S. Strategic Value portfolios, U.S. Diversified
when we believe it advisable, we may also sell a security        Value™ portfolios, Strategic Growth portfolios, Enhanced
in order to generate funds to reinvest for the purpose of        Equity portfolios, Structured Equity portfolios, and the
maintaining the agreed-upon asset allocation. In certain         U.S. equity portions of balanced portfolios under our
cases, clients may give us authority to vary the percentage      management generally in larger-capitalization companies
invested in domestic and international equity and fixed-         listed on the New York Stock Exchange, the American
income assets, and the percentages invested in each of the       Stock Exchange, and other exchanges, as well as over-the-
international markets, based on our opinion of the relative      counter issues. We invest small-cap equity portfolios in
attractiveness of the asset class and the market.                smaller-capitalization companies listed on the New York
The portfolio-construction rules of one or more of our           Stock Exchange and American Stock Exchange, as well
equity services may serve as the model for the equity            as over-the-counter issues. Holdings in our clients’ U.S.
portion of our clients’ balanced accounts. Your account’s size   portfolios, and the U.S. portions of balanced portfolios, may
and your risk/reward orientation determine the structure         include American Depositary Receipts (ADRs) and other
of the equity and fixed-income portions of your balanced         non-U.S. stocks that trade on U.S. exchanges. We invest
                                                                 international-equity accounts (generally benchmarked

8      Bernstein Global Wealth Management
to an MSCI EAFE index) and the international portion            U.S. Strategic Growth Accounts aim for long-term capital
of global accounts in the equity markets of up to               growth on a total-return basis (appreciation and dividends)
21 industrialized countries. These countries encompass          and performance superior to the S&P 500 and the Russell
Europe, Australasia, and the Far East, plus Canada.             1000 Growth Index over a full market cycle (a rising and
Depending on account size, international accounts may           falling market taken together). Like all equity portfolios,
be invested in one of the International Portfolios of the       these accounts are vulnerable to declines in value. Your
Fund, as described above. We invest emerging markets            account will typically hold 40-50 stocks at a time, chosen
accounts and the emerging-markets portion of global
                                                                from a group of roughly 500 of the largest-capitalization
balanced accounts in equities in up to 30 countries in
the developing world. Currently, we invest only in the          stocks trading in the U.S., although the number of stocks
more advanced emerging nations—those with relatively            may vary from account to account. Since your account will
more established political and legal infrastructures and        have weightings in stocks and sectors that differ from those
more liquid markets. Emerging markets accounts may be           of the U.S. stock indexes, the performance of the account
invested in the Emerging Markets Portfolio of the Fund,         may be significantly better or worse than that of the market,
as described above, or be separately managed, depending         and the account’s volatility may also be greater.
on account size. We invest Canadian Value Equity                Many of our clients choose to diversify their portfolios
portfolios in companies listed on the Toronto Stock
                                                                by investment style to include Strategic Value and Strategic
Exchange, primarily larger-capitalization companies
included in the S&P/TSX Composite Index. Although               Growth accounts. We aim for performance superior
the situation occurs infrequently, we may include fixed-        to the S&P 500 for each of these portfolio style constructions
income securities in place of equities when we believe          over a full market cycle (a rising and falling market
fixed-income securities will provide returns comparable         taken together).
to those of equity securities. For certain accounts, we may     It is possible that either of these accounts might
purchase other instruments, such as warrants, private           underperform the S&P 500 at any given time, since growth
placements, financial futures, options on financial futures
                                                                and value style investing have historically tended to move
(including index futures), and currency forward contracts,
as well as other derivative instruments. Derivatives can        in and out of favor at different times. We believe that
be volatile and involve various types and degrees of risks,     when these accounts are held in combination, it is more
such as the risk that a party will default on payment           likely that their combined performance will outperform
obligations and limited liquidity.                              the S&P 500 on a more consistent basis over full market
                                                                cycles. Accordingly, we generally advocate a 50/50 mix
                                                                of growth and value, although we ultimately tailor each
                                                                portfolio to meet a client’s specific needs.
We manage equity-oriented portfolios along the following
lines:                                                          U.S. Diversified Value™ Accounts seek long-term capital
                                                                growth on a total return basis and are broadly diversified,
U.S. Strategic Value Accounts aim for long-term capital         holding approximately 150 stocks that emphasize sectors and
growth on a total-return basis (appreciation and dividends)     securities we consider undervalued, but the overweightings
and performance superior to the S&P 500 and the Russell         relative to an index are generally more modest than in the
1000 Value Index over a full market cycle (a rising             Strategic Value portfolios. The goal is to outperform the
and falling market taken together)—although all equity          S&P 500 or the Russell 1000 Value Index over a full market
portfolios are vulnerable to absolute-value declines. Your      cycle (a rising and falling market taken together) while
account will typically be invested in about 60 stocks (though   limiting the divergence from the market’s performance to
the number can vary meaningfully in different market            moderate levels in most environments—although all equity
environments), concentrated in out-of-favor companies and       portfolios are vulnerable to absolute-value declines.
industries, to the degree such opportunities are available      Structured and Enhanced Equity Services are risk-
in the market without undue risk. Since your account will       controlled, large-cap U.S. equity services that draw upon
have weightings in stocks and sectors that differ from those    fundamental stock research and quantitative tools to achieve
of the U.S. stock indexes, the performance of the account       their long-term capital growth objectives. Both the Enhanced
may be significantly better or worse than that of the market,   Equity Services and the Structured Equity Services are
and the account’s volatility may also be greater.               designed to provide a modest annualized premium to either

                                                                               Investment-Management Services and Policies   9
the S&P 500, the Russell 1000, the Russell 1000 Value, or          and value stocks will normally be about equal and will be
the S&P/Barra Value Index, with relatively tight tracking          rebalanced systematically to maintain that exposure across
to the index returns—although all equity portfolios are            both investment styles. In all cases, our international-equity
vulnerable to absolute-value declines. The Enhanced Equity         portfolios are diversified by industry and country, but not
Services are designed to track the relevant benchmark more         necessarily in the same proportions as they are represented
closely than the Structured Services. Your account will be         in the EAFE Index. As international-equity accounts are
broadly diversified, including about 170–300 stocks on             required to maintain modest cash balances, stock-index
average, at position weights that never vary widely from           futures in the major developed markets outside the U.S. are
benchmark weights. We also control portfolio deviation             used to more fully invest the portfolio. Currency exposure
from benchmark concentrations in industry sectors and other        is actively managed. Investment decisions concerning
risk factors. We overweight those stocks we find attractive        currencies are made independently of equity investments so
on the basis of our long- and short-term valuation models,         we may decide to hedge or not hedge stocks denominated
but only to a limited degree. We also hold some stocks at or       in non-U.S. dollar currencies. By their nature, currencies
below their benchmark weights to provide diversification.          carry their own investment risk. Returns of all non-U.S.
                                                                   securities are vulnerable to adverse movement of foreign
U.S. Small-Cap Value Equity Portfolios aim for long-
                                                                   currencies in relation to the U.S. dollar and the risk
term capital growth on a total-return basis (appreciation
                                                                   that non-U.S. governments will impose currency-exchange
and dividends) and performance superior to the Russell
                                                                   control regulations or other restrictions that would prevent
2000 Index over a full market cycle (a rising and falling
                                                                   cash from being brought back to the United States. Since
market taken together)—although all equity portfolios
                                                                   your account will have weightings in stocks and sectors that
are vulnerable to absolute-value declines. A small-cap
                                                                   differ from those of the MSCI EAFE Index, the performance
account tends to have higher volatility and less liquidity
                                                                   of the account may be significantly better or worse than
than portfolios composed of larger-capitalization companies.
                                                                   that of the market, and the account’s volatility may also
Your account will typically be invested in 70–90 stocks
                                                                   be greater. Returns of non-U.S. securities are subject to
to diversify company-specific risk. At times, the account
                                                                   other risks not associated with U.S. investing, including a
may concentrate in sectors we consider to be the most
                                                                   generally lower degree of market volume and liquidity than
undervalued. If permitted, stock-index futures are used to
                                                                   that available in U.S. markets, which may result in greater
participate in appreciation and/or depreciation of the stock
                                                                   price volatility, and settlement practices that may include
market during the buy-in period, generally up to 12 weeks.
                                                                   delays and otherwise differ from those in U.S. markets.
International Equity Portfolios seek long-term capital             Returns may also be affected by foreign tax or withholding
growth on a total-return basis (appreciation and dividends)        on dividends and interest. You should consult your tax
through investments in stocks of established foreign               advisor about whether you are entitled to claim foreign tax
companies making up the MSCI EAFE Index (Europe,                   credits or deductions on your income-tax returns.
Australasia and the Far East) plus Canada. Our performance
                                                                   Emerging Markets Equity Portfolios are actively managed
goal is to outperform the MSCI EAFE Index over full market
                                                                   portfolios of about 200 established companies found in
cycles (a rising and falling market taken together), although
                                                                   countries of the developing world. Their goal is to provide
all equity portfolios are vulnerable to absolute value declines.
                                                                   long-term capital growth through investments in equity
Typically, the portfolios are invested in a well-diversified
                                                                   securities of companies in emerging markets countries.
group of approximately 50 value stocks (selected using our
                                                                   We aim to outperform broad emerging markets indexes
fundamental international value discipline, which looks
                                                                   consistently and significantly over full market cycles,
for stocks that are attractively priced relative to long-term
                                                                   with materially lower volatility. In an effort to maximize
earnings ability, dividend-paying capability, and whether
                                                                   opportunities and take advantage of the cyclical nature of
or not the business environment and/or fundamentals are
                                                                   investment styles abroad, the investment strategy of the
improving) and approximately 50 growth stocks (selected
                                                                   portfolio is a blend of growth and value. The weightings
using our international growth investment discipline, which
                                                                   of growth and value stocks in this portfolio will normally
looks for companies with dominant market positions, above-
                                                                   be about equal and will be rebalanced systematically to
average profitability, superior earnings-growth prospects,
                                                                   maintain the ideal exposure across both investment styles.
and reasonable stock prices). The portfolios combine growth
                                                                   In all cases, the portfolio will be diversified by industry
and value equities in an effort to take advantage of the
                                                                   and country, but not necessarily in the same proportions
cyclicality of investment styles abroad, and generate a more
                                                                   as represented in the benchmark Index. Capital-market
consistent premium to the Index. The weightings of growth

10      Bernstein Global Wealth Management
performance in the emerging-markets countries has been          on the client mandate, currency forward contracts may be
imperfectly correlated with that in the industrialized          used to hedge currency exposures or to go long currencies
world. Hence, for clients already invested in U.S. stocks       in excess of underlying equity investments. The same
and those of the major non-U.S. markets, the emerging           unique risks as described above for the International Equity
markets should represent further diversification. Prominent     Portfolios and the Emerging Markets Portfolios pertain
risks attend investments in emerging-markets countries:         to Global Value portfolios. Since your account will have
The markets have been more volatile and less liquid             weightings in stocks, sectors, countries, and currencies that
than in the developed world; information about them is          differ from the benchmark’s weight, the performance of the
more limited; and social and political instability has been     account may be significantly better or worse that that of
greater. For these reasons, trading can be more difficult;      the market, and the account’s volatility may also be greater.
an investor may be unable to liquidate certain holdings         Returns may also be affected by foreign tax or withholding
in an emerging-markets portfolio, and in the case of the        on dividends and interest. You should consult your tax
Emerging Markets Portfolio of the Fund, the risk exists         advisor about whether you are entitled to claim foreign tax
that at some future point you may not be able to redeem         credits or deductions on your income-tax returns.
your shares. Currently, currency hedging is generally
unavailable or prohibitively expensive, so the portfolio        FIXED-INCOME PORTFOLIOS
will typically be exposed to foreign-currency movements,
though currency hedging may be used in the future if            Holdings
feasible. Returns of non-U.S. securities are subject to other   Fixed-income accounts may be invested in a wide variety
risks not associated with U.S. investing, including greater     of securities issued throughout the world, including but
price volatility, and settlement practices that may include     not limited to U.S. Treasury instruments, securities of
delays and otherwise differ from those in U.S. markets.         U.S. agencies and instrumentalities, issues of governments
Returns may be affected by foreign tax or withholding on        and related entities, supranational institutions such as the
dividends and interest. You should consult your tax advisor     World Bank, corporate debt securities, obligations of state
about whether you are entitled to claim foreign tax credits     and local governments, mortgage-related securities and
or deductions on your income-tax returns.                       other asset-backed securities, convertible debt (which
Global Value Equity Accounts, including Global Strategic        may be converted into the underlying shares of common
Value Equity, Global Value Equity, and Global Diversified       stock), preferred stock, private placements, and repurchase
Value Equity, seek long-term capital growth on a total-return   and reverse repurchase agreements. We also invest in a
basis (appreciation and dividends) through investments in       variety of U.S.-dollar-denominated fixed-income securities
stocks of established companies around the world. We tailor     issued by such entities from the developed and emerging
the global value services to the specific characteristics of    markets that may or may not be registered in the United
each client; this is possible because we are able to adjust     States. Investments may include debt of issuers located
stock selection, country allocation, currency management,       in, and sovereigns of, newly developed and emerging
and benchmark selection to meet the client’s mandate with       markets. Where appropriate and authorized by the client,
no change in our investment process.                            our clients’ fixed-income accounts may also be invested in
                                                                high-yield bonds, (i.e., debt rated below investment-grade,
The primary source of our expected performance premium          or, if unrated, of comparable quality). These lower-quality
for our global value services is research-driven security       debt securities are generally considered to be speculative
selection. We use a disciplined portfolio construction          and involve greater risk of default or price change due to
framework to develop a portfolio with the desired risk/         changes in the issuer’s creditworthiness. The secondary
reward tradeoff. We look for securities that are attractively   market for high-yield bonds may be less liquid than that
priced relative to their future earnings power and dividend-    of higher-quality securities, and high-yield bonds may be
paying capability.                                              particularly susceptible to economic downturns. Where
Global value portfolios are diversified by industry and         we have not been given authority to purchase high-yield
country, but not necessarily in the same proportion as          bonds in an account, securities that have been downgraded
the benchmark. Stock-index futures in the major global          to non-investment-grade subsequent to purchase may
markets may be used to more fully invest the transactional      be held in the account. We continually monitor the
cash balances. Investment decisions concerning currencies       investments in the account and evaluate whether to
are made independently of equity investments. Depending         dispose of or retain securities whose credit rating or credit
                                                                quality may have changed.

                                                                               Investment-Management Services and Policies   11
Depending on account size and type of service, our clients’      high probability of exhibiting positive annual returns,
accounts may be invested in one or more portfolios of            although their income levels are volatile and their
the Fund, as described above. We take clients’ tax status        expected returns are usually relatively low.
and tolerance for risk into account in determining the
                                                                 There are other risks associated with the various financial
appropriate fixed-income service.
                                                                 instruments in which fixed-income accounts may be
When appropriate and authorized by the client, we may            invested. For example, mortgage-related securities are
use financial futures and options on financial futures. We       subject to prepayment risk: A borrower is more likely
may also use other derivatives for certain accounts whose        to prepay a mortgage that bears a relatively high rate
objectives, in our view, make their use advisable. Derivatives   of interest. Thus, the value of the securities may not
can be volatile and involve various types and degrees of         increase as much as other debt securities when interest
risks, such as the risk that a party will default on payment     rates fall. However, when interest rates rise, the rate of
obligations and limited liquidity. When appropriate and          prepayments may slow and the value of the mortgage-
authorized by the client, we may invest in fixed-income          related securities may decrease like other debt securities.
securities denominated in currencies other than the client’s     In addition, commercial mortgage-backed securities are
domestic currency. Foreign-currency forward agreements           subject to credit risks associated with the performance
as well as futures and options on futures on foreign fixed-      of the underlying properties. Asset-backed securities
income securities and currencies may also be used. Financial     present certain additional risks that are not presented by
instruments denominated in other currencies are subject          mortgage-backed securities. There is the possibility that
to foreign-currency risks. By their nature, currencies carry     recoveries on the underlying collateral may not, in some
their own investment risk. Returns of foreign securities are     cases, be available to support payments on these securities.
vulnerable to adverse movement of foreign currencies in          Reverse repurchase agreements present the risk that the
relation to the client’s domestic currency and the risk that     underlying securities will gain value during the time they
foreign governments will impose currency-exchange control        are lent and the opposite parties will then default. Zero
regulations or other restrictions that would prevent cash        coupon and payment-in-kind securities, whose prices
from being removed from their countries. There are special       may react more strongly to changes in interest rates
risk factors associated with investing in non-U.S. markets.      than the prices of comparable-maturity cash-payment
Such markets generally are not as developed or efficient as      coupon bonds, may also be purchased for your account.
those in the U.S. Securities of some non-U.S. issuers are less   Your account may also include variable- and floating-
liquid and more volatile than securities of comparable U.S.      rate securities, as well as inflation-protected securities.
issuers. The risk of investing in foreign securities may be      Decreases in the inflation rate or in investors’ expectations
intensified in the case of investments in emerging markets       about inflation could cause inflation-protected securities
or countries with limited or developing capital markets.         to underperform non-inflation-adjusted securities on a
Returns may also be affected by foreign tax or withholding       total-return basis. In addition, these securities may have
on dividends and interest. You should consult your tax           limited liquidity in the secondary market.
advisor about whether you are entitled to claim foreign tax
                                                                 We offer the following fixed-income alternatives, which
credits or deductions on your income-tax returns.
                                                                 may be combined in a bond or balanced account:

INVESTMENT OBJECTIVES, RISK/REWARD CONSIDERATIONS                U.S. Government Cash Accounts attempt to achieve
                                                                 a higher return than three-month Treasury bills and
All of these accounts invest in fixed income securities that
                                                                 inflation, and to limit state and local taxes, nearly assuring
provide current investment income but hold little, if any,
                                                                 a positive annual return. These accounts hold no securities
potential for capital growth. The investment spectrum
                                                                 with maturities greater than 12 months and are designed
ranges from overnight instruments to issues maturing
                                                                 generally to maintain a level of risk comparable to that
in 100 years or more. The longer the maturity, the more
                                                                 of a portfolio with an effective duration of two to four
stable the income level and the greater the expected
                                                                 months. These accounts will be invested exclusively in
return, but also the greater the price volatility—that is,
                                                                 U.S. Treasury and agency securities, with agency securities
the greater the vulnerability of market price to interest-
                                                                 normally constituting no more than half of the portfolio.
rate change. The probability of a negative annual return
on 20- and 30-year bonds is considerable because of their        U.S. Government Short Duration Accounts attempt to
price volatility. In contrast, short-term investments—           achieve a higher return than money-market instruments
those maturing in less than a year—have an extremely             and inflation, while seeking a high probability of positive

12     Bernstein Global Wealth Management
annual return. While the maturities of individual securities     average and be slightly less volatile on average because the
in these accounts may vary widely, the accounts are              accounts maintain a lower level of interest-rate sensitivity.
designed generally to maintain a level of risk comparable        Limited Duration Accounts will typically have an effective
to that of a portfolio with an average effective duration        duration in the range of two to five years.
of one to three years. Normally, these accounts will be
                                                                 Global/International Fixed-Income Accounts attempt
largely or exclusively invested in U.S. Treasury and agency
                                                                 to outperform either global or non-U.S. bond indexes
securities, and the income earned by the accounts will, for
                                                                 over a full market cycle (a rising and falling market
the most part, be exempt from state and local taxes. Other
                                                                 taken together). These accounts are invested primarily in
fixed-income securities may be purchased, but only if
                                                                 government, corporate, and supranational securities issued
their expected returns are higher than those available from
                                                                 throughout the world. We may also use bond futures on
Treasury or agency issues.
                                                                 U.S. and non-U.S. bonds as well as currency forwards to
U.S. Short Duration Plus Accounts share many of the              manage bond and currency exposure. We select securities
objectives and techniques of the Government Short                and adjust country and sector weightings consistent with
Duration Accounts, but they aim for higher returns than          our assessment of opportunities, and actively manage
the Government Short Duration Accounts because their             currency exposure with the goal of increasing return and
investments will normally include a higher percentage of         limiting currency risk.
nongovernment securities, such as corporate bonds and
                                                                 U.S. Municipal Bond Accounts attempt to maximize
mortgages. When authorized by the client, we may invest
                                                                 return after consideration of the client’s federal tax bracket.
in non-U.S.-currency-denominated securities when, in our
                                                                 Municipal accounts may include nonmunicipal securities
judgment, they hold high return potential relative to U.S.-
                                                                 to maintain the target duration of the account, pending
dollar-denominated securities. Risk-control guidelines may
                                                                 investment of cash balances in municipal securities and when
limit the non-U.S.-dollar-denominated bond weightings
                                                                 market conditions cause the expected after-tax return of
in the account, both in aggregate and for any individual
                                                                 nonmunicipal securities to be higher than that of municipal
country. We actively manage currency exposure separately
                                                                 securities. Short Duration Municipal Bond Accounts seek
from security selection; here as well, risk-control guidelines
                                                                 a high probability of positive annual returns; the overall
may limit the size of our positions.
                                                                 risk level of the accounts is designed to be comparable to
Intermediate Duration Accounts attempt to outperform the         a portfolio with an average effective duration of one-half to
bond market as a whole, the median fixed-income manager,         two and one-half years, although maturities of individual
and inflation, while seeking a moderate-to-high probability      securities may vary widely. Intermediate Duration Municipal
of positive annual return. Investments can include securities    Bond Accounts seek a moderate-to-high probability of
from a wide range of market sectors. While the maturities        positive annual returns; in general, the overall risk level
of the individual securities in these accounts may vary          of the accounts is designed to be comparable to a portfolio
widely, the accounts are designed generally to maintain a        with an average effective duration of three to seven years,
level of risk comparable to that of an intermediate portfolio    although maturities of individual securities may vary widely.
with an average effective duration of three to six years.        We also offer Short and Intermediate Duration New York
Because Intermediate Duration Accounts are managed               and California Municipal Accounts, which take state and
without regard to potential tax consequences, they may be        local taxes (if any) into account.
particularly appropriate for investors not subject to current
                                                                 Inflation-Protected Bond Accounts aim to provide a
taxation, such as IRAs. When authorized by the clients, we
                                                                 high-quality portfolio whose long-term returns exceed
may invest in non-U.S.-currency-denominated securities
                                                                 the general level of inflation in the U.S. as measured by
(including emerging markets) and high-yield securities
                                                                 the Consumer Price Index (CPI). These accounts invest
when, in our judgment, they hold high return potential
                                                                 primarily in securities whose coupons and/or principal
relative to U.S.-dollar-denominated securities. Risk-control
                                                                 payments are linked to the inflation rate in the U.S. These
guidelines may limit the non-U.S.-dollar-denominated bond
                                                                 securities are designed to protect an investor’s wealth
weightings in the account, both in aggregate and for any
                                                                 in inflationary environments. The total return on these
individual country. In almost all cases, foreign currency
                                                                 accounts is likely to exceed that of conventional bonds in
exposure is hedged back to U.S. dollars.
                                                                 environments when inflation is rising. These accounts are
U.S. Limited Duration Accounts share many of the                 likely to underperform conventional bonds when inflation
objectives and techniques of the Intermediate Duration           is lower than expected. Decreases in the inflation rate
Accounts but will produce somewhat lower returns on              or in investors’ expectations about inflation could cause

                                                                                 Investment-Management Services and Policies   13
these accounts to underperform conventional bonds on                       Real-estate investment trusts, or REITs, are pooled
a total-return basis. Over the long term, these accounts                   investment vehicles that invest primarily in real-estate-
are likely to produce a lower level of returns than stocks                 related loans or interest, or income-producing real property
and bonds because they offer an additional level of risk                   interests. REITs allow investors to participate in the
protection. In addition, inflation-protected securities may                commercial real-estate market without the illiquidity,
have limited liquidity in the secondary market.                            lack of diversification or high maintenance costs that
                                                                           are associated with owning individual pieces of property.
The total return on these accounts may be negative for a
                                                                           REITs own nearly all types of properties, including
time, even in the years where inflation is positive, because,
                                                                           office buildings, industrial warehouses, shopping centers,
like all bonds, inflation-linked securities are subject to price
                                                                           residential apartments, and hotels. To qualify as a REIT
losses when interest rates rise. However, since the yields on
                                                                           and be exempt from corporate income taxes, the company
inflation-protected securities tend to move less than other
                                                                           must distribute virtually all its taxable income to its
bond yields, their returns are likely to be less volatile than
                                                                           shareholders every year.
the returns of intermediate-term bonds.
A portion of the accounts may be invested in high-quality                  INVESTMENT OBJECTIVES, RISK/REWARDS CONSIDERATIONS
fixed-income securities whose returns are not directly
linked to U.S. inflation. These may include conventional                   The REIT Fund seeks a high level of current income
Treasury, mortgage, agency, and corporate securities, as well              along with capital appreciation. Because the bulk of REIT
as non-U.S. inflation-linked bonds that may entail some                    returns come in the form of current dividend income, we
currency risk.                                                             encourage clients in high tax brackets to hold REITS in
                                                                           tax-free or tax-deferred accounts, such as an IRA. REITs
Stable Value Services are Guaranteed Investment Contract                   carry the same risks associated with other equities: The
(GIC) alternatives for institutional savings plans. These                  price is likely to fluctuate, and shares may be redeemed at
accounts are actively managed bond portfolios that seek to                 a price lower than the purchase price, resulting in a loss.
maximize return according to targeted specifications set by                See the REIT Fund prospectus for more information.
such plans; an agreement (termed a “wrapper”) purchased
from a bank or insurance company provides for book-                        ADDITIONAL SERVICES
value payment for plan-permitted employee withdrawals.
The rate of interest credited on book value is based on                    The following additional services are available through
current bond yields and the account’s performance. The                     your Bernstein Advisor:
crediting rate is reset quarterly, semiannually or annually,               CollegeBoundfund TM, which is officially known as the
depending on the plan sponsor’s preference, and moves                      Rhode Island Tuition Savings Program, has been established
with the same responsiveness to market interest rates as                   by the Rhode Island Higher Education Assistance Authority
the blended rate on a laddered GIC portfolio of similar                    (the “RIHEAA”) to enable residents of any state to save money
duration. Stable Value Services accounts are tailored to                   on a tax-advantaged basis for qualified higher-education
the level of diversification, credit quality, and duration                 expenses of their designated beneficiaries. RIHEAA has
desired by the plan sponsor.                                               established the Rhode Island Higher Education Savings
                                                                           Trust (the “Trust”),* of which RIHEAA is the trustee,
THE REIT FUND                                                              to hold all assets of the program. We are the manager of
                                                                           the program, and in that capacity provide comprehensive
AllianceBernstein Real Estate Investment Institutional Fund
                                                                           investment, operational, and other services for the program.
(the “REIT Fund”) is a registered investment company
                                                                           Individuals may participate in the program (regardless of
that invests in real-estate companies that we believe have
                                                                           their income level or age) by establishing accounts with us
strong property fundamentals and management teams. We
                                                                           representing interests in the Trust that are invested through
are the REIT Fund’s investment adviser.* The REIT Fund
                                                                           Trust allocation portfolios in a blend of shares of open-end
offers an actively managed vehicle for clients seeking to
                                                                           registered investment companies managed by us. Each
diversify their portfolios by participating in the commercial
                                                                           account established by an individual has a single beneficiary
real-estate market. Subject to minimum account size
                                                                           selected by the participant.
requirements, certain clients may have separately managed
REIT portfolios.

* Our subsidiary, Sanford C. Bernstein & Co. LLC, acts as a distributor.

14        Bernstein Global Wealth Management
The assets of the CollegeBoundfund ™ accounts are               After we have a clear picture of your financial situation,
invested through investment portfolio options designed for      we proceed together to set specific investment objectives.
participants and their beneficiaries in different situations,   At that time, we will establish the risk/reward orientation
and are invested in shares of stock, bond, and money-           for your account, perhaps the single most important
market mutual funds, or blends of these types of funds,         consideration. Your Bernstein Advisor then discusses
based on the account’s investment orientation. Once a           possible plans of action and investment strategies by
participant selects the allocation portfolio for the account,   which your goals can be achieved.
the participant may change the selected allocation once per
                                                                If you use securities to fund your account, we will
year. See the CollegeBoundfund™ Program Description for
                                                                determine whether they are appropriate to retain as part
more information on the program.
                                                                of your managed portfolio. Although in making this
Federated Money-Market Funds. We offer money-market             determination we will consider, where you provide us
investment opportunities through select money-market            with cost information, any capital gains that you would
funds (the "Federated Funds") with distinct investment          realize if the securities were liquidated, it is likely that
objectives managed by Federated Investment Management           most of the securities that you transfer to your account for
Company, a registered investment advisor and a subsidiary       management will be sold, in which case you may realize
of Federated Investors, Inc. The five Federated Funds are:      capital gains. We integrate tax considerations throughout
(1) the Federated Prime Obligations Fund; (2) Government        the management of our clients’ taxable accounts. See more
Obligations Tax Managed Fund (3) Municipal Obligations          about our tax-related strategies in the section “Tax-Related
Fund; (4) New York Municipal Cash Trust; and (5) California     Strategies and Communications” on page 18.
Municipal Cash Trust. Investments in the Federated Funds
                                                                After we begin managing your account, we encourage you
are maintained as part of your Bernstein relationship.
                                                                to inform us in writing of any changes in your personal
Additions to and withdrawals from the Federated Funds
                                                                situation or your tax or financial position.
are handled through your Bernstein Advisor.

                                                                HOW TO OPEN A PENSION, PROFIT-SHARING, ENDOWMENT OR
                                                                FOUNDATION ACCOUNT
Opening a managed investment account is simple. You
read, complete, and sign an account agreement and               Our Bernstein Advisors are also trained to work with
application, and transfer or deposit cash or securities with    pension and profit-sharing plan sponsors.
your custodian to fund your account.                            In order to open your pension or profit-sharing account,
Before we accept a new account, we generally require            you need to deliver to us a copy of the governing plan
that you talk with one of our Bernstein Advisors. In this       documents. Your Bernstein Advisor will discuss with you
investment-planning session, you will develop together a        any prototype Defined Contribution Plan, IRA or other
clear understanding of the investment objectives for your       individual retirement plan that we make available to you.
account. Your Bernstein Advisor is a trained professional       For 401(k) and other defined-contribution plans, we
who is able to work with you to help ensure that                offer The Informed Choice ®, a comprehensive and fully
your investment program reflects your personal financial        integrated package of investment options. External
situation. We discuss your current tax status, your             recordkeepers you select offer recordkeeping, reporting,
investment temperament, your current and future financial       and administrative services tailored to the particular
needs, and your current financial position.                     needs of your plan. These services may include the ability
                                                                to accommodate nonaffiliated investments, including
It has been our experience that these investment-
                                                                existing GICs and company stock. The Informed Choice
planning sessions can include topics that our clients
                                                                offers plans access to a broad range of investment options,
should pursue with their attorneys and accountants: wills,
                                                                consisting of certain portfolios of the AllianceBernstein
estates, trusts, insurance, and other aspects of personal
                                                                family of funds, the Sanford C. Bernstein Fund, Inc.,
financial planning. We are not tax advisors, and tax
                                                                and collective trusts offered by Investor’s Bank & Trust
planning varies greatly with individual circumstances.
                                                                Company, for which we serve as subadvisor. Changing your
You should consult your accountant and attorney for
                                                                recordkeeper or plan administrator, if required, may create
counsel in their respective areas of expertise.
                                                                a period during which benefit processing/payments, in-

                                                                               Investment-Management Services and Policies   15
service withdrawals, loan transactions, individual transfer    When the value of U.S. assets delivered meets the minimum
election/processing, etc., cannot be performed. Individual     requirement for management, we may make a partial
participant balance information provided by the external       allocation, assuming that the remaining assets will be
recordkeeper is not available during this period until all     delivered. The minimum assets required for initial allocation
prior recordkeeping information has been transferred and       depend upon the asset allocation of the account selected by
participant records have been reconciled.                      the client. For Strategic Value and Strategic Growth, we will
                                                               generally make a partial allocation when the assets received
We provide an account agreement for your review and
                                                               for the account, or for the corresponding equity portion of a
signature. Informed Choice, endowment, and foundation
                                                               balanced account, are at least $100,000 and equal to 25%
accounts may have additional or different requirements.
                                                               of the anticipated equity portion. Most private clients are
Your Bernstein Advisor will advise you as to the proper
                                                               on a wrap (i.e., all-inclusive) fee package. For those clients
method of opening your account in light of the structure
                                                               on a fee schedule that charges commission, however, this
of your entity.
                                                               partial allocation may increase the transaction charges during
                                                               the opening period but will provide the diversification and
POLICIES FOR OPENING OR CLOSING AN ACCOUNT AND                 asset mix that the account would have if all assets had been
COMMUNICATING INSTRUCTIONS TO US                               received by us at one time. For equity and balanced accounts,
It usually takes up to six business days from our receipt      this partial allocation will generally be done pro rata over all
of complete documentation—and from your delivery of            the sectors and for all securities that we have approved for
cash or securities to fund your account—to the time when       purchase, except that consideration will be given to securities
we begin purchasing large-capitalization U.S. equity. For      you advise us will be used to fund your account.
fixed-income, small-capitalization equity, international       For separately managed International, Global, and
equity, and emerging-markets equity, as well as accounts       Emerging Markets accounts, the amount of funding
involving complex or unusual circumstances, it may take        required before making an initial allocation will be
somewhat longer. For instance, because of the nature           determined on a case-by-case basis.
of the small-cap market, it generally takes up to 12
weeks before a small-cap account is fully invested. Our        For fixed-income accounts, depending on the size of the
performance-measurement inception date for an account          account, a pro-rata allocation may be made before all
commences when it is substantially invested. For certain       assets are delivered. A partial allocation may, depending
accounts, securities may be held by a custodian chosen         upon market conditions, result in temporary exposure
by the client. For these accounts, clients must, or must       to interest-rate risk that varies from, and/or credit risk
cause the custodian or other administrator to, promptly        that may be in excess of, that which would be normal for
notify us of any additions to or withdrawals from the          accounts where all assets have been delivered at one time.
account. We will not be responsible for accessing this         We accept reasonable limitations as to which securities
information through on-line electronic reporting systems       are bought or sold, such as agreeing not to buy stock in a
of the custodians, since such information is not necessarily   company for a client’s account if the client is an affiliate or
available or reliable. For most private-client accounts,       controlling person in the company.
our subsidiary Sanford C. Bernstein & Co., LLC acts as
custodian, and in these cases we will be aware of additions    You may change your asset allocation or request partial
to and withdrawals from your account.                          or complete liquidation of your account at any time by
                                                               sending us written notice signed by all relevant parties.
When you deliver to your account any assets for deposit        Prior to receiving written notice, if a client orally
or transfer, we will review the securities as to their         requests that we discontinue management, we will do so
appropriateness for the account. Securities deemed             and confirm these instructions to the client in writing.
inappropriate in view of our investment style or legal         Notice becomes effective upon our receipt if it is signed
limitations as to our aggregate ownership position, as         by all relevant account parties and sent by U.S. mail,
well as the portion of securities that are overweighted in     certified mail, express mail or facsimile transmission.
relationship to the total anticipated value of the account,    A notice of discontinuance of management should specify
will be sold. As a matter of policy, we manage securities      whether you wish securities and other positions that are in
only when, in our opinion, they are appropriate for the        your account to be liquidated.
account in question. Otherwise, these positions will be
sold. If at some later date we develop this opinion, we may
reestablish an investment position in the same security.

16     Bernstein Global Wealth Management
Under normal market conditions, a change in asset                QUALITY-CONTROL REPORTS
allocation or a partial or complete liquidation is commenced     A variety of internal quality-control reports monitor and
by the close of business on the business day following our       review the implementation of our security-selection and
receipt of the notice. While this is our policy, there are       investment policies.
times when immediate accommodation of a client request
may not be possible—notably, periods of high volatility          For U.S.-equity accounts and for the U.S.-equity portion of
and extreme trading volume. During such periods, which           balanced accounts, these reports include:
can occur anywhere in the world, it may take longer for          1. A daily summary of all orders that are recommended
an asset-allocation change or liquidation to be initiated,           for trading. It is reviewed daily by members of the
and the prices of securities may be significantly different          applicable Investment Policy Group or, in the case of
at the time of liquidation than at the time of notice. Our           Strategic Growth, by members of our large-cap growth
concern is that short-term tactical decision making based            team, to determine the appropriateness of all orders and
on current events or market extremes can be difficult to             set trading limits.
implement—another reason that we advise clients to take
a long-term approach to investing. When we discontinue           2. A computer run that includes all equity securities
management of an account, we will refund the portion of             owned in clients’ portfolios. It is reviewed by designated
the fee that has not been earned.                                   members of the applicable portfolio-management group
                                                                    on at least a monthly basis.
We will not accept any notice or instruction, including those
relating to discontinuance of management, liquidation of         3. A report of our large-cap accounts that shows aggregate
positions or change in asset allocation, by e-mail, internet        weightings across those accounts and any deviations from
or any other electronic system (other than facsimile                acceptable tolerances for every individual account. This is
transmission) or by messages left on our voice-mail                 generated weekly and reviewed by designated members
system. We recommend that you confirm all transmissions             of the applicable portfolio-management group in order
via facsimile by a phone call to ensure adequate and                to determine the appropriateness of the holdings.
timely delivery, since we will not be responsible for any        For non-U.S. equity accounts and for the non-U.S. equity
mechanical or other failure in transmission.                     portion of balanced accounts, a variety of proprietary
                                                                 reports and analyses are used to ensure that our investment
PORTFOLIO INFORMATION SYSTEMS AND REVIEW                         decisions are implemented properly and in a timely fashion.
                                                                 These reports are reviewed at least weekly by the respective
PORTFOLIO INFORMATION SYSTEMS                                    portfolio management group.
Your portfolio is maintained for management and internal         For equity accounts, and the equity portion of balanced
review on a computerized portfolio information system.           accounts, a number of proprietary reports and analyses
The information system summarizes the asset allocation           are used to ensure that our investment decisions are
for your account and your tax status. (This information          implemented properly and in a timely fashion. Reports are
system has been developed for in-house use.)                     reviewed by account managers as well as senior investment
                                                                 professionals of the respective portfolio management group
The system records all information pertaining to each            and are produced daily, weekly and monthly depending
account, including the portfolio market value, cash              upon the report's purpose.
balances, and securities currently in the portfolio. Current
security market values and costs, the percentage of the          For fixed-income accounts, and for the fixed-income portion
portfolio invested in each position, realized gains or losses,   of balanced accounts, individual reports, which are reviewed
and information needed for the calculation of unrealized         at least monthly by the fixed-income portfolio-management
gains or losses are also included.                               teams, are used to ensure that accounts possess the desired
                                                                 combination of characteristics—e.g., the appropriate
Each portfolio is reviewed at least monthly by designated        maturity, sector, and security mix.
members of the applicable portfolio-management group.
They also use the data on a day-to-day basis in a variety of
situations. For instance, the portfolio is reviewed whenever     SECURITY-SELECTION REVIEW
material cash or securities are added to or withdrawn from       Members of the applicable Investment Policy Group,
the account, or whenever you advise us of a change in your       the Strategic Growth portfolio managers or fixed-income
circumstances that may warrant a change in the current           portfolio-management teams meet at least monthly to review
management of the account.                                       significant issues affecting securities in your portfolio.

                                                                                Investment-Management Services and Policies   17
CLIENT COMMUNICATIONS                                               CLIENT CONFERENCES
                                                                    We host periodic conferences for our private clients. At these
OPENING LETTER                                                      conferences our senior executives, research staff, and portfolio
Upon opening a managed investment account, you receive              managers deliver speeches that address issues affecting our
from us an executed copy of your account agreement and              management of your portfolio. Following these presentations,
application, and a letter confirming your account’s asset           you may meet our staff members to discuss your individual
allocation. We try to meet with you at least annually to            situation and questions. Audiotapes of many conferences are
review your investment objectives.                                  available to all invitees, along with a printed copy of the
                                                                    slides used in presentations.
If you hold shares of a Fund, you receive semiannual and            RESEARCH REPORTS
annual reports on the Fund. If your account holds Fund              Throughout the year, we conduct research into specific
shares exclusively, these reports may be in lieu of the             topics related to investing and wealth management. Such
communications cited below.                                         research is published and made available to private clients.

After the close of each full quarter, you receive (or have access   Our website devoted to our private-client business, www.
to, via our website) a report of our capital-markets outlook        bernstein.com, provides access to our latest strategies,
and composite performance data for our various services.            performance, research findings, and other general resources
                                                                    as well as account-specific information. Clients interested
                                                                    in accessing account-specific information on this site should
YEAR-END INVESTMENT-PERFORMANCE REPORT                              contact their Bernstein Advisor.
At the end of each calendar year, a report of the time-
weighted total return in each of your accounts for the
year, for each prior year, and from the performance                 THE INFORMED CHOICE
inception date, compared with the major capital-market              Participants in our Informed Choice defined-contribution
indexes, is available from your Advisor. As in all                  plan receive a quarterly newsletter, Your Retirement Plan
communications in which we cite performance, your                   Investment Report, which provides a detailed review of
investment-performance report shows performance on a                performance and strategies for the preceding quarter.
total-return basis, which includes all interest, dividends,         Participants and other plan clients also receive an educational
and realized and unrealized gains or losses. In individual          booklet, Using Your 401(k) Plan Wisely.
communications with you, we show performance of
our various investment services after transaction costs             TAX-RELATED STRATEGIES AND COMMUNICATIONS
(if applicable) but before investment-management fees
                                                                    Integrating tax considerations into the management of
(except for investments in the Fund, which are always
                                                                    our clients’ taxable accounts—factoring in each client’s
shown net of all costs). In literature addressed to the
                                                                    unique tax situation—is a key aspect of our service. Along
public generally, in accordance with applicable regulatory
                                                                    these lines, before the end of the calendar year, for taxable
requirements, we cite performance of our investment
                                                                    accounts, we ask that you supply us with information
services after fees and other expenses that clients paid;
                                                                    on any short- or long-term capital gains and/or losses
these deductions reflect average deductions rather than
                                                                    you’ve realized during the year from sources other than
deductions applicable specifically to your account.
                                                                    your account(s) with Bernstein, and any short- or long-
                                                                    term loss carryforward; and that you confirm your tax
THE BERNSTEIN JOURNAL                                               bracket(s) for this year and the next year. We inform you
Private clients receive The Bernstein Journal: Perspectives on      that—unless you advise us otherwise—we plan to offset
Investing & Wealth Management, a semiannual periodical              realized capital gains with losses on individual security
reviewing our key research findings on critical wealth              positions in your account if we deem it advantageous for
management issues, such as asset allocation, estate planning,       you, choosing among a variety of tax-trading strategies.
diversification, the status of the capital markets, the             With your permission, we may also contact your tax
investment strategies we’re employing in your accounts, and         advisor or accountant to clarify your tax-planning
other related topics we consider of interest.                       situation or gather other tax information. In addition,

18      Bernstein Global Wealth Management
on an account-by-account basis, we can quantify the tax        Our Statement of Policies and Procedures is a set of
penalty, amortized over various time periods, for selling      proxy-voting guidelines that, when followed, is intended
an appreciated equity position. By comparing the penalty       to maximize the value of the securities in our clients’
with our assessment of the expected return of a potential      accounts. It describes our approach to analyzing and
alternative purchase, our goal is to determine whether         voting issues and how we determine our proxy votes, and
selling or holding the stock is more advantageous in light     identifies the persons responsible for determining how to
of your tax circumstances. The tax center on our website       vote proxies. It also includes our procedures for addressing
provides details on year-to-date capital gains and income      material conflicts of interest that may arise between our
as well as our latest tax-related research.                    interests and those of our clients in connection with our
                                                               consideration of a proxy.
Where our subsidiary Sanford C. Bernstein & Co., LLC
acts as your custodian, after the end of the year you          In addition, we have adopted a Proxy-Voting Manual that
will receive a comprehensive tax report for each of your       provides further detail into our proxy-voting process and
accounts, which provides you with information necessary        addresses a range of specific voting issues.
in the preparation of your tax returns. The year-end tax
                                                               Clients may obtain a copy of the Statement of Policies
report is designed to provide you with summary and
                                                               and Procedures and our Proxy-Voting Manual, as well
detailed information to complete key items on your
                                                               as information about how we voted with respect to
federal and state tax returns as these items relate to
                                                               their securities, by contacting their Bernstein Advisor.
your accounts with Bernstein, including capital gains
                                                               Alternatively, clients may make a written request to:
and losses, taxable interest and dividend income, and
                                                               Mark R. Manley, Senior Vice President and Deputy
investment-management fees. If applicable, the report
                                                               General Counsel, AllianceBernstein L.P., 1345 Avenue of
also provides you with information on income derived
                                                               the Americas, New York, NY 10105.
from U.S. Treasury and agency securities that is exempt
from state and local taxation, margin interest, accrued
interest paid on bonds, foreign withholding on dividends,      EXECUTION AND ALLOCATION
state-specific information on tax-exempt income, and
covered and open short-sale positions.                         PRE-EXECUTION
Tax planning and preparation vary with individual              Allocation and execution policies help us to provide each
circumstances. Because of the complex nature of the tax        client with money management on an individual basis. Our
laws and the complicated calculations required, your tax       general policy is to allocate investment opportunities in a
advisor should review all tax-related communications           fair and equitable manner over time. Affiliated accounts
with us and verify the accuracy of any information             (i.e., of our employees and those of Sanford C. Bernstein &
included in your tax filings, as we are not tax advisors and   Co., LLC) invested in our discretionary services are managed
are not responsible for your tax filings.                      in the same manner as other clients’ accounts so that such
                                                               affiliated account orders are aggregated with other advisory
                                                               clients’ orders. The affiliated accounts are subject to the
PROXY VOTING                                                   same allocation procedures, quality-control processes, and
Generally, you will be responsible for voting proxies          the other policies set forth in this booklet. We maintain
for the assets in your accounts. If you do not want to         an internal report for each account reflecting factors
receive proxy-soliciting materials and annual and interim      pertaining to the account. Bernstein operates its own order-
reports, you may choose to appoint a proxy-voting agent        placement facility. From time to time, Bernstein and other
to receive these materials and the Bernstein Proxy Voting      units of Alliance may be transacting in the same securities
Committee will determine the vote on your behalf.              at the same time, and order executions are generally not
Consult your Bernstein Advisor for further information.        coordinated. Accordingly, your account may get a higher
                                                               or lower price for the same security than orders placed by
As a registered investment adviser that exercises proxy-
                                                               Alliance personnel other than those servicing Bernstein.
voting authority over client securities, we have a fiduciary
duty to vote proxies in a timely manner and make voting
decisions that are in our clients’ best interests. In this     GENERAL PARTICIPATION
regard, we have adopted a Statement of Policies and            Prior to determining which accounts should participate in
Procedures for Proxy Voting (the “Statement of Policies        a potential purchase or sale of blocks of securities during a
and Procedures”).

                                                                              Investment-Management Services and Policies   19
trading day, in addition to prevailing market conditions, we     1. Whether or not a client has an existing partial position
consider the following:                                             in that particular security;

Purchases                                                        2. The tax status of the account, e.g., time constraints
                                                                    involved in reviewing tax consequences or effecting
1. Whether the security is appropriate for all accounts; or         tax strategies;
2. Whether the security is appropriate for all accounts,         3. The account’s risk/reward goals; and
   though in varying percentages for each account; or
                                                                 4. Time constraints involved in reviewing guidelines that
3. Whether the security is appropriate for a certain                may prohibit certain allocations.
   category of accounts.
                                                                 Equity Security Allocation
                                                                 Upon execution of the order, the appropriate amounts and
1. Whether the security should not be owned for any of           prices are recorded for each account. Our internal allocation
     our accounts or a certain category of accounts; or          procedure provides fair treatment, as follows:
2. Whether the security should be owned in lesser
   percentages for each account or a certain category of         U.S. Equity Securities
   accounts; or                                                  Our Trading and Technical Group records the specific
                                                                 accounts that may participate in a proposed execution of
3. Whether we want to liquidate a position for tax               U.S. equity orders. The pending orders on these accounts
   purposes for those clients requiring a gain or loss.          are then used as a basis for the allocations of executed
Where we determine to sell a security regardless of tax          orders. U.S. equity orders for accounts for which our
considerations, both taxable and tax-exempt accounts are         subsidiary broker-dealer Sanford C. Bernstein & Co., LLC
eligible for sale contemporaneously. In those situations         executes transactions, and for accounts that utilize other
where tax gains influence the sale, securities in the tax-       brokers, are executed on a proportional basis. Among the
exempt accounts may be placed for sale first to delay            accounts that direct brokerage to firms other than Sanford
the realization of a taxable gain, or to address the tax         C. Bernstein & Co., LLC, the priority of the orders is
implications for each taxable account. Conversely, when tax      generally determined on a random basis. This procedure
losses influence the sale, we may prioritize taxable clients     may vary depending on factors such as purchase or sale
first as the loss has a specific impact in a given year.         opportunities among brokers selected by the clients, the
                                                                 size of the order, and timing considerations.
SPECIFIC PARTICIPATION                                           Where Sanford C. Bernstein & Co., LLC executes
When orders are generated, the decision as to which              transactions, at any particular time, all outstanding
accounts should participate, and in what amount, is based        equity orders for investment-management accounts for
on the type of security, the present or desired structure of     the same security at the same limit are treated equally.
the portfolio, the nature of the account’s goals and tolerance   When such executions occur at different prices during
for risk, the tax status, the permitted investment techniques    the day, participating clients get the average price of all
and, for fixed-income accounts, the size of the account and      eligible executions in that security during the day. If all
settlement and other practical considerations. As a result,      the orders for the same security have the same limit, or if
we may have different price limits at which we would             all the executions satisfy the most restrictive limit, then
wish to purchase or sell a security for different accounts.      all the executions are price-averaged for allocation to
Our portfolio-information systems, portfolio reports, and        the orders. Otherwise, the orders are grouped according
quality-control reports permit us to consider and weigh          to limit. For each group, portions of each execution are
these factors as appropriate.                                    chosen such that the average price of executions chosen for
                                                                 each group meets its limit, does not exceed the quantity
                                                                 ordered, and comes closer to proportional allocation than
ADDITIONAL CONSIDERATIONS                                        any other distribution. If the amount that Sanford C.
For equity, balanced, and fixed-income accounts, partici-        Bernstein & Co., LLC has been able to execute in the
pation in an order may also be based on the following            desired price range is not sufficient to fill all the orders,
factors:                                                         the total amount executed is allocated to the accounts on
                                                                 a mechanical basis as follows:

20     Bernstein Global Wealth Management
Accounts under the supervision of our Investment Policy           accounts on a mechanical basis as follows: Accounts are
Groups, as well as Strategic Growth accounts, that utilize        randomly ranked to determine the priority in which they
Sanford C. Bernstein & Co., LLC as broker, are generally          will be considered for participation in the allocation.
divided into two categories: 1) those with equity equal to        Allocations are then made to the accounts in the order
or greater than $5 million (including relationships with          they are ranked, subject to minimums and rounding
combined equity equal to or greater than $5 million); and         restrictions, until the total number of shares executed
2) those with equity of less than $5 million. Accounts or         has been allocated. If selected, an account with an order
account relationships falling into the first category will        valued at less than $20,000 (U.S.) will receive an all-or-
receive the appropriate partial allocation rounded to the         nothing allocation. If selected, an account with an order
nearest 100 shares if the result of the partial allocation is     valued at $20,000 or more will receive its proportional
1,000 shares or more. In any account or account relationship      share of the total shares executed, rounded to the nearest
in this category where, as a result of the partial allocation,    round lot, if the market value of the partial allocation is
the account or account relationship would receive fewer           at least $10,000. Partial allocations are only made to the
than 1,000 shares, those accounts or account relationships        extent that the portion of the account’s order that remains
are then chosen on a random basis to receive, if selected, the    unfilled has a value of at least $10,000, since minimum
lesser of 1,000 shares or the number of shares remaining to       transaction costs charged by custodian banks will apply to
be filled. Transactions for accounts or account relationships     each allocation. After selecting each account and applying
with equity of less than $5 million will be allocated on an       the rules above, any shares remaining are allocated among
all-or-nothing basis by random selection. This category of        the accounts already allocated in the order in which they
accounts and account relationships will receive roughly the       were randomly ranked, subject to the $10,000 minimum
percentage of the execution to which it is entitled as a whole    for the portion of the account’s order that remains unfilled.
(e.g., if this group represents 30% of the entire order, then     For accounts that direct brokerage to particular firms,
approximately 30% of the shares executed will be allocated        there may be times when your particular instructions
to the group). However, if there are shares remaining that        cannot be satisfied using the random allocation procedures
would result in a partial allocation to an account with           described above. In these rare cases, the orders may be
equity of less than $5 million, these shares will be allocated,   executed later or handled separately in a manner that we
if possible, to accounts with equity greater than $5 million      deem to be fair.
if there are partial allocations that have not been completed.
To the extent there are none, these shares will be allocated      FIXED-INCOME SECURITY ALLOCATION
to one account with equity of less than $5 million, resulting
in a partial allocation. While a defined relationship of          Allocation of securities to fixed-income accounts (including
accounts will generally be treated as a single trading entity     the fixed-income portfolios of the Fund) and to the fixed-
from the standpoint of allocation, account-specific factors,      income portion of balanced accounts is made on a priority
such as differences in risk tolerance, tax considerations or      basis with purchases and sales for an account executed as
permitted investment techniques, may make treatment of            contemporaneously as possible so that trades are executed
the relationship as an entity inappropriate.                      in a similar interest-rate environment. Factors considered in
                                                                  establishing this priority are the same as those considered
For accounts managed by Stanley M. Bogen, a Senior                in determining which accounts are chosen to participate in
Portfolio Manager of Bernstein, when stocks are selected          the transaction, including the type of security, the present or
for purchase, accounts are identified for participation based     desired structure of the portfolio, the nature of the account’s
on the risk level of the stock and the risk tolerance of the      goals and tolerance for risk, the tax status, permitted
client. Priority as to purchase is given based on relative        investment techniques, the size of the account, and settlement
percentages of uninvested funds. When stocks are identified       and other practical considerations. The execution price of
for sale, priority is given to clients with the least amount of   fixed-income account trades is usually the actual price at
cash and whose objectives have been obtained with respect         which the security was traded. Occasionally, executions occur
to the position. The timing of the sale for taxable accounts      at different prices during the day, with the same broker; in
may be affected by tax considerations.                            these instances, the participating clients receive the average
                                                                  price of executions in that security during the day.
Non-U.S. Equity Securities
                                                                  Due to the nature of some fixed-income offerings, investment
With regard to non-U.S. equity portfolios, if the amount          opportunities for fixed-income securities may be too limited
we have been able to execute is not sufficient to fill all        to effectively allocate among all accounts, and therefore
the orders, the total amount executed is allocated to the

                                                                                  Investment-Management Services and Policies   21
only a limited number of accounts can participate in a             On occasion, we, our affiliates, and/or our respective
given transaction. Such investment opportunities may be            employees may have a position or interest in securities that
allocated by rotation, provided that the rotation system           we recommend or buy or sell for clients, and an individual
implemented results in fair access to such investment              employee may take an action for himself or herself different
opportunities over time. We may use other methods of               from the firm’s recommendations.
trade allocation provided that all accounts receive fair and
equitable treatment.                                               INVESTMENT-MANAGEMENT FEES AND TRANSACTION CHARGES
                                                                   The current schedules of fees applicable to each client’s
INITIAL PUBLIC OFFERINGS                                           account are available and delineate the various schedules
Initial public offerings (“IPOs”) of equity securities are         for discretionary money management. The appropriate
usually made by smaller, less seasoned companies. These            schedule is also sent to each new investment-management
companies generally do not fall within the investment              client. Our investment-management fee schedule is based
objectives of clients in our value services or in our              on the value of the client’s managed assets, including any
Strategic Growth service; however, they may fall within            cash available for investment. Clients who choose to have
the investment objectives of other clients, including clients      assets held by a custodian other than Sanford C. Bernstein
with Small Cap Growth accounts. Many of these IPOs                 & Co., LLC may make arrangements with that custodian
are oversubscribed and these issues immediately trade at           for cash-management services, for which their custodian
a premium to their offering price. Accordingly, we will            may impose a separate fee in addition to our investment-
generally allocate these issues first to our Small Cap             management fee.
Growth accounts. We may also sell these issues shortly
after trading in the security commences.                           Sanford C. Bernstein & Co., LLC acts as an agent on both
                                                                   fixed-income and equity-security transactions. The Firm
In light of the size of most IPOs, the policy is to allow          does not generally impose transaction charges on U.S.
only client accounts with Small Cap Growth investment              equity securities transactions. Where they are imposed,
guidelines and objectives to participate in the majority           transaction charges apply to U.S.-listed and over-the-
of IPOs. In addition, certain sector clients are permitted         counter stocks, and, in certain cases, fixed-income equity
to participate in IPOs provided the issuer is in the               substitutes. The current industry standard rate is four
clients’ chosen sector and there are no minimum market             cents per share with certain discount venues available for
capitalization requirements in the clients’ guidelines.            executing transactions at a lower rate. Sanford C. Bernstein
While investment opportunities for IPOs are generally              & Co., LLC does not currently charge commissions on
allocated pro-rata, with a cap as described above, we may          transactions in managed fixed-income accounts. However,
use other methods of trade allocation provided that all            because fixed-income securities are generally traded on a
accounts receive fair and equitable treatment. For example,        “net” rather than a transaction-charge basis, with dealers
where investment opportunities are too limited to be               acting as principals for their own accounts without a
effectively allocated among all accounts, such investment          stated transaction charge, the price of the fixed-income
opportunities may be allocated by rotation, provided that          security purchased for your account may reflect an increase
the rotation system implemented results in fair access to          or decrease from the price paid by the dealer together
such investment opportunities over time.                           with a spread between the bid and asked price, which
                                                                   provides the opportunity for a profit or loss to the dealer.
Transactions for affiliated accounts (i.e., of our employees and   For non-U.S. value equity accounts, the non-U.S. brokers
those of Sanford C. Bernstein & Co., LLC) in securities of the     and dealers with whom we trade securities on your behalf
types purchased for our investment-advisory discretionary          will charge commissions. Traditionally, commission rates
and nondiscretionary clients may be undertaken only with           have not been negotiated on stock markets outside the
the approval of key executives or the Legal department and         United States. In recent years, however, an increasing
must be made only with strict regard to laws and regulations       number of non-U.S. stock markets have adopted a system
and in accordance with AllianceBernstein’s Code of Ethics          of negotiated rates, although a few markets continue to be
and Statement of Policy and Procedures Regarding Personal          subject to an established schedule of minimum commission
Securities Transactions, as well as the Code of Ethics of          rates. There may be transfer taxes and other charges for
Sanford C. Bernstein & Co., LLC, if applicable.                    transactions effected in non-U.S. markets.

22      Bernstein Global Wealth Management
Generally, client accounts are subject to an integrated, or         Research services we receive may include pricing data,
wrap, fee schedule, and all transactions in U.S. equities are       statistical information, financial news, historical and current
executed by our subsidiary Sanford C. Bernstein & Co., LLC.         financial data, information regarding trading, proxy-
Clients with Strategic Value accounts over a specific market        voting information, analyses, and reports regarding issuers,
value may choose to have their transactions executed through        industries, securities, economic factors, and trends with
broker-dealers other than Sanford C. Bernstein & Co., LLC.          respect to a variety of financial instruments, including
For clients who make that choice, the advisory fee under            equity and fixed-income securities and currencies from both
this arrangement is generally higher than when Sanford C.           a domestic and international perspective. Research services
Bernstein & Co., LLC executes the transaction. Where you            may be received in the form of written reports, computers
designate a brokerage firm, the rates for transaction charges       on which we receive data and/or software, telephone contacts
may be negotiated by you. Your transaction charges are              and personal meetings with security analysts, conferences,
based on the purchase or sale of securities for your account.       seminars, and meetings arranged with corporate and industry
While we always seek to obtain the best execution for your          representatives, economists, academicians, and government
account, when you direct brokerage to a particular broker,          representatives. Research services may be generated by the
our ability to obtain the best execution of the trades may          broker itself or by third parties, in which case the research
be impaired. When we are responsible for selecting brokers          would be provided to us by or through the broker. Some
other than Sanford C. Bernstein & Co., LLC for you and              of the third-party products or research services that we
negotiating transaction charges for you, we will attempt to         receive may have more than one function; for example,
obtain the best results.                                            these products and services may be used by our investment-
                                                                    management department to make investment decisions for
                                                                    any or all of our investment-management clients’ accounts
                                                                    or the portfolios of the Fund, by our marketing department
When we are responsible for selecting brokers and negotiating       to prepare client communications, and/or for other non-
transaction charges for you, we will attempt to obtain the          research purposes. If this is the case, we make a good-faith
best results. The factors that may be considered are: price, the    determination of the anticipated use of the product or service
broker’s trading expertise, stature in the industry, execution      by our investment-management department and by other
ability, facilities, clearing capabilities and financial services   departments for other purposes, and allocate brokerage
offered, the value of research provided, long-term relations        only with respect to the portion of the cost of such research
with us, reliability and financial responsibility, integrity,       that is attributable to use by our investment-management
timing and size of order and execution, difficulty of execution,    department for investment-management clients. We pay
current market conditions, depth of the market, and the             with our own funds the portion of the cost of such research
broker’s ability and willingness to commit capital (on the          attributable to use for other purposes.
infrequent occasions when deemed appropriate). Transaction
charges, being a component of price, are also considered as         The research services described above are designed to
a factor in making such determinations. We do not obligate          augment our internal research and investment-strategy
ourselves to seek the lowest transaction charge except to the       capabilities. As a practical matter, we could not generate all
extent that it contributes to the overall goal of obtaining the     the information currently provided by broker-dealers, and
best results for you. A higher transaction charge on exchange       our expenses would be increased if we attempted to generate
and over-the-counter trades may be determined reasonable            this information through our own efforts. We pay for
in light of the value of the brokerage and research services        certain of the research services that we obtain from external
provided. These research services are of the type described in      sources but also allocate brokerage for research services that
Section 28(e) of the Securities Exchange Act of 1934 and are        are available for cash; accordingly, we may be relieved of
designed to augment our internal research and investment-           expenses that we might otherwise bear.
strategy capabilities. These services may be used for any or        Semiannually, we assess the contribution of the brokerage
all of our clients’ accounts. Accordingly, the accounts that        and research services provided by broker-dealers, and attempt
provide the brokerage transaction charges for which such            to allocate a portion of our brokerage business in response
services are provided do not necessarily receive the direct         to these assessments. Research analysts, members of the
benefit of the services. We may also receive services that may      Investment Policy Groups, other investment professionals,
be deemed research, at no additional cost to our clients, from      and our Trading department each seek to evaluate the
dealers from whom we order the purchase or sale of over-the-        brokerage and research services they receive from broker-
counter securities.                                                 dealers and make judgments as to the level of business

                                                                                    Investment-Management Services and Policies   23
that would recognize such services. After this assessment,         portfolio managers, are limited partners in these funds,
a budget is drawn up specifying the total dollar amount of         which utilize leverage and pay fees based, in part, on
brokerage transactions that may be directed to such firms          the funds’ performance. Similarly, our employees may be
in return for supplying these services. Budgets are reviewed       investors in the various mutual funds we manage (including
on an ongoing basis and reevaluated in light of services           the portfolio manager that manages the mutual fund).
provided. Brokerage is then directed to these firms, based
                                                                   We have arrangements where we pay fees to certain
on a continual review of the amount of brokerage previously
                                                                   third parties that refer clients to us. For example, we pay
directed compared with the dollar amount that has been
                                                                   participating registered investment advisers, including
budgeted for that year. We don’t commit a specific amount
                                                                   affiliates of public accounting firms, a percentage of the fees
of business to any broker-dealer over any specific time
                                                                   that we earn on the referred clients’ accounts. We may pay
period. Broker-dealers sometimes suggest a level of business
                                                                   referral fees to other third parties, such as brokers. All such
they would like to receive in return for the various brokerage
                                                                   payments comply with all applicable requirements of the
and research services they provide. However, since the total
                                                                   Investment Advisers Act of 1940.
business is allocated to a broker-dealer on the basis of all the
considerations described above, the actual brokerage received      In addition, our employees are eligible to earn an account
by a broker-dealer may be more or less than the suggested          referral bonus for referring a potential client to us. Our
allocations. An overwhelming percentage of the brokerage is        management Executive Committee or its designate
allocated to broker-dealers who provide research services. Our     will determine, in its sole discretion, if an employee’s
applicable trading and portfolio-management departments            involvement was significant enough to warrant the account
continuously monitor and evaluate the performance and              referral bonus. Certain employees may not be eligible for an
execution capabilities of the brokers who transact orders to       account referral bonus due to a conflict of interest or other
ensure consistently satisfactory service.                          reasons as determined by the Executive Committee.
                                                                   AllianceBernstein employees are prohibited from serving
POLICY REVIEW                                                      on boards of directors of unaffiliated publicly traded
Our policies and procedures are under continuing review in         companies. However, independent (non-employee) directors
order to improve service to our clients and to keep in step        of AllianceBernstein Corporation are permitted to do so.
with changing laws and regulations. Hence, at any given            Two independent directors serve on the boards of unaffiliated
time, there may be changes from the practices we describe.         publicly traded companies. Such activity is not uncommon
                                                                   in the financial services industry, the directorships are
                                                                   disclosed in our public filings with the Securities and
OTHER BUSINESS ACTIVITIES                                          Exchange Commission (“SEC”), and we believe that a
Overall, our investment-management activities center               prohibition of this activity could impair its ability to attract
on serving individuals by managing personal investment             qualified outside directors.
accounts on a discretionary basis, and by managing various
employee-benefit funds, pension and profit-sharing plans,          The following are the outside directors of AllianceBernstein
individual retirement accounts, trusts, endowments,                Corporation who currently serve on the boards of directors of
charitable foundations, corporate accounts and other               unaffiliated public companies: Weston M. Hicks (Alleghany
institutional accounts. Also, we are retained on a fee basis       Corporation) and Peter J. Tobin (CIT Group, Inc.).
as an investment advisor on a nondiscretionary basis by            From time to time, your account may be invested in
some institutional and fiduciary accounts. We also have a          securities of companies where one of our outside directors
minor amount of individual nondiscretionary business. In           sits on the board.
special instances, we provide consulting services to other
investment-management firms. These services are priced
                                                                   NOT-FOR-PROFIT AFFILIATIONS
according to their duration and complexity. Almost all our
advisory billings are derived from providing investment-           Our employees are permitted to serve on the board of
supervisory services.                                              directors of not-for-profit organizations such as educational
                                                                   institutions, charitable foundations or other civic organi-
AllianceBernstein Global Derivatives Corporation, an               zations. These organizations may from time to time issue
indirect wholly owned subsidiary of AllianceBernstein,             publicly traded debt obligations to fund projects such as
is the general partner of numerous privately placed funds          the construction of buildings, dormitories, etc. We may
to which we serve as investment adviser. Several of our            purchase such securities on behalf of client accounts.
senior executives and other employees, including the funds’

24      Bernstein Global Wealth Management
We are part of a distinguished family of companies.              operates is that if there were a SIPC liquidation, clients
AllianceBernstein Corporation is the general partner of          would contact the SIPC trustee and, if all but $500,000
AllianceBernstein and an indirect, wholly owned subsidiary       worth of a client’s assets were found, full restitution of this
of AXA Financial, Inc., a Delaware corporation. AXA              $500,000 amount (which could include up to $100,000
Financial is one of AllianceBernstein’s principal owners         in cash) would be completely covered. In addition, in the
and is wholly owned by AXA, a French insurance holding           event there were a SIPC liquidation, for each individual or
company. Another major owner of AllianceBernstein                organization, Sanford C. Bernstein & Co., LLC currently
is AllianceBernstein Holding L.P., which is a limited            has $24,500,000 of excess insurance for securities with a
partnership whose shares are traded on the New York              private insurance carrier, totaling in aggregate $25,000,000
Stock Exchange.                                                  of coverage for each individual or organization.
                                                                 Sanford C. Bernstein & Co., LLC pays interest on clients’
SANFORD C. BERNSTEIN & CO., LLC AND                              cash balances at all times at a monthly rate based on the
SANFORD C. BERNSTEIN LIMITED                                     average discount rate of Treasury bills maturing in 30
Sanford C. Bernstein & Co., LLC is a broker-dealer               days. Sanford C. Bernstein & Co., LLC holds clients’ cash
registered with the SEC under the Securities Exchange Act        balances in special reserve bank accounts for the exclusive
of 1934 and is a member of the New York Stock Exchange,          benefit of customers pursuant to SEC Rule 15c3-3. The
Inc. and the National Association of Securities Dealers,         reserve account held for the benefit of clients subject to
Inc. In the course of Sanford C. Bernstein & Co., LLC’s          ERISA invests in 30-day Treasury bills, and the interest
business as a broker-dealer, it regularly effects transactions   payments on their cash balances reflect the earnings on
for our investment-advisory clients, for compensation.           those investments. The reserve account held for the benefit
Our London affiliate, Sanford C. Bernstein Limited               of other clients may invest in Treasury bills of maturity
(regulated in the United Kingdom by the Financial                greater than 30 days. Because our subsidiary, Sanford C.
Services Authority), may also effect transactions for our        Bernstein & Co., LLC, keeps the spread, if any, between
investment-advisory clients, for compensation. Sanford           its investment of clients’ cash balances (other than those
C. Bernstein & Co., LLC executes transactions for the            subject to ERISA) and the interest it pays to clients on such
majority of clients serviced by Bernstein. All investment-       balances, there may be an incentive to maintain or increase
advisory equity activity is monitored under the supervision      cash balances in non-ERISA accounts. However, we make
of the chief investment officer in charge of the applicable      all portfolio-management decisions in our clients’ accounts
portfolio-management department and the Legal and                without regard to the potential use by our subsidiary of
Compliance department. With respect to transactions              cash balances.
Sanford C. Bernstein & Co., LLC or its affiliates route to
                                                                 Sanford C. Bernstein & Co., LLC will immediately add
other firms for execution or direct to particular exchanges,
                                                                 dividend and interest payments to client portfolios. Clients
it is the policy of Sanford C. Bernstein & Co., LLC not to
                                                                 may request that we manage those additional funds, or
receive payment for order flow.
                                                                 clients may request to have the dividend and interest
Your Bernstein Advisor is dually registered as our               amounts paid over to them on either a predetermined day
investment adviser representative and as a broker-dealer         of each month, on the first business day of each quarter or
representative of Sanford C. Bernstein & Co., LLC. You           pursuant to individual requests as desired. Currently, there
should address to your Bernstein Advisor, in accordance          is no separate charge for the custody services provided by
with our notice and instruction procedures described             Sanford C. Bernstein & Co., LLC for our clients, except for
above, instructions to Sanford C. Bernstein, Co., LLC,           certain non-U.S. assets. Small accounts may be subject to
including instructions relating to cash withdrawals and          a modest account maintenance fee. In general, securities
transfers of funds or securities.                                are held for clients by Sanford C. Bernstein & Co., LLC in
                                                                 nominee name. In the event any are “called” by the issuer,
Clients’ accounts that are custodied at Sanford C. Bernstein
                                                                 an impartial random-selection process will be used to
& Co., LLC are protected by the insurance coverage provided
                                                                 allocate the calls to particular accounts.
by the Securities Investor Protection Corporation (“SIPC”).
Our clients’ interests in limited partnerships or other          Each month, Sanford C. Bernstein & Co., LLC sends a
securities that are not registered with the SEC, however, are    statement listing in detail account activity, current holdings
not protected by SIPC. SIPC protection covers $500,000           and their market value, cash and income received into the
worth of assets held for each individual or organization, of     account, cash and income withdrawn from the account,
which $100,000 may be in cash. The way that this coverage        interest earned on your credit balance, if any, and many

                                                                                 Investment-Management Services and Policies   25
other details. In addition to the monthly statement, unless      Institutional Brokerage Clients
you affirmatively select otherwise, Sanford C. Bernstein &       Sanford C. Bernstein & Co., LLC and Sanford C. Bernstein
Co., LLC sends a confirmation whenever a transaction is          Limited, in addition to functioning as brokers for
executed in the account.                                         our investment-management clients, also function as
In general, your Sanford C. Bernstein Fund, Inc. mutual-         brokers for their institutional-nonmanagement clients.
fund holdings are not transferable to brokers other than         At times, investment recommendations made in research
Sanford C. Bernstein & Co., LLC.                                 reports distributed by Sanford C. Bernstein & Co., LLC
                                                                 or Sanford C. Bernstein Limited to their institutional
Cross Transactions                                               brokerage clients may differ from the recommendations
From time to time, Sanford C. Bernstein & Co., LLC               indicated by our investment-management process.
or its affiliate Sanford C. Bernstein Limited executes           Additionally, Sanford C. Bernstein & Co., LLC’s and
agency cross transactions for our discretionary accounts.        Sanford C. Bernstein Limited’s institutional brokerage
An agency cross transaction occurs when securities are           clients very often have investment philosophies that differ
purchased or sold between a discretionary client’s account       significantly from those reflected in our investment-
through Sanford C. Bernstein Co., LLC (or its affiliate)         management process. Accordingly, the recommendations
and a non-managed client on the other side of the                made to Sanford C. Bernstein & Co., LLC’s and Sanford C.
transaction for which Sanford C. Bernstein & Co., LLC (or        Bernstein Limited’s institutional brokerage clients may
its affiliate) acts as a broker. Agency cross transactions are   differ from the actions taken by us for our discretionary
executed only when we are authorized to enter into such          investment-management clients.
transaction by our discretionary client. The authorization       We strongly believe that Sanford C. Bernstein & Co., LLC’s
can be terminated at any time with written notice to             and Sanford C. Bernstein Limited’s continuing dialogue
us. In addition, other types of cross transactions may be        with their institutional clients increases its ability to obtain
executed between managed or advisory accounts when               timely and advantageous executions in the marketplace for
allowed by law; in certain such cases, specific consent for      our investment-management clients and provides us with
each such transaction is required from both sides.               additional insight into the market generally.
The use of agency cross transactions often increases the
probability of completing a transaction at a better price.       BUSINESS CONTINUITY STATEMENT
For example, if we cause a large purchase order to be            The Sanford C. Bernstein & Co., LLC business continuity
entered into the market, it might drive up the price of          strategy provides for the continuation of business-critical
the security before the transaction is completed. By using       functions in the event of a partial or total building outage
an agency cross transaction, Sanford C. Bernstein & Co.,         affecting any of our offices or a technical problem affecting
LLC (or its affiliate) may not influence the market price        our applications, data centers, or network. The recovery
and therefore may achieve a better execution.                    strategies we employ are designed to limit the impact on
In an agency cross transaction, Sanford C. Bernstein &           clients from any business interruption or disaster.
Co., LLC (or its affiliate) may receive commissions from         Our process for developing business resumption strategies
both sides of the trade so there is a potential conflict of      and plans involved analysis, planning, implementation,
interest. On confirmations of purchase or sale for agency        and testing. The process was initiated by conducting
cross transactions, in addition to indicating the amount of      a Business Impact Analysis (“BIA”) with each of the
transaction charges, Sanford C. Bernstein & Co., LLC (or         business areas. The BIA identified requirements for key
its affiliate) will also indicate the amount of transaction      Sanford C. Bernstein & Co., LLC employees, applications
charges incurred by all clients on the other side of the         and services necessary to support the business-critical
transaction. Sanford C. Bernstein & Co., LLC (or its             functions for a short-duration outage through a longer-
affiliate) will notify clients annually of the total number      term outage affecting the office. These requirements
of agency cross transactions undertaken for their accounts       were reviewed and approved by the business and used
over the previous year, the amount of commission paid on         to develop the recovery plan that will be employed in
the cross transactions and the total commission paid by          the event of an emergency. The recovery plan will be
the clients on the other side of the transactions.               periodically tested and updated based on test results as
                                                                 well as any new requirements that are identified when
                                                                 the BIAs are reviewed or any ad hoc business changes that
                                                                 require the plan to be updated.

26     Bernstein Global Wealth Management
Business recovery strategies are varied to make appropriate     PRIVACY POLICY
use of both internal and external capabilities. They include    At AllianceBernstein, protecting the privacy and confiden-
external recovery vendor solutions, interoffice relocation,     tiality of our clients’ personal information is a priority. We
workload shifts, and secured remote access.                     understand that you have entrusted us with your private
Through testing, we have verified the resources identified      financial information, and we do everything possible to
during the BIA process as necessary for recovery of all         maintain that trust. The following sets forth details of our
critical business functions, and that such functions operate    approach to ensuring the confidentiality of your personal
in accordance with the recovery specifications outlined         information.
during the BIA process. While using cost-effective and          •   We never sell client lists or information about our
technologically proven systems, equipment and techniques,           clients (or former clients) to anyone.
the firm continually updates both the recovery plans and
the necessary technology in order to minimize the time          •   In the normal course of business we collect information
required to recover from a disruption.                              about our clients from the following sources: (1)
                                                                    account documentation, including applications or other
No plan is effective without proper documentation.
                                                                    forms (which may include information such as the
Therefore, Sanford C. Bernstein & Co., LLC has developed
                                                                    client’s name, address, social security number, assets,
and maintains business continuity plans for each business
                                                                    and income) and (2) information about our clients’
unit and office. These plans include mobilization
                                                                    transactions with us (such as account balances and
procedures, notification guidelines, call trees and other
                                                                    account activity).
pertinent information for the businesses as well as plans for
crisis management and executive management personnel            •   We have strict policies and procedures to safeguard
to insure proper coordination of command and control                personal information about our clients (or former
activities in the event of an emergency.                            clients) that include (1) restricting access and (2)
                                                                    maintaining physical, electronic, and procedural
Although we have taken steps to develop detailed business
                                                                    safeguards that comply with federal standards for
continuity plans, unforeseen circumstances may create
                                                                    protecting such information.
situations where we are unable to fully recover from a
significant business interruption. However, we believe our      •   To be able to serve our clients and to provide financial
planning and implementation process reduces the risk in             products efficiently and accurately, it is sometimes
this area.                                                          necessary to share information with companies that
                                                                    perform administrative services for us or on our behalf.
                                                                    These companies are required to use this information
                                                                    only for the services for which we hired them, and are
                                                                    not permitted to use or share this information for any
                                                                    other purpose.

                                                                               Investment-Management Services and Policies   27
ALLIANCEBERNSTEIN CORPORATION                                Marilyn Goldstein Fedak (1947)
                                                             Executive Vice President, Head—Bernstein Value
                                                             Equities Business and Co-Chief Investment Officer—
                                                             U.S. Value Equities
                                                             Smith College—B.A. 1968
Lewis A. Sanders (1946)                                      Harvard Business School—M.B.A. 1972
Chairman of the Board and Chief Executive Officer            AllianceBernstein L.P. and its predecessors and affiliates
Columbia University—B.S. 1968                                1984–present
AllianceBernstein L.P. and its predecessors and affiliates
1968–present                                                 Mark R. Gordon (1953)
                                                             Executive Vice President, Director of Global
                                                             Quantitative Research and Chief Investment Officer,
Roger Hertog (1941)
                                                             Absolute Return Strategy
Vice Chairman—Institutional and Private Asset
Management Sales and Marketing                               Brown University—B.S. 1975
Bernard M. Baruch College, City University of New            AllianceBernstein L.P. and its predecessors and affiliates
York—B.B.A. 1996                                             1983–present
AllianceBernstein L.P. and its predecessors and affiliates
1968–present                                                 Thomas S. Hexner (1956)
                                                             Executive Vice President and Head of Global Wealth
Lawrence H. Cohen (1961)
Executive Vice President, Chief Technology Officer           Hamilton College—B.A. 1978
Harvard University—B.A. 1982                                 AllianceBernstein L.P. and its predecessors and affiliates
AllianceBernstein L.P. and its predecessors and affiliates
                                                             Robert H. Joseph, Jr. (1947)
                                                             Senior Vice President and Chief Financial Officer
Laurence E. Cranch (1946)
Executive Vice President and General Counsel                 Gettysburg College—B.A. 1969
Amherst College—B.A. 1969                                    AllianceBernstein L.P. and its predecessors and affiliates
University of Pennsylvania—J.D. 1973
Clifford Chance LLP and its predecessor (Rogers & Wells)     Gerald M. Lieberman (1947)
                                                             President and Chief Operating Officer
AllianceBernstein L.P. and its predecessors and affiliates
2004–present                                                 University of Connecticut—B.S. 1969
                                                             AllianceBernstein L.P. and its predecessors and affiliates
Sharon E. Fay (1960)
Executive Vice President and Chief Investment Officer—
Global, U.K., and European Value Equities
Brown University—A.B. 1983
Harvard Business School—M.B.A. 1987
AllianceBernstein L.P. and its predecessors and affiliates

28     Bernstein Global Wealth Management
Mark R. Manley (1962)                                        James G. Reilly (1961)
Senior Vice President, Deputy General Counsel,               Executive Vice President and
and Chief Compliance Officer                                 US Large Cap Growth Team Leader
St. John’s University—B.A. 1984                              Northwestern University—B.S. 1983
New York Law School—J.D. 1989                                University of Chicago—M.B.A. 1986
AllianceBernstein L.P. and its predecessors and affiliates   AllianceBernstein L.P. and its predecessors and affiliates
1984–present                                                 1985–present

Seth J. Masters (1959)                                       Paul C. Rissman (1956)
Chief Investment Officer—Style Blend and                     Executive Vice President, Director of Global Growth
Core Equity Services                                         Research and Head of the Global Research Growth Team
Princeton—B.A. 1981                                          University of Pennsylvania—B.A. 1978, Ph.D. 1985
Oxford University—Master’s in Economics 1983                 Columbia Business School—M.B.A. 1990
AllianceBernstein L.P. and its predecessors and affiliates   AllianceBernstein L.P. and its predecessors and affiliates
1991–present                                                 1988–present

Marc O. Mayer (1957)                                         Lisa Shalett (1963)
Executive Vice President and Chairman of the Board,          Executive Vice President and Chairman of the Board,
AllianceBernstein Investment Research & Management, Inc.     Sanford C. Bernstein & Co., LLC
Yale University—B.A. 1978                                    Brown University—B.S. 1985
Columbia University—M.B.A.1983                               Harvard Business School—M.B.A. 1989
AllianceBernstein L.P. and its predecessors and affiliates   AllianceBernstein, L.P. and its predecessors and affiliates
1989–present                                                 1995–present

Douglas Peebles (1965)                                       David A. Steyn (1959)
Executive Vice President, Co-Head and Co-Chief               Executive Vice President and Head, AllianceBernstein
Investment Officer—Fixed Income and Director—                Institutional Investment Management
Global Fixed Income
                                                             Aberdeen University—Law 1979
Muhlenberg College—B.A. 1987
                                                             AllianceBernstein L.P. and its predecessors and affiliates
Rutgers University—M.B.A. 1992                               1999–present
AllianceBernstein L.P. and its predecessors and affiliates
1986–present                                                 Christopher M. Toub (1956)
                                                             Chief Executive Officer of AllianceBernstein Limited
Jeffrey Phlegar (1966)                                       and Head of Global/International Growth Equities
Executive Vice President, Co-Head and Co-Chief               Williams College—B.A 1982
Investment Officer—Fixed Income and Director—
                                                             Harvard Business School—M.B.A. 1987
US Investment Grade Fixed Income
                                                             AllianceBernstein L.P. and its predecessors and affiliates
Hofstra University—B.S. 1988
Adelphia University—M.B.A. 1991
AllianceBernstein L.P. and its predecessors and affiliates

                                                                            Investment-Management Services and Policies    29
CHIEF INVESTMENT OFFICERS                                    Sharon E. Fay (1960)
                                                             Chief Investment Officer—U.K. European
Edward D. Baker III (1951)
                                                             and Global Value Equities
Chief Investment Officer—Emerging Markets Equities
                                                             (See Executive Committee, above)
University of South Florida—B.A. 1977
University of California at Berkeley—M.A. 1980               Marilyn Goldstein Fedak (1947)
AllianceBernstein L.P. and its predecessors and affiliates   Executive Vice President and Co-Chief Investment
1995–present                                                 Officer—U.S. Large Capitalization Value Equities

John L. Blundin (1941)                                       (See Executive Committee, above)
Executive Vice President, Co-Head Global Growth Equities
Yale University—B.A. 1963
                                                             Mark R. Gordon (1953)
                                                             Chief Investment Officer—Absolute Return
AllianceBernstein L.P. and its predecessors and affiliates   and Director of Quantitative Research
                                                             (See Executive Committee, above)

Stanley M. Bogen (1937)
First Vice President and Senior Portfolio Manager
                                                             John P. Mahedy (1963)
                                                             Co-Chief Investment Officer—U.S. Large Capitalization
University of Pennsylvania—B.S. 1958                         Value Equities
New York University—M.B.A. 1959                              New York University—B.A. 1985, M.B.A. 1990
AllianceBernstein L.P. and its predecessors and affiliates   AllianceBernstein L.P. and its predecessors and affiliates
1969–present                                                 1989–present

Drew M. Demakis (1963)                                       Teresa Marziano (1954)
Chief Investment Officer—Structured Equities                 Co-Chief Investment Officer—REITs
University of Chicago—B.A. 1985                              Simón Bolívar University—B.S. 1977
Washington University—M.B.A. 1987                            Columbia University—M.B.A. 1982
AllianceBernstein L.P. and its predecessors and affiliates   AllianceBernstein L.P. and its predecessors and affiliates
1998–present                                                 1994–present

Henry D’Auria (1961)                                         Seth J. Masters (1959)
Chief Investment Officer—Emerging Markets                    Executive Vice President and Chief Investment Officer—
Equities and Co-Chief Investment Officer—                    Style Blend Services
International Value Equities                                 (See Executive Committee, above)
Trinity College—B.A. 1983
AllianceBernstein L.P. and its predecessors and affiliates

30     Bernstein Global Wealth Management
Joseph Gerard Paul (1960)
Chief Investment Officer—Advanced Value and
Small- and Mid-Capitalization Value Equities and
Co-Chief Investment Officer–REITs
University of Arizona—B.S. 1982
Massachusetts Institute of Technology—M.S. 1984
AllianceBernstein L.P. and its predecessors and affiliates

James G. Reilly (1961)
Executive Vice President and Head of Large Capitalization
Growth Equities
(See Executive Committee, above)

Kevin F. Simms (1966)
Director of Research—Global Value Equities and Co-Chief
Investment Officer—International Value Equities
Georgetown University—B.S., B.A. 1987
Harvard University—M.B.A. 1992
AllianceBernstein L.P. and its predecessors and affiliates

Jeffrey W. Singer (1958)
Chief Investment Officer—Canadian Value Equities
University of Western Ontario—B.A. 1980
Harvard Business School—M.B.A. 1984
Davis Selected Advisors 10/98–3/99
AllianceBernstein L.P. and its predecessors and affiliates
1992—1998 and 1999–present

345 Park Avenue
New York, NY 10154

                                                             Investment Management Services and Policies   31
                Global Wealth Management
                  A unit of AllianceBernstein L.P.

BER–0581–0206     www.bernstein.com

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