UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-05555
SANFORD C. BERNSTEIN FUND, INC.
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Mark R. Manley
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 221-5672
Date of fiscal year end: September 30, 2006
Date of reporting period: March 31, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
2
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SANFORD C. BERNSTEIN FUND, INC.
AND
SANFORD C. BERNSTEIN FUND II, INC.
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SEMIANNUAL REPORT
MARCH 31, 2006
Fixed-Income &
International Equity
Investments
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Table of Contents
Portfolio Manager Commentaries ............................................ 1
Historical Performance .................................................... 8
Mountain Charts ........................................................... 11
Fund Expenses ............................................................. 13
Portfolio Summaries ....................................................... 14
Statements of Assets and Liabilities ...................................... 18
Statements of Operations .................................................. 26
Statements of Changes in Net Assets ....................................... 30
Financial Highlights ...................................................... 38
Notes to Financial Statements ............................................. 52
Other ..................................................................... 77
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Before investing in any portfolio of the Sanford C. Bernstein Fund, Inc. or the
Sanford C. Bernstein Fund II, Inc., a prospective investor should consider
carefully the portfolio's investment objectives and policies, charges, expenses
and risks. These and other matters of importance to prospective investors are
contained in the Funds' prospectus, an additional copy of which may be obtained
by visiting our website at www.bernstein.com and clicking on OProspectusesO at
the bottom of any screen or by calling your financial adviser or by calling
Bernstein's mutual fund shareholder help line at (212) 756-4097. Please read the
prospectus carefully before investing.
For performance information current to the most recent month-end, please visit
our website at www.bernstein.com and click on "Updated Fund Performance" at the
bottom of any screen.
This shareholder report must be preceded or accompanied by the Sanford C.
Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc. prospectuses for
individuals who are not shareholders of the Funds.
You may obtain a description of the Funds' proxy voting policies and procedures,
without charge. Simply visit our website at www.bernstein.com or go to the
Securities and Exchange Commission's (the "Commission") website at www.sec.gov
or call Bernstein at (212) 756-4097.
Each Fund will file its complete schedule of portfolio holdings with the
Commission for the first and third quarters of each fiscal year on Form N-Q. The
Funds' Forms N-Q are available on the Commission's website at www.sec.gov. The
Funds' Forms N-Q may also be reviewed and copied at the Commission's Public
Reference Room in Washington, D.C.; information on the operation of the Public
Reference Room may be obtained by calling (800) SEC-0330.
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Investment Products Offered: o Are Not FDIC Insured o May Lose Value
o Are Not Bank Guaranteed
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Portfolio Manager Commentaries
To Our Shareholders--May 22, 2006
This report provides management's discussion of fund performance for the 12
portfolios of the Sanford C. Bernstein Fund, Inc. and one portfolio of the
Sanford C. Bernstein Fund II, Inc., for the semi-annual reporting period ended
March 31, 2006.
Bernstein Tax-Managed International Portfolio
Investment Objective and Strategy
Bernstein Tax-Managed International Portfolio (the "Portfolio") seeks to provide
long-term capital growth through investments in equity securities of established
foreign companies constituting the Morgan Stanley Capital International Europe,
Australasia and Far East (MSCI EAFE) Index, plus Canada. Normally, approximately
50% of the value of the Portfolio will consist of international growth stocks,
and 50% of the value of the Portfolio will consist of international value
stocks. The Portfolio will be rebalanced to maintain this targeted allocation;
however, the actual weightings of securities will vary within a narrow range,
usually from 45% to 55%. The Portfolio seeks to minimize the impact of taxes on
shareholders' return.
Bernstein International Portfolio
Investment Objective and Strategy
Bernstein International Portfolio (the "Portfolio") seeks to provide long-term
capital growth through investments in equity securities of established foreign
companies constituting the Morgan Stanley Capital International Europe,
Australasia and Far East (MSCI EAFE) Index, plus Canada. Normally, approximately
50% of the value of the Portfolio will consist of international growth stocks,
and 50% of the value of the Portfolio will consist of international value
stocks. The Portfolio will be rebalanced to maintain this targeted allocation;
however, the actual weightings of securities will vary within a narrow range,
usually from 45% to 55%. The Portfolio is managed without regard to tax
considerations.
Investment Results
The table on page 10 shows performance for the Bernstein Tax-Managed
International and Bernstein International Portfolios compared with their
benchmark, the MSCI EAFE Index (cap-weighted, unhedged), for the six- and
12-month periods ended March 31, 2006.
Both Portfolios outperformed their benchmark during both the six- and 12-month
periods ended March 31, 2006. While the MSCIValue and MSCI Growth Indices had
almost identical returns over the six- and 12-month periods, the premium from
the value portion of both Portfolios was particularly large, thanks in part to
several holdings driven up by take-over bids.
For both the six- and 12-month periods under review, positive stock selection in
financials and materials drove relative performance. Stock selection in health
care and technology shares offset some of the relative gains in both periods.
The Portfolios' financials stocks rose on improved investor sentiment after the
U.S. Federal Reserve indicated that it may be through raising interest rates.
Several financial services stocks were also lifted by strong fourth quarter 2005
earnings reports. Additionally, several Japanese financials rose due to strength
in Japan's economy. Within materials, several holdings rose on strong earnings
growth and high metals prices. In addition, mergers and acquisition activity
lifted the prices of some of the Portfolios' holdings.
Portfolio negatives in the health care sector were driven by stock-specific
factors as well as threats from generic versions of key drugs. The Portfolios'
Blend Investment Policy Team (the "team") still finds the Portfolios' core
holdings attractive given their strong drug pipelines, with one company
management highlighting 10-12 drugs that reported new trial data in the first
quarter of 2006 alone. In technology, select holdings fell sharply after several
companies announced new guidance that was below analysts' expectations. However,
the team's research suggests that the companies remain well positioned due to
solid new business pipelines, low-cost manufacturing presence and positive
operating cash flow.
Market Review and Investment Strategy
Non-U.S. developed equity markets, as represented by the MSCI EAFE Index, posted
strong gains in the six- and 12-month periods ended March 31, 2006, up 13.86%
and 24.41%, respectively. The 12-month return would have been almost 10% higher
if not for the strengthening of the U.S. dollar versus most other currencies. By
contrast, the Standard & Poor's 500 Stock Index was up only 6.38% and 11.72% in
the six- and 12-month periods, respectively.
(Portfolio Manager Commentaries continued on next page)
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2006 Semiannual Report 1
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Portfolio Manager Commentaries(continued from previous page)
The market's rally reflected a supportive global economic backdrop. Although
U.S. gross domestic product growth, which powered the global economy through the
first half of the decade, is widely expected to soften in 2006 as the housing
market slows, faster growth outside the U.S. is expected to more than offset
that. With more of the world's consumption, investment and profits coming from
outside the U.S., global economic growth is likely to be more balanced and
potentially more sustainable. Productivity-enhancing technological change and
globalization are keeping the lid on wage inflation, enabling central banks to
continue increasing interest rates only modestly. During the quarter, Japan's
central bank signaled the end of its ultra-loose monetary policy regime,
temporarily shaking bond and equity markets. With the world's second-largest
economy at last escaping deflation and moving toward a self-sustaining recovery,
the prospect of increases in rates seems more a cause for optimism than concern.
The favorable economic climate has helped boost corporate profitability and is
widely expected to continue to support strong earnings growth, especially
outside the U.S. The latter largely explains the recent out-performance of
non-U.S. equities.
Bernstein Emerging Markets Portfolio
Investment Objective and Strategy
Prior to May 2, 2005, the Bernstein Emerging Markets Portfolio was known as the
Bernstein Emerging Markets Value Portfolio (the "Portfolio"). The Portfolio
seeks to provide long-term capital growth through investments in equity
securities of companies in emerging-market countries. At least 80% of the
Portfolio's net assets will be invested in such companies. Under normal
circumstances, approximately 50% of the value of the Portfolio will consist of
emerging markets value stocks and 50% will consist of emerging markets growth
stocks. The Portfolio will be rebalanced as necessary to maintain this targeted
allocation. However, depending on market conditions, the actual weightings of
securities from each investment discipline may vary, normally from 45% to 55%.
The Portfolio will invest primarily in common stocks but may also invest in
preferred stocks, warrants and convertible securities of foreign issuers,
including sponsored or unsponsored ADRs and GDRs. The Portfolio may not
necessarily be diversified on a geographical basis, but may also make
investments in established foreign companies constituting the Morgan Stanley
Capital International Emerging Markets (MSCI EM) Index.
Investment Results
The table on page 10 shows performance for the Bernstein Emerging Markets
Portfolio and its benchmark, the Morgan Stanley Capital International Emerging
Markets (MSCI EM) Index, for the six- and 12-month periods ended March 31, 2006.
The Portfolio underperformed its benchmark during both the six- and 12-month
periods. Underperformance stemmed primarily from stock selection within the
technology, energy and industrial commodities sectors. In particular, steel
prices declined sharply in 2005 on fears of increased Chinese production,
depressing the share price of several of the Portfolio's steel holdings and
detracting from performance relative to the benchmark. Underexposure to Russia
was also a source of relative underperformance, as Russian shares climbed
110.62% in U.S. dollar terms during the 12-month period, as measured by the MSCI
Russia Index. This occurred largely on the strength of Russian energy companies.
Relative underperformance was softened by strong stock selection within the
financial sector, as several key holdings rallied in concert with increasing
demand for financial services, particularly in Korea, Brazil and South Africa.
Market Review and Investment Strategy
Equity markets around the world experienced strong gains in the six- and
12-month periods ending March 31, 2006, driven by optimism regarding rapid
global economic growth and continued robust corporate earnings. The emerging
markets fared particularly well, returning 20.06% and 47.45% in the six- and
12-month periods, respectively, as measured by the MSCI Emerging Markets Index
in U.S. dollar terms. Robust domestic economic fundamentals, including strong
gross domestic product growth, growing current account balances and high levels
of corporate profitability continued to instill confidence among investors in
the emerging equity markets.
Energy stocks far outpaced all other sectors over the 12-month period, propelled
by a tailwind of high oil prices. Despite being the only sector to post a
negative return in the fourth quarter of 2005 on signs of easing oil prices, the
energy sector snapped back in the first quarter of 2006. This was in response to
supply concerns stemming, in part, from the political situations in certain
oil-producing emerging markets.
(Portfolio Manager Commentaries continued on next page)
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2 Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
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Portfolio Manager Commentaries (continued from previous page)
Gains over the 12-month period were not just concentrated in the energy sector,
however, as every sector and every country posted positive returns in U.S.
dollar terms.
Over the 12-month period ending March 31, 2006, the Portfolio's investment
opportunities were expanded to incorporate the company research and stock
selection expertise of the Emerging Markets Growth Equities team. This blended
investment strategy--utilizing the expertise of both the Alliance Emerging
Markets Growth Equities team and the Bernstein Emerging Markets Value Equities
team--allows the management team to build a portfolio with overall strong growth
potential that is also trading at attractive prices. We believe that this
structure should serve investors well by taking advantage of a far broader set
of opportunities presented in the emerging markets.
Bernstein Intermediate Duration Portfolio and Bernstein Intermediate Duration
Institutional Portfolio
Investment Objective and Strategy
Bernstein Intermediate Duration Portfolio seeks to provide safety of principal
and a moderate-to-high rate of income that is subject to taxes. Bernstein
Intermediate Duration Institutional Portfolio seeks to provide safety of
principal and a moderate-to-high rate of current income. Under normal
circumstances, both Portfolios (the "Portfolios") will seek to maintain an
average portfolio quality minimum of A, based on ratings given to the
Portfolios' securities by nationally recognized statistical rating organizations
("NRSROs"). The Portfolios may also invest up to 25% of their total assets in
fixed-income, non-U.S. dollar denominated foreign securities, and may invest
without limit in fixed-income, U.S. dollar denominated foreign securites, in
each case in developed or emerging-market countries. The Portfolios may also
invest up to 25% of their total assets in fixed-income securities rated below
investment grade (BB or below) by NRSROs (commonly known as "junk bonds"). The
Portfolios seek to maintain an effective duration of three to six years under
normal market conditions.
Investment Results
The table on page 10 shows performance for the Bernstein Intermediate Duration
and Bernstein Intermediate Duration Institutional Portfolios compared with their
benchmark, the Lehman Brothers (LB) Aggregate Bond Index, for the six- and
12-month periods ended March 31, 2006.
Both Portfolios outperformed their benchmark for both the six- and 12-month
periods ended March 31, 2006. Exposure to non-benchmark sectors, high yield,
emerging-market debt and hedged non-U.S. government holdings all contributed
positively to relative performance. Additionally, the Portfolios' overweight
position in mortgages and commercial mortgage-backed securities (CMBS), as well
as the Portfolios' shorter-than-benchmark duration, also contributed positively
to performance.
Market Review and Investment Strategy
Investment-grade fixed-income returns were generally weak during the semi-annual
period, reflecting higher U.S. interest rates. Yields rose across the maturity
spectrum as the Federal Reserve continued to raise official interest rates
another 100 basis points in quarter point increments. The Treasury yield curve
finished the quarter almost perfectly flat, with most rates within a few basis
points of 4.8%. At the end of the period, the Fed funds rate stood at 4.75%, 375
basis points higher than when the Fed started tightening in June of 2004.
The U.S. Treasury market, as measured by the Lehman Brothers Treasury Index,
posted a return of -0.51%, underperforming all other fixed-income sectors on a
comparable duration basis. The Federal Open Market Committee hinted at further
rate increases in late March, pushing Treasury yields higher and triggering a
Treasury sell-off.
CMBS securities posted the best returns within the index at 0.37% over
comparable duration Treasuries. Mortgage pass-throughs and asset-backed
securities returned 0.20% respectively, followed by agency securities at 0.11%.
Mortgages benefited from low volatility and stable rates throughout most of the
period while CMBS securities were helped by improving delinquency trends.
Investment-grade corporates were the laggards during the reporting period,
posting a return of only 0.08% over duration-matched Treasuries.
Investment-grade corporate returns were dampened by both increasing event risk,
as well as a series of downgrades in the auto industry.
The non-benchmark sectors, less correlated with U.S. Treasuries, fared much
better. As rates generally rose less abroad than in the U.S., hedged non-U.S.
dollar government
(Portfolio Manager Commentaries continued on next page)
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2006 Semiannual Report 3
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Portfolio Manager Commentaries (continued from previous page)
bonds outperformed their U.S. counterparts, posting excess returns over U.S.
Treasuries exceeding 100 basis points. Select securities in non-U.S. bond
markets held in the Portfolios fared even better, including Poland, Japan,
Mexico and Australia.
The high yield market, as represented by the Lehman Brothers High Yield Index,
posted an excess return over Treasuries of 3.85%. High yield was helped by a
generally benign environment, sound technicals and strong corporate profits.
Lastly, the emerging market debt class posted the strongest returns within
fixed-income sectors, returning 5.19% in excess terms, according to Lehman
Brothers. The emerging markets enjoyed strong investor demand, a favorable low
global interest rate environment and strong global liquidity throughout the
period.
During the reporting period, the Portfolios were positioned for U.S. interest
rates to rise. Accordingly, the Portfolios' overall duration was kept shorter
than that of the benchmark. As a further buffer against rising U.S. interest
rates, investments were made in select hedged non-U.S. government bonds,
including Australia, Poland, Japan, Mexico and Sweden. An underweight position
in U.S. Treasuries and agencies was maintained while overweight positions in
high quality CMBS and asset-backed securities (ABS) were held. In late 2005,
quantitative and fundamental research indicated attractive relative valuations
among mortgage-related securities. Accordingly, the Portfolios' mortgage
allocation was increased to a significant overweighted allocation. As event risk
increased, exposure to investment-grade credit was reduced to a modest
underweight during the period, with the underweight focused on the long end of
the credit curve. Additionally, the Portfolios continued to have small positions
in both high yield and select dollar denominated emerging-market debt.
Bernstein Short Duration Plus Portfolio
Investment Objective and Strategy
Bernstein Short Duration Plus Portfolio (the "Portfolio") seeks to provide
safety of principal and a moderate rate of income that is subject to taxes.
Under normal circumstances, the Portfolio will invest at least 80% of its total
assets in securities rated A or better by nationally recognized statistical
rating organizations (NRSROs) and comparably rated commercial paper and notes.
The Portfolio's investments may consist of corporate bonds, notes, U.S.
government and agency securities, asset-backed securities, mortgage-related
securities and inflation-protected securities, as well as others. The Portfolio
may also invest up to 20% of its total assets in fixed-income securities rated
BB or B by NRSROs, which are not investment grade. The Portfolio seeks to
maintain an effective duration of one to three years under normal market
conditions.
Bernstein U.S. Government Short Duration Portfolio
Investment Objective and Strategy
Bernstein U.S. Government Short Duration Portfolio (the "Portfolio") seeks to
provide safety of principal and a moderate rate of income that is generally
exempt from state and local taxes. Under normal circumstances, the Portfolio
will invest at least 80% of its assets in U.S. government and agency securities.
Additionally, up to 10% of the Portfolio's total assets may be invested in other
securities rated A or better by nationally recognized statistical rating
organizations (NRSROs) and comparably rated commercial paper and notes. The
Portfolio seeks to maintain an effective duration of one to three years under
normal market conditions.
To the extent the Portfolio is invested in U.S. government and agency
securities, the income earned by the Portfolio is generally exempt from state
and local taxes. However, states have different requirements for tax-exempt
distributions and there is no assurance that your distributions from the
Portfolio's income will not be subject to the state and local taxes of your
state.
Investment Results
The table on page 10 shows performance for the Bernstein Short Duration Plus and
U.S. Government Short Duration Portfolios compared with their benchmark, the
Merrill Lynch 1-3 Treasury Index, for the six- and 12-month periods ended March
31, 2006.
Both Portfolios underperformed their benchmark for both the six- and 12-month
periods ended March 31, 2006. The Portfolios' shorter duration and yield curve
exposure contributed positively to performance for both the six- and 12-month
time periods. Exposure to spread sectors such as asset-backed securities (ABS)
and collateralized mortgage-backed securities (CMBS) was a positive contributor
to performance for the semi-annual period, but detracted slightly in the fourth
quarter. The Portfolios' mortgage allocation was a detractor to performance for
the year, as the sector experienced negative excess returns versus Treasuries.
(Portfolio Manager Commentaries continued on next page)
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4 Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
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Portfolio Manager Commentaries (continued from previous page)
Market Review and Investment Strategy
During the semi-annual period under review, U.S. yields rose as the Federal
Reserve (the "Fed") continued to tighten interest rates; the Fed raised the Fed
funds target rate another 25 basis points in March to 4.75%. As foreign demand
for U.S. fixed-income assets continued unabated, long-term interest rates ended
the year close to 40-year lows. The yield curve ended the year essentially flat
and inverted in the beginning of 2006 as shorter rates continued to rise.
U.S. fixed-income returns were generally weak during the semi-annual period,
reflecting higher U.S. interest rates, a significant flattening of the yield
curve and modest spread movement in the non-Treasury sectors. U.S. Treasuries
posted a return of 1.04%, according to the Lehman Brothers 1-3 Year Treasury
Index. Agencies returned 1.20% for the semi-annual period, only slightly
outperforming like-duration Treasuries.
Investment-grade corporates posted weak returns compared to the other short-end
U.S. bond sectors, with the Lehman Brothers U.S. Corporate 1-3 Year Index
returning 1.18% in absolute terms and 0.07% against comparable duration
Treasuries. Investment-grade corporate returns were significantly dampened by
both increasing event risk, as well as a series of downgrades in the auto
industry.
Mortgage-backed securities in the 1-3 year duration range returned 1.07% for the
semi-annual period, despite concerns about extension risk (the risk that
mortgage durations will shorten or lengthen rapidly as interest rates fall or
rise) and a flood of new supply. Among the other securitized sectors, ABS was
the strong performer, returning 2.31% for the reporting period.
Bernstein Short Duration California Municipal Portfolio
Investment Objective and Strategy
Bernstein Short Duration California Municipal Portfolio (the "Portfolio") seeks
to provide safety of principal and a moderate rate of return after taking
account of federal, state and local taxes for California residents. Under normal
circumstances, the Portfolio will invest at least 80% of its assets in municipal
securities issued by the state of California or its political subdivisions, or
otherwise exempt from California state income tax. The Portfolio may also invest
up to 20% of its net assets in fixed-income securities of U.S. issuers that are
not municipal securities if, in our opinion, these securities will enhance the
after-tax return for California investors.
Bernstein Short Duration New York Municipal Portfolio
Investment Objective and Strategy
Bernstein Short Duration New York Municipal Portfolio (the "Portfolio") seeks to
provide safety of principal and a moderate rate of return after taking account
of federal, state and local taxes for New York residents. Under normal
circumstances, the Portfolio will invest at least 80% of its assets in municipal
securities issued by the state of New York or its political subdivisions, or
otherwise exempt from New York state income tax. The Portfolio may also invest
up to 20% of its net assets in fixed-income securities of U.S. issuers that are
not municipal securities if, in our opinion, these securities will enhance the
after-tax return for New York investors.
Bernstein Short Duration Diversified Municipal Portfolio
Investment Objective and Strategy
Bernstein Short Duration Diversified Municipal Portfolio (the "Portfolio") seeks
to provide safety of principal and maximize total return after taking account of
federal taxes. Under normal circumstances, the Portfolio will invest at least
80% of its assets in municipal securities. The Portfolio will invest no more
than 25% of its total assets in municipal securities of issuers located in any
one state.
Each of the Bernstein Short Duration California Municipal, Bernstein Short
Duration New York Municipal and Bernstein Short Duration Diversified Municipal
Portfolios (the "Short Duration Portfolios") invests at least 80% of its total
assets in municipal securities rated A or better by nationally recognized
statistical rating organizations ("NRSROs") and comparably rated municipal
notes. Each of the Short Duration Portfolios may invest up to 20% of its assets
in fixed-income securities rated BB or B by NRSROs, which are not
investment-grade. Each of the Short Duration Portfolios seeks to maintain an
effective duration of one-half year to two and one-half years under normal
market conditions.
Investment Results
The table on page 10 shows performance for each of the Bernstein Short Duration
Portfolios compared to its benchmark, the Lehman Brothers (LB) 1-Year Municipal
Index, for the six- and 12-month periods ended March 31, 2006.
(Portfolio Manager Commentaries continued on next page)
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2006 Semiannual Report 5
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Portfolio Manager Commentaries (continued from previous page)
Each of the Bernstein Short Duration Portfolios underperformed its benchmark for
the six-month period ended March 31, 2006. During the 12-month period ended
March 31, 2006, Bernstein Short Duration New York Municipal Portfolio and
Bernstein Short Duration Diversified Municipal Portfolio outperformed their
benchmark, while Bernstein Short Duration California Municipal Portfolio
underperformed.
The Short Duration Portfolios' high credit quality stance limited both their
absolute and relative returns for both the six- and 12-month periods ended March
31, 2006. This underperformance was partly off-set by the fact that the Short
Duration Portfolios had modestly less interest rate risk than their benchmark.
Performance was also helped by the fact that the Short Duration Portfolios were
positioned to benefit from a flattening yield curve.
Market Review and Investment Strategy
Short-term bond prices fell over the last six and 12 months, depressing absolute
returns, as the Federal Reserve continued to push up official short-term
interest rates. On March 31, 2006, the Federal funds rate stood at 4.75%, 375
basis points higher than when the Fed began tightening less than two years ago.
Municipal bond returns were small but positive for the period. Although the
municipal yield curve is still upwardly sloping, the difference between short
and long rates at quarter-end was the smallest since 1989.
By March, the extra income for lower-rated bonds fell to its narrowest level
ever. This was due in part to yields being low, which in turn encourages
investors to take on more credit risk to capture a little more yield. It is also
because investors are complacent about credit risk in today's market, given the
strength of municipal finance and the long absence of a large and very public
municipal bond default. In fact, high-yield municipal bonds were the
best-performing sector by far in the municipal market. As a result, high-yield
municipal bond funds continued to garner the majority of the new cash flow into
the market. According to AMG Data, a provider of mutual fund money flow and
holding data, new money into high-yield municipal mutual funds accounted for 40%
of the flow into municipal mutual funds. By comparison, high-yield bonds
represent only 4% of the municipal market.
The Short Duration Portfolios' management team believes that investors are not
being adequately paid to take risk in the bond market today. A reduced appetite
for credit risk is reflected in the Portfolios' significant holdings of
high-quality bonds. If interest rates are compared to core inflation today,
short-term municipal rates appear a bit high, intermediate rates are near fair
value and long-term rates are low by historical standards. Based on this
relative value analysis, the management team has been moving to a more
concentrated maturity structure by selling holdings of longer-term bonds and
buying bonds maturing in one to two years.
Bernstein California Municipal Portfolio
Investment Objective and Strategy
Bernstein California Municipal Portfolio (the "Portfolio") seeks to provide
safety of principal and maximize total return after taking account of federal,
state and local taxes for California residents. Under normal circumstances, the
Portfolio will invest at least 80% of its assets in municipal securities issued
by the state of California or its political subdivisions, or otherwise exempt
from California state income tax. The Portfolio may also invest up to 20% of its
net assets in fixed-income securities of U.S. issuers that are not municipal
securities if, in our opinion, these securities will enhance the after-tax
return for California investors.
Bernstein New York Municipal Portfolio
Investment Objective and Strategy
Bernstein New York Municipal Portfolio (the "Portfolio") seeks to provide safety
of principal and maximize total return after taking account of federal, state
and local taxes for New York residents. Under normal circumstances, the
Portfolio will invest at least 80% of its assets in municipal securities issued
by the state of New York or its political subdivisions, or otherwise exempt from
New York state income tax. The Portfolio may also invest up to 20% of its net
assets in fixed-income securities of U.S. issuers that are not municipal
securities if, in our opinion, these securities will enhance the after-tax
return for New York investors.
Bernstein Diversified Municipal Portfolio
Investment Objective and Strategy
Bernstein Diversified Municipal Portfolio (the "Portfolio") seeks to provide
safety of principal and maximize total return after taking account of federal
taxes. Under normal circumstances, the Portfolio will invest at least 80% of its
assets in municipal securities. The Portfolio will invest no
(Portfolio Manager Commentaries continued on next page)
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6 Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
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Portfolio Manager Commentaries (continued from previous page)
more than 25% of its total assets in municipal securities of issuers located in
any one state.
Each of the Bernstein California Municipal, New York Municipal and Diversified
Municipal Portfolios (the "Portfolios") invests at least 80% of its total assets
in municipal securities rated A or better by nationally recognized statistical
rating organizations ("NRSROs") and comparably rated municipal notes. Each of
the Portfolios may invest up to 20% of its assets in fixed-income securities
rated BB or B by NRSROs, which are not investment-grade. Each of the Portfolios
seeks to maintain an effective duration of three and one-half to seven years
under normal market conditions.
Investment Results
The table on page 10 shows performance for the Bernstein California, Bernstein
New York and Bernstein Diversified Municipal Portfolios compared with their
benchmark, the Lehman Brothers (LB) 5-Year General Obligation (GO) Municipal
Index, for the six- and 12-month periods ended March 31, 2006.
All three Portfolios outperformed the benchmark for the six-month period ended
March 31, 2006. During the 12-month period ended March 31, 2006, Bernstein
California and Bernstein New York Portfolios outperformed the benchmark, while
Bernstein Diversified Portfolio underperformed. The Portfolios' high credit
quality stance limited both their absolute and relative returns for both
reporting periods. However, this underperformance was partly offset by the fact
that the Portfolios had modestly less interest rate risk than the benchmark and
were positioned to benefit from a flattening yield curve.
The Portfolios' management team believes that investors are not being adequately
paid to take risk in the bond market today. The team's reduced appetite for
credit risk is reflected in the Portfolios' significant holdings of high-quality
bonds. When the team compares interest rates today to core inflation, short-term
municipal rates appear a bit high, intermediate rates are near fair value and
long-term rates are low by historical standards. Based on this relative value
analysis, the team has been moving to a more concentrated maturity structure by
selling the Portfolios' holdings of long-term, premium-coupon, callable bonds
and buying intermediate-term bonds.
Market Review and Investment Strategy
Short- and intermediate-term bond prices fell over the six- and 12-month periods
ended March 31, 2006, depressing absolute returns, as the U.S. Federal Reserve
(the "Fed") continued to push up official short-term interest rates. On March
31, 2006, the Federal funds rate stood at 4.75%, 375 basis points higher than
when the Fed began tightening less than two years ago. Municipal bond returns
were small but positive for the period. Although the municipal yield curve is
still upwardly sloping, the difference between short and long rates at the end
of the reporting period was the smallest since 1989.
By March 2006, the extra income for lower-rated bonds fell to its narrowest
level ever, due in part to yields being low. This, in turn, encouraged investors
to take on more credit risk to capture a little more yield. It is also because
investors are complacent about credit risk in today's market, given the strength
of municipal finance and the long absence of a large and very public municipal
bond default. In fact, high-yield municipal bonds were the best-performing
sector by far in the municipal market. As a result, high-yield municipal bond
funds continued to garner the majority of the new cash flow into the market.
According to AMG Data, a provider of mutual fund money flow and holdings data,
new money into high-yield municipal mutual funds accounted for 40% of the flow
into municipal mutual funds. By comparison, high-yield bonds represent only 4%
of the municipal market.
- --------------------------------------------------------------------------------
2006 Semiannual Report 7
- --------------------------------------------------------------------------------
Historical Performance
An Important Note About the Value of Historical Performance
The performance shown on pages 10-12 represents past performance and does not
guarantee future results. Performance information is as of the dates shown.
Current performance may be lower or higher than the performance information
shown. You may obtain performance information current to the most recent
month-end by visiting www.bernstein.com and clicking on OUpdated Fund
PerformanceO at the bottom of any screen.
The investment return and principal value of an investment in the Portfolios
will fluctuate, so that your shares, when redeemed, may be worth more or less
than their original cost. Before investing in any portfolio of the Sanford C.
Bernstein Fund, Inc. or the Sanford C. Bernstein Fund II, Inc., a prospective
investor should consider carefully the portfolio's investment objectives,
policies, charges, expenses and risks. For a copy of the Funds' prospectus,
which contains this and other information, visit our website at
www.bernstein.com and click on OProspectusesO at the bottom of any screen. You
should read the prospectus carefully before investing.
Returns are annualized for periods longer than one year and do not reflect the
deduction of taxes that a shareholder would pay on portfolio distributions or
the redemption of portfolio shares. Certain Bernstein Emerging Markets Portfolio
performance data presented herein do not reflect the deduction of purchase and
redemption fees, which, when reflected as shown herein, reduces such before-fees
performance quoted. All fees and expenses related to the operation of the
Portfolios have been deducted, except as noted for Bernstein Emerging Markets
Portfolio. Bernstein Tax-Managed International Portfolio, Bernstein
International Portfolio and Bernstein Emerging Markets Portfolio returns
throughout this report include dividends net of withholding taxes. On April 30,
1999, the Bernstein International Value Portfolio (IVP) was split into two
portfolios: Bernstein International Value II (now known as International) for
tax-exempt investors such as 401(k) and other retirement plans; and Bernstein
Tax-Managed International Value (now known as Tax-Managed International) for
taxable investors. Both Portfolios have the same overall investment style,
except that the latter includes tax management. International is an extension of
the original IVP in that it is managed without regard to tax considerations. The
returns shown on pages 10-11 reflect the performance of the Bernstein
Tax-Managed International Portfolio and the Bernstein International Portfolio
using an all-value investment style through August 2003. In September 2003, the
investment style of each of the Bernstein International Portfolios changed from
all value to a blend of growth and value. In May 2005, the investment style of
the Bernstein Emerging Markets Portfolio changed from all value to a blend of
growth and value.
During the reporting period, the Adviser waived a portion of its advisory fee or
reimbursed Bernstein Intermediate Duration Institutional Portfolio for a portion
of its expenses to the extent necessary to limit the Portfolio's expenses to
0.45%. This waiver extends through the Portfolio's current fiscal year and may
be extended by the Adviser for additional one-year terms. Without the waiver,
the Fund's expenses would have been higher and its performance would have been
lower than that shown.
Benchmark Disclosures
None of the following indices or averages reflects fees and expenses associated
with the active management of a mutual fund portfolio. The Morgan Stanley
Capital International Europe, Australasia and Far East (MSCI EAFE) Index is a
market capitalization-weighted index that measures stock performance in 21
countries in Europe, Australasia and the Far East. The MSCI Emerging Markets
Index is a free float-adjusted market capitalization index that is designed to
measure equity market performance in the global emerging markets. The Lipper
Emerging Markets Index represents the performance for funds that have generally
similar investment objectives to their respective Bernstein Portfolios, although
some may have different investment policies and sales and management fees. The
Lehman Brothers Aggregate Bond Index represents the U.S. investment-grade
fixed-rate bond market, including government and credit securities, agency
mortgage pass-through securities, asset-backed securities and commercial
mortgage-backed securities. The Merrill Lynch 1-3 Year Treasury Index is
comprised of U.S. Treasury obligations with remaining maturities of 1-2.99
years. The Lehman Brothers 5-Year General Obligation Municipal Index is a
total-return performance benchmark for the intermediate-term, investment-grade
tax-exempt bond market. The Lehman Brothers 1-Year Municipal Index is a
total-return performance benchmark for the short-term municipal bond market with
maturities of up to 1.99 years. Lipper Composites are the equal-weighted average
returns of the funds in the relevant Lipper Analytical Services categories; the
average fund in a category may differ in
(Historical Performance continued on next page)
- --------------------------------------------------------------------------------
8 Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
Historical Performance (continued from previous page)
composition from the portfolios. Investors cannot invest directly in indices,
and their results are not indicative of the performance for any specific
investment, including the Portfolios.
A Word About Risk
Bernstein Tax-Managed International and International Portfolios: Substantially
all of the Portfolios' assets will be invested in foreign securities. Foreign
markets can be more volatile than the U.S. market due to increased risks of
adverse issuer, political, regulatory, market or economic developments. In
addition, because the Portfolios will invest in foreign currency denominated
securities, fluctuations in the value of the Portfolios' investments may be
magnified by changes in foreign exchange rates. Because the Portfolios allocate
between "growth" and "value" stocks, an investment in the Portfolios is subject
to the risk that this allocation will result in lower returns when one style is
outperforming another than if the Portfolios had invested entirely in the
outperforming style. In addition, the transaction costs associated with the
systematic rebalancing of the Portfolios may be significant over time. The
Tax-Managed International Portfolio may employ strategies that take into account
the tax impact of buy and sell decisions on the Portfolio's shareholders. While
the Portfolio seeks to maximize after-tax returns, there can be no assurance
that the strategies will be effective, and the use of these strategies may
affect the gross returns of the Portfolio.
Bernstein Emerging Markets Portfolio: This Portfolio invests a significant
amount of its assets in foreign securities which involves risks not associated
with U.S. investments, including currency fluctuations, accounting differences
and political instability and economic changes. These risks are heightened with
respect to investments in emerging-market countries where there is an even
greater amount of economic, political and social instability. Because the
Portfolio allocates between "growth" and "value" stocks, an investment in the
Portfolio is subject to the risk that this allocation will result in lower
returns when one style is outperforming another than if the Portfolio had
invested entirely in the outperforming style. In addition, the transaction costs
associated with the systematic rebalancing of the Portfolio may be significant
over time.
Bernstein Intermediate Duration, Bernstein Short Duration Plus, Bernstein U.S.
Government Short Duration, Bernstein Short Duration Diversified Municipal,
Bernstein Diversified Municipal, Bernstein Short Duration California Municipal,
Bernstein Short Duration New York Municipal, Bernstein California Municipal and
Bernstein New York Municipal Portfolios: Price fluctuation may be caused by
changes in the general level of interest rates or changes in bond credit-quality
ratings. Increases in interest rates may cause the value of the Portfolios'
investments to decline. Changes in interest rates have a greater effect on bonds
with longer maturities than on those with shorter maturities. Investments in the
Portfolios are not guaranteed because of fluctuation in the net asset value of
the underlying fixed-income-related investments. Similar to direct bond
ownership, bond funds have the same interest rate, inflation and credit risks
that are associated with the underlying bonds owned by the fund. Portfolio
purchasers should understand that, in contrast to owning individual bonds, there
are ongoing fees and expenses associated with owning shares of bond funds. The
Portfolios invest principally in bonds and other fixed-income securities. High
yield bonds involve a greater risk of default and price volatility than other
bonds. Investing in non-investment grade securities presents special risks,
including credit risk.
Bernstein Intermediate Duration, Bernstein Short Duration Plus, Bernstein Short
Duration Diversified Municipal and Bernstein Diversified Municipal Portfolios:
These Portfolios can invest up to 20% of their assets in non-investment-grade
bonds, which are subject to greater risk of loss of principal and interest, as
well as the possibility of greater market risk, than higher-rated bonds.
Bernstein Short Duration California Municipal, Bernstein Short Duration New York
Municipal, Bernstein California Municipal and Bernstein New York Municipal
Portfolios: These Portfolios can invest up to 20% of their assets in
non-investment-grade bonds, which are subject to greater risk of loss of
principal and interest, as well as the possibility of greater market risk, than
higher-rated bonds. The Portfolios are "non-diversified" and therefore may hold
more concentrated positions and be subject to certain additional risks than a
"diversified" portfolio.
All Bernstein Portfolios: In order to achieve their investment objectives, the
Portfolios may at times use certain types of investment derivatives, such as
options, futures, forwards and swaps. These instruments involve risks different
from, and in certain cases, greater than, the risks presented by more
traditional investments. Each Portfolio's risks are fully discussed in its
prospectus.
(Historical Performance continued on next page)
- --------------------------------------------------------------------------------
2006 Semiannual Report 9
- --------------------------------------------------------------------------------
Historical Performance (unaudited) (continued from previous page)
TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
------------------ -----------------------------------
PAST SIX PAST 12 PAST PAST SINCE INCEPTION
THROUGH MARCH 31, 2006 MONTHS MONTHS FIVE YEARS 10 YEARS INCEPTION DATE
====================================================================================================================================
SANFORD C. BERNSTEIN FUND PORTFOLIOS VS. THEIR BENCHMARKS AND LIPPER COMPOSITES
- ------------------------------------------------------------------------------------------------------------------------------------
Tax-Managed International 15.92% 27.36% 12.25% 10.05% 10.49% June 22, 1992
Pre-liquidation, after-tax 14.84 26.17 11.75 8.66 9.23
Post-liquidation, after-tax 11.78 19.36 10.56 8.09 8.66
- ------------------------------------------------------------------------------------------------------------------------------------
International 15.76 27.43 12.10 -- 8.73 April 30, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
MSCI EAFE INDEX 13.86 24.41 9.63 6.49
- ------------------------------------------------------------------------------------------------------------------------------------
International Large-Cap Core Lipper Composite 14.16 25.02 7.29 6.52
Emerging Markets December 15, 1995
Before deduction of purchase and redemption fees 18.72 43.96 29.76 10.02 11.04
After deduction of purchase and redemption fees* 16.35 39.67 28.97 9.69 10.72
- ------------------------------------------------------------------------------------------------------------------------------------
MSCI Emerging Markets Index 20.06 47.45 23.21 7.40
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Emerging Markets Index 19.90 47.09 23.79 7.60
Intermediate Duration 0.03 2.48 4.52 5.47 6.93 January 17, 1989
- ------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index -0.05 2.26 5.11 6.29
- ------------------------------------------------------------------------------------------------------------------------------------
Intermediate Bond Lipper Composite -0.16 1.82 4.36 5.36
Short Duration Plus 0.99 2.17 3.24 4.51 5.64 December 12, 1988
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT SHORT DURATION 0.81 1.78 2.89 4.23 5.33 JANUARY 3, 1989
- ------------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch 1-3 Year Treasury Index 1.08 2.32 3.18 4.79
- ------------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Lipper Composite 1.07 2.34 2.90 4.34
Short Duration Diversified Municipal 0.76 2.07 2.37 3.16 3.40 October 3, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Short Duration California Municipal 0.65 1.75 1.84 2.85 3.11 October 3, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Short Duration New York Municipal 0.76 2.07 2.11 2.96 3.19 October 3, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers 1-Year Muni Index 0.81 1.96 2.44 3.53
- ------------------------------------------------------------------------------------------------------------------------------------
Short-Term Municipal Lipper Composite 0.98 2.10 2.35 3.25
Diversified Municipal 0.44 2.25 3.59 4.38 5.37 January 9, 1989
- ------------------------------------------------------------------------------------------------------------------------------------
California Municipal 0.43 2.36 3.29 4.22 5.11 August 6, 1990
- ------------------------------------------------------------------------------------------------------------------------------------
New York Municipal 0.43 2.49 3.57 4.38 5.41 January 9, 1989
- ------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers 5-Year Go Muni Index 0.42 2.26 4.03 4.79
- ------------------------------------------------------------------------------------------------------------------------------------
Intermediate Municipal Lipper Composite 0.46 2.44 3.75 4.44
SANFORD C. BERNSTEIN FUND II PORTFOLIO VS. ITS BENCHMARK AND LIPPER COMPOSITE
Intermediate Duration Institutional 0.09% 2.54% -- -- 4.73% May 17, 2002
- ------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index -0.05 2.26 5.11% 6.29%
Intermediate Bond Lipper Composite -0.16 1.82 4.36 5.36
* Prior to May 2, 2005, the Portfolio imposed a 2% fee on purchases and
redemptions. Effective May 2, 2005, the fees were reduced from 2% to 1%.
The fees are retained by the Portfolio, not paid to Bernstein.
See Historical Performance and Benchmark Disclosures on pages 8-9.
(Historical Performance continued on next page)
- --------------------------------------------------------------------------------
10 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
Historical Performance (continued from previous page)
Sanford C. Bernstein Fund, Inc.
- --------------------------------------------------------------------------------
Foreign-Stock Portfolios
- --------------------------------------------------------------------------------
Tax-Managed International
- --------------------------------------------------------------------------------
Growth of $25,000
[The following table was represented as a line graph in the printed material.]
Tax Managed MSCI EAFE Foreign Lipper
International Stock-Market Index International
Yr:Month (after all costs) (before all costs) Large-Cap Core
-------- ----------------- ------------------ --------------
96:3 $25,000 $25,000 $25,000
4 $26,004 $25,727 $25,768
5 $26,048 $25,253 $25,770
6 $26,339 $25,396 $25,989
7 $25,335 $24,653 $25,017
8 $25,437 $24,707 $25,350
9 $26,397 $25,364 $25,915
10 $26,368 $25,104 $25,799
11 $27,503 $26,103 $27,027
12 $27,760 $25,767 $27,172
97:1 $27,745 $24,865 $27,088
2 $28,134 $25,272 $27,503
3 $28,740 $25,364 $27,599
4 $28,927 $25,498 $27,712
5 $29,860 $27,157 $29,416
6 $31,151 $28,655 $30,817
7 $32,752 $29,119 $31,744
8 $30,700 $26,944 $29,402
9 $32,535 $28,453 $31,271
10 $30,855 $26,266 $28,870
11 $30,513 $25,999 $28,705
12 $30,333 $26,225 $28,961
98:1 $32,010 $27,425 $29,705
2 $33,363 $29,184 $31,716
3 $35,982 $30,083 $33,283
4 $35,776 $30,321 $33,789
5 $36,855 $30,174 $33,822
6 $36,701 $30,402 $33,576
7 $37,266 $30,711 $34,062
8 $31,719 $26,906 $29,178
9 $30,196 $26,081 $28,209
10 $31,582 $28,800 $30,426
11 $33,414 $30,275 $32,042
12 $33,655 $31,470 $33,003
99:1 $33,712 $31,377 $33,327
2 $32,824 $30,629 $32,554
3 $34,884 $31,907 $33,725
4 $36,717 $33,200 $35,213
5 $35,866 $31,490 $33,769
6 $37,246 $32,718 $35,441
7 $37,794 $33,691 $36,341
8 $38,228 $33,814 $36,606
9 $37,850 $34,154 $36,796
10 $38,153 $35,433 $38,180
11 $38,587 $36,664 $40,872
12 $41,299 $39,955 $45,793
00:1 $38,864 $37,416 $43,068
2 $39,381 $38,424 $45,320
3 $40,628 $39,913 $46,009
4 $39,688 $37,813 $43,359
5 $39,669 $36,889 $42,084
6 $41,452 $38,332 $43,856
7 $40,513 $36,725 $42,233
8 $40,915 $37,044 $42,770
9 $39,170 $35,240 $40,212
10 $38,749 $34,407 $38,873
11 $38,116 $33,117 $37,240
12 $39,285 $34,294 $38,495
01:1 $40,049 $34,277 $38,646
2 $38,584 $31,707 $35,635
3 $36,545 $29,593 $33,062
4 $39,030 $31,650 $35,380
5 $38,011 $30,533 $34,212
6 $37,820 $29,284 $32,933
7 $36,885 $28,751 $32,073
8 $36,673 $28,023 $31,172
9 $32,320 $25,184 $27,971
10 $33,466 $25,829 $28,720
11 $33,934 $26,782 $29,817
12 $34,366 $26,941 $30,241
02:1 $33,350 $25,509 $28,771
2 $33,912 $25,688 $28,929
3 $35,900 $27,078 $30,399
4 $36,851 $27,257 $30,487
5 $37,932 $27,602 $30,694
6 $36,289 $26,504 $29,522
7 $32,810 $23,887 $26,534
8 $32,529 $23,833 $26,412
9 $28,314 $21,274 $23,502
10 $29,849 $22,417 $24,872
11 $31,988 $23,434 $25,956
12 $31,441 $22,646 $24,996
03:1 $30,630 $21,701 $23,841
2 $30,411 $21,203 $23,212
3 $29,097 $20,786 $22,759
4 $33,150 $22,824 $24,837
5 $35,319 $24,207 $26,210
6 $36,239 $24,791 $26,687
7 $37,181 $25,392 $27,202
8 $37,817 $26,005 $27,736
9 $38,408 $26,806 $28,285
10 $40,446 $28,477 $29,852
11 $41,103 $29,110 $30,517
12 $43,649 $31,385 $32,709
04:01 $43,938 $31,828 $33,222
2 $44,517 $32,563 $33,850
3 $44,851 $32,746 $33,772
4 $44,072 $32,006 $32,843
5 $44,094 $32,113 $32,870
6 $44,829 $32,817 $33,465
7 $43,471 $31,752 $32,242
8 $44,072 $31,892 $32,386
9 $45,452 $32,726 $33,186
10 $46,431 $33,841 $34,253
11 $49,102 $36,153 $36,363
12 $51,322 $37,739 $37,895
05:01 $50,276 $37,047 $37,053
2 $52,481 $38,647 $38,637
3 $51,140 $37,677 $37,604
4 $49,617 $36,791 $36,773
5 $49,640 $36,809 $36,744
6 $50,345 $37,297 $37,224
7 $52,208 $38,440 $38,458
8 $54,027 $39,412 $39,711
9 $56,186 $41,167 $41,180
10 $54,618 $39,965 $40,007
11 $55,868 $40,942 $40,842
12 $58,734 $42,847 $42,961
06:01 $62,762 $45,478 $45,747
2 $62,616 $45,377 $45,424
3 $65,130 $46,873 $47,013
- --------------------------------------------------------------------------------
International
- --------------------------------------------------------------------------------
Growth of $25,000
[The following table was represented as a line graph in the printed material.]
MSCI EAFE Foreign Lipper
International Stock-Market Index International
Yr:Month (after all costs) (before all costs) Large-Cap Core
-------- ----------------- ------------------ --------------
99:4 $25,000 $25,000 $25,000
5 $24,357 $23,713 $23,975
6 $25,270 $24,637 $25,162
7 $25,708 $25,369 $25,801
8 $26,081 $25,462 $25,989
9 $25,875 $25,718 $26,124
10 $25,888 $26,682 $27,107
11 $26,004 $27,609 $29,018
12 $27,631 $30,087 $32,511
00:1 $26,032 $28,175 $30,577
2 $26,461 $28,933 $32,176
3 $27,384 $30,055 $32,665
4 $26,708 $28,473 $30,784
5 $26,734 $27,778 $29,879
6 $28,034 $28,864 $31,137
7 $27,358 $27,654 $29,984
8 $27,670 $27,894 $30,365
9 $26,578 $26,536 $28,549
10 $26,253 $25,909 $27,599
11 $25,915 $24,937 $26,440
12 $26,812 $25,824 $27,331
01:1 $27,373 $25,811 $27,437
2 $26,500 $23,876 $25,300
3 $25,191 $22,284 $23,473
4 $26,687 $23,833 $25,119
5 $25,908 $22,991 $24,290
6 $25,799 $22,051 $23,381
7 $25,159 $21,650 $22,771
8 $25,097 $21,101 $22,131
9 $22,073 $18,964 $19,858
10 $22,821 $19,450 $20,391
11 $23,055 $20,167 $21,169
12 $23,347 $20,287 $21,470
02:1 $22,705 $19,209 $20,427
2 $23,122 $19,343 $20,539
3 $24,424 $20,390 $21,582
4 $25,034 $20,525 $21,645
5 $25,645 $20,785 $21,792
6 $24,601 $19,958 $20,960
7 $22,126 $17,987 $18,839
8 $22,030 $17,946 $18,752
9 $19,202 $16,019 $16,685
10 $20,262 $16,880 $17,658
11 $21,708 $17,646 $18,428
12 $21,284 $17,053 $17,746
03:1 $20,845 $16,341 $16,926
2 $20,650 $15,966 $16,480
3 $19,756 $15,652 $16,158
4 $22,520 $17,186 $17,633
5 $24,016 $18,228 $18,609
6 $24,683 $18,668 $18,947
7 $25,317 $19,120 $19,313
8 $25,723 $19,582 $19,691
9 $26,114 $20,185 $20,081
10 $27,496 $21,444 $21,194
11 $27,935 $21,920 $21,666
12 $29,661 $23,633 $23,222
04:01 $29,891 $23,967 $23,587
2 $30,301 $24,520 $24,032
3 $30,580 $24,658 $23,977
4 $30,088 $24,100 $23,318
5 $30,202 $24,181 $23,336
6 $30,695 $24,711 $23,759
7 $29,759 $23,909 $22,891
8 $30,137 $24,015 $22,993
9 $31,089 $24,643 $23,561
10 $31,729 $25,483 $24,318
11 $33,584 $27,224 $25,817
12 $35,143 $28,418 $26,904
05:01 $34,398 $27,896 $26,306
2 $35,921 $29,102 $27,431
3 $34,994 $28,371 $26,698
4 $33,968 $27,704 $26,108
5 $33,968 $27,717 $26,087
6 $34,464 $28,085 $26,428
7 $35,706 $28,946 $27,304
8 $37,014 $29,677 $28,194
9 $38,520 $30,999 $29,237
10 $37,444 $30,094 $28,404
11 $38,321 $30,830 $28,997
12 $40,298 $32,264 $30,501
06:01 $42,982 $34,245 $32,479
2 $42,780 $34,170 $32,249
3 $44,591 $35,296 $33,378
- --------------------------------------------------------------------------------
Emerging Markets
- --------------------------------------------------------------------------------
Growth of $25,000
[The following table was represented as a line graph in the printed material.]
Emerging Markets
(after deduction MSCI Emerging
of purchase and Markets Index Lipper Emerging
Yr:Month redemption fees)+ (before all costs) Markets Index
-------- ----------------- ------------------ ---------------
96:3 $24,750 $25,000 $25,000
4 $25,985 $26,000 $25,876
5 $25,843 $25,883 $26,130
6 $25,537 $26,045 $26,180
7 $23,941 $24,265 $24,657
8 $23,930 $24,886 $25,329
9 $23,854 $25,102 $25,589
10 $22,804 $24,432 $24,997
11 $23,591 $24,842 $25,566
12 $23,978 $24,954 $25,790
97:1 $25,856 $26,656 $27,749
2 $26,471 $27,798 $28,739
3 $26,142 $27,068 $28,003
4 $25,691 $27,115 $28,008
5 $25,966 $27,891 $28,974
6 $26,724 $29,384 $30,400
7 $27,789 $29,823 $31,284
8 $24,791 $26,028 $27,849
9 $24,758 $26,749 $28,854
10 $20,935 $22,360 $24,037
11 $18,925 $21,544 $22,941
12 $18,242 $22,063 $23,149
98:1 $17,474 $20,333 $21,538
2 $19,158 $22,455 $23,382
3 $20,074 $23,429 $24,203
4 $19,570 $23,174 $24,253
5 $17,085 $19,998 $20,632
6 $15,024 $17,901 $18,676
7 $15,173 $18,468 $19,246
8 $11,314 $13,128 $13,732
9 $11,577 $13,961 $14,247
10 $12,917 $15,431 $15,616
11 $14,279 $16,715 $16,666
12 $14,394 $16,472 $16,457
99:1 $14,034 $16,207 $16,123
2 $14,220 $16,364 $15,984
3 $16,074 $18,521 $17,765
4 $19,284 $20,812 $20,233
5 $19,655 $20,691 $19,988
6 $21,729 $23,040 $22,233
7 $21,150 $22,414 $21,679
8 $21,231 $22,618 $21,439
9 $20,478 $21,852 $20,678
10 $20,617 $22,317 $21,300
11 $21,973 $24,319 $23,649
12 $24,902 $27,411 $27,805
00:1 $24,064 $27,575 $27,482
2 $23,283 $27,939 $28,301
3 $23,400 $28,075 $28,386
4 $22,282 $25,414 $25,298
5 $20,709 $24,363 $23,952
6 $21,373 $25,221 $25,140
7 $21,187 $23,924 $24,114
8 $21,001 $24,042 $24,362
9 $19,696 $21,943 $22,033
10 $18,310 $20,352 $20,387
11 $17,227 $18,572 $18,544
12 $17,891 $19,021 $19,214
01:1 $19,323 $21,638 $21,441
2 $18,738 $19,942 $19,779
3 $17,485 $17,974 $17,892
4 $17,998 $18,860 $18,806
5 $18,583 $19,078 $19,324
6 $18,273 $18,680 $18,987
7 $17,175 $17,491 $17,810
8 $17,378 $17,316 $17,579
9 $14,895 $14,633 $15,070
10 $15,205 $15,541 $15,861
11 $16,423 $17,162 $17,433
12 $17,244 $18,523 $18,545
02:1 $18,291 $19,148 $19,276
2 $18,689 $19,459 $19,708
3 $19,604 $20,623 $20,788
4 $20,098 $20,755 $21,042
5 $20,122 $20,420 $20,848
6 $18,797 $18,882 $19,324
7 $17,942 $17,439 $17,881
8 $17,978 $17,705 $18,027
9 $16,437 $15,794 $16,219
10 $16,871 $16,821 $16,993
11 $17,978 $17,978 $18,136
12 $17,906 $17,380 $17,688
03:1 $18,172 $17,304 $17,585
2 $17,954 $16,817 $17,171
3 $17,373 $16,337 $16,617
4 $19,347 $17,790 $18,218
5 $20,666 $19,062 $19,528
6 $21,853 $20,142 $20,511
7 $23,245 $21,395 $21,450
8 $24,371 $22,827 $22,883
9 $25,194 $22,993 $23,391
10 $27,664 $24,949 $25,212
11 $28,306 $25,253 $25,587
12 $31,673 $27,081 $27,761
04:1 $31,514 $28,027 $28,554
2 $32,749 $29,312 $29,836
3 $33,189 $29,678 $30,236
4 $31,087 $27,248 $27,853
5 $30,292 $26,705 $27,310
6 $30,879 $26,818 $27,450
7 $31,453 $26,328 $27,047
8 $33,005 $27,419 $28,098
9 $35,327 $29,001 $29,745
10 $36,586 $29,694 $30,653
11 $41,009 $32,443 $33,174
12 $44,083 $34,001 $34,893
05:1 $44,196 $34,088 $35,017
2 $48,746 $37,062 $37,937
3 $44,672 $34,612 $35,358
4 $43,745 $33,683 $34,492
5 $44,685 $34,856 $35,560
6 $45,675 $36,040 $36,740
7 $49,084 $38,559 $39,276
8 $50,200 $38,889 $39,887
9 $54,173 $42,510 $43,377
10 $50,200 $39,732 $40,761
11 $53,685 $43,019 $43,784
12 $56,771 $45,561 $46,236
06:1 $63,956 $50,650 $51,538
2 $62,985 $50,590 $51,281
3 $63,669 $51,036 $52,076
Taxable-Bond Portfolios
- --------------------------------------------------------------------------------
Intermediate Duration
- --------------------------------------------------------------------------------
Growth of $25,000
[The following table was represented as a line graph in the printed material.]
Intermediate Lehman Brothers
Duration Aggregate Bond Index Lipper Intermediate
Yr:Month (after all costs) (before all costs) Bond Composite
-------- ----------------- -------------------- -------------------
96:3 $25,000 $25,000 $25,000
4 $24,895 $24,859 $24,848
5 $24,883 $24,809 $24,803
6 $25,150 $25,142 $25,086
7 $25,244 $25,211 $25,143
8 $25,250 $25,169 $25,123
9 $25,651 $25,607 $25,533
10 $26,174 $26,175 $26,048
11 $26,669 $26,623 $26,489
12 $26,466 $26,375 $26,255
97:1 $26,496 $26,456 $26,332
2 $26,551 $26,522 $26,384
3 $26,270 $26,228 $26,107
4 $26,612 $26,621 $26,447
5 $26,813 $26,872 $26,674
6 $27,135 $27,191 $26,970
7 $27,689 $27,925 $27,663
8 $27,553 $27,686 $27,420
9 $27,873 $28,095 $27,801
10 $28,251 $28,502 $28,129
11 $28,329 $28,633 $28,208
12 $28,492 $28,922 $28,462
98:1 $28,825 $29,293 $28,829
2 $28,825 $29,271 $28,788
3 $28,919 $29,372 $28,889
4 $29,032 $29,525 $29,013
5 $29,295 $29,805 $29,272
6 $29,438 $30,058 $29,482
7 $29,555 $30,122 $29,538
8 $29,847 $30,612 $29,899
9 $30,267 $31,329 $30,560
10 $30,025 $31,163 $30,337
11 $30,331 $31,340 $30,476
12 $30,450 $31,434 $30,577
99:1 $30,745 $31,659 $30,772
2 $30,300 $31,106 $30,200
3 $30,534 $31,278 $30,417
4 $30,659 $31,377 $30,509
5 $30,543 $31,104 $30,191
6 $30,468 $31,003 $30,080
7 $30,324 $30,871 $29,977
8 $30,261 $30,856 $29,929
9 $30,582 $31,214 $30,229
10 $30,633 $31,329 $30,268
11 $30,681 $31,327 $30,292
12 $30,647 $31,176 $30,162
00:1 $30,538 $31,074 $30,050
2 $30,851 $31,450 $30,342
3 $31,167 $31,864 $30,691
4 $30,951 $31,773 $30,522
5 $30,788 $31,758 $30,461
6 $31,430 $32,419 $31,076
7 $31,655 $32,713 $31,316
8 $32,017 $33,187 $31,723
9 $32,223 $33,396 $31,926
10 $32,119 $33,617 $31,996
11 $32,510 $34,166 $32,447
12 $33,211 $34,800 $33,064
01:1 $33,857 $35,369 $33,616
2 $34,014 $35,677 $33,915
3 $34,134 $35,857 $34,064
4 $33,939 $35,708 $33,880
5 $34,168 $35,923 $34,070
6 $34,201 $36,059 $34,172
7 $34,814 $36,865 $34,931
8 $35,151 $37,287 $35,284
9 $35,380 $37,722 $35,583
10 $36,085 $38,511 $36,235
11 $35,761 $37,980 $35,793
12 $35,598 $37,739 $35,553
02:1 $35,825 $38,044 $35,773
2 $35,965 $38,413 $36,052
3 $35,410 $37,774 $35,483
4 $35,794 $38,507 $36,068
5 $36,139 $38,834 $36,349
6 $35,969 $39,170 $36,437
7 $36,199 $39,642 $36,663
8 $36,887 $40,312 $37,278
9 $37,320 $40,964 $37,766
10 $37,222 $40,778 $37,566
11 $37,455 $40,767 $37,653
12 $38,146 $41,609 $38,405
03:1 $38,217 $41,645 $38,458
2 $38,728 $42,221 $38,986
3 $38,722 $42,188 $38,979
4 $39,215 $42,536 $39,369
5 $39,895 $43,329 $40,088
6 $39,765 $43,243 $40,040
7 $38,399 $41,790 $38,745
8 $38,772 $42,067 $38,983
9 $39,706 $43,181 $39,974
10 $39,484 $42,778 $39,659
11 $39,629 $42,880 $39,762
12 $40,090 $43,317 $40,141
04:01 $40,412 $43,665 $40,436
2 $40,777 $44,138 $40,802
3 $41,054 $44,468 $41,090
4 $40,098 $43,312 $40,119
5 $39,889 $43,138 $39,925
6 $40,081 $43,382 $40,105
7 $40,424 $43,812 $40,457
8 $41,061 $44,648 $41,147
9 $41,190 $44,769 $41,256
10 $41,579 $45,144 $41,571
11 $41,343 $44,784 $41,316
12 $41,722 $45,196 $41,659
05:01 $41,980 $45,480 $41,846
2 $41,821 $45,211 $41,660
3 $41,551 $44,979 $41,406
4 $41,982 $45,588 $41,880
5 $42,427 $46,081 $42,264
6 $42,673 $46,332 $42,485
7 $42,406 $45,911 $42,164
8 $42,870 $46,499 $42,638
9 $42,569 $46,020 $42,224
10 $42,243 $45,656 $41,895
11 $42,409 $45,858 $42,045
12 $42,747 $46,294 $42,388
06:01 $42,806 $46,297 $42,417
2 $42,992 $46,450 $42,541
3 $42,582 $45,995 $42,158
- --------------------------------------------------------------------------------
Short Duration Plus
- --------------------------------------------------------------------------------
Growth of $25,000
[The following table was represented as a line graph in the printed material.]
Short Merrill Lynch 1-3-
Duration Plus Lipper Short Investment Year Treasury Index
Yr:Month (after all costs) Grade Bond Composite (before all costs)
-------- ----------------- ----------------------- -------------------
96:3 $25,000 $25,000 $25,000
4 $25,051 $25,010 $25,021
5 $25,101 $25,050 $25,072
6 $25,244 $25,223 $25,252
7 $25,364 $25,319 $25,352
8 $25,475 $25,395 $25,439
9 $25,693 $25,623 $25,669
10 $25,999 $25,887 $25,959
11 $26,172 $26,092 $26,157
12 $26,154 $26,092 $26,157
97:1 $26,298 $26,206 $26,280
2 $26,369 $26,282 $26,340
3 $26,362 $26,254 $26,330
4 $26,544 $26,453 $26,545
5 $26,705 $26,633 $26,726
6 $26,868 $26,806 $26,911
7 $27,072 $27,098 $27,206
8 $27,138 $27,112 $27,231
9 $27,288 $27,310 $27,438
10 $27,453 $27,463 $27,642
11 $27,524 $27,526 $27,709
12 $27,603 $27,683 $27,898
98:1 $27,848 $27,924 $28,169
2 $27,885 $27,954 $28,193
3 $27,949 $28,060 $28,308
4 $28,072 $28,184 $28,441
5 $28,193 $28,331 $28,592
6 $28,303 $28,455 $28,741
7 $28,455 $28,572 $28,875
8 $28,650 $28,766 $29,238
9 $28,954 $29,106 $29,626
10 $28,986 $29,091 $29,771
11 $29,087 $29,152 $29,745
12 $29,240 $29,260 $29,850
99:1 $29,377 $29,392 $29,969
2 $29,282 $29,265 $29,822
3 $29,497 $29,485 $30,030
4 $29,604 $29,594 $30,126
5 $29,657 $29,538 $30,107
6 $29,753 $29,585 $30,201
7 $29,831 $29,611 $30,297
8 $29,895 $29,659 $30,384
9 $30,061 $29,869 $30,582
10 $30,144 $29,941 $30,663
11 $30,250 $30,028 $30,721
12 $30,346 $30,076 $30,765
00:1 $30,339 $30,067 $30,754
2 $30,508 $30,259 $30,958
3 $30,656 $30,432 $31,150
4 $30,671 $30,444 $31,231
5 $30,763 $30,523 $31,360
6 $31,095 $30,874 $31,685
7 $31,228 $31,059 $31,885
8 $31,439 $31,302 $32,121
9 $31,675 $31,558 $32,352
10 $31,655 $31,644 $32,525
11 $31,895 $31,913 $32,833
12 $32,263 $32,286 $33,225
01:1 $32,682 $32,719 $33,641
2 $32,857 $32,928 $33,860
3 $33,133 $33,155 $34,142
4 $33,231 $33,228 $34,233
5 $33,454 $33,424 $34,426
6 $33,591 $33,545 $34,543
7 $33,978 $33,964 $34,931
8 $34,235 $34,161 $35,132
9 $34,651 $34,506 $35,711
10 $35,025 $34,782 $36,048
11 $34,908 $34,625 $35,970
12 $34,956 $34,580 $35,983
02:1 $35,080 $34,681 $36,056
2 $35,124 $34,785 $36,230
3 $34,972 $34,586 $35,985
4 $35,240 $34,863 $36,387
5 $35,425 $35,055 $36,534
6 $35,627 $35,100 $36,840
7 $35,888 $35,237 $37,290
8 $36,008 $35,459 $37,418
9 $36,306 $35,694 $37,727
10 $36,304 $35,711 $37,813
11 $36,382 $35,737 $37,699
12 $36,737 $36,085 $38,054
03:1 $36,788 $36,147 $38,049
2 $36,999 $36,358 $38,208
3 $37,030 $36,406 $38,277
4 $37,178 $36,558 $38,349
5 $37,384 $36,787 $38,492
6 $37,434 $36,846 $38,551
7 $37,186 $36,490 $38,342
8 $37,226 $36,527 $38,367
9 $37,549 $36,915 $38,716
10 $37,450 $36,792 $38,572
11 $37,493 $36,798 $38,552
12 $37,680 $36,988 $38,775
04:01 $37,799 $37,094 $38,854
2 $37,971 $37,265 $39,040
3 $38,120 $37,387 $39,162
4 $37,735 $37,026 $38,785
5 $37,634 $36,955 $38,749
6 $37,681 $36,978 $38,746
7 $37,814 $37,113 $38,886
8 $38,039 $37,349 $39,155
9 $38,062 $37,357 $39,120
10 $38,179 $37,467 $39,240
11 $38,058 $37,364 $39,046
12 $38,157 $37,459 $39,127
05:01 $38,196 $37,457 $39,113
2 $38,115 $37,423 $39,025
3 $38,039 $37,373 $39,027
4 $38,237 $37,550 $39,246
5 $38,342 $37,677 $39,394
6 $38,417 $37,775 $39,470
7 $38,345 $37,705 $39,359
8 $38,552 $37,909 $39,603
9 $38,481 $37,844 $39,505
10 $38,446 $37,813 $39,502
11 $38,545 $37,915 $39,627
12 $38,674 $38,051 $39,779
06:01 $38,738 $38,146 $39,845
2 $38,807 $38,217 $39,878
3 $38,863 $38,248 $39,932
- --------------------------------------------------------------------------------
U.S. Government Short Duration
- --------------------------------------------------------------------------------
Growth of $25,000
[The following table was represented as a line graph in the printed material.]
U.S. Government Merrill Lynch 1-3-
Short Duration Lipper Short U.S. Year Treasury Index
Yr:Month (after all costs) Gov't Bond Composite (before all costs)
-------- ----------------- -------------------- -------------------
96:3 $25,000 $25,000 $25,000
4 $24,986 $25,005 $25,021
5 $25,015 $25,035 $25,072
6 $25,174 $25,203 $25,252
7 $25,270 $25,286 $25,352
8 $25,356 $25,354 $25,439
9 $25,551 $25,572 $25,669
10 $25,829 $25,841 $25,959
11 $26,000 $26,040 $26,157
12 $25,955 $26,032 $26,157
97:1 $26,093 $26,154 $26,280
2 $26,160 $26,222 $26,340
3 $26,154 $26,175 $26,330
4 $26,333 $26,366 $26,545
5 $26,494 $26,522 $26,726
6 $26,657 $26,662 $26,911
7 $26,860 $26,940 $27,206
8 $26,906 $26,950 $27,231
9 $27,052 $27,136 $27,438
10 $27,238 $27,326 $27,642
11 $27,286 $27,386 $27,709
12 $27,420 $27,521 $27,898
98:1 $27,618 $27,754 $28,169
2 $27,652 $27,774 $28,193
3 $27,734 $27,866 $28,308
4 $27,834 $27,974 $28,441
5 $27,950 $28,117 $28,592
6 $28,076 $28,241 $28,741
7 $28,220 $28,354 $28,875
8 $28,453 $28,643 $29,238
9 $28,770 $28,992 $29,626
10 $28,855 $29,041 $29,771
11 $28,875 $29,036 $29,745
12 $28,943 $29,120 $29,850
99:1 $29,052 $29,260 $29,969
2 $28,964 $29,146 $29,822
3 $29,158 $29,318 $30,030
4 $29,266 $29,432 $30,126
5 $29,256 $29,405 $30,107
6 $29,329 $29,414 $30,201
7 $29,407 $29,452 $30,297
8 $29,469 $29,505 $30,384
9 $29,652 $29,691 $30,582
10 $29,735 $29,769 $30,663
11 $29,811 $29,846 $30,721
12 $29,836 $29,855 $30,765
00:1 $29,835 $29,876 $30,754
2 $30,004 $30,046 $30,958
3 $30,153 $30,283 $31,150
4 $30,271 $30,392 $31,231
5 $30,359 $30,444 $31,360
6 $30,632 $30,749 $31,685
7 $30,787 $30,930 $31,885
8 $31,016 $31,159 $32,121
9 $31,223 $31,383 $32,352
10 $31,378 $31,562 $32,525
11 $31,663 $31,871 $32,833
12 $32,025 $32,203 $33,225
01:1 $32,414 $32,615 $33,641
2 $32,592 $32,863 $33,860
3 $32,791 $33,073 $34,142
4 $32,868 $33,166 $34,233
5 $33,019 $33,358 $34,426
6 $33,089 $33,448 $34,543
7 $33,453 $33,803 $34,931
8 $33,704 $33,985 $35,132
9 $34,226 $34,431 $35,711
10 $34,552 $34,730 $36,048
11 $34,430 $34,602 $35,970
12 $34,442 $34,567 $35,983
02:1 $34,531 $34,674 $36,056
2 $34,703 $34,848 $36,230
3 $34,527 $34,645 $35,985
4 $34,883 $34,981 $36,387
5 $35,007 $35,132 $36,534
6 $35,255 $35,350 $36,840
7 $35,641 $35,686 $37,290
8 $35,785 $35,835 $37,418
9 $36,081 $36,064 $37,727
10 $36,140 $36,119 $37,813
11 $36,034 $36,035 $37,699
12 $36,385 $36,331 $38,054
03:1 $36,416 $36,340 $38,049
2 $36,573 $36,502 $38,208
3 $36,586 $36,524 $38,277
4 $36,682 $36,595 $38,349
5 $36,862 $36,708 $38,492
6 $36,868 $36,726 $38,551
7 $36,570 $36,450 $38,342
8 $36,554 $36,460 $38,367
9 $36,837 $36,750 $38,716
10 $36,737 $36,625 $38,572
11 $36,750 $36,623 $38,552
12 $36,909 $36,788 $38,775
04:01 $36,986 $36,861 $38,854
2 $37,172 $37,011 $39,040
3 $37,307 $37,098 $39,162
4 $36,923 $36,774 $38,785
5 $36,816 $36,674 $38,749
6 $36,828 $36,691 $38,746
7 $36,983 $36,821 $38,886
8 $37,165 $37,041 $39,155
9 $37,178 $37,008 $39,120
10 $37,309 $37,110 $39,240
11 $37,177 $36,983 $39,046
12 $37,255 $37,060 $39,127
05:01 $37,278 $37,063 $39,113
2 $37,216 $36,994 $39,025
3 $37,156 $36,964 $39,027
4 $37,332 $37,140 $39,246
5 $37,447 $37,280 $39,394
6 $37,506 $37,354 $39,470
7 $37,421 $37,267 $39,359
8 $37,603 $37,463 $39,603
9 $37,513 $37,388 $39,505
10 $37,487 $37,355 $39,502
11 $37,558 $37,439 $39,627
12 $37,688 $37,571 $39,779
06:01 $37,755 $37,657 $39,845
2 $37,790 $37,704 $39,878
3 $37,818 $37,727 $39,932
Each chart shows the growth of $25,000 for the 10-year period ending March 31,
2006, or if the Portfolio's inception date is less than 10 years ago, growth is
shown from the first full month after its inception date.
* Portfolio, benchmark and Lipper returns are from the close of business on
March 31, 1996 (except Emerging Markets Portfolio which is from December
31, 1995 and International Portfolio which is from April 30, 1999) through
the close of business on March 31, 2006.
+ Reflects the growth of $25,000 in the Portfolio after deduction of the
purchase fee each investor must pay to the Portfolio upon making an
investment in the Portfolio (except for reinvested capital gains and
dividends) and the redemption fee payable on closing out an investment in
the Portfolio. The starting point for the indices is $25,000. The starting
point for the Portfolio is $24,750, which reflects the deduction of the 1%
purchase fee. The redemption fee is deducted from the last month's return.
Before purchase and redemption charges and excluding these fees, an
investment of $25,000 in this Portfolio would have increased to $64,962.
Prior to May 2, 2005, the Portfolio imposed a 2% fee on purchases and
redemptions. Effective May 2, 2005, the fees were reduced from 2% to 1%.
The fees are retained by the Portfolio, not paid to Bernstein.
See Historical Performance and Benchmark Disclosures on pages 8-9.
(Historical Performance continued on next page)
- --------------------------------------------------------------------------------
2006 Semiannual Report 11
- --------------------------------------------------------------------------------
(Historical Performance continued from previous page)
Sanford C. Bernstein Fund, Inc. Municipal Bond Portfolio (Intermediate and Short
Duration)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Short Duration Diversified Municipal
- --------------------------------------------------------------------------------
Growth of $25,000
[The following table was represented as a line graph in the printed material.]
Short Duration Lehman Brothers One-Year
Diversified Municipal Municipal Index Lipper Short-Term
Yr:Month (after all costs) (before all costs) Municipal Composite
- -------- --------------------- ------------------------ -------------------
96:3 $25,000 $25,000 $25,000
4 $25,030 $25,059 $25,028
5 $25,093 $25,122 $25,083
6 $25,172 $25,245 $25,173
7 $25,279 $25,351 $25,289
8 $25,314 $25,401 $25,344
9 $25,435 $25,516 $25,468
10 $25,532 $25,646 $25,609
11 $25,688 $25,801 $25,767
12 $25,734 $25,857 $25,809
97:1 $25,854 $26,006 $25,899
2 $25,917 $26,089 $26,010
3 $25,892 $26,076 $25,943
4 $25,972 $26,181 $26,031
5 $26,107 $26,313 $26,190
6 $26,209 $26,417 $26,323
7 $26,330 $26,579 $26,536
8 $26,365 $26,613 $26,536
9 $26,496 $26,750 $26,717
10 $26,577 $26,854 $26,813
11 $26,634 $26,936 $26,893
12 $26,753 $27,057 $27,039
98:1 $26,873 $27,198 $27,177
2 $26,956 $27,292 $27,242
3 $27,016 $27,371 $27,299
4 $27,056 $27,404 $27,299
5 $27,173 $27,547 $27,468
6 $27,235 $27,648 $27,562
7 $27,336 $27,743 $27,650
8 $27,460 $27,910 $27,849
9 $27,562 $28,043 $27,994
10 $27,660 $28,176 $28,089
11 $27,740 $28,260 $28,142
12 $27,807 $28,339 $28,235
99:1 $27,946 $28,498 $28,388
2 $28,046 $28,600 $28,390
3 $28,085 $28,624 $28,430
4 $28,141 $28,690 $28,501
5 $28,187 $28,746 $28,513
6 $28,182 $28,721 $28,413
7 $28,252 $28,824 $28,504
8 $28,284 $28,894 $28,507
9 $28,363 $28,991 $28,575
10 $28,391 $29,055 $28,584
11 $28,501 $29,144 $28,681
12 $28,521 $29,169 $28,684
00:1 $28,607 $29,279 $28,701
2 $28,675 $29,368 $28,807
3 $28,791 $29,495 $28,945
4 $28,833 $29,565 $28,974
5 $28,867 $29,614 $29,006
6 $29,098 $29,857 $29,244
7 $29,241 $30,024 $29,422
8 $29,383 $30,178 $29,578
9 $29,433 $30,245 $29,646
10 $29,552 $30,388 $29,771
11 $29,643 $30,502 $29,872
12 $29,857 $30,730 $30,114
01:1 $30,124 $31,094 $30,367
2 $30,222 $31,197 $30,476
3 $30,361 $31,359 $30,632
4 $30,412 $31,418 $30,653
5 $30,602 $31,641 $30,849
6 $30,694 $31,765 $30,973
7 $30,862 $31,904 $31,143
8 $31,052 $32,096 $31,355
9 $31,193 $32,253 $31,443
10 $31,332 $32,393 $31,575
11 $31,321 $32,423 $31,518
12 $31,383 $32,504 $31,543
02:1 $31,612 $32,767 $31,723
2 $31,768 $32,885 $31,875
3 $31,520 $32,655 $31,665
4 $31,773 $32,903 $31,915
5 $31,929 $33,048 $32,030
6 $32,125 $33,210 $32,200
7 $32,246 $33,332 $32,341
8 $32,319 $33,443 $32,468
9 $32,382 $33,518 $32,600
10 $32,296 $33,469 $32,462
11 $32,393 $33,542 $32,523
12 $32,543 $33,755 $32,770
03:1 $32,616 $33,833 $32,825
2 $32,711 $33,918 $32,986
3 $32,719 $33,918 $32,948
4 $32,757 $33,958 $33,022
5 $32,922 $34,067 $33,232
6 $32,903 $34,111 $33,230
7 $32,751 $34,097 $33,024
8 $32,807 $34,142 $33,109
9 $33,020 $34,302 $33,381
10 $33,025 $34,264 $33,335
11 $33,076 $34,297 $33,395
12 $33,147 $34,334 $33,438
04:01 $33,226 $34,407 $33,515
2 $33,301 $34,529 $33,674
3 $33,296 $34,534 $33,606
4 $33,191 $34,451 $33,379
5 $33,130 $34,397 $33,324
6 $33,178 $34,430 $33,353
7 $33,305 $34,565 $33,489
8 $33,427 $34,712 $33,679
9 $33,420 $34,690 $33,695
10 $33,466 $34,690 $33,740
11 $33,408 $34,646 $33,659
12 $33,511 $34,700 $33,766
05:01 $33,538 $34,727 $33,755
2 $33,484 $34,723 $33,744
3 $33,437 $34,695 $33,702
4 $33,580 $34,762 $33,791
5 $33,614 $34,806 $33,837
6 $33,729 $34,950 $33,950
7 $33,740 $34,970 $33,966
8 $33,833 $35,028 $34,039
9 $33,874 $35,092 $34,076
10 $33,868 $35,102 $34,089
11 $33,887 $35,127 $34,128
12 $33,990 $35,217 $34,237
06:01 $34,065 $35,317 $34,323
2 $34,105 $35,351 $34,385
3 $34,131 $35,376 $34,409
- --------------------------------------------------------------------------------
Short Duration California Municipal
- --------------------------------------------------------------------------------
Growth of $25,000
[The following table was represented as a line graph in the printed material.]
Short Duration Lehman Brothers
California Municipal One-Year Municipal Index Lipper Short-Term
Yr:Month (after all costs) (before all costs) Municipal Composite
- -------- -------------------- ------------------------ -------------------
96:3 $25,000 $25,000 $25,000
4 $25,044 $25,059 $25,028
5 $25,086 $25,122 $25,083
6 $25,184 $25,245 $25,173
7 $25,291 $25,351 $25,289
8 $25,329 $25,401 $25,344
9 $25,432 $25,516 $25,468
10 $25,551 $25,646 $25,609
11 $25,688 $25,801 $25,767
12 $25,732 $25,857 $25,809
97:1 $25,830 $26,006 $25,899
2 $25,890 $26,089 $26,010
3 $25,884 $26,076 $25,943
4 $25,961 $26,181 $26,031
5 $26,054 $26,313 $26,190
6 $26,154 $26,417 $26,323
7 $26,292 $26,579 $26,536
8 $26,321 $26,613 $26,536
9 $26,422 $26,750 $26,717
10 $26,492 $26,854 $26,813
11 $26,542 $26,936 $26,893
12 $26,659 $27,057 $27,039
98:1 $26,773 $27,198 $27,177
2 $26,852 $27,292 $27,242
3 $26,907 $27,371 $27,299
4 $26,918 $27,404 $27,299
5 $27,028 $27,547 $27,468
6 $27,110 $27,648 $27,562
7 $27,236 $27,743 $27,650
8 $27,355 $27,910 $27,849
9 $27,472 $28,043 $27,994
10 $27,590 $28,176 $28,089
11 $27,670 $28,260 $28,142
12 $27,699 $28,339 $28,235
99:1 $27,835 $28,498 $28,388
2 $27,913 $28,600 $28,390
3 $27,926 $28,624 $28,430
4 $27,999 $28,690 $28,501
5 $28,015 $28,746 $28,513
6 $28,005 $28,721 $28,413
7 $28,099 $28,824 $28,504
8 $28,149 $28,894 $28,507
9 $28,269 $28,991 $28,575
10 $28,296 $29,055 $28,584
11 $28,358 $29,144 $28,681
12 $28,354 $29,169 $28,684
00:1 $28,456 $29,279 $28,701
2 $28,565 $29,368 $28,807
3 $28,671 $29,495 $28,945
4 $28,682 $29,565 $28,974
5 $28,753 $29,614 $29,006
6 $28,981 $29,857 $29,244
7 $29,119 $30,024 $29,422
8 $29,285 $30,178 $29,578
9 $29,361 $30,245 $29,646
10 $29,478 $30,388 $29,771
11 $29,573 $30,502 $29,872
12 $29,737 $30,730 $30,114
01:1 $30,018 $31,094 $30,367
2 $30,111 $31,197 $30,476
3 $30,227 $31,359 $30,632
4 $30,230 $31,418 $30,653
5 $30,418 $31,641 $30,849
6 $30,507 $31,765 $30,973
7 $30,649 $31,904 $31,143
8 $30,781 $32,096 $31,355
9 $30,867 $32,253 $31,443
10 $30,969 $32,393 $31,575
11 $31,012 $32,423 $31,518
12 $31,049 $32,504 $31,543
02:1 $31,251 $32,767 $31,723
2 $31,303 $32,885 $31,875
3 $31,126 $32,655 $31,665
4 $31,296 $32,903 $31,915
5 $31,397 $33,048 $32,030
6 $31,486 $33,210 $32,200
7 $31,568 $33,332 $32,341
8 $31,675 $33,443 $32,468
9 $31,753 $33,518 $32,600
10 $31,629 $33,469 $32,462
11 $31,662 $33,542 $32,523
12 $31,862 $33,755 $32,770
03:1 $31,914 $33,833 $32,825
2 $32,015 $33,918 $32,986
3 $32,033 $33,918 $32,948
4 $32,057 $33,958 $33,022
5 $32,206 $34,067 $33,232
6 $32,172 $34,111 $33,230
7 $32,006 $34,097 $33,024
8 $32,071 $34,142 $33,109
9 $32,271 $34,302 $33,381
10 $32,237 $34,264 $33,335
11 $32,302 $34,297 $33,395
12 $32,344 $34,334 $33,438
04:01 $32,412 $34,407 $33,515
2 $32,505 $34,529 $33,674
3 $32,495 $34,534 $33,606
4 $32,365 $34,451 $33,379
5 $32,330 $34,397 $33,324
6 $32,376 $34,430 $33,353
7 $32,474 $34,565 $33,489
8 $32,541 $34,712 $33,679
9 $32,532 $34,690 $33,695
10 $32,578 $34,690 $33,740
11 $32,520 $34,646 $33,659
12 $32,592 $34,700 $33,766
05:01 $32,643 $34,727 $33,755
2 $32,587 $34,723 $33,744
3 $32,536 $34,695 $33,702
4 $32,643 $34,762 $33,791
5 $32,676 $34,806 $33,837
6 $32,806 $34,950 $33,950
7 $32,807 $34,970 $33,966
8 $32,862 $35,028 $34,039
9 $32,892 $35,092 $34,076
10 $32,902 $35,102 $34,089
11 $32,910 $35,127 $34,128
12 $32,973 $35,217 $34,237
06:01 $33,062 $35,317 $34,323
2 $33,091 $35,351 $34,385
3 $33,105 $35,376 $34,409
- --------------------------------------------------------------------------------
Short Duration New York Municipal
- --------------------------------------------------------------------------------
Growth of $25,000
[The following table was represented as a line graph in the printed material.]
Short Duration Lehman Brothers
New York Municipal One-Year Municipal Index Lipper Short-Term
Yr:Month (after all costs) (before all costs) Municipal Composite
- -------- -------------------- ------------------------ -------------------
96:3 $25,000 $25,000 $25,000
4 $25,021 $25,059 $25,028
5 $25,082 $25,122 $25,083
6 $25,161 $25,245 $25,173
7 $25,273 $25,351 $25,289
8 $25,270 $25,401 $25,344
9 $25,401 $25,516 $25,468
10 $25,529 $25,646 $25,609
11 $25,656 $25,801 $25,767
12 $25,688 $25,857 $25,809
97:1 $25,796 $26,006 $25,899
2 $25,862 $26,089 $26,010
3 $25,842 $26,076 $25,943
4 $25,930 $26,181 $26,031
5 $26,033 $26,313 $26,190
6 $26,140 $26,417 $26,323
7 $26,267 $26,579 $26,536
8 $26,283 $26,613 $26,536
9 $26,416 $26,750 $26,717
10 $26,498 $26,854 $26,813
11 $26,554 $26,936 $26,893
12 $26,652 $27,057 $27,039
98:1 $26,777 $27,198 $27,177
2 $26,841 $27,292 $27,242
3 $26,904 $27,371 $27,299
4 $26,924 $27,404 $27,299
5 $27,041 $27,547 $27,468
6 $27,126 $27,648 $27,562
7 $27,209 $27,743 $27,650
8 $27,332 $27,910 $27,849
9 $27,434 $28,043 $27,994
10 $27,533 $28,176 $28,089
11 $27,596 $28,260 $28,142
12 $27,655 $28,339 $28,235
99:1 $27,798 $28,498 $28,388
2 $27,860 $28,600 $28,390
3 $27,922 $28,624 $28,430
4 $27,963 $28,690 $28,501
5 $27,992 $28,746 $28,513
6 $27,970 $28,721 $28,413
7 $28,051 $28,824 $28,504
8 $28,092 $28,894 $28,507
9 $28,158 $28,991 $28,575
10 $28,194 $29,055 $28,584
11 $28,291 $29,144 $28,681
12 $28,292 $29,169 $28,684
00:1 $28,365 $29,279 $28,701
2 $28,455 $29,368 $28,807
3 $28,546 $29,495 $28,945
4 $28,593 $29,565 $28,974
5 $28,648 $29,614 $29,006
6 $28,860 $29,857 $29,244
7 $28,999 $30,024 $29,422
8 $29,115 $30,178 $29,578
9 $29,184 $30,245 $29,646
10 $29,295 $30,388 $29,771
11 $29,410 $30,502 $29,872
12 $29,644 $30,730 $30,114
01:1 $29,881 $31,094 $30,367
2 $29,978 $31,197 $30,476
3 $30,138 $31,359 $30,632
4 $30,136 $31,418 $30,653
5 $30,344 $31,641 $30,849
6 $30,429 $31,765 $30,973
7 $30,571 $31,904 $31,143
8 $30,747 $32,096 $31,355
9 $30,805 $32,253 $31,443
10 $30,961 $32,393 $31,575
11 $30,946 $32,423 $31,518
12 $30,979 $32,504 $31,543
02:1 $31,206 $32,767 $31,723
2 $31,312 $32,885 $31,875
3 $31,136 $32,655 $31,665
4 $31,307 $32,903 $31,915
5 $31,413 $33,048 $32,030
6 $31,526 $33,210 $32,200
7 $31,618 $33,332 $32,341
8 $31,712 $33,443 $32,468
9 $31,773 $33,518 $32,600
10 $31,683 $33,469 $32,462
11 $31,721 $33,542 $32,523
12 $31,932 $33,755 $32,770
03:1 $31,970 $33,833 $32,825
2 $32,081 $33,918 $32,986
3 $32,057 $33,918 $32,948
4 $32,115 $33,958 $33,022
5 $32,301 $34,067 $33,232
6 $32,277 $34,111 $33,230
7 $32,114 $34,097 $33,024
8 $32,184 $34,142 $33,109
9 $32,384 $34,302 $33,381
10 $32,380 $34,264 $33,335
11 $32,450 $34,297 $33,395
12 $32,505 $34,334 $33,438
04:01 $32,559 $34,407 $33,515
2 $32,661 $34,529 $33,674
3 $32,631 $34,534 $33,606
4 $32,501 $34,451 $33,379
5 $32,466 $34,397 $33,324
6 $32,512 $34,430 $33,353
7 $32,613 $34,565 $33,489
8 $32,737 $34,712 $33,679
9 $32,759 $34,690 $33,695
10 $32,782 $34,690 $33,740
11 $32,755 $34,646 $33,659
12 $32,833 $34,700 $33,766
05:01 $32,913 $34,727 $33,755
2 $32,830 $34,723 $33,744
3 $32,780 $34,695 $33,702
4 $32,945 $34,762 $33,791
5 $33,003 $34,806 $33,837
6 $33,110 $34,950 $33,950
7 $33,088 $34,970 $33,966
8 $33,174 $35,028 $34,039
9 $33,207 $35,092 $34,076
10 $33,193 $35,102 $34,089
11 $33,234 $35,127 $34,128
12 $33,332 $35,217 $34,237
06:01 $33,401 $35,317 $34,323
2 $33,437 $35,351 $34,385
3 $33,458 $35,376 $34,409
- --------------------------------------------------------------------------------
Diversified Municipal
- --------------------------------------------------------------------------------
Growth of $25,000
[The following table was represented as a line graph in the printed material.]
Lehman Brothers
Diversified Municipal Lipper Intermediate Five-year G/O Index
Yr:Month (after all costs) Municipal Composite (before all costs)
- -------- --------------------- ------------------- -------------------
96:3 $25,000 $25,000 $25,000
4 $24,949 $24,953 $24,963
5 $24,952 $24,940 $24,933
6 $25,118 $25,090 $25,110
7 $25,298 $25,310 $25,275
8 $25,276 $25,316 $25,328
9 $25,508 $25,531 $25,518
10 $25,717 $25,776 $25,756
11 $26,096 $26,160 $26,114
12 $26,029 $26,081 $26,074
97:1 $26,126 $26,136 $26,145
2 $26,283 $26,327 $26,331
3 $26,071 $26,053 $26,033
4 $26,229 $26,181 $26,163
5 $26,498 $26,492 $26,448
6 $26,694 $26,731 $26,681
7 $27,185 $27,314 $27,164
8 $27,039 $27,090 $27,020
9 $27,282 $27,369 $27,263
10 $27,379 $27,494 $27,430
11 $27,470 $27,596 $27,517
12 $27,768 $27,941 $27,765
98:1 $27,962 $28,176 $28,009
2 $28,000 $28,187 $28,043
3 $28,020 $28,187 $28,091
4 $27,975 $28,038 $27,956
5 $28,229 $28,433 $28,288
6 $28,312 $28,513 $28,376
7 $28,388 $28,561 $28,478
8 $28,672 $28,978 $28,863
9 $28,914 $29,291 $29,157
10 $28,969 $29,282 $29,218
11 $28,987 $29,335 $29,259
12 $29,052 $29,435 $29,388
99:1 $29,356 $29,770 $29,685
2 $29,309 $29,601 $29,649
3 $29,331 $29,574 $29,691
4 $29,408 $29,654 $29,777
5 $29,327 $29,476 $29,676
6 $29,073 $29,054 $29,346
7 $29,171 $29,188 $29,502
8 $29,124 $29,042 $29,502
9 $29,136 $29,054 $29,605
10 $29,014 $28,842 $29,540
11 $29,251 $29,084 $29,696
12 $29,184 $28,947 $29,598
00:1 $29,134 $28,811 $29,585
2 $29,284 $29,030 $29,676
3 $29,675 $29,439 $29,942
4 $29,620 $29,322 $29,883
5 $29,537 $29,187 $29,871
6 $30,051 $29,797 $30,423
7 $30,337 $30,131 $30,755
8 $30,650 $30,498 $31,078
9 $30,606 $30,407 $31,026
10 $30,847 $30,635 $31,246
11 $30,983 $30,779 $31,368
12 $31,462 $31,425 $31,871
01:1 $31,806 $31,771 $32,423
2 $31,901 $31,863 $32,501
3 $32,174 $32,111 $32,760
4 $31,993 $31,790 $32,587
5 $32,318 $32,105 $32,909
6 $32,476 $32,310 $33,054
7 $32,804 $32,698 $33,424
8 $33,202 $33,192 $33,872
9 $33,248 $33,139 $33,957
10 $33,505 $33,447 $34,208
11 $33,336 $33,082 $33,955
12 $33,189 $32,834 $33,778
02:1 $33,590 $33,307 $34,319
2 $33,871 $33,690 $34,700
3 $33,406 $33,070 $34,002
4 $33,902 $33,712 $34,764
5 $34,070 $33,897 $34,993
6 $34,369 $34,246 $35,375
7 $34,676 $34,647 $35,760
8 $34,939 $34,976 $36,095
9 $35,381 $35,610 $36,561
10 $34,971 $35,040 $36,200
11 $34,889 $34,882 $36,153
12 $35,441 $35,614 $36,818
03:1 $35,410 $35,453 $36,906
2 $35,795 $35,954 $37,302
3 $35,770 $35,937 $37,271
4 $35,930 $36,157 $37,424
5 $36,593 $36,890 $38,044
6 $36,416 $36,718 $37,952
7 $35,556 $35,585 $37,115
8 $35,762 $35,850 $37,381
9 $36,597 $36,759 $38,359
10 $36,450 $36,555 $38,080
11 $36,671 $36,856 $38,218
12 $36,873 $37,073 $38,358
04:01 $37,026 $37,199 $38,529
2 $37,460 $37,727 $39,037
3 $37,298 $37,473 $38,885
4 $36,651 $36,674 $38,096
5 $36,536 $36,607 $37,959
6 $36,633 $36,696 $38,102
7 $36,967 $37,063 $38,427
8 $37,503 $37,656 $39,095
9 $37,596 $37,761 $39,161
10 $37,797 $37,975 $39,377
11 $37,521 $37,642 $39,108
12 $37,830 $38,003 $39,476
05:01 $37,928 $38,162 $39,460
2 $37,778 $37,978 $39,274
3 $37,529 $37,682 $39,037
4 $37,978 $38,170 $39,513
5 $38,103 $38,360 $39,641
6 $38,281 $38,534 $39,799
7 $38,112 $38,320 $39,597
8 $38,349 $38,626 $39,845
9 $38,204 $38,425 $39,752
10 $38,066 $38,210 $39,588
11 $38,170 $38,348 $39,702
12 $38,388 $38,604 $39,899
06:01 $38,467 $38,693 $39,989
2 $38,562 $38,845 $40,075
3 $38,372 $38,600 $39,918
- --------------------------------------------------------------------------------
California Municipal
- --------------------------------------------------------------------------------
Growth of $25,000
[The following table was represented as a line graph in the printed material.]
Lehman Brothers Lipper Intermediate
California Municipal Five-year G/O Index California
Yr:Month (after all costs) (before all costs) Municipal Composite
-------- -------------------- ------------------- -------------------
96:3 $25,000 $25,000 $25,000
4 $24,965 $24,980 $24,963
5 $24,948 $24,973 $24,933
6 $25,132 $25,142 $25,110
7 $25,308 $25,366 $25,275
8 $25,322 $25,366 $25,328
9 $25,550 $25,574 $25,518
10 $25,777 $25,835 $25,756
11 $26,132 $26,246 $26,114
12 $26,076 $26,149 $26,074
97:1 $26,149 $26,198 $26,145
2 $26,301 $26,366 $26,331
3 $26,069 $26,115 $26,033
4 $26,202 $26,238 $26,163
5 $26,486 $26,582 $26,448
6 $26,701 $26,824 $26,681
7 $27,223 $27,443 $27,164
8 $27,076 $27,213 $27,020
9 $27,293 $27,485 $27,263
10 $27,386 $27,559 $27,430
11 $27,475 $27,672 $27,517
12 $27,730 $28,004 $27,765
98:1 $27,959 $28,268 $28,009
2 $28,014 $28,307 $28,043
3 $27,992 $28,259 $28,091
4 $27,927 $28,098 $27,956
5 $28,236 $28,486 $28,288
6 $28,318 $28,560 $28,376
7 $28,393 $28,645 $28,478
8 $28,713 $29,075 $28,863
9 $29,030 $29,505 $29,157
10 $29,059 $29,464 $29,218
11 $29,135 $29,544 $29,259
12 $29,151 $29,556 $29,388
99:1 $29,445 $29,901 $29,685
2 $29,372 $29,761 $29,649
3 $29,411 $29,805 $29,691
4 $29,443 $29,829 $29,777
5 $29,298 $29,647 $29,676
6 $29,068 $29,226 $29,346
7 $29,182 $29,387 $29,502
8 $29,110 $29,258 $29,502
9 $29,206 $29,363 $29,605
10 $29,062 $29,113 $29,540
11 $29,274 $29,373 $29,696
12 $29,132 $29,161 $29,598
00:1 $29,147 $29,179 $29,585
2 $29,381 $29,424 $29,676
3 $29,786 $29,883 $29,942
4 $29,620 $29,706 $29,883
5 $29,642 $29,698 $29,871
6 $30,140 $30,339 $30,423
7 $30,420 $30,691 $30,755
8 $30,836 $31,167 $31,078
9 $30,794 $31,045 $31,026
10 $30,972 $31,244 $31,246
11 $31,150 $31,397 $31,368
12 $31,617 $31,959 $31,871
01:1 $31,951 $32,365 $32,423
2 $32,018 $32,404 $32,501
3 $32,169 $32,556 $32,760
4 $31,896 $32,074 $32,587
5 $32,209 $32,497 $32,909
6 $32,336 $32,696 $33,054
7 $32,653 $33,085 $33,424
8 $33,129 $33,707 $33,872
9 $33,050 $33,619 $33,957
10 $33,341 $33,969 $34,208
11 $33,212 $33,680 $33,955
12 $33,062 $33,394 $33,778
02:1 $33,426 $33,911 $34,319
2 $33,673 $34,267 $34,700
3 $33,160 $33,551 $34,002
4 $33,591 $34,179 $34,764
5 $33,816 $34,449 $34,993
6 $34,026 $34,666 $35,375
7 $34,289 $35,026 $35,760
8 $34,606 $35,439 $36,095
9 $35,123 $36,174 $36,561
10 $34,450 $35,349 $36,200
11 $34,455 $35,317 $36,153
12 $34,984 $35,941 $36,818
03:1 $34,890 $35,698 $36,906
2 $35,302 $36,111 $37,302
3 $35,318 $36,110 $37,271
4 $35,514 $36,319 $37,424
5 $36,129 $37,029 $38,044
6 $35,903 $36,754 $37,952
7 $35,081 $35,686 $37,115
8 $35,277 $35,918 $37,381
9 $35,964 $36,778 $38,359
10 $35,867 $36,656 $38,080
11 $36,080 $36,944 $38,218
12 $36,271 $37,161 $38,358
04:01 $36,387 $37,265 $38,529
2 $36,828 $37,777 $39,037
3 $36,667 $37,494 $38,885
4 $35,982 $36,704 $38,096
5 $35,840 $36,608 $37,959
6 $36,005 $36,762 $38,102
7 $36,327 $37,135 $38,427
8 $36,822 $37,717 $39,095
9 $36,883 $37,827 $39,161
10 $37,125 $38,063 $39,377
11 $36,905 $37,770 $39,108
12 $37,203 $38,122 $39,476
05:01 $37,403 $38,324 $39,460
2 $37,207 $38,118 $39,274
3 $36,941 $37,818 $39,037
4 $37,404 $38,334 $39,513
5 $37,525 $38,470 $39,641
6 $37,673 $38,641 $39,799
7 $37,510 $38,423 $39,597
8 $37,794 $38,747 $39,845
9 $37,652 $38,538 $39,752
10 $37,491 $38,315 $39,588
11 $37,591 $38,466 $39,702
12 $37,776 $38,712 $39,899
06:01 $37,905 $38,838 $39,989
2 $37,998 $39,001 $40,075
3 $37,812 $38,740 $39,918
- --------------------------------------------------------------------------------
New York Municipal
- --------------------------------------------------------------------------------
Growth of $25,000
[The following table was represented as a line graph in the printed material.]
Lipper Intermediate Lehman Brothers
New York Municipal New York Five-year G/O Index
Yr:Month (after all costs) Municipal Composite (before all costs)
- -------- ------------------ ------------------- -------------------
96:3 $25,000 $25,000 $25,000
4 $24,969 $24,930 $24,963
5 $24,955 $24,893 $24,933
6 $25,124 $25,062 $25,110
7 $25,306 $25,305 $25,275
8 $25,289 $25,290 $25,328
9 $25,526 $25,538 $25,518
10 $25,760 $25,770 $25,756
11 $26,087 $26,182 $26,114
12 $26,036 $26,085 $26,074
97:1 $26,115 $26,117 $26,145
2 $26,294 $26,318 $26,331
3 $26,062 $26,036 $26,033
4 $26,221 $26,172 $26,163
5 $26,473 $26,515 $26,448
6 $26,673 $26,772 $26,681
7 $27,167 $27,395 $27,164
8 $27,001 $27,157 $27,020
9 $27,245 $27,440 $27,263
10 $27,365 $27,536 $27,430
11 $27,438 $27,646 $27,517
12 $27,739 $28,002 $27,765
98:1 $27,956 $28,240 $28,009
2 $27,975 $28,249 $28,043
3 $27,995 $28,221 $28,091
4 $27,890 $28,034 $27,956
5 $28,229 $28,472 $28,288
6 $28,336 $28,566 $28,376
7 $28,373 $28,597 $28,478
8 $28,723 $29,032 $28,863
9 $28,967 $29,377 $29,157
10 $29,041 $29,368 $29,218
11 $29,100 $29,407 $29,259
12 $29,183 $29,521 $29,388
99:1 $29,509 $29,873 $29,685
2 $29,418 $29,699 $29,649
3 $29,438 $29,667 $29,691
4 $29,496 $29,741 $29,777
5 $29,372 $29,562 $29,676
6 $29,072 $29,131 $29,346
7 $29,191 $29,268 $29,502
8 $29,144 $29,148 $29,502
9 $29,180 $29,174 $29,605
10 $29,036 $28,926 $29,540
11 $29,278 $29,192 $29,696
12 $29,174 $29,046 $29,598
00:1 $29,147 $28,924 $29,585
2 $29,344 $29,156 $29,676
3 $29,717 $29,631 $29,942
4 $29,617 $29,477 $29,883
5 $29,575 $29,359 $29,871
6 $30,111 $30,028 $30,423
7 $30,378 $30,388 $30,755
8 $30,692 $30,802 $31,078
9 $30,619 $30,691 $31,026
10 $30,863 $30,979 $31,246
11 $31,018 $31,140 $31,368
12 $31,565 $31,844 $31,871
01:1 $31,908 $32,226 $32,423
2 $31,954 $32,275 $32,501
3 $32,202 $32,562 $32,760
4 $32,039 $32,272 $32,587
5 $32,336 $32,611 $32,909
6 $32,467 $32,797 $33,054
7 $32,770 $33,174 $33,424
8 $33,166 $33,702 $33,872
9 $33,065 $33,452 $33,957
10 $33,370 $33,763 $34,208
11 $33,148 $33,442 $33,955
12 $32,999 $33,182 $33,778
02:1 $33,448 $33,722 $34,319
2 $33,777 $34,151 $34,700
3 $33,301 $33,471 $34,002
4 $33,798 $34,151 $34,764
5 $33,936 $34,301 $34,993
6 $34,236 $34,637 $35,375
7 $34,542 $35,022 $35,760
8 $34,852 $35,382 $36,095
9 $35,324 $36,021 $36,561
10 $34,911 $35,473 $36,200
11 $34,774 $35,260 $36,153
12 $35,402 $35,997 $36,818
03:1 $35,366 $35,795 $36,906
2 $35,776 $36,312 $37,302
3 $35,699 $36,251 $37,271
4 $35,881 $36,501 $37,424
5 $36,520 $37,288 $38,044
6 $36,364 $37,046 $37,952
7 $35,495 $35,853 $37,115
8 $35,701 $36,149 $37,381
9 $36,544 $37,102 $38,359
10 $36,371 $36,863 $38,080
11 $36,621 $37,187 $38,218
12 $36,802 $37,413 $38,358
04:01 $36,959 $37,490 $38,529
2 $37,397 $38,035 $39,037
3 $37,209 $37,699 $38,885
4 $36,558 $36,905 $38,096
5 $36,418 $36,848 $37,959
6 $36,519 $36,932 $38,102
7 $36,887 $37,309 $38,427
8 $37,434 $37,904 $39,095
9 $37,505 $38,005 $39,161
10 $37,712 $38,201 $39,377
11 $37,441 $37,832 $39,108
12 $37,732 $38,190 $39,476
05:01 $37,863 $38,356 $39,460
2 $37,718 $38,162 $39,274
3 $37,447 $37,825 $39,037
4 $37,933 $38,338 $39,513
5 $38,091 $38,519 $39,641
6 $38,278 $38,689 $39,799
7 $38,087 $38,464 $39,597
8 $38,359 $38,770 $39,845
9 $38,217 $38,553 $39,752
10 $38,026 $38,300 $39,588
11 $38,135 $38,423 $39,702
12 $38,387 $38,682 $39,899
06:01 $38,470 $38,769 $39,989
2 $38,570 $38,933 $40,075
3 $38,381 $38,668 $39,918
Sanford C. Bernstein Fund II, Inc. Taxable-Bond Portfolio
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Intermediate Duration Institutional
- --------------------------------------------------------------------------------
Growth of $25,000
[The following table was represented as a line graph in the printed material.]
Intermediate Duration Lehman Brothers
Institutional Lipper Intermediate Aggregate Bond Index
Yr:Month (after all costs) Bond Composite (before all costs)
- -------- --------------------- ------------------- --------------------
02:5 $25,000 $25,000 $25,000
6 $24,908 $25,060 $25,216
7 $25,077 $25,215 $25,520
8 $25,578 $25,639 $25,951
9 $25,878 $25,975 $26,372
10 $25,788 $25,837 $26,252
11 $25,923 $25,897 $26,245
12 $26,432 $26,414 $26,787
03:1 $26,474 $26,450 $26,809
2 $26,840 $26,813 $27,180
3 $26,816 $26,809 $27,160
4 $27,155 $27,077 $27,384
5 $27,624 $27,572 $27,894
6 $27,541 $27,538 $27,839
7 $26,623 $26,647 $26,903
8 $26,875 $26,811 $27,082
9 $27,545 $27,493 $27,798
10 $27,378 $27,276 $27,539
11 $27,498 $27,347 $27,605
12 $27,842 $27,607 $27,886
04:01 $28,034 $27,811 $28,110
2 $28,282 $28,063 $28,415
3 $28,480 $28,261 $28,627
4 $27,811 $27,593 $27,883
5 $27,664 $27,459 $27,771
6 $27,813 $27,583 $27,928
7 $28,054 $27,825 $28,205
8 $28,489 $28,300 $28,743
9 $28,581 $28,375 $28,821
10 $28,848 $28,591 $29,062
11 $28,685 $28,416 $28,831
12 $28,959 $28,652 $29,096
05:01 $29,150 $28,781 $29,279
2 $29,032 $28,652 $29,106
3 $28,849 $28,478 $28,956
4 $29,148 $28,804 $29,348
5 $29,456 $29,068 $29,666
6 $29,622 $29,220 $29,827
7 $29,460 $28,999 $29,556
8 $29,777 $29,325 $29,935
9 $29,555 $29,041 $29,626
10 $29,337 $28,814 $29,392
11 $29,476 $28,917 $29,522
12 $29,708 $29,153 $29,803
06:01 $29,742 $29,173 $29,804
2 $29,870 $29,258 $29,903
3 $29,583 $28,995 $29,610
Each chart shows the growth of $25,000 for the 10-year period ending March 31,
2006, or if the Portfolio's inception date is less than 10 years ago, growth is
shown from the first full month after its inception date.
* Portfolio, benchmark and Lipper returns are from the close of business on
March 31, 1996 (except Intermediate Duration Institutional Portfolio which
is from May 31, 2002) through the close of business on March 31, 2006.
See Historical Performance and Benchmark Disclosures on pages 8-9.
- --------------------------------------------------------------------------------
12 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
Fund Expenses--March 31, 2006 (Unaudited)
Fund Expenses--As a shareholder of the Fund, you incur two types of costs: (1)
in the case of the Emerging Markets Portfolio only, transaction fees (1% of
amounts invested or redeemed at the time of such purchase or redemption) and (2)
ongoing costs, including management fees and other Fund expenses. This example
is intended to help you understand your ongoing costs (in dollars) of investing
in the Fund and to compare these costs with the ongoing costs of investing in
other mutual funds. The example is based on an investment of $1,000 invested at
the beginning of the period and held for the entire period as indicated below.
Actual Expenses--The first line of the table below provides information about
actual account values and actual expenses. You may use the information in this
line, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes--The second line of the table below
provides information about hypothetical account values and hypothetical expenses
based on the Fund's actual expense ratio and an assumed annual rate of return of
5% before expenses, which is not the Fund's actual return. The hypothetical
account values and expenses may not be used to estimate the actual ending
account balance or expenses you paid for the period. You may use this
information to compare the ongoing costs of investing in the Fund and other
funds by comparing this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of other funds. Please note that
the expenses shown in the table are meant to highlight your ongoing costs only
and do not reflect any transactional costs, such as sales charges (loads), or
contingent deferred sales charges on redemptions. Therefore, the second line of
the table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
BEGINNING ENDING EXPENSES ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE PAID DURING EXPENSE
OCTOBER 1, 2005 MARCH 31, 2006 PERIOD* RATIO*
- ---------------------------------------------------------------------------------------------------------------
Tax-Managed International Class Shares
Actual $ 1,000 $ 1,159.17 $ 6.24 1.16%
Hypothetical (5% return before expenses) $ 1,000 $ 1,019.15 $ 5.84 1.16%
- ---------------------------------------------------------------------------------------------------------------
International Class Shares
Actual $ 1,000 $ 1,157.62 $ 6.56 1.22%
Hypothetical (5% return before expenses) $ 1,000 $ 1,018.85 $ 6.14 1.22%
- ---------------------------------------------------------------------------------------------------------------
Emerging Markets Class Shares
Actual $ 1,000 $ 1,187.11 $ 8.67 1.59%
Hypothetical (5% return before expenses) $ 1,000 $ 1,017.00 $ 8.00 1.59%
- ---------------------------------------------------------------------------------------------------------------
Intermediate Duration Class Shares
Actual $ 1,000 $ 1,000.08 $ 2.94 0.59%
Hypothetical (5% return before expenses) $ 1,000 $ 1,021.99 $ 2.97 0.59%
- ---------------------------------------------------------------------------------------------------------------
U.S. Government Short Duration Class Shares
Actual $ 1,000 $ 1,007.95 $ 3.95 0.79%
Hypothetical (5% return before expenses) $ 1,000 $ 1,020.99 $ 3.98 0.79%
- ---------------------------------------------------------------------------------------------------------------
Intermediate Duration Institutional Class Shares
Actual $ 1,000 $ 1,000.66 $ 2.24 0.45%
Hypothetical (5% return before expenses) $ 1,000 $ 1,022.69 $ 2.27 0.45%
- ---------------------------------------------------------------------------------------------------------------
Short Duration Diversified Municipal Class Shares
Actual $ 1,000 $ 1,007.44 $ 3.55 0.71%
Hypothetical (5% return before expenses) $ 1,000 $ 1,021.39 $ 3.58 0.71%
- ---------------------------------------------------------------------------------------------------------------
Short Duration California Municipal Class Shares
Actual $ 1,000 $ 1,006.36 $ 4.10 0.82%
Hypothetical (5% return before expenses) $ 1,000 $ 1,020.84 $ 4.13 0.82%
- ---------------------------------------------------------------------------------------------------------------
Short Duration New York Municipal Class Shares
Actual $ 1,000 $ 1,007.43 $ 3.70 0.74%
Hypothetical (5% return before expenses) $ 1,000 $ 1,021.24 $ 3.73 0.74%
- ---------------------------------------------------------------------------------------------------------------
Diversified Municipal Class Shares
Actual $ 1,000 $ 1,004.21 $ 3.00 0.60%
Hypothetical (5% return before expenses) $ 1,000 $ 1,021.94 $ 3.02 0.60%
- ---------------------------------------------------------------------------------------------------------------
California Municipal Class Shares
Actual $ 1,000 $ 1,004.08 $ 3.20 0.64%
Hypothetical (5% return before expenses) $ 1,000 $ 1,021.74 $ 3.23 0.64%
- ---------------------------------------------------------------------------------------------------------------
New York Municipal Class Shares
Actual $ 1,000 $ 1,004.11 $ 3.15 0.63%
Hypothetical (5% return before expenses) $ 1,000 $ 1,021.79 $ 3.18 0.63%
- ---------------------------------------------------------------------------------------------------------------
Short Duration Plus Class Shares
Actual $ 1,000 $ 1,009.71 $ 3.36 0.67%
Hypothetical (5% return before expenses) $ 1,000 $ 1,021.59 $ 3.38 0.67%
* Expenses are equal to each Class's annualized expense ratio, shown in the
table above, multiplied by the average account value over the period,
multiplied by 182/365 (to reflect the one-half-year period).
- --------------------------------------------------------------------------------
2006 Semiannual Report 13
- --------------------------------------------------------------------------------
Portfolio Summary--March 31, 2006 (Unaudited)
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
Foreign Stock Portfolios
- --------------------------------------------------------------------------------
Tax-Managed International
- --------------------------------------------------------------------------------
[The following table was represented as a pie chart in the printed material.]
Country Breakdown(1) Sector Breakdown(1)
26.7% Japan Financial 34.2%
18.1% United Kingdom Capital Equipment 11.3
14.1% France Energy 9.5
9.3% Switzerland Technology/Electronics 9.1
7.1% Germany Industrial Commodities 7.5
4.2% Netherlands Consumer Staples 7.1
3.3% Italy Medical 5.8
3.1% Spain Consumer Cyclicals 5.4
2.8% Ireland Construction & Housing 4.3
2.2% Canada Utilities 2.8
2% Sweden Telecommunications 2.3
1.8% Australia Transportation 0.7
1.2% Singapore
1.2% Greece
1.2% Norway
1% Belgium
0.7% Hong Kong
- --------------------------------------------------------------------------------
International
- --------------------------------------------------------------------------------
[The following table was represented as a pie chart in the printed material.]
Country Breakdown(1) Sector Breakdown(1)
26.7% Japan Financial 34.9%
19.3% United Kingdom Capital Equipment 12.4
15.9% France Technology/Electronics 9.9
8.1% Switzerland Energy 9.5
6.9% Germany Industrial Commodities 7.7
4.7% Netherlands Consumer Staples 6.8
3.2% Italy Medical 5.8
2.9% Spain Consumer Cyclicals 3.7
2.3% Canada Construction & Housing 3.6
2.3% Sweden Utilities 2.8
1.9% Ireland Telecommunications 2.2
1.3% Australia Transportation 0.7
1.2% Singapore
1.2% Norway
1.0% Belgium
1.0% Greece
0.1% Hong Kong
- --------------------------------------------------------------------------------
Emerging Markets
- --------------------------------------------------------------------------------
[The following table was represented as a pie chart in the printed material.]
Country Breakdown(1) Sector Breakdown(1)
18.2% South Korea Financial 21.4%
14.8% Brazil Energy 19.3
13.7% South Africa Technology/Electronics 16.6
12.9% Taiwan Industrial Commodities 12.6
7.8% China Telecommunications 8.8
6.6% India Capital Equipment 6.5
5% Mexico Consumer Cyclicals 4.2
4.1% Israel Construction & Housing 3.5
3.7% Thailand Consumer Staples 2.2
3.1% Turkey Medical 2.0
2.9% Russia Utilities 1.4
1.7% Indonesia Gold 0.9
1.7% Hungary Transportation 0.6
0.9% Chili
0.8% Philippines
0.7% Argentina
0.7% Egypt
0.5% Malaysia
0.1% Peru
0.1% Luxembourg
1. All data as of March 31, 2006. The Portfolios' sector and country
breakdowns are expressed as a percentage of each Portfolio's total
long-term investments and may vary over time. Please note: The sector
classifications presented herein are based on the sector categorization
methodology of the Adviser. These sector classifications are broadly
defined. The "Schedule of Investments" section of the report reflects more
specific industry information and is consistent with the investment
restrictions discussed in the Portfolios' prospectus.
- --------------------------------------------------------------------------------
14 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
Portfolio Summary--March 31, 2006 (Unaudited) (continued from previous page)
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
Taxable Bond Portfolios
- --------------------------------------------------------------------------------
Intermediate Duration
- --------------------------------------------------------------------------------
[The following table was represented as a pie chart in the printed material.]
Security Type Breakdown(1)
31.8% Federal National Mortgage Association
14.2% Corporate Bonds
3.9% U.S. Treasury Securities
6.6% Commercial Mortgage-Backed Securities
4.9% Asset-Backed Securities
10.9% Sovereign Debt
1.4% Federal Home Loan Mortgage Corporation
4.4% Collateralized Mortgage Obligations
21.9% Short-Term
- --------------------------------------------------------------------------------
Short Duration Plus
- --------------------------------------------------------------------------------
[The following table was represented as a pie chart in the printed material.]
Security Type Breakdown(1)
15.3% Federal National Mortgage Association
7.9% U.S. Treasury Securities
22.6% Corporate Bonds
5.2% Commercial Mortgage-Backed Securities
11.3% Collateralized Mortgage Obligations
13.9% Federal Home Loan Mortgage Corporation
10.9% Short-Term
12.7% Asset-Backed Securities
0.2% Government National Mortgage Securities
- --------------------------------------------------------------------------------
U.S. Government Short Duration
- --------------------------------------------------------------------------------
[The following table was represented as a pie chart in the printed material.]
Security Type Breakdown(1)
32.3% U.S. Treasury Securities
27.7% Federal National Mortgage Association
2.4% Federal Home Loan Mortgage Corporation
10.2% Federal Farm Credit Bank
16.9% Federal Home Loan Bank
4.6% Collateralized Mortgage Obligations
1.0% Asset-Backed Securities
4.9% Short-Term
- --------------------------------------------------------------------------------
Intermediate Duration Institutional
- --------------------------------------------------------------------------------
[The following table was represented as a pie chart in the printed material.]
Security Type Breakdown(1)
34.2% Mortgage Pass-Throughs
14.4% Corporate Bonds
3.0% U.S. Treasury Securities
11.5% Sovereign Debt
7.4% Commercial Mortgage-Backed Securities
3.3% Asset-Backed Securities
21.3% Short-Term
4.9% Collateralized Mortgage Obligations
1. All data are as of March 31, 2006. The Portfolios' security type
breakdowns are expressed as a percentage of each Portfolio's total
investments and may vary over time.
- --------------------------------------------------------------------------------
2006 Semiannual Report 15
- --------------------------------------------------------------------------------
Portfolio Summary--March 31, 2006 (Unaudited) (continued from previous page)
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
Municipal Bond Portfolios (Short Duration)
- --------------------------------------------------------------------------------
Short Duration Diversified Municipal
- --------------------------------------------------------------------------------
[The following table was represented as a pie chart in the printed material.]
State Breakdown(1) Quality Rating Breakdown(1)
15.0% Texas 58.7% AAA
9.9% Florida 24.7% AA
7.2% California 5.4% A
7.0% Michigan 3.1% BBB
6.9% Pennsylvania 5.2% BB
6.0% New York 2.9% Unrated
5.7% New Jersey
5.2% Massachusetts
5.1% Maryland
3.3% Kansas
3.3% Oklahoma
3.0% Colorado
2.6% Illinois
2.3% Arizona
2.2% Indiana
2.1% Minnesota
13.2% Other
- --------------------------------------------------------------------------------
Short Duration California Municipal
- --------------------------------------------------------------------------------
[The following table was represented as a pie chart in the printed material.]
State Breakdown(1) Quality Rating Breakdown(1)
85.7% California 67.7% AAA
6.5% Puerto Rico 15.4% AA
3.1% Florida 7.6% A
2.0% Kansas 4.0% BBB
0.7% Virginia 4.1% BB
0.6% Delaware 1.2% Unrated
0.5% Guam
0.5% Wisconsin
0.4% Nevada
- --------------------------------------------------------------------------------
Short Duration New York Municipal
- --------------------------------------------------------------------------------
[The following table was represented as a pie chart in the printed material.]
State Breakdown(1) Quality Rating Breakdown(1)
84.4% New York 71.3% AAA
6.4% Puerto Rico 10.5% AA
3.8% Florida 9.6% A
2.4% Kansas 2.3% BBB
0.6% Delaware 5.9% BB
0.5% Guam 0.4% B
0.5% New Mexico
0.5% Virginia
0.4% Nevada
0.3% Arizona
0.2% Illinois
1. All data are as of March 31, 2006. The Portfolios' quality rating and
state breakdowns are expressed as a percentage of each Portfolio's total
investments and may vary over time. The quality ratings are determined by
using the Standard & Poor's Ratings Services and Moody's Investors
Services, Inc.
- --------------------------------------------------------------------------------
16 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
Portfolio Summary--March 31, 2006 (Unaudited) (continued from previous page)
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
Municipal Bond Portfolios (Intermediate Duration)
- --------------------------------------------------------------------------------
Diversified Municipal
- --------------------------------------------------------------------------------
State Breakdown(1) Quality Rating Breakdown(1)
9.7% New York 69.7% AAA
9.4% Texas 14.4% AA
7.2% Florida 7.6% A
6.9% California 2.8% BBB
6.8% New Jersey 5.5% BB
6.8% Massachusetts
4.8% Washington
4.5% Pennsylvania
4.4% Illinois
3.3% Hawaii
3.2% Maryland
2.9% Ohio
2.7% Oklahoma
2.3% Virginia
2.3% North Carolina
2.2% Nevada
2.2% Colorado
2.1% Michigan
16.3% Other
- --------------------------------------------------------------------------------
California Municipal
- --------------------------------------------------------------------------------
State Breakdown(1) Quality Rating Breakdown(1)
84.2% California 66.9% AAA
7.0% Puerto Rico 10.6% AA
2.8% Florida 12.6% A
2.3% New York 4.4% BBB
0.6% Nevada 5.5% BB
0.5% Virginia
0.5% Guam
0.5% Illinois
0.3% North Carolina
0.3% Pennsylvania
0.3% Trust Territories
0.2% Ohio
0.2% West Virginia
0.1% U.S. Virgin Islands
0.1% Arizona
0.1% Coloroda
- --------------------------------------------------------------------------------
New York Municipal
- --------------------------------------------------------------------------------
State Breakdown(1) Quality Rating Breakdown(1)
87.1% New York 71.3% AAA
4.6% Puerto Rico 10.5% AA
3.6% Florida 9.6% A
1.4% California 2.3% BBB
0.6% Nevada 5.9% BB
0.6% Virginia 0.4% B
0.4% Ohio
0.4% Guam
0.3% North Carolina
0.3% Colorado
0.2% Illinois
0.2% Pennsylvania
0.1% West Virginia
0.1% Arizona
0.1% Texas
1. All data are as of March 31, 2006. The Portfolios' quality rating and
state breakdowns are expressed as a percentage of each Portfolio's total
investments and may vary over time. The quality ratings are determined by
using the Standard & Poor's Ratings Services and Moody's Investors
Services, Inc.
- --------------------------------------------------------------------------------
2006 Semiannual Report 17
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Statements of Assets and Liabilities--March 31, 2006 (Unaudited)
TAX-MANAGED EMERGING
INTERNATIONAL INTERNATIONAL MARKETS
PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in securities at value (including
investments of cash collateral for securities
loaned of: International, $818,944,000) $ 7,258,970,058 $ 4,142,918,908 (a) $ 2,113,316,736
Foreign currency at value (b) 37,422,956 (c) 13,732,759 (c) 38,915,719
Cash in bank 277 335 303,898 (c)
Receivables:
Interest 51,694 16,993 4,857
Dividends 25,865,850 11,751,495 9,176,964
Investment securities sold 23,220,463 10,785,852 20,542,916
Capital shares sold 20,197,660 7,394,251 5,622,873
Foreign withholding tax reclaims 1,167,459 291,170 0
Margin due from broker on futures contracts 0 0 11,995
--------------- --------------- ---------------
Total assets 7,366,896,417 4,186,891,763 2,187,895,958
--------------- --------------- ---------------
LIABILITIES
Payable for collateral on securities lending at value 0 818,944,000 0
Payables:
Investment securities purchased 49,535,136 42,998,289 13,995,839
Capital shares redeemed 4,079,482 1,497,454 645,951
Management fee 5,339,543 2,559,180 2,116,871
Shareholder servicing and administration fee 1,605,296 722,763 477,107
Transfer Agent fee 54,213 28,338 47,006
Distribution fee payable 2,581 21,886 0
Accrued expenses 287,212 193,995 327,228
Foreign capital gains taxes 0 0 8,834,081
Margin owed to broker on futures contracts 530,819 118,730 0
--------------- --------------- ---------------
Total liabilities 61,434,282 867,084,635 26,444,083
--------------- --------------- ---------------
NET ASSETS (d) $ 7,305,462,135 $ 3,319,807,128 $ 2,161,451,875
=============== =============== ===============
Cost of investments (including cash collateral
on securities loaned) $ 5,170,668,986 $ 3,302,781,265 $ 1,303,078,289
=============== =============== ===============
SHARES OF CAPITAL STOCK OUTSTANDING 54,391,657
===============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $ 39.74
===============
NET ASSETS CONSIST OF:
Capital stock, at par * $ 273,806 $ 124,870 $ 54,392
Additional paid-in capital 4,776,043,765 2,301,597,091 1,200,301,235
Undistributed net investment income/(excess distributions) (1,392,601) (4,174,588) 2,626,487
Accumulated net realized gain on investment
and foreign currency transactions 441,577,292 182,046,723 156,522,142
Unrealized appreciation/(depreciation) of:
Investments and futures 2,088,929,321 840,262,873 801,719,317**
Foreign currency denominated assets and liabilities 30,552 (49,841) 228,302
--------------- --------------- ---------------
$ 7,305,462,135 $ 3,319,807,128 $ 2,161,451,875
=============== =============== ===============
(a) Includes securities on loan with a value of $772,761,501.
(b) Cost: $37,387,062, $13,748,185 and $38,977,104, respectively. (Note 1)
(c) The amounts of U.S. $5,335,631, $1,094,710 and $87,500, respectively, have
been segregated to collateralize margin requirements for the open futures
contracts at March 31, 2006.
(d) See page 19 for share class information on net assets value, offering
price and redemption price per share of the Tax-Managed International and
International Portfolios.
* The Sanford C. Bernstein Fund, Inc., has authorized 7.8 billion shares of
common stock with par value $.001 per share.
** Net of accrued foreign capital gains taxes of $8,531,125.
See Notes to Financial Statements. The Schedules of Investments, an integral
part of the financial statements for each Portfolio, are included as inserts to
this report.
- --------------------------------------------------------------------------------
18 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
TAX-MANAGED
INTERNATIONAL INTERNATIONAL
PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------
CALCULATION OF MAXIMUM OFFERING PRICE
Tax-Managed International Class Shares
Net Assets $ 7,299,523,053
Shares of capital stock outstanding 273,581,856
---------------
Net asset value, offering and redemption price per share $ 26.68
===============
International Class Shares
Net Assets $ 3,274,379,631
Shares of capital stock outstanding 123,150,449
---------------
Net asset value, offering and redemption price per share $ 26.59
===============
Class A Shares
Net Assets $ 4,141,347 $ 29,465,416
Shares of capital stock outstanding 156,020 1,113,043
--------------- ---------------
Net asset value and redemption price per share $ 26.54 $ 26.47
Sales charge--4.25% of public offering price 1.18 1.17
--------------- ---------------
Maximum offering price $ 27.72 $ 27.64
=============== ===============
Class B Shares
Net Assets $ 414,911 $ 3,753,114
Shares of capital stock outstanding 15,752 142,633
--------------- ---------------
Net asset value and offering price per share $ 26.34 $ 26.31
=============== ===============
Class C Shares
Net Assets $ 1,382,824 $ 12,208,967
Shares of capital stock outstanding 52,526 463,871
--------------- ---------------
Net asset value and offering price per share $ 26.33 $ 26.32
=============== ===============
- --------------------------------------------------------------------------------
2006 Semiannual Report 19
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Statements of Assets and Liabilities--March 31, 2006 (Unaudited) (continued)
INTERMEDIATE
INTERMEDIATE U.S. GOVERNMENT DURATION
DURATION SHORT DURATION INSTITUTIONAL
PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in securities at value $ 4,636,043,933 $ 86,920,386 $ 886,186,025
Cash in bank 0 387,003 0
Receivables:
Interest 27,928,076 683,552 5,288,287
Investment securities sold 161,212,253 0 48,759,273
Capital shares sold 13,926,482 66,150 1,752,150
Margin due from broker on futures contracts 7,344 0 844
Appreciation of interest rate swap agreement 537,956 0 116,985
Appreciation of foreign currency contracts 3,758,169 0 757,034
--------------- --------------- ---------------
Total assets 4,843,414,213 88,057,091 942,860,598
--------------- --------------- ---------------
LIABILITIES
Due to custodian 437,568 0 1,207,349
Payables:
Dividends to shareholders 6,179,339 105,264 1,196,139
Investment securities purchased 1,145,532,751 5,576,912 229,773,376
Credit default swap contracts, at value
(amortized discount $402,673, $0,
$76,288, $0, $0 and $0 respectively) 254,396 0 53,557
Capital shares redeemed 1,101,201 25,967 0
Deferred income on dollar rolls 188,217 1,703 38,934
Management fee 1,507,690 37,998 247,865
Shareholder servicing and administration fee 331,716 7,602 0
Transfer Agent fee 28,770 6,637 7,403
Accrued expenses 101,125 25,529 40,769
Depreciation of interest rate swap agreement 981,901 0 146,826
Depreciation of foreign currency contracts 696,653 0 145,698
--------------- --------------- ---------------
Total liabilities 1,157,341,327 5,787,612 232,857,916
=============== =============== ===============
NET ASSETS $ 3,686,072,886 $ 82,269,479 $ 710,002,682
=============== =============== ===============
Cost of investments $ 4,682,383,175 $ 87,711,979 $ 895,142,178
=============== =============== ===============
SHARES OF CAPITAL STOCK OUTSTANDING 284,141,489 6,661,888 47,625,584
=============== =============== ===============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $ 12.97 $ 12.35 $ 14.91
=============== =============== ===============
NET ASSETS CONSIST OF:
Capital stock, at par* $ 284,141 $ 6,662 $ 47,626
Additional paid-in capital 3,771,828,437 85,326,674 727,530,538
Undistributed net investment income/(excess distributions) (2,407,734) (12,649) (915,585)
Accumulated net realized loss on investment,
futures and foreign currency transactions (39,743,522) (2,259,615) (8,247,269)
Unrealized appreciation/(depreciation) of:
Investments, futures and swaps (46,635,592) (791,593) (8,963,342)
Foreign currency denominated assets and liabilities 2,747,156 0 550,714
--------------- --------------- ---------------
$ 3,686,072,886 $ 82,269,479 $ 710,002,682
=============== =============== ===============
* The Sanford C. Bernstein Fund, Inc., and the Sanford C. Bernstein Fund II,
Inc. have authorized 7.8 billion shares and 300 million shares,
respectively, of common stock with par value $.001 per share. See Notes to
Financial Statements. The Schedules of Investments, an integral part of
the financial statements for each Portfolio, are included as inserts to
this Report.
- --------------------------------------------------------------------------------
20 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
SHORT DURATION SHORT DURATION SHORT DURATION
DIVERSIFIED CALIFORNIA NEW YORK
MUNICIPAL MUNICIPAL MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------
ASSETS
Investments in securities at value $ 232,235,473 $ 70,776,600 $ 118,973,148
Cash in bank 299,215 93,307 66,231
Receivables:
Interest 3,598,658 973,292 1,744,616
Investment securities sold 0 0 65,000
Capital shares sold 261,152 0 31,223
Margin due from broker on futures contracts 0 0 0
Appreciation of interest rate swap agreement 1,106 251 500
Appreciation of foreign currency contracts 0 0 0
-------------- -------------- --------------
Total assets 236,395,604 71,843,450 120,880,718
-------------- -------------- --------------
LIABILITIES
Due to custodian 0 0 0
Payables:
Dividends to shareholders 217,913 53,639 107,841
Investment securities purchased 0 0 3,878,519
Credit default swap contracts, at value
(amortized discount $402,673, $0,
$76,288, $0, $0 and $0 respectively) 0 0 0
Capital shares redeemed 1,255,422 2,272,535 1,261,154
Deferred income on dollar rolls 0 0 0
Management fee 107,605 30,598 54,587
Shareholder servicing and administration fee 21,602 6,091 10,913
Transfer Agent fee 6,865 6,042 6,931
Accrued expenses 29,027 14,572 21,661
Depreciation of interest rate swap agreement 34,180 9,358 17,932
Depreciation of foreign currency contracts 0 0 0
-------------- -------------- --------------
Total liabilities 1,672,614 2,392,835 5,359,538
============== ============== ==============
NET ASSETS $ 234,722,990 $ 69,450,615 $ 115,521,180
============== ============== ==============
Cost of investments $ 233,834,090 $ 71,154,793 $ 119,304,120
============== ============== ==============
SHARES OF CAPITAL STOCK OUTSTANDING 18,867,873 5,594,806 9,369,285
============== ============== ==============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $ 12.44 $ 12.41 $ 12.33
============== ============== ==============
NET ASSETS CONSIST OF:
Capital stock, at par* $ 18,868 $ 5,595 $ 9,369
Additional paid-in capital 237,859,334 70,307,276 117,035,445
Undistributed net investment income/(excess distributions) (34,515) (25,095) (8,282)
Accumulated net realized loss on investment,
futures and foreign currency transactions (1,489,006) (449,861) (1,166,948)
Unrealized appreciation/(depreciation) of:
Investments, futures and swaps (1,631,691) (387,300) (348,404)
Foreign currency denominated assets and liabilities 0 0 0
-------------- -------------- --------------
$ 234,722,990 $ 69,450,615 $ 115,521,180
============== ============== ==============
- --------------------------------------------------------------------------------
2006 Semiannual Report 21
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Statements of Assets and Liabilities--March 31, 2006 (Unaudited) (continued)
DIVERSIFIED CALIFORNIA NEW YORK
MUNICIPAL MUNICIPAL MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------
ASSETS
Investments in securities at value $ 3,440,636,583 $ 1,141,750,980 $ 1,502,960,520
Cash in bank 81,542 81,238 90,840
Receivables:
Interest 46,349,385 15,108,230 22,144,182
Investment securities sold 55,978,881 6,837,982 330,000
Capital shares sold 12,857,883 2,403,805 1,776,048
Appreciation of interest rate swap agreement 13,248 4,592 5,833
--------------- --------------- ---------------
Total assets 3,555,917,522 1,166,186,827 1,527,307,423
--------------- --------------- ---------------
LIABILITIES
Payables:
Dividends to shareholders 3,905,636 1,275,678 1,728,279
Investment securities purchased 45,873,848 6,200,559 42,191,064
Capital shares redeemed 4,651,148 781,808 1,544,503
Management fee 1,438,747 512,822 646,618
Shareholder servicing and administration fee 298,354 97,005 123,482
Transfer Agent fee 43,908 13,977 37,420
Distribution fee payable 116,445 50,401 75,536
Accrued expenses 131,754 98,352 94,258
Depreciation of interest rate swap agreement 436,958 147,060 197,785
--------------- --------------- ---------------
Total liabilities 56,896,798 9,177,662 46,638,945
--------------- --------------- ---------------
NET ASSETS (a) $ 3,499,020,724 $ 1,157,009,165 $ 1,480,668,478
=============== =============== ===============
Cost of investments $ 3,434,649,989 $ 1,138,179,948 $ 1,498,187,719
=============== =============== ===============
NET ASSETS CONSIST OF:
Capital stock, at par* $ 251,843 $ 82,274 $ 107,857
Additional paid-in capital 3,501,966,188 1,156,392,918 1,476,777,730
Undistributed net investment income/(excess distributions) (219,786) (235,700) (91,176)
Accumulated net realized loss on investment
and futures transactions (8,540,405) (2,658,891) (706,782)
Unrealized appreciation of investments
and swaps 5,562,884 3,428,564 4,580,849
--------------- --------------- ---------------
$ 3,499,020,724 $ 1,157,009,165 $ 1,480,668,478
=============== =============== ===============
(a) See page 23 for share class information on net asset value, offering price
and redemption price per share of the Diversified Municipal, California
Municipal and New York Municipal Portfolios.
* The Sanford C. Bernstein Fund, Inc., has authorized 7.8 billion shares of
common stock with par value $.001 per share. See Notes to Financial
Statements. The Schedules of Investments, an integral part of the financial
statements for each Portfolio, are included as inserts to this Report.
- --------------------------------------------------------------------------------
22 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
DIVERSIFIED CALIFORNIA NEW YORK
MUNICIPAL MUNICIPAL MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------
CALCULATION OF MAXIMUM OFFERING PRICE
Municipal Class Shares
Municipal Class Shares
Net Assets $ 3,323,082,537 $ 1,079,633,668 $ 1,370,240,143
Shares of capital stock outstanding 239,184,664 76,771,848 99,808,919
--------------- --------------- ---------------
Net asset value and offering price per share $ 13.89 $ 14.06 $ 13.73
=============== =============== ===============
Class A Shares
Net Assets $ 70,937,833 $ 32,350,395 $ 41,161,523
Shares of capital stock outstanding 5,104,258 2,300,520 2,999,380
--------------- --------------- ---------------
Net asset value and redemption price per share $ 13.90 $ 14.06 $ 13.72
Sales charge--4.25% of public offering price .62 .62 .61
--------------- --------------- ---------------
Maximum offering price $ 14.52 $ 14.68 $ 14.33
=============== =============== ===============
Class B Shares
Net Assets $ 50,805,669 $ 21,302,644 $ 40,497,682
Shares of capital stock outstanding 3,655,228 1,514,610 2,952,152
--------------- --------------- ---------------
Net asset value and offering price per share $ 13.90 $ 14.06 $ 13.72
=============== =============== ===============
Class C Shares
Net Assets $ 54,194,685 $ 23,722,458 $ 28,769,130
Shares of capital stock outstanding 3,899,338 1,686,976 2,096,259
--------------- --------------- ---------------
Net asset value and offering price per share $ 13.90 $ 14.06 $ 13.72
=============== =============== ===============
- --------------------------------------------------------------------------------
2006 Semiannual Report 23
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Statements of Assets and Liabilities--March 31, 2006 (Unaudited) (continued)
SHORT
DURATION PLUS
PORTFOLIO
- -------------------------------------------------------------------------------
ASSETS
Investments in securities at value $ 482,350,475
Cash in bank 1,008,011
Receivables:
Interest 3,962,756
Capital shares sold 241,105
--------------
Total assets 487,562,347
--------------
LIABILITIES
Payables:
Dividends to shareholders 683,843
Investment securities purchased 32,597,980
Capital shares redeemed 677,227
Deferred income on dollar rolls 9,893
Management fee 197,522
Shareholder servicing and administration fee 34,093
Transfer Agent fee 17,849
Distribution fee payable 48,283
Accrued expenses 113,313
Depreciation of swap agreement 20,331
--------------
Total liabilities 34,400,334
--------------
NET ASSETS $ 453,162,013
==============
Cost of investments $ 487,504,090
==============
NET ASSETS CONSIST OF:
Capital stock, at par * $ 36,967
Additional paid-in capital 472,806,973
Undistributed net investment income/(excess distributions) (1,345,847)
Accumulated net realized loss on investment transactions (13,162,134)
Unrealized appreciation/(depreciation) of
investments and swaps (5,173,946)
--------------
$ 453,162,013
==============
SHORT
DURATION PLUS
PORTFOLIO
- -------------------------------------------------------------------------------
CALCULATION OF MAXIMUM OFFERING PRICE
Short Duration Plus Class Shares
Net Assets $ 374,477,837
Shares of capital stock outstanding 30,547,508
--------------
Net asset value and offering price per share $ 12.26
==============
Short Duration Class A Shares
Net Assets $ 38,164,081
Shares of capital stock outstanding 3,112,894
--------------
Net asset value and redemption price per share $ 12.26
Sales charge--4.25% of public offering price 0.54
--------------
Maximum offering price $ 12.80
==============
Short Duration Class B Shares
Net Assets $ 21,233,474
Shares of capital stock outstanding 1,732,206
--------------
Net asset value and offering price per share $ 12.26
==============
Short Duration Class C Shares
Net Assets $ 19,286,621
Shares of capital stock outstanding 1,573,975
--------------
Net asset value and offering price per share $ 12.25
==============
* The Sanford C. Bernstein Fund Inc., has authorized 7.8 billion shares of
common stock with par value $0.001 per share. See Notes to Financial
Statements. The Schedules of Investments, an integral part of the
financial statements for each Portfolio, are included as inserts to this
Report.
- --------------------------------------------------------------------------------
24 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
This page intentionally left blank.
- --------------------------------------------------------------------------------
2006 Semiannual Report 25
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Statements of Operations for the Six Months Ended March 31, 2006 (Unaudited)
TAX-MANAGED EMERGING INTERMEDIATE
INTERNATIONAL INTERNATIONAL MARKETS DURATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Income:
Interest $ 1,457,210 $ 1,076,138 $ 298,595 $ 88,848,231
Dividends (net of foreign withholding taxes of
$2,778,041, $1,304,348, $2,514,104 and $0,
respectively) 50,635,232 22,095,881 20,063,457 0
------------- ------------- -------------- -------------
Total income 52,092,442 23,172,019 20,362,052 88,848,231
------------- ------------- -------------- -------------
Expenses
Management fee 27,962,377 13,506,375 11,157,403 8,075,760
Shareholder servicing and administration fee 8,174,830 3,729,555 2,454,756 1,766,885
Custodian fee 1,309,842 770,224 1,684,904 237,947
Transfer agent fee--Non-Retail Class 146,899 96,259 143,337 112,660
Transfer agent fee--Class A 7,334 17,118 0 0
Transfer agent fee--Class B 556 1,853 0 0
Transfer agent fee--Class C 2,154 6,288 0 0
Distribution fees--Class A 4,810 43,670 0 0
Distribution fees--Class B 1,247 15,902 0 0
Distribution fees--Class C 4,749 53,846 0 0
Auditing and tax fees 103,855 53,972 31,572 52,485
Directors' fees and expenses 96,283 44,052 24,395 29,702
Legal fees 65,198 27,895 19,657 49,743
Registration fees 106,809 58,241 43,716 64,820
Printing fees 72,778 43,052 46,284 42,820
Miscellaneous 93,415 46,101 55,392 48,513
------------- ------------- -------------- -------------
Total expenses 38,153,136 18,514,403 15,661,416 10,481,335
Less: expenses waived and reimbursed by the
Adviser or Transfer Agent (8,365) (291) 0 0
Less: expense offset arrangement (35) (539) 0 0
------------- ------------- -------------- -------------
Net expenses 38,144,736 18,513,573 15,661,416 10,481,335
------------- ------------- -------------- -------------
Net investment income 13,947,706 4,658,446 4,700,636 78,366,896
------------- ------------- -------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on:
Investment transactions 446,902,709 235,662,855 196,477,996 * (31,023,220)
Futures transactions 3,324,769 1,597,879 0 (762,934)
Foreign currency transactions (5,066,243) (582,915) (1,376,324) (2,222,662)
Swap transactions 0 0 0 (1,165,557)
------------- ------------- -------------- -------------
Net realized gain (loss) on investment and foreign
currency transactions 445,161,235 236,677,819 195,101,672 (35,174,373)
------------- ------------- -------------- -------------
Net increase (decrease) in unrealized
appreciation/(depreciation) of:
Investments, futures and swaps 526,624,891 207,189,201 135,036,556 + (42,760,844)
Foreign currency denominated assets and
liabilities (405,324) 34,826 177,394 742,941
------------- ------------- -------------- -------------
Net increase (decrease) in unrealized
appreciation/(depreciation) of investments and
foreign currency denominated assets and
liabilities 526,219,567 207,224,027 135,213,950 (42,017,903)
------------- ------------- -------------- -------------
Net realized and unrealized gain (loss) on
investment and foreign currency transactions 971,380,802 443,901,846 330,315,622 (77,192,276)
------------- ------------- -------------- -------------
Net increase in net assets resulting from operations $ 985,328,508 $ 448,560,292 $ 335,016,258 $ 1,174,620
============= ============= ============== =============
* Net of foreign capital gains taxes of $1,098,881.
+ Net of change in foreign capital gains taxes of $2,254,942. See Notes to
Financial Statements.
- --------------------------------------------------------------------------------
26 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
INTERMEDIATE SHORT DURATION SHORT DURATION SHORT DURATION
U.S. GOVERNMENT DURATION DIVERSIFIED CALIFORNIA NEW YORK
SHORT DURATION INSTITUTIONAL MUNICIPAL MUNICIPAL MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Income:
Interest $ 1,634,590 $ 17,723,687 $ 4,120,303 $ 996,494 $ 1,941,588
Dividends (net of foreign withholding
taxes of $2,778,041, $1,304,348,
$2,514,104 and $0, respectively) 0 0 0 0 0
--------------- ------------- -------------- ------------- --------------
Total income 1,634,590 17,723,687 4,120,303 996,494 1,941,588
--------------- ------------- -------------- ------------- --------------
Expenses
Management fee 212,221 1,773,953 625,547 164,204 305,327
Shareholder servicing and
administration fee 42,444 0 125,109 32,841 61,066
Custodian fee 44,885 115,351 68,914 46,997 54,492
Transfer agent fee--Non-Retail Class 12,550 11,991 13,681 12,267 12,380
Transfer agent fee--Class A 0 0 0 0 0
Transfer agent fee--Class B 0 0 0 0 0
Transfer agent fee--Class C 0 0 0 0 0
Distribution fees--Class A 0 0 0 0 0
Distribution fees--Class B 0 0 0 0 0
Distribution fees--Class C 0 0 0 0 0
Auditing and tax fees 3,610 30,191 4,191 314 2,511
Directors' fees and expenses 551 12,099 2,526 592 1,012
Legal fees 1,046 35,229 3,114 855 1,465
Registration fees 11,537 21,915 32,680 5,608 4,280
Printing fees 929 16,858 4,862 1,826 3,796
Miscellaneous 6,253 20,402 6,814 3,927 4,680
--------------- ------------- -------------- ------------- --------------
Total expenses 336,026 2,037,989 887,438 269,431 451,009
Less: expenses waived and reimbursed by
the Adviser or Transfer Agent 0 (431,431) 0 0 0
Less: expense offset arrangement 0 0 0 0 0
--------------- ------------- -------------- ------------- --------------
Net expenses 336,026 1,606,558 887,438 269,431 451,009
--------------- ------------- -------------- ------------- --------------
Net investment income 1,298,564 16,117,129 3,232,865 727,063 1,490,579
--------------- ------------- -------------- ------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on:
Investment transactions (689,521) (6,736,462) (431,721) (259,752) 4,090
Futures transactions 0 (271,543) 33,632 24,023 19,218
Foreign currency transactions 0 (405,212) 0 0 0
Swap transactions 0 (259,626) 70,200 7,117 (23,476)
--------------- ------------- -------------- ------------- --------------
Net realized gain (loss) on investment and
foreign currency transactions (689,521) (7,672,843) (327,889) (228,612) (168)
--------------- ------------- -------------- ------------- --------------
Net increase (decrease) in unrealized
appreciation/(depreciation) of:
Investments, futures and swaps 59,855 (7,991,051) (966,695) (72,316) (558,299)
Foreign currency denominated assets and
liabilities 0 179,919 0 0 0
--------------- ------------- -------------- ------------- --------------
Net increase (decrease) in unrealized
appreciation/(depreciation) of investments
and foreign currency denominated assets
and liabilities 59,855 (7,811,132) (966,695) (72,316) (558,299)
--------------- ------------- -------------- ------------- --------------
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions (629,666) (15,483,975) (1,294,584) (300,928) (558,467)
--------------- ------------- -------------- ------------- --------------
Net increase in net assets resulting from
operations $ 668,898 $ 633,154 $ 1,938,281 $ 426,135 $ 932,112
=============== ============= ============== ============= ==============
- --------------------------------------------------------------------------------
2006 Semiannual Report 27
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Statements of Operations for the Six Months Ended March 31, 2006 (Unaudited)
(continued)
DIVERSIFIED CALIFORNIA NEW YORK
MUNICIPAL MUNICIPAL MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Income:
Interest $ 64,638,327 $ 21,297,336 $ 29,139,439
------------ ------------ -------------
Total income 64,638,327 21,297,336 29,139,439
------------ ------------ -------------
Expenses:
Management fee 7,707,181 2,742,833 3,494,822
Shareholder servicing fee 1,576,059 511,454 660,317
Custodian fee 237,296 131,551 147,353
Transfer agent fee--Municipal Class 55,266 16,915 20,238
Transfer agent fee--Class A 16,868 7,051 13,173
Transfer agent fee--Class B 12,999 4,900 13,946
Transfer agent fee--Class C 13,527 5,423 10,006
Distribution fees--Class A 115,326 51,131 64,137
Distribution fees--Class B 294,944 118,538 226,876
Distribution fees--Class C 307,449 131,546 162,313
Auditing and tax fees 57,929 23,353 28,795
Printing fees 57,243 20,769 29,873
Registration fees 123,022 20,260 38,605
Legal fees 40,420 17,281 19,965
Directors' fees and expenses 35,187 10,755 11,336
Miscellaneous 52,444 18,631 31,048
------------ ------------ -------------
Total expenses 10,703,160 3,832,391 4,972,803
Less: expense offset arrangement (909) (410) (521)
------------ ------------ -------------
Net expenses 10,702,251 3,831,981 4,972,282
------------ ------------ -------------
Net investment income 53,936,076 17,465,355 24,167,157
------------ ------------ -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
TRANSACTIONS
Net realized gain (loss) on:
Investment transactions (3,981,659) (634,824) (119,900)
Futures transactions 105,699 201,789 321,901
Swap transactions 1,548,606 8,337 287,249
------------ ------------ -------------
Net realized gain (loss) on investment transactions (2,327,354) (424,698) 489,250
------------ ------------ -------------
Net decrease in unrealized appreciation/
(depreciation) of investments, futures and swaps (38,554,016) (13,104,063) (18,972,070)
------------ ------------ -------------
Net realized and unrealized loss on investment
transactions (40,881,370) (13,528,761) (18,482,820)
------------ ------------ -------------
Net increase in net assets resulting from operations $ 13,054,706 $ 3,936,594 $ 5,684,337
============ ============ =============
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
28 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
SHORT
DURATION PLUS
PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income:
Interest $ 10,363,007
------------
Total income 10,363,007
------------
Expenses
Management fee 1,137,531
Shareholder servicing fee 195,861
Custodian fees 104,095
Transfer Agent fee--Plus Class 25,734
Transfer Agent fee--Class A 21,284
Transfer Agent fee--Class B 13,646
Transfer Agent fee--Class C 11,895
Distribution fees--Short Duration Class A 58,830
Distribution fees--Short Duration Class B 124,475
Distribution fees--Short Duration Class C 108,637
Auditing and tax fees 14,220
Directors' fees and expenses 3,840
Legal fees 9,686
Registration fees 48,347
Printing fees 35,666
Miscellaneous 14,597
------------
Total expenses 1,928,344
Less: expense offset arrangement (1,014)
------------
Net expenses 1,927,330
------------
Net investment income 8,435,677
------------
REALIZED AND UNREALIZED LOSS ON
INVESTMENT TRANSACTIONS
Net realized loss on investment transactions (3,690,713)
------------
Net decrease in unrealized appreciation/(depreciation)
of investments and swaps (424,785)
------------
Net realized and unrealized loss on investment transactions (4,115,498)
------------
Net increase in net assets resulting from operations $ 4,320,179
============
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
2006 Semiannual Report 29
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Statements of Changes in Net Assets
TAX-MANAGED
INTERNATIONAL INTERNATIONAL
PORTFOLIO PORTFOLIO
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED 3/31/06 ENDED ENDED 3/31/06 ENDED
(UNAUDITED) 9/30/05 (UNAUDITED) 9/30/05
- -----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
Operations:
Net investment income $ 13,947,706 $ 62,239,311 $ 4,658,446 $ 29,005,975
Net realized gain (loss) on investment and
foreign currency transactions 445,161,235 350,763,410 236,677,819 211,320,415
Increase (decrease) in unrealized
appreciation/ (depreciation) of
investments and foreign currency denominated
assets and liabilities 526,219,567 714,291,614 207,224,027 294,200,680
--------------- --------------- --------------- ---------------
Net increase in net assets resulting from
operations 985,328,508 1,127,294,335 448,560,292 534,527,070
--------------- --------------- --------------- ---------------
Dividends and distributions to shareholders:
Dividends from net investment income (a) (76,837,936) (38,554,498) (37,507,007) (19,679,950)
Distributions from net realized gain on
investment transactions (a) (352,939,338) (64,402,318) 0 0
--------------- --------------- --------------- ---------------
Total dividends and distributions to shareholders (429,777,274) (102,956,816) (37,507,007) (19,679,950)
--------------- --------------- --------------- ---------------
Capital-share transactions
Net proceeds from sales of shares 674,615,593 1,054,997,614 347,040,701 443,734,535
Net proceeds from sales of shares issued to
shareholders on reinvestment of dividends
and distributions 368,733,747 97,862,728 36,476,471 19,096,435
--------------- --------------- --------------- ---------------
Total proceeds from shares sold 1,043,349,340 1,152,860,342 383,517,172 462,830,970
Cost of shares redeemed (375,485,678) (707,054,456) (302,368,400) (349,463,822)
--------------- --------------- --------------- ---------------
Increase (decrease) in net assets from
capital-share transactions 667,863,662 445,805,886 81,148,772 113,367,148
--------------- --------------- --------------- ---------------
Net increase in net assets 1,223,414,896 1,470,143,405 492,202,057 628,214,268
NET ASSETS:
Beginning of period 6,082,047,239 4,611,903,834 2,827,605,071 2,199,390,803
--------------- --------------- --------------- ---------------
End of period (b) $ 7,305,462,135 $ 6,082,047,239 $ 3,319,807,128 $ 2,827,605,071
=============== =============== =============== ===============
(b) Includes undistributed net investment
income/(excess distributions) of: $ (1,392,601) $ 61,497,629 $ (4,174,588) $ 28,673,973
=============== =============== =============== ===============
(a) See page 36 for share class information on dividend distributions of the
Tax-Managed International and International Portfolios. *Includes effect
of portfolio transaction fee in the amounts of $4,523,703 and $13,012,499
for the six months ended March 31, 2006 and the year ended September 30,
2005, respectively.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
30 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
EMERGING INTERMEDIATE
MARKETS DURATION
PORTFOLIO PORTFOLIO
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED 3/31/06 ENDED ENDED 3/31/06 ENDED
(UNAUDITED) 9/30/05 (UNAUDITED) 9/30/05
- -----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
Operations:
Net investment income $ 4,700,636 $ 29,612,420 $ 78,366,896 $ 123,254,319
Net realized gain (loss) on investment and
foreign currency transactions 195,101,672 379,858,809 (35,174,373) 2,643,441
Increase (decrease) in unrealized
appreciation/ (depreciation) of
investments and foreign currency
denominated assets and liabilities 135,213,950 263,522,430 (42,017,903) (26,423,230)
--------------- --------------- --------------- ---------------
Net increase in net assets resulting from
operations 335,016,258 672,993,659 1,174,620 99,474,530
--------------- --------------- --------------- ---------------
Dividends and distributions to shareholders:
Dividends from net investment income (a) (25,802,664) (2,635,948) (80,100,965) (126,024,077)
Distributions from net realized gain on
investment transactions (a) (403,836,187) (36,713,975) (1,045,578) (8,277,788)
--------------- --------------- --------------- ---------------
Total dividends and distributions to shareholders (429,638,851) (39,349,923) (81,146,543) (134,301,865)
--------------- --------------- --------------- ---------------
Capital-share transactions
Net proceeds from sales of shares 232,745,899 373,695,958 565,381,615 923,619,555
Net proceeds from sales of shares issued to
shareholders on reinvestment of dividends
and distributions 371,843,207 38,639,865 14,315,849 30,945,279
--------------- --------------- --------------- ---------------
Total proceeds from shares sold 604,589,106 412,335,823 579,697,464 954,564,834
Cost of shares redeemed (229,040,957) (526,820,800) (200,397,612) (385,795,947)
--------------- --------------- --------------- ---------------
Increase (decrease) in net assets from
capital-share transactions 375,548,149* (114,484,977)* 379,299,852 568,768,887
--------------- --------------- --------------- ---------------
Net increase in net assets 280,925,556 519,158,759 299,327,929 533,941,552
NET ASSETS:
Beginning of period 1,880,526,319 1,361,367,560 3,386,744,957 2,852,803,405
--------------- --------------- --------------- ---------------
End of period (b) $ 2,161,451,875 $ 1,880,526,319 $ 3,686,072,886 $ 3,386,744,957
=============== =============== =============== ===============
(b) Includes undistributed net investment
income/(excess distributions) of: $ 2,626,487 $ 23,728,515 $ (2,407,734) $ (673,655)
=============== =============== =============== ===============
- --------------------------------------------------------------------------------
2006 Semiannual Report 31
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Statements of Changes in Net Assets (continued)
U.S. GOVERNMENT INTERMEDIATE DURATION
SHORT DURATION INSTITUTIONAL
PORTFOLIO PORTFOLIO
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED 3/31/06 ENDED ENDED 3/31/06 ENDED
(UNAUDITED) 9/30/05 (UNAUDITED) 9/30/05
- -----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
Operations:
Net investment income $ 1,298,564 $ 2,209,374 $ 16,117,129 $ 25,442,124
Net realized gain (loss) on investment
and foreign currency transactions (689,521) (547,164) (7,672,843) 537,774
Increase (decrease) in unrealized
appreciation/ (depreciation) of
investments, futures and swaps 59,855 (874,120) (7,811,132) (5,540,221)
--------------- --------------- --------------- ---------------
Net increase in net assets resulting from
operations 668,898 788,090 633,154 20,439,677
--------------- --------------- --------------- ---------------
Dividends and distributions to shareholders:
Dividends from net investment income (a) (1,360,920) (2,490,757) (16,490,318) (25,875,590)
Distributions from net realized gain on
investment transactions (a) 0 (7,475) 0 (3,830,748)
--------------- --------------- --------------- ---------------
Total dividends and distributions to shareholders (1,360,920) (2,498,232) (16,490,318) (29,706,338)
--------------- --------------- --------------- ---------------
Capital-share transactions:
Net proceeds from sales of shares 8,732,080 16,832,340 161,149,112 197,365,725
Net proceeds from sales of shares
issued to shareholders on reinvestment
of dividends and distributions 735,817 1,339,188 4,547,163 13,042,331
--------------- --------------- --------------- ---------------
Total proceeds from shares sold 9,467,897 18,171,528 165,696,275 210,408,056
Cost of shares redeemed (12,900,895) (23,661,657) (90,751,620) (159,474,673)
--------------- --------------- --------------- ---------------
Increase (decrease) in net assets from
capital-share transactions (3,432,998) (5,490,129) 74,944,655 50,933,383
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets (4,125,020) (7,200,271) 59,087,491 41,666,722
NET ASSETS:
Beginning of period 86,394,499 93,594,770 650,915,191 609,248,469
--------------- --------------- --------------- ---------------
End of period (b) $ 82,269,479 $ 86,394,499 $ 710,002,682 $ 650,915,191
=============== =============== =============== ===============
(b) Includes undistributed net investment
income/ (excess distributions) of: $ (12,649) $ 49,707 $ (915,585) $ (542,396)
=============== =============== =============== ===============
(a) See page 36 for share class information on dividend distributions of the
Diversified Municipal Portfolio.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
32 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
SHORT DURATION SHORT DURATION
DIVERSIFIED MUNICIPAL CALIFORNIA MUNICIPAL
PORTFOLIO PORTFOLIO
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED 3/31/06 ENDED ENDED 3/31/06 ENDED
(UNAUDITED) 9/30/05 (UNAUDITED) 9/30/05
- -----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
Operations:
Net investment income $ 3,232,865 $ 5,217,926 $ 727,063 $ 1,286,431
Net realized gain (loss) on investment
and foreign currency transactions (327,889) (957,651) (228,612) (168,122)
Increase (decrease) in unrealized
appreciation/ (depreciation) of
investments, futures and swaps (966,695) (1,112,181) (72,316) (392,395)
--------------- --------------- ------------- ---------------
Net increase in net assets resulting from
operations 1,938,281 3,148,094 426,135 725,914
--------------- --------------- ------------- ---------------
Dividends and distributions to shareholders:
Dividends from net investment income (a) (3,251,067) (5,214,254) (732,083) (1,288,933)
Distributions from net realized gain on
investment transactions (a) 0 0 0 0
--------------- --------------- ------------- ---------------
Total dividends and distributions to shareholders (3,251,067) (5,214,254) (732,083) (1,288,933)
--------------- --------------- ------------- ---------------
Capital-share transactions:
Net proceeds from sales of shares 79,018,564 171,799,003 30,196,178 45,457,089
Net proceeds from sales of shares
issued to shareholders on reinvestment
of dividends and distributions 1,389,926 2,175,270 447,706 806,718
--------------- --------------- ------------- ---------------
Total proceeds from shares sold 80,408,490 173,974,273 30,643,884 46,263,807
Cost of shares redeemed (102,672,682) (167,336,591) (22,911,903) (55,312,984)
--------------- --------------- ------------- ---------------
Increase (decrease) in net assets from
capital-share transactions (22,264,192) 6,637,682 7,731,981 (9,049,177)
--------------- --------------- ------------- ---------------
Net increase (decrease) in net assets (23,576,978) 4,571,522 7,426,033 (9,612,196)
NET ASSETS:
Beginning of period 258,299,968 253,728,446 62,024,582 71,636,778
--------------- --------------- ------------- ---------------
End of period (b) $ 234,722,990 $ 258,299,968 $ 69,450,615 $ 62,024,582
=============== =============== ============= ===============
(b) Includes undistributed net investment
income/ (excess distributions) of: $ (34,515) $ (16,313) $ (25,095) $ (20,075)
=============== =============== ============= ===============
SHORT DURATION
NEW YORK MUNICIPAL DIVERSIFIED MUNICIPAL
PORTFOLIO PORTFOLIO
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED 3/31/06 ENDED ENDED 3/31/06 ENDED
(UNAUDITED) 9/30/05 (UNAUDITED) 9/30/05
- -----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
Operations:
Net investment income $ 1,490,579 $ 2,453,523 $ 53,936,076 $ 91,004,516
Net realized gain (loss) on investment
and foreign currency transactions (168) (632,730) (2,327,354) 93,901
Increase (decrease) in unrealized
appreciation/ (depreciation) of
investments, futures and swaps (558,299) (173,740) (38,554,016) (43,831,499)
--------------- --------------- --------------- ---------------
Net increase in net assets resulting from
operations 932,112 1,647,053 13,054,706 47,266,918
--------------- --------------- --------------- ---------------
Dividends and distributions to shareholders:
Dividends from net investment income (a) (1,499,968) (2,457,605) (54,147,869) (90,960,777)
Distributions from net realized gain on
investment transactions (a) 0 0 0 0
--------------- --------------- --------------- ---------------
Total dividends and distributions to shareholders (1,499,968) (2,457,605) (54,147,869) (90,960,777)
--------------- --------------- --------------- ---------------
Capital-share transactions:
Net proceeds from sales of shares 25,888,349 72,030,243 631,852,110 985,636,697
Net proceeds from sales of shares
issued to shareholders on reinvestment
of dividends and distributions 678,296 1,121,675 9,223,603 18,173,262
--------------- --------------- --------------- ---------------
Total proceeds from shares sold
Cost of shares redeemed 26,566,645 73,151,918 641,075,713 1,003,809,959
(33,535,425) (72,459,303) (293,859,675) (564,369,617)
--------------- --------------- --------------- ---------------
Increase (decrease) in net assets from
capital-share transactions (6,968,780) 692,615 347,216,038 439,440,342
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets
(7,536,636) (117,937) 306,122,875 395,746,483
NET ASSETS:
Beginning of period 123,057,816 123,175,753 3,192,897,849 2,797,151,366
--------------- --------------- --------------- ---------------
End of period (b) $ 115,521,180 $ 123,057,816 $ 3,499,020,724 $ 3,192,897,849
=============== =============== =============== ===============
(b) Includes undistributed net investment
income/ (excess distributions) of: $ (8,282) $ 1,107 $ (219,786) $ (7,993)
=============== =============== =============== ===============
- --------------------------------------------------------------------------------
2006 Semiannual Report 33
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Statements of Changes in Net Assets (continued)
CALIFORNIA MUNICIPAL NEW YORK MUNICIPAL
PORTFOLIO PORTFOLIO
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED 3/31/06 ENDED ENDED 3/31/06 ENDED
(UNAUDITED) 9/30/05 (UNAUDITED) 9/30/05
- -----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
Operations:
Net investment income $ 17,465,355 $ 29,762,722 $ 24,167,157 $ 43,100,305
Net realized gain (loss) on investment
transactions (424,698) 354,068 489,250 1,717,857
Increase (decrease) in unrealized
appreciation/ (depreciation) of
investments, futures and swaps (13,104,063) (10,356,391) (18,972,070) (21,490,657)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets resulting
from operations 3,936,594 19,760,399 5,684,337 23,327,505
--------------- --------------- --------------- ---------------
Dividends and distributions to shareholders:
Dividends from net investment income (a) (17,531,171) (29,792,395) (24,264,396) (43,178,963)
Distributions from net realized gain on
investment transactions (a) 0 (675,420) 0 0
--------------- --------------- --------------- ---------------
Total dividends and distributions to shareholders (17,531,171) (30,467,815) (24,264,396) (43,178,963)
--------------- --------------- --------------- ---------------
Capital-share transactions:
Net proceeds from sales of shares 206,373,617 324,048,982 215,858,329 388,609,059
Net proceeds from sales of shares
issued to shareholders on reinvestment
of dividends and distributions 3,555,776 7,794,812 6,093,043 12,522,489
--------------- --------------- --------------- ---------------
Total proceeds from shares sold 209,929,393 331,843,794 221,951,372 401,131,548
Cost of shares redeemed (114,710,060) (197,962,811) (126,967,238) (263,675,915)
--------------- --------------- --------------- ---------------
Increase in net assets from capital-share
transactions 95,219,333 133,880,983 94,984,134 137,455,633
--------------- --------------- --------------- ---------------
Net increase in net assets 81,624,756 123,173,567 76,404,075 117,604,175
NET ASSETS:
Beginning of period 1,075,384,409 952,210,842 1,404,264,403 1,286,660,228
--------------- --------------- --------------- ---------------
End of period (b) $ 1,157,009,165 $ 1,075,384,409 $ 1,480,668,478 $ 1,404,264,403
=============== =============== =============== ===============
(b) Includes undistributed net investment
income/ (excess distributions) of: $ (235,700) $ (169,884) $ (91,176) $ 6,063
=============== =============== =============== ===============
(a) See pages 36 & 37 for share class information on dividend distributions of
the California Municipal and New York Municipal Portfolios.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
34 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
SHORT
DURATION PLUS
PORTFOLIO
SIX MONTHS YEAR
ENDED 3/31/06 ENDED
(UNAUDITED) 9/30/05
- ----------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
Operations:
Net investment income $ 8,435,677 $ 14,775,130
Net realized loss on investment transactions (3,690,713) (4,683,066)
Decrease in unrealized appreciation/
(depreciation) of investments and swaps (424,785) (5,122,328)
--------------- ---------------
Net increase in net assets resulting
from operations 4,320,179 4,969,736
--------------- ---------------
Dividends and distributions to shareholders:
Dividends from net investment income (a) (9,352,304) (16,141,481)
Distributions from net realized gain on
investment transactions (a) 0 (520,245)
--------------- ---------------
Total dividends and distributions to shareholders (9,352,304) (16,661,726)
--------------- ---------------
Capital-share transactions:
Net proceeds from sales of shares 65,907,491 178,626,953
Net proceeds from sales of shares issued
to shareholders on reinvestment of
dividends and distributions 3,964,696 7,646,420
--------------- ---------------
Total proceeds from shares sold 69,872,187 186,273,373
Cost of shares redeemed (105,126,970) (245,678,393)
--------------- ---------------
Decrease in net assets from capital-share
transactions (35,254,783) (59,405,020)
--------------- ---------------
Net decrease in net assets (40,286,908) (71,097,010)
NET ASSETS:
Beginning of period 493,448,921 564,545,931
--------------- ---------------
End of period (b) $ 453,162,013 $ 493,448,921
=============== ===============
(b) Includes excess distributions of: $ (1,345,847) $ (429,220)
=============== ===============
(a) See page 37 for share class information on dividend distributions of the
Short Duration Plus Portfolio.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
2006 Semiannual Report 35
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Statements of Changes in Net Assets (continued)
-------------------------------- ---------------------------------
TAX-MANAGED
INTERNATIONAL INTERNATIONAL
PORTFOLIO PORTFOLIO
-------------------------------- ---------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED 3/31/06 ENDED ENDED 3/31/06 ENDED
(UNAUDITED) 9/30/05 (UNAUDITED) 9/30/05
- --------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders:
Dividends from net investment income
Tax-Managed International and International
Class Shares, respectively $ (76,795,406) $ (38,551,625) $ (37,094,428) $ (19,606,874)
Class A (36,350) (1,635) (355,394) (32,241)
Class B (1,290) (374) (13,731) (6,949)
Class C (4,890) (864) (43,454) (33,811)
Class R 0 0 0 (75)
------------- ------------- ------------- -------------
$ (76,837,936) $ (38,554,498) $ (37,507,007) $ (19,679,950)
============= ============= ============= =============
Distributions from net realized gain on
investment transactions
Tax-Managed International and International
Class Shares, respectively $(352,717,365) $ (64,395,815)
Class A (170,785) (2,979)
Class B (10,684) (1,067)
Class C (40,504) (2,457)
------------- -------------
$(352,939,338) $ (64,402,318)
============= =============
-------------------------------- ---------------------------------
DIVERSIFIED CALIFORNIA
MUNICIPAL MUNICIPAL
PORTFOLIO PORTFOLIO
-------------------------------- ---------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED 3/31/06 ENDED ENDED 3/31/06 ENDED
(UNAUDITED) 9/30/05 (UNAUDITED) 9/30/05
- --------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders:
Dividends from net investment income
Municipal Class $ (51,595,905) $ (84,945,388) $ (16,453,918) $ (27,333,546)
Class A (1,157,586) (2,586,427) (507,371) (1,117,535)
Class B (682,847) (1,768,647) (269,999) (671,269)
Class C (711,531) (1,660,315) (299,883) (670,045)
------------- ------------- ------------- -------------
$ (54,147,869) $ (90,960,777) $ (17,531,171) $ (29,792,395)
============= ============= ============= =============
Distributions from net realized gain on
investment transactions
Municipal Class $ 0 $ 0 $ 0 $ (600,291)
Class A 0 0 0 (27,031)
Class B 0 0 0 (24,289)
Class C 0 0 0 (23,809)
------------- ------------- ------------- -------------
$ 0 $ 0 $ 0 $ (675,420)
============= ============= ============= =============
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
36 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
---------------------------------
NEW YORK
MUNICIPAL
PORTFOLIO
---------------------------------
SIX MONTHS YEAR
ENDED 3/31/06 ENDED
(UNAUDITED) 9/30/05
- --------------------------------------------------------------------------------
Dividends to shareholders:
Dividends from net investment income
Municipal Class $ (22,632,283) $ (39,335,597)
Class A (674,410) (1,528,070)
Class B (558,291) (1,267,103)
Class C (399,412) (1,048,193)
------------- -------------
$ (24,264,396) $ (43,178,963)
============= =============
---------------------------------
SHORT
DURATION PLUS
PORTFOLIO
---------------------------------
SIX MONTHS YEAR
ENDED 3/31/06 ENDED
(UNAUDITED) 9/30/05
- --------------------------------------------------------------------------------
Dividends to shareholders:
Dividends from net investment income
Short Duration Plus Class $ (7,926,035) $ (13,219,192)
Class A (726,768) (1,460,769)
Class B (373,215) (783,292)
Class C (326,286) (678,131)
Class R 0 (97)
------------- -------------
$ (9,352,304) $ (16,141,481)
============= =============
Distributions from net realized gain on
investment transactions
Short Duration Plus Class $ 0 $ (395,649)
Class A 0 (50,066)
Class B 0 (39,845)
Class C 0 (34,676)
Class R 0 (9)
------------- -------------
$ 0 $ (520,245)
============= =============
- --------------------------------------------------------------------------------
2006 Semiannual Report 37
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
Financial Highlights
Selected per-share data and ratios for a share of capital stock outstanding for
each respective Portfolio for each of the periods presented:
--------------------------------------------------------------------------------------
TAX-MANAGED INTERNATIONAL PORTFOLIO
TAX-MANAGED INTERNATIONAL CLASS
--------------------------------------------------------------------------------------
SIX MONTHS
ENDED 3/31/06 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 9/30/05 9/30/04 9/30/03 9/30/02 9/30/01 (a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 24.72 $ 20.42 $ 17.53 $ 13.10 $ 15.22 $ 20.44
---------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Investment income, net+ 0.05 0.26 0.15 0.24 0.17 0.21
Net realized and unrealized gain
(loss) on investment and
foreign currency transactions 3.65 4.49 3.04 4.39 (2.00) (3.48)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 3.70 4.75 3.19 4.63 (1.83) (3.27)
---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from taxable net
investment income (0.31) (0.17) (0.30) (0.20) (0.29) (0.16)
Distributions from net realized
gain on investment transactions (1.43) (0.28) 0 0 0 (1.79)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (1.74) (0.45) (0.30) 0.20) (0.29) (1.95)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 26.68 $ 24.72 $ 20.42 $ 17.53 $ 13.10 $ 15.22
========== ========== ========== ========== ========== ==========
Total return (b) 15.92% 23.62% 18.34% 35.65% (12.39)% (17.49)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $7,299,523 $6,078,513 $4,611,550 $3,561,248 $2,365,421 $2,420,323
Average net assets (000 omitted) $6,486,550 $5,303,305 $4,206,956 $2,890,486 $2,708,477 $2,828,736
Ratio of expenses to average
net assets 1.16%(h)* 1.22% 1.24% 1.25% 1.25% 1.25%
Ratio of net investment income
to average net assets 0.43%(h)* 1.17% 0.79% 1.59% 1.04% 1.14%
Portfolio turnover rate 32% 53% 71% 28% 64% 46%
See Footnote Summary on page 51.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
38 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
INTERNATIONAL PORTFOLIO
INTERNATIONAL CLASS
--------------------------------------------------------------------------------------
SIX MONTHS
ENDED 3/31/06 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 9/30/05 9/30/04 9/30/03 9/30/02 9/30/01 (a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 23.27 $ 18.94 $ 16.06 $ 11.95 $ 14.16 $ 20.44
----------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Investment income, net+ 0.04 0.25 0.14 0.23 0.14 0.18
Net realized and unrealized gain
(loss) on investment and
foreign currency transactions 3.59 4.25 2.91 4.04 (1.90) (3.11)
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 3.63 4.50 3.05 4.27 (1.76) (2.93)
----------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from taxable net
investment income (0.31) (0.17) (0.17) (0.16) (0.45) (0.79)
Distributions from net realized
gain on investment transactions 0 0 0 0 0 (2.56)
----------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.31) (0.17) (0.17) (0.16) (0.45) (3.35)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 26.59 $ 23.27 $ 18.94 $ 16.06 $ 11.95 $ 14.16
=========== ========== ========== ========== ========== ==========
Total return (b) 15.76% 23.90% 19.05% 36.00% (13.01)% (16.95)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $ 3,274,380 $2,785,730 $2,190,687 $1,826,667 $1,299,449 $1,426,683
Average net assets (000 omitted) $ 2,959,321 $2,462,819 $2,045,596 $1,572,731 $1,539,788 $1,718,245
Ratio of expenses to average
net assets 1.22%(h)* 1.26% 1.28% 1.29% 1.29% 1.28%
Ratio of net investment income
to average net assets 0.32%(h)* 1.17% 0.76% 1.63% 0.97% 1.06%
Portfolio turnover rate 39% 61% 92% 28% 67% 45%
See Footnote Summary on page 51.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
2006 Semiannual Report 39
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
Financial Highlights (continued)
Selected per-share data and ratios for a share of capital stock outstanding for
each respective Portfolio for each of the periods presented:
-------------------------------------------------------------------------------------
EMERGING MARKETS
PORTFOLIO
-------------------------------------------------------------------------------------
SIX MONTHS
ENDED 3/31/06 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 9/30/05 9/30/04 9/30/03 9/30/02 9/30/01 (a)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 43.22 $ 28.91 $ 20.81 $ 13.65 $ 12.48 $ 16.91
---------- ---------- ---------- -------- -------- ----------
Income from investment operations:
Investment income, net+ 0.09 0.66 0.36 0.26 0.13 0.17
Net realized and unrealized gain
(loss) on investment and
foreign currency transactions 6.33 14.20 7.76 6.87 1.04 (4.34)
---------- ---------- ---------- -------- -------- ----------
Total from investment operations 6.42 14.86 8.12 7.13 1.17 (4.17)
---------- ---------- ---------- -------- -------- ----------
Less distributions:
Dividends from taxable net
investment income (0.60) (0.06) (0.22) (0.08) (0.13) (0.09)
Distributions from net realized
gain on investment transactions (9.39) (0.78) 0 0 0 (0.28)
---------- ---------- ---------- -------- -------- ----------
Total distributions (9.99) (0.84) (0.22) (0.08) (0.13) (0.37)
---------- ---------- ---------- -------- -------- ----------
Portfolio transaction fee 0.09 0.29 0.20 0.11 0.13 0.11
---------- ---------- ---------- -------- -------- ----------
Net asset value, end of period $ 39.74 $ 43.22 $ 28.91 $ 20.81 $ 13.65 $ 12.48
========== ========== ========== ======== ======== ==========
Total return (b) 16.35%(c) 48.78%(c) 34.66%(c) 47.21%(c) 5.98%(c) (27.36)%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $2,161,452 $1,880,526 $1,361,368 $898,402 $518,984 $ 499,414
Average net assets (000 omitted) $1,947,795 $1,600,912 $1,150,902 $653,705 $588,195 $ 578,168
Ratio of expenses to average net
assets 1.59%(h)* 1.68% 1.72% 1.72% 1.73% 1.75%
Ratio of net investment income to
average net assets 0.48%(h)* 1.85% 1.41% 1.57% 0.89% 1.10%
Portfolio turnover rate 29% 54% 44% 38% 34% 34%
See Footnote Summary on page 51.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
40 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
INTERMEDIATE
DURATION PORTFOLIO
--------------------------------------------------------------------------------------
SIX MONTHS
ENDED 3/31/06 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 9/30/05 9/30/04 9/30/03 9/30/02 9/30/01 (a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.27 $ 13.41 $ 13.43 $ 13.08 $ 12.98 $ 12.51
----------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Investment income, net+ 0.29 0.53 0.50 0.47 0.59 0.72
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions (0.29) (0.09) (0.01) 0.35 0.10 0.47
----------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.00 0.44 0.49 0.82 0.69 1.19
----------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from taxable net
investment income (0.30) (0.54) (0.51) (0.47) (0.59) (0.68)
Distributions from net realized
gain on investment transactions 0.00(d) (0.04) 0 0 0 (0.04)
----------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.30) (0.58) (0.51) (0.47) (0.59) (0.72)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 12.97 $ 13.27 $ 13.41 $ 13.43 $ 13.08 $ 12.98
=========== ========== ========== ========== ========== ==========
Total return (b) 0.01% 3.35% 3.74% 6.39% 5.48% 9.80%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $ 3,686,073 $3,386,745 $2,852,803 $2,402,262 $2,151,988 $2,130,691
Average net assets (000 omitted) $ 3,504,963 $3,104,905 $2,612,933 $2,249,030 $2,135,339 $2,060,159
Ratio of expenses to average
net assets 0.59%(h)* 0.60% 0.61% 0.61% 0.61% 0.61%
Ratio of net investment income to
average net assets 4.43%(h)* 3.97% 3.72% 3.55% 4.57% 5.66%
Portfolio turnover rate 188% 586% 660% 796% 727% 532%
See Footnote Summary on page 51.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
2006 Semiannual Report 41
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
Financial Highlights (continued)
Selected per-share data and ratios for a share of capital stock outstanding for
each respective Portfolio for each of the periods presented:
------------------------------------------------------------------------------------
U.S. GOVERNMENT
SHORT DURATION PORTFOLIO
------------------------------------------------------------------------------------
SIX MONTHS
ENDED 3/31/06 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 9/30/05 9/30/04 9/30/03 9/30/02 9/30/01 (a)
- ------------------------------------------------------------------------ ---------------------------------------------------
Net asset value, beginning of period $ 12.45 $ 12.68 $ 13.00 $ 13.23 $ 13.07 $ 12.49
------------- ---------- ---------- ---------- ---------- -----------
Income from investment operations:
Investment income, net+ 0.19 0.30 0.26 0.31 0.40 0.59
Net realized and unrealized gain
(loss) on investment
transactions (0.09) (0.19) (0.14) (0.04) 0.16 0.58
------------- ---------- ---------- ---------- ---------- -----------
Total from investment operations 0.10 0.11 0.12 0.27 0.56 1.17
------------- ---------- ---------- ---------- ---------- -----------
Less distributions:
Dividends from taxable net
investment income (0.20) (0.34) (0.30) (0.31) (0.40) (0.59)
Dividends from net realized gain
on investment transactions 0 0(d) (0.14) (0.19) 0 0
------------- ---------- ---------- ---------- ---------- -----------
Total distributions (0.20) (0.34) (0.44) (0.50) (0.40) (0.59)
------------- ---------- ---------- ---------- ---------- -----------
Net asset value, end of period $ 12.35 $ 12.45 $ 12.68 $ 13.00 $ 13.23 $ 13.07
============= ========== ========== ========== ========== ===========
Total return (b) 0.80% 0.90% 0.93% 2.10% 5.42% 9.62%
Ratios/Supplemental Data
Net assets, end of period
(000 omitted) $ 82,269 $ 86,394 $ 93,595 $ 112,561 $ 115,400 $ 101,664
Average net assets (000 omitted) $ 84,197 $ 91,842 $ 101,777 $ 120,631 $ 106,080 $ 101,326
Ratio of expenses to average
net assets 0.79%(h)* 0.78% 0.80% 0.76% 0.74% 0.72%
Ratio of expenses to average net
assets excluding interest expense 0.79%(h)* 0.78% 0.78% 0.76% 0.74% 0.72%
Ratio of net investment income to
average net assets 3.06%(h)* 2.41% 2.06% 2.39% 3.04% 4.65%
Portfolio turnover rate 83% 167% 358% 323% 230% 344%
See Footnote Summary on page 51.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
42 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund II, Inc.
Financial Highlights
Selected per-share data and ratios for a share of capital stock outstanding for
the Portfolio for each of the periods presented:
------------------------------------------------------------------------
INTERMEDIATE DURATION
INSTITUTIONAL PORTFOLIO
------------------------------------------------------------------------
SIX MONTHS
ENDED 3/31/06 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 9/30/05 9/30/04 9/30/03 9/30/02(e)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 15.25 $ 15.48 $ 15.74 $ 15.44 $ 15.00(f)
------------- ---------- ---------- ---------- ----------
Income from investment operations:
Investment income, net+ 0.35 0.64 0.60 0.56 0.25
Net realized and unrealized gain
(loss) on investment and foreign
currency transactions (0.34) (0.13) (0.03) 0.41 0.44
------------- ---------- ---------- ---------- ----------
Total from investment operations 0.01 0.51 0.57 0.97 0.69
------------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from taxable net
investment income (0.35) (0.65) (0.61) (0.57) (0.25)
Dividends from net realized gain
on investment transactions 0 (0.09) (0.22) (0.10) 0
------------- ---------- ---------- ---------- ----------
Total distributions (0.35) (0.74) (0.83) (0.67) (0.25)
------------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 14.91 $ 15.25 $ 15.48 $ 15.74 $ 15.44
============= ========== ========== ========== ==========
Total return (b) 0.07% 3.41% 3.76% 6.44% 4.62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $ 710,003 $ 650,915 $ 609,248 $ 464,517 $ 328,393
Average net assets (000 omitted) $ 703,796 $ 611,401 $ 535,624 $ 383,604 $ 237,462
Ratio of expenses to average
net assets 0.45%(h)* 0.45% 0.45% 0.45% 0.45%*
Ratio of expenses to average net
assets before reimbursement 0.57%(h)* 0.57% 0.58% 0.64% 0.75%*
Ratio of net investment income to
average net assets 4.54%(h)* 4.16% 3.86% 3.64% 4.37%*
Portfolio turnover rate 254% 619% 682% 791% 324%
See Footnote Summary on page 51.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
2006 Semiannual Report 43
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
Financial Highlights (continued)
Selected per-share data and ratios for a share of capital stock outstanding for
each respective Portfolio for each of the periods presented:
------------------------------------------------------------------------------------
SHORT DURATION DIVERSIFIED
MUNICIPAL PORTFOLIO
------------------------------------------------------------------------------------
SIX MONTHS
ENDED 3/31/06 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 9/30/05 9/30/04(g) 9/30/03 9/30/02 9/30/01 (a)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.51 $ 12.60 $ 12.69 $ 12.79 $ 12.70 $ 12.44
------------- ---------- ---------- ---------- ---------- -----------
Income from investment operations:
Investment income, net+ 0.16 0.26 0.22 0.29 0.37 0.47
Net realized and unrealized gain
(loss) on investment
transactions (0.07) (0.09) (0.07) (0.05) 0.10 0.26
------------- ---------- ---------- ---------- ---------- -----------
Total from investment operations 0.09 0.17 0.15 0.24 0.47 0.73
------------- ---------- ---------- ---------- ---------- -----------
Less distributions:
Dividends from taxable net
investment income 0 0 (0.01) 0 0 (0.01)
Dividends from tax-exempt net
investment income (0.16) (0.26) (0.21) (0.29) (0.37) (0.46)
Dividends from net realized gain
on investment transactions 0 0 (0.02) (0.05) (0.01) 0
------------- ---------- ---------- ---------- ---------- -----------
Total distributions (0.16) (0.26) (0.24) (0.34) (0.38) (0.47)
------------- ---------- ---------- ---------- ---------- -----------
Net asset value, end of period $ 12.44 $ 12.51 $ 12.60 $ 12.69 $ 12.79 $ 12.70
============= ========== ========== ========== ========== ===========
Total return (b) 0.76% 1.36% 1.21% 1.97% 3.81% 5.98%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $ 234,723 $ 258,300 $ 253,728 $ 233,649 $ 200,696 $ 156,920
Average net assets (000 omitted) $ 248,179 $ 253,042 $ 240,126 $ 220,768 $ 182,317 $ 144,315
Ratio of expenses to average
net assets 0.71%(h)* 0.71% 0.69% 0.71% 0.71% 0.71%
Ratio of net investment income to
average net assets 2.59%(h)* 2.06% 1.81% 2.30% 2.92% 3.73%
Portfolio turnover rate 24% 100% 84% 57% 56% 77%
See Footnote Summary on page 51.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
44 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
------------------------------------------------------------------------------------
SHORT DURATION CALIFORNIA
MUNICIPAL PORTFOLIO
------------------------------------------------------------------------------------
SIX MONTHS
ENDED 3/31/06 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 9/30/05 9/30/04(g) 9/30/03 9/30/02 9/30/01 (a)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.47 $ 12.57 $ 12.67 $ 12.69 $ 12.68 $ 12.51
------------- ---------- ---------- ---------- ---------- -----------
Income from investment operations:
Investment income, net+ 0.14 0.24 0.20 0.22 0.35 0.46
Net realized and unrealized gain
(loss) on investment
transactions (0.06) (0.10) (0.10) (0.02) 0.01 0.17
------------- ---------- ---------- ---------- ---------- -----------
Total from investment operations 0.08 0.14 0.10 0.20 0.36 0.63
------------- ---------- ---------- ---------- ---------- -----------
Less distributions:
Dividends from taxable net
investment income 0 0 (0.01) (0.01) 0 (0.03)
Dividends from tax-exempt net
investment income (0.14) (0.24) (0.19) (0.21) (0.35) (0.43)
------------- ---------- ---------- ---------- ---------- -----------
Total distributions (0.14) (0.24) (0.20) (0.22) (0.35) (0.46)
------------- ---------- ---------- ---------- ---------- -----------
Net asset value, end of period $ 12.41 $ 12.47 $ 12.57 $ 12.67 $ 12.69 $ 12.68
============= ========== ========== ========== ========== ===========
Total return (b) 0.65% 1.11% 0.81% 1.63% 2.87% 5.13%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $ 69,451 $ 62,025 $ 71,637 $ 79,818 $ 74,648 $ 54,073
Average net assets (000 omitted) $ 65,146 $ 68,266 $ 77,177 $ 80,862 $ 61,944 $ 55,681
Ratio of expenses to average
net assets 0.82%(h)* 0.81% 0.78% 0.80% 0.79% 0.79%
Ratio of net investment income to
average net assets 2.22%(h)* 1.88% 1.59% 1.77% 2.70% 3.66%
Portfolio turnover rate 25% 91% 90% 72% 28% 60%
See Footnote Summary on page 51.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
2006 Semiannual Report 45
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
Financial Highlights (continued)
Selected per-share data and ratios for a share of capital stock outstanding for
each respective Portfolio for each of the periods presented:
------------------------------------------------------------------------------------
SHORT DURATION NEW YORK
MUNICIPAL PORTFOLIO
------------------------------------------------------------------------------------
SIX MONTHS
ENDED 3/31/06 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 9/30/05 9/30/04(g) 9/30/03 9/30/02 9/30/01 (a)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.39 $ 12.47 $ 12.55 $ 12.57 $ 12.54 $ 12.31
------------- ---------- ---------- ---------- ---------- -----------
Income from investment operations:
Investment income, net+ 0.15 0.25 0.22 0.26 0.36 0.44
Net realized and unrealized gain
(loss) on investment
transactions (0.06) (0.08) (0.08) (0.02) 0.03 0.23
------------- ---------- ---------- ---------- ---------- -----------
Total from investment operations 0.09 0.17 0.14 0.24 0.39 0.67
------------- ---------- ---------- ---------- ---------- -----------
Less distributions:
Dividends from taxable net
investment income 0 0 (0.01) 0 0 (0.03)
Dividends from tax-exempt net
investment income (0.15) (0.25) (0.21) (0.26) (0.36) (0.41)
------------- ---------- ---------- ---------- ---------- -----------
Total distributions (0.15) (0.25) (0.22) (0.26) (0.36) (0.44)
Net asset value, end of period $ 12.33 $ 12.39 $ 12.47 $ 12.55 $ 12.57 $ 12.54
============= ========== ========== ========== ========== ===========
Total return (b) 0.76% 1.37% 1.16% 1.92% 3.14% 5.55%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $ 115,521 $ 123,058 $ 123,176 $ 120,941 $ 116,307 $ 87,919
Average net assets (000 omitted) $ 121,135 $ 122,925 $ 123,457 $ 119,346 $ 102,743 $ 94,322
Ratio of expenses to average
net assets 0.74%(h)* 0.74% 0.74% 0.76% 0.77% 0.73%
Ratio of net investment income to
average net assets 2.44%(h)* 2.00% 1.80% 2.06% 2.83% 3.56%
Portfolio turnover rate 21% 98% 68% 47% 38% 93%
See Footnote Summary on page 51.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
46 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
DIVERSIFIED MUNICIPAL PORTFOLIO
MUNICIPAL CLASS
---------------------------------------------------------------------------------------
SIX MONTHS
ENDED 3/31/06 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 9/30/05 9/30/04(g) 9/30/03 9/30/02 9/30/01 (a)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.06 $ 14.27 $ 14.34 $ 14.37 $ 14.05 $ 13.50
------------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Investment income, net+ 0.23 0.44 0.45 0.51 0.56 0.59
Net realized and unrealized gain
(loss) on investment
transactions (0.17) (0.21) (0.07) (0.03) 0.32 0.55
------------- ----------- ----------- ----------- ----------- -----------
Total from investment operations 0.06 0.23 0.38 0.48 0.88 1.14
------------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends from taxable net
investment income 0 0 (0.02) (0.01) 0 (0.01)
Dividends from tax-exempt net
investment income (0.23) (0.44) (0.43) (0.50) (0.56) (0.58)
------------- ----------- ----------- ----------- ----------- -----------
Total distributions (0.23) (0.44) (0.45) (0.51) (0.56) (0.59)
------------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 13.89 $ 14.06 $ 14.27 $ 14.34 $ 14.37 $ 14.05
============= =========== =========== =========== =========== ===========
Total return (b) 0.44% 1.62% 2.73% 3.44% 6.42% 8.63%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $ 3,323,083 $ 2,976,421 $ 2,509,749 $ 2,045,981 $ 1,731,818 $ 1,388,653
Average net assets (000 omitted) $ 3,126,422 $ 2,752,982 $ 2,261,248 $ 1,844,104 $ 1,532,681 $ 1,277,970
Ratio of expenses to average
net assets 0.60%(h)* 0.61% 0.61% 0.63% 0.64% 0.63%
Ratio of net investment income to
average net assets 3.26%(h)* 3.09% 3.19% 3.58% 3.96% 4.30%
Portfolio turnover rate 17% 28% 41% 38% 22% 26%
See Footnote Summary on page 51.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
2006 Semiannual Report 47
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
Financial Highlights (continued)
Selected per-share data and ratios for a share of capital stock outstanding for
each respective Portfolio for each of the periods presented:
---------------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL PORTFOLIO
MUNICIPAL CLASS
---------------------------------------------------------------------------------------
SIX MONTHS
ENDED 3/31/06 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 9/30/05 9/30/04(g) 9/30/03 9/30/02 9/30/01 (a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.23 $ 14.38 $ 14.46 $ 14.59 $ 14.23 $ 13.81
------------ ----------- ----------- ----------- ----------- ------------
Income from investment operations:
Investment income, net+ 0.23 0.43 0.43 0.47 0.51 0.57
Net realized and unrealized gain
(loss) on investment
transactions (0.17) (0.13) (0.07) (0.13) 0.36 0.42
------------ ----------- ----------- ----------- ----------- ------------
Total from investment operations 0.06 0.30 0.36 0.34 0.87 0.99
------------ ----------- ----------- ----------- ----------- ------------
Less distributions:
Dividends from taxable net
investment income 0 0 (0.02) (0.03) 0 (0.04)
Dividends from tax-exempt net
investment income (0.23) (0.44) (0.41) (0.44) (0.51) (0.53)
Distributions from net realized
gain on investment transactions 0 (0.01) (0.01) 0 0 0
------------ ----------- ----------- ----------- ----------- ------------
Total distributions (0.23) (0.45) (0.44) (0.47) (0.51) (0.57)
------------ ----------- ----------- ----------- ----------- ------------
Net asset value, end of period $ 14.06 $ 14.23 $ 14.38 $ 14.46 $ 14.59 $ 14.23
============ =========== =========== =========== ========== ============
Total return (b) 0.43% 2.09% 2.55% 2.40% 6.27% 7.33%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $ 1,079,634 $ 983,388 $ 843,206 $ 685,360 $ 597,222 $ 491,194
Average net assets (000 omitted) $ 1,014,569 $ 898,450 $ 752,372 $ 625,249 $ 541,454 $ 460,729
Ratio of expenses to average
net assets 0.64%(h)* 0.65% 0.64% 0.66% 0.66% 0.65%
Ratio of net investment income to
average net assets 3.21%(h)* 3.04% 3.01% 3.26% 3.57% 4.07%
Portfolio turnover rate 15% 30% 52% 44% 31% 46%
See Footnote Summary on page 51.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
48 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
NEW YORK MUNICIPAL PORTFOLIO
MUNICIPAL CLASS
----------------------------------------------------------------------------------------
SIX MONTHS
ENDED 3/31/06 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 9/30/05 9/30/04(g) 9/30/03 9/30/02 9/30/01 (a)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.91 $ 14.11 $ 14.21 $ 14.23 $ 13.85 $ 13.37
------------- ----------- ------------ ---------- ----------- ------------
Income from investment operations:
Investment income, net+ 0.24 0.46 0.47 0.50 0.54 0.57
Net realized and unrealized gain
(loss) on investment
transactions (0.18) (0.20) (0.10) (0.02) 0.38 0.48
------------- ----------- ------------ ---------- ----------- ------------
Total from investment operations 0.06 0.26 0.37 0.48 0.92 1.05
------------- ----------- ------------ ---------- ----------- ------------
Less distributions:
Dividends from taxable net
investment income 0 0 (0.01) (0.01) (0.01) (0.02)
Dividends from tax-exempt net
investment income (0.24) (0.46) (0.46) (0.49) (0.53) (0.55)
------------- ----------- ------------ ---------- ----------- ------------
Total distributions (0.24) (0.46) (0.47) (0.50) (0.54) (0.57)
------------- ----------- ------------ ---------- ----------- ------------
Net asset value, end of period $ 13.73 $ 13.91 $ 14.11 $ 14.21 $ 14.23 $ 13.85
============= =========== ============ ========== =========== ============
Total return (b) 0.43% 1.90% 2.63% 3.45% 6.83% 7.99%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $ 1,370,240 $ 1,274,466 $ 1,121,213 $1,006,023 $ 940,302 $ 763,728
Average net assets (000 omitted) $ 1,309,868 $ 1,190,723 $ 1,055,386 $ 954,250 $ 835,184 $ 713,704
Ratio of expenses to average
net assets 0.63%(h)* 0.63% 0.63% 0.65% 0.66% 0.64%
Ratio of net investment income to
average net assets 3.41%(h)* 3.30% 3.31% 3.53% 3.89% 4.17%
Portfolio turnover rate 17% 32% 39% 29% 37% 29%
See Footnote Summary on page 51.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
2006 Semiannual Report 49
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
Financial Highlights (continued)
Selected per-share data and ratios for a share of capital stock outstanding for
each respective Portfolio for each of the periods presented:
---------------------------------------------------------------------------------------
SHORT DURATION PLUS PORTFOLIO
SHORT DURATION PLUS CLASS
---------------------------------------------------------------------------------------
SIX MONTHS
ENDED 3/31/06 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 9/30/05 9/30/04 9/30/03 9/30/02 9/30/01 (a)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.39 $ 12.67 $ 12.84 $ 12.78 $ 12.69 $ 12.25
------------- ----------- ------------ ---------- ----------- ------------
Income from investment operations:
Investment income, net+ 0.23 0.37 0.30 0.37 0.50 0.68
Net realized and unrealized gain
(loss) on investment
transactions (0.11) (0.24) (0.12) 0.06 0.09 0.44
------------- ----------- ------------ ---------- ----------- ------------
Total from investment operations 0.12 0.13 0.18 0.43 0.59 1.12
------------- ----------- ------------ ---------- ----------- ------------
Less distributions:
Dividends from taxable net
investment income (0.25) (0.40) (0.33) (0.37) (0.50) (0.66)
Distributions from net realized
gain on investment transactions 0 (0.01) (0.02) 0 0 0
Distributions in excess of net
investment income due to timing
differences 0 0 0 0 0 (0.01)
Distributions in excess of net
realized gain on investment
transactions due to timing
differences 0 0 0 0 0 (0.01)
------------- ----------- ------------ ---------- ----------- ------------
Total distributions (0.25) (0.41) (0.35) (0.37) (0.50) (0.68)
------------- ----------- ------------ ---------- ----------- ------------
Net asset value, end of period $ 12.26 $ 12.39 $ 12.67 $ 12.84 $ 12.78 $ 12.69
============= =========== ============ ========== =========== ============
Total return (b) 0.97% 1.10% 1.37% 3.42% 4.78% 9.40%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $ 374,478 $ 398,787 $ 421,881 $ 413,100 $ 397,719 $ 367,738
Average net assets (000 omitted) $ 388,527 $ 410,072 $ 411,043 $ 408,848 $ 377,656 $ 377,112
Ratio of expenses to average
net assets 0.67%(h)* 0.68% 0.70% 0.67% 0.67% 0.67%
Ratio of expenses to average net
assets excluding interest expense 0.67%(h)* 0.68% 0.68% 0.66% 0.67% 0.67%
Ratio of net investment income to
average net assets 3.66%(h)* 2.97% 2.39% 2.89% 3.95% 5.48%
Portfolio turnover rate 88% 220% 359% 286% 226% 377%
See Footnote Summary on page 51.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
50 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
* Annualized.
+ Based on Average shares outstanding.
(a) Prior to October 2, 2000, Sanford C. Bernstein & Co., Inc. served as
investment manager to the Fund. On October 2, 2000, AllianceBernstein L.P.
(prior to February 24, 2006, known as Alliance Capital Management L.P.),
acquired the business and substantially all of the assets of Sanford C.
Bernstein & Co., Inc. and became investment adviser for the Fund.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Total Return does not reflect
the deduction of taxes that a shareholder would pay on fund distributions
or the redemption of fund shares. Total investment return calculated for a
period of less than one year is not annualized.
(c) This reflects the return to a shareholder who purchased shares of the
Portfolio at the beginning of the period and redeemed them at the end of
the period, paying, in each case, the applicable portfolio transaction
fee. Effective May 2, 2005 the portfolio transaction fee payable when
shares of the Portfolio are purchased or sold was reduced from 2.00% to
1.00% Total Return to a shareholder for the six months ending March 31,
2006 and the years ending September 30, 2005, September 30, 2004,
September 30, 2003, September 30, 2002, and September 30, 2001, without
taking into account these transaction fees would have been 18.72%, 53.35%,
40.22%, 53.28%, 10.35%, and (24.37)% respectively.
(d) Amount is less than .005.
(e) Commenced operations May 17, 2002.
(f) Prior to the commencement of operations, May 17, 2002, AllianceBernstein
L.P. (prior to February 24, 2006 known as Alliance Capital), redeemed
1,333 shares representing $16,666 of Intermediate Duration Institutional
Portfolio and made a capital contribution of $16,666 into the Portfolio,
adjusting the opening net asset value per share from $12.50 to $15.00.
(g) As of October 1, 2003, the Portfolios have adopted the method of
accounting for interim payments on swap contracts in accordance with
Financial Accounting Standards Board Statement No. 133. These interim
payments are reflected within net realized and unrealized gain (loss) on
swap contracts, however prior to October 1, 2003, these interim payments
were reflected within interest income in the Statement of Operations. For
the year ended September 30, 2004, the effect of this change was to
increase net investment income and decrease net realized and unrealized
gain (loss) on investment transaction per share by less than $0.01 for
Short Duration Diversified, Short Duration California, Short Duration New
York, Diversified Municipal, California Municipal and New York Municipal
Class. The effect on the ratio of the net investment income per share was
as follows:
YEAR
ENDED 9/30/04
Short Duration Diversified 0.03%
Short Duration California 0.00%
Short Duration New York 0.01%
Diversified Municipal Class 0.01%
California Municipal Class 0.00%
New York Municipal Class 0.01%
(h) The ratio includes expenses attributable to estimated costs of proxy
solicitation.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
2006 Semiannual Report 51
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Notes to Financial Statements
NOTE 1. Organization and Significant Accounting Policies
This report includes the financial statements of the Sanford C.
Bernstein Fund, Inc. and the Sanford C. Bernstein Fund II, Inc. (the
"Funds"). Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein
Fund II, Inc. are managed open-end registered investment companies,
incorporated in Maryland on May 4, 1988 and February 7, 2002,
respectively. Sanford C. Bernstein Fund, Inc., currently comprises
12 portfolios ("SCB Portfolios"), each with its own investment
objectives. There are three international equity portfolios,
Tax-Managed International, International and Emerging Markets, nine
fixed-income portfolios, Intermediate Duration, Short Duration Plus,
U.S. Government Short Duration, Short Duration Diversified
Municipal, Short Duration California Municipal, Short Duration New
York Municipal, Diversified Municipal, California Municipal and New
York Municipal.
Effective February 1, 2002, each of the Diversified Municipal,
California Municipal and New York Municipal Portfolios
(collectively, Bernstein "Intermediate Municipal Portfolios")
commenced offering of AllianceBernstein Intermediate Municipal Class
A, Class B and Class C Shares (collectively, "Intermediate Municipal
Retail Classes") in addition to the existing share class of the
Intermediate Municipal Portfolios (each, a "Municipal Class").
Effective May 21, 2003, the Short Duration Plus Portfolio commenced
offering of AllianceBernstein Short Duration Class A, Class B and
Class C Shares (collectively, "Short Duration Retail Classes") in
addition to the existing Short Duration Plus Class shares. Effective
January 30, 2004, the Tax-Managed International and International
Portfolios commenced distribution of AllianceBernstein Tax-Managed
International and AllianceBernstein International Class A, Class B
and Class C Shares (collectively, "International Retail Classes") in
addition to the existing Tax-Managed International and International
Class Shares, respectively. Collectively, the Intermediate Retail
Classes, Short Duration Retail Classes and International Retail
Classes are the "Retail Classes." The financial highlights of the
Retail Classes are presented in separate financial reports. Each
class of shares has identical voting, dividend, liquidation and
other rights, except that each class bears different distribution
expenses and has exclusive voting rights with respect to its
distribution plan, as applicable. Sanford C. Bernstein Fund II, Inc.
currently comprises one portfolio, the Intermediate Duration
Institutional Portfolio (together with the SCB Portfolios, the
"Portfolios"). Intermediate Duration Institutional Portfolio
commenced offering on May 17, 2002, through an investment of
securities received in an in-kind redemption in the amount of
$149,411,702 from the Intermediate Duration Portfolio of the Sanford
C. Bernstein Fund, Inc. The preparation of financial statements in
accordance with U.S. generally accepted accounting principles
requires management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. Additional
information about some of the items discussed in these Notes to
Financial Statements is contained in the Fund's Statement of
Additional Information, which is available upon request. The
following is a summary of significant accounting policies followed
by the Funds.
A. Portfolio Valuation
Portfolio securities are valued at their current market value
determined on the basis of market quotations or, if market
quotations are not readily available or are deemed unreliable,
at"fair value" as determined in accordance with procedures
established by and under the general supervision of the Funds'
Boards of Directors.
In general, the market value of securities which are readily
available and deemed reliable are determined as follows: Securities
listed on a national securities exchange or on a foreign securities
exchange are valued at the last sale price at the close of the
exchange or foreign securities exchange. If there has been no sale
on such day, the securities are valued at the mean of the closing
bid and asked prices on such day. Securities listed on more than one
exchange are valued by reference to the principal exchange on which
the securities are traded; securities not listed on an exchange but
traded on The NASDAQ Stock Market, Inc. ("NASDAQ") are valued in
accordance with the NASDAQ Official Closing Price; listed put or
call options are valued at the last sale price. If there has been no
sale on that day, such securities will be valued at the closing bid
prices on that day; open futures contracts and options thereon are
valued using the closing settlement price or, in the absence of such
a price, the most recent quoted bid price. If there are no
quotations available for the day of valuation, the last available
closing settlement price is used; securities traded in the
over-the-counter market, ("OTC") (but excluding
- --------------------------------------------------------------------------------
52 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
securities traded on NASDAQ) are valued at the mean of the current
bid and asked prices as reported by the National Quotation Bureau or
other comparable sources; U.S. Government securities and other debt
instruments having 60 days or less remaining until maturity are
valued at amortized cost if their original maturity was 60 days or
less; or by amortizing their fair value as of the 61st day prior to
maturity if their original term to maturity exceeded 60 days;
fixed-income securities, including mortgage backed and asset backed
securities, may be valued on the basis of prices provided by a
pricing service or at a price obtained from one or more of the major
broker/dealers. In cases where broker/dealer quotes are obtained,
AllianceBernstein L.P. (prior to February 24, 2006 known as Alliance
Capital Management, L.P.), (the "Adviser") may establish procedures
whereby changes in market yields or spreads are used to adjust, on a
daily basis, a recently obtained quoted price on a security; and OTC
and other derivatives are valued on the basis of a quoted bid price
or spread from a major broker/dealer in such security.
Securities for which market quotations are not readily available
(including restricted securities) or are deemed unreliable are
valued at fair value. Factors considered in making this
determination may include, but are not limited to, information
obtained by contacting the issuer, analysts, analysis of the
issuer's financial statements or other available documents. In
addition, the Funds may use fair value pricing for securities
primarily traded in non-U.S. markets because most foreign markets
close well before the Funds value their securities at 4:00 p.m.,
Eastern Time. The earlier close of these foreign markets gives rise
to the possibility that significant events, including broad market
moves, may have occurred in the interim and may materially affect
the value of those securities. To account for this, the Funds may
frequently value many of their foreign equity securities using fair
value prices based on third party vendor modeling tools to the
extent available.
B. Foreign Currency Translation
The accounting records of the Funds are maintained in U.S. dollars.
Prices of securities and other assets and liabilities denominated in
non-U.S. currencies are translated into U.S. dollars using the
exchange rate at 12:00 p.m., Eastern time. Amounts related to the
purchases and sales of securities, investment income and expenses
are translated at the rates of exchange prevailing on the respective
dates of such transactions.
Net realized gain or loss on foreign currency transactions
represents net foreign exchange gains or losses from the closure of
forward currency contracts, disposition of foreign currencies,
currency gains or losses realized between the trade and settlement
dates on security transactions and the difference between the amount
of dividends, interest and foreign withholding taxes recorded on the
Funds' books and the U.S. dollar equivalent amount actually received
or paid. Net unrealized currency gains and losses arising from
valuing foreign currency denominated assets and liabilities, other
than security investments, at the current exchange rate are
reflected as part of unrealized appreciation/depreciation on foreign
currencies.
The Funds do not isolate that portion of the results of operations
arising as a result of changes in the foreign exchange rates from
the changes in the market prices of securities held at period end.
The Funds do not isolate the effect of changes in foreign exchange
rates from changes in market prices of equity securities sold during
the year. The Funds do isolate the effect of changes in foreign
exchange rates from changes in market prices of debt securities sold
during the year, as required by the Internal Revenue Code.
The Tax-Managed International Portfolio, International Portfolio,
Emerging Markets Portfolio, Intermediate Duration Portfolio and
Intermediate Duration Institutional Portfolio may invest in foreign
securities and foreign currency transactions that may involve risks
not associated with domestic investments as a result of the level of
governmental supervision and regulation of foreign securities
markets and the possibility of political or economic instability,
among others.
C. Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (the date
the buy or sell order is executed). Securities gains and losses are
calculated on the identified cost basis. Interest income is recorded
on the accrual basis and dividend income is recorded on the
ex-dividend date or as soon as the Fund is informed of the dividend.
- --------------------------------------------------------------------------------
2006 Semiannual Report 53
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Notes to Financial Statements (continued)
D. Futures Contracts
Upon entering into a futures contract, a Portfolio is required to
deposit cash or to pledge securities and maintain as collateral an
initial margin with the broker, equal to a certain percentage of the
purchase price indicated in the futures contract. Subsequent
payments, which are dependent on the daily fluctuations in the
market value of the underlying index or security, are made or
received by the Portfolio each day (daily variation margin) or at
other intervals as is required. The aggregate of these payments or
receipts through the expiration of the futures contract is recorded
for book purposes as unrealized gains or losses by the Portfolio. If
the Portfolio enters into a closing transaction, it will realize,
for book purposes, a gain or loss equal to the difference between
the value of the futures contract at the time it was opened or
purchased and its value at the time it was closed.
E. Written Options
When a Portfolio writes an option, an amount equal to the premium
received by the Portfolio is recorded as an asset and a
corresponding liability. The amount of the liability is adjusted
daily to reflect the current market value of the option. When a call
option is exercised, a Portfolio realizes a gain or loss on the
underlying security, with the proceeds from the security sale
increased by the amount of the option premium received. When a put
option is exercised, the cost basis of the security purchased by a
Portfolio is reduced by the option premium received.
F. Taxes
Each of the Portfolios is treated as separate entities for federal
income tax purposes. Each Portfolio intends to continue to comply
with the requirements of Subchapter M of the Internal Revenue Code
of 1986 as they apply to regulated investment companies. By so
complying, each Portfolio will not be subject to federal income
taxes to the extent that all of its income is distributed. The
Portfolios may be subject to taxes imposed by countries in which
they invest. Such taxes are generally based on income and/or capital
gains earned or repatriated. Taxes are accrued and applied to net
investment income, net realized gains and net unrealized
appreciation/depreciation as such income and/or gains are earned.
G. Repurchase Agreements
Each Portfolio may enter into repurchase agreements with banks or
securities broker-dealers. It is the Funds' policy that their
custodian receive delivery of the securities collateralizing
repurchase agreements, the amount of which at the time of purchase
and each subsequent business day is required to be maintained at
such a level that the market value of the collateral is equal to at
least 100% of the repurchase price. Repurchase agreements could
involve certain risks in the event of default or insolvency of the
other party, including possible delays or restrictions on the
Portfolio's ability to dispose of the underlying securities.
H. Securities Transactions on a When-Issued or Delayed-Delivery Basis
Each Portfolio may purchase securities on a when-issued basis or
purchase or sell securities on a delayed-delivery basis. At the time
a Portfolio commits to purchase a security on a when-issued or
delayed-delivery basis, the Portfolio will record the transaction
and use the security's value in determining the Portfolio's net
asset value. At the time a Portfolio commits to sell a security on a
delayed-delivery basis, the Portfolio will record the transaction
and exclude the security's value in determining the Portfolio's net
asset value. Each Portfolio segregates cash and marketable
securities at least equal in value to its purchase commitment for
when-issued or delayed-delivery securities, and segregates portfolio
securities on a delayed-delivery basis.
I. Distribution of Income and Gains
Net investment income of each Portfolio except the Tax-Managed
International Portfolio, International Portfolio and Emerging
Markets Portfolio is declared and recorded as a dividend to
shareholders daily and is payable to shareholders monthly. Dividends
from net investment income, if any, of the Tax-Managed International
Portfolio, International Portfolio and Emerging Markets Portfolio
will be paid to shareholders at least once a year.
- --------------------------------------------------------------------------------
54 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
Distributions of net realized gains, less any available loss
carryforwards, if any, for all Portfolios will be paid to
shareholders at least once a year, and recorded on the ex-dividend
date.
Elements of realized gains and net investment income may be recorded
in different accounting periods for financial reporting (book) and
federal income tax (tax) purposes (temporary differences). To the
extent that such distributions required for tax purposes exceed
income and gains recorded for book purposes as a result of such
temporary differences, "excess distributions" are reflected in the
accompanying financial statements. Certain other
differences--permanent differences--arise because treatment of
elements of income and gains is different between book and tax
accounting. Permanent differences are reclassified in the year they
arise.
J. Income and Expenses
All income earned and expenses incurred by the Portfolios are borne
on a pro-rata basis by each outstanding class of shares, based on
the proportionate interest in the Funds represented by the shares of
such class, except for class specific expenses which are allocated
to the respective class. Expenses of the Funds are charged to each
Fund in proportion to net assets. Realized and unrealized gains and
losses are allocated among the various share classes based on their
relative net assets.
K. Portfolio Transaction Fee
The Emerging Markets Portfolio imposes a 1.00% fee on purchases and
redemptions. This fee is retained by the Portfolio and is included
in the financial statements as a component of additional paid-in
capital.
L. Securities Lending
Each of the Portfolios may enter into securities lending
transactions. By lending its portfolio securities, a Portfolio
attempts to increase its income through the interest earned on the
loan. It is the policy of each Portfolio to receive collateral
consisting of cash or U.S. Government securities in an amount at
least equal to the value of the securities loaned. The securities
lending agent has agreed to indemnify the Funds in the case of
default of any securities borrower. Collateral received and
securities loaned are marked to market daily to ensure that
collateral levels are maintained. Cash collateral received is
invested by the securities lending agent in liquid short-term
investments such as repurchase agreements and overnight time
deposits pursuant to investment guidelines set forth by the Funds.
Cash collateral received is recorded as an asset as well as a
corresponding liability in the statements of assets and liabilities.
At March 31, 2006, the International Portfolio had securities on
loan with a value of $772,761,501 and had received collateral of
$819,125,444 of which $818,944,000 was cash collateral and $181,444
was collateral in the form of U.S. Government securities. The
International Portfolio earned $522,949 from securities lending
transactions for the six months ended March 31, 2006. The amount is
reflected in the statements of operations as a component of interest
income.
M. Swap Agreements
Each of the Portfolios may enter into swaps to hedge its exposure to
interest rates and credit risk or for investment purposes. A swap is
an agreement that obligates two parties to exchange a series of cash
flows at specified intervals based upon or calculated by reference
to changes in specified prices or rates for a specified amount of an
underlying asset. The payment flows are usually netted against each
other, with the difference being paid by one party to the other.
Risks may arise as a result of the failure of the counterparty to
the swap contract to comply with the terms of the swap contract. The
loss incurred by the failure of a counterparty is generally limited
to the net interim payment to be received by the Portfolio, and/or
the termination value at the end of the contract. Therefore, the
Portfolios consider the creditworthiness of each counterparty to a
swap contract in evaluating potential credit risk. Additionally,
risks may arise from unanticipated movements in interest rates or in
the value of the underlying securities.
As of October 1, 2003, the Portfolios have adopted the method of
accounting for interim payments on swap contracts in accordance with
Financial Accounting Standards Board Statement No. 133. The
Portfolios accrue for the interim payments
- --------------------------------------------------------------------------------
2006 Semiannual Report 55
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Notes to Financial Statements (continued)
on swap contracts on a daily basis, with the net amount recorded
within unrealized appreciation/depreciation of swap contracts on the
statement of assets and liabilities. Once the interim payments are
settled in cash, the net amount is recorded as realized gain/loss on
swaps, in addition to realized gain/loss recorded upon the
termination of swap contracts on the statement of operations. Prior
to October 1, 2003, these interim payments were reflected within
interest income/expense in the statements of operations.
Fluctuations in the value of swap contracts are recorded as a
component of net change in unrealized appreciation/depreciation of
investments.
Each of the Portfolios may enter into credit default swaps. The
Portfolios may purchase credit protection on the referenced
obligation of the credit default swap ("Buy Contract") or provide
credit protection on the referenced obligation of the credit default
swap ("Sale Contract"). A sale/(buy) in a credit default swap
default provides upon the occurrence of a credit event, as defined
in the swap agreement, for the Portfolio to buy/(sell) from/(to) the
counterparty at the notional amount (the "Notional Amount") and
receive/(deliver) the principal amount of the referenced obligation.
If a credit event occurs, the maximum payout amount for a Sale
Contract is limited to the Notional Amount of the swap contract
("Maximum Payout Amount"). During the term of the swap agreement,
the Portfolio receives/(pays) semi-annual fixed payments from/(to)
the respective counterparty, calculated at the agreed upon interest
rate applied to the Notional Amount. These interim payments are
recorded within unrealized appreciation/depreciation of swap
contracts on the statement of assets and liabilities.
Credit default swaps may involve greater risks than if the Portfolio
had invested in the referenced obligation directly. Credit default
swaps are subject to general market risk, liquidity risk,
counterparty risk and credit risk. If the Fund is a buyer and no
credit event occurs, it will lose its investment. In addition, if
the Portfolio is a seller and a credit event occurs, the value of
the referenced obligation received by the Portfolio coupled with
periodic payments previously received, may be less than the Maximum
Payout Amount it pays to the buyer, resulting in a loss to the
Portfolio.
N. Reverse Repurchase Agreements
Under a reverse repurchase agreement, a Portfolio sells securities
and agrees to repurchase them at a mutually agreed upon date and
price. At the time a Portfolio enters into a reverse repurchase
agreement, it will establish a segregated account with the custodian
containing liquid assets having a value at least equal to the
repurchase price. At March 31, 2006, the Portfolios have not entered
into any reverse repurchase agreements.
O. Mortgage-Backed Dollar Rolls
The Intermediate Duration Portfolio, the Intermediate Duration
Institutional Portfolio, U.S. Government Short Duration Portfolio
and the Short Duration Plus Portfolio may enter into dollar rolls.
Dollar rolls involve sales by the Portfolio of securities for
delivery in the current month and such Portfolio's simultaneously
contracting to repurchase similar securities on a specified future
date. During the roll period, the Portfolios forgo principal and
interest paid on the securities. In consideration for entering into
the commitment to repurchase the Portfolios are compensated by "fee
income", which is received when the Portfolios enter into the
commitment. Such fee income is recorded as deferred income and
accrued by each Portfolio over the roll period. Dollar rolls involve
the risk that the market value of the securities the Portfolios are
obligated to repurchase under the agreement may decline below the
repurchase price. Dollar rolls are speculative techniques and may be
considered to be borrowings by the Portfolios.
NOTE 2. Investment Management and Transactions with Affiliated Persons
A. Management Fee
Under the Investment Management Agreement between the Funds and the
Adviser, the Adviser manages the investment of each Portfolio's
assets, places purchase and sale orders, and bears various expenses,
including the salaries and expenses of all personnel except those of
outside directors. In addition, the Adviser agrees to permit its
directors, officers and employees who may be elected directors or
officers of the Funds to serve in the capacities to which they are
elected. The Adviser renders these services subject to the general
oversight of the Boards of Directors.
- --------------------------------------------------------------------------------
56 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
Each of the Portfolios of Sanford C. Bernstein Fund, Inc. pays the
Adviser an investment management fee, based on the annual rate, for
such services as follows:
ANNUAL PERCENTAGE OF AVERAGE DAILY NET ASSETS OF EACH PORTFOLIO
FIRST NEXT NEXT NEXT
$1 BILLION $3 BILLION $2 BILLION $2 BILLION THEREAFTER
---------------------------------------------------------------------------------------------------------------
Tax-Managed International and 0.925% 0.850% 0.800% 0.750% 0.650%
International Portfolios
FIRST NEXT NEXT
$1 BILLION $1 BILLION $1 BILLION THEREAFTER
-----------------------------------------------------------------------------------------------------------------
Emerging Markets Portfolio 1.175% 1.050% 1.000% 0.900%
FIRST NEXT NEXT
$1 BILLION $2 BILLION $2 BILLION THEREAFTER
-----------------------------------------------------------------------------------------------------------------
New York Municipal, California Municipal, 0.500% 0.450% 0.400% 0.350%
Diversified Municipal and
Intermediate Duration Portfolios
FIRST NEXT
$250 BILLION $500 BILLION THEREAFTER
-----------------------------------------------------------------------------------------------------------------
Short Duration California Municipal, Short Duration 0.500% 0.450% 0.400%
Diversified Municipal, Short Duration New York
Municipal, U.S. Government Short Duration and
Short Duration Plus Portfolios
Prior to November 29, 2005, each of the Portfolios paid the Adviser
an investment management fee, based on the annual rate, for such
services as follows:
ANNUAL PERCENTAGE OF AVERAGE DAILY NET ASSETS OF EACH PORTFOLIO
FIRST NEXT
$250 MILLION $500 MILLION THEREAFTER
-----------------------------------------------------------------------------------------------------------------
Short Duration California Municipal, Short Duration 0.50% 0.45% 0.40%
Diversified Municipal, Short Duration New York
Municipal, U.S. Government Short Duration and
Short Duration Plus Portfolios
FIRST NEXT
$1 BILLION $2 BILLION THEREAFTER
-----------------------------------------------------------------------------------------------------------------
New York Municipal, California Municipal, Diversified 0.50% 0.45% 0.40%
Municipal, and Intermediate Duration Portfolios
FIRST NEXT NEXT
$1 BILLION $3 BILLION $2 BILLION THEREAFTER
-----------------------------------------------------------------------------------------------------------------
Tax-Managed International and International Portfolios 1.00% 0.90% 0.85% 0.75%
FIRST NEXT
$1 BILLION $1 BILLION THEREAFTER
-----------------------------------------------------------------------------------------------------------------
Emerging Markets Portfolio 1.25% 1.125% 1.00%
- --------------------------------------------------------------------------------
2006 Semiannual Report 57
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Notes to Financial Statements (continued)
The Intermediate Duration Institutional Portfolio of Sanford C.
Bernstein Fund II, Inc. pays the Adviser an advisory fee at an
annual rate of .50% of the average daily net assets of the Portfolio
for the first $1 billion and .45% thereafter. The Intermediate
Duration Institutional Portfolio and the Adviser have entered into
an Expense Limitation Agreement (the "Agreement"), dated March 22,
2002, under which the Adviser has agreed to waive its fees and, if
necessary, reimburse expenses in respect of the Portfolio for the
current fiscal year, so that total operational expenses do not
exceed the annual rate of 0.45% of average daily net assets of the
Portfolio. For the six months ended March 31, 2006, the aggregate
amount of such fee waiver was $431,431.
B. Shareholder Servicing Fee; Transfer Agency Fee
Under the Shareholder Servicing Agreement between the Sanford
C.Bernstein Fund, Inc. and the Adviser, the Adviser pays expenses it
incurs in providing shareholder services to individual shareholders
of the Portfolios (except the Retail Classes). Such services
include, but are not limited to, providing information to
shareholders concerning their Sanford C. Bernstein Fund investments,
systematic withdrawal plans, fund dividend payments and
reinvestments, shareholder account or transactions status, net asset
value of shares, fund performance, fund services, plans and options,
fund investment policies, portfolio holdings and tax consequences of
fund investments; dealing with shareholder complaints and other
correspondence relating to fund matters; and communications with
shareholders when proxies are being solicited from them with respect
to voting their fund shares. The Shareholder Servicing Agreement
does not apply to the Retail Classes and the Intermediate Duration
Institutional Portfolio. Under the agreement, the fee paid by each
Portfolio except the Tax-Managed International Portfolio,
International Portfolio and Emerging Markets Portfolio to the
Adviser for services is .10 of 1% of the average daily net assets of
each Portfolio during the month, and the fee paid by the Tax-Managed
International Portfolio, International Portfolio and Emerging
Markets Portfolio for services is .25 of 1% of the average daily net
assets of each Portfolio during the month.
Under a Transfer Agency Agreement between the Sanford C. Bernstein
Fund, Inc., on behalf of the Retail Classes, and AllianceBernstein
Investor Services, Inc. (prior to February 24, 2006 known as
Alliance Global Investor Services, Inc.) ("ABIS"), the Retail
Classes compensate ABIS, a wholly owned subsidiary of the Adviser,
for providing personnel and facilities to perform transfer agency
services. ABIS may make payments to intermediaries that provide
omnibus account services, sub-accounting services and/or networking
services. For the six months ended March 31, 2006, the compensation
retained by ABIS amounted to: Tax-Managed International, $635;
International $9,892; Diversified Municipal Portfolio, $20,648;
California Municipal Portfolio, $9,000; New York Municipal
Portfolio, $12,281; and Short Duration Plus Portfolio, $21,204.
During the period, ABIS voluntarily agreed to waive a portion of its
fees for such services for the Tax-Managed International Portfolio
and the International Portfolio. Such waivers amounted to $8,365 and
$291, respectively, for the six months ended March 31, 2006.
For the six months ended March 31, 2006, the expenses for the Retail
Classes of the Tax-Managed International Portfolio, International
Portfolio, Diversified Municipal Portfolio, California Municipal
Portfolio, New York Municipal Portfolio and Short Duration Plus
Portfolio were reduced under an expense offset arrangement with ABIS
by $35, $539, $909, $410, $521 and $1,014, respectively.
C. Distribution Arrangements--the Funds Except the Retail Classes
Under the Distribution Agreement between the Funds, on behalf of
each Portfolio, and Sanford C. Bernstein & Co., LLC (the
"Distributor"), the Distributor agrees to act as agent to sell
shares of the 13 Portfolios. The Distributor receives no fee for
this service, and furthermore agrees to pay all expenses arising
from the performance of its obligations under this agreement. The
Distributor is a wholly owned subsidiary of the Adviser.
D. Distribution Arrangements--the Retail Classes Only
The Retail Classes of the Tax-Managed International Portfolio and
International Portfolio, the Intermediate Municipal Portfolios, and
the Short Duration Plus Portfolio have adopted a Distribution
Services Agreement (the "Agreement"), including a distribution plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940.
Under the Agreement, each of the Retail Classes pays distribution
services fees to AllianceBernstein Investments, Inc. (prior to
February 24, 2006 known as AllianceBernstein Investment Research and
Management, Inc.), (the "Distributor"), a wholly-owned subsidiary
- --------------------------------------------------------------------------------
58 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
of the Adviser, at an annual rate of up to .30 of 1% of the Class A
Shares and 1% of the Class B and Class C Shares, respective average
daily net assets attributable to the Retail Classes. The fees are
accrued daily and paid monthly. The Agreement provides that the
Distributor will use such payments in their entirety for
distribution assistance and promotional activities. The Distributor
has advised the Sanford C.Bernstein Fund, Inc., that it has incurred
expenses in excess of the distribution costs reimbursed by each of
the Retail Classes as follows:
TAX-MANAGED DIVERSIFIED CALIFORNIA NEW YORK SHORT
INTERNATIONAL INTERNATIONAL MUNICIPAL MUNICIPAL MUNICIPAL DURATION PLUS
============================================================================================================
Class B $138,934 $173,081 $ 982,970 $608,393 $1,135,983 $306,380
Class C 438,294 484,522 1,272,139 727,812 859,227 595,392
Such costs may be recovered from each Portfolio in future periods so
long as the Agreement is in effect. In accordance with the
Agreement, there is no provision for recovery of unreimbursed
distribution costs incurred by the Distributor beyond the current
fiscal year for Class A Shares. The Agreement also provides that the
Adviser may use its own resources to finance the distribution of
each Portfolio's Shares.
E. Other Transactions with Affiliates
Class A Shares of the Retail Classes are sold with a front-end sales
charge of up to 4.25% for purchases not exceeding $1,000,000. With
respect to purchases of $1,000,000 or more, Class A Shares redeemed
within one year of purchase may be subject to a contingent deferred
sales charge of 1%. Class B Shares of the Intermediate Municipal
Portfolios and the Short Duration Plus Portfolio are currently sold
with a contingent deferred sales charge that declines from 3% to
zero depending on the period of time the shares are held. Class B
Shares of the Tax-Managed International Portfolio and the
International Portfolio are currently sold with a contingent
deferred sales charge that declines from 4% to zero depending on the
period of time the shares are held. Class B Shares will
automatically convert to Class A Shares six years after the end of
the calendar month of purchase for the Intermediate Municipal
Portfolios and the Short Duration Plus Portfolio, and eight years
after the end of the calendar month of purchase for the Tax-Managed
International Portfolio and the International Portfolio. Class C
Shares are subject to a contingent deferred sales charge of 1% on
redemptions made within the first year after purchase.
AllianceBernstein Investments, Inc., has advised Sanford C.
Bernstein Fund, Inc., that it has retained front-end sales charges
from sales of Class A Shares and received contingent deferred sales
charges imposed upon redemptions by shareholders of Class A, Class
B, and Class C Shares for the six months ended March 31, 2006, as
follows:
FRONT-END CONTINGENT DEFERRED SALES CHARGES
SALES CHARGES ---------------------------------------
PORTFOLIO CLASS A CLASS A CLASS B CLASS C
====================================================================================
Tax-Managed International $1,404 $ 0 $ 113 $ 107
International 5,811 0 5,081 8,341
Diversified Municipal 1,301 0 36,735 2,242
California Municipal 846 0 9,424 689
New York Municipal 1,525 1,991 26,804 1,247
Short Duration Plus 2,237 655 28,873 924
For the six months ended March 31, 2006, the Tax-Managed
International, International and Emerging Markets Portfolios paid
brokerage commissions to Sanford C. Bernstein & Co., LLC, in the
amount of $560, $640 and $11,945, and the Tax-Managed International
Portfolio paid commissions to Sanford C. Bernstein & Co., Ltd., in
the amount of $69,330.
NOTE 3. Investment Security Transactions
A. Purchases and Sales
For the period from October 1, 2005 through March 31, 2006, the
Portfolios had purchases and sales transactions, excluding
repurchase transactions and transactions in short-term instruments,
as follows:
- --------------------------------------------------------------------------------
2006 Semiannual Report 59
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Notes to Financial Statements (continued)
PURCHASES SALES
EXCLUDING U.S. PURCHASES OF EXCLUDING U.S. SALES OF
GOVERNMENT U.S. GOVERNMENT GOVERNMENT U.S. GOVERNMENT
SECURITIES SECURITIES SECURITIES SECURITIES
============================================================================================================
Tax-Managed International $2,161,654,856 $ 0 $2,069,135,210 $ 0
International 1,196,537,428 0 1,164,312,240 0
Emerging Markets 564,870,478 0 650,667,526 0
Intermediate Duration 966,247,626 5,863,946,202 406,119,592 5,695,115,286
U.S. Government Short Duration 1,152,620 68,165,392 515,504 67,633,601
Intermediate Duration Institutional 199,386,039 1,226,368,733 79,641,819 1,184,113,703
Short Duration Diversified Municipal 56,154,340 0 74,050,955 0
Short Duration California Municipal 22,526,183 0 15,332,265 0
Short Duration New York Municipal 24,064,078 0 44,718,422 0
Diversified Municipal 809,890,476 0 559,675,427 0
California Municipal 230,803,057 0 161,409,802 0
New York Municipal 242,699,528 0 243,212,086 0
Short Duration Plus 78,416,330 326,050,607 63,345,824 357,875,522
B. Distributions to Shareholders
The tax character of distributions to be paid for the year ending
September 30, 2006 will be determined at the end of the fiscal year.
The tax character of distributions paid during the fiscal years
ended September 30, 2005 and September 30, 2004, were as follows:
TAX-MANAGED INTERNATIONAL 2005 2004
------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 38,554,498 $ 61,238,586
Net long-term capital gains 64,402,318 0
------------ ------------
Total distributions paid $102,956,816 $ 61,238,586
------------ ------------
INTERNATIONAL 2005 2004
------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 19,679,950 $ 18,338,621
------------ ------------
Total distributions paid $ 19,679,950 $ 18,338,621
------------ ------------
EMERGING MARKETS 2005 2004
------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 2,635,948 $ 9,586,370
Net long-term capital gains 36,713,975 0
------------ ------------
Total distributions paid $ 39,349,923 $ 9,586,370
------------ ------------
INTERMEDIATE DURATION 2005 2004
------------------------------------------------------------------------
Distributions paid from:
Ordinary income $126,024,077 $ 99,678,637
Net long-term capital gains 8,277,788 0
------------ ------------
Total distributions paid $134,301,865 $ 99,678,637
------------ ------------
- --------------------------------------------------------------------------------
60 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
U.S. GOVERNMENT SHORT DURATION 2005 2004
------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 2,498,232 $ 3,537,784
----------- -----------
Total distributions paid $ 2,498,232 $ 3,537,784
----------- -----------
INTERMEDIATE DURATION INSTITUTIONAL 2005 2004
------------------------------------------------------------------------
Distributions paid from:
Ordinary income $27,390,220 $26,771,666
Net long-term capital gains 2,316,118 1,035,029
----------- -----------
Total distributions paid $29,706,338 $27,806,695
----------- -----------
SHORT DURATION DIVERSIFIED MUNICIPAL 2005 2004
------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 60,040 $ 469,395
----------- -----------
Total taxable distributions paid 60,040 469,395
Tax exempt distributions 5,154,214 4,112,219
----------- -----------
Total distributions paid $ 5,214,254 $ 4,581,614
----------- -----------
SHORT DURATION CALIFORNIA MUNICIPAL 2005 2004
------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 19,368 $ 44,614
Total taxable distributions paid 19,368 44,614
Tax exempt distributions 1,269,565 1,182,918
----------- -----------
Total distributions paid $ 1,288,933 $ 1,227,532
----------- -----------
SHORT DURATION NEW YORK MUNICIPAL 2005 2004
------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 26,833 $ 68,586
----------- -----------
Total taxable distributions paid 26,833 68,586
Tax exempt distributions 2,430,772 2,136,107
----------- -----------
Total distributions paid $ 2,457,605 $ 2,204,693
----------- -----------
DIVERSIFIED MUNICIPAL 2005 2004
------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 983,998 $ 2,700,837
----------- -----------
Total taxable distributions paid 983,998 2,700,837
Tax Exempt Distributions 89,976,779 77,360,866
----------- -----------
Total distributions paid $90,960,777 $80,061,703
----------- -----------
CALIFORNIA MUNICIPAL 2005 2004
------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 608,022 $ 1,078,849
Net long-term capital gains 257,140 584,016
----------- -----------
Total taxable distributions paid 865,162 1,662,865
Tax exempt distributions 29,602,653 24,422,628
----------- -----------
Total distributions paid $30,467,815 $26,085,493
----------- -----------
- --------------------------------------------------------------------------------
2006 Semiannual Report 61
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Notes to Financial Statements (continued)
NEW YORK MUNICIPAL 2005 2004
------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ 394,306 $ 1,067,657
----------- -----------
Total taxable distributions paid 394,308 1,067,657
Tax exempt distributions 42,784,655 38,705,448
----------- -----------
Total Distributions Paid $43,178,963 $39,773,105
----------- -----------
SHORT DURATION PLUS 2005 2004
------------------------------------------------------------------------
Distributions paid from:
Ordinary income $16,260,569 $14,180,368
Total taxable distributions paid 401,157 0
----------- -----------
Total distributions paid $16,661,726 $14,180,368
----------- -----------
As of September 30, 2005, the components of accumulated earnings
(deficits) on a tax basis were as follows:
ACCUMULATED TOTAL
LONG TERM CAPITAL AND UNREALIZED ACCUMULATED
ORDINARY CAPITAL OTHER GAINS APPRECIATION/ EARNINGS/
INCOME (a) GAIN (LOSSES) (b) (DEPRECIATION) (c) (DEFICIT) (d)
------------------------------------------------------------------------------------------------------------------------------
Tax-Managed International $107,662,808 $320,454,973 $ 0 $ 1,545,804,490 $ 1,973,922,271
International 36,957,866 0 (54,114,121) 624,188,137 607,031,882
Emerging Markets 41,825,953 350,419,065 0 665,442,114 1,057,687,132
Intermediate Duration 4,986,387 927,234 0 (7,887,417) (1,973,796)
U.S. Government Short Duration 120,626 0 (772,540) (873,118) (1,525,032)
Intermediate Duration Institutional 553,516 0 (81,091) (1,322,441) (850,016)
Short Duration Diversified Municipal 157,229(a) 0 (235,136) (678,819) (756,726)
Short Duration California Municipal 18,652(a) 0 (53,282) (329,146) (363,776)
Short Duration New York Municipal 74,805(a) 0 (536,888) 200,791 (261,292)
Diversified Municipal 2,831,820(a) 0 (5,593,133) 43,464,135 40,702,822
California Municipal 756,170(a) 0 (2,122,815) 16,386,194 15,019,549
New York Municipal 1,262,158(a) 0 (1,041,094) 23,398,194 23,619,258
Short Duration Plus 62,743 0 (3,594,854) (4,914,253) (8,446,364)
(a) Includes tax exempt income as shown below:
Short Duration Diversified Municipal $ 153,764
Short Duration California Municipal 17,279
Short Duration New York Municipal 74,049
Diversified Municipal 2,781,491
California Municipal 756,170
New York Municipal 1,247,841
- --------------------------------------------------------------------------------
62 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
(b) At September 30, 2005, the following Portfolios had capital loss
carryforwards as shown below:
CAPITAL LOSS
CARRYFORWARD AMOUNT EXPIRATION
--------------------------------------------------------------------------
International $54,114,121 9/30/11
U.S. Government Short Duration 772,540 9/30/13
Intermediate Duration Institutional 81,091 9/30/13
Short Duration Diversified Municipal 235,136 9/30/13
Short Duration California Municipal 53,282 9/30/13
Short Duration New York Municipal 467,595 9/30/09
Short Duration New York Municipal 69,293 9/30/11
Diversified Municipal 1,541,518 9/30/09
Diversified Municipal 4,051,615 9/30/13
California Municipal 2,122,815 9/30/13
New York Municipal 1,041,094 9/30/09
Short Duration Plus 3,594,854 9/30/13
(c) The difference between book-basis and tax-basis unrealized
appreciation (depreciation) is attributable primarily to tax deferral of
losses on wash sales and straddles, swap income (loss) accrual, and mark
to market on forward contracts and passive foreign investment companies.
(d) The difference between book-basis and tax-basis components of
accumulated earnings (deficit) is attributable primarily to post-October
deferrals.
At September 30, 2005, the following Portfolios had post-October capital
and/or currency loss defferrals as shown below. For tax purposes, these
losses are deemed to arise on October 1, 2005:
POST-OCTOBER CAPITAL POST-OCTOBER FOREIGN
LOSS DEFERRAL CURRENCY LOSS DEFERRAL
---------------------------------------------------------------------------------------
Tax-Managed International $ 0 $ 328,941
Emerging Markets 0 1,968,291
U.S. Government Short Duration 775,884 0
Intermediate Duration Institutional 36,043 0
Short Duration Diversified Municipal 909,794 0
Short Duration California Municipal 156,405 0
Short Duration New York Municipal 620,624 0
Short Duration Plus 5,711,473 0
During the year ended September 30, 2005, capital loss carryforwards were
utilized by the Portolios as shown below:
CAPITAL LOSS
CARRYFORWARD UTILIZED
------------------------------------------------------------------------
International $210,700,325
Short Duration New York Municipal 499
New York Municipal 1,172,858
------------
- --------------------------------------------------------------------------------
2006 Semiannual Report 63
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Notes to Financial Statements (continued)
NOTE 4. Risks Involved in Investing in the Portfolios
Emerging Markets and International Portfolios--Investments in foreign
securities entail significant risks in addition to those customarily
associated with investing in U.S. equities. These risks are heightened
with respect to investments in emerging-market countries where there is an
even greater amount of economic, political and social instability.
Economic, political and social instability could disrupt financial markets
in which the Portfolio invests and adversely affect the value of the
Portfolio's assets. In addition, national policies may restrict investment
opportunities.
In foreign markets there may be a lower degree of market volume and
liquidity than in U.S. markets, and this may result in greater price
volatility. The securities markets in many emerging-market countries are
substantially smaller, less developed, less liquid and more volatile than
the securities markets of developed countries.Furthermore, since the
composition of each Portfolio will differ from that of market indexes, its
performance generally will not mirror the returns provided by a specific
market index.
Fixed Income Portfolios--Interest rate risk is the risk that changes in
interest rates will affect the value of a Portfolio's investments in
fixed-income debt securities such as bonds or notes. Increases in interest
rates may cause the value of a Portfolio's investments to decline. Credit
risk is the risk that the issuer or guarantor of a debt security, or the
counterparty to a derivative contract, will be unable or unwilling to make
timely principal and/or interest payments, or to otherwise honor its
obligations. The degree of risk for a particular security may be reflected
in its credit risk rating. Credit risk is greater for medium quality and
lower-rated securities. Lower-rated debt securities and similar unrated
securities (commonly known as "junk bonds") have speculative elements or
are predominantly speculative risks.
Concentration of Credit Risk--The two California Municipal Portfolios and
two New York Municipal Portfolios invest primarily in securities issued by
the State of California and New York, respectively, and their various
political subdivisions, and the performance of each of these Portfolios is
closely tied to economic conditions within the applicable state and the
financial condition of that state and its agencies and municipalities.
Indemnification Risk--In the ordinary course of business, the Portfolios
enter into contracts that contain a variety of indemnifications. The
Portfolios maximum exposure under these arrangements is unknown. However,
the Portfolios have not had prior claims or losses pursuant to these
indemnification provisions and expect the risk of loss thereunder to be
remote.
NOTE 5. Risks Involved in Futures and Foreign Currency Contracts
Portfolios may purchase or sell financial futures contracts for the
purpose of hedging their portfolios against adverse effects of anticipated
movements in the market. Financial futures contracts obligate the buyer to
take and the seller to make delivery at a future date of a specified
quantity of a financial instrument or an amount of cash based on the value
of a securities index or the market value in U.S. dollars of a foreign
currency. The contract amounts reflect the extent of each Portfolio's
involvement in these financial instruments. To the extent that the Funds
enter into short futures, losses may be unlimited. A Portfolio's
participation in the futures markets involves certain risks, including
imperfect correlation between movements in the price of the futures
contracts and movements in the price of the securities hedged or used for
cover. The Funds' activities in futures contracts are conducted through
regulated exchanges that do not result in counterparty credit risks.
The Short Duration Plus Portfolio, Intermediate Duration
Portfolio,Intermediate Duration Institutional Portfolio, Tax-Managed
International Portfolio, International Portfolio and Emerging Markets
Portfolio may enter into forward exchange currency contracts in order to
hedge exposure to changes in foreign currency exchange rates on foreign
portfolio holdings. Foreign currency contracts involve elements of market
risk in excess of the amount reflected in the statements of assets and
liabilities. A Portfolio bears the risk of an unfavorable change in the
foreign exchange rate underlying the foreign currency contract. In
addition, a Portfolio could be exposed to risks if the counterparties to
the contracts are unable to meet the terms
- --------------------------------------------------------------------------------
64 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
of their contracts.
NOTE 6. Capital-Share Transactions
As of March 31, 2006, the Sanford C. Bernstein Fund, Inc., has authorized
7.8 billion shares of common stock, par value $0.001 per share, of which
7.5 billion are divided into 12 Portfolios. It has allocated 1 billion to
the Tax-Managed International Portfolio of which 400 million is allocated
to the Tax-Managed International Class Shares and 200 million to each of
the three retail classes of shares; 600 million to the Intermediate
Duration Portfolio; 1.2 billion to the International Portfolio of which
600 million is allocated to the International Class Shares and 200 million
to each of the three retail classes of shares; 1.6 billion to the
Diversified Municipal Portfolio, divided evenly into four classes; 200
million each to the Emerging Markets Portfolio and the U.S. Government
Short Duration Portfolio; 800 million each to the California Municipal
Portfolio and New York Municipal Portfolio, divided evenly into four
classes; 800 million to the Short Duration Plus Portfolio, 200 million
each to the four existing classes; and 100 million each to the Short
Duration Diversified Municipal Portfolio, Short Duration California
Municipal Portfolio, and Short Duration New York Municipal Portfolio. The
Sanford C. Bernstein Fund II, Inc., has authorized 300 million shares of
common stock with par value $0.001 per share. Share transactions for each
Portfolio for the six months ended March 31, 2006 and the year ended
September 30, 2005, were as follows:
- --------------------------------------------------------------------------------
2006 Semiannual Report 65
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Notes to Financial Statements (continued)
TAX-MANAGED INTERNATIONAL PORTFOLIO
SHARES AMOUNT
SIX MONTHS SIX MONTHS
ENDED 3/31/06 YEAR ENDED ENDED 3/31/06 YEAR ENDED
(UNAUDITED) 9/30/05 (UNAUDITED) 9/30/05
- -----------------------------------------------------------------------------------------------------------------------
Tax-Managed International Class Shares
Shares sold 26,974,754 47,072,434 $ 672,676,228 $ 1,052,136,545
Shares issued to shareholders on
reinvestment of dividends 15,633,830 4,555,651 368,489,365 97,855,405
Shares redeemed (14,953,408) (31,558,920) (375,291,147) (706,984,300)
--------------- --------------- --------------- ---------------
Net increase 27,655,176 20,069,165 665,874,446 443,007,650
Beginning of period 245,926,680 225,857,515 4,105,308,695 3,662,301,045
--------------- --------------- --------------- ---------------
End of period 273,581,856 245,926,680 $ 4,771,183,141 $ 4,105,308,695
=============== =============== =============== ===============
- -----------------------------------------------------------------------------------------------------------------------
Tax-Managed International Class A Shares
Shares sold 42,688 102,026 $ 1,076,447 $ 2,254,583
Shares issued to shareholders on
reinvestment of dividends 8,764 205 205,596 4,390
Shares converted from Class B 0 540 0 12,028
Shares redeemed (4,194) (516) (103,346) (12,442)
--------------- --------------- --------------- ---------------
Net increase 47,258 102,255 1,178,697 2,258,559
Beginning of period 108,762 6,507 2,387,469 128,910
--------------- --------------- --------------- ---------------
End of period 156,020 108,762 $ 3,566,166 $ 2,387,469
=============== =============== =============== ===============
- -----------------------------------------------------------------------------------------------------------------------
Tax-Managed International Class B Shares
Shares sold 9,991 6,403 $ 250,292 $ 141,983
Shares issued to shareholders on
reinvestment of dividends 298 51 6,962 1,059
Shares converted to Class A 0 (544) 0 (12,028)
Shares redeemed (1,890) (1,294) (48,479) (29,294)
--------------- --------------- --------------- ---------------
Net increase 8,399 4,616 208,775 101,720
Beginning of period 7,353 2,737 156,250 54,530
--------------- --------------- --------------- ---------------
End of period 15,752 7,353 $ 365,025 $ 156,250
=============== =============== =============== ===============
- -----------------------------------------------------------------------------------------------------------------------
Tax-Managed International Class C Shares
Shares sold 25,088 20,255 $ 612,626 $ 452,475
Shares issued to shareholders on
reinvestment of dividends 1,365 87 31,824 1,874
Shares redeemed (1,746) (706) (42,706) (16,392)
--------------- --------------- --------------- ---------------
Net increase 24,707 19,636 601,744 437,957
Beginning of period 27,819 8,183 601,495 163,538
--------------- --------------- --------------- ---------------
End of period 52,526 27,819 $ 1,203,239 $ 601,495
=============== =============== =============== ===============
- --------------------------------------------------------------------------------
66 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
INTERNATIONAL PORTFOLIO
SHARES AMOUNT
SIX MONTHS SIX MONTHS
ENDED 3/31/06 YEAR ENDED ENDED 3/31/06 YEAR ENDED
(UNAUDITED) 9/30/05 (UNAUDITED) 9/30/05
- -----------------------------------------------------------------------------------------------------------------------
International Class Shares
Shares sold 13,622,805 19,431,940 $ 332,317,269 $ 410,168,394
Shares issued to shareholders on
reinvestment of dividends 1,540,784 945,230 36,285,430 19,065,301
Shares redeemed (11,721,889) (16,342,116) (285,237,628) (343,893,907)
--------------- --------------- --------------- ---------------
Net increase 3,441,700 4,035,054 83,365,071 85,339,788
Beginning of period 119,708,749 115,673,695 2,184,055,571 2,098,715,783
--------------- --------------- --------------- ---------------
End of period 123,150,449 119,708,749 $ 2,267,420,642 $ 2,184,055,571
=============== =============== =============== ===============
- -----------------------------------------------------------------------------------------------------------------------
International Class A Shares
Shares sold 374,178 1,175,024 $ 9,164,160 $ 24,657,035
Shares issued to shareholders on
reinvestment of dividends 7,075 1,066 166,052 21,461
Shares converted from Class B 2,169 3,514 55,294 75,664
Shares redeemed (493,555) (121,631) (12,125,133) (2,656,916)
--------------- --------------- --------------- ---------------
Net increase (decrease) (110,133) 1,057,973 (2,739,627) 22,097,244
Beginning of period 1,223,176 165,203 25,143,620 3,046,376
--------------- --------------- --------------- ---------------
End of period 1,113,043 1,223,176 $ 22,403,993 $ 25,143,620
=============== =============== =============== ===============
- -----------------------------------------------------------------------------------------------------------------------
International Class B Shares
Shares sold 45,251 91,339 $ 1,088,752 $ 1,892,028
Shares issued to shareholders on
reinvestment of dividends 441 216 10,303 4,324
Shares converted to Class A (2,181) (3,545) (55,294) (75,664)
Shares redeemed (17,740) (19,485) (433,534) (413,136)
--------------- --------------- --------------- ---------------
Net increase 25,771 68,525 610,227 1,407,552
Beginning of period 116,862 48,337 2,295,837 888,285
--------------- --------------- --------------- ---------------
End of period 142,633 116,862 $ 2,906,064 $ 2,295,837
=============== =============== =============== ===============
- -----------------------------------------------------------------------------------------------------------------------
International Class C Shares
Shares sold 181,390 337,112 $ 4,415,226 $ 6,941,414
Shares issued to shareholders on
reinvestment of dividends 628 267 14,686 5,349
Shares redeemed (190,486) (112,716) (4,516,811) (2,412,856)
--------------- --------------- --------------- ---------------
Net increase (decrease) (8,468) 224,663 (86,899) 4,533,907
Beginning of period 472,339 247,676 9,079,404 4,545,497
--------------- --------------- --------------- ---------------
End of period 463,871 472,339 $ 8,992,505 $ 9,079,404
=============== =============== =============== ===============
- --------------------------------------------------------------------------------
2006 Semiannual Report 67
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Notes to Financial Statements (continued)
----------------------------- -----------------------------------
EMERGING INTERMEDIATE
MARKETS VALUE DURATION
PORTFOLIO PORTFOLIO
----------------------------- -----------------------------------
SIX MONTHS SIX MONTHS
ENDED 3/31/06 YEAR ENDED ENDED 3/31/06 YEAR ENDED
(UNAUDITED) 9/30/05 (UNAUDITED) 9/30/05
- ------------------------------------------------------------------------------------------------------------------------
Shares sold 5,989,617 10,080,394 43,058,481 69,094,301
Shares issued to shareholders
on reinvestment of dividends
and distributions 10,834,592 1,190,384 1,089,413 2,311,887
Shares redeemed (5,938,415) (14,857,739) (15,273,347) (28,853,086)
------------ ------------ ------------ ------------
Net increase (decrease)
in shares outstanding 10,885,794 (3,586,961) 28,874,547 42,553,102
Shares outstanding at
beginning of period 43,505,863 47,092,824 255,266,942 212,713,840
------------ ------------ ------------ ------------
Shares outstanding at
end of period 54,391,657 43,505,863 284,141,489 255,266,942
============ ============ ============ ============
----------------------------- -----------------------------------
U.S. GOVERNMENT INTERMEDIATE DURATION
SHORT DURATION INSTITUTIONAL
PORTFOLIO PORTFOLIO
----------------------------- -----------------------------------
SIX MONTHS SIX MONTHS
ENDED 3/31/06 YEAR ENDED ENDED 3/31/06 YEAR ENDED
(UNAUDITED) 9/30/05 (UNAUDITED) 9/30/05
- -----------------------------------------------------------------------------------------------------------------------
Shares sold 704,338 1,335,866 10,672,443 12,843,724
Shares issued to shareholders
on reinvestment of dividends
and distributions 59,335 106,625 300,939 846,398
Shares redeemed (1,041,160) (1,882,568) (6,021,696) (10,364,588)
------------ ------------ ------------ ------------
Net increase (decrease)
in shares outstanding (277,487) (440,077) 4,951,686 3,325,534
Shares outstanding at
beginning of period 6,939,375 7,379,452 42,673,898 39,348,364
------------ ------------ ------------ ------------
Shares outstanding at
end of period 6,661,888 6,939,375 47,625,584 42,673,898
============ ============ ============ ============
- --------------------------------------------------------------------------------
68 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
--------------------------- --------------------------- ---------------------------
SHORT DURATION SHORT DURATION SHORT DURATION
DIVERSIFIED MUNICIPAL CALIFORNIA MUNICIPAL NEW YORK MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------- --------------------------- ---------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED 3/31/06 YEAR ENDED ENDED 3/31/06 YEAR ENDED ENDED 3/31/06 YEAR ENDED
(UNAUDITED) 9/30/05 (UNAUDITED) 9/30/05 (UNAUDITED) 9/30/05
- -----------------------------------------------------------------------------------------------------------------------
Shares sold 6,335,045 13,703,501 2,428,014 3,635,973 2,094,589 5,800,480
Shares issued to shareholders
on reinvestment of dividends
and distributions 111,444 173,534 35,997 64,525 54,888 90,356
Shares redeemed (8,234,314) (13,353,227) (1,842,359) (4,425,411) (2,714,545) (5,836,199)
Net increase (decrease)
in shares outstanding (1,787,825) 523,808 621,652 (724,913) (565,068) 54,637
Shares outstanding at
beginning of period 20,655,698 20,131,890 4,973,154 5,698,067 9,934,353 9,879,716
Shares outstanding at
end of period 18,867,873 20,655,698 5,594,806 4,973,154 9,369,285 9,934,353
=========== =========== =========== =========== =========== ===========
- --------------------------------------------------------------------------------
2006 Semiannual Report 69
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Notes to Financial Statements (continued)
---------------------------------------------------------------------
DIVERSIFIED MUNICIPAL PORTFOLIO
---------------------------------------------------------------------
----------------------------- -----------------------------------
SHARES AMOUNT
----------------------------- -----------------------------------
SIX MONTHS SIX MONTHS
ENDED 3/31/05 YEAR ENDED ENDED 3/31/05 YEAR ENDED
(UNAUDITED) 9/30/04 (UNAUDITED) 9/30/04
- ------------------------------------------------------------------------------------------------------------------------
Municipal Class
Shares sold 44,466,957 67,306,052 $ 622,068,157 $ 954,163,543
Shares issued to shareholders on
reinvestment of dividends 549,549 1,025,694 7,690,007 14,537,618
Shares redeemed (17,474,505) (32,601,964) (244,380,717) (461,940,395)
------------- ------------ --------------- ---------------
Net increase 27,542,001 35,729,782 385,377,447 506,760,766
Beginning of period 211,642,663 175,912,881 2,936,487,756 2,429,726,990
------------- ------------ --------------- ---------------
End of period 239,184,664 211,642,663 $ 3,321,865,203 $ 2,936,487,756
============= ============ =============== ===============
- ------------------------------------------------------------------------------------------------------------------------
Intermediate Municipal Class A Shares
Shares sold 503,158 1,418,380 $ 7,046,986 $ 20,132,758
Shares issued to shareholders on
reinvestment of dividends 51,666 115,543 723,320 1,638,421
Shares converted from Class B 59,569 157,152 831,957 2,222,023
Shares redeemed (1,435,225) (2,905,957) (20,077,736) (41,230,449)
------------- ------------ --------------- ---------------
Net decrease (820,832) (1,214,882) (11,475,473) (17,237,247)
Beginning of period 5,925,090 7,139,972 84,215,672 101,452,919
------------- ------------ --------------- ---------------
End of period 5,104,258 5,925,090 $ 72,740,199 $ 84,215,672
============= ============ =============== ===============
- ------------------------------------------------------------------------------------------------------------------------
Intermediate Municipal Class B Shares
Shares sold 27,346 201,550 $ 382,425 $ 2,864,835
Shares issued to shareholders on
reinvestment of dividends 32,415 81,542 453,868 1,156,539
Shares converted to Class A (59,574) (157,197) (831,957) (2,222,023)
Shares redeemed (1,040,696) (2,160,430) (14,559,769) (30,611,828)
------------- ------------ --------------- ---------------
Net decrease (1,040,509) (2,034,535) (14,555,433) (28,812,477)
Beginning of period 4,695,737 6,730,272 66,505,842 95,318,319
------------- ------------ --------------- ---------------
End of period 3,655,228 4,695,737 $ 51,950,409 $ 66,505,842
============= ============ =============== ===============
- ------------------------------------------------------------------------------------------------------------------------
Intermediate Municipal Class C Shares
Shares sold 108,707 440,590 $ 1,522,585 $ 6,253,538
Shares issued to shareholders on
reinvestment of dividends 25,454 59,271 356,408 840,684
Shares redeemed (1,001,320) (2,000,134) (14,009,496) (28,364,922)
------------- ------------ --------------- ---------------
Net decrease (867,159) (1,500,273) (12,130,503) (21,270,700)
Beginning of period 4,766,497 6,266,770 67,792,723 89,063,423
------------- ------------ --------------- ---------------
End of period 3,899,338 4,766,497 $ 55,662,220 $ 67,792,723
============= ============ =============== ===============
- --------------------------------------------------------------------------------
70 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
--------------------------------------------------------------------
CALIFORNIA MUNICIPAL PORTFOLIO
--------------------------------------------------------------------
----------------------------- ----------------------------------
SHARES AMOUNT
----------------------------- ----------------------------------
SIX MONTHS SIX MONTHS
ENDED 3/31/05 YEAR ENDED ENDED 3/31/05 YEAR ENDED
(UNAUDITED) 9/30/04 (UNAUDITED) 9/30/04
=======================================================================================================================
Municipal Class
Shares sold 14,174,089 21,434,750 $ 200,578,253 $ 307,063,523
Shares issued to shareholders on
reinvestment of dividends 196,690 414,093 2,784,335 5,934,834
Shares redeemed (6,684,168) (11,381,962) (94,559,568) (163,180,906)
------------ ------------- --------------- ---------------
Net increase 7,686,611 10,466,881 108,803,020 149,817,451
Beginning of period 69,085,237 58,618,356 968,230,834 818,413,383
------------ ------------- --------------- ---------------
End of period 76,771,848 69,085,237 $ 1,077,033,854 $ 968,230,834
============ ============= =============== ===============
Intermediate Municipal Class A Shares
Shares sold 354,345 956,855 $ 5,015,586 $ 13,703,260
Shares issued to shareholders on
reinvestment of dividends 25,251 58,866 357,393 843,393
Shares converted from Class B 893 50,349 12,647 722,083
Shares redeemed (708,931) (1,108,320) (10,025,860) (15,850,412)
------------ ------------- --------------- ---------------
Net decrease (328,442) (42,250) (4,640,234) (581,676)
Beginning of period 2,628,962 2,671,212 37,856,603 38,438,279
------------ ------------- --------------- ---------------
End of period 2,300,520 2,628,962 $ 33,216,369 $ 37,856,603
============ ============= =============== ===============
Intermediate Municipal Class B Shares
Shares sold 22,577 31,283 $ 320,547 $ 449,100
Shares issued to shareholders on
reinvestment of dividends 14,627 36,862 207,082 528,386
Shares converted to Class A (893) (50,375) (12,647) (722,083)
Shares redeemed (353,726) (668,920) (5,001,681) (9,570,894)
------------ ------------- --------------- ---------------
Net decrease (317,415) (651,150) (4,486,699) (9,315,491)
Beginning of period 1,832,025 2,483,175 26,334,637 35,650,128
------------ ------------- --------------- ---------------
End of period 1,514,610 1,832,025 $ 21,847,938 $ 26,334,637
============ ============= =============== ===============
Intermediate Municipal Class C Shares
Shares sold 31,622 147,263 $ 446,584 $ 2,111,016
Shares issued to shareholders on
reinvestment of dividends 14,623 34,066 206,966 488,199
Shares redeemed (361,153) (602,915) (5,110,304) (8,638,516)
------------ ------------- --------------- ---------------
Net decrease (314,908) (421,586) (4,456,754) (6,039,301)
Beginning of period 2,001,884 2,423,470 28,833,785 34,873,086
------------ ------------- --------------- ---------------
End of period 1,686,976 2,001,884 $ 24,377,031 $ 28,833,785
============ ============= =============== ===============
- --------------------------------------------------------------------------------
2006 Semiannual Report 71
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Notes to Financial Statements (continued)
--------------------------------------------------------------------
NEW YORK MUNICIPAL PORTFOLIO
--------------------------------------------------------------------
----------------------------- ----------------------------------
SHARES AMOUNT
----------------------------- ----------------------------------
SIX MONTHS SIX MONTHS
ENDED 3/31/06 YEAR ENDED ENDED 3/31/06 YEAR ENDED
(UNAUDITED) 9/30/05 (UNAUDITED) 9/30/05
- -----------------------------------------------------------------------------------------------------------------------
Municipal Class
Shares sold 15,340,042 26,547,744 $ 212,078,706 $ 372,003,374
Shares issued to shareholders on
reinvestment of dividends 356,667 701,028 4,932,890 9,824,232
Shares redeemed (7,537,076) (15,053,132) (104,201,906) (210,928,598)
------------ ------------- --------------- ---------------
Net increase 8,159,633 12,195,640 112,809,690 170,899,008
Beginning of period 91,649,286 79,453,646 1,250,318,289 1,079,419,281
------------ ------------- --------------- ---------------
End of period 99,808,919 91,649,286 $ 1,363,127,979 $ 1,250,318,289
============ ============= =============== ===============
- -----------------------------------------------------------------------------------------------------------------------
Intermediate Municipal Class A Shares
Shares sold 170,318 698,228 $ 2,350,771 $ 9,785,713
Shares issued to shareholders on
reinvestment of dividends 39,688 87,840 548,614 1,230,549
Shares converted from Class B 5,362 78,587 74,057 1,099,352
Shares redeemed (433,890) (1,492,557) (5,994,533) (20,880,330)
------------ ------------- --------------- ---------------
Net decrease (218,522) (627,902) (3,021,091) (8,764,716)
Beginning of period 3,217,902 3,845,804 45,196,625 53,961,341
------------ ------------- --------------- ---------------
End of period 2,999,380 3,217,902 $ 42,175,534 $ 45,196,625
============ ============= =============== ===============
- -----------------------------------------------------------------------------------------------------------------------
Intermediate Municipal Class B Shares
Shares sold 53,967 187,179 $ 746,945 $ 2,625,061
Shares issued to shareholders on
reinvestment of dividends 30,350 68,721 419,450 962,490
Shares converted to Class A (5,362) (78,669) (74,057) (1,099,352)
Shares redeemed (642,565) (786,711) (8,871,510) (11,010,516)
------------ ------------- --------------- ---------------
Net decrease (563,610) (609,480) (7,779,172) (8,522,317)
Beginning of period 3,515,762 4,125,242 49,444,786 57,967,103
------------ ------------- --------------- ---------------
End of period 2,952,152 3,515,762 $ 41,665,614 $ 49,444,786
============ ============= =============== ===============
- -----------------------------------------------------------------------------------------------------------------------
Intermediate Municipal Class C Shares
Shares sold 43,975 220,479 $ 607,850 $ 3,095,559
Shares issued to shareholders on
reinvestment of dividends 13,896 36,044 192,089 505,218
Shares redeemed (566,879) (1,410,557) (7,825,232) (19,757,119)
------------ ------------- --------------- ---------------
Net decrease (509,008) (1,154,034) (7,025,293) (16,156,342)
Beginning of period 2,605,267 3,759,301 36,941,753 53,098,095
------------ ------------- --------------- ---------------
End of period 2,096,259 2,605,267 $ 29,916,460 $ 36,941,753
============ ============= =============== ===============
- --------------------------------------------------------------------------------
72 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
-------------------------------------------------------------------
SHORT DURATION PLUS PORTFOLIO
-------------------------------------------------------------------
----------------------------- ---------------------------------
SHARES AMOUNT
----------------------------- ---------------------------------
SIX MONTHS SIX MONTHS
ENDED 3/31/06 YEAR ENDED ENDED 3/31/06 YEAR ENDED
(UNAUDITED) 9/30/05 (UNAUDITED) 9/30/05
======================================================================================================================
Short Duration Plus Class
Shares sold 4,377,069 11,221,512 $ 53,924,591 $ 140,436,628
Shares issued to shareholders on
reinvestment of dividends and distributions 231,338 426,621 2,850,766 5,342,279
Shares redeemed (6,249,330) (12,766,090) (76,958,363) (159,809,492)
------------ ------------- --------------- ---------------
Net decrease (1,640,923) (1,117,957) (20,183,006) (14,030,585)
Beginning of period 32,188,431 33,306,388 408,567,036 422,597,621
------------ ------------- --------------- ---------------
End of period 30,547,508 32,188,431 $ 388,384,030 $ 408,567,036
============ ============= =============== ===============
- -----------------------------------------------------------------------------------------------------------------------
Short Duration Class A Shares (a)
Shares sold 747,770 1,940,658 $ 9,205,670 $ 24,341,652
Shares issued to shareholders on
reinvestment of dividends and distributions 50,173 96,914 618,299 1,213,366
Shares converted from Class B 48,798 106,805 601,137 1,334,579
Shares redeemed (1,172,109) (3,347,092) (14,447,547) (41,955,853)
------------ ------------- --------------- ---------------
Net decrease (325,368) (1,202,715) (4,022,441) (15,066,256)
Beginning of period 3,438,262 4,640,977 45,013,580 60,079,836
------------ ------------- --------------- ---------------
End of period 3,112,894 3,438,262 $ 40,991,139 $ 45,013,580
============ ============= =============== ===============
- -----------------------------------------------------------------------------------------------------------------------
Short Duration Class B Shares (a)
Shares sold 98,234 489,329 $ 1,211,635 $ 6,137,972
Shares issued to shareholders on
reinvestment of dividends and distributions 23,282 50,309 286,901 630,063
Shares converted to Class A (48,798) (106,847) (601,137) (1,334,579)
Shares redeemed (597,801) (1,671,609) (7,366,441) (20,944,554)
------------ ------------- --------------- ---------------
Net decrease (525,083) (1,238,818) (6,469,042) (15,511,098)
Beginning of period 2,257,289 3,496,107 29,232,925 44,744,023
------------ ------------- --------------- ---------------
End of period 1,732,206 2,257,289 $ 22,763,883 $ 29,232,925
============ ============= =============== ===============
- -----------------------------------------------------------------------------------------------------------------------
Short Duration Class C Shares (a)
Shares sold 78,277 508,402 $ 964,458 $ 6,376,122
Shares issued to shareholders on
reinvestment of dividends and distributions 16,945 36,795 208,730 460,712
Shares redeemed (467,041) (1,725,576) (5,753,482) (21,624,133)
------------ ------------- --------------- ---------------
Net decrease (371,819) (1,180,379) (4,580,294) (14,787,299)
Beginning of period 1,945,794 3,126,173 25,284,964 40,072,263
------------ ------------- --------------- ---------------
End of period 1,573,975 1,945,794 $ 20,704,670 $ 25,284,964
============ ============= =============== ===============
(a) Class A, B and C Shares commenced distribution on January 30, 2004.
- --------------------------------------------------------------------------------
2006 Semiannual Report 73
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Notes to Financial Statements (continued)
NOTE 7. Line of Credit
The Emerging Markets Portfolio maintains a $35,000,000 line of credit
intended to provide short-term financing, if necessary, subject to certain
restrictions in connection with abnormal redemption activity. Commitment
fees related to the line of credit are paid by the Portfolio and are
included in the miscellaneous expenses in the statement of operations. The
Portfolio did not utilize the line of credit during the six months ended
March 31, 2006.
A number of open-end mutual funds managed by the Adviser, including the
Sanford C. Bernstein Fund II, Inc., participate in a $250 million
revolving credit facility (the "Facility") intended to provide short-term
financing, if necessary, subject to certain restrictions in connection
with abnormal redemption activity. Commitment fees related to the Facility
are paid by the participating funds and are included in miscellaneous
expenses in the statements of operations. The Portfolio did not utilize
the Facility during the period ended March 31, 2006.
NOTE 8. Legal Proceedings
As has been previously reported, the staff of the U.S. Securities and
Exchange Commission ("SEC") and the Office of New York Attorney General
("NYAG") have been investigating practices in the mutual fund industry
identified as "market timing" and "late trading" of mutual fund shares.
Certain other regulatory authorities have also been conducting
investigations into these practices within the industry and have requested
that the Adviser provide information to them. The Adviser has been
cooperating and will continue to cooperate with all of these authorities.
On December 18, 2003, the Adviser confirmed that it had reached terms with
the SEC and the NYAG for the resolution of regulatory claims relating to
the practice of "market timing" mutual fund shares in some of the
AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in
an Order of the Commission ("SEC Order"). The agreement with the NYAG is
memorialized in an Assurance of Discontinuance dated September 1, 2004
("NYAG Order"). Among the key provisions of these agreements are the
following:
(i)The Adviser agreed to establish a $250 million fund (the"Reimbursement
Fund") to compensate mutual fund shareholders for the adverse effects of
market timing attributable to market timing relationships described in the
SEC Order. According to the SEC Order, the Reimbursement Fund is to be
paid, in order of priority, to fund investors based on (i) their aliquot
share of losses suffered by the fund due to market timing, and (ii)
proportionate share of advisory fees paid by such fund during the period
of such market timing;
(ii)The Adviser agreed to reduce the advisory fees it receives from some
of the AllianceBernstein long-term, open-end retail funds until December
31, 2008; however, the Portfolios did not have their fees reduced; and
(iii)The Adviser agreed to implement changes to its governance and
compliance procedures. Additionally, the SEC Order and the NYAG Order
contemplate that the Adviser's registered investment company clients,
including the Funds, will introduce governance and compliance changes.
A special committee of the AllianceBernstein's Board of Directors,
comprised of the members of the AllianceBernstein's Audit Committee and
the other independent member of the AllianceBernstein's Board, is
continuing to direct and oversee an internal investigation and a
comprehensive review of the facts and circumstances relevant to the SEC's
and the NYAG's investigations.
In addition, the independent directors of the Sanford C. Bernstein Fund,
Inc. have designated an independent economic consultant and independent
counsel to investigate the above-mentioned matters.
On October 2, 2003, a purported class action complaint entitled Hindo, et
al. v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint")
was filed against the Adviser, Alliance Capital Management Holding L.P.
("Alliance Holding"), Alliance Capital Management Corporation, AXA
Financial, Inc., the AllianceBernstein Funds, certain officers of the
Adviser ("Alliance defendants"), and certain other defendants not
affiliated with the Adviser, as well as unnamed Doe defendants. The Hindo
Complaint was filed in the United States District Court for the Southern
District of New York by
- --------------------------------------------------------------------------------
74 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
alleged shareholders of two of the AllianceBernstein Funds. The Hindo
Complaint alleges that certain of the Alliance defendants failed to
disclose that they improperly allowed certain hedge funds and other
unidentified parties to engage in "late trading" and "market timing" of
AllianceBernstein Fund securities, violating Sections 11 and 15 of the
Securities Act, Sections 10(b) and 20(a) of the Exchange Act and Sections
206 and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of
compensatory damages and rescission of their contracts with the Adviser,
including recovery of all fees paid to the Adviser pursuant to such
contracts.
Since October 2, 2003, numerous additional lawsuits making factual
allegations generally similar to those in the Hindo Complaint were filed
in various federal and state courts against the Adviser and certain other
defendants, and others may be filed. The plaintiffs in such lawsuits have
asserted a variety of theories for recovery including, but not limited to,
violations of the Securities Act, the Exchange Act, the Advisers Act, the
Investment Company Act, the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), certain state securities laws and common law.
All state court actions against the Adviser either were voluntarily
dismissed or removed to federal court. On February 20, 2004, the Judicial
Panel on Multidistrict Litigation transferred all federal actions to the
United States District Court for the District of Maryland (the "Mutual
Fund MDL"). All of the actions removed to federal court were also
transferred to the Mutual Fund MDL. The plaintiffs in the removed actions
have since moved for remand, and that motion is pending.
On September 29, 2004, plaintiffs filed consolidated amended complaints
with respect to four claim types: mutual fund shareholder claims; mutual
fund derivative claims; derivative claims brought on behalf of Alliance
Holding; and claims brought under ERISA by participants in the Profit
Sharing Plan for Employees of the Adviser. All four complaints include
substantially identical factual allegations, which appear to be based in
large part on the SEC Order and the NYAG Order. The claims in the mutual
fund derivative consolidated amended complaint are generally based on the
theory that all fund advisory agreements, distribution agreements and
12b-1 plans between the Adviser and the AllianceBernstein Funds should be
invalidated, regardless of whether market timing occurred in each
individual fund, because each was approved by fund trustees on the basis
of materially misleading information with respect to the level of market
timing permitted in funds managed by the Adviser. The claims asserted in
the other three consolidated amended complaints are similar to those that
the respective plaintiffs asserted in their previous federal lawsuits. All
of these lawsuits seek an unspecified amount of damages. The Alliance
defendants have moved to dismiss the complaints, and those motions are
pending.
On February 10, 2004, the Adviser received (i) a subpoena duces tecum from
the Office of the Attorney General of the State of West Virginia and (ii)
a request for information from West Virginia's Office of the State
Auditor, Securities Commission (the "West Virginia Securities Commission")
(together, the "Information Requests"). Both Information Requests require
the Adviser to produce documents concerning, among other things, any
market timing or late trading in the Adviser's sponsored mutual funds. The
Adviser responded to the Information Requests and has been cooperating
fully with the investigation.
On April 11, 2005, a complaint entitled The Attorney General of the State
of West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was
filed against the Adviser, Alliance Holding, and various other defendants
not affiliated with the Adviser. The WVAG Complaint was filed in the
Circuit Court of Marshall County, West Virginia by the Attorney General of
the State of West Virginia. The WVAG Complaint makes factual allegations
generally similar to those in the Hindo Complaint. On May 31, 2005,
defendants removed the WVAG Complaint to the United States District Court
for the Northern District of West Virginia. On July 12, 2005, plaintiff
moved to remand. On October 19, 2005, the WVAG Complaint was transferred
to the Mutual Fund MDL.
On August 30, 2005, the deputy commissioner of securities of the West
Virginia Securities Commission signed a "Summary Order to Cease and
Desist, and Notice of Right to Hearing" addressed to the Adviser and
Alliance Holding. The Summary Order claims that the Adviser and Alliance
Holding violated the West Virginia Uniform Securities Act, and makes
factual allegations generally similar to those in the Commission Order and
the NYAG Order. On January 26, 2006, the Adviser, Alliance Holding, and
various unaffiliated defendants filed a Petition for Writ of Prohibition
and Order
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2006 Semiannual Report 75
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Sanford C. Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc.
Notes to Financial Statements (continued)
Suspending Proceedings in West Virginia state court seeking to vacate the
Summary Order and for other relief. On April 11, 2006, the Court dismissed
the Writ and later granted defendants a 30-day stay to file an appeal. The
Adviser intends to vigorously defend against the allegations in the WVAG
Complaint.
On June 22, 2004, a purported class action complaint entitled Aucoin, et
al. v. Alliance Capital Management L.P., et al. ("Aucoin Complaint") was
filed against the Adviser, Alliance Holding, Alliance Capital Management
Corporation, AXA Financial, Inc., AllianceBernstein Investment Research &
Management, Inc., certain current and former directors of the
AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin
Complaint names certain of the AllianceBernstein mutual funds as nominal
defendants. The Aucoin Complaint was filed in the United States District
Court for the Southern District of New York by an alleged shareholder of
an AllianceBernstein mutual fund. The Aucoin Complaint alleges, among
other things, (i) that certain of the defendants improperly authorized the
payment of excessive commissions and other fees from fund assets to
broker-dealers in exchange for preferential marketing services, (ii) that
certain of the defendants misrepresented and omitted from registration
statements and other reports material facts concerning such payments, and
(iii) that certain defendants caused such conduct as control persons of
other defendants. The Aucoin Complaint asserts claims for violation of
Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections
206 and 215 of the Advisers Act, breach of common law fiduciary duties,
and aiding and abetting breaches of common law fiduciary duties.
Plaintiffs seek an unspecified amount of compensatory damages and punitive
damages, rescission of their contracts with the Adviser, including
recovery of all fees paid to the Adviser pursuant to such contracts, an
accounting of all fundrelated fees, commissions and soft dollar payments,
and restitution of all unlawfully or discriminatorily obtained fees and
expenses.
Since June 22, 2004, nine additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against
the Adviser and certain other defendants. All nine of the lawsuits (i)
were brought as class actions filed in the United States District Court
for the Southern District of New York, (ii) assert claims substantially
identical to the Aucoin Complaint, and (iii) are brought on behalf of
shareholders of the Funds.
On February 2, 2005, plaintiffs filed a consolidated amended class action
complaint ("Aucoin Consolidated Amended Complaint") that asserts claims
substantially similar to the Aucoin Complaint and the nine additional
lawsuits referenced above. On October 19, 2005, the District Court
dismissed each of the claims set forth in the Aucoin Consolidated Amended
Complaint, except for plaintiff's claim under Section 36(b) of the
Investment Company Act. On January 11, 2006, the District Court granted
defendants' motion for reconsideration and dismissed the remaining Section
36(b) claim. Plaintiffs have moved for leave to amend their consolidated
complaint.
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the
AllianceBernstein Mutual Funds' shares or other adverse consequences to
the AllianceBernstein Mutual Funds. This may require the AllianceBernstein
Mutual Funds to sell investments held by those funds to provide for
sufficient liquidity and could also have an adverse effect on the
investment performance of the AllianceBernstein Mutual Funds. However, the
Adviser believes that these matters are not likely to have a material
adverse effect on its ability to perform advisory services relating to the
AllianceBernstein Mutual Funds.
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76 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
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Results of Shareholders Meeting
Unaudited
The Annual Meeting of Stockholders of Sanford C. Bernstein Fund (the "Fund") was
held on December 6, 2005. The Meeting was originally scheduled to be held on
November 15, 2005, however an insufficient number of votes had been received as
of November 15, 2005 to constitute a quorum and the Meeting was therefore
adjourned until December 6, 2005 in order to permit for additional time for the
solicitation of proxies. At the December 6, 2005 Meeting, with respect to the
first item of business, the election of Directors, the required number of
outstanding shares was voted in favor of the proposal, and the proposal was
approved. A description of the proposal and number of shares voted at the
Meeting are as follows:
1. The election of the Directors, each such Director to serve a term of
an indefinite duration and until his or her successor is duly
elected and qualifies.
WITHHELD
VOTED FOR AUTHORITY
- --------------------------------------------------------------------------------
Irwin Engelman 482,138,928 3,375,067
Bart Friedman 482,352,757 3,161,238
Roger Hertog 481,543,420 3,970,575
William Kristol 474,455,075 11,058,920
Thomas B. Stiles II 482,140,530 3,373,465
Rosalie J. Wolf 482,546,822 2,967,173
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2006 Semiannual Report 77
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Sanford C. Bernstein Fund, Inc.
================================================================================
BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
Roger Hertog
President
Rosalie J. Wolf*
Chairman
Irwin Engelman*
Director
Bart Friedman*+
Director
William Kristol*+
Director
Thomas B. Stiles II*+
Director
================================================================================
OFFICERS
- --------------------------------------------------------------------------------
Philip L. Kirstein
Senior Vice President and
Independent Compliance Officer
Mark D. Gersten
Treasurer and Chief Financial Officer
Emilie D. Wrapp
Secretary
================================================================================
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
PricewaterhouseCoopers LLP
300 Madison Avenue
New York, New York 10017
================================================================================
LEGAL COUNSEL
- --------------------------------------------------------------------------------
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, New York 10019
================================================================================
CUSTODIAN AND TRANSFER AGENT
- --------------------------------------------------------------------------------
State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111
================================================================================
INVESTMENT ADVISER
- --------------------------------------------------------------------------------
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York 10105
* Member of the Audit Committee and the Independent Directors Committee.
+ Member of the Governance, Nominating and Compensation Committee.
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78 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
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Sanford C. Bernstein Fund, Inc.
Board's Consideration of Investment Management Arrangements
The process relating to the annual review of the Investment Management
Agreement between the Sanford C. Bernstein Fund, Inc. (the "Fund"), on
behalf of each of its portfolios (each, a "Portfolio" and collectively,
the "Portfolios"), and AllianceBernstein L.P. (the "Adviser") (the
"Investment Management Agreement") commenced following receipt by the
Adviser of a letter dated July 21, 2005, from counsel to the Directors who
are not interested persons of the Fund (the "Independent Directors"). The
letter contained a preliminary list of information required by the
Independent Directors to conduct their annual review. The Directors
received materials relating to the renewal of the Investment Management
Agreement from the Adviser during September 2005. In addition, the
Independent Directors received materials prepared by the Senior Officer,
as described below. On September 28, 2005, the Directors held an in-person
meeting to begin their review of the Investment Management Agreement and
to consider an amendment proposed by the Adviser to the fee schedule,
which included additional breakpoints at higher asset levels for the
Intermediate Duration Portfolio, Diversified Municipal Portfolio, New York
Municipal Portfolio, California Municipal Portfolio, Tax-Managed
International Portfolio, International Portfolio and Emerging Markets
Portfolio. Following discussion at this meeting, the Independent Directors
requested that the Adviser propose a different amended schedule for
certain of the Portfolios. On October 25, 2005, the Independent Directors
met in executive session with counsel to the Independent Directors and the
Senior Officer to review a revised proposal with respect to the fee
schedule from the Adviser. On October 26, 2005, the Board of Directors
held an in-person meeting to review the Investment Management Agreement
and the revised proposal from the Adviser, which included a further
reduction in the advisory fee rate for the Tax-Managed International
Portfolio, International Portfolio and Emerging Markets Portfolio. The
Board considered the Adviser's amended proposal and in turn proposed
additional reductions in fees for the Tax-Managed International Portfolio,
International Portfolio and Emerging Markets Portfolio. The Board of
Directors, including the Independent Directors, determined to extend the
Investment Management Agreement with the fee rates then in effect until
December 1, 2005, to provide sufficient time for management to review the
additional reductions proposed by the Board and the Board to consider the
Adviser's responses to the Board's proposal. It was determined that the
Board of Directors would meet at an in-person meeting on November 28, 2005
for the purpose of considering the renewal of the Investment Management
Agreement for an additional annual term in light of the various proposals
that had been made. Between October 26, 2005 and November 28, 2005, the
Independent Directors, their counsel, and the Adviser considered
additional proposed amendments to the fee schedule. At the November 28,
2005 meeting, the Board approved the advisory fee rate structure shown
below under "Advisory Fee Rate Schedule."
In approving the continuation of the Investment Management Agreement for
an additional annual term with the revised fee schedule, the Board of
Directors considered all information it deemed reasonably necessary to
evaluate the terms of the Agreement and considered whether continuance of
the Agreement would be in the best interests of each respective Portfolio.
The Board received materials relating to its consideration of the
Investment Management Agreement, including: (i) information comparing the
performance of the Portfolios to other investment companies with similar
investment objectives and to one or more securities indices; (ii)
information about the nature, extent and quality of investment and
administrative services rendered by the Adviser; (iii) payments received
by the Adviser from all sources in respect of the Portfolios and the Fund
as a group; (iv) costs borne by, and profitability of, the Adviser and its
affiliates in providing services to the Portfolios and the Fund as a
group; (v) comparative fee and expense data for the Portfolios and other
investment companies with similar investment objectives; (vi) information
about the extent to which economies of scale would be realized as the
Portfolios grow and whether fee levels reflect these economies of scale
for the benefit of investors; (vii) the Adviser's policies and practices
regarding allocation of portfolio transactions of the Portfolios,
including the extent to which the Adviser benefits from soft dollar
arrangements; (viii) information about "revenue sharing" arrangements that
the Adviser may enter into in respect of any of the Portfolios; (ix)
portfolio turnover rates of the Portfolios; (x) fall-out benefits which
the Adviser and its affiliates may receive from their relationships to the
Portfolios; (xi) information about fees charged by the Adviser to other
like clients with similar investment objectives; (xii) professional
experience and qualifications of the Fund's management teams and other
senior personnel of the Adviser; and (xiii) the terms of the Investment
Management Agreement.
The Directors also reviewed an independent evaluation from the Fund's
Senior Officer (who is also the Fund's Independent Compliance Officer) of
the reasonableness of the advisory fees in the Investment Management
Agreement. This evaluation was contemplated by the September 2004
Assurance of Discontinuance between the Adviser and the New York Attorney
General. In his evaluation, the Senior Officer concluded that the fees
contained in the Adviser's September 28, 2005 proposal
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2006 Semiannual Report 79
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Sanford C. Bernstein Fund, Inc.
Board's Consideration of Investment Management Arrangements (continued)
were reasonable with respect to the fixed-income Portfolios and
recommended that the fees for the Tax-Managed International Portfolio,
International Portfolio and Emerging Markets Portfolio be reduced. The
Directors noted that the Senior Officer's evaluation considered the
following factors: management fees charged to institutional and other
clients of the Adviser for like services; management fees charged by other
mutual fund companies for like services; costs to the Adviser and its
affiliates of supplying such services pursuant to the Investment
Management Agreement, excluding any intra-corporate profit; profit margins
of the Adviser and its affiliates from supplying such services; possible
economies of scale as the Portfolios grow larger; and the nature and
quality of the Adviser's services including the performance of the
Portfolios.
The matters discussed below were considered separately by the Independent
Directors in several executive sessions, during which experienced counsel
that is independent of the Adviser provided guidance to the Independent
Directors. No single factor was considered in isolation or to be
determinative to the decision of the Board to approve the Investment
Management Agreement. Rather, the Board concluded, in light of a weighing
and balancing of all factors considered, that it was in the best interests
of each Portfolio to approve the continuation of the Investment Management
Agreement as amended, including the fees to be charged for services
thereunder.
Fees and Expenses
The Board of Directors, including the Independent Directors, compared the
fees and expense ratios of each Portfolio as proposed by the Adviser at
the September 28, 2005 meeting (before and after any fee waivers and
expense reimbursements) against fees and expense ratios of a peer group of
funds with similar investment objectives ("peer group"). Both the peer
group category and the funds within the peer group, with respect to the
fee and expense data, were prepared by Lipper, Inc. ("Lipper"), an
independent provider of investment company data. Where applicable, the
Board considered similarities and differences between each Portfolio and
the other funds in its respective peer group. The Senior Officer also
performed analyses of the advisory fees based upon hypothetical fee
structures and asset levels, and compared such analyses to the Portfolios'
peer groups.
The Board considered data based on information provided by Lipper,
particularly that:
o the Short Duration Plus Portfolio's contractual management fee was
at the median of its peer group, its actual management fee was above
the median of its peer group, and its actual total expenses were
below the median of its peer group.
o the U.S. Government Short Duration Portfolio's contractual
management fee and actual management fee were above the median of
its peer group, and its actual total expenses were at the median of
its peer group.
o the Intermediate Duration Portfolio's contractual management fee was
above the median of its peer group, its actual management fee was at
the median of its peer group, and its actual total expenses were
below the median of its peer group.
o the California Municipal Portfolio's contractual management fee and
actual total expenses were below the median of its peer group, and
its actual management fee was at the median of its peer group.
o the Diversified Municipal Portfolio's contractual management fee was
above the median of its peer group, and its actual management fee
and actual total expenses were below the median of its peer group.
o the New York Municipal Portfolio's contractual management fee and
its actual total expenses were below the median of its peer group,
and its actual management fee was above the median of its peer
group.
o the Short Duration California Municipal Portfolio's contractual
management fee was below the median of its peer group, its actual
management fee was at the median of its peer group, and its actual
total expenses were above the median of its peer group.
o the Short Duration Diversified Municipal Portfolio's contractual
management fee, actual management fee and actual total
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80 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
expenses were above the median of its peer group.
o the Short Duration New York Municipal Portfolio's contractual
management fee and actual management fee were above the median of
its peer group, and its actual total expenses were below the median
of its peer group.
o the International Portfolio's contractual management fee, actual
management fee, and actual total expenses were above the median of
its peer group
o the Tax-Managed International Portfolio's contractual management fee
and actual total expenses were above the median of its peer group,
and its actual management fee was at the median of its peer group.
o the Emerging Markets Portfolio's contractual management fee, actual
management fee and actual total expenses were above the median of
its peer group.
The Board also received and considered information about the services
rendered, and the fee rates offered, to other clients advised by the
Adviser.
On the basis of its review and consideration of the proposed fees as
described above, the Board concluded that the fees shown below under
"Advisory Fee Schedule Effective November 29, 2005" were reasonable.
Nature, Extent and Quality of Services
The Board of Directors, including the Independent Directors, considered
the nature, quality and extent of services performed by the Adviser and
its affiliates. The Board used its knowledge and experience gained as
directors of the Fund in evaluating the quality of the services of the
Adviser, including the scope and quality of the Adviser's investment
management capabilities, other resources dedicated to performing its
services and the quality of its administrative and other services provided
to the Fund. Particularly, the Board considered the background and
experience of the Adviser's senior management. The Board also reviewed the
qualifications, backgrounds and responsibilities of the investment staff
primarily responsible for day-to-day portfolio management services for
each Portfolio. In further evaluating the quality of services provided by
the Adviser, the Board was informed that in management's judgment, the
Adviser has the resources to attract and retain highly qualified
investment professionals, including research and advisory personnel. In
particular, the Board was informed that the Adviser's investment staff
consists of:
o In the case of the Fixed-Income Portfolios, there are 63 Fixed
Income Portfolio Managers, 46 Fixed-Income Credit Research Analysts,
4 Structured Analysts, 8 Fixed-Income Economists, 8 Fixed-Income
Quantitative Analysts and 7 Fixed-Income Traders.
o In the case of the International and Tax-Managed International
Portfolios, there are 28 senior portfolio managers*, including 1
economist, 123 research analysts, including 100 fundamental and 23
quantitative, and 20 traders.
* Includes 8 members of the Style Blend Investment Team dedicated to
managing style blend portfolios comprised of underlying investments
in Bernstein Value and Alliance Growth portfolios.
o In the case of the Emerging Markets Portfolio, there are 19 senior
portfolio managers*, including 1 economist, 94 research analysts,
including 71 fundamental and 23 quantitative, and 18 traders.
* Includes 8 members of the Style Blend Investment Team dedicated to
managing style blend portfolios comprised of underlying investments
in Bernstein Value and Alliance Growth portfolios.
The Board also considered the allocation of responsibilities as well as
the factors which impacted the making and implementing of investment
decisions for the Portfolios.
The Board then reviewed the compliance and administrative services of the
Adviser that support the investment advisory services provided to the Fund
and noted that such staff was sufficient to ensure a high level of quality
service to the Fund.
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2006 Semiannual Report 81
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Sanford C. Bernstein Fund, Inc.
Board's Consideration of Investment Management Arrangements (continued)
The Board concluded that it was satisfied with the nature, quality and
extent of the services provided by the Adviser.
Fund Performance
The Board of Directors, including the Independent Directors, received and
considered information about each Portfolio's investment performance, as
well as the performance of its peer group and the performance of an
appropriate benchmark index. The Board was provided with performance data
versus each Portfolio's peer group, both before and after fees, for the
1-year, 3-year, 5-year and 10-year periods, as applicable, ended June 30,
2005 ("relevant periods") and versus each Portfolio's appropriate
benchmark index, after fees, for the year to date, 1-year, 3-years,
5-years, 10-years and since inception periods, as applicable, ended June
30, 2005. Both the funds included in each Portfolio's peer group and the
comparative performance data were provided to the Directors by Lipper. The
Board noted that:
(i) the Short Duration Plus Portfolio underperformed the median of its
peer group over the 1-year period both before and after fees, but that it
outperformed the median of its peer group over the remaining relevant
periods both before and after fees. The Portfolio outperformed its
benchmark index, the Merrill Lynch 1-3 Year Treasury Index, over the
1-year and 3-year periods ended June 30, 2005. The Portfolio
underperformed against the benchmark index for the year to date, 5-year,
10-year and since inception periods.
(ii) the U.S. Government Short Duration Portfolio performed at the median
of its peer group over the 1-year period and below the median of its peer
group over all remaining relevant periods, all after fees. The Portfolio
outperformed the median of its peer group before fees over all relevant
periods with the exception of the 10-year period over which it
underperformed against the median. The Portfolio underperformed its
benchmark index, the Merrill Lynch 1-3 Year Treasury Index, over all
relevant periods.
(iii) the Intermediate Duration Portfolio performed at the median of its
peer group over the 1-year and 3-year periods but underperformed against
the median over the 5-year and 10-year periods, all net of fees. Before
fees, the Portfolio underperformed its peer group over all relevant
periods except the 3-year period over which it performed at the median of
its peer group. The Portfolio underperformed its benchmark index, the
Lehman Aggregate Bond Index, over all relevant periods except the 3-year
period, over which it outperformed the benchmark index.
(iv) the Diversified Municipal Portfolio underperformed the median of its
peer group, both before and after fees, over all relevant periods. The
Portfolio outperformed its benchmark index, the Lehman 5 Year General
Obligation Municipal Bond Index, over the year to date and 1-year periods
and underperformed against the benchmark index for the remaining relevant
periods.
(v) the New York Municipal Portfolio underperformed the median of its peer
group, both before and after fees, over all relevant periods. The
Portfolio outperformed its benchmark index, the Lehman 5 Year General
Obligation Municipal Bond Index, over the year to date and 1-year periods
and underperformed against the benchmark index for the remaining relevant
periods.
(vi) the California Municipal Portfolio underperformed the median of its
peer group, both before and after fees, over all relevant periods. The
Portfolio outperformed its benchmark index, the Lehman 5 Year General
Obligation Municipal Bond Index, over the year to date and 1-year periods
and underperformed against the benchmark index for the remaining relevant
periods.
(vii) the Short Duration Diversified Municipal Portfolio underperformed
the median of its peer group, both before and after fees, over all
relevant periods. The Portfolio outperformed its benchmark index, the
Lehman 1 Year Municipal Bond Index, over the 1-year period and
underperformed against the benchmark index for the remaining relevant
periods.
(viii) the Short Duration New York Municipal Portfolio underperformed the
median of its peer group, both before and after fees, over all relevant
periods. The Portfolio outperformed its benchmark index, the Lehman 1 Year
Municipal Bond Index, over the year to date and 1-year periods and
underperformed against the benchmark index for the remaining relevant
periods.
(ix) the Short Duration California Municipal Portfolio underperformed the
median of its peer group, both before and after
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82 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
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fees, over all relevant periods. The Portfolio also underperformed its
benchmark index, the Lehman 1 Year Municipal Bond Index, over all relevant
periods.
(x) the Tax-Managed International Portfolio underperformed the median of
its peer group over all relevant periods except the 5-year and 10-year
periods during which it performed at the median, all after fees. Before
fees, the Portfolio underperformed against the median over the 1-year and
3-year periods, outperformed the median for the 5-year period and
performed at the median for the 10-year period. The Portfolio outperformed
its benchmark index, the MSCI EAFE Foreign-Stock Market Index, over the
5-year, 10-year and since inception periods, but underperformed against
the benchmark index for the year to date, 1-year and 3-year periods.
(xi) the International Portfolio performed at the median of its peer group
over the 3-year period but underperformed against the median over the
1-year and 5-year periods, all net of fees. Before fees, the Portfolio
underperformed its peer group over the 1-year period, but outperformed its
peer group over the 3-year and 5-year periods. The Portfolio outperformed
its benchmark index, the MSCI EAFE Foreign-Stock Market Index over the
5-year and since inception periods, but underperformed against the
benchmark index for the year to date, 1-year and 3-year periods.
(xii) the Emerging Markets Portfolio substantially outperformed the median
of its peer group over the 1-year, 3-year and 5-year periods both before
and after fees. The Portfolio outperformed its benchmark index, the MSCI
Emerging Markets Index, over the 1-year, 3-year, 5-year and since
inception periods but underperformed the benchmark index over the year to
date period.
The Board noted that the underperformance of some of the Portfolios net of
fees versus their respective indices was at least partly due to the fact
that the Portfolios' benchmarks do not account for the fees that would be
charged if an entity were able to replicate them and offer them to retail
investors. The Board also noted that the duration of each of the
fixed-income Portfolios is shorter than the implied duration of the
Portfolios' peer categories. These differences have a substantial impact
to the performance of the fixed-income Portfolios.
The Board concluded that the performance generated by the Adviser was
satisfactory.
Profitability
The Board of Directors, including the Independent Directors, considered
the level of the Adviser's profits in respect of its management of the
Fund. The materials provided to the Independent Directors included a
schedule of the revenues, expenses and related notes indicating the
profitability of the Fund to the Adviser for calendar years 2003 and 2004
which had been reviewed by an independent consultant retained by the
Senior Officer. The Directors also reviewed information in respect of 2004
that had been prepared with revised expense allocation methodology, which
had also been reviewed by the Senior Officer's independent consultant. The
Directors reviewed the assumptions and methods of allocation used by the
Adviser in preparing fund-specific profitability data, and noted the
Adviser's representation to them that it believed that the methods of
allocation used in preparing the profitability information were reasonable
and appropriate and that the Adviser had previously discussed that there
is no generally accepted allocation methodology for information of this
type. The Directors also received a presentation from the independent
consultant which reviewed the Adviser's methods of calculating
profitability.
After reviewing all relevant factors, the Board of Directors, including
the Independent Directors, concluded that the level of the Adviser's
profits in respect of its management of the Fund was reasonable.
Economies of Scale
The Board of Directors, including the Independent Directors, considered
whether there have been economies of scale in respect of the management of
the Fund, whether the Fund has appropriately benefited from any economies
of scale, and whether there is potential for realization of any further
economies of scale. The Directors also considered a presentation by an
independent consultant discussing economies of scale issues in the mutual
fund industry.
The Board concluded that each Portfolio's breakpoint arrangements could
result in a sharing of economies of scale.
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2006 Semiannual Report 83
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Sanford C. Bernstein Fund, Inc.
Board's Consideration of Investment Management Arrangements (continued)
Other Benefits to the Adviser
The Board of Directors, including the Independent Directors, also took
into account not only the advisory fees payable by the Portfolios, but
also so-called "fallout benefits" to the Adviser, such as the engagement
of affiliates of the Adviser as service providers to the Portfolios,
including for administrative and transfer agency services, as well as the
extent to which the Adviser benefits from soft dollar arrangements. It
also considered other benefits potentially derived from an increase in the
Adviser's business as a result of its relationship with the Fund.
The Board concluded that other ancillary benefits that the Adviser could
be expected to receive with regard to providing investment advisory and
other services to the Fund, such as those noted above, were reasonable.
Advisory Fee Rate Schedule
On the basis of the information considered, the Board concluded that the
advisory fee rates for the New York Municipal, California Municipal,
Diversified Municipal, Intermediate Duration, Tax-Managed International,
International and Emerging Markets Portfolios should be amended as
follows:
For the Short Duration Plus, U.S. Government Short Duration, Short
Duration California Municipal, Short Duration New York Municipal and Short
Duration Diversified Municipal Portfolios, the Independent Directors
determined to approve the continuation of the Investment Management
Agreement, without change to these Portfolios' fee schedules, for an
additional annual term.
ADVISORY FEE SCHEDULE EFFECTIVE
- ------------------------------------------------------------------------------------------------------------------------------------
NOVEMBER 29, 2005 PREVIOUS ADVISORY FEE SCHEDULE
- ------------------------------------------------------------------------------------------------------------------------------------
New York Municipal Portfolio .50% of the first $1 billion; .50% of the first $1 billion;
.45% of assets in excess of $1 billion up to, .45% of assets in excess of $1 billion up to,
but not exceeding $3 billion; but not exceeding $3 billion;
.40% of assets in excess of $3 billion up to, .40% of assets in excess of $3 billion
but not exceeding $5 billion;
.35% of assets in excess of $5 billion
California Municipal Portfolio .50% of the first $1 billion; .50% of the first $1 billion;
.45% of assets in excess of $1 billion up to, .45% of assets in excess of $1 billion up to,
but not exceeding $3 billion; but not exceeding $3 billion;
.40% of assets in excess of $3 billion up to, .40% of assets in excess of $3 billion
but not exceeding $5 billion;
.35% of assets in excess of $5 billion
Diversified Municipal Portfolio .50% of the first $1 billion; .50% of the first $1 billion;
.45% of assets in excess of $1 billion up to, .45% of assets in excess of $1 billion up to,
but not exceeding $3 billion; but not exceeding $3 billion;
.40% of assets in excess of $3 billion up to, .40% of assets in excess of $3 billion
but not exceeding $5 billion;
.35% of assets in excess of $5 billion
Intermediate Duration Portfolio .50% of the first $1 billion; .50% of the first $1 billion;
.45% of assets in excess of $1 billion up to, .45% of assets in excess of $1 billion up to,
but not exceeding $3 billion; but not exceeding $3 billion;
.40% of assets in excess of $3 billion up to, .40% of assets in excess of $3 billion
but not exceeding $5 billion;
.35% of assets in excess of $5 billion
Tax-Managed International Portfolio .925% of the first $1 billion; 1.00% of the first $1 billion;
.85% of assets in excess of $1 billion up to, .90% of assets in excess of $1 billion up to,
but not exceeding $4 billion; but not exceeding $4 billion;
.80% of assets in excess of $4 billion up to, .85% of assets in excess of $4 billion up to,
but not exceeding $6 billion; but not exceeding $6 billion;
.75% of assets in excess of $6 billion up to, .75% of assets in excess of $6 billion
but not exceeding $8 billion;
.65% of assets in excess of $8 billion
- --------------------------------------------------------------------------------
84 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
NOVEMBER 29, 2005 PREVIOUS ADVISORY FEE SCHEDULE
- ------------------------------------------------------------------------------------------------------------------------------------
International Portfolio .925% of the first $1 billion; 1.00% of the first $1 billion;
.85% of assets in excess of $1 billion up to, .90% of assets in excess of $1 billion up to,
but not exceeding $4 billion; but not exceeding $4 billion;
.80% of assets in excess of $4 billion up to, .85% of assets in excess of $4 billion up to,
but not exceeding $6 billion; but not exceeding $6 billion;
.75% of assets in excess of $6 billion up to, .75% of assets in excess of $6 billion
but not exceeding $8 billion;
.65% of assets in excess of $8 billion
Emerging Markets Portfolio 1.175% of the first $1 billion; 1.25% of the first $1 billion;
1.05% of assets in excess of $1 billion up to, 1.125% of assets in excess of $1 billion up to,
but not exceeding $2 billion; but not exceeding $2 billion;
1.00% of assets in excess of $2 billion up to, 1.00% of assets in excess of $2 billion
but not exceeding $3 billion;
0.90% of assets in excess of $3 billion
For the Short Duration Plus, U.S. Government Short Duration, Short
Duration California Municipal, Short Duration New York Municipal and Short
Duration Diversified Municipal Portfolios, the Independent Directors
determined to approve the continuation of the Investment Management
Agreement, without change to these Portfolios' fee schedules, for an
additional annual term.
- --------------------------------------------------------------------------------
2006 Semiannual Report 85
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
The Following Is Not Part of the Shareholders Report or the Financial Statements
SUMMARY OF SENIOR OFFICER'S EVALUATION OF INVESTMENT ADVISORY AGREEMENT(1)
The following is a summary of the evaluation of the investment advisory
agreement between Alliance Capital Management L.P. (the "Adviser") and the
Sanford C. Bernstein Fund, Inc. (the "Fund")(2), prepared by Philip L.
Kirstein, the Senior Officer, for the independent directors of the Fund,
as required by the Assurance of Discontinuance between the New York State
Attorney General and the Adviser. The Senior Officer's evaluation of the
investment advisory agreement is not meant to diminish the responsibility
or authority of the Board of Directors to perform its duties pursuant to
Section 15 of the Investment Company Act of 1940 (the "40 Act") and
applicable state law. The purpose of the summary is to provide
shareholders with a synopsis of the independent evaluation of the
reasonableness of the advisory fees which was provided to the independent
directors in connection with their review of the proposed continuance of
the investment advisory agreement. The Senior Officer's evaluation will
consider the following factors:
1. Management fees charged to institutional and other clients of the
Adviser for like services.
2. Management fees charged by other mutual fund companies for like
services.
3. Costs to the Adviser and its affiliates of supplying services
pursuant to the advisory agreements, excluding any intra-corporate
profit.
4. Profit margins of the Adviser and its affiliates from supplying such
services.
5. Possible economies of scale as the Fund grows larger.
6. Nature and quality of the Adviser's services including the
performance of the Fund.
FUNDS ADVISORY FEES AND EXPENSE RATIOS
The table below describes the Portfolios' advisory fees pursuant to the
Investment Advisory Agreement. The fees below reflect the additional
breakpoints proposed by the Adviser at the Board of Directors meeting on
September 28, 2005.
ADVISORY FEE BASED ON % OF
PORTFOLIO AVERAGE DAILY NET ASSETS
-----------------------------------------------------------------------------------------------------------------
Tax-Managed International Portfolio First $1 billion 1.00%
Next $3 billion 0.90%
Next $2 billion 0.85%
Next $2 billion 0.75%
Excess of $8 billion 0.65%
International Portfolio First $1 billion 1.00%
Next $3 billion 0.90%
Next $2 billion 0.85%
Next $2 billion 0.75%
Excess of $8 billion 0.65%
Emerging Markets Portfolio First $1 billion 1.250%
Next $1 billion 1.125%
Next $1 billion 1.000%
Excess of $3 billion 0.900%
(1) It should be noted that the information in the fee summary was completed on
October 17, 2005 in accordance with the Assurance of Discontinuance between the
New York State Attorney General and the Adviser. It also should be noted that
references in the fee summary pertaining to performance and expense ratios refer
to the Advisor Class shares of the Fund. In addition, because the Fund's
September 30, 2005 annual financial statements had not yet been finalized,
references to "most recently completed fiscal year" or "most recent fiscal year"
in this report refer to the Fund's fiscal year end as of September 30, 2004.
(2) The Fund includes the Sanford C. Bernstein Tax-Managed International
Portfolio, Sanford C. Bernstein International Portfolio, Sanford C. Bernstein
Emerging Markets Portfolio, Sanford C. Bernstein U.S. Government Short Duration
Portfolio, Sanford C. Bernstein Short Duration Plus Portfolio, Sanford C.
Bernstein Intermediate Duration Portfolio, Sanford C. Bernstein Short Duration
California Municipal Portfolio, Sanford C. Bernstein Short Duration Diversified
Municipal Portfolio, Sanford C. Bernstein Short Duration New York Municipal
Portfolio, Sanford C. Bernstein California Municipal Portfolio, Sanford C.
Bernstein Diversified Municipal Portfolio, Sanford C. Bernstein New York
Municipal Portfolio (each a "Portfolio" and collectively the "Portfolios").
Future references to the various Portfolios in this report do not include
"Sanford C. Bernstein."
- --------------------------------------------------------------------------------
86 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
ADVISORY FEE BASED ON % OF
PORTFOLIO AVERAGE DAILY NET ASSETS
-----------------------------------------------------------------------------------------------------------------
U.S. Government Short Duration Portfolio First $250 million 0.50%
Next $500 million 0.45%
Excess of $750 million 0.40%
Short Duration Plus Portfolio First $250 million 0.50%
Next $500 million 0.45%
Excess of $750 million 0.40%
Intermediate Duration Portfolio First $1 billion 0.50%
Next $2 billion 0.45%
Next $2 billion 0.40%
Excess of $5 billion 0.35%
Short Duration California Municipal Portfolio First $250 million 0.50%
Next $500 million 0.45%
Excess of $750 million 0.40%
Short Duration Diversified Municipal Portfolio First $250 million 0.50%
Next $500 million 0.45%
Excess of $750 million 0.40%
Short Duration New York Municipal Portfolio First $250 million 0.50%
Next $500 million 0.45%
Excess of $750 million 0.40%
California Municipal Portfolio First $1 billion 0.50%
Next $2 billion 0.45%
Next $2 billion 0.40%
Excess of $5 billion 0.35%
Diversified Municipal Portfolio First $1 billion 0.50%
Next $2 billion 0.45%
Next $2 billion 0.40%
Excess of $5 billion 0.35%
New York Municipal Portfolio First $1 billion 0.50%
Next $2 billion 0.45%
Next $2 billion 0.40%
Excess of $5 billion 0.35%
The table below shows the Portfolios' expense ratios calculated from the
beginning of the Portfolios' current fiscal year, October 1, 2004 through
June 30, 2005.
PORTFOLIO EXPENSE RATIO
-----------------------------------------------------------------------------------------------------------------
Tax-Managed International Portfolio Advisor 1.22%
Class A 1.54%
Class B 2.24%
Class C 2.25%
- --------------------------------------------------------------------------------
2006 Semiannual Report 87
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
The Following Is Not Part of the Shareholder Report or the Financial
Statements (continued)
PORTFOLIO EXPENSE RATIO
--------------------------------------------------------------------------------------------------
International Portfolio Advisor 1.26%
Class A 1.59%
Class B 2.29%
Class C 2.29%
Emerging Markets Portfolio Advisor 1.67%
U.S. Government Short Duration Portfolio Advisor 0.77%
Short Duration Plus Portfolio Advisor 0.66%
Class A 1.00%
Class B 1.70%
Class C 1.70%
Intermediate Duration Portfolio Advisor 0.60%
Short Duration California Municipal Portfolio Advisor 0.79%
Short Duration Diversified Municipal Portfolio Advisor 0.70%
Short Duration New York Municipal Portfolio Advisor 0.74%
California Municipal Portfolio Advisor 0.64%
Class A 0.88%
Class B 1.58%
Class C 1.58%
Diversified Municipal Portfolio Advisor 0.61%
Class A 0.86%
Class B 1.56%
Class C 1.56%
New York Municipal Portfolio Advisor 0.63%
Class A 0.89%
Class B 1.59%
Class C 1.59%
I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS
The management fees charged to investment companies which the Adviser
manages and sponsors is normally higher than those charged to similar
sized institutional accounts, including pension plans and sub-advised
investment companies. The fee differential reflects, among other things,
different services provided to such clients, and different liabilities
assumed. Services provided by the Adviser to the Fund that are not
provided to non-investment company clients include providing office space
and personnel to serve as Fund Officers, who among other responsibilities
make the certifications required under the Sarbanes-Oxley Act of 2002, and
coordinating with and monitoring the Fund's third party service providers
such as Fund counsel, auditors, custodians, transfer agents and pricing
services. The accounting, administrative, legal and compliance
requirements for the Fund are more costly than those for institutional
assets due to the greater complexities and time required for investment
companies. In addition, managing the cash flow of an investment company
may be more difficult than that of a stable pool of assets, such as an
institutional account with little cash movement in either direction,
particularly if a Portfolio is in net redemption and the Adviser is
frequently forced to sell securities to raise cash for redemptions.
However, managing a Portfolio with positive cash flow may be easier at
times than managing a stable pool
- --------------------------------------------------------------------------------
88 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
of assets. Finally, in recent years, investment advisers have been sued by
institutional clients and have suffered reputational damage both by the
attendant publicity and outcomes other than complete victories.
Accordingly, the legal and reputational risks associated with
institutional accounts are greater than previously thought, although still
not equal to those related to the mutual fund industry.
Notwithstanding the Adviser's view that managing an investment company is
not comparable to managing other institutional accounts because the
services provided are different, it is worth considering information
regarding the advisory fees charged to institutional accounts with
substantially similar investment styles as the Portfolios.
NET ASSETS ALLIANCE INSTITUTIONAL
PORTFOLIO 08/31/05 ($MIL) FEE SCHEDULE
-----------------------------------------------------------------------------------------------------------
Tax-Managed International Portfolio $5,828.3 International Style Blend
80 bp on 1st $25 million
International Portfolio $2,718.6 65 bp on next $25 million
55 bp on next $50 million
45 bp on next $100 million
40 bp on the balance
Minimum account size: $50 million
Emerging Markets Portfolio $1,747.4 Emerging Markets Style Blend
100 bp on 1st $50 million
80 bp on the balance
Minimum account size: $50 million
U.S. Government Short Duration Portfolio $86.9 Low Duration
40 bp on 1st $20 million
25 bp on next $80 million
Short Duration Plus Portfolio $505.2 20 bp on next $100 million
15 bp on the balance
Minimum account size: $20 million
Intermediate Duration Portfolio $3,369.8 U.S. Core Plus
40 bp on 1st $20 million
25 bp on next $80 million
20 bp on next $100 million
15 bp on the balance
Minimum account size: $20 million
Short Duration California $63.0 Short Duration Municipal
Municipal Portfolio 30 bp on 1st $20 million
20 bp on next $80 million
Short Duration Diversified $256.7 15 bp on next $150 million
Municipal Portfolio 12.5 bp on next $250 million
10 bp on the balance
Short Duration New York Municipal Portfolio $124.0 Minimum account size: $5 million
California Municipal Portfolio $1,063.5 Intermediate Duration Municipal
Diversified Municipal Portfolio $3,183.7 50 bp on 1st $5 million
37.5 bp on next $15 million
New York Municipal Portfolio $1,400.4 25 bp on next $80 million
18.75 bp on the balance
Minimum account size: $3 million
- --------------------------------------------------------------------------------
2006 Semiannual Report 89
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
The Following Is Not Part of the Shareholder Report or the Financial
Statements (continued)
The Adviser manages the AllianceBernstein Mutual Funds, which are open-end
investment companies. The advisory schedule of these funds, implemented in
January 2004 as a result of the Assurance of Discontinuance between the
New York State Attorney General and the Adviser, contemplates eight
categories of the AllianceBernstein Mutual Funds with all
AllianceBernstein funds in each category having the same advisory fee
schedule. The Adviser charges the following fees for these funds:
CATEGORY ADVISORY FEE
--------------------------------------------------------------------------
Growth 75 bp on 1st $2.5 billion
65 bp on next $2.5 billion
60 bp on the balance
Value 55 bp on 1st $2.5 billion
45 bp on next $2.5 billion
40 bp on the balance
Balanced 55 bp on 1st $2.5 billion
45 bp on next $2.5 billion
40 bp on the balance
Blend 65 bp on 1st $2.5 billion
55 bp on next $2.5 billion
50 bp on the balance
International 75 bp on 1st $2.5 billion
65 bp on next $2.5 billion
60 bp on the balance
Specialty 75 bp on 1st $2.5 billion
65 bp on next $2.5 billion
60 bp on the balance
High Income 50 bp on 1st $2.5 billion
45 bp on next $2.5 billion
40 bp on the balance
Low Risk Income 45 bp on 1st $2.5 billion
40 bp on next $2.5 billion
35 bp on the balance
- --------------------------------------------------------------------------------
90 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
Set forth below are what would have been the Portfolios' effective
advisory fees at current net asset levels had the AllianceBernstein fee
schedules been applied to the Portfolios as well as the contractual
management fees of the Portfolios(3). In this regard, since there is no
AllianceBernstein Emerging Markets category for the Emerging Markets
Portfolio, the Specialty/International category fee schedule is applied to
the Emerging Markets Portfolio.
ALLIANCEBERNSTEIN FUND EFFECTIVE
PORTFOLIO EFFECTIVE ADVISORY FEE (%) ADVISORY FEE (%)
------------------------------------------------------------------------------------------------
Tax-Managed International Portfolio 0.686 0.906
International Portfolio 0.742 0.940
Emerging Markets Portfolio 0.750 1.204
U.S. Government Short Duration Portfolio 0.450 0.500
Short Duration Plus Portfolio 0.450 0.479
Intermediate Duration Portfolio 0.437 0.481
Short Duration California Municipal Portfolio 0.450 0.500
Short Duration Diversified Municipal Portfolio 0.450 0.500
Short Duration New York Municipal Portfolio 0.450 0.500
California Municipal Portfolio 0.450 0.498
Diversified Municipal Portfolio 0.439 0.465
New York Municipal Portfolio 0.450 0.486
In all cases, the Portfolios' effective advisory fees are higher than what
they would have been had the AllianceBernstein advisory fee schedules been
applied to the Portfolios(4). The services the Adviser provides to the
Portfolios are not substantially different from the investment services it
provides to the other investment companies it manages. From the schedule
alone, it is clear that the proposed advisory fees to be charged to the
Portfolios are generally higher than the advisory fees charged by the
Adviser to other investment companies which it manages.
The Adviser also manages and sponsors retail mutual funds which are
organized in jurisdictions outside the United States, generally
Luxembourg, and sold to non-United States resident investors. The Adviser
charges the following fees for these funds:
ASSET CLASS FEE(5)
--------------------------------------------------------------------------
Emerging Markets Value 0.98%
Emerging Markets Growth 1.00%
Global Growth 1.00%
Fixed Income 0.65%
(3) The contractual effective management fees shown were provided by Lipper. See
footnote 8 for additional discussion.
(4) However, at certain asset levels, because the Short Duration Portfolios
(Short Duration Plus Portfolio, Short Duration California Municipal Portfolio,
Short Duration Diversified Municipal Portfolio and Short Duration New York
Municipal Portfolio) reach their breakpoints at lower asset levels than mandates
with the AllianceBernstein fee schedule, the effective advisory fee for the
Short Duration Portfolios is lower at certain asset levels than the
corresponding AllianceBernstein fund.
(5) The fees charged to the funds include a 0.10% fee for administrative
services provided by the Adviser or its affiliates.
- --------------------------------------------------------------------------------
2006 Semiannual Report 91
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
The Following Is Not Part of the Shareholder Report or the Financial
Statements (continued)
The offshore Global Wealth Strategies funds have an "all-in" fee which
includes the investment advisory fee and distribution related fees. None
of these off-shore funds have breakpoints in the advisory fee schedule.
The "all-in" fee schedule for the Class A shares of these funds are:
FUND FEE
-------------------------------------------------------------------------
Global Equity Blend 1.70%
Global Balanced 1.50%
Global Conservative 1.25%
The Adviser provides sub-advisory investment services to certain other
investment companies managed by other fund families whose investment
styles are similar to the Portfolios. Set forth below are the different
fee schedules that the Adviser has in place with the various sub-advisory
relationships.
PORTFOLIO FEE SCHEDULE
---------------------------------------------------------------------------------
International Portfolio 0.65% on first $75 million
0.50% on next $25 million
0.40% on next $200 million
0.35% on next $450 million
0.30% on the balance
International Portfolio6 0.60% on the first $1 billion
0.55% on the next $500 million
0.50% on the next $500 million
0.45% on the next $500 million
0.40% on the balance
International Portfolio 0.50% on the first $50 million
0.40% on the balance
International Portfolio 0.50%
International Portfolio 0.30%
International Portfolio Base fee of
0.22% on the first $1 billion
0.18% on next $1.5 billion
0.16% thereafter
Plus Performance Fee(7)
Emerging Markets Portfolio 0.90%
U.S. Government Short Duration Portfolio(6) 0.30% on the first $500 million
0.25% on the next $500 million
0.20% on the next $500 million
0.15% on the next $1.5 billion
0.12% on the balance
(6) This is the fee schedule of a fund managed by an affiliate of the Adviser.
(7) The additional performance fee is calculated by multiplying the Base Fee
during the period by an adjustment factor that considers the excess performance
of the fund over its benchmark, the Morgan Stanley Capital International All
World Index Excluding US (ACWI ex US) over a 60 month rolling period. The fund's
annualized effective advisory fee rate over the most recent four quarterly
payments, including base fee plus performance fee, is 0.23%.
- --------------------------------------------------------------------------------
92 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
It is fair to note that the services the Adviser provides pursuant to
sub-advisory agreements are generally confined to the services related to
the investment process; in other words, they are not as comprehensive as
the services provided to the Portfolios by the Adviser. In addition, to
the extent that certain of these sub-advisory relationships are with
affiliates of the Adviser, the fee schedules may not reflect arms-length
bargaining or negotiations.
II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES
Lipper, Inc., an analytical service that is not affiliated with the
Adviser, compared the fees charged to the Portfolios with fees charged to
other investment companies for similar services by other investment
advisers. Lipper's analysis included the Portfolios' ranking with respect
to the proposed management fees relative to the Lipper group medians at
the approximate current asset levels of the Portfolios(8). It should be
noted that at the request of the Senior Officer and Adviser, to obtain an
expense group with a sufficient number of similar sized funds, front-end
load, no-load and institutional funds were considered for inclusion in
Lipper's Expense Group(9).
EFFECTIVE LIPPER
MANAGEMENT GROUP
PORTFOLIO FEE (%) MEDIAN (%) RANK
----------------------------------------------------------------------------------------
Tax-Managed International Portfolio 0.906 0.879 9/15
International Portfolio 0.940 0.900 9/15
Emerging Markets Portfolio 1.204 1.110 6/10
U.S. Government Short Duration Portfolio 0.500 0.483 10/17
Short Duration Plus Portfolio 0.479 0.479 8/15
Intermediate Duration Portfolio 0.481 0.461 7/13
Short Duration California Municipal Portfolio(10) 0.500 0.562 4/10
Short Duration Diversified Municipal Portfolio 0.500 0.482 7/10
Short Duration New York Municipal Portfolio 0.500 0.483 7/11
California Municipal Portfolio(11) 0.498 0.596 4/15
Diversified Municipal Portfolio(12) 0.465 0.452 7/12
New York Municipal Portfolio 0.486 0.500 4/9
(8) The "effective management fee" is calculated by Lipper using the Portfolio's
contractual management fee rate at a hypothetical asset level. The hypothetical
asset level is based on the combined net assets of all classes of the Portfolio,
rounded up to the next $25 million. Lipper's total expense ratio information is
based on the most recent annual report except as otherwise noted. A ranking of
"1" means that the Portfolio has the lowest effective fee rate in the Lipper
peer group.
(9) Lipper's methodology uses the following criteria in screening funds to be
included in each Portfolio's expense group: fund type, investment
classification/objective, load type and similar 12b-1/non-12b-1 service fees,
asset (size) comparability, and expense components and attributes. An expense
group will typically consist of seven to twenty funds.
(10) The Portfolio's Lipper Expense Group includes seven other California
short-intermediate municipal debt funds and two "other states"
short-intermediate municipal debt funds as classified by Lipper. Without the
"other states" short-intermediate municipal debt funds, the Lipper Expense Group
would have had an effective management fee median of 0.563 and the Portfolio
would have an effective management fee ranking of 4/8.
(11) The Portfolio's Lipper Expense Group includes five other California
intermediate municipal debt funds and nine "other states" intermediate municipal
debt funds as classified by Lipper. Without the "other states" intermediate
municipal debt funds, the Lipper Expense Group would have had an effective
management fee median of 0.498 and the Portfolio would have an effective
management fee ranking of 3/6.
(12) The Portfolio's Lipper Expense Group includes 9 other intermediate
municipal debt funds and two short-intermediate municipal debt funds as
classified by Lipper. Without the two short-intermediate municipal debt funds,
the Lipper Expense Group would have had an effective management fee median of
0.481 and the Portfolio would have an effective management fee ranking of 4/10.
- --------------------------------------------------------------------------------
2006 Semiannual Report 93
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
The Following Is Not Part of the Shareholder Report or the Financial
Statements (continued)
Lipper also analyzed the expense ratios of each Portfolio in comparison to
its Lipper Expense Group and Lipper Expense Universe13. Lipper describes a
Lipper Expense Group as a representative sample of comparable funds and a
Lipper Expense Universe as a broader group, consisting of all funds in the
same investment classification/objective with a similar load type as the
subject Portfolio. The results of that analysis are set forth below:
EXPENSE LIPPER LIPPER LIPPER LIPPER
RATIO(14) UNIVERSE UNIVERSE GROUP GROUP
PORTFOLIO (%) MEDIAN (%) RANK MEDIAN (%) RANK
--------------------------------------------------------------------------------------------------------------
Tax-Managed International Portfolio 1.245 1.612 47/219 1.205 9/15
International Portfolio 1.280 1.612 56/219 1.205 9/15
Emerging Markets Portfolio 1.720 1.998 48/156 1.475 9/10
U.S. Government Short Duration Portfolio 0.781 0.808 30/72 0.781 9/17
Short Duration Plus Portfolio 0.683 0.871 58/190 0.804 6/15
Intermediate Duration Portfolio 0.613 0.900 76/395 0.615 6/13
Short Duration California Municipal Portfolio(15) 0.781 0.753 13/23 0.734 6/10
Short Duration Diversified Municipal Portfolio 0.691 0.735 26/61 0.646 6/10
Short Duration New York Municipal Portfolio 0.735 0.741 29/60 0.747 5/11
California Municipal Portfolio(16) 0.645 0.894 34/230 0.766 2/15
Diversified Municipal Portfolio(17) 0.611 0.835 39/180 0.706 4/12
New York Municipal Portfolio(18) 0.636 0.954 4/38 0.735 2/10
Based on this analysis, except for Emerging Markets Portfolio and Short
Duration California Municipal Portfolio, which have a more favorable
ranking for management fees compared to total expense ratio, and
Tax-Managed International Portfolio and International Portfolio which have
equally favorable rankings, the Portfolios have a more favorable ranking
on total expense ratio basis than they do on a management fee basis.
III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO
THE MANAGEMENT FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT
Members of the Adviser's Controller's Office presented to the Board of
Directors the Adviser's revenue and expenses associated with providing
services to the Portfolios. The presentation included an update on the
Adviser's work with an independent consultant to align the Adviser's two
profitability systems. The alignment, which now is complete, produces
profitability information at the Portfolio level which reflects the
Adviser's management reporting approach. See discussion below in Section
IV.
(13) Except for asset (size) comparability and load type, Lipper uses the same
criteria for selecting an Expense Group when selecting an Expense Universe.
Unlike an Expense Group, an Expense Universe allows for the same adviser to be
represented by more than just one fund. For each Lipper Expense Universe Lipper
included each Portfolio and all of the funds of the same Lipper
Classification/Objective, regardless of asset size or primary channel of
distribution.
(14) Most recent fiscal year end Advisor Class share expense ratios.
(15) The Portfolio's Lipper Expense Group includes seven other California
short-intermediate municipal debt funds and two "other states"
short-intermediate municipal debt funds as classified by Lipper. Without the
"other states" short-intermediate municipal debt funds, the Lipper Expense Group
would have had a total expense ratio median of 0.695 and the Portfolio would
have a total expense ratio ranking of 5/8.
(16) The Portfolio's Lipper Expense Group includes five other California
intermediate municipal debt funds and nine "other states" intermediate municipal
debt funds as classified by Lipper. Without the "other states" intermediate
municipal debt funds, the Lipper Expense Group would have had a total expense
ratio median of 0.712 and the Portfolio would have a total expense ratio ranking
of 2/6.
(17) The Portfolio's Lipper Expense Group includes 9 other intermediate
municipal debt funds and two short-intermediate municipal debt funds as
classified by Lipper. Without the two short-intermediate municipal debt funds,
the Lipper Expense Group would have had a total expense ratio median of 0.676
and the Portfolio would have a total expense ratio ranking of 4/10.
(18) The number of funds used in Lipper's group ranking for management fees is
one less than the number of funds used in Lipper's group ranking for total
expenses. According to Lipper, the excluded fund's contractual management fee
cannot be computed because of its breakpoint gross income component.
- --------------------------------------------------------------------------------
94 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES
The profitability information for the Portfolios prepared by the Adviser
for the Board of Directors was reviewed by the Senior Officer. Based on
the information provided, except for the Short-Term Municipal Income
Portfolios, the Adviser's profitability from providing investment advisory
services to the Portfolios decreased during calendar 2004 relative to
2003.
The Portfolios have a Shareholder Servicing Agreement with the Adviser
where the Adviser pays expenses it incurs in providing shareholder
servicing to the Portfolios. Under the Shareholder Servicing Agreement,
except for Tax-Managed International Portfolio, International Portfolio
and Emerging Markets Portfolio, which pays 0.25%, the Portfolios pay the
Adviser 0.10% of the Portfolio's daily average net assets. Set forth below
are the fees paid by the Portfolios under the Shareholder Servicing
Agreement in the Portfolios most recently completed fiscal year.
SHAREHOLDER SERVING
PORTFOLIO AGREEMENT FEE
--------------------------------------------------------------------------
Tax-Managed International Portfolio $10,517,391
International Portfolio $ 5,113,991
Emerging Markets Portfolio $ 2,877,256
U.S. Government Short Duration Portfolio $ 101,774
Short Duration Plus Portfolio $ 411,043
Intermediate Duration Portfolio $ 2,612,933
Short Duration California Municipal Portfolio $ 77,177
Short Duration Diversified Municipal Portfolio $ 240,126
Short Duration New York Municipal Portfolio $ 123,457
California Municipal Portfolio $ 752,374
Diversified Municipal Portfolio $ 2,261,248
New York Municipal Portfolio $ 1,055,386
In addition to the Adviser's direct profits from managing the Fund,
certain of the Adviser's affiliates have business relationships with the
Fund and may earn a profit from providing other services to the Fund. The
courts have referred to this type of business opportunity as "fall-out
benefits" to the Adviser and indicated that they should be factored into
the evaluation of the total relationship between the Fund and the Adviser.
Neither case law nor common business practice precludes the Adviser's
affiliates from earning a reasonable profit on this type of relationship.
These affiliates provide transfer agent, distribution, and brokerage
related services to the Fund and receive transfer agent fees, Rule 12b-1
payments, front-end sales loads, contingent deferred sales charges
("CDSC") and commissions for providing brokerage services. In addition,
the Adviser benefits from soft dollar arrangements which offset expenses
the Adviser would otherwise incur. Additional information regarding the
distribution related fees of the Retail Classes can be found in Retail
Class prospectuses of the Portfolios.
The Adviser's affiliate, AllianceBernstein Investment Research and
Management, Inc. ("ABIRM"), is the Portfolios' principal underwriter.
ABIRM and the Adviser have disclosed in the prospectuses of the Retail
Class shares that they may make payments(19) from their own resources, in
addition to resources derived from sales loads and Rule 12b-1 fees, to
firms that sell shares of the Portfolios. In 2004, ABIRM paid
approximately 0.04% of the average monthly assets of the Retail Classes of
the mutual funds it manages for distribution services and educational
support. For 2005, it is anticipated, ABIRM will pay approximately 0.04%
of the average monthly assets of the Retail Classes of the Portfolios for
such purposes.
(19) The total amount paid to the financial intermediary in connection with the
sale of shares will generally not exceed the sum of (a) 0.25% of the current
year's Fund sales by that firm and (b) 0.10% of the average daily net assets
attributable to that firm over the year.
- --------------------------------------------------------------------------------
2006 Semiannual Report 95
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
The Following Is Not Part of the Shareholder Report or the Financial
Statements (continued)
After payments to third party intermediaries, ABIRM retained the following
amounts in Class A front-end load sales charges from sales associated with
each Portfolio's most recent fiscal year.
PORTFOLIO(20) AMOUNT RECEIVED
-------------------------------------------------------------------------
Tax-Managed International Portfolio $ 2,693
International Portfolio $ 1,530
Short Duration Plus Portfolio $17,025
California Municipal Portfolio $ 5,418
Diversified Municipal Portfolio $18,508
New York Municipal Portfolio $ 9,701
ABIRM received the amounts set forth below in Rule 12b-1 fees and CDSC for
each of the following Portfolios during the most recent fiscal year.
PORTFOLIO 12B-1 FEE RECEIVED CDSC RECEIVED
--------------------------------------------------------------------------
Tax-Managed International Portfolio $ 957 $ 8,330
International Portfolio $ 24,010 $ 282
Short Duration Plus Portfolio $1,002,662 $ 196,528
California Municipal Portfolio $ 933,919 $ 125,577
Diversified Municipal Portfolio $2,462,472 $ 359,297
New York Municipal Portfolio $1,414,168 $ 185,125
Fees and reimbursements for out of pocket expenses charged by Alliance
Global Investor Services, Inc. ("AGIS"), the affiliated transfer agent,
are based on the level of the network account and the class of share held
by the account. AGIS also receives a fee per shareholder sub-account for
each account maintained by an intermediary on an omnibus basis. AGIS'
after-tax profitability decreased in 2004 in comparison to 2003.
Certain of the Portfolios effected brokerage transactions through the
Adviser's affiliate, Sanford C. Bernstein & Co. LLC ("SCB"), and paid
commissions during the Fund's recent fiscal year. The Adviser represented
that SCB's profitability from business conducted with these Portfolios is
comparable to the profitability of SCB's dealings with other similar third
party clients. In the ordinary course of business, SCB receives and pays
liquidity rebates from electronic communications networks ("ECNs") derived
from trading for its clients, including the Portfolios. These credits and
charges are not being passed on to any SCB client.
V. POSSIBLE ECONOMIES OF SCALE
The Adviser has indicated that the breakpoints in the fee schedule in the
Investment Advisory Agreement reflect a sharing of economies of scale to
the extent the breakpoints are reached. Based on some of the professional
literature that has considered economies of scale in the mutual fund
industry it is thought that to the extent economies of scale exist, they
may more often exist across a fund family as opposed to a specific fund.
This is because the costs incurred by the Adviser, such as investment
research or technology for trading or compliance systems can be spread
across a greater asset base as the fund family increases in size. It is
also possible that as the level of services required to operate a
successful investment
(20) There are no Retail Class shares (A, B, C and R) for Emerging Markets
Portfolio, U.S. Government Short Duration Portfolio, Intermediate Duration
Portfolio, Short Duration California Municipal Portfolio, Short Duration
Diversified Municipal Portfolio and Short Duration New York Municipal Portfolio.
- --------------------------------------------------------------------------------
96 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
company has increased over time, and advisory firms have made such
investments in their business to provide improved services, there may be a
sharing of economies of scale without a reduction in advisory fees.
An independent consultant made a presentation to the Board of Directors
and the Senior Officer regarding possible economies of scale or scope in
the mutual fund industry. Based on the presentation, it was evident that
fund management companies benefit from economies of scale. However, due to
lack of cost data, researchers had to infer facts about the costs from the
behavior of fund expenses; there was a lack of consensus among researchers
as to whether economies of scale were being passed on to the shareholders.
It is contemplated that additional work will be performed to determine if
the benefits of economies of scale or scope are being passed to
shareholders by the Adviser. In the meantime, it is clear that to the
extent that a Portfolio's assets exceed the initial breakpoint its
shareholders benefit from a lower fee rate.
VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING THE PERFORMANCE OF
THE FUND
With assets under management of $516 billion as of June 30, 2005, the
Adviser has the investment experience to manage and provide non-investment
services (described in Section II) to the Fund.
The information prepared by Lipper showed the 1, 3, 5 and 10 year
performance ranking of the Portfolios21 as of June 30, 2005 relative to
its Lipper Performance Group22 and Lipper Performance Universe23. It
should be noted that the duration of the fixed income Portfolios is
shorter than the implied duration of the Portfolios' peer category. For
example, the Intermediate Duration Portfolios have a 5 year average
maturity, which generally translates to a duration of about 4 years, while
the peer category is typically defined as having a maturity of anywhere
from 5 to 10 years. The Short Duration
TAX-MANAGED INTERNATIONAL PORTFOLIO GROUP UNIVERSE
--------------------------------------------------------------------------
1 year 10/15 177/275
3 year 9/15 78/221
5 year 7/12 33/163
10 year 4/7 13/54
INTERNATIONAL PORTFOLIO GROUP UNIVERSE
--------------------------------------------------------------------------
1 year 10/15 174/275
3 year 8/15 66/221
5 year 7/12 30/163
EMERGING MARKETS PORTFOLIO GROUP UNIVERSE
--------------------------------------------------------------------------
1 year 1/10 2/183
3 year 1/10 4/159
5 year 1/9 6/114
U.S. GOVERNMENT SHORT DURATION PORTFOLIO GROUP UNIVERSE
--------------------------------------------------------------------------
1 year 9/17 48/82
3 year 9/16 36/74
5 year 9/15 35/65
10 year 7/11 41/50
SHORT DURATION PLUS PORTFOLIO GROUP UNIVERSE
--------------------------------------------------------------------------
1 year 11/14 161/206
3 year 5/12 77/134
5 year 5/12 66/104
10 year 5/11 32/58
(21) The performance rankings are for the Advisor Class shares of the
Portfolios.
(22) The Lipper Performance Group is identical to the Lipper Expense Group.
(23) For each Lipper Performance Universe, Lipper included each Portfolio and
all of the funds of the same Lipper Classification/Objective, regardless of
asset size or primary channel of distribution.
- --------------------------------------------------------------------------------
2006 Semiannual Report 97
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
The Following Is Not Part of the Shareholder Report or the Financial
Statements (continued)
INTERMEDIATE DURATION PORTFOLIO GROUP UNIVERSE
--------------------------------------------------------------------------
1 year 7/13 261/445
3 year 7/13 167/387
5 year 11/12 234/273
10 year 6/9 113/135
SHORT DURATION CALIFORNIA MUNICIPAL PORTFOLIO GROUP UNIVERSE
--------------------------------------------------------------------------
1 year 8/8 17/17
3 year 8/8 12/12
5 year 8/8 12/12
10 year 6/6 7/7
SHORT DURATION DIVERSIFIED MUNICIPAL PORTFOLIO GROUP UNIVERSE
--------------------------------------------------------------------------
1 year 8/10 42/64
3 year 6/8 30/45
5 year 5/6 24/35
10 year 4/5 17/25
SHORT DURATION NEW YORK MUNICIPAL PORTFOLIO GROUP UNIVERSE
--------------------------------------------------------------------------
1 year 7/11 35/64
3 year 6/8 26/45
5 year 5/6 25/35
10 year 4/5 18/25
CALIFORNIA MUNICIPAL PORTFOLIO GROUP UNIVERSE
--------------------------------------------------------------------------
1 year 5/6 29/45
3 year 5/6 23/35
5 year 6/6 29/29
10 year 6/6 14/14
DIVERSIFIED MUNICIPAL PORTFOLIO GROUP UNIVERSE
--------------------------------------------------------------------------
1 year 9/10 117/150
3 year 8/9 104/125
5 year 8/9 93/95
10 year 7/9 61/69
NEW YORK MUNICIPAL PORTFOLIO GROUP UNIVERSE
--------------------------------------------------------------------------
1 year 9/10 27/37
3 year 9/10 20/27
5 year 10/10 17/18
10 year 7/7 13/14
(24) The performance returns are for the Advisor Class shares of the Portfolios.
(25) The Adviser provided Portfolio and benchmark performance return information
for periods through June 30, 2005 in order to maintain consistency with Lipper's
performance rankings in the analysis.
- --------------------------------------------------------------------------------
98 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
Portfolios have a duration of 2 years while the short-term category
includes funds with a duration of up to 5 years. These differences may
have a substantial impact on the performance of the Portfolios depending
on the movement of short and long term interest rates.
Set forth below are the 1, 3, 5, 10 year and since inception performance
returns of the Portfolios (in bold) (24) versus its benchmarks(25)
PERIODS ENDING JUNE 30, 2005
ANNUALIZED PERFORMANCE
---------------------------------------------------------------------------------------------------------------------------
FUNDS 1 YEAR 3 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
---------------------------------------------------------------------------------------------------------------------------
Tax Managed International Portfolio 12.30 11.53 3.93 8.91 8.95
MSCI EAFE 14.13 12.51 -0.17 5.57 7.24
International Portfolio 12.28 11.89 4.16 n/a 5.30
MSCI EAFE 14.13 12.51 -0.17 n/a 2.26
Emerging Markets Portfolio 47.92 34.44 16.40 n/a 7.79
MSCI Emerging Markets 34.89 24.42 7.68 n/a 4.73
U.S. Government Short Duration Portfolio 1.84 2.09 4.13 4.54 5.53
Merrill Lynch 1-3 Yr. Treasury Index 1.87 2.33 4.49 5.12 6.17
Short Duration Plus Portfolio 1.95 2.55 4.32 4.83 5.85
Merrill Lynch 1-3 Yr. Treasury Index 1.87 2.33 4.49 5.12 6.19
Intermediate Duration Portfolio 6.47 5.86 6.30 5.94 7.27
Lehman Brothers Aggregate Bond Index 6.80 5.76 7.40 6.83 7.97
Short Duration California Municipal Portfolio 1.33 1.38 2.52 3.08 3.26
Lehman Brothers 1 Yr. Municipal Index 1.51 1.72 3.20 3.79 3.93
Short Duration Diversified Municipal Portfolio 1.66 1.64 3.00 3.36 3.55
Lehman Brothers 1 Yr. Municipal Index 1.51 1.72 3.20 3.79 3.93
Short Duration New York Portfolio 1.84 1.65 2.79 3.17 3.34
Lehman Brothers 1 Yr. Municipal Index 1.51 1.72 3.20 3.79 3.93
California Municipal Portfolio 4.63 3.46 4.57 4.70 5.40
Lehman Brothers 5 Yr. G/O Index 4.49 4.02 5.53 5.27 5.97
Diversified Municipal Portfolio 4.50 3.66 4.97 4.84 5.60
Lehman Brothers 5 Yr. G/O Index 4.49 4.02 5.53 5.27 6.05
New York Municipal Portfolio 4.81 3.79 4.92 4.82 5.64
Lehman Brothers 5 Yr. G/O Index 4.49 4.02 5.53 5.27 6.05
Set forth below are the 1, 3, 5, 10 year and since inception performance
returns of the Portfolios (in bold)24 versus its benchmarks25.
VII. CONCLUSION
Based on the factors discussed above my conclusion is that the proposed
fee for each of the fixed income Portfolios is reasonable and within the
range of what would have been negotiated at arms-length in light of all
the surrounding circumstances. This conclusion in respect of each
Portfolio is based on my evaluation of all of the factors that I
considered and no single factor was dispositive.
With respect to the International, Tax-Managed International and Emerging
Markets Portfolios, I recommend the directors modify the advisory fee
schedule for these Portfolios. Although the performances of the equity
Portfolios are more than adequate relative to the Lipper comparisons and
the benchmarks, and most notably in the case of the Emerging Markets
Portfolio, where it is quite exceptional, the effective advisory fees of
the Portfolios are higher than the Lipper Group Medians. Furthermore, the
effective advisory fees are higher than what the effective advisory fees
would have been had the AllianceBernstein advisory fee schedules been
applied to the Portfolios.
The Directors may want to consider reaching a lower effective advisory fee
by a variety of ways including: combining some or all of the Portfolios
for purposes of calculating the advisory fee, reducing the initial rate of
the advisory fee, reducing the asset levels to reach subsequent
breakpoints or adding additional breakpoints at assets levels that the
Portfolio (or Portfolios on a combined basis) have reached.
Dated: November 29, 2005
(24) The performance returns are for the Advisor Class shares of the
Portfolios.
(25) The Adviser provided Portfolio and benchmark performance return
information for periods through June 30, 2005 in order to maintain
consistency with Lipper's performance rankings in the analysis.
- --------------------------------------------------------------------------------
2006 Semiannual Report 99
- --------------------------------------------------------------------------------
Results of Shareholders Meeting
Unaudited
The Annual Meeting of Stockholders of Sanford C. Bernstein Fund II (the "Fund")
was held on December 6, 2005. The Meeting was originally scheduled to be held on
November 15, 2005, however an insufficient number of votes had been received as
of November 15, 2005 to constitute a quorum and the Meeting was therefore
adjourned until December 6, 2005 in order to permit for additional time for the
solicitation of proxies. At the December 6, 2005 Meeting, with respect to the
first item of business, the election of Directors, the second item of business,
the amendment and restatement of the Fund's charter, and the third item of
business, the amendment, elimination or reclassification as non-fundamental of
certain investment restrictions, the required number of outstanding shares were
voted in favor of each proposal, and the proposals were approved. A description
of each proposal and number of shares voted at the Meetings are as follows (the
proposal numbers shown below correspond to the proposal numbers in the Fund's
proxy statement):
1. The election of the Directors, each such Director to serve a term of
an indefinite duration and until his or her successor is duly
elected and qualifies.
WITHHELD
VOTED FOR AUTHORITY
--------------------------------------------------------------------------
Ruth Block 23,097,366 162,045
David H. Dievler 23,097,366 162,045
John H. Dobkin 23,097,366 162,045
Michael J. Downey 23,097,366 162,045
William H. Foulk, Jr. 23,097,366 162,045
D. James Guzy 23,097,366 162,045
Mark O. Mayer 23,097,366 162,045
Marshall C. Turner, Jr. 23,097,366 162,045
2. The amendment and restatement of the Charter. VOTED BROKER
VOTED FOR AGAINST ABSTAINED NON-VOTES
--------------------------------------------------------------
23,097,366 0 162,045 0
3. The amendment, elimination, or reclassification as non-fundamental,
of the fundamental investment restrictions regarding:
VOTED BROKER
VOTED FOR AGAINST ABSTAINED NON-VOTES
--------------------------------------------------------------
3.A Diversification 23,097,366 0 162,045 0
3.B Issuing Senior Securities
and Borrowing Money 22,845,179 0 414,232 0
3.C Underwriting Securities 22,845,179 0 414,232 0
3.D Concentration of Investments 22,660,996 0 598,415 0
3.E Real Estate and Companies
That Deal In Real Estate 23,097,366 0 162,045 0
3.F Commodity Contracts and
Futures Contracts 22,913,183 0 346,228 0
3.G Loans 22,845,179 0 414,232 0
3.H Pledging, Hypothecating, Mortgaging,
or Otherwise Encumbering Assets 23,097,366 0 162,045 0
3.K Other Investment Companies 21,750,479 1,346,887 162,045 0
- --------------------------------------------------------------------------------
100 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund II, Inc.
================================================================================
BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
William H. Foulk, Jr.*
Chairman
Marc O. Mayer
President
Ruth Block*
David H. Dievler*
John H. Dobkin*
Michael J. Downey*
D. James Guzy*
Marshall C. Turner, Jr.*
================================================================================
OFFICERS
- --------------------------------------------------------------------------------
Philip L. Kirstein
Senior Vice President and
Independent Compliance Officer
Shawn Keegan
Vice President
Joran Laird
Vice President
Alison M. Martier
Vice President
Jeffrey Phlegar
Vice President
Greg Wilensky
Vice President
Mark D. Gersten
Treasurer and Chief Financial Officer
Vincent S. Noto
Controller
Emilie D. Wrapp
Secretary
================================================================================
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
PricewaterhouseCoopers LLP
300 Madison Avenue
New York, New York 10017
================================================================================
LEGAL COUNSEL
- --------------------------------------------------------------------------------
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, New York 10019
================================================================================
CUSTODIAN AND TRANSFER AGENT
- --------------------------------------------------------------------------------
State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111
================================================================================
INVESTMENT ADVISER
- --------------------------------------------------------------------------------
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York 10105
* Member of the Audit Committee, the Independent Directors Committee and the
Governance and Nominating Committee.
- --------------------------------------------------------------------------------
2006 Semiannual Report 101
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund II, Inc.
Bernstein Intermediate Duration Institutional Portfolio
Board's Consideration of Investment Management Arrangements
The Fund's disinterested directors (the "directors") unanimously approved
the continuance of the Advisory Agreement between the Fund and the Adviser
at a meeting held on December 14, 2005. Bernstein Intermediate Duration
Institutional Portfolio is the Fund's sole portfolio and is sometimes
referred to as the "Fund" in this section.
In preparation for the meeting, the directors had requested from the
Adviser and evaluated extensive materials, including performance and
expense information for other investment companies with similar investment
objectives derived from data compiled by Lipper Inc. ("Lipper"), which is
not affiliated with the Adviser. The directors also reviewed an
independent evaluation from the Fund's Senior Officer (who is also the
Fund's Independent Compliance Officer) of the reasonableness of the
advisory fees in the Fund's Advisory Agreement (as contemplated by the
September 2004 Assurance of Discontinuance between the Adviser and the New
York Attorney General) wherein the Senior Officer concluded that such fees
were reasonable. In addition, the directors received a presentation from
the Adviser and had an opportunity to ask representatives of the Adviser
various questions relevant to the proposed approval. The directors noted
that the Senior Officer's evaluation considered the following factors:
management fees charged to institutional and other clients of the Adviser
for like services; management fees charged by other mutual fund companies
for like services; cost to the Adviser and its affiliates of supplying
services pursuant to the Advisory Agreement, excluding any intra-corporate
profit; profit margins of the Adviser and its affiliates from supplying
such services; possible economies of scale as the Fund grows larger; and
nature and quality of the Adviser's services including the performance of
the Fund.
Prior to voting, the directors reviewed the proposed continuance of the
Advisory Agreement with management and with experienced counsel who are
independent of the Adviser and received a memorandum from such counsel
discussing the legal standards for their consideration of the proposed
continuance. The directors also discussed the proposed continuance in four
private sessions at which only the directors, their independent counsel
and the Fund's Independent Compliance Officer were present. In reaching
their determinations relating to continuance of the Advisory Agreement,
the directors considered all factors they believed relevant, including the
following:
1. information comparing the performance of the Fund to other
investment companies with similar investment objectives and to an
index;
2. the nature, extent and quality of investment, compliance,
administrative and other services rendered by the Adviser;
3. payments received by the Adviser from all sources in respect of the
Fund and all investment companies in the AllianceBernstein Funds
complex;
4. the costs borne by, and profitability of, the Adviser and its
affiliates in providing services to the Fund and to all investment
companies in the AllianceBernstein Funds complex;
5. comparative fee and expense data for the Fund and other investment
companies with similar investment objectives;
6. the extent to which economies of scale would be realized to the
extent the Fund grows and whether fee levels reflect these economies
of scale for the benefit of investors;
7. the Adviser's policies and practices regarding allocation of
portfolio transactions of the Fund;
8. portfolio turnover rates for the Fund compared to other investment
companies with similar investment objectives;
9. fall-out benefits which the Adviser and its affiliates receive from
their relationships with the Fund;
10. information about fees charged by the Adviser to other clients with
a substantially similar investment style as the Fund;
11. the Senior Officer's evaluation of the reasonableness of the fee
payable to the Adviser in the Advisory Agreement;
12. the professional experience and qualifications of the Fund's
portfolio management team and other senior personnel of the Adviser;
and
13. the terms of the Advisory Agreement.
- --------------------------------------------------------------------------------
102 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
The directors also considered their knowledge of the nature and quality of
the services provided by the Adviser to the Fund gained from their
experience as directors or trustees of most of the registered investment
companies advised by the Adviser, their overall confidence in the
Adviser's integrity and competence they have gained from that experience
and the Adviser's responsiveness to concerns raised by them in the past,
including the Adviser's willingness to consider and implement
organizational and operational changes designed to improve investment
results and the services provided to the AllianceBernstein Funds.
In their deliberations, the directors did not identify any particular
information that was all-important or controlling, and the directors
attributed different weights to the various factors.
The directors determined that the overall arrangements between the Fund
and the Adviser, as provided in the Advisory Agreement, were fair and
reasonable in light of the services performed, expenses incurred and such
other matters as the directors considered relevant in the exercise of
their business judgment.
The material factors and conclusions that formed the basis for the
directors' reaching their determinations to approve the continuance of the
Advisory Agreement (including their determinations that the Adviser should
continue to be the investment adviser for the Fund, and that the fees
payable to the Adviser pursuant to the Advisory Agreement are appropriate)
were separately discussed by the directors.
Nature, extent and quality of services provided by the Adviser
The directors noted that, under the Advisory Agreement, the Adviser,
subject to the oversight of the directors, administers the Fund's business
and other affairs. The Adviser manages the investment of the assets of the
Fund, including making purchases and sales of portfolio securities
consistent with the Fund's investment objective and policies. Under the
Advisory Agreement, the Adviser also provides the Fund with such office
space, administrative and other services (exclusive of, and in addition
to, any such services provided by any others retained by the Fund) and
executive and other personnel as are necessary for the Fund's operations.
The Adviser pays all of the compensation of directors of the Fund who are
affiliated persons of the Adviser and of the officers of the Fund.
The directors also considered that the Advisory Agreement for the Fund
provides that the Fund will reimburse the Adviser for the cost of certain
clerical, accounting, administrative and other services provided at the
Fund's request by employees of the Adviser or its affiliates. Requests for
these "at no more than cost" reimbursements are approved by the directors
on a quarterly basis and (to the extent requested and paid) result in a
higher rate of total compensation from the Fund to the Adviser than the
fee rates stated in the Fund's Advisory Agreement. The directors noted
that no reimbursements have been made to date by the Fund in light of the
expense cap for the Fund.
The directors considered the scope and quality of services provided by the
Adviser under the Advisory Agreement and noted that the scope of services
provided by advisers had expanded over time as a result of regulatory and
other developments. The directors noted that, for example, the Adviser is
responsible for maintaining and monitoring its own and, to varying
degrees, the Fund's compliance programs, and that these compliance
programs have recently been refined and enhanced in light of new
regulatory requirements. The directors considered the quality of the
in-house investment research capabilities of the Adviser and the other
resources it has dedicated to performing services for the Fund. The
quality of administrative and other services, including the Adviser's role
in coordinating the activities of the Fund's other service providers, also
were considered. The directors also considered the Adviser's response to
recent regulatory compliance issues affecting a number of the investment
companies in the AllianceBernstein Funds complex. The directors concluded
that, overall, they were satisfied with the nature, extent and quality of
services provided to the Fund under the Advisory Agreement.
Costs of Services Provided and Profitability to the Adviser
The directors reviewed a schedule of the revenues, expenses and related
notes indicating the profitability of the Fund to the Adviser for calendar
years 2003 and 2004. The directors also reviewed information in respect of
2004 that had been prepared with an updated expense allocation
methodology. The directors noted that the updated expense allocation
- --------------------------------------------------------------------------------
2006 Semiannual Report 103
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund II, Inc.
Bernstein Intermediate Duration Institutional Portfolio
Board's Consideration of Investment Management Arrangements (continued)
methodology would be used in 2005, and that it differed in various
respects from the methodology used in prior years. The directors reviewed
the assumptions and methods of allocation used by the Adviser in preparing
fund-specific profitability data, and noted the Adviser's representation
to them that it believed that the methods of allocation used in preparing
the profitability information were reasonable and appropriate and that the
Adviser had previously discussed with the directors that there is no
generally accepted allocation methodology for information of this type.
The directors recognized that it is difficult to make comparisons of
profitability from fund management contracts because comparative
information is not generally publicly available and is affected by
numerous factors, including the structure of the particular adviser, the
types of funds it manages, its business mix, numerous assumptions
regarding allocations and the adviser's capital structure and cost of
capital. In considering profitability information, the directors
considered the effect of fall-out benefits on the Adviser's expenses. The
directors focused on the profitability of the Adviser's relationship with
the Fund before taxes and distribution expenses. The directors recognized
that the Adviser should generally be entitled to earn a reasonable level
of profits for the services it provides to the Fund and, based on their
review, concluded that they were satisfied that the Adviser's level of
profitability from its relationship with the Fund in calendar 2004 was not
excessive. The directors noted that the Adviser's relationship with the
Fund in calendar 2003 was not profitable to it.
Fall-Out Benefits
The directors considered that the Adviser benefits from soft dollar
arrangements whereby it receives brokerage and research services from many
of the brokers and dealers that execute purchases and sales of securities
on behalf of its clients on an agency basis. The directors noted that
since the Fund does not engage in brokerage transactions, the Adviser does
not receive soft dollar benefits in respect of portfolio transactions of
the Fund.
The directors also noted that shares of the Fund are distributed
exclusively through a subsidiary of the Adviser, and that such subsidiary
receives fees from its clients in connection with its services.
The directors recognized that the Adviser's profitability would be
somewhat lower if the Adviser's subsidiary did not receive the benefits
described above. The directors understood that the Adviser might derive
reputational and other benefits from its association with the Fund.
Investment Results
In addition to the information reviewed by the directors in connection
with the meeting, the directors receive detailed comparative performance
information for the Fund at each regular Board meeting during the year. At
the meeting, the directors reviewed information from a report prepared by
Lipper showing performance of the Fund as compared to a group of 15 funds
in its Lipper category selected by Lipper (the "Performance Group") and as
compared to a universe of 73 to 149 funds (depending on the year) in its
Lipper category selected by Lipper (the "Performance Universe") for
periods ended September 30, 2005 over the 1- and 3-year periods, and as
compared to the Lehman Brothers Aggregate Bond Index (the "Index") for
periods ended September 30, 2005 over the year to date ("YTD"), 1- and
3-year and since inception periods (May 2002 inception). The directors
noted that in the Performance Group comparison the Fund was in the 2nd
quintile in the 1-year period and 3rd quintile in the 3-year period, and
in the Performance Universe comparison the Fund was in the 1st quintile in
the 1-year period and 2nd quintile in the 3-year period. The comparative
information showed that the Fund outperformed the Index in the YTD, 1- and
3-year periods and underperformed the Index in the since inception period.
Based on their review, the directors concluded that the Fund's relative
performance over time was satisfactory.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate paid by the Fund to the
Adviser and information prepared by Lipper concerning fee rates paid by
other funds in the same Lipper category as the Fund at a common asset
level. The directors recognized that it is difficult to make comparisons
of advisory fees because there are variations in the services that are
included in the fees paid by other funds.
- --------------------------------------------------------------------------------
104 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
The directors also considered the fees the Adviser charges other clients
with investment objectives similar to those of the Fund. For this purpose,
they reviewed information in the Adviser's Form ADV and a chart prepared
by the Adviser disclosing the institutional fee schedule for institutional
products offered by it that have a substantially similar investment style
as the Fund. They also received an oral presentation from the Adviser that
supplemented such information. The directors noted that the institutional
fee schedule for clients with a comparable investment style to the Fund
had much lower breakpoints than the fee schedule in the Fund's Advisory
Agreement. The directors also noted that the application of such fee
schedule to the level of assets of the Fund would result in a fee rate
that would be significantly lower than that in the Fund's Advisory
Agreement. The directors noted that the Adviser may, in some cases,
negotiate fee rates with large institutional clients that are lower than
those reviewed by the directors and that they had previously discussed
with the Adviser its policies in respect of such negotiated arrangements.
The Adviser reviewed with the directors the significant differences in the
scope of services it provides to institutional clients and to the Fund.
For example, the Advisory Agreement requires the Adviser to provide, in
addition to investment advice, office facilities and officers (including
officers to provide required certifications). The Adviser also coordinates
the provision of services to the Fund by non-affiliated service providers
and is responsible for the compensation of the Fund's Independent
Compliance Officer and certain related expenses. The provision of these
non-advisory services involves costs and exposure to liability. The
Adviser explained that many of these services normally are not provided to
non-investment company clients and that fees charged to the Fund reflect
the costs and risks of the additional obligations. The Adviser also noted
that since the Fund is constantly issuing and redeeming its shares, it is
more difficult to manage than an institutional account, where the assets
are relatively stable. In light of these facts, the directors did not
place significant weight on these fee comparisons.
The directors also considered the total expense ratio of the Fund in
comparison to the fees and expenses of funds within two comparison groups
created by Lipper: an Expense Group and an Expense Universe. Lipper
described an Expense Group as a representative sample of comparable funds
and an Expense Universe as a broader group, consisting of all funds in the
Fund's investment classification/objective with a similar load type as the
Fund. The expense ratio of the Fund was based on the Fund's latest fiscal
year expense ratio. The expense ratio of the Fund reflected fee waivers
and/or expense reimbursements as a result of an applicable expense
limitation undertaking by the Adviser. The directors recognized that the
expense ratio information for the Fund potentially reflected on the
Adviser's provision of services, as the Adviser is responsible for
coordinating services provided to the Fund by others. The directors noted
that the expense ratios of some funds in the Fund's Lipper category also
were lowered by waivers or reimbursements by those funds' investment
advisers, which in some cases were voluntary and perhaps temporary.
The information reviewed by the directors showed that the Fund's at
current size contractual effective fee rate of 50 basis points was
materially lower than the Expense Group median. The directors noted that
to date the Adviser has not requested the reimbursement of administrative
expenses pursuant to the Advisory Agreement in light of the expense cap in
place for the Fund. The directors also noted that the Adviser advises
another AllianceBernstein fund with a similar investment style as the
Fund. The directors noted that the fee schedule for the other
AllianceBernstein fund had lower breakpoints than the fee schedule in the
Fund's Advisory Agreement. The directors also noted that application of
such fee schedule to the level of assets of the Fund would result in a fee
rate that would be the same as that in the Fund's Advisory Agreement. The
directors further noted that the Fund's total expense ratio, which
benefits from a cap implemented by the Adviser at a rate that is
materially lower than the advisory fee rate, was significantly lower than
the medians for the Expense Group and Expense Universe. The directors
concluded that the Fund's expense ratio was highly satisfactory.
- --------------------------------------------------------------------------------
2006 Semiannual Report 105
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund II, Inc.
Bernstein Intermediate Duration Institutional Portfolio
Board's Consideration of Investment Management Arrangements (continued)
Economies of Scale
The directors noted that the advisory fee schedule for the Fund contains
breakpoints so that, if assets were to increase over the breakpoint
levels, the fee rates would be reduced on the incremental assets. The
directors also considered a presentation by an independent consultant
discussing economies of scale issues in the mutual fund industry. The
directors believe that economies of scale are realized (if at all) by the
Adviser across a variety of products and services, and not only in respect
of a single fund. The directors noted that there is no uniform methodology
for establishing breakpoints that give effect to fund-specific services
provided by the Adviser and to the economies of scale that the Adviser may
realize in its overall mutual fund business or those components of it
which directly or indirectly affect the Fund's operations. The directors
observed that in the mutual fund industry as a whole, as well as among
funds similar to the Fund, there is no uniformity or pattern in the fees
and asset levels at which breakpoints (if any) apply. Depending on the age
and size of a particular fund and its adviser's cost structure, different
conclusions can be drawn as to whether there are economies of scale to be
realized at any particular level of assets, notwithstanding the intuitive
conclusion that such economies exist, or will be realized at some level of
total assets. Moreover, because different advisers have different cost
structures and service models, it is difficult to draw meaningful
conclusions from the comparison of a fund's advisory fee breakpoints with
those of comparable funds. The directors noted that the Fund's net assets
are well below the initial breakpoint in the advisory agreements of
AllianceBernstein Funds that have breakpoints. The directors agreed to
monitor the asset level of the Fund and stated that they would expect to
seek to implement additional breakpoints if the Fund reaches a size such
that the directors believe that meaningful economies of scale are likely
being realized by the Adviser.
- --------------------------------------------------------------------------------
106 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund II, Inc.
The Following Is Not Part of the Shareholder Report or the Financial Statements
SUMMARY OF SENIOR OFFICER'S EVALUATION OF INVESTMENT ADVISORY AGREEMENT1
The following is a summary of the evaluation of the investment advisory
agreement between Alliance Capital Management L.P. (the "Adviser") and
Sanford C. Bernstein Fund II, Inc.--Intermediate Duration Institutional
Portfolio (the "Fund"), prepared by Philip L. Kirstein, the Senior
Officer, for the independent directors of the Fund, as required by the
Assurance of Discontinuance between the New York State Attorney General
and the Adviser. The Senior Officer's evaluation of the investment
advisory agreement is not meant to diminish the responsibility or
authority of the Board of Directors of the Fund to perform its duties
pursuant to Section 15 of the Investment Company Act of 1940 (the "40
Act") and applicable state law. The purpose of the summary is to provide
shareholders with a synopsis of the independent evaluation of the
reasonableness of the advisory fees which was provided to the independent
directors in connection with their review of the proposed continuance of
the investment advisory agreement. The Senior Officer's evaluation
considered the following factors:
1. Management fees charged to institutional and other clients of the
Adviser for like services.
2. Management fees charged by other mutual fund companies for like
services.
3. Costs to the Adviser and its affiliates of supplying services
pursuant to the advisory agreement, excluding any intra-corporate
profit.
4. Profit margins of the Adviser and its affiliates from supplying such
services.
5. Possible economies of scale as the Fund grows larger.
6. Nature and quality of the Adviser's services including the
performance of the Fund.
Fund Advisory Fees & Expense Ratios
The table below describes the Fund's advisory fee pursuant to the
Investment Advisory Agreement.
ADVISORY FEE BASED ON % OF
FUND AVERAGE DAILY NET ASSETS
------------------------------------------------------------------------------
Sanford C. Bernstein Fund II, Inc.-- First $1 billion 0.50%
Intermediate Duration Institutional Portfolio Excess of $1 billion 0.45%
The Fund's net assets as of September 30, 2005 were $646.0 million. The
effective advisory fee of the Fund at this asset level is 0.50%.
The Adviser has agreed to waive that portion of its management fees and/or
reimburse the Fund for that portion of its total operating expenses to the
degree necessary to limit the Fund's expense ratio to the amounts set
forth below for the Fund's current fiscal year, which is five basis points
less than the Fund's contractual advisory fee rate at the Fund's current
level of net assets. The waiver agreement is terminable by the Adviser at
the end of the Fund's fiscal year upon at least 60 days written notice.
The Fund's gross expense ratio is also set forth below.
EXPENSE CAP
PURSUANT TO EXPENSE GROSS
FUND LIMITATION UNDERTAKING EXPENSE RATIO(2) FISCAL YEAR END
--------------------------------------------------------------------------------------------------------------------
Sanford C. Bernstein Fund II, Inc.--
Intermediate Duration Institutional Portfolio 0.45% 0.57% September 30
(1) It should be noted that the information in the fee summary was completed on
December 7, 2005 and presented to the Board of Directors on December 14, 2005 in
accordance with the Assurance of Discontinuance between the New York State
Attorney General and the Adviser.
(2) The Fund's expense ratio is calculated from the beginning of the Fund's
current fiscal year through March 31, 2005 and annualized.
- --------------------------------------------------------------------------------
2006 Semiannual Report 107
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund II, Inc.
The Following Is Not Part of the Shareholder Report or the Financial
Statements (continued)
I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS
The management fees charged to investment companies which the Adviser
manages and sponsors is normally higher than those charged to similar
sized institutional accounts, including pension plans and sub-advised
investment companies. The fee differential reflects, among other things,
different services provided to such clients, and different liabilities
assumed. Services provided by the Adviser to the Fund that are not
provided to non-investment company clients include providing office space
and personnel to serve as Fund Officers, who among other responsibilities
make the certifications required under the Sarbanes-Oxley Act of 2002, and
coordinating with and monitoring the Fund's third party service providers
such as Fund counsel, auditors, custodians, transfer agents and pricing
services. The accounting, administrative, legal and compliance
requirements for the Fund are more costly than those for institutional
assets due to the greater complexities and time required for investment
companies, although as previously noted, a portion of these expenses are
reimbursed by the Fund to the Adviser. In addition, managing the cash flow
of an investment company may be more difficult than that of a stable pool
of assets, such as an institutional account with little cash movement in
either direction, particularly if the fund is in net redemption and the
Adviser is frequently forced to sell securities to raise cash for
redemptions. However, managing a fund with positive cash flow may be
easier at times than managing a stable pool of assets. Finally, in recent
years, investment advisers have been sued by institutional clients and
have suffered reputational damage both by the attendant publicity and
outcomes other than complete victories. Accordingly, the legal and
reputational risks associated with institutional accounts are greater than
previously thought, although still not equal to those related to the
mutual fund industry.
Notwithstanding the Adviser's view that managing an investment company is
not comparable to managing other institutional accounts because the
services provided are different, it is worth considering information
regarding the advisory fees charged to institutional accounts with
substantially similar investment styles as the Fund. In addition to the
Alliance institutional fee schedule, set forth below are what would have
been the effective advisory fee of the Fund had the Alliance institutional
fee schedule been applicable to the Fund.
NET ASSETS ALLIANCE EFFECTIVE ALLIANCE
09/30/05 INSTITUTIONAL INSTITUTIONAL
FUND ($MIL) FEE SCHEDULE ADVISORY FEE
------------------------------------------------------------------------------------------------------------------------
Sanford C. Bernstein Fund II, Inc.--
Intermediate Duration Institutional Portfolio $646.0 U.S. Core Plus Schedule 0.178%
40 bp on 1st $20 m
25 bp on next $80 m
20 bp on next $100 m
15 bp on the balance
Minimum account size $20m
The Adviser manages Sanford C. Bernstein Fund, Inc., an open-end
management investment company. The Intermediate Duration Portfolio of
Sanford C. Bernstein Fund, Inc. has a similar investment style as the
Fund. The following table shows the fee schedule of the Intermediate
Duration Portfolio.
FUND SCB PORTFOLIO FEE SCHEDULE
----------------------------------------------------------------------------------------------------------------
Sanford C. Bernstein Fund II, Inc.-- Intermediate Duration Portfolio 0.50% on first $1 billion
Intermediate Duration Institutional Portfolio(3) 0.45% on next $2 billion
0.40% on next $2 billion
0.35% on the balance
The Adviser also manages and sponsors retail mutual funds which are
organized in jurisdictions outside the United States, generally
Luxembourg, and sold to non-United States resident investors. None of
these off-shore funds have breakpoints in the advisory fee schedule. The
Adviser charges the following fee for an offshore mutual fund that invests
in fixed income securities:
(3) Although the fee schedule for SCB Intermediate Duration Portfolio could
produce a lower effective advisory fee at higher asset levels, at the current
asset level of $646 million, the effective contractual advisory fees are the
same for the Fund and the SCB Intermediate Duration Portfolio. If assets exceed
$3 billion, the SCB Intermediate Duration Portfolio will have a lower effective
advisory fee than the Fund.
- --------------------------------------------------------------------------------
108 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
ASSET CLASS FEE(4)
--------------------------------------------------------------------------
Fixed Income 0.65%
The Adviser represented that it does not sub-advise any registered
investment companies with a similar investment style as the Fund.
II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES
Lipper, Inc., an analytical service that is not affiliated with the
Adviser, compared the fees charged to the Fund with fees charged to other
investment companies for similar services by other investment advisers.
Lipper's analysis included the Fund's ranking with respect to the proposed
management fees relative to the Lipper group median at the approximate
current asset level of the Fund(5).
LIPPER
EFFECTIVE GROUP
FUND MANAGEMENT FEE(6) MEDIAN RANK
----------------------------------------------------------------------------------------
Sanford C. Bernstein Fund II, Inc.--
Intermediate Duration Institutional Portfolio(7) 0.500 0.590 4/15
Lipper also analyzed the total expense ratio of the Fund in comparison to
the Fund's Lipper Expense Group(8) and Lipper Expense Universe(9). Lipper
describes a Lipper Expense Group as a representative sample of comparable
funds and a Lipper Expense Universe as a broader group, consisting of all
funds in the same investment classification/objections with a similar load
type as the subject Fund. The results of that analysis are set forth
below:
EXPENSE LIPPER LIPPER LIPPER LIPPER
RATIO UNIVERSE UNIVERSE GROUP GROUP
PORTFOLIO (%) MEDIAN (%) RANK MEDIAN (%) RANK
--------------------------------------------------------------------------------------------------------------------
Sanford C. Bernstein Fund II, Inc.--
Intermediate Duration Institutional Portfolio 0.450 0.695 16/119 0.680 1/15
Based on this analysis, the Fund has a more favorable ranking on a total
expense ratio basis than on a management fee basis. However, it should be
noted that certain of the Fund's expenses were waived or reimbursed by the
Adviser as a result of the Fund's expense cap.
III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO
THE MANAGEMENT FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT
Members of the Adviser's Controller's Office presented to the Board of
Directors the Adviser's revenue and expenses associated with providing
services to the Fund. The presentation included an update on the Adviser's
work with an independent consultant to align the Adviser's two
profitability systems. The alignment, which now is complete, produces
profitability information at the Fund level which reflects the Adviser's
management reporting approach. See discussion below in Section IV.
(4) The fee charged to the fund includes a 0.10% fee for administrative services
provided by the Adviser or its affiliates.
(5) It should be noted that "effective management fee" is calculated by Lipper
using the Fund's contractual management fee rate at a hypothetical asset level.
The hypothetical asset level is based on the net asset of the Fund, rounded up
to the next $25 million. Lipper's total expense ratio information is based on
the most recent annual report except as otherwise noted. A ranking of "1" means
that the AllianceBernstein Fund has the lowest effective fee rate in the Lipper
peer group.
(6) The "effective management fee" does not reflect fee waivers or expense
reimbursements that effectively reduce the contractual management fee rates.
(7) It should be noted that the Fund has an expense cap of 0.450% which
automatically reduces the advisory fee received by the Adviser by at the least 5
basis points. The actual management fee that the Adviser received in the Fund's
most recent completed fiscal year was 0.369% according to Lipper. The Fund's
actual management fee group ranking was 3/15; universe ranking was 40/119.
(8) Lipper uses the following criteria in screening funds to be included in the
Fund's expense group: fund type, investment classification/objective, load type
and similar 12b-1/non-12b-1 service fees, asset (size) comparability, and
expense components and attributes. A Lipper Expense Group will typically consist
of seven to twenty funds.
(9) Except for asset (size) comparability and load type, Lipper uses the same
criteria for selecting a Lipper Expense Group when selecting a Lipper Expense
Universe. Unlike the Lipper Expense Group, the Lipper Expense Universe allows
for the same adviser to be represented by more than just one fund.
- --------------------------------------------------------------------------------
2006 Semiannual Report 109
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund II, Inc.
The Following Is Not Part of the Shareholder Report or the Financial
Statements (continued)
IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES
The profitability information for the Fund prepared by the Adviser for the
Board of Directors was reviewed by the Senior Officer. Based on the
information provided, the Adviser's profitability from providing
investment advisory services to the Fund increased during calendar year
2004 relative to 2003.
V. POSSIBLE ECONOMIES OF SCALE
The Adviser has indicated that the breakpoints in the fee schedule in the
Investment Advisory Agreement reflect a sharing of economies of scale to
the extent the breakpoints are reached. Based on some of the professional
literature that has considered economies of scale in the mutual fund
industry it is thought that to the extent economies of scale exist, they
may more often exist across a fund family as opposed to a specific fund.
This is because the costs incurred by the Adviser, such as investment
research or technology for trading or compliance systems can be spread
across a greater asset base as the fund family increases in size. It is
also possible that as the level of services required to operate a
successful investment company has increased over time, and advisory firms
have made such investments in their business to provide improved services,
there may be a sharing of economies of scale without a reduction in
advisory fees.
An independent consultant made a presentation to the Board of Directors
and the Senior Officer regarding possible economies of scale or scope in
the mutual fund industry. Based on the presentation, it was evident that
fund management companies benefit from economies of scale. However, due to
lack of cost data, researchers had to infer facts about the costs from the
behavior of fund expenses; there was a lack of consensus among researchers
as to whether economies of scale were being passed on to the shareholders.
It is contemplated that additional work will be performed to determine if
the benefits of economies of scale or scope are being passed to
shareholders by the Adviser. In the meantime, it is clear that to the
extent the Fund's assets exceed the initial breakpoint its shareholders
benefit from a lower fee rate.
VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING THE PERFORMANCE OF
THE FUND
With assets under management of $550 billion as of October 31, 2005, the
Adviser has the investment experience to manage and provide non-investment
services (described in Section II) to the Fund.
The information prepared by Lipper showed the 1 and 3 year performance
ranking of the Fund relative to its Lipper group and universe for the
periods ended September 30, 2005:
SANFORD C. BERNSTEIN FUND II, INC.--
INTERMEDIATE DURATION INSTITUTIONAL PORTFOLIO GROUP UNIVERSE
--------------------------------------------------------------------------
1 year 5/15 30/173
3 year 8/15 58/149
PERIODS ENDING SEPTEMBER 30, 2005
ANNUALIZED PERFORMANCE (%)
-------------------------------------------------------------------------------------
FUNDS 1 YEAR 3 YEAR SINCE INCEPTION
-------------------------------------------------------------------------------------
Sanford C. Bernstein Fund II, Inc.--
Intermediate Duration Institutional Portfolio 3.41 4.52 5.14
Lehman Brothers Aggregated Bond Index 2.80 3.96 5.23
(10) The Adviser provided Fund and benchmark performance return information for
periods through September 30, 2005 in order to maintain consistency with
Lipper's performance rankings in the analysis.
- --------------------------------------------------------------------------------
110 Sanford C. Bernstein Fund, Inc., and Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
Set forth below are the 1, 3 year and since inception performance returns
of the Fund (in bold) versus its benchmark10.
CONCLUSION
Based on the factors discussed above the Senior Officer's conclusion is
that the proposed fee for the Fund is reasonable and within the range of
what would have been negotiated at arms-length in light of all the
surrounding circumstances. This conclusion in respect of the Fund is based
on an evaluation of all of these factors and no single factor was
dispositive.
Dated: January 13, 2006
(10) The Adviser provided Fund and benchmark performance return information for
periods through September 30, 2005 in order to maintain consistency with
Lipper's performance rankings in the analysis.
- --------------------------------------------------------------------------------
2006 Semiannual Report 111
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This page intentionally left blank.
AB
SANFORD C. BERNSTEIN & CO., LLC
A Subsidiary of AllianceBernstein L.P.
Distributor
SANFORD C. BERNSTEIN FUND, INC.
SANFORD C. BERNSTEIN FUND II, INC.
1345 Avenue of the Americas, New York, NY 10105
(212) 756-4097
SCB-SEMI-0860-0506
Sanford C. Bernstein Fund, Inc.
Sanford C. Bernstein Fund II, Inc.
- --------------------------------------------------------------------------------
March 31, 2006
- --------------------------------------------------------------------------------
Schedule of Investments
To the Semiannual Report
For the Taxable Bond
Portfolios
Intermediate Duration
- --------------------------------------------------------------------------------
Short Duration Plus
- --------------------------------------------------------------------------------
U.S. Government Short Duration
- --------------------------------------------------------------------------------
Intermediate Duration Institutional
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
Schedule of Investments
Intermediate Duration Portfolio
March 31, 2006 (Unaudited)
- --------------------------------------------------------------------------------
Principal Amount (000) U.S. $ Value
================================================================================
U.S. GOVERNMENT & GOVERNMENT
SPONSORED AGENCY OBLIGATIONS--47.0%
- --------------------------------------------------------------------------------
Federal Agency--Collateralized Mortgage Obligations--0.4%
Fannie Mae Grantor Trust
Series 2004-T5 Class AB4
4.53%, 5/28/35(a)(b) $ 9,620 $ 9,622,702
Series 2005-T3 Class A1A
4.86%, 7/25/35(a)(b) 4,572 4,571,745
---------------
14,194,447
---------------
Mortgage Pass Thru's--41.7%
Federal Home Loan Mortgage Corp.
3.75%, 11/17/06(a) 28,946 28,064,768
6.00%, 6/01/20(a) 4,071 4,120,707
8.50%, 5/01/25(a) 0 6
4.50%, 3/01/34-1/01/36(a) 74,666 68,887,591
6.00%, TBA(c) 12,890 12,881,944
Federal National Mortgage Association
5.50%, 1/01/09-2/01/35 321,940 316,568,167
6.00%, 11/01/16-9/01/35 134,187 134,529,605
5.00%, 4/01/19(a) 60,125 58,715,340
6.50%, 1/01/36(a) 14,976 15,295,529
4.50%, TBA(c) 113,065 108,083,130
5.00%, TBA(c) 147,065 141,086,513
5.50%, TBA(c) 392,135 382,765,742
6.00%, TBA(c) 132,090 132,048,788
6.50%, TBA(c) 131,580 134,047,125
Government National Mortgage Association
8.50%, 11/15/26(a) 1 1,580
7.00%, 10/15/27(a) 3 3,532
---------------
1,537,100,067
---------------
U.S. Treasury Bonds--1.5%
United States Treasury Bond
7.25%, 5/15/16(a) 32,490 38,424,494
5.375%, 2/15/31 15,005 15,795,103
---------------
54,219,597
---------------
U.S. Treasury Notes--3.4%
United States Treasury Notes
4.25%, 1/15/11(a) 13,780 13,438,187
4.50%, 11/15/15(a) 114,220 110,838,060
---------------
124,276,247
---------------
Total U.S. Government & Government
Sponsored Agency Obligations
(cost $1,752,933,618) 1,729,790,358
---------------
================================================================================
CORPORATE DEBT OBLIGATIONS--17.9%
- --------------------------------------------------------------------------------
Automotive--0.6%
DaimlerChrysler North America
4.875%, 6/15/10(a) 2,995 2,886,437
Ford Motor Credit Co.
6.50%, 1/25/07(a) 4,135 4,119,171
6.625%, 6/16/08(a) 5,310 5,025,857
General Motors Acceptance Corp.
6.875%, 9/15/11(a) 6,530 6,086,476
Hertz Corp.
Callable 1/01/14 @ 104.44
8.875%, 1/01/14(a)(d) 3,040 3,154,000
---------------
21,271,941
---------------
Banking--1.5%
Barclays Bank plc
Callable 6/15/11 @ 100.00
8.55%, 9/29/49(a)(b)(d) 6,460 7,268,327
Huntington National Bank
Senior Note
4.375%, 1/15/10(a) 4,100 3,948,304
J.P. Morgan Chase & Co.
6.75%, 2/01/11(a) 8,605 9,045,714
RBS Capital Trust III
Callable 9/30/14 @ 100.00
5.51%, 9/29/49(a) 10,580 10,205,024
Sumitomo Mitsui Banking Corp.
Callable 10/15/15 @ 100.00
5.625%, 7/29/49(a) 2,270 2,202,079
Suntrust Bank
4.943%, 6/02/09(a)(b) 4,770 4,777,155
UFJ Bank Ltd.
Subordinated Note
7.40%, 6/15/11(a) 1,210 1,304,225
UFJ Finance Aruba AEC
6.75%, 7/15/13(a) 2,366 2,507,286
Wachovia Capital Trust III
Callable 3/15/11 @ 100.00
5.80%, 8/29/49(a) 5,965 5,860,487
Wells Fargo & Co.
Senior Note
4.20%, 1/15/10(a) 4,455 4,275,579
Zions Bancorp
5.50%, 11/16/15(a) 4,040 3,941,477
---------------
55,335,657
---------------
Broadcasting/Media--1.1%
Allbritton Communications Co.
Senior Subordinated Note
Callable 12/15/07 @ 103.88
7.75%, 12/15/12(a) 3,465 3,482,325
BSKYB Finance United Kingdom plc
5.625%, 10/15/15(a)(d) 6,400 6,168,320
Lamar Media Corp.
Callable 8/15/15 @ 103.31
6.625%, 8/15/15(a) 3,355 3,338,225
Schedule of Investments--Intermediate Duration Portfolio 1
- --------------------------------------------------------------------------------
Principal Amount (000) U.S. $ Value
================================================================================
News America Holdings
9.25%, 2/01/13(a) $ 4,810 $ 5,672,274
6.55%, 3/15/33(a) 3,525 3,433,561
Time Warner Entertainment Co.
Senior Debenture
8.375%, 3/15/23(a) 8,485 9,593,396
Time Warner, Inc.
6.875%, 5/01/12(a) 4,175 4,377,383
WPP Finance Corp.
5.875%, 6/15/14(a) 3,490 3,446,204
---------------
39,511,688
---------------
Building/Real Estate--0.2%
iStar Financial, Inc.
Senior Note
5.15%, 3/01/12(a) 2,965 2,845,424
Simon Property Group, LP
6.375%, 11/15/07(a) 4,290 4,352,111
---------------
7,197,535
---------------
Cable--0.6%
British Sky Broadcasting Group plc
6.875%, 2/23/09(a) 2,115 2,188,837
Cablevision Systems Corp.
8.00%, 4/15/12(a) 3,675 3,583,125
Comcast Cable Communications Holdings, Inc.
9.455%, 11/15/22(a) 7,600 9,587,385
Comcast Corp.
5.30%, 1/15/14(a) 4,800 4,563,936
DirecTV Holdings LLC
Callable 6/15/10 @ 103.19
6.375%, 6/15/15(a) 3,525 3,480,937
---------------
23,404,220
---------------
Chemicals--0.3%
Ineos Group Holdings plc
Callable 2/15/11 @ 104.25
8.50%, 2/15/16(a)(d) 3,550 3,372,500
ProLogis
7.05%, 7/15/06(a) 3,045 3,055,590
Union Carbide Corp.
Debenture
7.75%, 10/01/96(a) 3,600 3,708,929
---------------
10,137,019
---------------
Communications--1.8%
AT&T Corp.
Senior Notes
9.05%, 11/15/11(a)(d) 5,600 6,053,651
9.75%, 11/15/31(a) 1,800 2,149,313
British Telecommunications plc
8.375%, 12/15/10(a) 10,250 11,432,778
Cox Enterprises, Inc.
4.375%, 5/01/08(a) 6,050 5,872,880
Qwest Communications International, Inc.
Callable 2/15/09 @ 103.75
7.50%, 2/15/14 3,335 3,435,050
Sprint Capital Corp.
8.375%, 3/15/12(a) 20,520 23,185,548
Telecom Italia Capital
4.00%, 1/15/10(a) 11,555 10,862,786
Verizon Global Funding Corp.
4.90%, 9/15/15(a) 4,390 4,059,969
---------------
67,051,975
---------------
Communications--Fixed--0.2%
Qwest Corp.
8.875%, 3/15/12(a)(d) 1,055 1,178,963
Vodafone Group plc
5.50%, 6/15/11(a) 8,020 7,945,887
---------------
9,124,850
---------------
Communications--Mobile--0.8%
AT&T Wireless Services, Inc.
Senior Note
8.75%, 3/01/31(a) 3,795 4,806,550
Cingular Wireless LLC
5.625%, 12/15/06(a) 6,706 6,722,530
New Cingular Wireless Services, Inc.
7.875%, 3/01/11(a) 12,520 13,722,734
TELUS Corp.
7.50%, 6/01/07(a) 5,595 5,721,430
---------------
30,973,244
---------------
Conglomerate/Miscellaneous--0.2%
Hutchison Whampoa International Ltd.
7.45%, 11/24/33(a)(d) 5,920 6,457,281
---------------
Consumer Manufacturing--0.1%
Fortune Brands, Inc.
2.875%, 12/01/06(a) 2,800 2,755,276
---------------
Energy--0.9%
Amerada Hess Corp.
7.875%, 10/01/29(a) 4,600 5,356,433
Conoco, Inc.
Senior Note
6.95%, 4/15/29(a) 6,235 7,053,606
Duke Energy Field Services Corp.
7.875%, 8/16/10(a) 2,100 2,279,451
Enterprise Products Operating LP
Series B
5.60%, 10/15/14(a) 3,310 3,209,684
NRG Energy, Inc.
Senior Note
Callable 2/01/09 @ 107.25
7.25%, 2/01/14(a) 560 569,100
Callable 2/01/16 @ 103.69
7.375%, 2/01/16(a) 2,985 3,048,431
The Williams Cos., Inc.
7.875%, 9/01/21(a) 3,235 3,477,625
Valero Energy Corp.
6.875%, 4/15/12(a) 6,055 6,415,345
7.50%, 4/15/32(a) 2,270 2,609,842
---------------
34,019,517
---------------
2 Sanford C. Bernstein Fund, Inc.--2006 Semiannual Report
- --------------------------------------------------------------------------------
Principal Amount (000) U.S. $ Value
================================================================================
Financial--4.4%
American General Finance Corp.
Medium-Term Note
4.625%, 5/15/09(a) $ 10,015 $ 9,810,524
Berkshire Hathaway Finance Corp.
4.20%, 12/15/10(a) 5,700 5,423,345
Boeing Capital Corp.
Senior Note
4.75%, 8/25/08(a) 1,865 1,844,962
BOI Capital Funding No. 2
Callable 2/01/16 @ 100.00
5.57%, 2/01/49(a)(d) 1,500 1,436,355
Capital One Bank
Subordinated Note
6.50%, 6/13/13(a) 2,884 3,001,021
CIT Group, Inc.
Medium-Term Note
4.99%, 5/18/07(a)(b) 2,945 2,952,242
Senior Note
7.75%, 4/02/12(a) 6,035 6,652,037
Citigroup, Inc.
Subordinated Notes
5.00%, 9/15/14(a) 18,963 18,149,487
5.01%, 6/09/09(a)(b) 3,435 3,443,732
Core Investment Grade Trust
4.659%, 11/30/07(a) 17,490 17,280,120
CountryWide Home Loans, Inc.
Medium-Term Note, Series L
4.00%, 3/22/11(a) 6,605 6,136,388
Dow Jones Cdx, High Yield
8.00%, 6/29/10(a) 18,971 19,374,134
General Electric Capital Corp.
4.375%, 11/21/11(a) 6,275 5,961,890
Medium-Term Note
4.995%, 6/22/07(a) 22,130 22,153,015
Goldman Sachs Group, Inc.
4.75%, 7/15/13(a) 4,795 4,529,942
5.125%, 1/15/15(a) 3,450 3,297,234
Household Finance Corp.
6.50%, 11/15/08(a) 8,848 9,096,257
7.00%, 5/15/12(a) 2,855 3,051,618
ILFC E-Capital Trust I
Callable 12/21/10 @ 100.00
5.90%, 12/21/65(a)(d) 1,390 1,349,020
Kinder Morgan Finance
5.35%, 1/05/11(a) 8,940 8,797,434
Manufacturing Capital Finance, Ltd.
Callable 7/25/16 @ 100.00
6.346%, 7/29/49(a) 3,245 3,193,203
Resona Bank, Ltd.
5.85%, 9/29/49(a) 1,300 1,261,428
Resona Preferred Global Securities
Callable 7/30/15 @ 100
7.191%, 12/29/49(a)(b)(d) 2,460 2,566,779
---------------
160,762,167
---------------
Food/Beverage--0.3%
ConAgra Foods, Inc.
7.875%, 9/15/10(a) 1,834 1,978,901
6.75%, 9/15/11(a) 1,225 1,273,144
Kraft Foods, Inc.
5.25%, 10/01/13(a) 6,910 6,728,702
---------------
9,980,747
---------------
Gaming--0.1%
MGM Mirage
8.375%, 2/01/11(a) 3,245 3,423,475
Riviera Holdings Corp.
Callable 6/15/06 @ 105.50
11.00%, 6/15/10(a) 1,110 1,179,375
---------------
4,602,850
---------------
Healthcare--0.3%
Humana, Inc.
Senior Note
6.30%, 8/01/18(a) 3,550 3,610,495
Wellpoint, Inc.
3.75%, 12/14/07(a) 1,796 1,748,990
Wyeth
5.50%, 2/01/14(a) 5,331 5,260,162
---------------
10,619,647
---------------
Industrial--0.1%
Tyco International Group SA
6.00%, 11/15/13(a) 4,950 4,972,488
---------------
Insurance--0.8%
Assurant, Inc.
5.625%, 2/15/14(a) 3,830 3,763,538
Liberty Mutual Group
5.75%, 3/15/14(a)(d) 4,025 3,912,650
Mangrove Bay Pass-Through Trust
Callable 7/15/13 @ 100
6.102%, 7/15/33(a)(d) 4,315 4,167,729
MetLife, Inc.
5.00%, 11/24/13(a) 4,125 3,959,196
Royal & Sun Alliance Insurance Group plc
8.95%, 10/15/29(a) 2,615 3,306,780
Zurich Capital Trust
Callable 6/01/07 @ 104.19
8.376%, 6/01/37(a)(d) 8,625 9,226,654
---------------
28,336,547
---------------
Metals/Mining--0.2%
AK Steel Corp.
Callable 5/12/06 @ 101.31
7.875%, 2/15/09(a) 2,540 2,552,700
Ispat Inland ULC
Callable 4/01/09 @ 104.88
9.75%, 4/01/14(a) 3,005 3,399,406
---------------
5,952,106
---------------
Schedule of Investments--Intermediate Duration Portfolio 3
- --------------------------------------------------------------------------------
Principal Amount (000) U.S. $ Value
================================================================================
Paper/Packaging--0.3%
International Paper Co.
5.30%, 4/01/15(a) $ 5,170 $ 4,846,187
Packaging Corp. of America
5.75%, 8/01/13(a) 4,230 4,100,393
Weyerhaeuser Co.
5.95%, 11/01/08(a) 4,060 4,097,340
---------------
13,043,920
---------------
Petroleum Products--0.0%
Tengizchevroil Finance Co.
6.124%, 11/15/14(a)(d) 1,840 1,830,800
---------------
Public Utilities--Electric & Gas--1.9%
Carolina Power & Light Co.
6.50%, 7/15/12(a) 5,775 6,017,793
Consumers Energy Co.
Series C
4.25%, 4/15/08(a) 2,810 2,740,486
Duke Capital LLC
Senior Note
5.50%, 3/01/14(a) 3,125 3,055,572
8.00%, 10/01/19(a) 5,485 6,405,855
Exelon Corp.
6.75%, 5/01/11(a) 7,415 7,741,445
FirstEnergy Corp.
Series B
6.45%, 11/15/11(a) 7,945 8,220,970
Series C
7.375%, 11/15/31(a) 7,850 8,719,568
MidAmerican Energy Holdings Co.
Senior Notes
5.875%, 10/01/12(a) 2,400 2,422,236
6.125%, 4/01/36(a)(d) 4,120 4,033,101
Nisource Finance Corp.
7.875%, 11/15/10(a) 3,010 3,264,965
Pacific Gas & Electric Co.
4.80%, 3/01/14(a) 3,280 3,101,630
6.05%, 3/01/34(a) 260 254,431
Progress Energy, Inc.
7.10%, 3/01/11(a) 4,850 5,143,900
Public Service Co. of Colorado
7.875%, 10/01/12(a) 2,545 2,878,219
TXU Australia Holdings Pty Ltd.
6.15%, 11/15/13(a)(d) 5,805 5,966,948
---------------
69,967,119
---------------
Public Utilities--Telephone--0.3%
Bell Atlantic New Jersey, Inc.
Debenture
5.875%, 1/17/12(a) 5,695 5,645,812
Telecom Italia Capital
4.00%, 11/15/08(a) 3,085 2,972,629
6.375%, 11/15/33(a) 1,375 1,295,668
---------------
9,914,109
---------------
Service--0.3%
Pershing Road Development Co. LLC
Callable 6/01/06 @ 101.50
5.22%, 9/01/26(a)(b)(d) 9,390 9,390,000
---------------
Supermarket/Drug--0.1%
Safeway, Inc.
6.50%, 3/01/11(a) 1,895 1,951,818
7.25%, 2/01/31(a) 3,040 3,221,427
---------------
5,173,245
---------------
Technology--0.5%
Cisco Systems, Inc.
5.25%, 2/22/11(a) 3,090 3,063,630
International Business Machines Corp.
Medium-Term Note
4.375%, 6/01/09(a) 1,720 1,677,922
Motorola, Inc.
7.625%, 11/15/10(a) 609 664,231
Oracle Corp.
5.25%, 1/15/16(a)(d) 13,945 13,377,341
---------------
18,783,124
---------------
Total Corporate Debt Obligations
(cost $670,483,057) 660,569,072
---------------
================================================================================
NON U.S. DOLLAR SOVEREIGN DEBT--11.5.%
- --------------------------------------------------------------------------------
Australia (Commonwealth of)
6.00%, 2/15/17(a) AUD 95,545 71,562,288
Japan (Government of)
.70%, 6/20/10(a) JPY 8,653,000 72,079,343
Poland (Government of)
6.25%, 10/24/15(a) PLN 106,330 35,914,860
Sweden (Kingdom of)
Series 1043
5.00%, 1/28/09(a) SEK 519,510 69,970,596
5.25%, 3/15/11(a) 461,930 64,071,770
United Mexican States
10.00%, 12/05/24(a) MXN 1,088,760 111,509,915
---------------
Total Non U.S. Dollar Sovereign Debt
(cost $427,704,564) 425,108,772
---------------
================================================================================
COMMERCIAL MORTGAGE-BACKED SECURITIES--8.4%
- --------------------------------------------------------------------------------
Banc of America Commercial Mortgage, Inc.
Series 2004-3 Class A5
5.304%, 6/10/39(a) $ 13,780 13,678,441
Series 2004-4 Class A3
4.128%, 7/10/42(a) 8,850 8,517,948
Series 2005-1 Class A3
4.877%, 11/10/42(a) 13,680 13,433,760
Series 2004-6 Class A2
4.161%, 12/10/42(a) 11,835 11,360,416
Bear Stearns Commercial Mortgage
Securities, Inc. Series 2005-T18
Class A4
4.933%, 2/13/42(a) 12,490 11,927,201
4 Sanford C. Bernstein Fund, Inc.--2006 Semiannual Report
- --------------------------------------------------------------------------------
Principal Amount (000) U.S. $ Value
================================================================================
Commercial Mortgage Asset Trust
Series 1999-C1 Class A3
6.64%, 1/17/32(a) $ 0 $ 87
Series 2003-CK2 Class A2
3.861%, 3/15/36(a) 7,790 7,534,410
Series 2004-C5 Class A2
4.183%, 11/15/37(a) 10,070 9,669,516
Series 2005-C1 Class A4
5.014%, 2/15/38(a) 10,900 10,462,256
GE Capital Commercial Mortgage Corp.
Series 2005-C3 Class A3FX
4.863%, 7/10/45(a) 12,735 12,477,753
Goldman Sachs Mortgage Securities Corp. II
Series 2006-GG6 Class A2
5.506%, 4/10/38(a) 9,545 9,578,598
Greenwich Capital Commercial Funding Corp.
Series 2003-C1 Class A4
4.111%, 7/05/35(a) 9,240 8,491,560
Series 2003-C2 Class A3
4.533%, 1/05/36(a) 325 312,816
Series 2005-GG3 Class A2
4.305%, 8/10/42(a) 13,565 13,082,357
JP Morgan Chase Commercial
Mortgage Securities
Series 2004-C1 Class A2
4.302%, 1/15/38(a) 9,775 9,280,776
Series 2005-LDP3 Class A2
4.851%, 8/15/42(a) 11,220 10,968,672
Series 2005-LDP4 Class A2
4.79%, 10/15/42(a) 8,210 8,003,765
Series 2006-CB14 Class A4
5.481%, 12/12/44(a) 6,750 6,688,508
Series 2005-LDP1 Class A2
4.625%, 3/15/46(a) 13,520 13,149,958
Series 2005-LDP1 Class A4
5.038%, 3/15/46(a) 13,750 13,214,987
LB-UBS Commercial Mortgage Trust
Series 2004-C7 Class A2
3.992%, 10/15/29(a) 8,440 8,072,944
Series 2004-C8 Class A2
4.201%, 12/15/29(a) 9,405 9,051,560
Series 2005-C1 Class A4
4.742%, 2/15/30(a) 8,960 8,451,968
Series 2005-C7 Class A4
5.197%, 11/15/30(a) 10,140 9,854,500
Series 2006-C1 Class A4
5.156%, 2/15/31(a) 9,535 9,240,368
Merrill Lynch Commercial Mortgage Trust
Series 2006-1 Class A2
5.439%, 2/12/39(a) 8,250 8,250,083
Merrill Lynch Mortgage Trust
Series 2005-CKI1 Class A6
5.245%, 11/12/37(a) 9,050 8,873,887
Series 2005-MKB2 Class A2
4.806%, 9/12/42(a) 16,215 15,875,944
Morgan Stanley Capital I
Series 2005-T17 Class A5
4.78%, 12/13/41(a) 13,195 12,488,408
Series 2005-HQ5 Class A4
5.168%, 1/14/42(a) 16,915 16,436,475
Series 2004-T13 Class A2
3.94%, 9/13/45(a) 9,275 8,795,112
---------------
Total Commercial Mortgage-Backed Securities
(cost $317,595,289) 307,225,034
================================================================================
ASSET-BACKED SECURITIES--6.2%
- --------------------------------------------------------------------------------
Aegis Asset Backed Securities Trust
Series 2004-3 Class A2A
5.018%, 9/25/35(a)(b) 4,042 4,044,055
American Express Credit Account Master Trust
Series 2005-1 Class A
4.779%, 10/15/12(a)(b) 9,305 9,310,862
Asset Backed Funding Corp.
Series 2003-WF1 Class A2
5.331%, 12/25/32(a)(b) 3,555 3,583,880
Bank One Issuance Trust
Series 2004-A4 Class A4
4.789%, 2/16/10(a)(b) 9,890 9,895,736
Bear Stearns Asset Backed Securities, Inc.
Series 2005-SD1 Class 1A1
4.968%, 4/25/22(a)(b) 3,636 3,635,803
Capital Auto Receivables Asset Trust
Series 2005-SN1A Class A3A
4.10%, 6/15/08(a) 11,915 11,782,863
Citifinancial Mortgage Securities, Inc.
Series 2003-1 Class AFPT
3.36%, 1/25/33(a) 3,215 2,961,201
Credit-Based Asset Servicing &
Securities Trust
Series 2005-CB7 Class AF2
5.147%, 11/25/35(a) 7,695 7,565,185
CS First Boston Mortgage Securities Corp.
Series 2006-1 Class A2
5.30%, 5/25/36(a) 4,135 4,118,253
GE-WMC Mortgage Securities LLC
Series 2005-2 Class A2B
4.988%, 12/25/35(a)(b) 8,945 8,934,177
Home Equity Mortgage Trust
Series 2005-2 Class A1
4.998%, 7/25/35(a) 3,616 3,615,836
Series 2005-4 Class A3
4.742%, 1/25/36(a) 8,695 8,549,359
Household Home Equity Loan Trust
Series 2005-3 Class A1
5.036%, 1/20/35(a)(b) 9,522 9,530,814
HSI Asset Securitization Corp. Trust
Series 2006-OPT2 Class 2A1
4.898%, 1/25/36(a) 8,473 8,472,940
Master Asset Backed Securities Trust
Series 2004-HE1 Class A1
5.218%, 9/25/34(a) 13,223 13,268,064
Schedule of Investments--Intermediate Duration Portfolio 5
- --------------------------------------------------------------------------------
Principal Amount (000) U.S. $ Value
================================================================================
MBNA Credit Card Master Note Trust
Series 2001-A5 Class A5
4.959%, 3/15/11(a) $ 30,140 $ 30,299,441
Merrill Lynch Mortgage Investment, Inc.
Series 2006-A1 Class A1
6.233%, 3/25/36(a) 17,720 17,837,661
Morgan Stanley ABS Capital I
Series 2004-HE4 Class A3
5.018%, 5/25/34(a)(b) 46 45,887
Novastar Home Equity Loan
Series 2001-1 Class A1
5.378%, 7/25/31(a) 2,304 2,304,376
Residential Asset Mortgage Products, Inc.
Series 2005-RS1 Class AII1
4.928%, 1/25/35(a) 3,440 3,439,789
Series 2005-RS3 Class AIA2
4.988%, 3/25/35(a) 8,945 8,940,796
Series 2005-RZ1 Class A2
5.018%, 4/25/35(a)(b) 12,390 12,390,000
Residential Asset Securities Corp.
Series 2004-KS7 Class AI1
4.968%, 10/25/21(a)(b) 255 255,454
Series 2002-KS7 Class A2
5.188%, 11/25/32(a) 2,032 2,036,661
Series 2003-KS3 Class A2
5.118%, 5/25/33(a)(b) 1,239 1,240,547
Residential Funding Mortgage Securities II
Series 2005-HI2 Class A3
4.46%, 5/25/35(a) 6,000 5,888,460
Saxon Asset Securities Trust
Series 2005-4 Class A2B
4.998%, 11/25/37(a)(b) 9,225 9,225,000
SLM Student Loan Trust
Series 2003-C Class A1
5.01%, 9/15/16(a)(b) 9,274 9,282,658
Specialty Underwriting & Residential Finance
Series 2006-BC1 Class A2A
4.65%, 12/25/36(a) 8,564 8,563,643
Structured Asset Investment Loan Trust
Series 2004-5 Class A2
4.998%, 5/25/34(a)(b) 568 567,943
Series 2006-1 Class A1
4.898%, 1/25/36(a) 7,985 7,985,829
---------------
Total Asset-Backed Securities
(cost $230,298,493) 229,573,173
================================================================================
COLLATERALIZED MORTGAGE OBLIGATIONS--5.1%
- --------------------------------------------------------------------------------
American Home Mortgage Investment Trust
Series 2005-4 Class 5A
5.35%, 11/25/45(a) 18,744 18,664,723
Bear Stearns Alt-A Trust
Series 2005-10 Class 24A1
5.993%, 1/25/36(a) 16,320 16,396,621
Series 2006-1 Class 22A1
5.453%, 2/25/36(a) 20,567 20,419,957
Series 2006-2 Class 23A1
6.00%, 3/25/36(a) 17,482 17,513,817
Citigroup Mortgage Loan Trust, Inc.
Series 2005-2 Class 1A4
5.126%, 5/25/35(a) 21,422 21,020,168
IndyMac Index Mortgage Loan Trust
Series 2006-AR7 Class 4A1
6.265%, 3/25/36(a) 11,037 11,124,744
J.P. Morgan Alternative Loan Trust
Series 2006-S1 Class 3A1
4.715%, 3/25/36(a) 8,108 8,108,078
Residential Accredit Loans, Inc.
Series 2006-QS2 Class 1A9
5.50%, 2/25/36(a) 20,116 19,977,485
Residential Funding Mortgage Securities, Inc.
Series 2005-SA3 Class 3A
5.249%, 8/25/35(a) 13,477 13,249,063
Structured Adjustment Mortgage Loan Trust
Series 2006-3 Class 2A1
4.017%, 4/25/36(a) 15,413 15,473,203
Structured Asset Mortgage Investment, Inc.
Series 2004-AR5 Class 1A1
5.106%, 10/19/34(a) 21,324 21,313,472
Washington Mutual, Inc.
Series 2005-AR2 Class 2A22
5.038%, 1/25/45(a)(b) 5,647 5,647,378
---------------
Total Collateralized Mortgage Obligations
(cost $189,591,551) 188,908,709
================================================================================
U.S. DOLLAR SOVEREIGN DEBT--2.2%
- --------------------------------------------------------------------------------
Brazilian (Republic of)
8.25%, 1/20/34(a) 32,180 35,446,270
Panama (Republic of)
6.70%, 1/26/36(a) 7,135 7,117,163
Peru (Republic of)
7.35%, 7/21/25(a) 8,100 7,938,000
Russian Federation
5.00%, 3/31/30(a)(d) 14,580 15,950,520
Ukraine (Republic of)
7.65%, 6/11/13(a) 6,700 7,028,300
7.50%, 4/08/33(a) 6,595 7,353,425
---------------
Total U.S. Dollar Sovereign Debt
(cost $79,741,466) 80,833,678
================================================================================
SHORT-TERM INVESTMENTS--27.5%
- --------------------------------------------------------------------------------
U.S. Government & Government Sponsored
Agency Obligations--3.0%
Federal Home Loan Mortgage Corp.
Zero Coupon, 5/11/06(f) 24,930 24,810,510
Federal National Mortgage Association
Zero Coupon, 4/03/06(e)(f) 46,550 46,463,230
Zero Coupon, 4/18/06(f) 40,000 40,000,000
---------------
111,273,740
---------------
6 Sanford C. Bernstein Fund, Inc.--2006 Semiannual Report
- --------------------------------------------------------------------------------
Principal Amount (000) U.S. $ Value
================================================================================
U.S. Treasury Bills--0.1%
United States Treasury Bills
4.55%, 5/04/06(f) $ 3,760 $ 3,745,835
---------------
Commercial Paper--24.4%
ABN Amro Finance
4.63%, 4/12/06(f) 50,000 49,942,125
AIG Funding, Inc.
4.63%, 4/12/06(f) 50,000 49,942,125
Bank of Montreal
4.615%, 4/12/06(f) 50,000 49,942,312
Barclays Bank
4.63%, 4/12/06(f) 50,000 49,942,125
Bear Stearns & Co., Inc.
4.66%, 4/12/06(f) 50,000 49,941,750
BNP Paribas Finance
4.62%, 4/12/06(f) 50,000 49,942,250
Canadian Imperial Holdings
4.63%, 4/12/06(f) 50,000 49,942,125
Citigroup Funding, Inc.
4.63%, 4/12/06(f) 50,000 49,942,125
Depfa Bank plc
4.655%, 4/12/06(f) 50,000 49,941,813
Deutsche Bank
4.62%, 4/12/06(f) 50,000 49,942,250
Dexia Delaware LLC
4.64%, 4/12/06(f) 50,000 49,942,125
GE Capital Corp.
4.64%, 4/12/06(f) 50,000 49,942,000
Prudential Funding LLC
4.64%, 4/12/06(f) 50,000 49,942,000
Royal Bank of Scotland plc
4.615%, 4/12/06(f) 50,000 49,942,312
Societe Generale, Inc.
4.64%, 4/12/06(f) 50,000 49,942,000
State Street Corp.
4.64%, 4/12/06(f) 50,000 49,942,000
Toyota Motor Credit Co.
4.63%, 4/12/06(f) 50,000 49,942,125
UBS Finance, LLC
4.83%, 4/03/06(f) 50,000 50,000,000
---------------
899,015,562
---------------
Total Short-Term Investments
(cost $1,014,035,137) 1,014,035,137
---------------
Total Investments--125.8%
(cost $4,682,383,175)(g) 4,636,043,933
Other assets less liabilities--(25.8)% (949,971,047)
---------------
Net Assets--100% $ 3,686,072,886
---------------
================================================================================
INTEREST RATE SWAP CONTRACTS
- --------------------------------------------------------------------------------
Rate Type
----------------------------------
Payments Unrealized
Notional Amount Received by the Payments Made by Appreciation/
Swap Counterparty (000) Termination Date Portfolio the Portfolio (Depreciation)
- ---------------------------------------------------------------------------------------------------------------
Lehman Brothers 43,445 11/02/07 3 month LIBOR+ 4.814% $ 153,234
Lehman Brothers 116,000 10/28/07 BMA* 4.800% 384,722
Lehman Brothers 107,000 1/23/08 3 month LIBOR+ 4.777% (981,901)
* Variable interest based on the BMA (Bond Market Association) Municipal
Swap Index, which fluctuates weekly.
+ LIBOR (London Interbank Offered Rate).
================================================================================
CREDIT DEFAULT SWAP CONTRACTS
- --------------------------------------------------------------------------------
Unrealized
Swap Counterparty & Notional Amount Appreciation/
Referenced Obligation (000) Interest Rate Termination Date (Depreciation)
- ----------------------------------------------------------------------------------------------
Sell Contracts
JP Morgan Chase
Dow Jones High Volume
4.00%, 6/20/10 87,500 0.90% 6/20/10 $ (84,469)
JP Morgan Chase
Dow Jones High Volume
4.00%, 6/20/10 17,000 0.90% 6/20/10 232,746
Schedule of Investments--Intermediate Duration Portfolio 7
================================================================================
FORWARD EXCHANGE CURRENCY CONTRACTS
- --------------------------------------------------------------------------------
Contract Unrealized
Amount U.S. $ Value on U.S. $ Appreciation/
(000) Origination Date Current Value (Depreciation)
- -------------------------------------------------------------------------------------------------------
Purchase Contracts
Japanese Yen Settling 4/03/06 16,243,345 $ 138,764,766 $ 138,068,113 $ (696,653)
Sales Contracts
Australian Dollar Settling 4/26/06 101,974 73,149,169 72,967,116 182,053
Japanese Yen Settling 4/03/06 16,243,345 139,547,636 138,068,113 1,479,523
Japanese Yen Settling 5/08/06 8,759,881 74,971,384 74,833,934 137,450
Mexican Peso Settling 4/25/06 551,137 50,779,009 50,550,282 228,727
Polish Zloty Settling 4/11/06 119,961 37,210,306 37,080,007 130,299
Swedish Krona Settling 4/20/06 1,102,646 143,387,914 141,787,797 1,600,117
================================================================================
FINANCIAL FUTURES CONTRACTS SOLD
- --------------------------------------------------------------------------------
Number of Value at Unrealized
Type Contracts Expiration Month Original Value March 31, 2006 Depreciatin
- -------------------------------------------------------------------------------------------------
U.S. Treasury Bonds
Futures 235 June 2006 $ 25,651,037 $ 25,651,719 $ (682)
- --------------------------------------------------------------------------------
(a) Positions, or portion thereof, with an aggregate market value of
$2,694,379,059 have been segregated to collateralize open forward exchange
currency contracts.
(b) Variable rate coupon, rate shown as of March 31, 2006.
(c) When-issued security.
(d) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities are considered liquid and may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At March 31, 2006, the aggregate market value of these securities
amounted to $106,860,939 or 2.9% of net assets.
(e) Represents entire or partial position segregated as collateral for swaps.
(f) Represents entire or partial position segregated as collateral for when
issued securities.
(g) At March 31, 2006, the cost basis of investment securities owned was
substantially identical for both book and tax. Gross unrealized
appreciation of investments was $11,917,341 and gross unrealized
depreciation of investments was $58,256,583, resulting in net unrealized
depreciation of $46,339,242 (excluding swap and future transactions).
- --------------------------------------------------------------------------------
Explanation of abbreviation:
TBA-To Be Announced
Currency Abbreviations:
AUD--Australian Dollar
JPY--Japanese Yen
MXN--Mexican Peso
PLN--Polish Zloty
SEK--Swedish Krona
Please note: The industry classifications presented herein are based on the
industry categorization methodology of the Adviser.
See notes to financial statements.
8 Sanford C. Bernstein Fund, Inc.--2006 Semiannual Report
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
Schedule of Investments
Short Duration Plus Portfolio
March 31, 2006 (Unaudited)
- --------------------------------------------------------------------------------
Principal Amount (000) U.S. $ Value
================================================================================
U.S. GOVERNMENT & GOVERNMENT SPONSORED
AGENCY OBLIGATIONS--40.1%
Federal Agency--16.2%
Federal Home Loan Mortgage Corp.
3.75%, 8/03/07 $ 9,940 $ 9,766,159
4.00%, 8/17/07 11,370 11,203,168
3.875%, 6/15/08 31,870 31,086,317
Callable 11/03/06 @ 100
4.90%, 11/03/08 4,295 4,238,306
Federal National Mortgage Association
Callable 11/28/06 @ 100
4.90%, 11/28/07 4,645 4,621,775
Callable 2/27/07 @ 100
5.00%, 2/27/08 7,250 7,215,925
4.25%, 5/15/09 5,305 5,175,203
---------------
73,306,853
---------------
Federal Agency--Collateralized
Mortgage Obligations-1.1%
Federal Home Loan Mortgage Corp.
Series 2974 Class AM
4.60%, 8/15/29 4,838 4,714,027
Federal Agency--Commercial
Mortgage Backed Securities--0.3%
Federal National Mortgage Association
Series 2000-M2 Class B
7.079%, 2/17/21 1,381 1,387,700
---------------
6,101,727
---------------
Mortgage Pass Thru's-14.1%
Federal Home Loan Mortgage Corp.
9.00%, 3/17/08 60 59,626
7.00%, 5/01/35 6,069 6,251,046
Federal National Mortgage Association
6.00%, 12/01/13-2/01/17 5,709 5,786,929
7.50%, 3/01/15 425 445,216
8.00%, 8/01/16 718 760,132
7.00%, 9/01/25-11/01/34 17,060 17,587,041
5.00%, TBA(a) 11,760 11,462,331
5.50%, TBA(a) 11,520 11,448,000
6.00%, TBA(a) 9,500 9,497,036
Government National Mortgage Association
7.50%, 3/15/32 748 784,429
---------------
64,081,786
---------------
U.S. Treasury Notes--8.4%
United States Treasury Notes
3.625%, 4/30/07 2,210 2,181,339
3.50%, 5/31/07 36,505 35,944,575
---------------
38,125,914
---------------
Total U.S. Government & Government
Sponsored Agency Obligations
(cost $183,261,966) 181,616,280
---------------
================================================================================
CORPORATE DEBT OBLIGATIONS--24.0%
- --------------------------------------------------------------------------------
Automotive--0.9%
DaimlerChrysler North America
4.125%, 3/07/07 3,370 3,333,324
4.875%, 6/15/10 970 934,840
---------------
4,268,164
---------------
Banking--0.5%
Washington Mutual Bank
4.50%, 8/25/08 2,305 2,261,293
---------------
Broadcasting/Media--1.2%
AOL Time Warner, Inc.
6.125%, 4/15/06 5,200 5,201,035
---------------
Building/Real Estate--1.3%
Simon Property Group, LP
6.375%, 11/15/07 2,150 2,181,128
---------------
Vornado Realty LP
5.625%, 6/15/07 3,590 3,594,387
---------------
5,775,515
---------------
Cable--1.9%
British Sky Broadcasting Group plc
6.875%, 2/23/09 3,665 3,792,949
Comcast Cable Communications, Inc.
8.375%, 5/01/07 4,750 4,896,191
---------------
8,689,140
---------------
Communications--1.1%
Sprint Capital Corp.
6.00%, 1/15/07 5,140 5,164,389
---------------
Communications--Mobile-0.8%
Cingular Wireless LLC
5.625%, 12/15/06 3,720 3,729,170
---------------
Financial--7.8%
CIT Group, Inc.
7.375%, 4/02/07 7,310 7,450,484
Countrywide Home Loans, Inc.
5.625%, 5/15/07 7,695 7,717,800
Goldman Sachs Group, Inc.
4.125%, 1/15/08 6,390 6,264,392
International Lease Finance Corp.
5.625%, 6/01/07 6,025 6,028,030
Merrill Lynch & Co., Inc.
6.56%, 12/16/07 7,725 7,882,011
---------------
35,342,717
---------------
Schedule of Investments--Short Duration Plus Portfolio 9
- --------------------------------------------------------------------------------
Principal Amount (000) U.S. $ Value
================================================================================
Food/Beverage--1.5%
General Mills, Inc.
5.125%, 2/15/07 $ 2,250 $ 2,246,373
The Kroger Co.
7.80%, 8/15/07 4,205 4,330,128
---------------
6,576,501
---------------
Healthcare--1.6%
Anthem, Inc.
3.50%, 9/01/07 3,470 3,374,349
Wellpoint, Inc.
3.75%, 12/14/07 3,864 3,762,860
---------------
7,137,209
---------------
Insurance--0.9%
Marsh & McLennan Cos., Inc.
5.375%, 3/15/07 4,220 4,208,399
---------------
Non-Air Transportation--0.5%
CSX Corp.
6.25%, 10/15/08 2,180 2,226,286
---------------
Paper/Packaging--0.1%
Weyerhaeuser Co.
6.125%, 3/15/07 456 458,035
---------------
Public Utilities--Electric & Gas--2.2%
Duke Energy Corp.
3.75%, 3/05/08 4,137 4,019,538
Pacific Gas & Electric Co.
3.60%, 3/01/09 2,450 2,329,935
Progress Energy, Inc.
6.05%, 4/15/07 3,715 3,737,056
---------------
10,086,529
---------------
Service--0.7%
Waste Management, Inc.
6.50%, 11/15/08 3,045 3,123,104
---------------
Supermarket/Drug--0.8%
Safeway, Inc.
6.50%, 11/15/08 3,600 3,663,986
---------------
Technology--0.2%
Oracle Corp.
5.00%, 1/15/11(b) 1,005 981,578
---------------
Total Corporate Debt Obligations
(cost $110,526,872) 108,893,050
---------------
================================================================================
ASSET-BACKED SECURITIES--13.4%
- --------------------------------------------------------------------------------
Ace Securities Corp.
Series 2003-0P1 Class A2
5.18%, 12/25/33(c) 1,207 1,207,305
American General Mortgage Loan Trust
Series 2003-1 Class A3
4.03%, 4/25/33 1,680 1,624,255
Bayview Financial Acquisition Trust
Series 2005-C Class A1B
5.11%, 6/28/44(c) 2,330 2,332,913
Capital Auto Receivables Asset Trust
Series 2005-SN1A Class A3A
4.10%, 6/15/08 1,995 1,972,876
Citibank Credit Card Issuance Trust
Series 2004-A4 Class A4
3.20%, 8/24/09 3,000 2,920,770
Citifinancial Mortgage Securities, Inc.
Series 2003-1 Class AFPT
3.36%, 1/25/33 1,250 1,151,170
Countrywide Asset-Backed Certificates
Series 2003-BC1 Class A
5.22%, 3/25/33(c) 277 277,971
Credit-Based Asset Servicing & Securities, Inc.
Series 2003-CB3 Class AF1
2.879%, 12/25/32 1,636 1,581,887
Series 2005-CB4 Class AF2
4.751%, 8/25/35 3,850 3,768,274
Series 2005-RP2 Class AF2
5.75%, 9/25/35 1,200 1,202,987
First Franklin Mortgage Loan
Asset-Backed Certificates
Series 2000-FF1 Class A
5.28%, 9/25/30(c) 305 305,331
Home Equity Mortgage Trust
Series 2005-3 Class M1
5.36%, 11/25/35(c) 3,825 3,842,212
HSI Asset Securitization Corp. Trust
Series 2006-OPT1 Class 2A1
4.90%, 12/25/35(c) 4,323 4,320,304
Series 2006-OPT2 Class 2A1
4.90%, 1/25/36(c) 3,587 3,586,764
Irwin Home Equity
Series 2005-C Class 2A1
5.07%, 4/25/30(c) 1,818 1,818,663
Lehman XS Trust
Series 2006-3 Class M1
5.27%, 3/25/36(c) 1,000 1,003,130
Long Beach Mortgage Loan Trust
Series 2003-1 Class M2
6.87%, 3/25/33(c) 5,660 5,716,600
Series 2004-3 Class M2
5.418%, 7/25/34(c) 6,700 6,730,083
Master Asset Backed Securities Trust
Series 2004-HE1 Class A3
5.18%, 9/25/34(c) 1,059 1,059,485
Series 2004-HE1 Class A1
5.22%, 9/25/34(c) 1,829 1,835,386
Series 2004-WMC3 Class A4
5.11%, 10/25/34(c) 1,769 1,770,374
Providian Gateway Master Trust
Series 2004-DA Class A
3.35%, 9/15/11 2,000 1,947,900
Residential Asset Mortgage Products, Inc.
Series 2004-RS4 Class AI4
4.911%, 4/25/34 2,120 2,091,507
10 Sanford C. Bernstein Fund, Inc.--2006 Semiannual Report
- --------------------------------------------------------------------------------
Principal Amount (000) U.S. $ Value
================================================================================
Residential Asset Securities Corp.
Series 2003-KS8 Class A2B2
4.27%, 10/25/33 $ 28 $ 28,244
Structured Asset Investment Loan Trust
Series 2006-1 Class A1
4.90%, 1/25/36(c) 3,140 3,140,465
Winston Funding Ltd.
Series 2003-1 Class A2
5.51%, 4/23/09(b)(c) 3,500 3,508,750
---------------
Total Asset-Backed Securities
(cost $61,003,603) 60,745,606
---------------
================================================================================
COLLATERALIZED MORTGAGE OBLIGATIONS--11.8%
- --------------------------------------------------------------------------------
American Home Mortgage Investment Trust
Series 2004-3 Class MF1
5.35%, 10/25/34(c) 2,000 1,928,260
Series 2004-4 Class M2
5.87%, 2/25/45(c) 2,860 2,845,700
Series 2005-2 Class 2A1
6.39%, 9/25/45(c) 2,203 2,224,573
Series 2005-4 Class 5A
5.35%, 11/25/45(c) 3,074 3,061,109
Bear Stearns Alt-A Trust
Series 2005-10 Class 24A1
5.99%, 1/25/36(c) 1,052 1,057,095
Series 2006-1 Class 22A1
5.45%, 2/25/36 2,811 2,791,625
Series 2006-2 Class 23A1
6.00%, 3/25/36 1,700 1,703,094
Citicorp Mortgage Securities, Inc.
Series 2004-7 Class 1A1
5.25%, 9/25/34 49 48,109
Citigroup Mortgage Loan Trust, Inc.
Series 2005-2 Class 1A4
5.13%, 5/25/35 1,853 1,817,768
Countrywide Home Loans
Series 2005-12 Class 1A5
5.25%, 5/25/35 4,568 4,464,189
Credit Suisse First Boston Mortgage
Securities Corp.
Series 2004-2R Class A1
5.02%, 12/28/33(b)(c) 2,912 2,567,632
Series 2005-11 Class 3A6
5.50%, 12/25/35 3,485 3,445,236
Deutsche Alt-A Securities, Inc. Mortgage Loan
Series 2005-AR1 Class 1A1
5.13%, 8/25/35(c) 2,169 2,161,199
First Horizon Alternative Mortgage Securities
Series 2005-FA11 Class 1A5
5.75%, 2/25/36 2,313 2,316,352
IndyMac Index Mortgage Loan Trust
Series 2006-AR7 Class 4A1
6.27%, 5/25/36 1,090 1,098,665
Merrill Lynch Mortgage Investors, Inc.
Series 2005-A8 Class A1C1
5.25%, 8/25/36 1,666 1,652,892
MLCC Mortgage Investors, Inc.
Series 2003-F Class A1
5.14%, 10/25/28(c) 4,804 4,811,376
Series 2004-A Class A1
5.05%, 4/25/29(c) 4,073 4,074,299
Residential Accredit Loans, Inc.
Series 2006-QS2 Class 1A9
5.50%, 2/25/36 3,295 3,272,343
Residential Funding Mortgage Securities, Inc.
Series 2005-SA3 Class 3A
5.25%, 8/25/35 1,852 1,821,177
Structured Adjustable Rate Mortgage Loan
Series 2005-5 Class A3
5.05%, 5/25/35(c) 1,224 1,224,213
Structured Asset Securities Corp.
Series 2002-11A Class 1A
5.59%, 6/25/32 1,581 1,581,169
Series 2003-21 Class 2A1
4.00%, 8/25/33 54 52,352
Washington Mutual
Series 2005-AR7 Class A4
4.94%, 8/25/35 1,463 1,438,616
---------------
Total Collateralized Mortgage Obligations
(cost $54,169,273) 53,459,043
---------------
================================================================================
COMMERCIAL MORTGAGE-BACKED SECURITIES-5.5%
- --------------------------------------------------------------------------------
Asset Securitization Corp.
Series 1996-MD6 Class A1C
7.04%, 11/13/29 6,393 6,392,830
Commercial Mortgage Acceptance Corp.
Series 1997-ML1 Class A2
6.53%, 12/15/30 458 459,645
Credit Suisse First Boston Mortgage
Securities Corp.
Series 2005-TF2A Class G
5.30%, 9/15/20(c) 1,065 1,065,000
Series 2005-TF2A Class F
5.25%, 9/15/20(c) 1,065 1,065,000
First Union Lehman Brothers Bank of America
Series 1998-C2 Class A2
6.56%, 11/18/35 3,675 3,738,077
LB-UBS Commercial Mortgage Trust
Series 2004-C7 Class A2
3.99%, 10/15/29 3,385 3,237,786
Lehman Brothers Floating Rate
Commercial Mortgage Trust
Series 2005-LLFA Class F
5.079%, 7/15/18 1,550 1,550,000
Morgan Stanley Capital I
Series 2005-XLF Class G
5.119%, 8/15/19 2,645 2,645,000
Schedule of Investments--Short Duration Plus Portfolio 11
- --------------------------------------------------------------------------------
Principal Amount (000) U.S. $ Value
================================================================================
Nomura Asset Securities Corp.
Series 1998-D6 Class A1B
6.59%, 3/15/30 $ 4,910 $ 5,017,676
---------------
Total Commercial Mortgage-Backed Securities
(cost $26,076,894) 25,171,014
---------------
================================================================================
SHORT-TERM INVESTMENTS--11.6%
- --------------------------------------------------------------------------------
Commercial Paper--7.4%
Deutsche Bank
4.62%, 4/12/06(d) 15,000 14,982,675
Barclays Fund
4.63%, 4/12/06(d) 15,000 14,982,638
Royal Bank Scotland plc
4.755%, 11/12/07(d) 3,500 3,500,169
---------------
33,465,482
---------------
U.S. Government & Government
Sponsored Agency Obligations--4.2%
Federal Home Loan Bank
Zero Coupon, 4/03/06(d) 19,000 19,000,000
---------------
Total Short-Term Investments
(cost $52,465,482) 52,465,482
---------------
Total Investments--106.4%
(cost $487,504,090)(e) 482,350,475
Other assets less liabilities--(6.4)% (29,188,462)
---------------
Net Assets--100% $ 453,162,013
---------------
================================================================================
INTEREST RATE SWAP CONTRACTS
- --------------------------------------------------------------------------------
Rate Type
----------------------------------
Payments Unrealized
Notional Amount Received by the Payments Made by Appreciation/
Swap Counterparty (000) Termination Date Portfolio the Portfolio (Depreciation)
- -------------------------------------------------------------------------------------------------------------
Lehman Brothers 14,000 1/27/08 3 month LIBOR+ 4.835% $ (20,331)
+ LIBOR (London Interbank Offered Rate).
- --------------------------------------------------------------------------------
(a) When-issued security.
(b) Security is exempt from registration under rule 144A of the Securities Act
of 1933. This security is considered liquid and may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At March 31, 2006, the market value of securities amounted to
$7,057,960 or 1.6% of net assets.
(c) Variable rate coupon, rate shown as of March 31, 2006.
(d) Represents entire or partial position segregated as collateral for when
issued securities.
(e) At March 31, 2006, the cost basis of investment securities owned was
substantially identical for both book and tax. Gross unrealized
appreciation of investments was $90,985 and gross unrealized depreciation
of investments was $5,244,600, resulting in net unrealized depreciation of
$5,153,615 (excluding swap transactions).
Explanation of abbreviation:
TBA--To Be Announced
See notes to financial statements.
12 Sanford C. Bernstein Fund, Inc.--2006 Semiannual Report
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund, Inc.
Schedule of Investments
U.S. Government Short Duration Portfolio
March 31, 2006 (Unaudited)
- --------------------------------------------------------------------------------
Principal Amount (000) U.S. $ Value
================================================================================
U.S. GOVERNMENT & GOVERNMENT SPONSORED
AGENCY OBLIGATIONS--94.6%
- --------------------------------------------------------------------------------
Federal Agency--46.8%
Federal Farm Credit Bank
2.05%, 6/12/06 (a) $ 4,000 $ 3,977,432
3.25%, 6/15/07 5,000 4,891,830
Federal Home Loan Bank
2.04%, 6/12/06 (a) 4,000 3,977,360
2.875%, 8/15/06 450 446,542
3.625%, 6/20/07 800 785,989
4.75%, 8/08/07 4,000 3,980,772
4.625%, 2/08/08 4,200 4,166,253
3.00%, 4/15/09 1,405 1,321,834
Federal Home Loan Mortgage Corp.
Callable 11/03/06 @ 100
4.90%, 11/03/08 845 833,846
Federal National Mortgage Association
Callable 11/28/06 @ 100
4.90%, 11/28/07 825 820,875
3.80%, 1/18/08 250 244,046
5.75%, 2/15/08 8,260 8,356,840
Callable 2/27/07 @ 100
5.00%, 2/27/08 1,260 1,254,078
4.25%, 5/15/09 830 809,692
6.625%, 9/15/09 2,500 2,615,303
---------------
38,482,692
---------------
Federal Agency--Collateralized
Mortgage Obligations--0.3%
Federal National Mortgage Association
Series 2000-M2 Class B
7.08%, 2/17/21(b) 238 239,370
---------------
Mortgage Pass Thru's--13.4%
Federal Home Loan Mortgage Corp.
7.00%, 4/01/32-5/01/35 1,263 1,300,972
Federal National Mortgage Association
6.00%, 12/01/13-11/01/16 1,278 1,295,208
7.50%, 3/01/15 152 159,006
8.00%, 7/01/17 272 287,861
7.00%, 2/01/31-9/01/33 2,349 2,422,626
5.00%, TBA(c) 2,085 2,032,224
5.50%, TBA(c) 2,125 2,111,719
6.00%, TBA(c) 1,400 1,399,563
---------------
11,009,179
---------------
U.S. Treasury Notes--34.1%
United States Treasury Notes
3.00%, 12/31/06 4,940 4,872,267
3.75%, 3/31/07-5/15/08 6,930 6,808,422
3.50%, 5/31/07 16,640 16,384,543
---------------
28,065,232
---------------
Total U.S. Government & Government
Sponsored Agency Obligations
(cost $78,515,947) 77,796,473
---------------
================================================================================
COLLATERALIZED MORTGAGE OBLIGATIONS--4.9%
- --------------------------------------------------------------------------------
American Home Mortgage Investment Trust
Series 2005-2 Class 2A1
6.39%, 9/25/45(b) 387 390,545
Bear Stearns Alt-A Trust
Series 2005-10 Class 24A1
5.99%, 1/25/36 818 821,461
Series 2006-2 Class 23A1
6.00%, 3/25/36 305 305,555
Countrywide Home Loans
Series 2005-12 Class 1A5
5.25%, 5/25/35 783 765,093
MLCC Mortgage Investors, Inc.
Series 2004-A Class A1
5.05%, 4/25/29(b) 739 739,172
Structured Asset Securities Corp.
Series 2003-23H Class 1A1
5.50%, 7/25/33 1,015 995,782
---------------
Total Collateralized Mortgage Obligations
(cost $4,084,445) 4,017,608
---------------
================================================================================
ASSET-BACKED SECURITIES-1.0%
- --------------------------------------------------------------------------------
Ace Securities Corp.
Series 2003-0P1 Class A2
5.18%, 12/25/33(b) 183 183,469
Capital Auto Receivables Asset Trust
Series 2005-SN1A Class A3A
4.10%, 6/15/08 345 341,174
Residential Asset Securities Corp.
Series 2003-KS8 Class A2B2
5.26%, 10/25/33(b) 341 341,496
---------------
Total Asset-Backed Securities
(cost $871,421) 866,139
---------------
Schedule of Investments--U.S. Government Short Duratio Portfolio 13
================================================================================
Principal Amount (000) U.S. $ Value
================================================================================
SHORT-TERM INVESTMENT--5.2%
- ------------------------------------
U.S. Government Agency--5.2%
Federal National Mortgage Association
Zero Coupon, 5/10/06 (a) $ 4,260 $ 4,240,166
---------------
Total Investments--105.7%
(cost $87,711,979)(d) 86,920,386
Other assets less liabilities--(5.7)% (4,650,907)
---------------
Net Assets--100% $ 82,269,479
---------------
(a) Represents entire or partial position segregated as collateral for when
issued securities
(b) Variable rate coupon, rate shown as of March 31, 2006.
(c) When-issued security.
(d) At March 31, 2006, the cost basis of investment securities owned was
substantially identical for both book and tax. Gross unrealized
appreciation of investments was $4,539 and gross unrealized depreciation
of investments was $796,132, resulting in net unrealized depreciation of
$791,593.
Explanation of abbreviation:
TBA--To Be Announced
See notes to financial statements.
14 Sanford C. Bernstein Fund, Inc.--2006 Semiannual Report
- --------------------------------------------------------------------------------
Sanford C. Bernstein Fund II, Inc.
Schedule of Investments
Intermediate Duration Institutional Portfolio
March 31, 2006 (Unaudited)
- --------------------------------------------------------------------------------
Principal Amount (000) U.S. $ Value
================================================================================
U.S. GOVERNMENT & GOVERNMENT SPONSORED
AGENCY OBLIGATIONS--46.8%
- --------------------------------------------------------------------------------
Federal Agency--Collateralized Mortgage Obligations--0.4%
Fannie Mae Grantor Trust
Series 2004-T5 Class AB4
4.53%, 5/28/35(a)(b) $ 1,938 $ 1,938,242
Series 2005-T3 Class A1A
4.86%, 7/25/35(a)(b) 833 832,893
---------------
2,771,135
---------------
Mortgage Pass Thru's-42.7%
Federal Home Loan Mortgage Corp.
6.00%, 6/01/20(a) 578 585,597
4.50%, 8/01/35-1/01/36 14,397 13,280,397
6.00%, TBA(c) 3,110 3,108,056
Federal National Mortgage Association
5.50%, 2/01/09-2/01/35 59,542 58,550,343
6.00%, 2/01/17-9/01/35 29,025 29,097,442
5.00%, 4/01/19(a) 11,557 11,286,409
6.50%, 5/01/34-1/01/36 4,131 4,217,368
4.50%, TBA(c) 21,635 20,681,719
5.00%, TBA(c) 30,925 29,681,404
5.50%, TBA(c) 83,360 81,368,333
6.00%, TBA(c) 24,570 24,562,334
6.50%, TBA(c) 26,190 26,681,062
---------------
303,100,464
---------------
U.S. Treasury Bonds--0.8%
United States Treasury Bond
7.25%, 5/15/16(a) 4,560 5,392,911
---------------
U.S. Treasury Notes--2.9%
United States Treasury Note
4.50%, 11/15/15(a) 21,625 20,984,705
---------------
Total U.S. Government & Government
Sponsored Agency Obligations
(cost $336,575,787) 332,249,215
---------------
================================================================================
CORPORATE DEBT OBLIGATIONS-17.7%
- --------------------------------------------------------------------------------
Automotive--0.6%
DaimlerChrysler North America
4.875%, 6/15/10(a) 530 510,789
Ford Motor Credit Co.
6.50%, 1/25/07(a) 740 737,167
6.625%, 6/16/08(a) 1,040 984,348
General Motors Acceptance Corp.
6.875%, 9/15/11(a) 1,265 1,179,080
Hertz Corp.
Callable 1/01/14 @ 104.44
8.875%, 1/01/14(a)(d) 610 632,875
---------------
4,044,259
---------------
Banking-1.6%
Barclays Bank plc
Callable 06/15/11 @ 100.00
8.55%, 9/29/49(a)(b)(d) 1,400 1,575,179
Huntington National Bank
Senior Note
4.375%, 1/15/10(a) 980 943,741
J.P. Morgan Chase & Co.
6.75%, 2/01/11(a) 1,820 1,913,213
RBS Capital Trust III
Callable 9/30/14 @ 100.00
5.512%, 9/29/49(a)(b) 1,950 1,880,888
Royal Bank of Scotland Group Plc
5.00%, 10/01/14(a) 120 115,381
Sumitomo Mitsui Banking Corp.
Callable 10/15/15 @ 100.00
5.625%, 7/29/49(a)(b)(d) 410 397,732
Suntrust Bank
4.943%, 6/02/09(a)(b) 1,015 1,016,523
UFJ Bank Ltd.
Subordinated Note
7.40%, 6/15/11(a) 280 301,804
UFJ Finance Aruba AEC
6.75%, 7/15/13(a) 500 529,858
Wachovia Capital Trust III
Callable 3/15/11 @ 100.00
5.80%, 8/29/49(a) 1,230 1,208,449
Wells Fargo & Co.
Senior Note
4.20%, 1/15/10(a) 955 916,538
Zions Bancorp
5.50%, 11/16/15(a) 805 785,369
---------------
11,584,675
---------------
Broadcasting/Media--1.1%
Allbritton Communications Co.
Senior Subordinated Note
Callable 12/15/07 @ 103.88
7.75%, 12/15/12(a) 695 698,475
BSKYB Finance United Kingdom plc
5.625%, 10/15/15(a)(d) 1,200 1,156,560
Lamar Media Corp.
Callable 8/15/15 @ 103.31
6.625%, 8/15/15(a) 610 606,950
News America Holdings
9.25%, 2/01/13(a) 890 1,049,548
6.55%, 3/15/33(a) 655 638,009
Time Warner Entertainment Co.
Senior Debenture
8.375%, 3/15/23(a) 1,710 1,933,377
Time Warner, Inc.
6.875%, 5/01/12(a) 845 885,961
WPP Finance Corp.
5.875%, 6/15/14(a) 735 725,777
---------------
7,694,657
---------------
Schedule of Investments--Intermediate Duration Institutional Portfolio 15
================================================================================
Principal Amount (000) U.S. $ Value
================================================================================
Building/Real Estate--0.2%
iStar Financial, Inc.
Senior Note
5.15%, 3/01/12(a) $ 590 $ 566,206
Simon Property Group, LP
6.375%, 11/15/07(a) 815 826,799
---------------
1,393,005
---------------
Cable--0.6%
British Sky Broadcasting Group plc
6.875%, 2/23/09(a) 445 460,535
Cablevision Systems Corp.
8.00%, 4/15/12(a) 730 711,750
Comcast Cable Communications
Holdings, Inc.
9.455%, 11/15/22(a) 1,400 1,766,097
Comcast Corp.
5.30%, 1/15/14(a) 1,025 974,591
DirecTV Holdings LLC
Callable 6/15/10 @ 103.19
6.375%, 6/15/15(a) 705 696,188
---------------
4,609,161
---------------
Chemicals--0.3%
Ineos Group Holdings plc
Callable 2/15/11 @ 104.25
8.50%, 2/15/16(a)(d) 730 693,500
ProLogis
7.05%, 7/15/06(a) 585 587,035
Union Carbide Corp.
Debenture
7.75%, 10/01/96(a) 735 757,239
---------------
2,037,774
---------------
Communications--1.7%
AT&T Corp.
Senior Note
9.05%, 11/15/11(a)(d) 1,085 1,172,895
9.75%, 11/15/31(a) 335 400,011
British Telecommunications plc
8.375%, 12/15/10(a) 1,920 2,141,555
Cox Enterprises, Inc.
4.375%, 5/01/08(a)(d) 1,155 1,121,186
Qwest Communications International, Inc.
Callable 2/15/09 @ 103.75
7.50%, 2/15/14 665 684,950
Sprint Capital Corp.
8.375%, 3/15/12(a) 4,035 4,559,146
Telecom Italia Capital
4.00%, 1/15/10(a) 2,465 2,317,332
---------------
12,397,075
---------------
Communications--Fixed--0.4%
Qwest Corp.
8.875%, 3/15/12(a)(d) 195 217,913
Verizon Global Funding Corp.
4.90%, 9/15/15(a) 875 809,219
Vodafone Group plc
5.50%, 6/15/11(a) 1,625 1,609,983
---------------
2,637,115
---------------
Communications--Mobile--0.9%
AT&T Wireless Services, Inc.
Senior Note
8.75%, 3/01/31(a) 705 892,916
Cingular Wireless LLC
5.625%, 12/15/06(a) 1,225 1,228,020
New Cingular Wireless Services, Inc.
7.875%, 3/01/11(a) 2,230 2,444,225
TELUS Corp.
7.50%, 6/01/07(a) 1,480 1,513,444
---------------
6,078,605
---------------
Conglomerate/Miscellaneous--0.2%
Hutchison Whampoa International Ltd.
7.45%, 11/24/33(a)(d) 1,170 1,276,186
---------------
Consumer Manufacturing--0.1%
Fortune Brands, Inc.
2.875%, 12/01/06(a) 540 531,375
---------------
Energy--0.9%
Amerada Hess Corp.
7.875%, 10/01/29(a) 900 1,047,998
Conoco, Inc.
Senior Note
6.95%, 4/15/29(a) 1,150 1,300,986
Duke Energy Field Services Corp.
7.875%, 8/16/10(a) 360 390,763
Enterprise Products Operating LP
Series B
5.60%, 10/15/14(a) 600 581,816
NRG Energy, Inc.
Senior Note
Callable 2/01/09 @ 107.25
7.25%, 2/01/14(a) 115 116,869
Callable 2/01/16 @ 103.69
7.375%, 2/01/16(a) 615 628,068
The Williams Cos., Inc.
7.875%, 9/01/21(a) 650 698,750
Valero Energy Corp.
6.875%, 4/15/12(a) 1,235 1,308,497
7.50%, 4/15/32(a) 510 586,352
---------------
6,660,099
---------------
Financial--3.8%
American General Finance Corp.
Medium-Term Note
4.625%, 5/15/09(a) 2,160 2,115,899
Berkshire Hathaway Finance Corp.
4.20%, 12/15/10(a) 1,225 1,165,543
Boeing Capital Corp.
Senior Note
4.75%, 8/25/08(a) 365 361,079
16 Sanford C. Bernstein Fund, Inc.--2006 Semiannual Report
================================================================================
Principal Amount (000) U.S. $ Value
================================================================================
BOI Capital Funding No. 2
Callable 2/01/16 @ 100.00
5.571%, 2/01/49(a)(d) $ 300 $ 287,271
CIT Group, Inc.
Medium-Term Note
4.99%, 5/18/07(a)(b) 530 531,303
Senior Note
7.75%, 4/02/12(a) 1,100 1,212,467
Citigroup, Inc.
Subordinated Note
5.01%, 6/09/09(a)(b) 720 721,830
5.00%, 9/15/14(a) 3,671 3,513,514
Core Investment Grade Trust
4.659%, 11/30/07(a) 3,295 3,255,460
CountryWide Home Loans, Inc.
Medium-Term Note, Series L
4.00%, 3/22/11(a) 1,375 1,277,447
Dow Jones Cdx, High Yield
8.00%, 6/29/10(a) 3,754 3,833,773
General Electric Capital Corp.
4.375%, 11/21/11(a) 1,435 1,363,396
Goldman Sachs Group, Inc.
4.75%, 7/15/13(a) 650 614,069
5.125%, 1/15/15(a) 790 755,019
Household Finance Corp.
6.50%, 11/15/08(a) 1,880 1,932,749
7.00%, 5/15/12(a) 565 603,910
ILFC E-Capital Trust I
Callable 12/21/10 @ 100.00
5.90%, 12/21/65(a)(d) 310 300,861
Kinder Morgan Finance
5.35%, 1/05/11(a) 1,845 1,815,578
Manufacturing Capital Finance, Ltd.
Callable 7/25/16 @ 100.00
6.346%, 7/29/49(a) 615 605,183
Resona Bank, Ltd.
5.85%, 9/29/49(a)(d) 240 232,879
Resona Preferred Global Securities
Callable 7/30/15 @ 100
7.191%, 12/29/49(a)(d) 450 469,533
---------------
26,968,763
---------------
Food/Beverage--0.2%
ConAgra Foods, Inc.
7.875%, 9/15/10(a) 341 367,942
6.75%, 9/15/11(a) 223 231,764
Kraft Foods, Inc.
5.25%, 10/01/13(a) 650 632,946
---------------
1,232,652
---------------
Gaming--0.1%
MGM Mirage
8.375%, 2/01/11(a) 655 691,025
Riviera Holdings Corp.
Callable 6/15/06 @ 105.50
11.00%, 6/15/10(a) 220 233,750
---------------
924,775
---------------
Healthcare--0.3%
Humana, Inc.
Senior Note
6.30%, 8/01/18(a) 685 696,673
Wellpoint, Inc.
3.75%, 12/14/07(a) 388 377,844
Wyeth
5.50%, 2/01/14(a) 1,019 1,005,460
---------------
2,079,977
---------------
Industrial--0.1%
Tyco International Group SA
6.00%, 11/15/13(a) 1,025 1,029,657
---------------
Insurance--0.8%
Assurant, Inc.
5.625%, 2/15/14(a) 735 722,246
Liberty Mutual Group
5.75%, 3/15/14(a)(d) 855 831,134
Mangrove Bay Pass-Through Trust
Callable 7/15/13 @ 100
6.102%, 7/15/33(a)(d) 810 782,355
MetLife, Inc.
5.00%, 11/24/13(a) 780 748,648
Royal & Sun Alliance Insurance Group plc
8.95%, 10/15/29(a) 510 644,917
Zurich Capital Trust
Callable 6/01/07 @ 104.19
8.376%, 6/01/37(a)(d) 1,740 1,861,377
---------------
5,590,677
---------------
Metals/Mining--0.2%
AK Steel Corp.
Callable 5/12/06 @ 101.31
7.875%, 2/15/09(a) 455 457,275
Ispat Inland ULC
Callable 4/01/09 @ 104.88
9.75%, 4/01/14(a) 600 678,750
---------------
1,136,025
---------------
Paper/Packaging--0.4%
International Paper Co.
6.75%, 9/01/11(a) 5 5,193
5.30%, 4/01/15(a) 1,015 951,427
Packaging Corp. of America
5.75%, 8/01/13(a) 790 765,794
Weyerhaeuser Co.
5.95%, 11/01/08(a) 830 837,634
---------------
2,560,048
---------------
Petroleum Products--0.1%
Tengizchevroil Finance Co.
6.124%, 11/15/14(a)(d) 405 402,975
---------------
Public Utilities--Electric & Gas--1.9%
Carolina Power & Light Co.
6.50%, 7/15/12(a) 1,135 1,182,718
Schedule of Investments--Intermediate Duration Institutional Portfolio 17
================================================================================
Principal Amount (000) U.S. $ Value
================================================================================
Consumers Energy Co.
Series C
4.25%, 4/15/08(a) $ 600 $ 585,157
Duke Capital LLC
Senior Note
5.50%, 3/01/14(a) 660 645,337
8.00%, 10/01/19(a) 1,085 1,267,156
Exelon Corp.
6.75%, 5/01/11(a) 1,515 1,581,698
FirstEnergy Corp.
Series B
6.45%, 11/15/11(a) 1,415 1,464,150
Series C
7.375%, 11/15/31(a) 1,500 1,666,159
MidAmerican Energy Holdings Co.
Senior Note
5.875%, 10/01/12(a) 410 413,799
6.125%, 4/01/36(a)(d) 830 812,494
Nisource Finance Corp.
7.875%, 11/15/10(a) 590 639,976
Pacific Gas & Electric Co.
4.80%, 3/01/14(a) 960 907,794
Progress Energy, Inc.
7.10%, 3/01/11(a) 895 949,235
Public Service Co. of Colorado
7.875%, 10/01/12(a) 410 463,682
TXU Australia Holdings Pty Ltd.
6.15%, 11/15/13(a)(d) 1,150 1,182,083
---------------
13,761,438
---------------
Public Utilities--Telephone--0.3%
Bell Atlantic New Jersey, Inc.
Debenture
5.875%, 1/17/12(a) 1,175 1,164,851
Telecom Italia Capital
4.00%, 11/15/08(a) 645 621,506
6.375%, 11/15/33(a) 270 254,422
---------------
2,040,779
---------------
Service--0.3%
Pershing Road Development Co. LLC
Callable 6/01/06 @ 101.50
5.22%, 9/01/26(a)(b)(d) 2,015 2,015,000
---------------
Supermarket/Drug--0.1%
Safeway, Inc.
6.50%, 3/01/11(a) 350 360,494
7.25%, 2/01/31(a) 585 619,913
---------------
980,407
---------------
Technology--0.5%
Cisco Systems, Inc.
5.25%, 2/22/11(a) 630 624,624
International Business Machines Corp.
Medium-Term Note
4.375%, 6/01/09(a) 355 346,315
Motorola, Inc.
7.625%, 11/15/10(a) 111 121,067
Oracle Corp.
5.25%, 1/15/16(a)(d) 2,885 2,767,560
---------------
3,859,566
---------------
Total Corporate Debt Obligations
(cost $127,541,841) 125,526,725
---------------
================================================================================
COMMERCIAL MORTGAGE-BACKED SECURITIES-8.7%
- --------------------------------------------------------------------------------
Banc of America Commercial Mortgage, Inc.
Series 2004-3 Class A5
5.304%, 6/10/39(a) 2,845 2,824,032
Series 2004-4 Class A3
4.128%, 7/10/42(a) 1,900 1,828,712
Series 2005-1 Class A3
4.877%, 11/10/42(a) 2,650 2,602,300
Series 2004-6 Class A2
4.161%, 12/10/42(a) 2,565 2,462,143
Bear Stearns Commercial Mortgage
Securities, Inc.
Series 2005-T18 Class A4
4.933%, 2/13/42(a) 2,520 2,406,449
Series 2003-CK2 Class A2
3.861%, 3/15/36(a) 1,695 1,639,387
Series 2004-C5 Class A2
4.183%, 11/15/37(a) 2,170 2,083,699
Series 2005-C1 Class A4
5.014%, 2/15/38(a) 2,150 2,063,656
GE Capital Commercial Mortgage Corp.
Series 2005-C3 Class A3FX
4.863%, 7/10/45(a) 2,370 2,322,126
Goldman Sachs Mortgage
Securities Corp. II
Series 2006-GG6 Class A2
5.506%, 4/10/38(a) 1,940 1,946,829
Greenwich Capital Commercial
Funding Corp.
Series 2003-C1 Class A4
4.111%, 7/05/35(a) 2,035 1,870,165
Series 2003-C2 Class A3
4.533%, 1/05/36(a) 895 861,446
Series 2005-GG3 Class A2
4.305%, 8/10/42(a) 2,620 2,526,780
JP Morgan Chase Commercial
Mortgage Securities
Series 2004-C1 Class A2
4.302%, 1/15/38(a) 245 232,613
Series 2005-LDP3 Class A2
4.851%, 8/15/42(a) 2,085 2,038,296
Series 2005-LDP4 Class A2
4.79%, 10/15/42(a) 1,945 1,896,142
Series 2006-CB14 Class A4
5.481%, 12/12/44(a) 1,380 1,367,428
Series 2005-LDP1 Class A2
4.625%, 3/15/46(a) 2,665 2,592,059
18 Sanford C. Bernstein Fund, Inc.--2006 Semiannual Report
================================================================================
Principal Amount (000) U.S. $ Value
================================================================================
Series 2005-LDP1 Class A4
5.038%, 3/15/46(a) $ 2,620 $ 2,518,056
LB-UBS Commercial Mortgage Trust
Series 2004-C7 Class A2
3.992%, 10/15/29(a) 1,975 1,889,107
Series 2004-C8 Class A2
4.201%, 12/15/29(a) 2,025 1,948,901
Series 2005-C1 Class A4
4.742%, 2/15/30(a) 1,760 1,660,208
Series 2005-C7 Class A4
5.197%, 11/15/30(a) 1,965 1,909,674
Series 2006-C1 Class A4
5.156%, 2/15/31(a) 1,965 1,904,282
Merrill Lynch Commercial Mortgage Trust
Series 2006-1 Class A2
5.439%, 2/12/39(a) 1,660 1,660,017
Merrill Lynch Mortgage Trust
Series 2005-CKI1 Class A6
5.245%, 11/12/37(a) 1,730 1,696,334
Series 2005-MKB2 Class A2
4.806%, 9/12/42(a) 3,175 3,108,611
Morgan Stanley Capital I
Series 2005-T17 Class A5
4.78%, 12/13/41(a) 2,850 2,697,382
Series 2005-HQ5 Class A4
5.168%, 1/14/42(a) 3,745 3,639,054
Series 2004-T13 Class A2
3.94%, 9/13/45(a) 1,555 1,474,544
---------------
Total Commercial Mortgage
Backed Securities (cost $63,700,726) 61,670,432
---------------
================================================================================
ASSET-BACKED SECURITIES--5.4%
- --------------------------------------------------------------------------------
Aegis Asset Backed Securities Trust
Series 2004-3 Class A2A
5.018%, 9/25/35(a)(b) 896 896,265
American Express Credit Account Master Trust
Series 2005-1 Class A
4.779%, 10/15/12(a)(b) 1,910 1,911,203
Asset Backed Funding Corp.
Series 2003-WF1 Class A2
5.331%, 12/25/32(a)(b) 654 659,104
Bank One Issuance Trust
Series 2004-A4 Class A4
4.789%, 2/16/10(a)(b) 1,910 1,911,108
Bear Stearns Asset Backed Securities, Inc.
Series 2005-SD1 Class 1A1
4.968%, 4/25/22(a)(b) 772 772,031
Capital Auto Receivables Asset Trust
Series 2005-SN1A Class A3A
4.10%, 6/15/08(a) 2,300 2,274,493
Citifinancial Mortgage Securities, Inc.
Series 2003-1 Class AFPT
3.36%, 1/25/33(a) 594 546,806
Credit-Based Asset Servicing & Securities Trust
Series 2005-CB7 Class AF2
5.147%, 11/25/35(a) 1,490 1,464,864
CS First Boston Mortgage Securities Corp.
Series 2006-1 Class A2
5.30%, 5/25/36(a) 840 836,598
GE-WMC Mortgage Securities LLC
Series 2005-2 Class A2B
4.988%, 12/25/35(a)(b) 1,785 1,782,840
Home Equity Mortgage Trust
Series 2005-2 Class A1
4.998%, 7/25/35(a)(b) 716 715,826
Series 2005-4 Class A3
4.742%, 1/25/36(a) 1,605 1,578,116
Household Home Equity Loan Trust
Series 2005-3 Class A1
5.036%, 1/20/35(a)(b) 1,841 1,842,433
HSI Asset Securitization Corp. Trust
Series 2006-OPT2 Class 2A1
4.898%, 1/25/36(a) 1,733 1,732,548
Master Asset Backed Securities Trust
Series 2004-HE1 Class A1
5.218%, 9/25/34(a) 2,734 2,743,211
Merrill Lynch Mortgage Investment, Inc.
Series 2006-A1 Class A1
6.233%, 3/25/36(a) 3,450 3,472,908
Morgan Stanley ABS Capital I
Series 2004-HE4 Class A3
5.018%, 5/25/34(a)(b) 9 9,399
Novastar Home Equity Loan
Series 2001-1 Class A1
5.378%, 7/25/31(a)(b) 606 606,415
Residential Asset Mortgage Products, Inc.
Series 2005-RS3 Class AIA2
4.988%, 3/25/35(a)(b) 1,785 1,784,161
Series 2005-RZ1 Class A2
5.018%, 4/25/35(a) 2,565 2,565,000
Residential Asset Securities Corp.
Series 2004-KS7 Class AI1
4.968%, 10/25/21(a)(b) 63 62,773
Series 2002-KS7 Class A2
5.188%, 11/25/32(a)(b) 490 490,957
Residential Funding Mortgage Securities II
Series 2005-HI2 Class A3
4.46%, 5/25/35(a) 1,100 1,079,551
Saxon Asset Securities Trust
Series 2005-4 Class A2B
4.998%, 11/25/37(a)(b) 1,825 1,825,000
SLM Student Loan Trust
Series 2003-C Class A1
5.01%, 9/15/16(a)(b) 1,654 1,655,689
Specialty Underwriting & Residential Finance
Series 2006-BC1 Class A2A
4.65%, 12/25/36(a) 1,759 1,759,319
Structured Asset Investment Loan Trust
Series 2004-5 Class A2
4.998%, 5/25/34(a)(b) 116 115,910
Schedule of Investments--Intermediate Duration Institutional Portfolio 19
================================================================================
Principal Amount (000) U.S. $ Value
================================================================================
Series 2006-1 Class A1
4.898%, 1/25/36(a) $ 1,606 $ 1,606,413
---------------
Total Asset-Backed Securities
(cost $38,837,031) 38,700,941
---------------
================================================================================
COLLATERALIZED MORTGAGE OBLIGATIONS--5.3%
- --------------------------------------------------------------------------------
American Home Mortgage Investment Trust
Series 2005-4 Class 5A
5.35%, 11/25/45(a) 3,777 3,761,332
Bear Stearns Alt-A Trust
Series 2005-10 Class 24A1
5.993%, 1/25/36(a) 3,328 3,343,588
Series 2006-1 Class 22A1
5.453%, 2/25/36(a) 4,200 4,170,905
Series 2006-2 Class 23A1
6.00%, 3/25/36(a) 3,505 3,511,379
Citigroup Mortgage Loan Trust, Inc.
Series 2005-2 Class 1A4
5.126%, 5/25/35(a) 3,996 3,920,676
IndyMac Index Mortgage Loan Trust
Series 2006-AR7 Class 4A1
6.265%, 3/25/36(a) 2,175 2,192,291
J.P. Morgan Alternative Loan Trust
Series 2006-S1 Class 3A1
4.715%, 3/25/36(a) 1,657 1,656,924
Residential Accredit Loans, Inc.
Series 2006-QS2 Class 1A9
5.50%, 2/25/36(a) 4,085 4,057,313
Residential Funding Mortgage Securities, Inc.
Series 2005-SA3 Class 3A
5.249%, 8/25/35(a) 2,631 2,586,071
Structured Adjustment Mortgage Loan Trust
Series 2006-3 Class 2A1
6.017%, 4/25/36(a) 2,830 2,841,054
Structured Asset Mortgage Investment, Inc.
Series 2004-AR5 Class 1A1
5.106%, 10/19/34(a) 4,349 4,347,040
Washington Mutual, Inc.
Series 2005-AR2 Class 2A22
5.038%, 1/25/45(a)(b) 1,157 1,156,627
---------------
Total Collateralized Mortgage Obligations
(cost $37,681,782) 37,545,200
---------------
================================================================================
NON U.S. DOLLAR SOVEREIGN DEBT--11.9%
- --------------------------------------------------------------------------------
Australia (Commonwealth of)
6.00%, 2/15/17(a) AUD 19,210 14,388,106
Japan (Government of)
.70%, 6/20/10(a) JPY 1,739,000 14,485,841
Poland (Government of)
6.25%, 10/24/15(a) PLN 21,365 7,216,411
Sweden (Kingdom of)
Series 1043
5.00%, 1/28/09(a) SEK 103,195 13,898,896
Sweden (Kingdom of)
5.25%, 3/15/11(a) SEK 92,625 12,847,504
United Mexican States
10.00%, 12/05/24(a) MXN 215,270 22,047,779
---------------
Total Non U.S. Dollar Sovereign Debt
(cost $85,453,380) 84,884,537
---------------
================================================================================
U.S. DOLLAR SOVEREIGN DEBT--2.4%
- --------------------------------------------------------------------------------
Brazilian (Republic of)
8.25%, 1/20/34(a) $ 6,620 7,291,930
Panama (Republic of)
6.70%, 1/26/36(a) 1,470 1,466,325
Peru (Republic of)
7.35%, 7/21/25(a) 1,470 1,440,600
Russian Federation
5.00%, 3/31/30(a) 3,110 3,402,340
Ukraine (Republic of)
7.65%, 6/11/13(a) 1,400 1,468,600
7.50%, 4/08/33(a) 1,530 1,705,950
---------------
Total U.S. Dollar Sovereign Debt
(cost $16,518,401) 16,775,745
---------------
================================================================================
SHORT-TERM INVESTMENTS--26.6%
- --------------------------------------------------------------------------------
Commercial Paper-10.6%
AIG Funding, Inc.
4.63%, 4/12/06(f) 25,000 24,971,062
Bear Stearns & Co., Inc.
4.66%, 4/12/06(f) 25,000 24,970,875
Deutsche Bank
4.62%, 4/12/06(f) 25,000 24,971,125
---------------
74,913,062
---------------
U.S. Government & Government Sponsored
Agency Obligations--16.0%
Federal Home Loan Mortgage Corp.
Zero Coupon, 4/12/06-5/11/06(f) 81,455 81,215,830
Federal National Mortgage Association
Zero Coupon, 4/18/06(e)(f) 32,765 32,704,338
---------------
113,920,168
---------------
Total Short-Term Investments
(cost $188,833,230) 188,833,230
---------------
Total Investments--124.8%
(cost $895,142,178)(g) 886,186,025
Other assets less liabilities--(24.8)% (176,183,343)
---------------
Net Assets--100% $ 710,002,682
---------------
20 Sanford C. Bernstein Fund, Inc.--2006 Semiannual Report
================================================================================
INTEREST RATE SWAP CONTRACTS
- --------------------------------------------------------------------------------
Rate Type
---------------------------------
Payments Unrealized
Notional Amount Received by the Payments Made by Appreciation/
Swap Counterparty (000) Termination Date Portfolio the Portfolio (Depreciation)
- --------------------------------------------------------------------------------------------------------
Lehman Brothers 10,130 11/02/07 3 month LIBOR+ 4.814% $ 35,729
Lehman Brothers 24,500 10/28/07 BMA* 4.800% 81,256
Lehman Brothers 16,000 1/23/08 3 month LIBOR+ 4.777% (146,826)
* Variable interest based on the BMA (Bond Market Association) Municipal
Swap Index, which fluctuates weekly.
+ Interest based on LIBOR (London Interbank Offered Rate).
================================================================================
CREDIT DEFAULT SWAP CONTRACTS
- --------------------------------------------------------------------------------
Unrealized
Swap Counterparty & Notional Amount Appreciation/
Referenced Obligation (000) Interest Rate Termination Date (Depreciation)
- -------------------------------------------------------------------------------------------------
Sell Contracts
JP Morgan Chase
Dow Jones High Volume
4.00%, 6/20/10 19,000 0.90% 6/20/10 $ (18,342)
JP Morgan Chase
Dow Jones High Volume
4.00%, 6/20/10 3,000 0.90% 6/20/10 41,073
================================================================================
FORWARD EXCHANGE CURRENCY CONTRACTS
- --------------------------------------------------------------------------------
Contract Unrealized
Amount U.S. $ Value on U.S. $ Appreciation/
(000) Origination Date Current Value (Depreciation)
- --------------------------------------------------------------------------------------------------------
Purchase Contracts
Japanese Yen Settling 4/03/06 3,346,071 $ 28,587,236 $ 28,441,538 $ (145,698)
Sales Contracts
Australian Dollar Settling 4/26/06 20,503 14,707,159 14,670,556 36,603
Japanese Yen Settling 4/03/06 3,346,071 28,746,315 28,441,538 304,777
Japanese Yen Settling 5/08/06 1,761,628 15,076,878 15,049,237 27,641
Mexican Peso Settling 4/25/06 113,046 10,415,465 10,368,550 46,915
Polish Zloty Settling 4/11/06 24,098 7,470,451 7,448,635 21,816
Swedish Krona Settling 4/20/06 220,019 28,611,178 28,291,896 319,282
================================================================================
FINANCIAL FUTURES CONTRACTS SOLD
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Number of Value at Unrealized
Type Contracts Expiration Month Original Value March 31, 2006 Depreciatin
- ------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds
Futures 27 June 2006 $ 2,947,140 $ 2,947,219 $ 79
Schedule of Investments--Intermediate Duration Institutional Portfolio 21
================================================================================
(a) Positions, or portion thereof, with an aggregate market value of
$511,269,887 have been segregated to collateralize open forward exchange
currency contracts.
(b) Variable rate coupon, rate shown as of March 31, 2006.
(c) When-issued security.
(d) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities are considered liquid and may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At March 31, 2006, the aggregate market value of these securities
amounted to $17,849,437 or 2.5% of net assets.
(e) Represents entire or partial position segregated as collateral for swaps.
(f) Represents entire or partial position segregated as collateral for
when-issued securities.
(g) At March 31, 2006, the cost basis of investment securities owned was
substantially identical for both book and tax. Gross unrealized
appreciation of investments was $2,179,933 and gross unrealized
depreciation of investments was $11,136,086, resulting in net unrealized
depreciation of $8,956,153 (excluding swap and future transactions).
Explanation of abbreviation:
TBA--To Be Announced
Currency Abbreviations:
AUD--Australian Dollar
JPY--Japanese Yen
MZN--Mexican Peso
PLN--Polish Zloty
SEK--Swedish Krona
Please note: The industry classifications presented herein are based on the
industry categorization methodology of the Adviser.
See notes to financial statements.
22 Sanford C. Bernstein Fund, Inc.--2006 Semiannual Report
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SCB-TAX-0860-0506
ITEM 2. CODE OF ETHICS.
Not applicable when filing a semi-annual report to shareholders.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable when filing a semi-annual report to shareholders.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable when filing a semi-annual report to shareholders.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicaNot applicable to the registrant.
ITEM 6. SCHEDULE OF INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Fund's Board of Directors since the Fund last provided
disclosure in response to this item.
3
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer
have concluded that the registrant's disclosure controls and procedures (as
defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended)
are effective at the reasonable assurance level based on their evaluation of
these controls and procedures as of a date within 90 days of the filing date of
this document.
(b) There were no changes in the registrant's internal controls over financial
reporting that occurred during the second fiscal quarter of the period that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
12(b)(1) Certification of Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
12(b)(2) Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
12(c) Certification of Principal Executive Officer and
Principal Financial Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): Sanford C. Bernstein Fund, Inc.
By: /s/ Marc O. Mayer
-----------------
Marc O. Mayer
President
Date: May 29, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Marc O. Mayer
-----------------
Marc O. Mayer
President
Date: May 29, 2006
By: /s/ Mark D. Gersten
-------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: May 29, 2006
00250.0073 #462870v4