485BPOS

                   As filed with the Securities and Exchange
                         Commission on August 30, 2011


                                                                File No. 2-29901
                                                                        811-1716

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                       ----------------------------------

                                   FORM N-1A

            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF l933

                          Pre-Effective Amendment No.


                       Post-Effective Amendment No. 103                 X


                                     and/or

        REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF l940


                               Amendment No. 82                         X

                        --------------------------------


                        ALLIANCEBERNSTEIN CAP FUND, INC.
               (Exact Name of Registrant as Specified in Charter)

             1345 Avenue of the Americas, New York, New York l0105
               (Address of Principal Executive Office) (Zip Code)

              Registrant's Telephone Number, including Area Code:
                                 (800) 221-5672

                        --------------------------------

                                EMILIE D. WRAPP
                             AllianceBernstein L.P.
                          1345 Avenue of the Americas
                            New York, New York l0105
                    (Name and address of agent for service)

                          Copies of communications to:
                               Kathleen K. Clarke
                              Seward & Kissel LLP
                               1200 G Street, NW
                                   Suite 350
                              Washington, DC 20005



      It is proposed that this filing will become effective (check appropriate
box)


      [_]   immediately upon filing pursuant to paragraph (b)
      [X]   on August 31, 2011 pursuant to paragraph (b)
      [_]   60 days after filing pursuant to paragraph (a)(1)
      [_]   on (date) pursuant to paragraph (a)(1)
      [_]   75 days after filing pursuant to paragraph (a)(2)
      [_]   on (date) pursuant to paragraph (a)(2) of rule 485.

      If appropriate, check the following box:

      [_] This post-effective amendment designates a new effective date for a
     previously filed post-effective amendment.


This Post-Effective Amendment No. 103 relates solely to the Class A, Class C,
Advisor Class, Class R, Class K and Class I, as applicable, of the
AllianceBernstein Emerging Markets Multi-Asset Portfolio. No information in the
Registrant's Registration Statement relating to the Class A, Class B, Class C,
Class R, Class K, Class I and Advisor Class shares, as applicable, of the
AllianceBernstein Small Cap Growth Portfolio, the Class A, Class C, Class R,
Class K, Class I and Advisor Class shares, as applicable, of the
AllianceBernstein U.S. Strategic Research Portfolio, the Class A, Class C,
Advisor Class, Class R, Class K and Class I shares, as applicable, of the
AllianceBernstein International Discovery Equity Portfolio, the Class A, Class
C, Advisor Class, Class R, Class K and Class I shares, as applicable, of the
AllianceBernstein Market Neutral Strategy - U.S., the Class A, Class C, Advisor
Class, Class R, Class K and Class I shares, as applicable, of the
AllianceBernstein Market Neutral Strategy - Global, the Class A, Class C,
Advisor Class, Class R, Class K and Class I shares, as applicable, of the
AllianceBernstein International Focus 40 Portfolio, the Class 1 and Class 2
shares, as applicable, of the AllianceBernstein Emerging Markets Multi-Asset
Portfolio, the Class A, Class C, Advisor Class, Class R, Class K, Class I, Class
1 and Class 2 shares, as applicable, of the AllianceBernstein Dynamic All Market
Fund and the Class A, Class C, Advisor Class, Class R, Class K, Class I, Class 1
and Class 2 shares, as applicable, of the AllianceBernstein Dynamic All Market
Plus Fund is amended or superseded.







ALLIANCEBERNSTEIN EMERGING MARKETS MULTI-ASSET PORTFOLIO -- (A, C AND ADVISOR
CLASS SHARES)

PROSPECTUS  |  AUGUST 31, 2011


AllianceBernstein Emerging Markets Multi-Asset Portfolio
(Shares Offered--Exchange Ticker Symbol)


 (Class A-ABAEX; Class C-ABCEX; Advisor Class-ABYEX)




The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation
to the contrary is a criminal offense.

     [LOGO]
       AB
ALLIANCEBERNSTEIN









INVESTMENT PRODUCTS OFFERED
..  ARE NOT FDIC INSURED
..  MAY LOSE VALUE
..  ARE NOT BANK GUARANTEED




TABLE OF CONTENTS
--------------------------------------------------------------------------------




                                                               Page
                                                            

SUMMARY INFORMATION...........................................   4

ADDITIONAL INFORMATION ABOUT THE FUND'S RISKS AND INVESTMENTS.   8

INVESTING IN THE FUND.........................................  18

  How to Buy Shares...........................................  18

  The Different Share Class Expenses..........................  19

  Sales Charge Reduction Programs.............................  19

  CDSC Waivers and Other Programs.............................  21

  The "Pros" and "Cons" of Different Share Classes............  21

  Payments to Financial Advisors and Their Firms..............  22

  How to Exchange Shares......................................  23

  How to Sell or Redeem Shares................................  23

  Frequent Purchases and Redemptions of Fund Shares...........  24

  How the Fund Values Its Shares..............................  25

MANAGEMENT OF THE FUND........................................  26

DIVIDENDS, DISTRIBUTIONS AND TAXES............................  28

GENERAL INFORMATION...........................................  29

FINANCIAL HIGHLIGHTS..........................................  30

APPENDIX A--HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION... A-1






SUMMARY INFORMATION
--------------------------------------------------------------------------------

ALLIANCEBERNSTEIN EMERGING MARKETS MULTI-ASSET PORTFOLIO
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The Fund's investment objective is to maximize total return. Total return is
the sum of capital appreciation and income.


FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You may qualify for sales charge reductions if you and
members of your family invest, or agree to invest in the future, at least
$100,000 in AllianceBernstein Mutual Funds. More information about these and
other discounts is available from your financial intermediary and in Investing
in the Fund--Sales Charge Reduction Programs on page 19 of this Prospectus and
in Purchase of Shares--Sales Charge Reduction Programs on page 75 of the Fund's
Statement of Additional Information ("SAI").


SHAREHOLDER FEES (fees paid directly from your investment)




                                                                                CLASS A CLASS C   ADVISOR CLASS
                                                                                SHARES  SHARES       SHARES
---------------------------------------------------------------------------------------------------------------
                                                                                         
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)                                              4.25%     None       None
---------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price or redemption proceeds, whichever is lower)   None    1.00%(a)     None
---------------------------------------------------------------------------------------------------------------
Exchange Fee                                                                     None      None       None



ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage
of the value of your investment)




                                                                                    CLASS A CLASS C ADVISOR CLASS
-----------------------------------------------------------------------------------------------------------------
                                                                                           
Management Fees                                                                      1.00%   1.00%      1.00%
Distribution and/or Service (12b-1) Fees                                              .30%   1.00%       None
Other Expenses:
  Transfer Agent                                                                      .06%    .08%       .06%
  Other Expenses                                                                      .47%    .47%       .47%
                                                                                    ------  ------     ------
Total Other Expenses(b)                                                               .53%    .55%       .53%
                                                                                    ------  ------     ------
Total Annual Fund Operating Expenses                                                 1.83%   2.55%      1.53%
                                                                                    ======  ======     ======
Fee Waiver and/or Expense Reimbursement(c)                                          (.18)%  (.20)%     (.18)%
                                                                                    ------  ------     ------
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement   1.65%   2.35%      1.35%
                                                                                    ======  ======     ======
-----------------------------------------------------------------------------------------------------------------




(a)For Class C shares, the contingent deferred sales charge, or CDSC, is 0%
   after the first year.

(b)Total other expenses are based on estimated amounts for the current fiscal
   year.

(c)The Adviser has agreed to waive its management fees and/or to bear expenses
   of the Fund through March 31, 2015 to the extent necessary to prevent total
   Fund operating expenses, on an annualized basis, from exceeding the net
   expenses reflected in this table. The fee waiver and expense reimbursement
   apply to total annual fund operating expenses (excluding distribution and
   service (12b-1) fees, interest expense, acquired fund fees and expenses,
   taxes and extraordinary expenses). Any fees waived and expenses borne by the
   Adviser may be reimbursed by the Fund until August 31, 2014, provided that
   no reimbursement payment will be made that would cause the Fund's total
   annual Fund operating expenses to exceed the Total Annual Fund Operating
   Expenses After Fee Waiver reflected in the table or cause the total of the
   payments to exceed the Fund's total initial offering expenses.


EXAMPLES
The Examples are intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Examples assume that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your shares at the end of those periods. The Examples also assume that your
investment has a 5% return each year, that the Fund's operating expenses stay
the same and that the fee waiver is in effect for only the first year. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:




               CLASS A CLASS C ADVISOR CLASS
--------------------------------------------
                      
After 1 Year    $586    $338       $137
After 3 Years   $923    $733       $428
--------------------------------------------



4





You would pay the following expenses if you did not redeem your shares at the
end of period:




               CLASS A CLASS C ADVISOR CLASS
--------------------------------------------
                      
After 1 Year    $586    $238       $137
After 3 Years   $923    $733       $428
--------------------------------------------



PORTFOLIO TURNOVER
The Fund pays transactions costs, such as commissions, when it buys or sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when
shares are held in a taxable account. These transaction costs, which are not
reflected in the Annual Fund Operating Expenses or in the Examples, affect the
Fund's performance.

PRINCIPAL STRATEGIES

The Fund invests at least 80% of its net assets under normal circumstances in
securities of emerging market issuers and/or the currencies of emerging market
countries. Examples of emerging market countries include Argentina, Brazil,
Chile, Croatia, Egypt, Hong Kong, India, Indonesia, Israel, Kazakhstan,
Malaysia, Mexico, the People's Republic of China, Peru, the Philippines,
Poland, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey and
Venezuela. Investing in emerging markets generally involves risks greater than
investing in the markets of developed countries. The Fund may invest up to 20%
of its net assets in the securities of developed market issuers.


The Fund invests in equity securities, debt securities and currencies, and does
not attempt to maintain a constant or relatively constant allocation among
these asset classes. Rather, allocations among asset classes are adjusted based
on the Adviser's view of the relative attractiveness of the asset classes.
These allocations are informed by the Adviser's proprietary asset allocation
tools, which are comprised of a series of volatility, correlation and expected
return forecasts. The Adviser reviews potential Fund investments in each asset
class holistically from a country, currency, sector and security standpoint to
optimize overall portfolio construction. Under normal circumstances, the Fund
will invest between 30% and 95% of its net assets in equity securities, and
between 0% and 65% of its net assets in debt securities, with any remainder
held in cash (including foreign currency). The Fund is not constrained based on
the country, region, market capitalization, credit quality or duration of its
investments, and its assets may at times be concentrated in a particular
country or region.

The process for selecting equity securities for the Fund is primarily
bottom-up. The Adviser seeks to identify stocks that are attractive based on
valuation, profitability, earnings quality, business trends, price momentum and
other measures.


The process for selecting debt securities for the Fund is more top-down. The
Adviser believes that inefficiencies in the global debt markets arise from
investor emotion, market complexity and conflicting investment agendas. The
Adviser combines quantitative forecasts with fundamental credit and economic
research in seeking to exploit these inefficiencies. The Adviser seeks to
generate returns from the Fund's fixed-income investments through a combination
of country selection, currency allocation, sector analysis and security
selection. Debt securities may include those of both corporate and governmental
issuers, and may include below investment grade debt securities ("junk bonds").
The Fund may invest in debt securities with a range of maturities from short-
to long-term.


The Adviser considers both quantitative and fundamental factors in adjusting
the Fund's currency exposures. In addition to the Fund's currency exposure that
results from its investments in equity and debt securities denominated in
foreign currencies (and any related hedging), the Fund may hold foreign
currency (or related derivatives) independent of any such investments, and may
hold a currency even if the Fund does not hold any securities denominated in
that currency.


The Fund expects to utilize derivatives, such as futures, forwards and swap
agreements, and invests in exchange-traded funds, or ETFs, to a significant
extent. Derivatives and ETFs may provide more efficient and economical exposure
to market segments than direct investments, and may also be a quicker and more
efficient way to alter the Portfolio's exposure than buying and selling direct
investments. In determining when and to what extent to enter into derivative
transactions or to invest in ETFs, the Adviser will consider factors such as
the relative risks and returns expected of potential investments and the cost
of such transactions. Derivatives may also be used for hedging purposes,
including to hedge against interest rate, credit and currency fluctuations. The
Adviser also expects to use derivatives frequently to effectively leverage the
Fund by creating aggregate exposure somewhat in excess of the Fund's net
assets. The notional value of derivatives and ETFs linked to emerging market
securities or currencies are counted towards meeting the percentage minimums
and ranges set forth above, including the requirement that the Fund invest at
least 80% of its net assets in the securities of emerging market issuers and/or
the currencies of emerging market countries.


PRINCIPAL RISKS
..  EMERGING MARKET RISK: Investments in emerging market countries may involve
   more risk than investments in other foreign countries because the markets in
   emerging market countries are less developed and less liquid as well as
   being subject to increased economic, political, regulatory, or other
   uncertainties.

                                                                             5





..  MARKET RISK: The value of the Fund's assets will fluctuate as the stock,
   bond or currency markets fluctuate. The value of the Fund's investments may
   decline, sometimes rapidly and unpredictably, simply because of economic
   changes or other events that affect large portions of the market.

..  FOREIGN (NON-U.S.) RISK: Investments in securities of non-U.S. issuers may
   involve more risk than those of U.S. issuers. These securities may fluctuate
   more widely in price and may be less liquid due to adverse market, economic,
   political, regulatory or other factors.

..  CURRENCY RISK: Fluctuations in currency exchange rates may negatively affect
   the value of the Fund's investments or reduce its returns. Emerging market
   currencies may be more volatile and less liquid, and subject to
   significantly greater risk of currency controls and convertibility
   restrictions, than currencies of developed countries.

..  COUNTRY CONCENTRATION RISK: The Fund may not always be diversified among
   countries or geographic regions and the effect on the Fund's net asset value
   ("NAV") of the specific risks identified above, such as political,
   regulatory and currency risks, may be magnified due to concentration of the
   Fund's investments in a particular country or region.


..  ALLOCATION RISK: The allocation of Fund assets among different asset
   classes, such as equity securities, debt securities and currencies, may have
   a significant effect on the Fund's NAV when one of these asset classes is
   performing better or worse than others. The diversification benefits
   typically associated with investing in both equity and debt securities may
   be limited in the emerging markets context, as movements in emerging market
   equity and emerging market debt markets may be more correlated than
   movements in the equity and debt markets of developed countries.


..  CAPITALIZATION RISK: Investments in small- and mid-capitalization companies
   may be more volatile than investments in large-cap companies. Investments in
   small-cap companies may have additional risks because these companies have
   limited product lines, markets or financial resources.

..  INTEREST RATE RISK: Changes in interest rates will affect the value of
   investments in fixed-income securities. When interest rates rise, the value
   of existing investments in fixed-income securities tends to fall and this
   decrease in value may not be offset by higher income from new investments.
   Interest rate risk is generally greater for fixed-income securities with
   longer maturities or durations.

..  CREDIT RISK: An issuer or guarantor of a fixed-income security, or the
   counterparty to a derivatives or other contract, may be unable or unwilling
   to make timely payments of interest or principal, or to otherwise honor its
   obligations. The issuer or guarantor may default causing a loss of the full
   principal amount of a security. The degree of risk for a particular security
   may be reflected in its credit rating. There is the possibility that the
   credit rating of a fixed-income security may be downgraded after purchase,
   which may adversely affect the value of the security. Investments in
   fixed-income securities with lower ratings tend to have a higher probability
   that an issuer will default or fail to meet its payment obligations.

..  BELOW INVESTMENT GRADE SECURITIES: Investments in fixed-income securities
   with lower ratings (commonly known as "junk bonds") tend to have a higher
   probability that an issuer will default or fail to meet its payment
   obligations. These securities may be subject to greater price volatility due
   to factors such as specific corporate developments, interest rate
   sensitivity, negative perceptions of the junk bond market generally, and
   less secondary market liquidity.

..  DERIVATIVES RISK: Investments in derivatives may be illiquid, difficult to
   price, and leveraged so that small changes may produce disproportionate
   losses for the Fund, and may be subject to counterparty risk to a greater
   degree than more traditional investments.

..  LEVERAGE RISK: To the extent the Fund uses leveraging techniques, its NAV
   may be more volatile because leverage tends to exaggerate the effect of
   changes in interest rates and any increase or decrease in the value of the
   Fund's investments.

..  LIQUIDITY RISK: Liquidity risk exists when particular investments are
   difficult to purchase or sell, possibly preventing the Fund from selling out
   of these illiquid securities at an advantageous price. Derivatives and
   securities involving substantial market and credit risk tend to involve
   greater liquidity risk.


..  DIVERSIFICATION RISK: The Fund may have more risk because it is
   "non-diversified", meaning that it can invest more of its assets in a
   smaller number of issuers.


..  MANAGEMENT RISK: The Fund is subject to management risk because it is an
   actively managed investment fund. The Adviser will apply its investment
   techniques and risk analyses in making investment decisions, but there is no
   guarantee that its techniques will produce the intended results.

As with all investments, you may lose money by investing in the Fund.

PERFORMANCE INFORMATION
No performance information is available for the Fund because it has not yet
been in operation for a full calendar year.

6





INVESTMENT ADVISER
AllianceBernstein L.P. is the investment adviser for the Fund.

PORTFOLIO MANAGER
The following table lists the persons responsible for day-to-day management of
the Fund's portfolio:




EMPLOYEE             LENGTH OF SERVICE WITH THE FUND  TITLE
-------------------------------------------------------------------------------------------
                                                
Henry S. D'Auria               Since 2011             Senior Vice President of the Adviser

Paul J. DeNoon                 Since 2011             Senior Vice President of the Adviser

Morgan C. Harting              Since 2011             Vice President of the Adviser

Marco G. Santamaria            Since 2011             Vice President of the Adviser



PURCHASE AND SALE OF FUND SHARES

PURCHASE MINIMUMS



                                                                      INITIAL               SUBSEQUENT
------------------------------------------------------------------------------------------------------------------
                                                                           
Class A/Class C Shares, including traditional IRAs and Roth IRAs       $2,500                  $50
------------------------------------------------------------------------------------------------------------------
Automatic Investment Program                                         No minimum                $50
                                                                                 If initial minimum investment is
                                                                                   less than $2,500, then $200
                                                                                  monthly until account balance
                                                                                          reaches $2,500
------------------------------------------------------------------------------------------------------------------
Advisor Class Shares (only available to fee-based programs or           None                   None
through other limited arrangements)
------------------------------------------------------------------------------------------------------------------


You may sell (redeem) your shares each day the New York Stock Exchange is open.
You may sell your shares through your financial intermediary or by mail
(AllianceBernstein Investor Services, Inc., P.O. Box 786003, San Antonio, TX
78278-6003) or telephone (800-221-5672).

TAX INFORMATION
The Fund may make income dividends or capital gains distributions, which may be
subject to federal income taxes and taxable as ordinary income or capital
gains, and may also be subject to state and local taxes.

PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
If you purchase shares of the Fund through a broker-dealer or other financial
intermediary (such as a bank), the Fund and its related companies may pay the
intermediary for the sale of Fund shares and related services. These payments
may create a conflict of interest by influencing the broker-dealer or other
financial intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary's website
for more information.

                                                                             7




ADDITIONAL INFORMATION ABOUT THE FUND'S RISKS AND INVESTMENTS
--------------------------------------------------------------------------------

This section of the Prospectus provides additional information about the
investment practices and related risks of the Fund. Most of these investment
practices are discretionary, which means that the Adviser may or may not decide
to use them. This Prospectus does not describe all of the Fund's investment
practices and additional information about the Fund's risks and investments can
be found in the Fund's SAI.

FOREIGN (NON-U.S.) SECURITIES
Investing in foreign securities involves special risks and considerations not
typically associated with investing in U.S. securities. The securities markets
of many foreign countries are relatively small, with the majority of market
capitalization and trading volume concentrated in a limited number of companies
representing a small number of industries. The Fund may experience greater
price volatility and significantly lower liquidity than U.S. portfolios. These
markets may be subject to greater influence by adverse events generally
affecting the market, and by large investors trading significant blocks of
securities, than is usual in the United States.

Securities registration, custody, and settlement may in some instances be
subject to delays and legal and administrative uncertainties. Foreign
investment in the securities markets of certain foreign countries is restricted
or controlled to varying degrees. These restrictions or controls may at times
limit or preclude investment in certain securities and may increase the cost
and expenses of the Fund. In addition, the repatriation of investment income,
capital or the proceeds of sales of securities from certain countries is
controlled under regulations, including in some cases the need for certain
advance government notification or authority, and if a deterioration occurs in
a country's balance of payments, the country could impose temporary
restrictions on foreign capital remittances.

The Fund also could be adversely affected by delays in, or a refusal to grant,
any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investment. Investing in local
markets may require the Fund to adopt special procedures or seek local
governmental approvals or other actions, any of which may involve additional
costs to the Fund. These factors may affect the liquidity of the Fund's
investments in any country and the Adviser will monitor the effect of any such
factor or factors on the Fund's investments. Transaction costs, including
brokerage commissions for transactions both on and off the securities
exchanges, in many foreign countries are generally higher than in the United
States.

Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
insider trading rules, restrictions on market manipulation, shareholder proxy
requirements, and timely disclosure of information. The reporting, accounting,
and auditing standards of foreign countries may differ, in some cases
significantly, from U.S. standards in important respects. Substantially less
information is publicly available about certain non-U.S. issuers than is
available about most U.S. issuers.

The economies of individual foreign countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product or gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency, and balance of payments position. Nationalization,
expropriation or confiscatory taxation, currency blockage, political changes,
government regulation, political or social instability, revolutions, wars or
diplomatic developments could affect adversely the economy of a foreign
country. In the event of nationalization, expropriation, or other confiscation,
the Fund could lose its entire investment in securities in the country
involved. In addition, laws in foreign countries governing business
organizations, bankruptcy and insolvency may provide less protection to
security holders such as the Fund than that provided by U.S. laws.

INVESTING IN EMERGING MARKET SECURITIES IMPOSES RISKS DIFFERENT FROM, OR
GREATER THAN, RISKS OF INVESTING IN DOMESTIC SECURITIES OR IN FOREIGN,
DEVELOPED COUNTRIES. These risks include: smaller market capitalization of
securities markets, which may suffer periods of relative illiquidity;
significant price volatility; restrictions on foreign investment and
repatriation of investment income and capital. In addition, foreign investors
may be required to register the proceeds of sales; future economic or political
crises could lead to price controls, forced mergers, expropriation or
confiscatory taxation, seizure, nationalization or creation of government
monopolies. The currencies of emerging market countries may experience
significant declines against the U.S. Dollar, and devaluation may occur
subsequent to investments in these currencies by the Fund. Inflation and rapid
fluctuations in inflation rates have had, and may continue to have, negative
effects on the economies and securities markets of certain emerging market
countries.

Additional risks of emerging market securities may include: greater social,
economic and political uncertainty and instability; more substantial
governmental involvement in the economy; less governmental supervision and
regulation; unavailability of currency hedging techniques; companies that are
newly organized and small; differences in auditing and financial reporting
standards, which may result in unavailability of material information about
issuers; and less developed legal systems. In addition, emerging securities
markets may have different clearance and settlement procedures, which may be
unable to keep pace with the volume of securities transactions or otherwise
make it difficult to engage in such transactions. Settlement problems may cause
the Fund to miss attractive investment opportunities, hold a portion of its
assets in cash pending investment, or be delayed in disposing of a portfolio
security. Such a delay could result in possible liability to a purchaser of the
security.


8





For purposes of the Fund, "emerging market issuer" is an issuer that is
domiciled in, maintains its principal listing in, is principally traded in or
has its principal operations in (as defined in the SAI) an emerging market
country. In addition, fixed-income securities of any issuer that are
denominated in the currency of an emerging market country will be considered
securities of an emerging market issuer, regardless of the identity of the
issuer. An emerging market issuer will also include any issuer included in the
MSCI Emerging Markets Index, the MSCI Emerging Markets Frontier Index, the JP
Morgan EMBI Global Index, or the JP Morgan Corporate Emerging Bond Index.
"Emerging market country" is defined as any country with securities included in
the MSCI Emerging Markets Index, the MSCI Emerging Markets Frontier Index, the
JP Morgan EMBI Global Index or the JP Morgan Corporate Emerging Bond Index, any
country whose per capita gross national income is not classified as "High
Income" by the World Bank, or any country that is not a member of the
Organisation for Economic Co-Operation and Development. The Fund may define
"emerging market issuer" and "emerging market country" differently in the
future.


FOREIGN (NON-U.S.) CURRENCIES
Investing in and exposure to foreign currencies involves special risks and
considerations, in that the Fund will be adversely affected by reductions in
the value of foreign currencies relative to the U.S. Dollar. Foreign currency
exchange rates may fluctuate significantly. They are determined by supply and
demand in the foreign exchange markets, the relative merits of investments in
different countries, actual or perceived changes in interest rates, and other
complex factors. Currency exchange rates also can be affected unpredictably by
intervention (or the failure to intervene) by U.S. or foreign governments or
central banks or by currency controls or political developments. In light of
these risks, the Fund may engage in certain currency hedging transactions, as
described above, which involve certain special risks.

The Fund may also invest directly in foreign currencies for non-hedging
purposes, directly on a spot basis (i.e., cash) or through derivative
transactions, such as forward currency exchange contracts, futures and options
thereon, swaps and options as described above. These investments will be
subject to the same risks. In addition, currency exchange rates may fluctuate
significantly over short periods of time, causing the Fund's NAV to fluctuate.

SOVEREIGN DEBT OBLIGATIONS
No established market may exist for many sovereign debt obligations. Reduced
secondary market liquidity may have an adverse effect on the market price and
the Fund's ability to dispose of particular instruments when necessary to meet
its liquidity requirements or in response to specific economic events such as a
deterioration in the creditworthiness of the issuer. Reduced secondary market
liquidity for certain sovereign debt obligations may also make it more
difficult for the Fund to obtain accurate market quotations for the purpose of
valuing its portfolio. Market quotations are generally available on many
sovereign debt obligations only from a limited number of dealers and may not
necessarily represent firm bids of those dealers or prices for actual sales.

By investing in sovereign debt obligations, the Fund will be exposed to the
direct or indirect consequences of political, social, and economic changes in
various countries. Political changes in a country may affect the willingness of
a foreign government to make or provide for time payments of its obligations.
The country's economic status, as reflected in, among other things, its
inflation rate, the amount of external debt and its gross domestic product,
will also affect the government's ability to honor its obligations. The Fund is
permitted to invest in sovereign debt obligations that are not current in the
payment of interest or principal or are in default so long as the Adviser
believes it to be consistent with the Fund's investment objectives. The Fund
may have limited legal recourse in the event of a default with respect to
certain sovereign debt obligations it holds. For example, remedies from
defaults on certain sovereign debt obligations, unlike those on private debt,
must, in some cases, be pursued in the courts of the defaulting party itself.
Legal recourse therefore may be significantly diminished. Bankruptcy,
moratorium, and other similar laws applicable to issuers of sovereign debt
obligations may be substantially different from those applicable to issuers of
private debt obligations. The political context, expressed as a willingness of
an issuer of sovereign debt obligations to meet the terms of the debt
obligation, is of considerable importance. In addition, no assurance can be
given that the holders of commercial bank debt will not contest payments to the
holders of securities issued by foreign governments in the event of default
under commercial bank loan agreements.

DERIVATIVES
The Fund may, but is not required to, use derivatives for risk management
purposes or as part of its investment strategies. Derivatives are financial
contracts whose value depends on, or is derived from, the value of an
underlying asset, reference rate or index. The Fund may use derivatives to earn
income and enhance returns, to hedge or adjust the risk profile of its
investments, to replace more traditional direct investments and to obtain
exposure to otherwise inaccessible markets.

There are four principal types of derivatives--options, futures, forwards and
swaps--each of which is described below. Derivatives may be (i) standardized,
exchange-traded contracts or (ii) customized, privately negotiated contracts.
Exchange-traded derivatives tend to be more liquid and subject to less credit
risk than those that are privately negotiated.

The Fund's use of derivatives may involve risks that are different from, or
possibly greater than, the risks associated with investing directly in
securities or other more traditional instruments. These risks include the risk
that the value of a derivative instrument may not correlate perfectly, or at
all, with the value of the assets, reference rates, or indices that they are
designed to track. Other risks include the possible absence of a liquid
secondary market for a particular instrument and possible exchange-imposed
price fluctuation limits, either of which may make it difficult or impossible
to close out a position when

                                                                             9




desired, and the risk that the counterparty will not perform its obligations.
Certain derivatives may have a leverage component and involve leverage risk.
Adverse changes in the value or level of the underlying asset, note or index
can result in a loss substantially greater than the Fund's investment (in some
cases, the potential loss is unlimited).

The Fund's investments in derivatives may include, but are not limited to, the
following:

..  FORWARD CONTRACTS--A forward contract is an agreement that obligates one
   party to buy, and the other party to sell, a specific quantity of an
   underlying commodity or other tangible asset for an agreed upon price at a
   future date. A forward contract generally is settled by physical delivery of
   the commodity or tangible asset to an agreed-upon location (rather than
   settled by cash), or is rolled forward into a new forward contract. The
   Fund's investments in forward contracts may include the following:


 - Forward Currency Exchange Contracts. The Fund may purchase or sell forward
   currency exchange contracts for hedging purposes to minimize the risk from
   adverse changes in the relationship between the U.S. Dollar and other
   currencies or for non-hedging purposes as a means of making direct
   investments in foreign currencies, as described below under "Other
   Derivatives and Strategies--Currency Transactions". The Fund, for example,
   may enter into a forward contract as a transaction hedge (to "lock in" the
   U.S. Dollar price of a non-U.S. Dollar security), as a position hedge (to
   protect the value of securities the Fund owns that are denominated in a
   foreign currency against substantial changes in the value of the foreign
   currency) or as a cross-hedge (to protect the value of securities the Fund
   owns that are denominated in a foreign currency against substantial changes
   in the value of that foreign currency by entering into a forward contract
   for a different foreign currency that is expected to change in the same
   direction as the currency in which the securities are denominated).

..  FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS--A futures contract is a
   standardized, exchange-traded agreement that obligates the buyer to buy and
   the seller to sell a specified quantity of an underlying asset (or settle
   for cash the value of a contract based on an underlying asset, rate or
   index) at a specific price on the contract maturity date. Options on futures
   contracts are options that call for the delivery of futures contracts upon
   exercise. The Fund may purchase or sell futures contracts and options
   thereon to hedge against changes in interest rates, securities (through
   index futures or options) or currencies. In addition, the Fund may for
   example purchase or sell futures contracts for foreign currencies or options
   thereon for non-hedging purposes as a means of making investments in foreign
   currencies, as described below under "Other Derivatives and
   Strategies--Currency Transactions".


..  OPTIONS-- An option is an agreement that, for a premium payment or fee,
   gives the option holder (the buyer) the right but not the obligation to buy
   (a "call option") or sell (a "put option") the underlying asset (or settle
   for cash an amount based on an underlying asset, rate or index) at a
   specified price (the exercise price) during a period of time or on a
   specified date. Investments in options are considered speculative. The Fund
   may lose the premium paid for them if the price of the underlying security
   or other asset decreased or remained the same (in the case of a call option)
   or increased or remained the same (in the case of a put option). If a put or
   call option purchased by the Fund were permitted to expire without being
   sold or exercised, its premium would represent a loss to the Fund. The
   Fund's investments in options may include the following:

 - Options on Securities. The Fund may purchase or write a put or call option
   on securities. The Fund will only exercise an option it purchased if the
   price of the security was less (in the case of a put option) or more (in the
   case of a call option) than the exercise price. If the Fund does not
   exercise an option, the premium it paid for the option will be lost. The
   Fund may write covered options, which means writing an option for securities
   the Fund owns, and uncovered options. The Fund may also enter into options
   on the yield "spread" or yield differential between two securities. In
   contrast to other types of options, this option is based on the difference
   between the yields of designated securities, futures or other instruments.
   In addition, the Fund may write covered straddles. A straddle is a
   combination of a call and a put written on the same underlying security. In
   purchasing an option on securities, the Fund would be in a position to
   realize a gain if, during the option period, the price of the underlying
   securities increased (in the case of a call) or decreased (in the case of a
   put) by an amount in excess of the premium paid; otherwise the Fund would
   experience a loss not greater than the premium paid for the option. Thus,
   the Fund would realize a loss if the price of the underlying security
   declined or remained the same (in the case of a call) or increased or
   remained the same (in the case of a put) or otherwise did not increase (in
   the case of a put) or decrease (in the case of a call) by more than the
   amount of the premium. If a put or call option purchased by the Fund were
   permitted to expire without being sold or exercised, its premium would
   represent a loss to the Fund.

   If the Fund purchases or writes privately negotiated options on securities,
   it will effect such transactions only with investment dealers and other
   financial institutions (such as commercial banks or savings and loan
   institutions) deemed creditworthy by the Adviser. The Adviser has adopted
   procedures for monitoring the creditworthiness of such counterparties.

 - Options on Securities Indices. An option on a securities index is similar to
   an option on a security except that, rather than taking or making delivery
   of a security at a specified price, an option on a securities index gives
   the holder the right to receive, upon exercise of the option, an amount of
   cash if the closing level of the chosen index is greater than (in the case
   of a call) or less than (in the case of a put) the exercise price of the
   option.


10





 - Options on Foreign Currencies. The Fund may invest in options on foreign
   currencies that are privately negotiated or traded on U.S. or foreign
   exchanges for hedging purposes to protect against declines in the
   U.S. Dollar value of foreign currency denominated securities held by the
   Fund and against increases in the U.S. Dollar cost of securities to be
   acquired. The purchase of an option on a foreign currency may constitute an
   effective hedge against fluctuations in exchange rates, although if rates
   move adversely, the Fund may forfeit the entire amount of the premium plus
   related transaction costs. The Fund may also invest in options on foreign
   currencies for non-hedging purposes as a means of making investments in
   foreign currencies, as described below under "Other Derivatives and
   Strategies--Currency Transactions".

..  SWAP TRANSACTIONS--A swap is an agreement that obligates two parties to
   exchange a series of cash flows at specified intervals (payment dates) based
   upon or calculated by reference to changes in specified prices or rates
   (e.g., interest rates in the case of interest rate swaps or currency
   exchange rates in the case of currency swaps) for a specified amount of an
   underlying asset (the "notional" principal amount). Except for currency
   swaps, the notional principal amount is used solely to calculate the payment
   stream, but is not exchanged. Rather, swaps are entered into on a net basis
   (i.e., the two payment streams are netted out, with the Fund receiving or
   paying, as the case may be, only the net amount of the two payments). The
   Fund's investments in swap transactions may include the following:

 - Interest Rate Swaps, Swaptions, Caps and Floors. Interest rate swaps involve
   the exchange by the Fund with another party of payments calculated by
   reference to specified interest rates (e.g., an exchange of floating rate
   payments for fixed rate payments). Unless there is a counterparty default,
   the risk of loss to the Fund from interest rate swap transactions is limited
   to the net amount of interest payments that the Fund is contractually
   obligated to make. If the counterparty to an interest rate transaction
   defaults, the Fund's risk of loss consists of the net amount of interest
   payments that the Fund is contractually entitled to receive.


   An option on a swap agreement, also called a "swaption", is an option that
   gives the buyer the right, but not the obligation, to enter into a swap on a
   future date in exchange for paying a market-based "premium". A receiver
   swaption gives the owner the right to receive the total return of a
   specified asset, reference rate, or index. A payer swaption gives the owner
   the right to pay the total return of a specified asset, reference rate, or
   index. Swaptions also include options that allow an existing swap to be
   terminated or extended by one of the counterparties.

   The purchase of an interest rate cap entitles the purchaser, to the extent
   that a specified index exceeds a predetermined interest rate, to receive
   payments of interest on a contractually-based principal amount from the
   party selling the interest rate cap. The purchase of an interest rate floor
   entitles the purchaser, to the extent that a specified index falls below a
   predetermined interest rate, to receive payments of interest on an agreed
   principal amount from the party selling the interest rate floor. Caps and
   floors may be less liquid than swaps.

   The value of these transactions will fluctuate based on changes in interest
   rates.

   Interest rate swap, swaption, cap and floor transactions may for example be
   used to preserve a return or spread on a particular investment or a portion
   of the Fund's portfolio or to protect against an increase in the price of
   securities the Fund anticipates purchasing at a later date.

 - Credit Default Swap Agreements. The "buyer" in a credit default swap
   contract is obligated to pay the "seller" a periodic stream of payments over
   the term of the contract in return for a contingent payment upon the
   occurrence of a credit event with respect to an underlying reference
   obligation. Generally, a credit event means bankruptcy, failure to pay,
   obligation acceleration or modified restructuring. The Fund may be either
   the buyer or seller in the transaction. If the Fund is a seller, the Fund
   receives a fixed rate of income throughout the term of the contract, which
   typically is between one month and five years, provided that no credit event
   occurs. If a credit event occurs, the Fund typically must pay the contingent
   payment to the buyer, which will be either (i) the "par value" (face amount)
   of the reference obligation, in which case the Fund will receive the
   reference obligation in return, or (ii) an amount equal to the difference
   between the par value and the current market value of the reference
   obligation. The periodic payments previously received by the Fund, coupled
   with the value of any reference obligation received, may be less than the
   amount it pays to the buyer, resulting in a loss to the Fund. If the Fund is
   a buyer and no credit event occurs, the Fund will lose its periodic stream
   of payments over the term of the contract. However, if a credit event
   occurs, the buyer typically receives full notional value for a reference
   obligation that may have little or no value.

   Credit default swaps may involve greater risks than if the Fund had invested
   in the reference obligation directly. Credit default swaps are subject to
   general market risk, liquidity risk and credit risk.


 - Currency Swaps. The Fund may invest in currency swaps for hedging purposes
   to protect against adverse changes in exchange rates between the U.S. Dollar
   and other currencies or for non-hedging purposes as a means of making direct
   investments in foreign currencies, as described below under "Other
   Derivatives and Strategies--Currency Transactions". Currency swaps involve
   the individually negotiated exchange by the Fund with another party of a
   series of payments in specified currencies. Actual principal amounts of
   currencies may be exchanged by the counterparties at the initiation, and
   again upon the termination of the transaction. Therefore, the entire
   principal value of a currency swap is subject to the risk


                                                                             11




   that the swap counterparty will default on its contractual delivery
   obligations. If there is a default by the counterparty to the transaction,
   the Fund will have contractual remedies under the transaction agreements.

..  OTHER DERIVATIVES AND STRATEGIES--

 - Currency Transactions. The Fund may invest in non-U.S. Dollar-denominated
   securities on a currency hedged or un-hedged basis. The Adviser may actively
   manage the Fund's currency exposures and may seek investment opportunities
   by taking long or short positions in currencies through the use of
   currency-related derivatives, including forward currency exchange contracts,
   futures and options on futures, swaps and options. The Adviser may enter
   into transactions for investment opportunities when it anticipates that a
   foreign currency will appreciate or depreciate in value but securities
   denominated in that currency are not held by the Fund and do not present
   attractive investment opportunities. Such transactions may also be used when
   the Adviser believes that it may be more efficient than a direct investment
   in a foreign currency-denominated security. The Fund may also conduct
   currency exchange contracts on a spot basis (i.e., for cash at the spot rate
   prevailing in the currency exchange market for buying or selling currencies).

 - Synthetic Foreign Equity Securities. The Fund may invest in different types
   of derivatives generally referred to as synthetic foreign equity securities.
   These securities may include international warrants or local access
   products. International warrants are financial instruments issued by banks
   or other financial institutions, which may or may not be traded on a foreign
   exchange. International warrants are a form of derivative security that may
   give holders the right to buy or sell an underlying security or a basket of
   securities representing an index from or to the issuer of the warrant for a
   particular price or may entitle holders to receive a cash payment relating
   to the value of the underlying security or index, in each case upon exercise
   by the Fund. Local access products are similar to options in that they are
   exercisable by the holder for an underlying security or a cash payment based
   upon the value of that security, but are generally exercisable over a longer
   term than typical options. These types of instruments may be American style,
   which means that they can be exercised at any time on or before the
   expiration date of the international warrant, or European style, which means
   that they may be exercised only on the expiration date.

   Other types of synthetic foreign equity securities in which the Fund may
   invest include covered warrants and low exercise price warrants. Covered
   warrants entitle the holder to purchase from the issuer, typically a
   financial institution, upon exercise, common stock of an international
   company or receive a cash payment (generally in U.S. Dollars). The issuer of
   the covered warrant usually owns the underlying security or has a mechanism,
   such as owning equity warrants on the underlying securities, through which
   they can obtain the securities. The cash payment is calculated according to
   a predetermined formula, which is generally based on the difference between
   the value of the underlying security on the date of exercise and the strike
   price. Low exercise price warrants are warrants with an exercise price that
   is very low relative to the market price of the underlying instrument at the
   time of issue (e.g., one cent or less). The buyer of a low exercise price
   warrant effectively pays the full value of the underlying common stock at
   the outset. In the case of any exercise of warrants, there may be a time
   delay between the time a holder of warrants gives instructions to exercise
   and the time the price of the common stock relating to exercise or the
   settlement date is determined, during which time the price of the underlying
   security could change significantly. In addition, the exercise or settlement
   date of the warrants may be affected by certain market disruption events,
   such as difficulties relating to the exchange of a local currency into U.S.
   Dollars, the imposition of capital controls by a local jurisdiction or
   changes in the laws relating to foreign investments. These events could lead
   to a change in the exercise date or settlement currency of the warrants, or
   postponement of the settlement date. In some cases, if the market disruption
   events continue for a certain period of time, the warrants may become
   worthless, resulting in a total loss of the purchase price of the warrants.

   The Fund will acquire synthetic foreign equity securities issued by entities
   deemed to be creditworthy by the Adviser, which will monitor the
   creditworthiness of the issuers on an ongoing basis. Investments in these
   instruments involve the risk that the issuer of the instrument may default
   on its obligation to deliver the underlying security or cash in lieu
   thereof. These instruments may also be subject to liquidity risk because
   there may be a limited secondary market for trading the warrants. They are
   also subject, like other investments in foreign securities, to foreign
   (non-U.S.) risk and currency risk.


 - Structured Instruments. As part of its investment program and to maintain
   greater flexibility, the Fund may invest in structured instruments.
   Structured instruments, including indexed or structured securities, combine
   the elements of futures contracts or options with those of debt, preferred
   equity or a depositary instrument. Generally, a structured instrument will
   be a debt security, preferred stock, depositary share, trust certificate,
   certificate of deposit or other evidence of indebtedness on which a portion
   of or all interest payments, and/or the principal or stated amount payable
   at maturity, redemption or retirement, is determined by reference to prices,
   changes in prices, or differences between prices, of securities, currencies,
   intangibles, goods, articles or commodities (collectively "underlying
   assets") or by another objective index, economic factor or other measure,
   such as interest rates, currency exchange rates, commodity indices, and
   securities indices (collectively, "benchmarks"). Thus, structured
   instruments may take a variety of forms, including, but not


12




   limited to, debt instruments with interest or principal payments or
   redemption terms determined by reference to the value of a currency or
   commodity or securities index at a future point in time, preferred stock
   with dividend rates determined by reference to the value of a currency, or
   convertible securities with the conversion terms related to a particular
   commodity.

   Structured instruments are potentially more volatile and carry greater
   market risks than traditional debt instruments. Depending on the structure
   of the particular structured instrument, changes in a benchmark may be
   magnified by the terms of the structured instrument and have an even more
   dramatic and substantial effect upon the value of the structured instrument.
   The prices of the structured instrument and the benchmark or underlying
   asset may not move in the same direction or at the same time. Structured
   instruments may be less liquid and more difficult to price than less complex
   securities or instruments or more traditional debt securities. The risk of
   these investments can be substantial; possibly all of the principal is at
   risk.


   The Fund may invest in a particular type of structured instrument sometimes
   referred to as "structured notes" because the term of these notes may be
   structured by the issuer and the purchaser of the note. These structured
   notes may include leveraged or unleveraged commodity index-linked notes,
   which are derivative debt instruments with principal and/or coupon payments
   linked to the performance of commodity indices. They also include
   commodity-linked notes with principal and/or coupon payments linked to the
   value of particular commodities or commodities futures contracts, or a
   subset of commodities and commodities futures contracts. The value of these
   notes will rise or fall in response to changes in the underlying commodity,
   commodity futures contract, subset of commodities or commodities futures
   contracts or commodity index. These notes expose the Fund economically to
   movements in commodity prices. These notes also are subject to risks, such
   as credit, market and interest rate risks, that in general affect the values
   of debt securities. In addition, these notes are often leveraged, increasing
   the volatility of each note's market value relative to changes in the
   underlying commodity, commodity futures contract or commodity index.
   Therefore, at the maturity of the note, the Fund may receive more or less
   principal than it originally invested. The Fund might receive interest
   payments on the note that are more or less than the stated coupon interest
   payments.


CONVERTIBLE SECURITIES
Prior to conversion, convertible securities have the same general
characteristics as non-convertible debt securities, which generally provide a
stable stream of income with generally higher yields than those of equity
securities of the same or similar issuers. The price of a convertible security
will normally vary with changes in the price of the underlying equity security,
although the higher yield tends to make the convertible security less volatile
than the underlying equity security. As with debt securities, the market value
of convertible securities tends to decrease as interest rates rise and increase
as interest rates decline. While convertible securities generally offer lower
interest or dividend yields than non-convertible debt securities of similar
quality, they offer investors the potential to benefit from increases in the
market prices of the underlying common stock. Convertible debt securities that
are rated Baa3 or lower by Moody's or BBB- or lower by S&P or Fitch and
comparable unrated securities may share some or all of the risks of debt
securities with those ratings.

DEPOSITARY RECEIPTS AND SECURITIES OF SUPRANATIONAL ENTITIES
The Fund may invest in depositary receipts. American Depositary Receipts, or
ADRs, are depositary receipts typically issued by a U.S. bank or trust company
that evidence ownership of underlying securities issued by a foreign
corporation. Global Depositary Receipts, or GDRs, European Depositary Receipts,
or EDRs and other types of depositary receipts are typically issued by non-U.S.
banks or trust companies and evidence ownership of underlying securities issued
by either a U.S. or a non-U.S. company. Depositary receipts may not necessarily
be denominated in the same currency as the underlying securities into which
they may be converted. In addition, the issuers of the stock of unsponsored
depositary receipts are not obligated to disclose material information in the
United States and, therefore, there may not be a correlation between such
information and the market value of the depositary receipts. Generally,
depositary receipts in registered form are designed for use in the U.S.
securities markets, and depositary receipts in bearer form are designed for use
in securities markets outside of the United States. For purposes of determining
the country of issuance, investments in depositary receipts of either type are
deemed to be investments in the underlying securities.

A supranational entity is an entity designated or supported by the national
government of one or more countries to promote economic reconstruction or
development. Examples of supranational entities include the World Bank
(International Bank for Reconstruction and Development) and the European
Investment Bank. "Semi-governmental securities" are securities issued by
entities owned by either a national, state or equivalent government or are
obligations of one of such government jurisdictions that are not backed by its
full faith and credit and general taxing powers.

EQUITY-LINKED DEBT SECURITIES
Equity-linked debt securities are securities on which the issuer is obligated
to pay interest and/or principal that is linked to the performance of a
specified index of equity securities. The interest or principal payments may be
significantly greater or less than payment obligations for other types of debt
securities. Adverse changes in equity securities indices and other adverse
changes in the securities markets may reduce payments made under, and/or the
principal of, equity-linked debt securities held by the Fund. As with any debt
securities, the values of equity-linked debt securities will generally vary
inversely with changes in interest rates. The Fund's ability to dispose of
equity-linked debt securities will depend on the availability of

                                                                             13




liquid markets for such securities. Investment in equity-linked debt securities
may be considered to be speculative.

FORWARD COMMITMENTS
Forward commitments for the purchase or sale of securities may include
purchases on a when-issued basis or purchases or sales on a delayed delivery
basis. In some cases, a forward commitment may be conditioned upon the
occurrence of a subsequent event, such as approval and consummation of a
merger, corporate reorganization or debt restructuring or approval of a
proposed financing by appropriate authorities (i.e., a "when, as and if issued"
trade).

When forward commitments with respect to fixed-income securities are
negotiated, the price, which is generally expressed in yield terms, is fixed at
the time the commitment is made, but payment for and delivery of the securities
take place at a later date. Securities purchased or sold under a forward
commitment are subject to market fluctuation and no interest or dividends
accrue to the purchaser prior to the settlement date. There is the risk of loss
if the value of either a purchased security declines before the settlement date
or the security sold increases before the settlement date. The use of forward
commitments helps the Fund to protect against anticipated changes in interest
rates and prices.

ILLIQUID SECURITIES
Under current Securities and Exchange Commission ("Commission") guidelines, the
Fund limits its investments in illiquid securities to 15% of its net assets.
The term "illiquid securities" for this purpose means securities that cannot be
disposed of within seven days in the ordinary course of business at
approximately the amount the Fund has valued the securities. If the Fund
invests in illiquid securities, the Fund may not be able to sell such
securities and may not be able to realize their full value upon sale.
Restricted securities (securities subject to legal or contractual restrictions
on resale) may be illiquid. Some restricted securities (such as securities
issued pursuant to Rule 144A under the Securities Act of 1933 (the "Securities
Act") or certain commercial paper) may be treated as liquid, although they may
be less liquid than registered securities traded on established secondary
markets.

INVESTMENT IN EXCHANGE-TRADED FUNDS AND OTHER INVESTMENT COMPANIES

The Fund may invest to a significant extent in shares of ETFs, subject to the
restrictions and limitations of the Investment Company Act of 1940 (the "1940
Act") or any applicable rules, exemptive orders or regulatory guidance. ETFs
are pooled investment vehicles, which may be managed or unmanaged, that
generally seek to track the performance of a specific index. The ETFs in which
the Fund invests will not be able to replicate exactly the performance of the
indices they track because the total return generated by the securities will be
reduced by transaction costs incurred in buying and selling the ETFs. In
addition, the ETFs in which the Fund invests will incur expenses not incurred
by their applicable indices, expenses that will be indirectly borne by the
Fund. Certain securities comprising the indices tracked by the ETFs may, from
time to time, temporarily be unavailable, which may further impede the ability
of the ETFs to track their indices. The market value of an ETF's shares may
differ from their NAV. This difference in price may be due to the fact that the
supply and demand in the market for ETF shares at any point in time is not
always identical to the supply and demand in the market for the underlying
basket of securities. Accordingly, there may be times when an ETF's shares
trade at a discount to its NAV.


The Fund may also invest in investment companies other than ETFs as permitted
by the 1940 Act or the rules and regulations thereunder. The Fund intends to
invest uninvested cash balances in an affiliated money market fund as permitted
by Rule 12d1-1 under the 1940 Act. As with ETF investments, if the Fund
acquires shares in other investment companies, shareholders would bear,
indirectly, the expenses of such investment companies (which may include
management and advisory fees), which are in addition to the Fund's expenses.

LEVERAGE

It is expected that the Fund's investments in certain derivatives may
effectively leverage the Fund's portfolio. In addition, the Fund may use
leverage for investment purposes by entering into transactions such as reverse
repurchase agreements. This means that the Fund uses cash made available during
the term of these transactions to make investments in other securities.


Utilization of leverage, which is usually considered speculative, involves
certain risks to the Fund's shareholders. These include a higher volatility of
the NAV of the Fund's shares and the relatively greater effect on the NAV of
the shares. So long as the Fund is able to realize a return on its investments
made with leveraged cash that is higher than the carrying costs of leveraged
transactions, the effect of leverage will be to cause the Fund's shareholders
to realize a higher current net investment income than if the Fund were not
leveraged. If the carrying costs of leveraged transactions approach the return
on the Fund's investments made through leverage, the benefit of leverage to the
Fund's shareholders will be reduced. If the carrying costs of leveraged
transactions were to exceed the return to shareholders, the Fund's use of
leverage would result in a lower rate of return. Similarly, the effect of
leverage in a declining market could be a greater decrease in NAV. In an
extreme case, if the Fund's current investment income were not sufficient to
meet the carrying costs of leveraged transactions, it could be necessary for
the Fund to liquidate certain of its investments, thereby reducing its NAV.

LOANS AND OTHER DIRECT DEBT INSTRUMENTS
Loans and other direct debt instruments are interests in amounts owed by a
corporate, governmental or other borrower to another party. They may represent
amounts owed to lenders or lending syndicates (loans and loan participations),
to suppliers of goods or services (trade claims or other receivables), or to
other creditors. Direct debt instruments involve the risk of loss in case of
default or insolvency of the borrower and may offer less legal protection to
the Fund in the event of fraud or misrepresentation than debt securities. In
addition, loan participations involve a risk of insolvency of the lending bank
or other financial intermediary. Direct debt

14




instruments may also include standby financing commitments that obligate the
Fund to supply additional cash to the borrower on demand. Loans and other
direct debt instruments are generally illiquid and may be transferred only
through individually negotiated private transactions.

MORTGAGE-RELATED AND OTHER ASSET-BACKED SECURITIES
The Fund may invest in mortgage-related or other asset-backed securities.
Mortgage-related securities include mortgage pass-through securities,
collateralized mortgage obligations ("CMOs"), commercial mortgage-backed
securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed
securities ("SMBSs") and other securities that directly or indirectly represent
a participation in or are secured by and payable from mortgage loans on real
property. These securities may be issued or guaranteed by the U.S. Government
or one of its sponsored entities or may be issued by private organizations.

The value of mortgage-related or asset-backed securities may be particularly
sensitive to changes in prevailing interest rates. Early payments of principal
on some mortgage-related securities may occur during periods of falling
mortgage interest rates and expose the Fund to a lower rate of return upon
reinvestment of principal. Early payments associated with mortgage-related
securities cause these securities to experience significantly greater price and
yield volatility than is experienced by traditional fixed-income securities.
During periods of rising interest rates, a reduction in prepayments may
increase the effective life of mortgage-related securities, subjecting them to
greater risk of decline in market value in response to rising interest rates.
If the life of a mortgage-related security is inaccurately predicted, the Fund
may not be able to realize the rate of return it expected.

The Fund may invest in other asset-backed securities. The securitization
techniques used to develop mortgage-related securities are applied to a broad
range of financial assets. Through the use of trusts and special purpose
corporations, various types of assets, including automobile loans and leases,
credit card receivables, home equity loans, equipment leases and trade
receivables, are securitized in structures similar to the structures used in
mortgage securitizations.

The Fund may invest in collateralized debt obligations ("CDOs"), which include
collateralized bond obligations ("CBOs"), collateralized loan obligations
("CLOs"), and other similarly structured securities. CBOs and CLOs are types of
asset-backed securities. A CBO is a trust that is backed by a diversified pool
of high-risk, below investment grade fixed-income securities. A CLO is a trust
typically collateralized by a pool of loans, which may include, among others,
domestic and foreign senior secured loans, senior unsecured loans, and
subordinate corporate loans, including loans that may be rated below investment
grade or equivalent unrated loans. The Fund may invest in other types of
asset-backed securities that have been offered to investors.

PREFERRED STOCK
The Fund may invest in preferred stock. Preferred stock is subordinated to any
debt the issuer has outstanding. Accordingly, preferred stock dividends are not
paid until all debt obligations are first met. Preferred stock may be subject
to more fluctuations in market value, due to changes in market participants'
perceptions of the issuer's ability to continue to pay dividends, than debt of
the same issuer. These investments include convertible preferred stock, which
includes an option for the holder to convert the preferred stock into the
issuer's common stock under certain conditions, among which may be the
specification of a future date when the conversion must begin, a certain number
of common shares per preferred share, or a certain price per share for the
common stock. Convertible preferred stock tends to be more volatile than
non-convertible preferred stock, because its value is related to the price of
the issuer's common stock as well as the dividends payable on the preferred
stock.

REAL ESTATE INVESTMENT TRUSTS
Real Estate Investment Trusts, or REITs, are pooled investment vehicles that
invest primarily in income producing real estate or real estate related loans
or interests. REITs are generally classified as equity REITs, mortgage REITs or
a combination of equity and mortgage REITs. Equity REITs invest the majority of
their assets directly in real property and derive income primarily from the
collection of rents. Equity REITs can also realize capital gains by selling
properties that have appreciated in value. Mortgage REITs invest the majority
of their assets in real estate mortgages and derive income from the collection
of interest and principal payments. Similar to investment companies such as the
Fund, REITs are not taxed on income distributed to shareholders provided they
comply with several requirements of the United States Internal Revenue Code of
1986, as amended (the "Code"). The Fund will indirectly bear its proportionate
share of expenses incurred by REITs in which the Fund invests in addition to
the expenses incurred directly by the Fund.

REPURCHASE AGREEMENTS AND BUY/SELL BACK TRANSACTIONS
The Fund may enter into repurchase agreements in which the Fund purchases a
security from a bank or broker-dealer, which agrees to repurchase the security
from the Fund at an agreed-upon future date, normally a day or a few days
later. The purchase and repurchase transactions are transacted under one
agreement. The resale price is greater than the purchase price, reflecting an
agreed-upon interest rate for the period the buyer's money is invested in the
security. Such agreements permit the Fund to keep all of its assets at work
while retaining "overnight" flexibility in pursuit of investments of a
longer-term nature. If the bank or broker-dealer defaults on its repurchase
obligation, the Fund would suffer a loss to the extent that the proceeds from
the sale of the security were less than the repurchase price.

The Fund may enter into buy/sell back transactions, which are similar to
repurchase agreements. In this type of transaction, the Fund enters a trade to
buy securities at one price and simultaneously enters a trade to sell the same
securities at another price on a specified date. Similar to a repurchase
agreement, the repurchase price is higher than the sale price and reflects
current interest rates. Unlike a repurchase

                                                                             15




agreement, however, the buy/sell back transaction is considered two separate
transactions.

REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS
A reverse repurchase agreement or dollar roll involves the sale of a security
by the Fund and its agreement to repurchase the instrument at a specified time
and price, and may be considered a form of borrowing for some purposes. Reverse
repurchase agreements are subject to the Fund's limitations on borrowings and
create leverage risk for the Fund. In addition, reverse repurchase agreements
involve the risk that the market value of the securities the Fund is obligated
to repurchase may decline below the repurchase price.

Dollar rolls involve sales by the Fund of securities for delivery in the
current month and the Fund's simultaneously contracting to repurchase
substantially similar (same type and coupon) securities on a specified future
date. During the roll period, the Fund forgoes principal and interest paid on
the securities. The Fund is compensated by the difference between the current
sales price and the lower forward price for the future purchase (often referred
to as the "drop") as well as by the interest earned on the cash proceeds of the
initial sale.

In the event the buyer of securities under a reverse repurchase agreement or
dollar roll files for bankruptcy or becomes insolvent, the Fund's use of the
proceeds of the agreement may be restricted pending a determination by the
other party, or its trustee or receiver, whether to enforce the Fund's
obligation to repurchase the securities.

RIGHTS AND WARRANTS
Rights and warrants are option securities permitting their holders to subscribe
for other securities. Rights are similar to warrants except that they have a
substantially shorter duration. Rights and warrants do not carry with them
dividend or voting rights with respect to the underlying securities, or any
rights in the assets of the issuer. As a result, an investment in rights and
warrants may be considered more speculative than certain other types of
investments. In addition, the value of a right or a warrant does not
necessarily change with the value of the underlying securities, and a right or
a warrant ceases to have value if it is not exercised prior to its expiration
date.

SHORT SALES
The Fund may make short sales as a part of overall portfolio management or to
offset a potential decline in the value of a security. A short sale involves
the sale of a security that the Fund does not own, or if the Fund owns the
security, is not to be delivered upon consummation of the sale. When the Fund
makes a short sale of a security that it does not own, it must borrow from a
broker-dealer the security sold short and deliver the security to the
broker-dealer upon conclusion of the short sale.

If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur
a loss; conversely, if the price declines, the Fund will realize a short-term
capital gain. Although the Fund's gain is limited to the price at which it sold
the security short, its potential loss is theoretically unlimited.

STANDBY COMMITMENT AGREEMENTS
Standby commitment agreements are similar to put options that commit the Fund,
for a stated period of time, to purchase a stated amount of a security that may
be issued and sold to the Fund at the option of the issuer. The price and
coupon of the security are fixed at the time of the commitment. At the time of
entering into the agreement, the Fund is paid a commitment fee, regardless of
whether the security ultimately is issued. The Fund will enter into such
agreements only for the purpose of investing in the security underlying the
commitment at a yield and price considered advantageous to the Fund and
unavailable on a firm commitment basis.

There is no guarantee that a security subject to a standby commitment will be
issued. In addition, the value of the security, if issued, on the delivery date
may be more or less than its purchase price. Since the issuance of the security
is at the option of the issuer, the Fund will bear the risk of capital loss in
the event the value of the security declines and may not benefit from an
appreciation in the value of the security during the commitment period if the
issuer decides not to issue and sell the security to the Fund.

STRUCTURED SECURITIES AND BASKET SECURITIES

The Fund may invest in various types of structured securities and basket
securities. Structured securities are securities issued in structured financing
transactions, which generally involve aggregating types of debt assets in a
pool or special purpose entity and then issuing new securities. Types of
structured financings include securities described elsewhere in this
Prospectus, such as mortgage-related and other asset-backed securities. The
Fund's investments may include investments in structured securities that
represent interests in entities organized and operated solely for the purpose
of restructuring the investment characteristics of particular debt obligations.
This type of restructuring involves the deposit with or purchase by an entity,
such as a corporation or trust, of specified instruments (such as commercial
bank loans or high-yield bonds) and the issuance by that entity of one or more
classes of structured securities backed by, or representing interests in, the
underlying instruments. The cash flow on the underlying instruments may be
apportioned among the newly issued structured securities to create securities
with different investment characteristics such as varying maturities, payment
priorities and interest rate provisions, and the extent of the payments made
with respect to structured securities is dependent on the extent of the cash
flow from the underlying instruments. Structured securities of a given class
may be either subordinated or unsubordinated to the payment of another class.
Subordinated structured securities typically have higher yields and present
greater risks than unsubordinated structured securities.


Basket securities in which the Fund may invest may consist of entities
organized and operated for the purpose of holding a basket of other securities.
Baskets involving debt obligations may be designed to represent the
characteristics of some portion of the debt securities market or the entire
debt market.

16





VARIABLE, FLOATING AND INVERSE FLOATING RATE INSTRUMENTS
Variable and floating rate securities pay interest at rates that are adjusted
periodically, according to a specified formula. A "variable" interest rate
adjusts at predetermined intervals (e.g., daily, weekly or monthly), while a
"floating" interest rate adjusts whenever a specified benchmark rate (such as
the bank prime lending rate) changes.

The Fund may also invest in inverse floating rate debt instruments ("inverse
floaters"). The interest rate on an inverse floater resets in the opposite
direction from the market rate of interest to which the inverse floater is
indexed. An inverse floater may have greater volatility in market value, in
that, during periods of rising interest rates, the market values of inverse
floaters will tend to decrease more rapidly than those of fixed rate securities.

ZERO-COUPON AND PAYMENT-IN-KIND BONDS
Zero-coupon bonds are issued at a significant discount from their principal
amount in lieu of paying interest periodically. Payment-in-kind bonds allow the
issuer to make current interest payments on the bonds in additional bonds.
Because zero-coupon bonds and payment-in-kind bonds do not pay current interest
in cash, their value is generally subject to greater fluctuation in response to
changes in market interest rates than bonds that pay interest in cash
currently. Both zero-coupon and payment-in-kind bonds allow an issuer to avoid
the need to generate cash to meet current interest payments. These bonds may
involve greater credit risks than bonds paying interest currently. Although
these bonds do not pay current interest in cash, the Fund is nonetheless
required to accrue interest income on such investments and to distribute such
amounts at least annually to shareholders. Thus, the Fund could be required at
times to liquidate other investments in order to satisfy its dividend
requirements.

INVESTMENT IN SMALLER, LESS-SEASONED COMPANIES
Investment in smaller, less-seasoned companies involves greater risks than is
customarily associated with securities of more established companies. Companies
in the earlier stages of their development often have products and management
personnel that have not been thoroughly tested by time or the marketplace;
their financial resources may not be as substantial as those of more
established companies. The securities of smaller, less-seasoned companies may
have relatively limited marketability and may be subject to more abrupt or
erratic market movements than securities of larger, more established companies
or broad market indices. The revenue flow of such companies may be erratic and
their results of operations may fluctuate widely and may also contribute to
stock price volatility.

INVESTMENT IN BELOW INVESTMENT GRADE FIXED-INCOME SECURITIES
Investments in securities rated below investment grade may be subject to
greater risk of loss of principal and interest than higher-rated securities.
These securities are also generally considered to be subject to greater market
risk than higher-rated securities. The capacity of issuers of these securities
to pay interest and repay principal is more likely to weaken than is that of
issuers of higher-rated securities in times of deteriorating economic
conditions or rising interest rates. In addition, below investment grade
securities may be more susceptible to real or perceived adverse economic
conditions than investment grade securities.

The market for these securities may be thinner and less active than that for
higher-rated securities, which can adversely affect the prices at which these
securities can be sold. To the extent that there is no established secondary
market for these securities, the Fund may experience difficulty in valuing such
securities and, in turn, the Fund's assets.

UNRATED SECURITIES

The Fund may invest in unrated securities when the Adviser believes that the
financial condition of the issuers of such securities, or the protection
afforded by the terms of the securities themselves, limits the risk to the Fund
to a degree comparable to that of rated securities that are consistent with the
Fund's investment objective and policies.


FUTURE DEVELOPMENTS
The Fund may take advantage of other investment practices that are not
currently contemplated for use by the Fund, or are not available but may yet be
developed, to the extent such investment practices are consistent with the
Fund's investment objective and legally permissible for the Fund. Such
investment practices, if they arise, may involve risks that exceed those
involved in the activities described above.

CHANGES IN INVESTMENT OBJECTIVES AND POLICIES
The Fund is a series of ALLIANCEBERNSTEIN CAP FUND, INC., (the "Fund") with one
Board of Directors (the "Board"). The Board may change the Fund's investment
objective without shareholder approval. The Fund will provide shareholders with
60 days' prior written notice of any change to the Fund's investment objective.
The Fund will not change its policy to invest at least 80% of its net assets in
emerging market issuers and/or the currencies of emerging market countries
without 60 days' prior written notice to shareholders. Unless otherwise noted,
all other policies of the Fund may be changed without shareholder approval.

TEMPORARY DEFENSIVE POSITION
For temporary defensive purposes in an attempt to respond to adverse market,
economic, political or other conditions, the Fund may reduce its positions in
equity securities and longer-term debt securities and invest in, without limit,
certain types of short-term, liquid, high-grade or high-quality debt
securities. While the Fund is investing for temporary defensive purposes, it
may not meet its investment objectives.

PORTFOLIO HOLDINGS

A description of the Fund's policies and procedures with respect to the
disclosure of the Fund's portfolio securities is available in the Fund's SAI.


                                                                             17




INVESTING IN THE FUND
--------------------------------------------------------------------------------

This section discusses how to buy, sell or redeem, or exchange different
classes of shares of the Fund that are offered in this Prospectus. The Fund
offers three classes of shares through this Prospectus. Retirement shares of
the Fund are available through a separate prospectus.

Each share class represents an investment in the same portfolio of securities,
but the classes may have different sales charges and bear different ongoing
distribution expenses. For additional information on the differences between
the different classes of shares and factors to consider when choosing among
them, please see "The Different Share Class Expenses" and "The 'Pros' and
'Cons' of Different Share Classes" below. ONLY CLASS A SHARES OFFER QUANTITY
DISCOUNTS ON SALES CHARGES, as described under "Sales Charge Reduction
Programs" below.

HOW TO BUY SHARES
The purchase of the Fund's shares is priced at the next determined NAV after
your order is received in proper form.

CLASS A AND CLASS C SHARES
You may purchase the Fund's Class A or Class C shares through financial
intermediaries, such as broker-dealers or banks. You also may purchase shares
directly from the Fund's principal underwriter, AllianceBernstein Investments,
Inc., or ABI.

PURCHASE MINIMUMS AND MAXIMUMS
------------------------------

MINIMUMS:*

                               
--Initial:                        $2,500
--Subsequent:                     $   50



*Purchase minimums may not apply to some accounts established in connection
 with the Automatic Investment Program and to some retirement-related
 investment programs. Please see "Automatic Investment Program" and "Retirement
 Plans, Tax-Deferred Accounts and Employee Benefit Plans" below. Additionally,
 these investment minimums do not apply to persons participating in a fee-based
 program sponsored and maintained by a registered broker-dealer or other
 financial intermediary and approved by ABI.

MAXIMUM INDIVIDUAL PURCHASE AMOUNT:

                            
--Class A shares                     None
--Class C shares               $1,000,000



Your broker or financial advisor must receive your purchase request by 4:00
p.m., Eastern time, and submit it to the Fund by a pre-arranged time for you to
receive the next-determined NAV, less any applicable initial sales charge.

If you are an existing Fund shareholder and you have completed the appropriate
section of the Mutual Fund Application, you may purchase additional shares by
telephone with payment by electronic funds transfer in amounts not exceeding
$500,000. AllianceBernstein Investor Services, Inc., or ABIS, must receive and
confirm telephone requests before 4:00 p.m., Eastern time, to receive that
day's public offering price. Call 800-221-5672 to arrange a transfer from your
bank account.

ADVISOR CLASS SHARES
You may purchase Advisor Class shares through your financial advisor at NAV.
Advisor Class shares may be purchased and held solely:

..  through accounts established under a fee-based program, sponsored and
   maintained by a registered broker-dealer or other financial intermediary and
   approved by ABI;

..  through a defined contribution employee benefit plan (e.g., a 401(k) plan)
   that has at least $10,000,000 in assets and that purchases shares directly
   without the involvement of a financial intermediary; and

..  by investment advisory clients of, and certain other persons associated
   with, the Adviser and its affiliates or the Fund.

The Fund's SAI has more detailed information about who may purchase and hold
Advisor Class shares.

RETIREMENT PLANS, TAX-DEFERRED ACCOUNTS AND EMPLOYEE BENEFIT PLANS
Special investment minimums and other eligibility requirements for the purchase
of Class A and Class C shares by these types of plans may apply. Investment
minimums are as set forth in the list below:

..  Traditional and Roth IRAs (the minimums listed in the table above);

..  SEPs, SAR-SEPs, SIMPLE IRAs, and individual 403(b) plans (no minimums);

..  AllianceBernstein-sponsored Coverdell Education Savings Accounts ($2,000
   initial investment minimum, $150 Automatic Investment Program monthly
   minimum);

..  AllianceBernstein Individual 401(k) and AllianceBernstein SIMPLE IRA plans
   with at least $250,000 in plan assets and 100 employees (no minimums); and

..  certain defined contribution retirement plans that do not have plan level or
   omnibus accounts on the books of the Fund (no minimums).

Class C shares are available to AllianceBernstein Link, AllianceBernstein
Individual 401(k) and AllianceBernstein SIMPLE IRA plans with less than
$250,000 in plan assets and 100 employees, and to group retirement plans with
plan assets of less than $1,000,000.

IRA custodians, plan sponsors, plan fiduciaries and other intermediaries may
establish their own eligibility requirements as to the purchase, sale or
exchange of shares of the Fund, including minimum investment requirements
greater than those described above and maximum investment requirements.

REQUIRED INFORMATION
The Fund is required by law to obtain, verify and record certain personal
information from you or persons on your behalf in order to establish an
account. Required information includes

18




name, date of birth, permanent residential address and taxpayer identification
number. The Fund may also ask to see other identifying documents. If you do not
provide the information, the Fund will not be able to open your account. If the
Fund is unable to verify your identity, or that of another person(s) authorized
to act on your behalf, or if the Fund believes it has identified potentially
criminal activity, the Fund reserves the right to take action it deems
appropriate or as required by law, which may include closing your account. If
you are not a U.S. citizen or resident alien, your account must be affiliated
with a Financial Industry Regulatory Authority, or FINRA, member firm.

The Fund is required to withhold 28% of taxable dividends, capital gains
distributions, and redemptions paid to any shareholder who has not provided the
Fund with his or her certified taxpayer identification number. To avoid this,
you must provide your correct tax identification number on your Mutual Fund
Application.

GENERAL
ABI may refuse any order to purchase shares. The Fund reserves the right to
suspend the sale of its shares to the public in response to conditions in the
securities markets or for other reasons.

THE DIFFERENT SHARE CLASS EXPENSES
This section describes the different expenses of investing in each class and
explains factors to consider when choosing a class of shares. The expenses can
include distribution and/or service (Rule 12b-1) fees, initial sales charges
and/or CDSCs. ONLY CLASS A SHARES OFFER QUANTITY DISCOUNTS as described below.

                           WHAT IS A RULE 12B-1 FEE?
  A Rule 12b-1 fee is a fee deducted from the Fund's assets that is used to pay
  for personal service, maintenance of shareholder accounts and distribution
  costs, such as advertising and compensation of financial intermediaries. The
  amount of each share class's Rule 12b-1 fee, if any, is disclosed below and
  in the Fund's fee table included in the Summary Information section above.

ASSET-BASED SALES CHARGES OR DISTRIBUTION AND/OR SERVICE (RULE 12B-1) FEES
The Fund has adopted a plan under Commission Rule 12b-1 that allows the Fund to
pay asset-based sales charges or distribution and/or service (Rule 12b-1) fees
for the distribution and sale of its shares. The amount of these fees for each
class of the Fund's shares is up to:



                                  DISTRIBUTION AND/OR SERVICE
                                    (RULE 12B-1) FEE (AS A
                                    PERCENTAGE OF AGGREGATE
                                   AVERAGE DAILY NET ASSETS)
                   ------------------------------------------
                               
                   Class A                   0.30%
                   Class C                   1.00%
                   Advisor Class             None


Because these fees are paid out of the Fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales fees. Because higher fees mean a higher
expense ratio, Class C shares pay correspondingly lower dividends and may have
a lower NAV (and returns) than Class A shares. All or some of these fees may be
paid to financial intermediaries, including your financial advisor's firm.

CLASS A SHARES - INITIAL SALES CHARGE ALTERNATIVE
You can purchase Class A shares at their public offering price (or cost), which
is NAV plus an initial sales charge of up to 4.25% of the offering price. Any
applicable sales charge will be deducted directly from your investment. Larger
investments are subject to "breakpoints or quantity discounts" as discussed
below. Purchases of Class A shares in the amount of $1,000,000 or more or by
AllianceBernstein or non-AllianceBernstein sponsored group retirement plans are
not subject to an initial charge, but may be subject to a 1% CDSC if redeemed
or terminated within one year.

CLASS C SHARES - ASSET-BASED SALES CHARGE ALTERNATIVE
You can purchase Class C shares at NAV without an initial sales charge. This
means that the full amount of your purchase is invested in the Fund. Your
investment is subject to a 1% CDSC if you redeem your shares within 1 year. If
you exchange your shares for the Class C shares of another AllianceBernstein
Mutual Fund, the 1% CDSC also will apply to the Class C shares received. The
1-year period for the CDSC begins with the date of your original purchase, not
the date of the exchange for the other Class C shares.

Class C shares do not convert to any other class of shares of the Fund.

                          HOW IS THE CDSC CALCULATED?
  The CDSC is applied to the lesser of NAV at the time of redemption or the
  original cost of shares being redeemed (or, as to Fund shares acquired
  through an exchange, the cost of the AllianceBernstein Mutual Fund shares
  originally purchased for cash). This means that no sales charge is assessed
  on increases in NAV above the initial purchase price. Shares obtained from
  dividend or distribution reinvestment are not subject to the CDSC. In
  determining the CDSC, it will be assumed that the redemption is, first, of
  any shares not subject to a CDSC and, second, of shares held the longest.

ADVISOR CLASS SHARES - FEE-BASED PROGRAM ALTERNATIVE
You may purchase Advisor Class shares through your financial advisor. Advisor
Class shares are not subject to any initial or contingent sales charges,
although your financial advisor may charge a fee.

SALES CHARGE REDUCTION PROGRAMS
THIS SECTION INCLUDES IMPORTANT INFORMATION ABOUT SALES CHARGE REDUCTION
PROGRAMS AVAILABLE TO INVESTORS IN CLASS A SHARES AND DESCRIBES INFORMATION OR
RECORDS YOU MAY NEED TO PROVIDE TO THE FUND OR YOUR FINANCIAL INTERMEDIARY IN
ORDER TO BE ELIGIBLE FOR SALES CHARGE REDUCTION PROGRAMS.

                                                                             19





Information about sales charge reduction programs also is available free of
charge and in a clear and prominent format on our website at
www.AllianceBernstein.com (click on "US Investors & Financial Advisors" then
"Investment Insights-Investor Education" then "Sales Charge Reduction
Programs"). More information on BREAKPOINTS and other sales charge waivers is
available in the Fund's SAI.

                         You Can Reduce Sales Charges
                          When Buying Class A Shares.

BREAKPOINTS OR QUANTITY DISCOUNTS OFFERED BY THE FUND
The Fund offers investors the benefit of discounts on the sales charges that
apply to purchases of Class A shares in certain circumstances. These discounts,
which are also known as BREAKPOINTS, can reduce or, in some cases, eliminate
the initial sales charges that would otherwise apply to your Class A
investment. Mutual funds are not required to offer breakpoints and different
mutual fund groups may offer different types of breakpoints.

BREAKPOINTS or QUANTITY DISCOUNTS allow larger investments in Class A shares to
be charged lower sales charges. A shareholder investing more than $100,000 in
Class A shares of the Fund is eligible for a reduced sales charge. Initial
sales charges are eliminated completely for purchases of $1,000,000 or more,
although a 1%, 1-year CDSC may apply.

The sales charge schedule of Class A share QUANTITY DISCOUNTS is as follows:



                                            INITIAL SALES CHARGE
                                            ------------------
                                             AS % OF    AS % OF
                                            NET AMOUNT  OFFERING
                 AMOUNT PURCHASED            INVESTED    PRICE
                 -----------------------------------------------
                                                  
                 Up to $100,000                4.44%      4.25%
                 $100,000 up to $250,000       3.36       3.25
                 $250,000 up to $500,000       2.30       2.25
                 $500,000 up to $1,000,000     1.78       1.75
                 $1,000,000 and above          0.00       0.00


RIGHTS OF ACCUMULATION

To determine if a new investment in Class A shares is eligible for a QUANTITY
DISCOUNT, a shareholder can combine the value of the new investment in the Fund
with the higher of cost or NAV of existing investments in the Fund, any other
AllianceBernstein Mutual Fund, AllianceBernstein Institutional Funds and
certain CollegeBoundfund accounts for which the shareholder, his or her spouse
or domestic partner, or child under the age of 21 is the participant. The
AllianceBernstein Mutual Funds use the higher of cost or current NAV of your
existing investments when combining them with your new investment.


COMBINED PURCHASE PRIVILEGES

A shareholder may qualify for a QUANTITY DISCOUNT by combining purchases of
shares of the Fund into a single "purchase". A "purchase" means a single
purchase or concurrent purchases of shares of the Fund or any other
AllianceBernstein Mutual Fund, including AllianceBernstein Institutional Funds,
by:


..  an individual, his or her spouse or domestic partner, or the individual's
   children under the age of 21 purchasing shares for his, her or their own
   account(s), including certain CollegeBoundfund accounts;

..  a trustee or other fiduciary purchasing shares for a single trust, estate or
   single fiduciary account with one or more beneficiaries involved;

..  the employee benefit plans of a single employer; or

..  any company that has been in existence for at least six months or has a
   purpose other than the purchase of shares of the Fund.

LETTER OF INTENT
An investor may not immediately invest a sufficient amount to reach a QUANTITY
DISCOUNT, but may plan to make one or more additional investments over a period
of time that, in the end, would qualify for a QUANTITY DISCOUNT. For these
situations, the Fund offers a LETTER OF INTENT, which permits the investor to
express the intention, in writing, to invest at least $100,000 in Class A
shares of the Fund or any AllianceBernstein Mutual Fund within 13 months. The
Fund will then apply the QUANTITY DISCOUNT to each of the investor's purchases
of Class A shares that would apply to the total amount stated in the LETTER OF
INTENT. If an investor fails to invest the total amount stated in the LETTER OF
INTENT, the Fund will retroactively collect the sales charges otherwise
applicable by redeeming shares in the investor's account at their then current
NAV. Investors qualifying for a Combined Purchase Privilege may purchase shares
under a single LETTER OF INTENT.

REQUIRED SHAREHOLDER INFORMATION AND RECORDS
In order for shareholders to take advantage of sales charge reductions, a
shareholder or his or her financial intermediary must notify the Fund that the
shareholder qualifies for a reduction. Without notification, the Fund is unable
to ensure that the reduction is applied to the shareholder's account. A
shareholder may have to provide information or records to his or her financial
intermediary or the Fund to verify eligibility for breakpoint privileges or
other sales charge waivers. This may include information or records, including
account statements, regarding shares of the Fund or other AllianceBernstein
Mutual Funds held in:

..  all of the shareholder's accounts at the Fund or a financial intermediary;
   and

..  accounts of related parties of the shareholder, such as members of the same
   family, at any financial intermediary.

OTHER PROGRAMS
Class A shareholders may be able to purchase additional Class A shares with a
reduced or eliminated sales charge through the following AllianceBernstein
programs: DIVIDEND REINVESTMENT PROGRAM, DIVIDEND DIRECTION PLAN and
REINSTATEMENT PRIVILEGE as described below.

CLASS A SHARES - PURCHASES NOT SUBJECT TO SALES CHARGES
The Fund may sell its Class A shares at NAV without an initial sales charge to
some categories of investors, including:

..  AllianceBernstein Link, AllianceBernstein Individual 401(k), and
   AllianceBernstein SIMPLE IRA plans with at least $250,000 in plan assets or
   100 employees;

20





..  persons participating in a fee-based program, sponsored and maintained by a
   registered broker-dealer or other financial intermediary and approved by
   ABI, under which persons pay an asset-based fee for services in the nature
   of investment advisory or administrative services;

..  plan participants who roll over amounts distributed from employer maintained
   retirement plans to AllianceBernstein-sponsored IRAs where the plan is a
   client of or serviced by AllianceBernstein's Institutional Investment
   Management or Bernstein Global Wealth Management Divisions, including
   subsequent contributions to those IRAs; or

..  certain other investors, such as investment management clients of the
   Adviser or its affiliates, including clients and prospective clients of the
   Adviser's AllianceBernstein Institutional Investment Management Division,
   and employees of selected dealers authorized to sell the Fund's shares.

Please see the Fund's SAI for more information about purchases of Class A
shares without sales charges.

CDSC WAIVERS AND OTHER PROGRAMS

                        Here Are Some Ways To Avoid Or
                        Minimize Charges On Redemption.

CDSC WAIVERS
The Fund will waive the CDSCs on redemptions of shares in the following
circumstances, among others:

..  permitted exchanges of shares;

..  following the death or disability of a shareholder;

..  if the redemption represents a minimum required distribution from an IRA or
   other retirement plan to a shareholder who has attained the age of 70 1/2;

..  if the proceeds of the redemption are invested directly in a
   CollegeBoundfund account; or

..  if the redemption is necessary to meet a plan participant's or beneficiary's
   request for a distribution or loan from a group retirement plan or to
   accommodate a plan participant's or beneficiary's direction to reallocate
   his or her plan account among other investment alternatives available under
   a group retirement plan.

DIVIDEND REINVESTMENT PROGRAM
Shareholders may elect to have all income and capital gains distributions from
their account paid to them in the form of additional shares of the same class
of the Fund under the Fund's Dividend Reinvestment Program. There is no initial
sales charge or CDSC imposed on shares issued pursuant to the Dividend
Reinvestment Program.

DIVIDEND DIRECTION PLAN
A shareholder who already maintains accounts in more than one AllianceBernstein
Mutual Fund may direct the automatic investment of income dividends and/or
capital gains by one Fund, in any amount, without the payment of any sales
charges, in shares of the same class of one or more other AllianceBernstein
Mutual Fund(s).

AUTOMATIC INVESTMENT PROGRAM
The Automatic Investment Program allows investors to purchase shares of the
Fund through pre-authorized transfers of funds from the investor's bank
account. Under the Automatic Investment Program, an investor may (i) make an
initial purchase of at least $2,500 and invest at least $50 monthly or
(ii) make an initial purchase of less than $2,500 and commit to a monthly
investment of $200 or more until the investor's account balance is $2,500 or
more.

REINSTATEMENT PRIVILEGE
A shareholder who has redeemed all or any portion of his or her Class A shares
may reinvest all or any portion of the proceeds from the redemption in Class A
shares of any AllianceBernstein Mutual Fund at NAV without any sales charge, if
the reinvestment is made within 120 calendar days after the redemption date.

SYSTEMATIC WITHDRAWAL PLAN

The Fund offers a systematic withdrawal plan that permits the redemption of
Class A or Class C shares without payment of a CDSC. Under this plan,
redemptions equal to 1% a month, 2% every two months or 3% a quarter of the
value of the Fund account would be free of a CDSC. For Class A and Class C
shares, shares held the longest would be redeemed first.


THE "PROS" AND "CONS" OF DIFFERENT SHARE CLASSES
The decision as to which class of shares is most beneficial to you depends on
the amount you intend to invest, how long you expect to own shares, and
expenses associated with owning a particular class of shares. If you are making
a large investment that qualifies for a reduced sales charge, you might
consider purchasing Class A shares. Class A shares, with their lower Rule 12b-1
fees, are designed for investors with a long-term investing time frame.

Class C shares should not be considered as a long-term investment because they
do not convert to Class A shares and are subject to a higher distribution fee
indefinitely. Class C shares do not, however, have an initial sales charge or a
CDSC so long as the shares are held for one year or more. Class C shares are
designed for investors with a short-term investing time frame.

Your financial intermediary may receive differing compensation for selling
Class A or Class C shares. See "Payments to Financial Advisors and their Firms"
below.

OTHER
A transaction, service, administrative or other similar fee may be charged by
your broker-dealer, agent or other financial intermediary, with respect to the
purchase, sale or exchange of Class A, Class C or Advisor Class shares made
through your financial advisor. The financial intermediaries or your fee-based
program also may impose requirements on the purchase, sale or exchange of
shares that are different from, or in addition to, those imposed by the Fund,
including requirements as to the minimum initial and subsequent investment
amounts.

                                                                             21





YOU SHOULD CONSULT YOUR FINANCIAL ADVISOR FOR ASSISTANCE IN CHOOSING A CLASS OF
FUND SHARES.

PAYMENTS TO FINANCIAL ADVISORS AND THEIR FIRMS
Financial intermediaries market and sell shares of the Fund. These financial
intermediaries employ financial advisors and receive compensation for selling
shares of the Fund. This compensation is paid from various sources, including
any sales charge, CDSC and/or Rule 12b-1 fee that you or the Fund may pay. Your
individual financial advisor may receive some or all of the amounts paid to the
financial intermediary that employs him or her.

                       WHAT IS A FINANCIAL INTERMEDIARY?
  A financial intermediary is a firm that receives compensation for selling
  shares of the Fund offered in this Prospectus and/or provides services to the
  Fund's shareholders. Financial intermediaries may include, among others, your
  broker, your financial planner or advisor, banks and insurance companies.
  Financial intermediaries may employ financial advisors who deal with you and
  other investors on an individual basis.

All or a portion of the initial sales charge that you pay may be paid by ABI to
financial intermediaries selling Class A shares. ABI may also pay these
financial intermediaries a fee of up to 1% on purchases of $1,000,000 or more
or for AllianceBernstein Link, AllianceBernstein SIMPLE IRA plans with more
than $250,000 in assets or for purchases made by certain other retirement plans.

ABI may pay, at the time of your purchase, a commission to financial
intermediaries selling Class C shares in an amount equal to 1% of your
investment for sales of Class C shares.

For Class A and Class C shares, up to 100% of the Rule 12b-1 fees applicable to
these classes of shares each year may be paid to financial intermediaries.

In the case of Advisor Class shares, your financial advisor may charge ongoing
fees or transactional fees.

  Your financial advisor's firm receives compensation from the Fund, ABI and/or
  the Adviser in several ways from various sources, which include some or all
  of the following:

  - upfront sales commissions;
  - Rule 12b-1 fees;
  - additional distribution support;
  - defrayal of costs for educational seminars and training; and
  - payments related to providing shareholder recordkeeping and/or transfer
    agency services.

  Please read the Prospectus carefully for information on this compensation.

OTHER PAYMENTS FOR DISTRIBUTION SERVICES AND EDUCATIONAL SUPPORT
In addition to the commissions paid to financial intermediaries at the time of
sale and Rule 12b-1 fees, some or all of which may be paid to financial
intermediaries (and, in turn, to your financial advisor), ABI, at its expense,
currently provides additional payments to firms that sell shares of the
AllianceBernstein Mutual Funds. Although the individual components may be
higher and the total amount of payments made to each qualifying firm in any
given year may vary, the total amount paid to a financial intermediary in
connection with the sale of shares of the AllianceBernstein Mutual Funds 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 average daily net assets attributable to that firm
over the year. These sums include payments to reimburse directly or indirectly
the costs incurred by these firms and their employees in connection with
educational seminars and training efforts about the AllianceBernstein Mutual
Funds for the firms' employees and/or their clients and potential clients. The
costs and expenses associated with these efforts may include travel, lodging,
entertainment and meals. ABI may pay a portion of "ticket" or other
transactional charges.

For 2011, ABI's additional payments to these firms for distribution services
and educational support related to the AllianceBernstein Mutual Funds are
expected to be approximately 0.04% of the average monthly assets of the
AllianceBernstein Mutual Funds, or approximately $18.0 million. In 2010, ABI
paid approximately 0.04% of the average monthly assets of the AllianceBernstein
Mutual Funds or approximately $16.5 million for distribution services and
educational support related to the AllianceBernstein Mutual Funds.


A number of factors are considered in determining the additional payments,
including each firm's AllianceBernstein Mutual Fund sales, assets and
redemption rates, and the willingness and ability of the firm to give ABI
access to its financial advisors for educational and marketing purposes. In
some cases, firms will include the AllianceBernstein Mutual Funds on a
"preferred list". ABI's goal is to make the financial advisors who interact
with current and prospective investors and shareholders more knowledgeable
about the AllianceBernstein Mutual Funds so that they can provide suitable
information and advice about the funds and related investor services.


The Fund and ABI also make payments for recordkeeping and other transfer agency
services to financial intermediaries that sell AllianceBernstein Mutual Fund
shares. Please see "Management of the Fund--Transfer Agency and Retirement Plan
Services" below. These expenses paid by the Fund are included in "Other
Expenses" under "Fees and Expenses of the Fund--Annual Fund Operating Expenses"
above.

22





  IF ONE MUTUAL FUND SPONSOR MAKES GREATER DISTRIBUTION ASSISTANCE PAYMENTS
  THAN ANOTHER, YOUR FINANCIAL ADVISOR AND HIS OR HER FIRM MAY HAVE AN
  INCENTIVE TO RECOMMEND ONE FUND COMPLEX OVER ANOTHER. SIMILARLY, IF YOUR
  FINANCIAL ADVISOR OR HIS OR HER FIRM RECEIVES MORE DISTRIBUTION ASSISTANCE
  FOR ONE SHARE CLASS VERSUS ANOTHER, THEN THEY MAY HAVE AN INCENTIVE TO
  RECOMMEND THAT CLASS.

  PLEASE SPEAK WITH YOUR FINANCIAL ADVISOR TO LEARN MORE ABOUT THE TOTAL
  AMOUNTS PAID TO YOUR FINANCIAL ADVISOR AND HIS OR HER FIRM BY THE FUND, THE
  ADVISER, ABI AND BY SPONSORS OF OTHER MUTUAL FUNDS HE OR SHE MAY RECOMMEND TO
  YOU. YOU SHOULD ALSO CONSULT DISCLOSURES MADE BY YOUR FINANCIAL ADVISOR AT
  THE TIME OF PURCHASE.

As of the date of the Prospectus, ABI anticipates that the firms that will
receive additional payments for distribution services and/or educational
support include:

  Advisor Group, Inc.
  Ameriprise Financial Services
  AXA Advisors
  Bank of America
  Cadaret, Grant & Co.
  CCO Investment Services Corp.
  Chase Investment Services
  Commonwealth Financial Network
  Donegal Securities
  Financial Network Investment Company
  LPL Financial Corporation
  Merrill Lynch
  Morgan Stanley Smith Barney
  Multi-Financial Securities Corporation
  Northwestern Mutual Investment Services
  PrimeVest Financial Services
  Raymond James
  RBC Wealth Management
  Robert W. Baird
  UBS Financial Services
  Wells Fargo Advisors
  Wells Fargo Investments

Although the Fund may use brokers and dealers that sell shares of the Fund to
effect portfolio transactions, the Fund does not consider the sale of
AllianceBernstein Mutual Fund shares as a factor when selecting brokers or
dealers to effect portfolio transactions.

HOW TO EXCHANGE SHARES
You may exchange your Fund shares for shares of the same class of other
AllianceBernstein Mutual Funds (including AllianceBernstein Exchange Reserves,
a money market fund managed by the Adviser) provided that the other fund offers
the same class of shares. Exchanges of shares are made at the next-determined
NAV, without sales or service charges, after your order is received in proper
form. All exchanges are subject to the minimum investment restrictions set
forth in the prospectus for the AllianceBernstein Mutual Fund whose shares are
being acquired. You may request an exchange by mail or telephone. In order to
receive a day's NAV, ABIS must receive and confirm your telephone exchange
request by 4:00 p.m., Eastern time, on that day. The Fund may modify, restrict
or terminate the exchange privilege on 60 days' written notice.

HOW TO SELL OR REDEEM SHARES
You may "redeem" your shares (i.e., sell your shares to the Fund) on any day
the New York Stock Exchange (the "Exchange") is open, either directly or
through your financial intermediary. Your sale price will be the
next-determined NAV, less any applicable CDSC, after the Fund receives your
redemption request in proper form. Normally, redemption proceeds are sent to
you within seven days. If you recently purchased your shares by check or
electronic funds transfer, your redemption payment may be delayed until the
Fund is reasonably satisfied that the check or electronic funds transfer has
been collected (which may take up to 15 days). For Advisor Class shares, if you
are in doubt about what procedures or documents are required by your fee-based
program or employee benefit plan to sell your shares, you should contact your
financial advisor.

SELLING SHARES THROUGH YOUR BROKER OR OTHER FINANCIAL ADVISOR
Your broker or financial advisor must receive your sales request by 4:00 p.m.,
Eastern time, and submit it to the Fund by a pre-arranged time for you to
receive that day's NAV, less any applicable CDSC. Your broker or financial
advisor is responsible for submitting all necessary documentation to the Fund
and may charge you a fee for this service.

SELLING SHARES DIRECTLY TO THE FUND
BY MAIL:
..  Send a signed letter of instruction or stock power, along with certificates,
   to:

          AllianceBernstein Investor Services, Inc.
          P.O. Box 786003
          San Antonio, TX 78278-6003

..  For certified or overnight deliveries, send to:

          AllianceBernstein Investor Services, Inc.
          8000 IH 10 W, 4th floor
          San Antonio, TX 78230

..  For your protection, a bank, a member firm of a national stock exchange or
   another eligible guarantor institution must guarantee signatures. Stock
   power forms are available from your financial intermediary, ABIS and many
   commercial banks. Additional documentation is required for the sale of
   shares by corporations, intermediaries, fiduciaries and surviving joint
   owners. If you have any questions about these procedures, contact ABIS.

BY TELEPHONE
..  You may redeem your shares for which no stock certificates have been issued
   by telephone request. Call ABIS at 800-221-5672 with instructions on how you
   wish to receive your sale proceeds.

                                                                             23





..  ABIS must receive and confirm a telephone redemption request by 4:00 p.m.,
   Eastern time, for you to receive that day's NAV, less any applicable CDSC.

..  For your protection, ABIS will request personal or other information from
   you to verify your identity and will generally record the calls. Neither the
   Fund nor the Adviser, ABIS, ABI or other Fund agent will be liable for any
   loss, injury, damage or expense as a result of acting upon telephone
   instructions purporting to be on your behalf that ABIS reasonably believes
   to be genuine.

..  If you have selected electronic funds transfer in your Mutual Fund
   Application, the redemption proceeds will be sent directly to your bank.
   Otherwise, the proceeds will be mailed to you.

..  Telephone redemptions may not exceed $100,000 per Fund account per day.

..  Telephone redemption is not available for shares held in nominee or "street
   name" accounts, retirement plan accounts, or shares held by a shareholder
   who has changed his or her address of record within the previous 30 calendar
   days.

FREQUENT PURCHASES AND REDEMPTIONS OF FUND SHARES
The Board has adopted policies and procedures designed to detect and deter
frequent purchases and redemptions of Fund shares or excessive or short-term
trading that may disadvantage long-term Fund shareholders. These policies are
described below. There is no guarantee that the Fund will be able to detect
excessive or short-term trading or to identify shareholders engaged in such
practices, particularly with respect to transactions in omnibus accounts.
Shareholders should be aware that application of these policies may have
adverse consequences, as described below, and should avoid frequent trading in
Fund shares through purchases, sales and exchanges of shares. The Fund reserves
the right to restrict, reject or cancel, without any prior notice, any purchase
or exchange order for any reason, including any purchase or exchange order
accepted by any shareholder's financial intermediary.

RISKS ASSOCIATED WITH EXCESSIVE OR SHORT-TERM TRADING GENERALLY. While the Fund
will try to prevent market timing by utilizing the procedures described below,
these procedures may not be successful in identifying or stopping excessive or
short-term trading in all circumstances. By realizing profits through
short-term trading, shareholders that engage in rapid purchases and sales or
exchanges of the Fund's shares dilute the value of shares held by long-term
shareholders. Volatility resulting from excessive purchases and sales or
exchanges of Fund shares, especially involving large dollar amounts, may
disrupt efficient portfolio management and cause the Fund to sell portfolio
securities at inopportune times to raise cash to accommodate redemptions
relating to short-term trading activity. In particular, the Fund may have
difficulty implementing its long-term investment strategies if it is forced to
maintain a higher level of its assets in cash to accommodate significant
short-term trading activity. In addition, the Fund may incur increased
administrative and other expenses due to excessive or short-term trading,
including increased brokerage costs and realization of taxable capital gains.


Because the Fund invests significantly in securities of foreign issuers, it may
be particularly susceptible to short-term trading strategies. This is because
securities of foreign issuers are typically traded on markets that close well
before the time the Fund calculates its NAV at 4:00 p.m., Eastern time, which
gives rise to the possibility that developments may have occurred in the
interim that would affect the value of these securities. The time zone
differences among international stock markets can allow a shareholder engaging
in a short-term trading strategy to exploit differences in Fund share prices
that are based on closing prices of securities of foreign issuers established
some time before the Fund calculates its own share price (referred to as "time
zone arbitrage"). The Fund has procedures, referred to as fair value pricing,
designed to adjust closing market prices of securities of foreign issuers to
reflect what is believed to be the fair value of those securities at the time
the Fund calculates its NAV. While there is no assurance, the Fund expects that
the use of fair value pricing, in addition to the short-term trading policies
discussed below, will significantly reduce a shareholder's ability to engage in
time zone arbitrage to the detriment of other Fund shareholders.


A shareholder engaging in a short-term trading strategy may also target a fund
irrespective of its investments in securities of foreign issuers. Any fund that
invests in securities that are, among other things, thinly traded, traded
infrequently or relatively illiquid has the risk that the current market price
for the securities may not accurately reflect current market values. A
shareholder may seek to engage in short-term trading to take advantage of these
pricing differences (referred to as "price arbitrage"). The Fund may be
adversely affected by price arbitrage.

POLICY REGARDING SHORT-TERM TRADING. Purchases and exchanges of shares of the
Fund should be made for investment purposes only. The Fund seeks to prevent
patterns of excessive purchases and sales of Fund shares to the extent they are
detected by the procedures described below. The Fund reserves the right to
modify this policy, including any surveillance or account blocking procedures
established from time to time to effectuate this policy, at any time without
notice.

..  TRANSACTION SURVEILLANCE PROCEDURES. The Fund, through its agents, ABI and
   ABIS, maintains surveillance procedures to detect excessive or short-term
   trading in Fund shares. This surveillance process involves several factors,
   which include scrutinizing transactions in Fund shares that exceed certain
   monetary thresholds or numerical limits within a specified period of time.
   Generally, more than two exchanges of Fund shares during any 90-day period
   or purchases of shares followed by a sale within 90 days will be identified
   by these surveillance procedures. For purposes of these transaction
   surveillance procedures, the Fund may consider trading activity in multiple
   accounts under common ownership, control or influence. Trading activity
   identified by either, or a combination, of these factors, or as a result

24




  of any other information available at the time, will be evaluated to
  determine whether such activity might constitute excessive or short-term
  trading. These surveillance procedures may be modified from time to time, as
  necessary or appropriate to improve the detection of excessive or short-term
  trading or to address specific circumstances.

..  ACCOUNT BLOCKING PROCEDURES. If the Fund determines, in its sole discretion,
   that a particular transaction or pattern of transactions identified by the
   transaction surveillance procedures described above is excessive or
   short-term trading in nature, the relevant Fund account(s) will be
   immediately "blocked" and no future purchase or exchange activity will be
   permitted. However, sales of Fund shares back to the Fund or redemptions
   will continue to be permitted in accordance with the terms of the Fund's
   current Prospectus. As a result, unless the shareholder redeems his or her
   shares, which may have consequences if the shares have declined in value, a
   CDSC is applicable or adverse tax consequences may result, the shareholder
   may be "locked" into an unsuitable investment. In the event an account is
   blocked, certain account-related privileges, such as the ability to place
   purchase, sale and exchange orders over the internet or by phone, may also
   be suspended. A blocked account will generally remain blocked unless and
   until the account holder or the associated broker, dealer or other financial
   intermediary provides evidence or assurance acceptable to the Fund that the
   account holder did not or will not in the future engage in excessive or
   short-term trading.

..  APPLICATIONS OF SURVEILLANCE PROCEDURES AND RESTRICTIONS TO OMNIBUS
   ACCOUNTS. Omnibus account arrangements are common forms of holding shares of
   the Fund, particularly among certain brokers, dealers and other financial
   intermediaries, including sponsors of retirement plans. The Fund applies its
   surveillance procedures to these omnibus account arrangements. As required
   by Commission rules, the Fund has entered into agreements with all of its
   financial intermediaries that require the financial intermediaries to
   provide the Fund, upon the request of the Fund or its agents, with
   individual account level information about their transactions. If the Fund
   detects excessive trading through its monitoring of omnibus accounts,
   including trading at the individual account level, the financial
   intermediaries will also execute instructions from the Fund to take actions
   to curtail the activity, which may include applying blocks to accounts to
   prohibit future purchases and exchanges of Fund shares. For certain
   retirement plan accounts, the Fund may request that the retirement plan or
   other intermediary revoke the relevant participant's privilege to effect
   transactions in Fund shares via the internet or telephone, in which case the
   relevant participant must submit future transaction orders via the U.S.
   Postal Service (i.e., regular mail).

HOW THE FUND VALUES ITS SHARES
The Fund's NAV is calculated at the close of regular trading on the Exchange
(ordinarily, 4:00 p.m., Eastern time), only on days when the Exchange is open
for business. To calculate NAV, the Fund's assets are valued and totaled,
liabilities are subtracted, and the balance, called net assets, is divided by
the number of shares outstanding. If the Fund invests in securities that are
primarily traded on foreign exchanges that trade on weekends or other days when
the Fund does not price its shares, the value of the Fund's shares may change
on days when the Fund's NAV is not calculated and shareholders will not be able
to purchase or redeem their shares in the Fund.

The Fund values its securities at their current market value determined on the
basis of market quotations or, if market quotations are not readily available
or are unreliable, at "fair value" as determined in accordance with procedures
established by and under the general supervision of the Fund's Board. When the
Fund uses fair value pricing, it may take into account any factors it deems
appropriate. The Fund may determine fair value based upon developments related
to a specific security, current valuations of foreign stock indices (as
reflected in U.S. futures markets) and/or U.S. sector or broader stock market
indices. The prices of securities used by the Fund to calculate its NAV may
differ from quoted or published prices for the same securities. Fair value
pricing involves subjective judgments and it is possible that the fair value
determined for a security is materially different than the value that could be
realized upon the sale of that security.

The Fund expects to use fair value pricing for securities primarily traded on
U.S. exchanges only under very limited circumstances, such as the early closing
of the exchange on which a security is traded or suspension of trading in the
security. The Fund may use fair value pricing more frequently for securities
primarily traded in non-U.S. markets because, among other things, most foreign
markets close well before the Fund values its 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. For example, the Fund believes that foreign security values may be
affected by events that occur after the close of foreign securities markets. To
account for this, the Fund may frequently value many of its foreign equity
securities using fair value prices based on third party vendor modeling tools
to the extent available.

Subject to its oversight, the Board has delegated responsibility for valuing
the Fund's assets to the Adviser. The Adviser has established a Valuation
Committee, which operates under the policies and procedures approved by the
Board, to value the Fund's assets on behalf of the Fund. The Valuation
Committee values Fund assets as described above.

                                                                             25




MANAGEMENT OF THE FUND
--------------------------------------------------------------------------------

INVESTMENT ADVISER

The Fund's Adviser is AllianceBernstein L.P., 1345 Avenue of the Americas, New
York, NY 10105. The Adviser is a leading international investment adviser
supervising client accounts with assets as of June 30, 2011 totaling
approximately $461 billion (of which approximately $85 billion represented
assets of investment companies). As of June 30, 2011, the Adviser managed
retirement assets for many of the largest public and private employee benefit
plans (including 28 of the nation's FORTUNE 100 companies), for public employee
retirement funds in 34 states, for investment companies, and for foundations,
endowments, banks and insurance companies worldwide. The 35 registered
investment companies managed by the Adviser, comprising approximately 118
separate investment portfolios, currently have approximately 3.0 million
shareholder accounts.

The Adviser provides investment advisory services and order placement
facilities for the Fund. For these advisory services, the Fund will pay the
Adviser a fee at an annualized rate of 1.00% of the first $1 billion of the
Fund's average net assets, .95% of the excess of $1 billion up to $2 billion,
..90% of the excess of $2 billion up to $3 billion, and .85% of the excess over
$3 billion as a percentage of average net assets. The Adviser has agreed to
waive its management fees and/or to bear expenses of the Fund through March 31,
2015 to the extent necessary to prevent total Fund operating expenses, on an
annualized basis, from exceeding the net expenses reflected in the "Fees and
Expenses of the Fund" at the beginning of the Prospectus.

Fees waived and expenses borne by the Adviser are subject to reimbursement
until August 31, 2014. No reimbursement payment will be made that would cause
the Fund's total annualized operating expenses to exceed the net fee
percentages set forth in "Fees and Expenses of the Fund" or cause the total of
the payments to exceed the Fund's total initial offering expenses.


The Adviser may act as an investment adviser to other persons, firms or
corporations, including investment companies, hedge funds, pension funds and
other institutional investors. The Adviser may receive management fees,
including performance fees, that may be higher or lower than the advisory fees
it receives from the Fund. Certain other clients of the Adviser may have
investment objectives and policies similar to those of the Fund. The Adviser
may, from time to time, make recommendations that result in the purchase or
sale of a particular security by its other clients simultaneously with the
Fund. If transactions on behalf of more than one client during the same period
increase the demand for securities being purchased or the supply of securities
being sold, there may be an adverse effect on price or quantity. It is the
policy of the Adviser to allocate advisory recommendations and the placing of
orders in a manner that is deemed equitable by the Adviser to the accounts
involved, including the Fund. When two or more of the clients of the Adviser
(including the Fund) are purchasing or selling the same security on a given day
from the same broker-dealer, such transactions may be averaged as to price.

PORTFOLIO MANAGERS
The day-to-day management of, and investment decisions for, the Fund's
portfolio are made by the Adviser's Emerging Markets Multi-Asset Team. The
Emerging Markets Multi-Asset Team relies heavily on the fundamental analysis
and research of the Adviser's large internal research staff. No one person is
principally responsible for coordinating the Fund's investments.


The following table lists the senior members of the Emerging Markets
Multi-Asset Team with the responsibility for day-to-day management of the
Fund's portfolio, the year that each person assumed joint and primary
responsibility for the Fund, and each person's principal occupation during the
past five years:




                                                 PRINCIPAL OCCUPATION DURING
EMPLOYEE; LENGTH OF SERVICE; TITLE                 THE PAST FIVE (5) YEARS
------------------------------------------------------------------------------------
                                        
Henry S. D'Auria; since 2011; Senior Vice  Senior Vice President of the Adviser,
President of the Adviser and Chief         with which he has been associated in a
Investment Officer, Emerging Markets       substantially similar capacity to his
Value Equity                               current position since 2006.

Paul J. DeNoon; since 2011; Senior Vice    Senior Vice President of the Adviser,
President of the Adviser and Director of   with which he has been associated in a
Emerging Market Debt                       substantially similar capacity to his
                                           current position since prior to 2006.

Morgan C. Harting; since 2011; Vice        Vice President of the Adviser, with
President of the Adviser                   which he has been associated in a
                                           substantially similar capacity to his
                                           current position since February 2007.
                                           Prior thereto, he was Senior Director at
                                           Fitch Ratings, a securities rating firm,
                                           beginning prior to 2006.

Marco G. Santamaria; since 2011; Vice      Vice President of the Adviser, with
President of the Adviser                   which he has been associated in a
                                           substantially similar capacity to his
                                           current position since June 2010. Prior
                                           thereto, he was a founding partner at
                                           Global Securities Advisors, an emerging
                                           market-oriented fixed-income hedge
                                           fund, beginning prior to 2006.


Additional information about the portfolio managers may be found in the Fund's
SAI.

TRANSFER AGENCY AND RETIREMENT PLAN SERVICES
ABIS acts as the transfer agent for the Fund. ABIS, an indirect wholly-owned
subsidiary of the Adviser, registers the transfer, issuance and redemption of
Fund shares and disburses dividends and other distributions to Fund
shareholders.

Many Fund shares are owned by financial intermediaries for the benefit of their
customers. Retirement plans also may hold Fund shares in the name of the plan,
rather than the participants. In those cases, the Fund often does not maintain
an account for you. Thus, some or all of the transfer agency functions for
these and certain other accounts are performed by the financial intermediaries
and plan recordkeepers. The Fund,

26





ABI and/or the Adviser pay to these financial intermediaries and recordkeepers,
including those that sell shares of the AllianceBernstein Mutual Funds, fees
for sub-transfer agency and recordkeeping services in amounts ranging up to $19
per customer fund account per annum and/or up to 0.25% per annum of the average
daily assets held through the intermediary. To the extent any of these payments
for recordkeeping services or transfer agency services are made by the Fund,
they are included in the amount appearing opposite the caption "Other Expenses"
found in the Fund expense tables under "Fees and Expenses of the Fund" in the
Summary Information at the beginning of the Prospectus. In addition, financial
intermediaries may be affiliates of entities that receive compensation from the
Adviser or ABI for maintaining retirement plan "platforms" that facilitate
trading by affiliated and non-affiliated financial intermediaries and
recordkeeping for retirement plans.


Because financial intermediaries and plan recordkeepers may be paid varying
amounts per class for sub-transfer agency and recordkeeping services, the
service requirements of which may also vary by class, this may create an
additional incentive for financial intermediaries and their financial advisors
to favor one fund complex over another or one class of shares over another.

                                                                             27




DIVIDENDS, DISTRIBUTIONS AND TAXES
--------------------------------------------------------------------------------

The Fund's income dividends and capital gains distributions, if any, declared
by the Fund on its outstanding shares will, at the election of each
shareholder, be paid in cash or in additional shares of the same class of
shares of the Fund. If paid in additional shares, the shares will have an
aggregate NAV as of the close of business on the declaration date of the
dividend or distribution equal to the cash amount of the dividend or
distribution. You may make an election to receive dividends and distributions
in cash or in shares at the time you purchase shares. Your election can be
changed at any time prior to a record date for a dividend. There is no sales or
other charge in connection with the reinvestment of dividends or capital gains
distributions. Cash dividends may be paid by check, or, at your election,
electronically via the ACH network.

If you receive an income dividend or capital gains distribution in cash you
may, within 120 days following the date of its payment, reinvest the dividend
or distribution in additional shares of the Fund without charge by returning to
the Adviser, with appropriate instructions, the check representing the dividend
or distribution. Thereafter, unless you otherwise specify, you will be deemed
to have elected to reinvest all subsequent dividends and distributions in
shares of the Fund.

While it is the intention of the Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and timing of any dividend or distribution will
depend on the realization by the Fund of income and capital gains from
investments. There is no fixed dividend rate and there can be no assurance that
the Fund will pay any dividends or realize any capital gains. The final
determination of the amount of the Fund's return of capital distributions for
the period will be made after the end of each calendar year.


You will normally have to pay federal income tax, and any state or local income
taxes, on the distributions you receive from the Fund, whether you take the
distributions in cash or reinvest them in additional shares. Distributions of
net capital gains from the sale of investments that the Fund owned for more
than one year and that are properly designated as capital gain dividends are
taxable as long-term capital gains. For taxable years beginning on or before
December 31, 2012, distributions of dividends to the Fund's non-corporate
shareholders may be treated as "qualified dividend income", which is taxed at
reduced rates, if such distributions are derived from, and designated by the
Fund as, "qualified dividend income" and provided that holding period and other
requirements are met by both the shareholder and the Fund. "Qualified dividend
income" generally is income derived from dividends from U.S. corporations and
"qualified foreign corporations". Other distributions by the Fund are generally
taxable to you as ordinary income. Dividends declared in October, November, or
December and paid in January of the following year are taxable as if they had
been paid the previous December. The Fund will notify you as to how much of the
Fund's distributions, if any, qualify for these reduced tax rates.


Investment income received by the Fund from sources within foreign countries
may be subject to foreign income taxes withheld at the source. To the extent
that the Fund is liable for foreign income taxes withheld at the source, the
Fund intends, if possible, to operate so as to meet the requirements of the
Code to "pass through" to the Fund's shareholders credits for foreign income
taxes paid (or to permit shareholders to claim a deduction for such foreign
taxes), but there can be no assurance that the Fund will be able to do so.
Furthermore, a shareholder's ability to claim a foreign tax credit or deduction
for foreign taxes paid by the Fund may be subject to certain limitations
imposed by the Code, as a result of which a shareholder may not be permitted to
claim a credit or deduction for all or a portion of the amount of such taxes.

Under certain circumstances, if the Fund realizes losses (e.g., from
fluctuations in currency exchange rates) after paying a dividend, all or a
portion of the dividend may subsequently be characterized as a return of
capital. Returns of capital are generally nontaxable, but will reduce a
shareholder's basis in shares of the Fund. If that basis is reduced to zero
(which could happen if the shareholder does not reinvest distributions and
returns of capital are significant), any further returns of capital will be
taxable as capital gain.

If you buy shares just before the Fund deducts a distribution from its NAV, you
will pay the full price for the shares and then receive a portion of the price
back as a taxable distribution.

The sale or exchange of Fund shares is a taxable transaction for federal income
tax purposes.

Each year shortly after December 31, the Fund will send you tax information
stating the amount and type of all its distributions for the year. You are
encouraged to consult your tax adviser about the federal, state, and local tax
consequences in your particular circumstances, as well as about any possible
foreign tax consequences.

NON-U.S. SHAREHOLDERS
If you are a nonresident alien individual or a foreign corporation for federal
income tax purposes, please see the Fund's SAI for information on how you will
be taxed as a result of holding shares in the Fund.

28




GENERAL INFORMATION
--------------------------------------------------------------------------------

Under unusual circumstances, the Fund may suspend redemptions or postpone
payment for up to seven days or longer, as permitted by federal securities law.
The Fund reserves the right to close an account that has remained below $1,000
for 90 days.

During drastic economic or market developments, you might have difficulty in
reaching ABIS by telephone, in which event you should issue written
instructions to ABIS. ABIS will employ reasonable procedures to verify that
telephone requests to purchase, sell or exchange shares are genuine, and could
be liable for losses resulting from unauthorized transactions if it failed to
do so. Otherwise, ABIS is not responsible for the authenticity of telephone
requests. Dealers and agents may charge a commission for handling telephone
requests. The telephone service may be suspended or terminated at any time
without notice.

Shareholder Services. ABIS offers a variety of shareholder services. For more
information about these services or your account, call ABIS's toll-free number,
800-221-5672. Some services are described in the Mutual Fund Application.

Householding. Many shareholders of the AllianceBernstein Mutual Funds have
family members living in the same home who also own shares of the same funds.
In order to reduce the amount of duplicative mail that is sent to homes with
more than one fund account and to reduce expenses of the funds, all
AllianceBernstein Mutual Funds will, until notified otherwise, send only one
copy of each prospectus, shareholder report and proxy statement to each
household address. This process, known as "householding", does not apply to
account statements, confirmations, or personal tax information. If you do not
wish to participate in householding, or wish to discontinue householding at any
time, call ABIS at 800-221-5672. We will resume separate mailings for your
account within 30 days of your request.

                                                                             29




FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------

Financial highlights information is not available because the Fund had not yet
commenced operation as of the date of this prospectus.

30




APPENDIX A
--------------------------------------------------------------------------------

HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION
--------------------------------------------------------------------------------


The settlement agreement between the Adviser and the New York State Attorney
General requires the Fund to include the following supplemental hypothetical
investment information, which provides additional information calculated and
presented in a manner different from expense information found under "Fees and
Expenses of the Fund" in the Summary Information at the beginning of this
Prospectus, about the effect of the Fund's expenses, including investment
advisory fees and other Fund costs, on the Fund's returns over a 10-year
period. The chart shows the estimated expenses (net of any fee or expense
waiver for the first three years) that would be charged on a hypothetical
investment of $10,000 in Class A shares of the Fund assuming a 5% return each
year, including an initial sales charge of 4.25%. Except as otherwise
indicated, the chart also assumes that the current annual expense ratio stays
the same throughout the 10-year period. The current annual expense ratio for
the Fund is the same as stated under "Fees and Expenses of the Fund". If you
wish to obtain hypothetical investment information for other classes of shares
of the Fund, please refer to the "Mutual Fund Fees & Expenses Calculators" on
www.AllianceBernstein.com. Your actual expenses may be higher or lower.


--------------------------------------------------------------------------------



                            HYPOTHETICAL INVESTMENT              HYPOTHETICAL
               HYPOTHETICAL PERFORMANCE    AFTER    HYPOTHETICAL    ENDING
   YEAR         INVESTMENT    EARNINGS    RETURNS    EXPENSES*    INVESTMENT
   --------------------------------------------------------------------------
                                                  
   1            $10,000.00   $  478.75   $10,053.75  $  590.89    $ 9,887.86
   2              9,887.86      494.39    10,382.25     171.31     10,210.94
   3             10,210.94      510.55    10,721.49     176.90     10,544.59
   4             10,544.59      527.23    11,071.82     202.61     10,869.21
   5             10,869.21      543.46    11,412.67     208.85     11,203.82
   6             11,203.82      560.19    11,764.01     215.28     11,548.73
   7             11,548.73      577.44    12,126.17     221.91     11,904.26
   8             11,904.26      595.21    12,499.47     228.74     12,270.73
   9             12,270.73      613.54    12,884.27     235.78     12,648.49
   10            12,648.49      632.42    13,280.91     243.04     13,037.87
   --------------------------------------------------------------------------
   Cumulative                $5,533.18               $2,495.31



*Expenses are net of any fee waiver or expense waiver for the first three
 years. Thereafter, the expense ratio reflects the Fund's operating expenses as
 reflected under "Fees and Expenses of the Fund" before fee waiver.


                                                                            A-1




For more information about the Fund, the following documents are available upon
request:

..  STATEMENT OF ADDITIONAL INFORMATION (SAI)
The Fund has an SAI, which contains more detailed information about the Fund,
including its operations and investment policies. The Fund's SAI is
incorporated by reference into (and is legally part of) this Prospectus.

You may request a free copy of the SAI, or make inquiries concerning the Fund,
by contacting your broker or other financial intermediary, or by contacting
the Adviser:

        
BY MAIL:   AllianceBernstein Investor Services, Inc.
           P.O. Box 786003
           San Antonio, TX 78278-6003

BY PHONE:  For Information: (800) 221-5672
           For Literature: (800) 227-4618




Or you may view or obtain these documents from the Securities and Exchange
Commission ("Commission"):


..  Call the Commission at 1-202-551-8090 for information on the operation of
   the Commission's Public Reference Room.

..  Reports and other information about the Fund are available on the EDGAR
   Database on the Commission's Internet site at http://www.sec.gov.


..  Copies of the information may be obtained, after paying a duplicating fee,
   by electronic request at publicinfo@sec.gov, or by writing the Commission's
   Public Reference Section, Washington, DC 20549-1520.


You also may find these documents and more information about the Adviser and
the Fund on the Internet at: www.AllianceBernstein.com.

AllianceBernstein(R) and the AB Logo are registered trademarks and service
marks used by permission of the owner, AllianceBernstein L.P.

SEC File No. 811-01716

                                                                  PRO-0134-0811

                                    [GRAPHIC]









ALLIANCEBERNSTEIN EMERGING MARKETS MULTI-ASSET PORTFOLIO -- (CLASS A, R, K AND
I SHARES)

PROSPECTUS  |  AUGUST 31, 2011


AllianceBernstein Emerging Markets Multi-Asset Portfolio
(Shares Offered--Exchange Ticker Symbol)


 (Class A-ABAEX; Class R-ABREX; Class K-ABKEX; Class I-ABIEX)



The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation
to the contrary is a criminal offense.

     [LOGO]
       AB
ALLIANCEBERNSTEIN









INVESTMENT PRODUCTS OFFERED
..  ARE NOT FDIC INSURED
..  MAY LOSE VALUE
..  ARE NOT BANK GUARANTEED




TABLE OF CONTENTS
--------------------------------------------------------------------------------




                                                               Page
                                                            
SUMMARY INFORMATION...........................................   4

ADDITIONAL INFORMATION ABOUT THE FUND'S RISKS AND INVESTMENTS.   8

INVESTING IN THE FUND.........................................  18

  How to Buy Shares...........................................  18

  The Different Share Class Expenses..........................  18

  Distribution Arrangements for Group Retirement Plans........  19

  Payments to Financial Intermediaries........................  19

  How to Exchange Shares......................................  20

  How to Sell or Redeem Shares................................  20

  Frequent Purchases and Redemptions of Fund Shares...........  21

  How the Fund Values Its Shares..............................  22

MANAGEMENT OF THE FUND........................................  23

DIVIDENDS, DISTRIBUTIONS AND TAXES............................  25

GENERAL INFORMATION...........................................  26

FINANCIAL HIGHLIGHTS..........................................  27

APPENDIX A--HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION... A-1






SUMMARY INFORMATION
--------------------------------------------------------------------------------

ALLIANCEBERNSTEIN EMERGING MARKETS MULTI-ASSET PORTFOLIO
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The Fund's investment objective is to maximize total return. Total return is
the sum of capital appreciation and income.


FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER FEES (fees paid directly from your investment)



                                                                                CLASS A  CLASS R CLASS K CLASS I
                                                                                SHARES   SHARES  SHARES  SHARES
----------------------------------------------------------------------------------------------------------------
                                                                                             
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)                                               None    None    None    None
----------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of offering price or redemption proceeds, whichever is lower)   None(a)  None    None    None
----------------------------------------------------------------------------------------------------------------
Exchange Fee                                                                      None    None    None    None


ANNUAL FUND OPERATING EXPENSES (expenses that you pay each year as a percentage
of the value of your investment)




                                                                                    CLASS A CLASS R CLASS K CLASS I
-------------------------------------------------------------------------------------------------------------------
                                                                                                
Management Fees                                                                      1.00%   1.00%   1.00%   1.00%
Distribution and/or Service (12b-1) Fees                                             0.30%   0.50%   0.25%    None
Other Expenses:
  Transfer Agent                                                                      .06%    .26%    .20%    .12%
  Other Expenses                                                                      .47%    .47%    .47%    .47%
                                                                                    ------  ------  ------  ------
Total Other Expenses(b)                                                               .53%    .73%    .67%    .59%
                                                                                    ------  ------  ------  ------
Total Annual Fund Operating Expenses                                                 1.83%   2.23%   1.92%   1.59%
                                                                                    ======  ======  ======  ======
Fee Waiver and/or Expense Reimbursement(c)                                          (.18)%  (.38)%  (.32)%  (.24)%
                                                                                    ------  ------  ------  ------
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement   1.65%   1.85%   1.60%   1.35%
                                                                                    ======  ======  ======  ======
-------------------------------------------------------------------------------------------------------------------




(a)In some cases, a 1%, 1-year contingent deferred sales charge, or CDSC, may
   apply. CDSCs for Class A shares may also be subject to waiver in certain
   circumstances.


(b)Total other expenses are based on estimated amounts for the current fiscal
   year.


(c)The Adviser has agreed to waive its management fees and/or to bear expenses
   of the Fund through March 31, 2015 to the extent necessary to prevent total
   Fund operating expenses, on an annualized basis, from exceeding the net
   expenses reflected in this table. The fee waiver and expense reimbursement
   apply to total annual fund operating expenses (excluding distribution and
   service (12b-1) fees, interest expense, acquired fund fees and expenses,
   taxes and extraordinary expenses). Any fees waived and expenses borne by the
   Adviser may be reimbursed by the Fund until August 31, 2014, provided that
   no reimbursement payment will be made that would cause the Fund's total
   annual Fund operating expenses to exceed the Total Annual Fund Operating
   Expenses After Fee Waiver reflected in the table or cause the total of the
   payments to exceed the Fund's total initial offering expenses.


EXAMPLES
The Examples are intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Examples assume that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your Fund shares at the end of those periods. The Examples also assume that
your investment has a 5% return each year, that the Fund's operating expenses
stay the same and that the fee waiver is in effect for only the first year.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:




               CLASS A CLASS R CLASS K CLASS I
----------------------------------------------
                           
After 1 Year    $586    $188    $163    $137
After 3 Years   $923    $582    $505    $428
----------------------------------------------



4





PORTFOLIO TURNOVER
The Fund pays transactions costs, such as commissions, when it buys or sells
securities (or "turns over" its portfolio). A higher portfolio turnover rate
may indicate higher transaction costs and may result in higher taxes when
shares are held in a taxable account. These transaction costs, which are not
reflected in the Annual Fund Operating Expenses or in the Examples, affect the
Fund's performance.

PRINCIPAL STRATEGIES

The Fund invests at least 80% of its net assets under normal circumstances in
securities of emerging market issuers and/or the currencies of emerging market
countries. Examples of emerging market countries include Argentina, Brazil,
Chile, Croatia, Egypt, Hong Kong, India, Indonesia, Israel, Kazakhstan,
Malaysia, Mexico, the People's Republic of China, Peru, the Philippines,
Poland, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey and
Venezuela. Investing in emerging markets generally involves risks greater than
investing in the markets of developed countries. The Fund may invest up to 20%
of its net assets in the securities of developed market issuers.


The Fund invests in equity securities, debt securities and currencies, and does
not attempt to maintain a constant or relatively constant allocation among
these asset classes. Rather, allocations among asset classes are adjusted based
on the Adviser's view of the relative attractiveness of the asset classes.
These allocations are informed by the Adviser's proprietary asset allocation
tools, which are comprised of a series of volatility, correlation and expected
return forecasts. The Adviser reviews potential Fund investments in each asset
class holistically from a country, currency, sector and security standpoint to
optimize overall portfolio construction. Under normal circumstances, the Fund
will invest between 30% and 95% of its net assets in equity securities, and
between 0% and 65% of its net assets in debt securities, with any remainder
held in cash (including foreign currency). The Fund is not constrained based on
the country, region, market capitalization, credit quality or duration of its
investments, and its assets may at times be concentrated in a particular
country or region.

The process for selecting equity securities for the Fund is primarily
bottom-up. The Adviser seeks to identify stocks that are attractive based on
valuation, profitability, earnings quality, business trends, price momentum and
other measures.


The process for selecting debt securities for the Fund is more top-down. The
Adviser believes that inefficiencies in the global debt markets arise from
investor emotion, market complexity and conflicting investment agendas. The
Adviser combines quantitative forecasts with fundamental credit and economic
research in seeking to exploit these inefficiencies. The Adviser seeks to
generate returns from the Fund's fixed-income investments through a combination
of country selection, currency allocation, sector analysis and security
selection. Debt securities may include those of both corporate and governmental
issuers, and may include below investment grade debt securities ("junk bonds").
The Fund may invest in debt securities with a range of maturities from short-
to long-term.


The Adviser considers both quantitative and fundamental factors in adjusting
the Fund's currency exposures. In addition to the Fund's currency exposure that
results from its investments in equity and debt securities denominated in
foreign currencies (and any related hedging), the Fund may hold foreign
currency (or related derivatives) independent of any such investments, and may
hold a currency even if the Fund does not hold any securities denominated in
that currency.


The Fund expects to utilize derivatives, such as futures, forwards and swap
agreements, and invests in exchange-traded funds, or ETFs, to a significant
extent. Derivatives and ETFs may provide more efficient and economical exposure
to market segments than direct investments, and may also be a quicker and more
efficient way to alter the Portfolio's exposure than buying and selling direct
investments. In determining when and to what extent to enter into derivative
transactions or to invest in ETFs, the Adviser will consider factors such as
the relative risks and returns expected of potential investments and the cost
of such transactions. Derivatives may also be used for hedging purposes,
including to hedge against interest rate, credit and currency fluctuations. The
Adviser also expects to use derivatives frequently to effectively leverage the
Fund by creating aggregate exposure somewhat in excess of the Fund's net
assets. The notional value of derivatives and ETFs linked to emerging market
securities or currencies are counted towards meeting the percentage minimums
and ranges set forth above, including the requirement that the Fund invest at
least 80% of its net assets in the securities of emerging market issuers and/or
the currencies of emerging market countries.


PRINCIPAL RISKS
..  EMERGING MARKET RISK: Investments in emerging market countries may involve
   more risk than investments in other foreign countries because the markets in
   emerging market countries are less developed and less liquid as well as
   being subject to increased economic, political, regulatory, or other
   uncertainties.

..  MARKET RISK: The value of the Fund's assets will fluctuate as the stock,
   bond or currency markets fluctuate. The value of the Fund's investments may
   decline, sometimes rapidly and unpredictably, simply because of economic
   changes or other events that affect large portions of the market.

                                                                             5





..  FOREIGN (NON-U.S.) RISK: Investments in securities of non-U.S. issuers may
   involve more risk than those of U.S. issuers. These securities may fluctuate
   more widely in price and may be less liquid due to adverse market, economic,
   political, regulatory or other factors.

..  CURRENCY RISK: Fluctuations in currency exchange rates may negatively affect
   the value of the Fund's investments or reduce its returns. Emerging market
   currencies may be more volatile and less liquid, and subject to
   significantly greater risk of currency controls and convertibility
   restrictions, than currencies of developed countries.

..  COUNTRY CONCENTRATION RISK: The Fund may not always be diversified among
   countries or geographic regions and the effect on the Fund's net asset value
   ("NAV") of the specific risks identified above, such as political,
   regulatory and currency risks, may be magnified due to concentration of the
   Fund's investments in a particular country or region.

..  ALLOCATION RISK: The allocation of Fund assets among different asset
   classes, such as equity securities, debt securities and currencies, may have
   a significant effect on the Fund's NAV when one of these asset classes is
   performing better or worse than others. The diversification benefits
   typically associated with investing both equity and debt securities may be
   limited in the emerging markets context, as movements in emerging market
   equity and emerging market debt markets may be more correlated than
   movements in the equity and debt markets of developed countries.

..  CAPITALIZATION RISK: Investments in small- and mid-capitalization companies
   may be more volatile than investments in large-cap companies. Investments in
   small-cap companies may have additional risks because these companies have
   limited product lines, markets or financial resources.

..  INTEREST RATE RISK: Changes in interest rates will affect the value of
   investments in fixed-income securities. When interest rates rise, the value
   of existing investments in fixed-income securities tends to fall and this
   decrease in value may not be offset by higher income from new investments.
   Interest rate risk is generally greater for fixed-income securities with
   longer maturities or durations.

..  CREDIT RISK: An issuer or guarantor of a fixed-income security, or the
   counterparty to a derivatives or other contract, may be unable or unwilling
   to make timely payments of interest or principal, or to otherwise honor its
   obligations. The issuer or guarantor may default causing a loss of the full
   principal amount of a security. The degree of risk for a particular security
   may be reflected in its credit rating. There is the possibility that the
   credit rating of a fixed-income security may be downgraded after purchase,
   which may adversely affect the value of the security. Investments in
   fixed-income securities with lower ratings tend to have a higher probability
   that an issuer will default or fail to meet its payment obligations.

..  BELOW INVESTMENT GRADE SECURITIES: Investments in fixed-income securities
   with lower ratings (commonly known as "junk bonds") tend to have a higher
   probability that an issuer will default or fail to meet its payment
   obligations. These securities may be subject to greater price volatility due
   to factors such as specific corporate developments, interest rate
   sensitivity, negative perceptions of the junk bond market generally, and
   less secondary market liquidity.

..  DERIVATIVES RISK: Investments in derivatives may be illiquid, difficult to
   price, and leveraged so that small changes may produce disproportionate
   losses for the Fund, and may be subject to counterparty risk to a greater
   degree than more traditional investments.

..  LEVERAGE RISK: To the extent the Fund uses leveraging techniques, its NAV
   may be more volatile because leverage tends to exaggerate the effect of
   changes in interest rates and any increase or decrease in the value of the
   Fund's investments.

..  LIQUIDITY RISK: Liquidity risk exists when particular investments are
   difficult to purchase or sell, possibly preventing the Fund from selling out
   of these illiquid securities at an advantageous price. Derivatives and
   securities involving substantial market and credit risk tend to involve
   greater liquidity risk.


..  DIVERSIFICATION RISK: The Fund may have more risk because it is
   "non-diversified", meaning that it can invest more of its assets in a
   smaller number of issuers.


..  MANAGEMENT RISK: The Fund is subject to management risk because it is an
   actively managed investment fund. The Adviser will apply its investment
   techniques and risk analyses in making investment decisions, but there is no
   guarantee that its techniques will produce the intended results.

As with all investments, you may lose money by investing in the Fund.

6





PERFORMANCE INFORMATION
No performance information is available for the Fund because it has not yet
been in operation for a full calendar year.

INVESTMENT ADVISER
AllianceBernstein L.P. is the investment adviser for the Fund.

PORTFOLIO MANAGER
The following table lists the persons responsible for day-to-day management of
the Fund's portfolio:




EMPLOYEE             LENGTH OF SERVICE WITH THE FUND  TITLE
-------------------------------------------------------------------------------------------
                                                
Henry S. D'Auria               Since 2011             Senior Vice President of the Adviser

Paul J. DeNoon                 Since 2011             Senior Vice President of the Adviser

Morgan C. Harting              Since 2011             Vice President of the Adviser

Marco G. Santamaria            Since 2011             Vice President of the Adviser



PURCHASE AND SALE OF FUND SHARES

Class A, Class R, Class K and Class I shares are available at NAV, without an
initial sales charge, to 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit-sharing and money purchase pension plans, defined benefit plans,
and non-qualified deferred compensation plans where plan level or omnibus
accounts are held on the books of the Fund.

You may sell (redeem) your shares each day the New York Stock Exchange is open.
You can sell your shares by following the procedures specified by your plan
sponsor or plan recordkeeper.

TAX INFORMATION

The Fund may make income dividends or capital gains distributions, which may be
subject to federal income taxes and taxable as ordinary income or capital
gains, and may also be subject to state and local taxes. However, participants
in tax-deferred retirement plans generally will not be subject to current
taxation on Fund dividends and distributions received in additional shares of
the Fund.

PAYMENTS TO FINANCIAL INTERMEDIARIES

Financial intermediaries market and sell shares of the Fund. The Fund and its
related companies may pay the intermediary for the sale of Fund shares and
related services. These payments may create a conflict of interest by
influencing the financial intermediary to recommend the Fund over another
investment to plan participants and/or to plan sponsors deciding which funds to
include as investment options under a plan.

                                                                             7




ADDITIONAL INFORMATION ABOUT THE FUND'S RISKS AND INVESTMENTS
--------------------------------------------------------------------------------


This section of the Prospectus provides additional information about the
investment practices and related risks of the Fund. Most of these investment
practices are discretionary, which means that the Adviser may or may not decide
to use them. This Prospectus does not describe all of the Fund's investment
practices and additional information about the Fund's risks and investments can
be found in the Fund's Statement of Additional Information ("SAI").


FOREIGN (NON-U.S.) SECURITIES
Investing in foreign securities involves special risks and considerations not
typically associated with investing in U.S. securities. The securities markets
of many foreign countries are relatively small, with the majority of market
capitalization and trading volume concentrated in a limited number of companies
representing a small number of industries. The Fund may experience greater
price volatility and significantly lower liquidity than U.S. portfolios. These
markets may be subject to greater influence by adverse events generally
affecting the market, and by large investors trading significant blocks of
securities, than is usual in the United States.

Securities registration, custody, and settlement may in some instances be
subject to delays and legal and administrative uncertainties. Foreign
investment in the securities markets of certain foreign countries is restricted
or controlled to varying degrees. These restrictions or controls may at times
limit or preclude investment in certain securities and may increase the cost
and expenses of the Fund. In addition, the repatriation of investment income,
capital or the proceeds of sales of securities from certain countries is
controlled under regulations, including in some cases the need for certain
advance government notification or authority, and if a deterioration occurs in
a country's balance of payments, the country could impose temporary
restrictions on foreign capital remittances.

The Fund also could be adversely affected by delays in, or a refusal to grant,
any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investment. Investing in local
markets may require the Fund to adopt special procedures or seek local
governmental approvals or other actions, any of which may involve additional
costs to the Fund. These factors may affect the liquidity of the Fund's
investments in any country and the Adviser will monitor the effect of any such
factor or factors on the Fund's investments. Transaction costs, including
brokerage commissions for transactions both on and off the securities
exchanges, in many foreign countries are generally higher than in the United
States.

Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
insider trading rules, restrictions on market manipulation, shareholder proxy
requirements, and timely disclosure of information. The reporting, accounting,
and auditing standards of foreign countries may differ, in some cases
significantly, from U.S. standards in important respects. Substantially less
information is publicly available about certain non-U.S. issuers than is
available about most U.S. issuers.

The economies of individual foreign countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product or gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency, and balance of payments position. Nationalization,
expropriation or confiscatory taxation, currency blockage, political changes,
government regulation, political or social instability, revolutions, wars or
diplomatic developments could affect adversely the economy of a foreign
country. In the event of nationalization, expropriation, or other confiscation,
the Fund could lose its entire investment in securities in the country
involved. In addition, laws in foreign countries governing business
organizations, bankruptcy and insolvency may provide less protection to
security holders such as the Fund than that provided by U.S. laws.

INVESTING IN EMERGING MARKET SECURITIES IMPOSES RISKS DIFFERENT FROM, OR
GREATER THAN, RISKS OF INVESTING IN DOMESTIC SECURITIES OR IN FOREIGN,
DEVELOPED COUNTRIES. These risks include: smaller market capitalization of
securities markets, which may suffer periods of relative illiquidity;
significant price volatility; restrictions on foreign investment and
repatriation of investment income and capital. In addition, foreign investors
may be required to register the proceeds of sales; future economic or political
crises could lead to price controls, forced mergers, expropriation or
confiscatory taxation, seizure, nationalization or creation of government
monopolies. The currencies of emerging market countries may experience
significant declines against the U.S. Dollar, and devaluation may occur
subsequent to investments in these currencies by the Fund. Inflation and rapid
fluctuations in inflation rates have had, and may continue to have, negative
effects on the economies and securities markets of certain emerging market
countries.

Additional risks of emerging market securities may include: greater social,
economic and political uncertainty and instability; more substantial
governmental involvement in the economy; less governmental supervision and
regulation; unavailability of currency hedging techniques; companies that are
newly organized and small; differences in auditing and financial reporting
standards, which may result in unavailability of material information about
issuers; and less developed legal systems. In addition, emerging securities
markets may have different clearance and settlement procedures, which may be
unable to keep pace with the volume of securities transactions or otherwise
make it difficult to engage in such transactions. Settlement problems may cause
the Fund to miss attractive investment opportunities, hold a portion of its
assets in cash pending investment, or be delayed in disposing of a portfolio
security. Such a delay could result in possible liability to a purchaser of the
security.

8






For purposes of the Fund, "emerging market issuer" is an issuer that is
domiciled in, maintains its principal listing in, is principally traded in or
has its principal operations in (as defined in the SAI) an emerging market
country. In addition, fixed-income securities of any issuer that are
denominated in the currency of an emerging market country will be considered
securities of an emerging market issuer, regardless of the identity of the
issuer. An emerging market issuer will also include any issuer included in the
MSCI Emerging Markets Index, the MSCI Emerging Markets Frontier Index, the JP
Morgan EMBI Global Index, or the JP Morgan Corporate Emerging Bond Index.
"Emerging market country" is defined as any country with securities included in
the MSCI Emerging Markets Index, the MSCI Emerging Markets Frontier Index, the
JP Morgan EMBI Global Index or the JP Morgan Corporate Emerging Bond Index, any
country whose per capita gross national income is not classified as "High
Income" by the World Bank, or any country that is not a member of the
Organisation for Economic Co-Operation and Development. The Fund may define
"emerging market issuer" and "emerging market country" differently in the
future.


FOREIGN (NON-U.S.) CURRENCIES
Investing in and exposure to foreign currencies involves special risks and
considerations, in that the Fund will be adversely affected by reductions in
the value of foreign currencies relative to the U.S. Dollar. Foreign currency
exchange rates may fluctuate significantly. They are determined by supply and
demand in the foreign exchange markets, the relative merits of investments in
different countries, actual or perceived changes in interest rates, and other
complex factors. Currency exchange rates also can be affected unpredictably by
intervention (or the failure to intervene) by U.S. or foreign governments or
central banks or by currency controls or political developments. In light of
these risks, the Fund may engage in certain currency hedging transactions, as
described above, which involve certain special risks.

The Fund may also invest directly in foreign currencies for non-hedging
purposes, directly on a spot basis (i.e., cash) or through derivative
transactions, such as forward currency exchange contracts, futures and options
thereon, swaps and options as described above. These investments will be
subject to the same risks. In addition, currency exchange rates may fluctuate
significantly over short periods of time, causing the Fund's NAV to fluctuate.

SOVEREIGN DEBT OBLIGATIONS
No established market may exist for many sovereign debt obligations. Reduced
secondary market liquidity may have an adverse effect on the market price and
the Fund's ability to dispose of particular instruments when necessary to meet
its liquidity requirements or in response to specific economic events such as a
deterioration in the creditworthiness of the issuer. Reduced secondary market
liquidity for certain sovereign debt obligations may also make it more
difficult for the Fund to obtain accurate market quotations for the purpose of
valuing its portfolio. Market quotations are generally available on many
sovereign debt obligations only from a limited number of dealers and may not
necessarily represent firm bids of those dealers or prices for actual sales.

By investing in sovereign debt obligations, the Fund will be exposed to the
direct or indirect consequences of political, social, and economic changes in
various countries. Political changes in a country may affect the willingness of
a foreign government to make or provide for time payments of its obligations.
The country's economic status, as reflected in, among other things, its
inflation rate, the amount of external debt and its gross domestic product,
will also affect the government's ability to honor its obligations.

The Fund is permitted to invest in sovereign debt obligations that are not
current in the payment of interest or principal or are in default so long as
the Adviser believes it to be consistent with the Fund's investment objectives.
The Fund may have limited legal recourse in the event of a default with respect
to certain sovereign debt obligations it holds. For example, remedies from
defaults on certain sovereign debt obligations, unlike those on private debt,
must, in some cases, be pursued in the courts of the defaulting party itself.
Legal recourse therefore may be significantly diminished. Bankruptcy,
moratorium, and other similar laws applicable to issuers of sovereign debt
obligations may be substantially different from those applicable to issuers of
private debt obligations. The political context, expressed as a willingness of
an issuer of sovereign debt obligations to meet the terms of the debt
obligation, is of considerable importance. In addition, no assurance can be
given that the holders of commercial bank debt will not contest payments to the
holders of securities issued by foreign governments in the event of default
under commercial bank loan agreements.

DERIVATIVES
The Fund may, but is not required to, use derivatives for risk management
purposes or as part of its investment strategies. Derivatives are financial
contracts whose value depends on, or is derived from, the value of an
underlying asset, reference rate or index. The Fund may use derivatives to earn
income and enhance returns, to hedge or adjust the risk profile of its
investments, to replace more traditional direct investments and to obtain
exposure to otherwise inaccessible markets.

There are four principal types of derivatives--options, futures, forwards and
swaps--each of which is described below. Derivatives may be (i) standardized,
exchange-traded contracts or (ii) customized, privately negotiated contracts.
Exchange-traded derivatives tend to be more liquid and subject to less credit
risk than those that are privately negotiated.

The Fund's use of derivatives may involve risks that are different from, or
possibly greater than, the risks associated with investing directly in
securities or other more traditional instruments. These risks include the risk
that the value of a derivative instrument may not correlate perfectly, or at
all, with the value of the assets, reference rates, or indices that they are
designed to track. Other risks include the possible absence of a liquid
secondary market for a particular instrument and possible exchange-imposed
price fluctuation limits, either of which may make it difficult or impossible
to close out a position when desired, and the risk that the counterparty will
not perform its

                                                                             9




obligations. Certain derivatives may have a leverage component and involve
leverage risk. Adverse changes in the value or level of the underlying asset,
note or index can result in a loss substantially greater than the Fund's
investment (in some cases, the potential loss is unlimited).

The Fund's investments in derivatives may include, but are not limited to, the
following:

..  FORWARD CONTRACTS. A forward contract is an agreement that obligates one
   party to buy, and the other party to sell, a specific quantity of an
   underlying commodity or other tangible asset for an agreed upon price at a
   future date. A forward contract generally is settled by physical delivery of
   the commodity or tangible asset to an agreed-upon location (rather than
   settled by cash), or is rolled forward into a new forward contract. The
   Fund's investments in forward contracts may include the following:


 - Forward Currency Exchange Contracts. The Fund may purchase or sell forward
   currency exchange contracts for hedging purposes to minimize the risk from
   adverse changes in the relationship between the U.S. Dollar and other
   currencies or for non-hedging purposes as a means of making direct
   investments in foreign currencies, as described below under "Other
   Derivatives and Strategies--Currency Transactions". The Fund, for example,
   may enter into a forward contract as a transaction hedge (to "lock in" the
   U.S. Dollar price of a non-U.S. Dollar security), as a position hedge (to
   protect the value of securities the Fund owns that are denominated in a
   foreign currency against substantial changes in the value of the foreign
   currency) or as a cross-hedge (to protect the value of securities the Fund
   owns that are denominated in a foreign currency against substantial changes
   in the value of that foreign currency by entering into a forward contract
   for a different foreign currency that is expected to change in the same
   direction as the currency in which the securities are denominated).

..  Futures Contracts and Options on Futures Contracts. A futures contract is a
   standardized, exchange-traded agreement that obligates the buyer to buy and
   the seller to sell a specified quantity of an underlying asset (or settle
   for cash the value of a contract based on an underlying asset, rate or
   index) at a specific price on the contract maturity date. Options on futures
   contracts are options that call for the delivery of futures contracts upon
   exercise. The Fund may purchase or sell futures contracts and options
   thereon to hedge against changes in interest rates, securities (through
   index futures or options) or currencies. In addition, the Fund may for
   example purchase or sell futures contracts for foreign currencies or options
   thereon for non-hedging purposes as a means of making investments in foreign
   currencies, as described below under "Other Derivatives and
   Strategies--Currency Transactions".


..  OPTIONS. An option is an agreement that, for a premium payment or fee, gives
   the option holder (the buyer) the right but not the obligation to buy (a
   "call option") or sell (a "put option") the underlying asset (or settle for
   cash an amount based on an underlying asset, rate or index) at a specified
   price (the exercise price) during a period of time or on a specified date.
   Investments in options are considered speculative. The Fund may lose the
   premium paid for them if the price of the underlying security or other asset
   decreased or remained the same (in the case of a call option) or increased
   or remained the same (in the case of a put option). If a put or call option
   purchased by the Fund were permitted to expire without being sold or
   exercised, its premium would represent a loss to the Fund. The Fund's
   investments in options may include the following:

 - Options on Securities. The Fund may purchase or write a put or call option
   on securities. The Fund will only exercise an option it purchased if the
   price of the security was less (in the case of a put option) or more (in the
   case of a call option) than the exercise price. If the Fund does not
   exercise an option, the premium it paid for the option will be lost. The
   Fund may write covered options, which means writing an option for securities
   the Fund owns, and uncovered options. The Fund may also enter into options
   on the yield "spread" or yield differential between two securities. In
   contrast to other types of options, this option is based on the difference
   between the yields of designated securities, futures or other instruments.
   In addition, the Fund may write covered straddles. A straddle is a
   combination of a call and a put written on the same underlying security. In
   purchasing an option on securities, the Fund would be in a position to
   realize a gain if, during the option period, the price of the underlying
   securities increased (in the case of a call) or decreased (in the case of a
   put) by an amount in excess of the premium paid; otherwise the Fund would
   experience a loss not greater than the premium paid for the option. Thus,
   the Fund would realize a loss if the price of the underlying security
   declined or remained the same (in the case of a call) or increased or
   remained the same (in the case of a put) or otherwise did not increase (in
   the case of a put) or decrease (in the case of a call) by more than the
   amount of the premium. If a put or call option purchased by the Fund were
   permitted to expire without being sold or exercised, its premium would
   represent a loss to the Fund.

   If the Fund purchases or writes privately negotiated options on securities,
   it will effect such transactions only with investment dealers and other
   financial institutions (such as commercial banks or savings and loan
   institutions) deemed creditworthy by the Adviser. The Adviser has adopted
   procedures for monitoring the creditworthiness of such counterparties.

 - Options on Securities Indices. An option on a securities index is similar to
   an option on a security except that, rather than taking or making delivery
   of a security at a specified price, an option on a securities index gives
   the holder the right to receive, upon exercise of the option, an amount of
   cash if the closing level of the chosen index is greater than (in the case
   of a call) or less than (in the case of a put) the exercise price of the
   option.

10






 - Options on Foreign Currencies. The Fund may invest in options on foreign
   currencies that are privately negotiated or traded on U.S. or foreign
   exchanges for hedging purposes to protect against declines in the
   U.S. Dollar value of foreign currency denominated securities held by the
   Fund and against increases in the U.S. Dollar cost of securities to be
   acquired. The purchase of an option on a foreign currency may constitute an
   effective hedge against fluctuations in exchange rates, although if rates
   move adversely, the Fund may forfeit the entire amount of the premium plus
   related transaction costs. The Fund may also invest in options on foreign
   currencies for non-hedging purposes as a means of making investments in
   foreign currencies, as described below under "Other Derivatives and
   Strategies--Currency Transactions".

..  SWAP TRANSACTIONS. A swap is an agreement that obligates two parties to
   exchange a series of cash flows at specified intervals (payment dates) based
   upon or calculated by reference to changes in specified prices or rates
   (e.g., interest rates in the case of interest rate swaps or currency
   exchange rates in the case of currency swaps) for a specified amount of an
   underlying asset (the "notional" principal amount). Except for currency
   swaps, the notional principal amount is used solely to calculate the payment
   stream, but is not exchanged. Rather, swaps are entered into on a net basis
   (i.e., the two payment streams are netted out, with the Fund receiving or
   paying, as the case may be, only the net amount of the two payments). The
   Fund's investments in swap transactions may include the following:

 - Interest Rate Swaps, Swaptions, Caps and Floors. Interest rate swaps involve
   the exchange by the Fund with another party of payments calculated by
   reference to specified interest rates (e.g., an exchange of floating rate
   payments for fixed rate payments). Unless there is a counterparty default,
   the risk of loss to the Fund from interest rate swap transactions is limited
   to the net amount of interest payments that the Fund is contractually
   obligated to make. If the counterparty to an interest rate transaction
   defaults, the Fund's risk of loss consists of the net amount of interest
   payments that the Fund is contractually entitled to receive.


   An option on a swap agreement, also called a "swaption", is an option that
   gives the buyer the right, but not the obligation, to enter into a swap on a
   future date in exchange for paying a market-based "premium". A receiver
   swaption gives the owner the right to receive the total return of a
   specified asset, reference rate, or index. A payer swaption gives the owner
   the right to pay the total return of a specified asset, reference rate, or
   index. Swaptions also include options that allow an existing swap to be
   terminated or extended by one of the counterparties.

   The purchase of an interest rate cap entitles the purchaser, to the extent
   that a specified index exceeds a predetermined interest rate, to receive
   payments of interest on a contractually-based principal amount from the
   party selling the interest rate cap. The purchase of an interest rate floor
   entitles the purchaser, to the extent that a specified index falls below a
   predetermined interest rate, to receive payments of interest on an agreed
   principal amount from the party selling the interest rate floor. Caps and
   floors may be less liquid than swaps.

   The value of these transactions will fluctuate based on changes in interest
   rates.

   Interest rate swap, swaption, cap and floor transactions may for example be
   used to preserve a return or spread on a particular investment or a portion
   of the Fund's portfolio or to protect against an increase in the price of
   securities the Fund anticipates purchasing at a later date.

 - Credit Default Swap Agreements. The "buyer" in a credit default swap
   contract is obligated to pay the "seller" a periodic stream of payments over
   the term of the contract in return for a contingent payment upon the
   occurrence of a credit event with respect to an underlying reference
   obligation. Generally, a credit event means bankruptcy, failure to pay,
   obligation acceleration or modified restructuring. The Fund may be either
   the buyer or seller in the transaction. If the Fund is a seller, the Fund
   receives a fixed rate of income throughout the term of the contract, which
   typically is between one month and five years, provided that no credit event
   occurs. If a credit event occurs, the Fund typically must pay the contingent
   payment to the buyer, which will be either (i) the "par value" (face amount)
   of the reference obligation, in which case the Fund will receive the
   reference obligation in return, or (ii) an amount equal to the difference
   between the par value and the current market value of the reference
   obligation. The periodic payments previously received by the Fund, coupled
   with the value of any reference obligation received, may be less than the
   amount it pays to the buyer, resulting in a loss to the Fund. If the Fund is
   a buyer and no credit event occurs, the Fund will lose its periodic stream
   of payments over the term of the contract. However, if a credit event
   occurs, the buyer typically receives full notional value for a reference
   obligation that may have little or no value.

   Credit default swaps may involve greater risks than if the Fund had invested
   in the reference obligation directly. Credit default swaps are subject to
   general market risk, liquidity risk and credit risk.


 - Currency Swaps. The Fund may invest in currency swaps for hedging purposes
   to protect against adverse changes in exchange rates between the U.S. Dollar
   and other currencies or for non-hedging purposes as a means of making direct
   investments in foreign currencies, as described below under "Other
   Derivatives and Strategies--Currency Transactions". Currency swaps involve
   the individually negotiated exchange by the Fund with another party of a
   series of payments in specified currencies. Actual principal amounts of
   currencies may be exchanged by the counterparties at the initiation, and
   again upon the termination of the transaction. Therefore, the entire
   principal value of a currency swap is subject to the risk


                                                                             11




   that the swap counterparty will default on its contractual delivery
   obligations. If there is a default by the counterparty to the transaction,
   the Fund will have contractual remedies under the transaction agreements.

..  OTHER DERIVATIVES AND STRATEGIES--

 - Currency Transactions. The Fund may invest in non-U.S. Dollar-denominated
   securities on a currency hedged or un-hedged basis. The Adviser may actively
   manage the Fund's currency exposures and may seek investment opportunities
   by taking long or short positions in currencies through the use of
   currency-related derivatives, including forward currency exchange contracts,
   futures and options on futures, swaps and options. The Adviser may enter
   into transactions for investment opportunities when it anticipates that a
   foreign currency will appreciate or depreciate in value but securities
   denominated in that currency are not held by the Fund and do not present
   attractive investment opportunities. Such transactions may also be used when
   the Adviser believes that it may be more efficient than a direct investment
   in a foreign currency-denominated security. The Fund may also conduct
   currency exchange contracts on a spot basis (i.e., for cash at the spot rate
   prevailing in the currency exchange market for buying or selling currencies).

 - Synthetic Foreign Equity Securities. The Fund may invest in different types
   of derivatives generally referred to as synthetic foreign equity securities.
   These securities may include international warrants or local access
   products. International warrants are financial instruments issued by banks
   or other financial institutions, which may or may not be traded on a foreign
   exchange. International warrants are a form of derivative security that may
   give holders the right to buy or sell an underlying security or a basket of
   securities representing an index from or to the issuer of the warrant for a
   particular price or may entitle holders to receive a cash payment relating
   to the value of the underlying security or index, in each case upon exercise
   by the Fund. Local access products are similar to options in that they are
   exercisable by the holder for an underlying security or a cash payment based
   upon the value of that security, but are generally exercisable over a longer
   term than typical options. These types of instruments may be American style,
   which means that they can be exercised at any time on or before the
   expiration date of the international warrant, or European style, which means
   that they may be exercised only on the expiration date.

   Other types of synthetic foreign equity securities in which the Fund may
   invest include covered warrants and low exercise price warrants. Covered
   warrants entitle the holder to purchase from the issuer, typically a
   financial institution, upon exercise, common stock of an international
   company or receive a cash payment (generally in U.S. Dollars). The issuer of
   the covered warrant usually owns the underlying security or has a mechanism,
   such as owning equity warrants on the underlying securities, through which
   they can obtain the securities. The cash payment is calculated according to
   a predetermined formula, which is generally based on the difference between
   the value of the underlying security on the date of exercise and the strike
   price. Low exercise price warrants are warrants with an exercise price that
   is very low relative to the market price of the underlying instrument at the
   time of issue (e.g., one cent or less). The buyer of a low exercise price
   warrant effectively pays the full value of the underlying common stock at
   the outset. In the case of any exercise of warrants, there may be a time
   delay between the time a holder of warrants gives instructions to exercise
   and the time the price of the common stock relating to exercise or the
   settlement date is determined, during which time the price of the underlying
   security could change significantly. In addition, the exercise or settlement
   date of the warrants may be affected by certain market disruption events,
   such as difficulties relating to the exchange of a local currency into U.S.
   Dollars, the imposition of capital controls by a local jurisdiction or
   changes in the laws relating to foreign investments. These events could lead
   to a change in the exercise date or settlement currency of the warrants, or
   postponement of the settlement date. In some cases, if the market disruption
   events continue for a certain period of time, the warrants may become
   worthless, resulting in a total loss of the purchase price of the warrants.

   The Fund will acquire synthetic foreign equity securities issued by entities
   deemed to be creditworthy by the Adviser, which will monitor the
   creditworthiness of the issuers on an ongoing basis. Investments in these
   instruments involve the risk that the issuer of the instrument may default
   on its obligation to deliver the underlying security or cash in lieu
   thereof. These instruments may also be subject to liquidity risk because
   there may be a limited secondary market for trading the warrants. They are
   also subject, like other investments in foreign securities, to foreign
   (non-U.S.) risk and currency risk.


 - Structured Instruments. As part of its investment program and to maintain
   greater flexibility, the Fund may invest in structured instruments.
   Structured instruments, including indexed or structured securities, combine
   the elements of futures contracts or options with those of debt, preferred
   equity or a depositary instrument. Generally, a structured instrument will
   be a debt security, preferred stock, depositary share, trust certificate,
   certificate of deposit or other evidence of indebtedness on which a portion
   of or all interest payments, and/or the principal or stated amount payable
   at maturity, redemption or retirement, is determined by reference to prices,
   changes in prices, or differences between prices, of securities, currencies,
   intangibles, goods, articles or commodities (collectively "underlying
   assets") or by another objective index, economic factor or other measure,
   such as interest rates, currency exchange rates, commodity indices, and
   securities indices (collectively, "benchmarks"). Thus, structured
   instruments may take a variety of forms, including, but not limited to, debt
   instruments with interest or principal payments or redemption terms
   determined by reference


12




   to the value of a currency or commodity or securities index at a future
   point in time, preferred stock with dividend rates determined by reference
   to the value of a currency, or convertible securities with the conversion
   terms related to a particular commodity.

   Structured instruments are potentially more volatile and carry greater
   market risks than traditional debt instruments. Depending on the structure
   of the particular structured instrument, changes in a benchmark may be
   magnified by the terms of the structured instrument and have an even more
   dramatic and substantial effect upon the value of the structured instrument.
   The prices of the structured instrument and the benchmark or underlying
   asset may not move in the same direction or at the same time. Structured
   instruments may be less liquid and more difficult to price than less complex
   securities or instruments or more traditional debt securities. The risk of
   these investments can be substantial; possibly all of the principal is at
   risk.


   The Fund may invest in a particular type of structured instrument sometimes
   referred to as "structured notes" because the term of these notes may be
   structured by the issuer and the purchaser of the note. These structured
   notes may include leveraged or unleveraged commodity index-linked notes,
   which are derivative debt instruments with principal and/or coupon payments
   linked to the performance of commodity indices. They also include
   commodity-linked notes with principal and/or coupon payments linked to the
   value of particular commodities or commodities futures contracts, or a
   subset of commodities and commodities futures contracts. The value of these
   notes will rise or fall in response to changes in the underlying commodity,
   commodity futures contract, subset of commodities or commodities futures
   contracts or commodity index. These notes expose the Fund economically to
   movements in commodity prices. These notes also are subject to risks, such
   as credit, market and interest rate risks, that in general affect the values
   of debt securities. In addition, these notes are often leveraged, increasing
   the volatility of each note's market value relative to changes in the
   underlying commodity, commodity futures contract or commodity index.
   Therefore, at the maturity of the note, the Fund may receive more or less
   principal than it originally invested. The Fund might receive interest
   payments on the note that are more or less than the stated coupon interest
   payments.


CONVERTIBLE SECURITIES
Prior to conversion, convertible securities have the same general
characteristics as non-convertible debt securities, which generally provide a
stable stream of income with generally higher yields than those of equity
securities of the same or similar issuers. The price of a convertible security
will normally vary with changes in the price of the underlying equity security,
although the higher yield tends to make the convertible security less volatile
than the underlying equity security. As with debt securities, the market value
of convertible securities tends to decrease as interest rates rise and increase
as interest rates decline. While convertible securities generally offer lower
interest or dividend yields than non-convertible debt securities of similar
quality, they offer investors the potential to benefit from increases in the
market prices of the underlying common stock. Convertible debt securities that
are rated Baa3 or lower by Moody's or BBB- or lower by S&P or Fitch and
comparable unrated securities may share some or all of the risks of debt
securities with those ratings.

DEPOSITARY RECEIPTS AND SECURITIES OF SUPRANATIONAL ENTITIES
The Fund may invest in depositary receipts. American Depositary Receipts, or
ADRs, are depositary receipts typically issued by a U.S. bank or trust company
that evidence ownership of underlying securities issued by a foreign
corporation. Global Depositary Receipts, or GDRs, European Depositary Receipts,
or EDRs and other types of depositary receipts are typically issued by non-U.S.
banks or trust companies and evidence ownership of underlying securities issued
by either a U.S. or a non-U.S. company. Depositary receipts may not necessarily
be denominated in the same currency as the underlying securities into which
they may be converted. In addition, the issuers of the stock of unsponsored
depositary receipts are not obligated to disclose material information in the
United States and, therefore, there may not be a correlation between such
information and the market value of the depositary receipts. Generally,
depositary receipts in registered form are designed for use in the U.S.
securities markets, and depositary receipts in bearer form are designed for use
in securities markets outside of the United States. For purposes of determining
the country of issuance, investments in depositary receipts of either type are
deemed to be investments in the underlying securities.

A supranational entity is an entity designated or supported by the national
government of one or more countries to promote economic reconstruction or
development. Examples of supranational entities include the World Bank
(International Bank for Reconstruction and Development) and the European
Investment Bank. "Semi-governmental securities" are securities issued by
entities owned by either a national, state or equivalent government or are
obligations of one of such government jurisdictions that are not backed by its
full faith and credit and general taxing powers.

EQUITY-LINKED DEBT SECURITIES
Equity-linked debt securities are securities on which the issuer is obligated
to pay interest and/or principal that is linked to the performance of a
specified index of equity securities. The interest or principal payments may be
significantly greater or less than payment obligations for other types of debt
securities. Adverse changes in equity securities indices and other adverse
changes in the securities markets may reduce payments made under, and/or the
principal of, equity-linked debt securities held by the Fund. As with any debt
securities, the values of equity-linked debt securities will generally vary
inversely with changes in interest rates. The Fund's ability to dispose of
equity-linked debt securities will depend on the availability of liquid markets
for such securities. Investment in equity-linked debt securities may be
considered to be speculative.

                                                                             13





FORWARD COMMITMENTS
Forward commitments for the purchase or sale of securities may include
purchases on a when-issued basis or purchases or sales on a delayed delivery
basis. In some cases, a forward commitment may be conditioned upon the
occurrence of a subsequent event, such as approval and consummation of a
merger, corporate reorganization or debt restructuring or approval of a
proposed financing by appropriate authorities (i.e., a "when, as and if issued"
trade).

When forward commitments with respect to fixed-income securities are
negotiated, the price, which is generally expressed in yield terms, is fixed at
the time the commitment is made, but payment for and delivery of the securities
take place at a later date. Securities purchased or sold under a forward
commitment are subject to market fluctuation and no interest or dividends
accrue to the purchaser prior to the settlement date. There is the risk of loss
if the value of either a purchased security declines before the settlement date
or the security sold increases before the settlement date. The use of forward
commitments helps the Fund to protect against anticipated changes in interest
rates and prices.

ILLIQUID SECURITIES
Under current Securities and Exchange Commission ("Commission") guidelines, the
Fund limits its investments in illiquid securities to 15% of its net assets.
The term "illiquid securities" for this purpose means securities that cannot be
disposed of within seven days in the ordinary course of business at
approximately the amount the Fund has valued the securities. If the Fund
invests in illiquid securities, the Fund may not be able to sell such
securities and may not be able to realize their full value upon sale.
Restricted securities (securities subject to legal or contractual restrictions
on resale) may be illiquid. Some restricted securities (such as securities
issued pursuant to Rule 144A under the Securities Act of 1933 (the "Securities
Act") or certain commercial paper) may be treated as liquid, although they may
be less liquid than registered securities traded on established secondary
markets.

INVESTMENT IN EXCHANGE-TRADED FUNDS AND OTHER INVESTMENT COMPANIES

The Fund may invest to a significant extent in shares of ETFs, subject to the
restrictions and limitations of the Investment Company Act of 1940 (the "1940
Act") or any applicable rules, exemptive orders or regulatory guidance. ETFs
are pooled investment vehicles, which may be managed or unmanaged, that
generally seek to track the performance of a specific index. The ETFs in which
the Fund invests will not be able to replicate exactly the performance of the
indices they track because the total return generated by the securities will be
reduced by transaction costs incurred in buying and selling the ETFs. In
addition, the ETFs in which the Fund invests will incur expenses not incurred
by their applicable indices, expenses that will be indirectly borne by the
Fund. Certain securities comprising the indices tracked by the ETFs may, from
time to time, temporarily be unavailable, which may further impede the ability
of the ETFs to track their indices. The market value of an ETF's shares may
differ from their NAV. This difference in price may be due to the fact that the
supply and demand in the market for ETF shares at any point in time is not
always identical to the supply and demand in the market for the underlying
basket of securities. Accordingly, there may be times when an ETF's shares
trade at a discount to its NAV.


The Fund may also invest in investment companies other than ETFs as permitted
by the 1940 Act or the rules and regulations thereunder. The Fund intends to
invest uninvested cash balances in an affiliated money market fund as permitted
by Rule 12d1-1 under the 1940 Act. As with ETF investments, if the Fund
acquires shares in other investment companies, shareholders would bear,
indirectly, the expenses of such investment companies (which may include
management and advisory fees), which are in addition to the Fund's expenses.

LEVERAGE

It is expected that the Fund's investments in certain derivatives may
effectively leverage the Fund's portfolio. In addition, the Fund may use
leverage for investment purposes by entering into transactions such as reverse
repurchase agreements. This means that the Fund uses cash made available during
the term of these transactions to make investments in other securities.


Utilization of leverage, which is usually considered speculative, involves
certain risks to the Fund's shareholders. These include a higher volatility of
the NAV of the Fund's shares and the relatively greater effect on the NAV of
the shares. So long as the Fund is able to realize a return on its investments
made with leveraged cash that is higher than the carrying costs of leveraged
transactions, the effect of leverage will be to cause the Fund's shareholders
to realize a higher current net investment income than if the Fund were not
leveraged. If the carrying costs of leveraged transactions approach the return
on the Fund's investments made through leverage, the benefit of leverage to the
Fund's shareholders will be reduced. If the carrying costs of leveraged
transactions were to exceed the return to shareholders, the Fund's use of
leverage would result in a lower rate of return. Similarly, the effect of
leverage in a declining market could be a greater decrease in NAV. In an
extreme case, if the Fund's current investment income were not sufficient to
meet the carrying costs of leveraged transactions, it could be necessary for
the Fund to liquidate certain of its investments, thereby reducing its NAV.

LOANS AND OTHER DIRECT DEBT INSTRUMENTS
Loans and other direct debt instruments are interests in amounts owed by a
corporate, governmental or other borrower to another party. They may represent
amounts owed to lenders or lending syndicates (loans and loan participations),
to suppliers of goods or services (trade claims or other receivables), or to
other creditors. Direct debt instruments involve the risk of loss in case of
default or insolvency of the borrower and may offer less legal protection to
the Fund in the event of fraud or misrepresentation than debt securities. In
addition, loan participations involve a risk of insolvency of the lending bank
or other financial intermediary. Direct debt instruments may also include
standby financing commitments that obligate the Fund to supply additional cash
to the borrower on demand. Loans and other direct debt instruments are

14




generally illiquid and may be transferred only through individually negotiated
private transactions.

MORTGAGE-RELATED AND OTHER ASSET-BACKED SECURITIES
The Fund may invest in mortgage-related or other asset-backed securities.
Mortgage-related securities include mortgage pass-through securities,
collateralized mortgage obligations ("CMOs"), commercial mortgage-backed
securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed
securities ("SMBSs") and other securities that directly or indirectly represent
a participation in or are secured by and payable from mortgage loans on real
property. These securities may be issued or guaranteed by the U.S. Government
or one of its sponsored entities or may be issued by private organizations.

The value of mortgage-related or asset-backed securities may be particularly
sensitive to changes in prevailing interest rates. Early payments of principal
on some mortgage-related securities may occur during periods of falling
mortgage interest rates and expose the Fund to a lower rate of return upon
reinvestment of principal. Early payments associated with mortgage-related
securities cause these securities to experience significantly greater price and
yield volatility than is experienced by traditional fixed-income securities.
During periods of rising interest rates, a reduction in prepayments may
increase the effective life of mortgage-related securities, subjecting them to
greater risk of decline in market value in response to rising interest rates.
If the life of a mortgage-related security is inaccurately predicted, the Fund
may not be able to realize the rate of return it expected.

The Fund may invest in other asset-backed securities. The securitization
techniques used to develop mortgage-related securities are applied to a broad
range of financial assets. Through the use of trusts and special purpose
corporations, various types of assets, including automobile loans and leases,
credit card receivables, home equity loans, equipment leases and trade
receivables, are securitized in structures similar to the structures used in
mortgage securitizations.

The Fund may invest in collateralized debt obligations ("CDOs"), which include
collateralized bond obligations ("CBOs"), collateralized loan obligations
("CLOs"), and other similarly structured securities. CBOs and CLOs are types of
asset-backed securities. A CBO is a trust that is backed by a diversified pool
of high-risk, below investment grade fixed-income securities. A CLO is a trust
typically collateralized by a pool of loans, which may include, among others,
domestic and foreign senior secured loans, senior unsecured loans, and
subordinate corporate loans, including loans that may be rated below investment
grade or equivalent unrated loans. The Fund may invest in other types of
asset-backed securities that have been offered to investors.

PREFERRED STOCK
The Fund may invest in preferred stock. Preferred stock is subordinated to any
debt the issuer has outstanding. Accordingly, preferred stock dividends are not
paid until all debt obligations are first met. Preferred stock may be subject
to more fluctuations in market value, due to changes in market participants'
perceptions of the issuer's ability to continue to pay dividends, than debt of
the same issuer. These investments include convertible preferred stock, which
includes an option for the holder to convert the preferred stock into the
issuer's common stock under certain conditions, among which may be the
specification of a future date when the conversion must begin, a certain number
of common shares per preferred share, or a certain price per share for the
common stock. Convertible preferred stock tends to be more volatile than
non-convertible preferred stock, because its value is related to the price of
the issuer's common stock as well as the dividends payable on the preferred
stock.

REAL ESTATE INVESTMENT TRUSTS
Real Estate Investment Trusts, or REITs, are pooled investment vehicles that
invest primarily in income producing real estate or real estate related loans
or interests. REITs are generally classified as equity REITs, mortgage REITs or
a combination of equity and mortgage REITs. Equity REITs invest the majority of
their assets directly in real property and derive income primarily from the
collection of rents. Equity REITs can also realize capital gains by selling
properties that have appreciated in value. Mortgage REITs invest the majority
of their assets in real estate mortgages and derive income from the collection
of interest and principal payments. Similar to investment companies such as the
Fund, REITs are not taxed on income distributed to shareholders provided they
comply with several requirements of the United States Internal Revenue Code of
1986, as amended (the "Code"). The Fund will indirectly bear its proportionate
share of expenses incurred by REITs in which the Fund invests in addition to
the expenses incurred directly by the Fund.

REPURCHASE AGREEMENTS AND BUY/SELL BACK TRANSACTIONS
The Fund may enter into repurchase agreements in which the Fund purchases a
security from a bank or broker-dealer, which agrees to repurchase the security
from the Fund at an agreed-upon future date, normally a day or a few days
later. The purchase and repurchase transactions are transacted under one
agreement. The resale price is greater than the purchase price, reflecting an
agreed-upon interest rate for the period the buyer's money is invested in the
security. Such agreements permit the Fund to keep all of its assets at work
while retaining "overnight" flexibility in pursuit of investments of a
longer-term nature. If the bank or broker-dealer defaults on its repurchase
obligation, the Fund would suffer a loss to the extent that the proceeds from
the sale of the security were less than the repurchase price.

The Fund may enter into buy/sell back transactions, which are similar to
repurchase agreements. In this type of transaction, the Fund enters a trade to
buy securities at one price and simultaneously enters a trade to sell the same
securities at another price on a specified date. Similar to a repurchase
agreement, the repurchase price is higher than the sale price and reflects
current interest rates. Unlike a repurchase agreement, however, the buy/sell
back transaction is considered two separate transactions.

                                                                             15





REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS
A reverse repurchase agreement or dollar roll involves the sale of a security
by the Fund and its agreement to repurchase the instrument at a specified time
and price, and may be considered a form of borrowing for some purposes. Reverse
repurchase agreements are subject to the Fund's limitations on borrowings and
create leverage risk for the Fund. In addition, reverse repurchase agreements
involve the risk that the market value of the securities the Fund is obligated
to repurchase may decline below the repurchase price.

Dollar rolls involve sales by the Fund of securities for delivery in the
current month and the Fund's simultaneously contracting to repurchase
substantially similar (same type and coupon) securities on a specified future
date. During the roll period, the Fund forgoes principal and interest paid on
the securities. The Fund is compensated by the difference between the current
sales price and the lower forward price for the future purchase (often referred
to as the "drop") as well as by the interest earned on the cash proceeds of the
initial sale.

In the event the buyer of securities under a reverse repurchase agreement or
dollar roll files for bankruptcy or becomes insolvent, the Fund's use of the
proceeds of the agreement may be restricted pending a determination by the
other party, or its trustee or receiver, whether to enforce the Fund's
obligation to repurchase the securities.

RIGHTS AND WARRANTS
Rights and warrants are option securities permitting their holders to subscribe
for other securities. Rights are similar to warrants except that they have a
substantially shorter duration. Rights and warrants do not carry with them
dividend or voting rights with respect to the underlying securities, or any
rights in the assets of the issuer. As a result, an investment in rights and
warrants may be considered more speculative than certain other types of
investments. In addition, the value of a right or a warrant does not
necessarily change with the value of the underlying securities, and a right or
a warrant ceases to have value if it is not exercised prior to its expiration
date.

SHORT SALES
The Fund may make short sales as a part of overall portfolio management or to
offset a potential decline in the value of a security. A short sale involves
the sale of a security that the Fund does not own, or if the Fund owns the
security, is not to be delivered upon consummation of the sale. When the Fund
makes a short sale of a security that it does not own, it must borrow from a
broker-dealer the security sold short and deliver the security to the
broker-dealer upon conclusion of the short sale.

If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur
a loss; conversely, if the price declines, the Fund will realize a short-term
capital gain. Although the Fund's gain is limited to the price at which it sold
the security short, its potential loss is theoretically unlimited.

STANDBY COMMITMENT AGREEMENTS
Standby commitment agreements are similar to put options that commit the Fund,
for a stated period of time, to purchase a stated amount of a security that may
be issued and sold to the Fund at the option of the issuer. The price and
coupon of the security are fixed at the time of the commitment. At the time of
entering into the agreement, the Fund is paid a commitment fee, regardless of
whether the security ultimately is issued. The Fund will enter into such
agreements only for the purpose of investing in the security underlying the
commitment at a yield and price considered advantageous to the Fund and
unavailable on a firm commitment basis.

There is no guarantee that a security subject to a standby commitment will be
issued. In addition, the value of the security, if issued, on the delivery date
may be more or less than its purchase price. Since the issuance of the security
is at the option of the issuer, the Fund will bear the risk of capital loss in
the event the value of the security declines and may not benefit from an
appreciation in the value of the security during the commitment period if the
issuer decides not to issue and sell the security to the Fund.

STRUCTURED SECURITIES AND BASKET SECURITIES

The Fund may invest in various types of structured securities and basket
securities. Structured securities are securities issued in structured financing
transactions, which generally involve aggregating types of debt assets in a
pool or special purpose entity and then issuing new securities. Types of
structured financings include securities described elsewhere in this
Prospectus, such as mortgage-related and other asset-backed securities. The
Fund's investments may include investments in structured securities that
represent interests in entities organized and operated solely for the purpose
of restructuring the investment characteristics of particular debt obligations.
This type of restructuring involves the deposit with or purchase by an entity,
such as a corporation or trust, of specified instruments (such as commercial
bank loans or high-yield bonds) and the issuance by that entity of one or more
classes of structured securities backed by, or representing interests in, the
underlying instruments. The cash flow on the underlying instruments may be
apportioned among the newly issued structured securities to create securities
with different investment characteristics such as varying maturities, payment
priorities and interest rate provisions, and the extent of the payments made
with respect to structured securities is dependent on the extent of the cash
flow from the underlying instruments. Structured securities of a given class
may be either subordinated or unsubordinated to the payment of another class.
Subordinated structured securities typically have higher yields and present
greater risks than unsubordinated structured securities.


Basket securities in which the Fund may invest may consist of entities
organized and operated for the purpose of holding a basket of other securities.
Baskets involving debt obligations may be designed to represent the
characteristics of some portion of the debt securities market or the entire
debt market.

16





VARIABLE, FLOATING AND INVERSE FLOATING RATE INSTRUMENTS
Variable and floating rate securities pay interest at rates that are adjusted
periodically, according to a specified formula. A "variable" interest rate
adjusts at predetermined intervals (e.g., daily, weekly or monthly), while a
"floating" interest rate adjusts whenever a specified benchmark rate (such as
the bank prime lending rate) changes.

The Fund may also invest in inverse floating rate debt instruments ("inverse
floaters"). The interest rate on an inverse floater resets in the opposite
direction from the market rate of interest to which the inverse floater is
indexed. An inverse floater may have greater volatility in market value, in
that, during periods of rising interest rates, the market values of inverse
floaters will tend to decrease more rapidly than those of fixed rate securities.

ZERO-COUPON AND PAYMENT-IN-KIND BONDS
Zero-coupon bonds are issued at a significant discount from their principal
amount in lieu of paying interest periodically. Payment-in-kind bonds allow the
issuer to make current interest payments on the bonds in additional bonds.
Because zero-coupon bonds and payment-in-kind bonds do not pay current interest
in cash, their value is generally subject to greater fluctuation in response to
changes in market interest rates than bonds that pay interest in cash
currently. Both zero-coupon and payment-in-kind bonds allow an issuer to avoid
the need to generate cash to meet current interest payments. These bonds may
involve greater credit risks than bonds paying interest currently. Although
these bonds do not pay current interest in cash, the Fund is nonetheless
required to accrue interest income on such investments and to distribute such
amounts at least annually to shareholders. Thus, the Fund could be required at
times to liquidate other investments in order to satisfy its dividend
requirements.

INVESTMENT IN SMALLER, LESS-SEASONED COMPANIES
Investment in smaller, less-seasoned companies involves greater risks than is
customarily associated with securities of more established companies. Companies
in the earlier stages of their development often have products and management
personnel that have not been thoroughly tested by time or the marketplace;
their financial resources may not be as substantial as those of more
established companies. The securities of smaller, less-seasoned companies may
have relatively limited marketability and may be subject to more abrupt or
erratic market movements than securities of larger, more established companies
or broad market indices. The revenue flow of such companies may be erratic and
their results of operations may fluctuate widely and may also contribute to
stock price volatility.

INVESTMENT IN BELOW INVESTMENT GRADE FIXED-INCOME SECURITIES
Investments in securities rated below investment grade may be subject to
greater risk of loss of principal and interest than higher-rated securities.
These securities are also generally considered to be subject to greater market
risk than higher-rated securities. The capacity of issuers of these securities
to pay interest and repay principal is more likely to weaken than is that of
issuers of higher-rated securities in times of deteriorating economic
conditions or rising interest rates. In addition, below investment grade
securities may be more susceptible to real or perceived adverse economic
conditions than investment grade securities.

The market for these securities may be thinner and less active than that for
higher-rated securities, which can adversely affect the prices at which these
securities can be sold. To the extent that there is no established secondary
market for these securities, the Fund may experience difficulty in valuing such
securities and, in turn, the Fund's assets.

UNRATED SECURITIES

The Fund may invest in unrated securities when the Adviser believes that the
financial condition of the issuers of such securities, or the protection
afforded by the terms of the securities themselves, limits the risk to the Fund
to a degree comparable to that of rated securities that are consistent with the
Fund's investment objective and policies.


FUTURE DEVELOPMENTS
The Fund may take advantage of other investment practices that are not
currently contemplated for use by the Fund, or are not available but may yet be
developed, to the extent such investment practices are consistent with the
Fund's investment objective and legally permissible for the Fund. Such
investment practices, if they arise, may involve risks that exceed those
involved in the activities described above.

CHANGES IN INVESTMENT OBJECTIVES AND POLICIES
The Fund is a series of ALLIANCEBERNSTEIN CAP FUND, INC. (the "Fund") with one
Board of Directors (the "Board"). The Board may change the Fund's investment
objective without shareholder approval. The Fund will provide shareholders with
60 days' prior written notice of any change to the Fund's investment objective.
The Fund will not change its policy to invest at least 80% of its net assets in
emerging market issuers and/or the currencies of emerging market countries
without 60 days' prior written notice to shareholders. Unless otherwise noted,
all other policies of the Fund may be changed without shareholder approval.

TEMPORARY DEFENSIVE POSITION
For temporary defensive purposes in an attempt to respond to adverse market,
economic, political or other conditions, the Fund may reduce its positions in
equity securities and longer-term debt securities and invest in, without limit,
certain types of short-term, liquid, high-grade or high-quality debt
securities. While the Fund is investing for temporary defensive purposes, it
may not meet its investment objectives.

PORTFOLIO HOLDINGS

A description of the Fund's policies and procedures with respect to the
disclosure of the Fund's portfolio securities is available in the Fund's SAI.


                                                                             17




INVESTING IN THE FUND
--------------------------------------------------------------------------------

This section discusses how to buy, sell or redeem, or exchange different
classes of shares of the Fund that are offered in this Prospectus. The Fund
offers four classes of shares through this Prospectus.

Each share class represents an investment in the same portfolio of securities,
but the classes may have different sales charges and bear different ongoing
distribution expenses. For additional information on the differences between
the different classes of shares and factors to consider when choosing among
them, please see "The Different Share Class Expenses" below.

HOW TO BUY SHARES
The purchase of the Fund's shares is priced at the next determined NAV after
your order is received in proper form.

Class A, Class R, Class K and Class I shares are available at NAV, without an
initial sales charge, to 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit-sharing and money purchase pension plans, defined benefit plans,
and non-qualified deferred compensation plans where plan level or omnibus
accounts are held on the books of the Fund ("group retirement plans"), as
follows:

Class A shares offered through this Prospectus are designed for group
retirement plans with assets in excess of $10,000,000. Class A shares are also
available at NAV to the AllianceBernstein Link, AllianceBernstein Individual
401(k) and AllianceBernstein SIMPLE IRA plans with at least $250,000 in plan
assets or 100 employees.

Class R shares are designed for group retirement plans with plan assets up to
$10,000,000.

Class K shares are designed for group retirement plans with at least $1,000,000
in plan assets.

Class I shares are designed for group retirement plans with at least
$10,000,000 in plan assets and certain related group retirement plans described
in the Fund's SAI. Class I shares are also available to certain institutional
clients of the Adviser who invest at least $2 million in the Fund.

Class A, Class R, Class K and Class I shares are also available to certain
AllianceBernstein-sponsored group retirement plans. Class R, Class K and Class
I shares generally are not available to retail non-retirement accounts,
traditional and Roth IRAs, Coverdell Education Savings Accounts, SEPs,
SAR-SEPs, SIMPLE IRAs and individual 403(b) plans. Class I shares are not
currently available to group retirement plans in the
AllianceBernstein-sponsored programs known as the "Informed Choice" programs.

REQUIRED INFORMATION
The Fund is required by law to obtain, verify and record certain personal
information from you or persons on your behalf in order to establish an
account. Required information includes name, date of birth, permanent
residential address and taxpayer identification number. The Fund may also ask
to see other identifying documents. If you do not provide the information, the
Fund will not be able to open your account. If the Fund is unable to verify
your identity, or that of another person(s) authorized to act on your behalf,
or if the Fund believes it has identified potentially criminal activity, the
Fund reserves the right to take action it deems appropriate or as required by
law, which may include closing your account. If you are not a U.S. citizen or
resident alien, your account must be affiliated with a Financial Industry
Regulatory Authority, or FINRA, member firm.

GENERAL
AllianceBernstein Investments, Inc., or ABI, may refuse any order to purchase
shares. The Fund reserves the right to suspend the sale of its shares to the
public in response to conditions in the securities markets or for other reasons.

THE DIFFERENT SHARE CLASS EXPENSES
This section describes the different expenses of investing in each class and
explains factors to consider when choosing a class of shares. The expenses can
include distribution and/or service (Rule 12b-1) fees or CDSCs.

                           WHAT IS A RULE 12B-1 FEE?
  A Rule 12b-1 fee is a fee deducted from the Fund's assets that is used to pay
  for personal service, maintenance of shareholder accounts and distribution
  costs, such as advertising and compensation of financial intermediaries. The
  amount of each share class's Rule 12b-1 fee, if any, is disclosed below and
  in the Fund's fee table included in the Summary Information section above.

ASSET-BASED SALES CHARGES OR DISTRIBUTION AND/OR SERVICE (RULE 12B-1) FEES
The Fund has adopted plans under Commission Rule 12b-1 that allows the Fund to
pay asset-based sales charges or distribution and/or service (Rule 12b-1) fees
for the distribution and sale of its shares. The amount of these fees for each
class of the Fund's shares is up to:




                               DISTRIBUTION AND/OR SERVICE
                                 (RULE 12B-1) FEE (AS A
                                 PERCENTAGE OF AGGREGATE
                                AVERAGE DAILY NET ASSETS)
                      ------------------------------------
                            
                      Class A             0.30%
                      Class R             0.50%
                      Class K             0.25%
                      Class I             None



Because these fees are paid out of the Fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales fees. Class R shares are subject to higher
Rule 12b-1 fees than Class A shares. Because higher fees mean a higher expense
ratio, Class R shares pay correspondingly lower dividends and may have a lower
NAV (and returns) than Class A shares. Conversely, Class K and Class I shares
have a lower or no Rule

18




12b-1 fee. Therefore, Class K and Class I shares have a lower expense ratio and
may have a higher NAV (and returns) than Class A or Class R shares. All or some
of these fees may be paid to financial intermediaries, including your financial
intermediary.

CLASS A SHARES
Class A shares offered through this Prospectus do not have an initial sales
charge. Class A shares may be subject to a CDSC of up to 1%. Purchases of
Class A shares by AllianceBernstein or non-AllianceBernstein sponsored group
retirement plans may be subject to a 1% CDSC if terminated within one year. The
CDSC is applied to the lesser of NAV at the time of redemption of shares or the
original cost of shares being redeemed.

CLASS R, CLASS K AND CLASS I SHARES
Class R, Class K and Class I shares do not have an initial sales charge or CDSC.

                      HOW IS THE CLASS A CDSC CALCULATED?
  The CDSC is applied to the lesser of NAV at the time of redemption or the
  original cost of shares being redeemed (or, as to Fund shares acquired
  through an exchange, the cost of the AllianceBernstein Mutual Fund shares
  originally purchased for cash). This means that no sales charge is assessed
  on increases in NAV above the initial purchase price. Shares obtained from
  dividend or distribution reinvestment are not subject to the CDSC. In
  determining the CDSC, it will be assumed that the redemption is, first, of
  any shares not subject to a CDSC and, second, of shares held the longest.

DISTRIBUTION ARRANGEMENTS FOR GROUP RETIREMENT PLANS
The Fund offers distribution arrangements for group retirement plans. Plan
sponsors, plan fiduciaries and other financial intermediaries may establish
requirements for group retirement plans as to the purchase, sale or exchange of
shares of the Fund, including maximum and minimum initial investment
requirements, that are different from those described in this Prospectus and
the Fund's SAI. Group retirement plans also may not offer all classes of shares
of the Fund. The Fund is not responsible for, and has no control over, the
decision of any plan sponsor or fiduciary to impose such differing requirements.

PAYMENTS TO FINANCIAL INTERMEDIARIES
Financial intermediaries market and sell shares of the Fund. These financial
intermediaries employ financial advisors and receive compensation for selling
shares of the Fund. This compensation is paid from various sources, including
any CDSC and/or Rule 12b-1 fee that you or the Fund may pay.

                       WHAT IS A FINANCIAL INTERMEDIARY?
  A financial intermediary is a firm that receives compensation for selling
  shares of the Fund offered in this Prospectus and/or provides services to the
  Fund's shareholders. Financial intermediaries may include, among others,
  brokers, financial planners or advisors, banks and insurance companies.
  Financial intermediaries may employ financial advisors who deal with you and
  other investors on an individual basis.

ABI may pay financial intermediaries selling Class A shares a fee of up to 1%
on group retirement plan purchases. Up to 100% of the Rule 12b-1 fees
applicable to Class A shares each year may be paid to financial intermediaries,
including your financial intermediary, that sell Class A shares.

For Class R and Class K shares, up to 100% of the Rule 12b-1 fee applicable to
these classes of shares each year may be paid to financial intermediaries,
including your financial intermediary, that sell Class R and Class K shares.


           A financial intermediary may receive compensation from
           the Fund, ABI and/or the Adviser in several ways from
           various sources, which include some or all of the
           following:

           -upfront sales commissions;
           -Rule 12b-1 fees;
           -additional distribution support;
           -defrayal of costs for educational seminars and training;
            and
           -payments related to providing shareholder record-
            keeping and/or transfer agency services.

           Please read the Prospectus carefully for information on
           this compensation.


OTHER PAYMENTS FOR DISTRIBUTION SERVICES AND EDUCATIONAL SUPPORT
In addition to the Rule 12b-1 fees described above, some or all of which may be
paid to financial intermediaries, ABI, at its expense, currently provides
additional payments to firms that sell shares of the AllianceBernstein Mutual
Funds. Although the individual components may be higher and the total amount of
payments made to each qualifying firm in any given year may vary, the total
amount paid to a financial intermediary in connection with the sale of shares
of the AllianceBernstein Mutual Funds 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
average daily net assets attributable to that firm over the year. These sums
include payments to reimburse directly or indirectly the costs incurred by
these firms and their employees in connection with educational seminars and
training efforts about the AllianceBernstein Mutual Funds for the firms'
employees and/or their clients and potential clients. The costs and expenses
associated with these efforts may include travel, lodging, entertainment and
meals. ABI may pay a portion of "ticket" or other transactional charges.

                                                                             19





For 2011, ABI's additional payments to these firms for distribution services
and educational support related to the AllianceBernstein Mutual Funds are
expected to be approximately 0.04% of the average monthly assets of the
AllianceBernstein Mutual Funds, or approximately $18.0 million. In 2010, ABI
paid approximately 0.04% of the average monthly assets of the AllianceBernstein
Mutual Funds or approximately $16.5 million for distribution services and
educational support related to the AllianceBernstein Mutual Funds.


A number of factors are considered in determining the additional payments,
including each firm's AllianceBernstein Mutual Fund sales, assets and
redemption rates, and the willingness and ability of the firm to give ABI
access to its financial advisors for educational and marketing purposes. In
some cases, firms will include the AllianceBernstein Mutual Funds on a
"preferred list". ABI's goal is to make the financial intermediaries who
interact with current and prospective investors and shareholders more
knowledgeable about the AllianceBernstein Mutual Funds so that they can provide
suitable information and advice about the funds and related investor services.


The Fund and ABI also make payments for recordkeeping and other transfer agency
services to financial intermediaries that sell AllianceBernstein Mutual Fund
shares. Please see "Management of the Fund--Transfer Agency and Retirement Plan
Services" below. If paid by the Fund, these expenses are included in "Other
Expenses" under "Fees and Expenses of the Fund--Annual Fund Operating Expenses"
in the Summary Information at the beginning of the Prospectus.

  IF ONE MUTUAL FUND SPONSOR MAKES GREATER DISTRIBUTION ASSISTANCE PAYMENTS
  THAN ANOTHER, A FINANCIAL INTERMEDIARY MAY HAVE AN INCENTIVE TO RECOMMEND ONE
  FUND COMPLEX OVER ANOTHER TO PLAN PARTICIPANTS AND TO PLAN SPONSORS DECIDING
  WHICH FUNDS TO INCLUDE AS INVESTMENT OPTIONS UNDER A PLAN. SIMILARLY, IF A
  FINANCIAL INTERMEDIARY RECEIVES MORE DISTRIBUTION ASSISTANCE FOR ONE SHARE
  CLASS VERSUS ANOTHER, THEN THEY MAY HAVE AN INCENTIVE TO RECOMMEND THAT CLASS.

As of the date of the Prospectus, ABI anticipates that the firms that will
receive additional payments for distribution services and/or educational
support include:

  Advisor Group, Inc.
  Ameriprise Financial Services
  AXA Advisors
  Bank of America
  Cadaret, Grant & Co.
  CCO Investment Services Corp.
  Chase Investment Services
  Commonwealth Financial Network
  Donegal Securities
  Financial Network Investment Company
  LPL Financial Corporation
  Merrill Lynch
  Morgan Stanley Smith Barney
  Multi-Financial Securities Corporation
  Northwestern Mutual Investment Services
  PrimeVest Financial Services
  Raymond James
  RBC Wealth Management
  Robert W. Baird
  UBS Financial Services
  Wells Fargo Advisors
  Wells Fargo Investments

Although the Fund may use brokers and dealers that sell shares of the Fund to
effect portfolio transactions, the Fund does not consider the sale of
AllianceBernstein Mutual Fund shares as a factor when selecting brokers or
dealers to effect portfolio transactions.

HOW TO EXCHANGE SHARES
You may exchange your Fund shares for shares of the same class of other
AllianceBernstein Mutual Funds (including AllianceBernstein Exchange Reserves,
a money market fund managed by the Adviser) provided that the other fund offers
the same class of shares and, in the case of retirement plans, is an investment
option under your plan Exchanges of shares are made at the next-determined NAV,
without sales or service charges, after your order is received in proper form.
All exchanges are subject to the minimum investment restrictions set forth in
the prospectus for the AllianceBernstein Mutual Fund whose shares are being
acquired. You may request an exchange either directly or through your financial
intermediary or, in the case of retirement plan participants, by following the
procedures specified by your plan sponsor or plan recordkeeper. In order to
receive a day's NAV, you must submit your exchange request by 4:00 p.m.,
Eastern time, on that day. The Fund may modify, restrict or terminate the
exchange privilege on 60 days' written notice.

HOW TO SELL OR REDEEM SHARES
You may "redeem" your shares (i.e., sell your shares to the Fund) on any day
the New York Stock Exchange (the "Exchange") is open, either directly or
through your financial intermediary or, in the case of retirement plan
participants, by following the procedures specified by your plan sponsor or
plan recordkeeper. Your sale price will be the next-determined NAV, less any
applicable CDSC, after the Fund receives your redemption request in proper
form. Normally, redemption proceeds are sent to you within seven days. If you
recently purchased your shares by check or electronic funds transfer, your
redemption payment may be delayed until the Fund is reasonably satisfied that
the check or electronic funds transfer has been collected (which may take up to
15 days).

Your financial intermediary or plan recordkeeper must receive your sales
request by 4:00 p.m., Eastern time, and submit it to the Fund by a pre-arranged
time for you to receive that day's NAV, less any applicable CDSC. Your
financial intermediary, plan sponsor or plan recordkeeper is responsible for
submitting all necessary documentation to the Fund and may charge you a fee for
this service.

20





FREQUENT PURCHASES AND REDEMPTIONS OF FUND SHARES

The Board has adopted policies and procedures designed to detect and deter
frequent purchases and redemptions of Fund shares or excessive or short-term
trading that may disadvantage long-term Fund shareholders. These policies are
described below. There is no guarantee that the Fund will be able to detect
excessive or short-term trading or to identify shareholders engaged in such
practices, particularly with respect to transactions in omnibus accounts.
Shareholders should be aware that application of these policies may have
adverse consequences, as described below, and should avoid frequent trading in
Fund shares through purchases, sales and exchanges of shares. The Fund reserves
the right to restrict, reject or cancel, without any prior notice, any purchase
or exchange order for any reason, including any purchase or exchange order
accepted by any shareholder's financial intermediary.


RISKS ASSOCIATED WITH EXCESSIVE OR SHORT-TERM TRADING GENERALLY. While the Fund
will try to prevent market timing by utilizing the procedures described below,
these procedures may not be successful in identifying or stopping excessive or
short-term trading in all circumstances. By realizing profits through
short-term trading, shareholders that engage in rapid purchases and sales or
exchanges of the Fund's shares dilute the value of shares held by long-term
shareholders. Volatility resulting from excessive purchases and sales or
exchanges of Fund shares, especially involving large dollar amounts, may
disrupt efficient portfolio management and cause the Fund to sell portfolio
securities at inopportune times to raise cash to accommodate redemptions
relating to short-term trading activity. In particular, the Fund may have
difficulty implementing its long-term investment strategies if it is forced to
maintain a higher level of its assets in cash to accommodate significant
short-term trading activity. In addition, the Fund may incur increased
administrative and other expenses due to excessive or short-term trading,
including increased brokerage costs and realization of taxable capital gains.

Because the Fund invests significantly in securities of foreign issuers, it may
be particularly susceptible to short-term trading strategies. This is because
securities of foreign issuers are typically traded on markets that close well
before the time the Fund calculates its NAV at 4:00 p.m., Eastern time, which
gives rise to the possibility that developments may have occurred in the
interim that would affect the value of these securities. The time zone
differences among international stock markets can allow a shareholder engaging
in a short-term trading strategy to exploit differences in Fund share prices
that are based on closing prices of securities of foreign issuers established
some time before the Fund calculates its own share price (referred to as "time
zone arbitrage"). The Fund has procedures, referred to as fair value pricing,
designed to adjust closing market prices of securities of foreign issuers to
reflect what is believed to be the fair value of those securities at the time
the Fund calculates its NAV. While there is no assurance, the Fund expects that
the use of fair value pricing, in addition to the short-term trading policies
discussed below, will significantly reduce a shareholder's ability to engage in
time zone arbitrage to the detriment of other Fund shareholders.

A shareholder engaging in a short-term trading strategy may also target a fund
irrespective of its investments in securities of foreign issuers. Any fund that
invests in securities that are, among other things, thinly traded, traded
infrequently or relatively illiquid has the risk that the current market price
for the securities may not accurately reflect current market values. A
shareholder may seek to engage in short-term trading to take advantage of these
pricing differences (referred to as "price arbitrage"). The Fund may be
adversely affected by price arbitrage.

POLICY REGARDING SHORT-TERM TRADING. Purchases and exchanges of shares of the
Fund should be made for investment purposes only. The Fund seeks to prevent
patterns of excessive purchases and sales of Fund shares to the extent they are
detected by the procedures described below. The Fund reserves the right to
modify this policy, including any surveillance or account blocking procedures
established from time to time to effectuate this policy, at any time without
notice.

..  TRANSACTION SURVEILLANCE PROCEDURES. The Fund, through its agents, ABI and
   ABIS, maintains surveillance procedures to detect excessive or short-term
   trading in Fund shares. This surveillance process involves several factors,
   which include scrutinizing transactions in Fund shares that exceed certain
   monetary thresholds or numerical limits within a specified period of time.
   Generally, more than two exchanges of Fund shares during any 90-day period
   or purchases of shares followed by a sale within 90 days will be identified
   by these surveillance procedures. For purposes of these transaction
   surveillance procedures, the Fund may consider trading activity in multiple
   accounts under common ownership, control or influence. Trading activity
   identified by either, or a combination, of these factors, or as a result of
   any other information available at the time, will be evaluated to determine
   whether such activity might constitute excessive or short-term trading.
   These surveillance procedures may be modified from time to time, as
   necessary or appropriate to improve the detection of excessive or short-term
   trading or to address specific circumstances.

..  ACCOUNT BLOCKING PROCEDURES. If the Fund determines, in its sole discretion,
   that a particular transaction or pattern of transactions identified by the
   transaction surveillance procedures described above is excessive or
   short-term trading in nature, the relevant Fund account(s) will be
   immediately "blocked" and no future purchase or exchange activity will be
   permitted. However, sales of Fund shares back to the Fund or redemptions
   will continue to be permitted in accordance with the terms of the Fund's
   current Prospectus. As a result, unless the shareholder redeems his or her
   shares, which may have consequences if the shares have declined in value, a
   CDSC is applicable or adverse tax consequences may result, the shareholder
   may be "locked" into an unsuitable investment. In the event an account is
   blocked, certain account-related privileges, such as the ability to place

                                                                             21




  purchase, sale and exchange orders over the internet or by phone, may also be
  suspended. A blocked account will generally remain blocked unless and until
  the account holder or the associated broker, dealer or other financial
  intermediary provides evidence or assurance acceptable to the Fund that the
  account holder did not or will not in the future engage in excessive or
  short-term trading.

..  APPLICATIONS OF SURVEILLANCE PROCEDURES AND RESTRICTIONS TO OMNIBUS
   ACCOUNTS. Omnibus account arrangements are common forms of holding shares of
   the Fund, particularly among certain brokers, dealers and other financial
   intermediaries, including sponsors of retirement plans. The Fund applies its
   surveillance procedures to these omnibus account arrangements. As required
   by Commission rules, the Fund has entered into agreements with all of its
   financial intermediaries that require the financial intermediaries to
   provide the Fund, upon the request of the Fund or its agents, with
   individual account level information about their transactions. If the Fund
   detects excessive trading through its monitoring of omnibus accounts,
   including trading at the individual account level, the financial
   intermediaries will also execute instructions from the Fund to take actions
   to curtail the activity, which may include applying blocks to accounts to
   prohibit future purchases and exchanges of Fund shares. For certain
   retirement plan accounts, the Fund may request that the retirement plan or
   other intermediary revoke the relevant participant's privilege to effect
   transactions in Fund shares via the internet or telephone, in which case the
   relevant participant must submit future transaction orders via the U.S.
   Postal Service (i.e., regular mail).

HOW THE FUND VALUES ITS SHARES
The Fund's NAV is calculated at the close of regular trading on the Exchange
(ordinarily, 4:00 p.m., Eastern time), only on days when the Exchange is open
for business. To calculate NAV, the Fund's assets are valued and totaled,
liabilities are subtracted, and the balance, called net assets, is divided by
the number of shares outstanding. If the Fund invests in securities that are
primarily traded on foreign exchanges that trade on weekends or other days when
the Fund does not price its shares, the value of the Fund's shares may change
on days when the Fund's NAV is not calculated and shareholders will not be able
to purchase or redeem their shares in the Fund.

The Fund values its securities at their current market value determined on the
basis of market quotations or, if market quotations are not readily available
or are unreliable, at "fair value" as determined in accordance with procedures
established by and under the general supervision of the Fund's Board. When the
Fund uses fair value pricing, it may take into account any factors it deems
appropriate. The Fund may determine fair value based upon developments related
to a specific security, current valuations of foreign stock indices (as
reflected in U.S. futures markets) and/or U.S. sector or broader stock market
indices. The prices of securities used by the Fund to calculate its NAV may
differ from quoted or published prices for the same securities. Fair value
pricing involves subjective judgments and it is possible that the fair value
determined for a security is materially different than the value that could be
realized upon the sale of that security.

The Fund expects to use fair value pricing for securities primarily traded on
U.S. exchanges only under very limited circumstances, such as the early closing
of the exchange on which a security is traded or suspension of trading in the
security. The Fund may use fair value pricing more frequently for securities
primarily traded in non-U.S. markets because, among other things, most foreign
markets close well before the Fund values its 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. For example, the Fund believes that foreign security values may be
affected by events that occur after the close of foreign securities markets. To
account for this, the Fund may frequently value many of its foreign equity
securities using fair value prices based on third party vendor modeling tools
to the extent available.

Subject to its oversight, the Board has delegated responsibility for valuing
the Fund's assets to the Adviser. The Adviser has established a Valuation
Committee, which operates under the policies and procedures approved by the
Board, to value the Fund's assets on behalf of the Fund. The Valuation
Committee values Fund assets as described above.

22




MANAGEMENT OF THE FUND
--------------------------------------------------------------------------------

INVESTMENT ADVISER

The Fund's Adviser is AllianceBernstein L.P., 1345 Avenue of the Americas, New
York, NY 10105. The Adviser is a leading international investment adviser
supervising client accounts with assets as of June 30, 2011 totaling
approximately $461 billion (of which approximately $85 billion represented
assets of investment companies). As of June 30, 2011, the Adviser managed
retirement assets for many of the largest public and private employee benefit
plans (including 28 of the nation's FORTUNE 100 companies), for public employee
retirement funds in 34 states, for investment companies, and for foundations,
endowments, banks and insurance companies worldwide. The 35 registered
investment companies managed by the Adviser, comprising approximately 118
separate investment portfolios, currently have approximately 3.0 million
shareholder accounts.

The Adviser provides investment advisory services and order placement
facilities for the Fund. For these advisory services, the Fund will pay the
Adviser a fee at an annualized rate of 1.00% of the first $1 billion of the
Fund's average net assets, .95% of the excess of $1 billion up to $2 billion,
..90% of the excess of $2 billion up to $3 billion, and .85% of the excess over
$3 billion as a percentage of average net assets. The Adviser has agreed to
waive its management fees and/or to bear expenses of the Fund through March 31,
2015 to the extent necessary to prevent total Fund operating expenses, on an
annualized basis, from exceeding the net expenses reflected in the "Fees and
Expenses of the Fund" at the beginning of the Prospectus.

Fees waived and expenses borne by the Adviser are subject to reimbursement
until August 31, 2014. No reimbursement payment will be made that would cause
the Fund's total annualized operating expenses to exceed the net fee
percentages set forth in "Fees and Expenses of the Fund" or cause the total of
the payments to exceed the Fund's total initial offering expenses.


The Adviser may act as an investment adviser to other persons, firms or
corporations, including investment companies, hedge funds, pension funds and
other institutional investors. The Adviser may receive management fees,
including performance fees, that may be higher or lower than the advisory fees
it receives from the Fund. Certain other clients of the Adviser may have
investment objectives and policies similar to those of the Fund. The Adviser
may, from time to time, make recommendations that result in the purchase or
sale of a particular security by its other clients simultaneously with the
Fund. If transactions on behalf of more than one client during the same period
increase the demand for securities being purchased or the supply of securities
being sold, there may be an adverse effect on price or quantity. It is the
policy of the Adviser to allocate advisory recommendations and the placing of
orders in a manner that is deemed equitable by the Adviser to the accounts
involved, including the Fund. When two or more of the clients of the Adviser
(including the Fund) are purchasing or selling the same security on a given day
from the same broker-dealer, such transactions may be averaged as to price.

PORTFOLIO MANAGERS
The day-to-day management of, and investment decisions for, the Fund's
portfolio are made by the Adviser's Emerging Markets Multi-Asset Team. The
Emerging Markets Multi-Asset Team relies heavily on the fundamental analysis
and research of the Adviser's large internal research staff. No one person is
principally responsible for coordinating the Fund's investments.


The following table lists the senior members of the Emerging Markets
Multi-Asset Team with the responsibility for day-to-day management of the
Fund's portfolio, the year that each person assumed joint and primary
responsibility for the Fund, and each person's principal occupation during the
past five years:




                                                 PRINCIPAL OCCUPATION DURING
EMPLOYEE; LENGTH OF SERVICE; TITLE                 THE PAST FIVE (5) YEARS
------------------------------------------------------------------------------------
                                        
Henry S. D'Auria; since 2011; Senior Vice  Senior Vice President of the Adviser,
President of the Adviser and Chief         with which he has been associated in a
Investment Officer, Emerging Markets       substantially similar capacity to his
Value Equity                               current position since 2006.

Paul J. DeNoon; since 2011; Senior Vice    Senior Vice President of the Adviser,
President of the Adviser and Director of   with which he has been associated in a
Emerging Market Debt                       substantially similar capacity to his
                                           current position since prior to 2006.

Morgan C. Harting; since 2011; Vice        Vice President of the Adviser, with
President of the Adviser                   which he has been associated in a
                                           substantially similar capacity to his
                                           current position since February 2007.
                                           Prior thereto, he was Senior Director at
                                           Fitch Ratings, a securities rating firm,
                                           beginning prior to 2006.

Marco G. Santamaria; since 2011; Vice      Vice President of the Adviser, with
President of the Adviser                   which he has been associated in a
                                           substantially similar capacity to his
                                           current position since June 2010. Prior
                                           thereto, he was a founding partner at
                                           Global Securities Advisors, an emerging
                                           market-oriented fixed-income hedge
                                           fund, beginning prior to 2006.


Additional information about the portfolio managers may be found in the Fund's
SAI.

TRANSFER AGENCY AND RETIREMENT PLAN SERVICES
ABIS acts as the transfer agent for the Fund. ABIS, an indirect wholly-owned
subsidiary of the Adviser, registers the transfer, issuance and redemption of
Fund shares and disburses dividends and other distributions to Fund
shareholders.

Many Fund shares are owned by financial intermediaries for the benefit of their
customers. Retirement plans also may hold Fund shares in the name of the plan,
rather than the participants. In those cases, the Fund often does not maintain
an account for you. Thus, some or all of the transfer agency functions for
these and certain other accounts are performed by the financial intermediaries
and plan recordkeepers. The Fund,

                                                                             23




ABI and/or the Adviser pay to these financial intermediaries and recordkeepers,
including those that sell shares of the AllianceBernstein Mutual Funds, fees
for sub-transfer agency and recordkeeping services in amounts ranging up to $19
per customer fund account per annum and/or up to 0.25% per annum of the average
daily assets held through the intermediary. To the extent any of these payments
for recordkeeping services or transfer agency services are made by the Fund,
they are included in the amount appearing opposite the caption "Other Expenses"
found in the Fund expense tables under "Fees and Expenses of the Fund" in the
Summary Information at the beginning of the Prospectus. In addition, financial
intermediaries may be affiliates of entities that receive compensation from the
Adviser or ABI for maintaining retirement plan "platforms" that facilitate
trading by affiliated and non-affiliated financial intermediaries and
recordkeeping for retirement plans.

Because financial intermediaries and plan recordkeepers may be paid varying
amounts per class for sub-transfer agency and recordkeeping services, the
service requirements of which may also vary by class, this may create an
additional incentive for financial intermediaries to favor one fund complex
over another or one class of shares over another.

24




DIVIDENDS, DISTRIBUTIONS AND TAXES
--------------------------------------------------------------------------------

The Fund's income dividends and capital gains distributions, if any, declared
by the Fund on its outstanding shares will, at the election of each
shareholder, be paid in cash or in additional shares of the same class of
shares of the Fund. If paid in additional shares, the shares will have an
aggregate NAV as of the close of business on the declaration date of the
dividend or distribution equal to the cash amount of the dividend or
distribution. You may make an election to receive dividends and distributions
in cash or in shares at the time you purchase shares. Your election can be
changed at any time prior to a record date for a dividend. There is no sales or
other charge in connection with the reinvestment of dividends or capital gains
distributions. Cash dividends may be paid by check, or, at your election,
electronically via the ACH network.

If you receive an income dividend or capital gains distribution in cash you
may, within 120 days following the date of its payment, reinvest the dividend
or distribution in additional shares of the Fund without charge by returning to
the Adviser, with appropriate instructions, the check representing the dividend
or distribution. Thereafter, unless you otherwise specify, you will be deemed
to have elected to reinvest all subsequent dividends and distributions in
shares of the Fund.

While it is the intention of the Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and timing of any dividend or distribution will
depend on the realization by the Fund of income and capital gains from
investments. There is no fixed dividend rate and there can be no assurance that
the Fund will pay any dividends or realize any capital gains. The final
determination of the amount of the Fund's return of capital distributions for
the period will be made after the end of each calendar year. Investments made
through a 401(k) plan, 457 plan, employer sponsored 403(b) plan, profit sharing
and money purchase plan, defined benefit plan or nonqualified deferred
compensation plan are subject to special United States federal income tax
rules. Therefore, the federal income tax consequences described below apply
only to investments made other than by such plans.


You will normally have to pay federal income tax, and any state or local income
taxes, on the distributions you receive from the Fund, whether you take the
distributions in cash or reinvest them in additional shares. Distributions of
net capital gains from the sale of investments that the Fund owned for more
than one year and that are properly designated as capital gain dividends are
taxable as long-term capital gains. For taxable years beginning on or before
December 31, 2012, distributions of dividends to the Fund's non-corporate
shareholders may be treated as "qualified dividend income", which is taxed at
reduced rates, if such distributions are derived from, and designated by the
Fund as, "qualified dividend income" and provided that holding period and other
requirements are met by both the shareholder and the Fund. "Qualified dividend
income" generally is income derived from dividends from U.S. corporations and
"qualified foreign corporations". Other distributions by the Fund are generally
taxable to you as ordinary income. Dividends declared in October, November, or
December and paid in January of the following year are taxable as if they had
been paid the previous December. The Fund will notify you as to how much of the
Fund's distributions, if any, qualify for these reduced tax rates.


Investment income received by the Fund from sources within foreign countries
may be subject to foreign income taxes withheld at the source. To the extent
that the Fund is liable for foreign income taxes withheld at the source, the
Fund intends, if possible, to operate so as to meet the requirements of the
Code to "pass through" to the Fund's shareholders credits for foreign income
taxes paid (or to permit shareholders to claim a deduction for such foreign
taxes), but there can be no assurance that the Fund will be able to do so.
Furthermore, a shareholder's ability to claim a foreign tax credit or deduction
for foreign taxes paid by the Fund may be subject to certain limitations
imposed by the Code, as a result of which a shareholder may not be permitted to
claim a credit or deduction for all or a portion of the amount of such taxes.

Under certain circumstances, if the Fund realizes losses (e.g., from
fluctuations in currency exchange rates) after paying a dividend, all or a
portion of the dividend may subsequently be characterized as a return of
capital. Returns of capital are generally nontaxable, but will reduce a
shareholder's basis in shares of the Fund. If that basis is reduced to zero
(which could happen if the shareholder does not reinvest distributions and
returns of capital are significant), any further returns of capital will be
taxable as capital gain.

If you buy shares just before the Fund deducts a distribution from its NAV, you
will pay the full price for the shares and then receive a portion of the price
back as a taxable distribution.

The sale or exchange of Fund shares is a taxable transaction for federal income
tax purposes.

Each year shortly after December 31, the Fund will send you tax information
stating the amount and type of all its distributions for the year. You are
encouraged to consult your tax adviser about the federal, state, and local tax
consequences in your particular circumstances, as well as about any possible
foreign tax consequences.

NON-U.S. SHAREHOLDERS
If you are a nonresident alien individual or a foreign corporation for federal
income tax purposes, please see the Fund's SAI for information on how you will
be taxed as a result of holding shares in the Fund.

                                                                             25




GENERAL INFORMATION
--------------------------------------------------------------------------------

Under unusual circumstances, the Fund may suspend redemptions or postpone
payment for up to seven days or longer, as permitted by federal securities law.
The Fund reserves the right to close an account that has remained below $1,000
for 90 days. (Participants in retirement plans that hold Fund shares in the
name of the plan may be subject to different minimums imposed by the plan
sponsor or plan recordkeeper.)

During drastic economic or market developments, you might have difficulty in
reaching ABIS by telephone, in which event you should issue written
instructions to ABIS. ABIS will employ reasonable procedures to verify that
telephone requests to purchase, sell or exchange shares are genuine, and could
be liable for losses resulting from unauthorized transactions if it failed to
do so. Otherwise, ABIS is not responsible for the authenticity of telephone
requests. Dealers and agents may charge a commission for handling telephone
requests. The telephone service may be suspended or terminated at any time
without notice.

26




FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------

Financial highlights information is not available because the Fund had not yet
commenced operation as of the date of this prospectus.

                                                                             27




APPENDIX A
--------------------------------------------------------------------------------

HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION
--------------------------------------------------------------------------------


The settlement agreement between the Adviser and the New York State Attorney
General requires the Fund to include the following supplemental hypothetical
investment information, which provides additional information calculated and
presented in a manner different from expense information found under "Fees and
Expenses of the Fund" in the Summary Information at the beginning of this
Prospectus, about the effect of the Fund's expenses, including investment
advisory fees and other Fund costs, on the Fund's returns over a 10-year
period. The chart shows the estimated expenses (net of any fee or expense
waiver for the first three years) that would be charged on a hypothetical
investment of $10,000 in Class A shares of the Fund assuming a 5% return each
year. Except as otherwise indicated, the chart also assumes that the current
annual expense ratio stays the same throughout the 10-year period. The current
annual expense ratio for the Fund is the same as stated under "Fees and
Expenses of the Fund". If you wish to obtain hypothetical investment
information for other classes of shares of the Fund, please refer to the
"Mutual Fund Fees & Expenses Calculators" on www.AllianceBernstein.com. Your
actual expenses may be higher or lower.


--------------------------------------------------------------------------------




                            HYPOTHETICAL INVESTMENT              HYPOTHETICAL
               HYPOTHETICAL PERFORMANCE    AFTER    HYPOTHETICAL    ENDING
   YEAR         INVESTMENT    EARNINGS    RETURNS    EXPENSES*    INVESTMENT
   --------------------------------------------------------------------------
                                                  
   1            $10,000.00   $  500.00   $10,500.00  $  173.25    $10,326.75
   2             10,326.75      516.34    10,843.09     178.91     10,664.18
   3             10,664.18      533.21    11,197.39     184.76     11,012.63
   4             11,012.63      550.63    11,563.26     211.61     11,351.65
   5             11,351.65      567.58    11,919.23     218.12     11,701.11
   6             11,701.11      585.06    12,286.17     224.84     12,061.33
   7             12,061.33      603.07    12,664.40     231.76     12,432.64
   8             12,432.64      621.63    13,054.27     238.89     12,815.38
   9             12,815.38      640.77    13,456.15     246.25     13,209.90
   10            13,209.90      660.50    13,870.40     253.83     13,616.57
   --------------------------------------------------------------------------
   Cumulative                $5,778.79               $2,162.22




* Expenses are net of any fee waiver or expense waiver for the first three
  years. Thereafter, the expense ratio reflects the Fund's operating expenses
  before fee waiver as reflected under "Fees and Expenses of the Fund".


A-1




For more information about the Fund, the following documents are available upon
request:

..  STATEMENT OF ADDITIONAL INFORMATION (SAI)
The Fund has an SAI, which contains more detailed information about the Fund,
including its operations and investment policies. The Fund's SAI is
incorporated by reference into (and is legally part of) this Prospectus.

You may request a free copy of the SAI, or make inquiries concerning the Fund,
by contacting your broker or other financial intermediary, or by contacting
the Adviser:

             
BY MAIL/PHONE:  AllianceBernstein Investor Services, Inc.
                P.O. Box 786003
                San Antonio, TX 78278-6003

                For Information: (800) 221-5672
                For Literature: (800) 227-4618




Or you may view or obtain these documents from the Securities and Exchange
Commission ("Commission"):


..  Call the Commission at 1-202-551-8090 for information on the operation of
   the Commission's Public Reference Room.

..  Reports and other information about the Fund are available on the EDGAR
   Database on the Commission's Internet site at http://www.sec.gov.

..  Copies of the information may be obtained, after paying a duplicating fee,
   by electronic request at publicinfo@sec.gov, or by writing the Commission's
   Public Reference Section, Washington, DC 20549-1520.

You also may find these documents and more information about the Adviser and
the Fund on the Internet at: www.AllianceBernstein.com.

AllianceBernstein(R) and the AB Logo are registered trademarks and service
marks used by permission of the owner, AllianceBernstein L.P.

SEC File No. 811-01716
                                                             PRO-RTMT-0134-0811

                                    [GRAPHIC]






(LOGO)                                          ALLIANCEBERNSTEIN CAP FUND, INC.
                       -ALLIANCEBERNSTEIN EMERGING MARKETS MULTI-ASSET PORTFOLIO
                             (Class A-ABAEX; Class C-ABCEX; Advisor Class-ABYEX;
                                    Class R-ABREX; Class K-ABKEX; Class I-ABIEX)


--------------------------------------------------------------------------------

                 c/o AllianceBernstein Investor Services, Inc.
                 P.O. Box 786003, San Antonio, Texas 78278-6003
                           Toll Free: (800) 221-5672
                    For Literature: Toll Free (800) 227-4618

--------------------------------------------------------------------------------


                      STATEMENT OF ADDITIONAL INFORMATION
                                August 31, 2011


--------------------------------------------------------------------------------


            This Statement of Additional Information ("SAI") is not a
prospectus, but supplements and should be read in conjunction with the current
prospectus, dated August 31, 2011, for the AllianceBernstein(R) Emerging Markets
Multi-Asset Portfolio (the "Fund") of AllianceBernstein Cap Fund, Inc. (the
"Company") that offers Class A, Class C and Advisor Class shares of the Fund or
the current prospectus, dated August 31, 2011, that offers Class A, Class R,
Class K and Class I shares of the Fund (each a "Prospectus", and together the
"Prospectuses"). Copies of the Prospectuses may be obtained by contacting
AllianceBernstein Investor Services, Inc. ("ABIS") at the address or the "For
Literature" telephone number shown above or on the Internet at
www.AllianceBernstein.com.




                               TABLE OF CONTENTS
                               -----------------


INFORMATION ABOUT THE FUND AND ITS INVESTMENTS..............................1

INVESTMENT RESTRICTIONS....................................................38

MANAGEMENT OF THE FUND.....................................................40

EXPENSES OF THE FUND.......................................................60

PURCHASE OF SHARES.........................................................63

REDEMPTION AND REPURCHASE OF SHARES........................................84

SHAREHOLDER SERVICES.......................................................86

NET ASSET VALUE............................................................89

DIVIDENDS, DISTRIBUTIONS AND TAXES.........................................92

PORTFOLIO TRANSACTIONS.....................................................99

GENERAL INFORMATION.......................................................103

FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM...........................................................105

APPENDIX A:  STATEMENT OF POLICIES AND  PROCEDURES FOR PROXY VOTING.......A-1




--------------------------------------------------------------------------------

                 INFORMATION ABOUT THE FUND AND ITS INVESTMENTS

--------------------------------------------------------------------------------

Introduction to the Fund
------------------------

            The Company's shares are offered in separate series. The Fund is a
series of the Company, a separate pool of assets constituting, in effect, a
separate open-end management investment company with its own investment
objective and policies. Except as otherwise noted, the Fund's investment
objective and policies described below are not "fundamental policies" within the
meaning of the Investment Company Act of 1940, as amended (the "1940 Act"), and
may, therefore, be changed by the Board of Directors of the Company (the "Board"
or the "Directors") without shareholder approval. However, the Fund will not
change its investment objective without at least 60 days' prior written notice
to shareholders. There is no guarantee that the Fund will achieve its investment
objective. Whenever any investment policy or restriction states a percentage of
the Fund's assets that may be invested in any security or other asset, it is
intended that such percentage limitation be determined immediately after and as
a result of the Fund's acquisition of such securities or other assets.
Accordingly, any later increases or decreases in percentage beyond the specified
limitations resulting from a change in values or net assets will not be
considered a violation of this percentage limitation.

Additional Investment Policies and Practices
--------------------------------------------

            The following information about the Fund's investment policies and
practices supplements the information set forth in the Prospectuses.

Convertible Securities
----------------------

            Convertible securities include bonds, debentures, corporate notes
and preferred stocks that are convertible at a stated exchange rate into shares
of the underlying common stock. Prior to their conversion, convertible
securities have the same general characteristics as non-convertible debt
securities, which provide a stable stream of income with generally higher yields
than those of equity securities of the same or similar issuers. As with all debt
securities, the market value of convertible securities tends to decline as
interest rates increase and, conversely, to increase as interest rates decline.
While convertible securities generally offer lower interest or dividend yields
than non-convertible debt securities of similar quality, they do enable the
investor to benefit from increases in the market price of the underlying common
stock.

            When the market price of the common stock underlying a convertible
security increases, the price of the convertible security increasingly reflects
the value of the underlying common stock and may rise accordingly. As the market
price of the underlying common stock declines, the convertible security tends to
trade increasingly on a yield basis, and thus may not depreciate to the same
extent as the underlying common stock. Convertible securities rank senior to
common stocks on an issuer's capital structure. They consequently entail less
risk than the issuer's common stock, although the extent to which such risk is
reduced depends in large measure upon the degree to which the convertible
security sells above its value as a fixed-income security.

Depositary Receipts
-------------------

            The Fund may invest in American Depositary Receipts ("ADRs"),
European Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs") or
other securities representing securities of companies based in countries other
than the U.S. Transactions in these securities may not necessarily be settled in
the same currency as transactions in the securities that they represent.
Generally, ADRs, in registered form, are designed for use in the U.S. securities
markets, EDRs, in bearer form, are designed for use in European securities
markets and GDRs, in bearer form, are designed for use in two or more securities
markets, such as those of Europe and Asia.

Derivatives
-----------

            The Fund may, but is not required to, use derivatives for risk
management purposes or as part of its investment strategies. Derivatives are
financial contracts whose value depends on, or is derived from, the value of an
underlying asset, reference rate or index. These assets, rates, and indices may
include bonds, stocks, mortgages, commodities, interest rates, currency exchange
rates, bond indices and stock indices.

            There are four principal types of derivatives - options, futures,
forwards and swaps. The four principal types of derivative instruments, as well
as the methods in which they may be used by the Fund are described below.
Derivatives may be (i) standardized, exchange-traded contracts or (ii)
customized, privately-negotiated contracts. Exchange-traded derivatives tend to
be more liquid and subject to less credit risk than those that are privately
negotiated. The Fund may use derivatives to earn income and enhance returns, to
hedge or adjust the risk profile of a portfolio and either to replace more
traditional direct investments or to obtain exposure to otherwise inaccessible
markets.

            Forward Contracts. A forward contract, which may be standardized or
customized and privately negotiated, is an agreement for one party to buy, and
the other party to sell, a specific quantity of an underlying commodity or other
tangible asset for an agreed-upon price at a future date. A forward contract
generally is settled by physical delivery of the commodity or other tangible
asset underlying the forward contract to an agreed upon location at a future
date (rather than settled by cash) or is rolled forward into a new forward
contract. Non-deliverable forwards ("NDFs") specify a cash payment upon
maturity.

            Futures Contracts and Options on Futures Contracts. A futures
contract is an agreement that obligates the buyer to buy and the seller to sell
a specified quantity of an underlying asset (or settle for cash the value of a
contract based on an underlying asset, rate or index) at a specific price on the
contract maturity date. Options on futures contracts are options that call for
the delivery of futures contracts upon exercise. Futures contracts are
standardized, exchange-traded instruments and are fungible (i.e., considered to
be perfect substitutes for each other). This fungibility allows futures
contracts to be readily offset or canceled through the acquisition of equal but
opposite positions, which is the primary method in which futures contracts are
liquidated. A cash-settled futures contract does not require physical delivery
of the underlying asset but instead is settled for cash equal to the difference
between the values of the contract on the date it is entered into and its
maturity date.

            Options. An option, which may be standardized and exchange-traded,
or customized and privately negotiated, is an agreement that, for a premium
payment or fee, gives the option holder (the buyer) the right but not the
obligation to buy (a "call") or sell (a "put") the underlying asset (or settle
for cash an amount based on an underlying asset, rate or index) at a specified
price (the exercise price) during a period of time or on a specified date.
Likewise, when an option is exercised the writer of the option is obligated to
sell (in the case of a call option) or to purchase (in the case of a put option)
the underlying asset (or settle for cash an amount based on an underlying asset,
rate or index).

            Swaps. A swap, which may be standardized or customized and privately
negotiated, is an agreement that obligates two parties to exchange a series of
cash flows at specified intervals (payment dates) based upon or calculated by
reference to changes in specified prices or rates (interest rates in the case of
interest rate swaps, currency exchange rates in the case of currency swaps) for
a specified amount of an underlying asset (the "notional" principal amount).
Swaps are entered into on a net basis (i.e., the two payment streams are netted
out, with the Fund receiving or paying, as the case may be, only the net amount
of the two payments). Except for currency swaps, the notional principal amount
is used solely to calculate the payment streams but is not exchanged. With
respect to currency swaps, actual principal amounts of currencies may be
exchanged by the counterparties at the initiation, and again upon the
termination, of the transaction.

            Risks of Derivatives. Investment techniques employing such
derivatives involve risks different from, and, in certain cases, greater than,
the risks presented by more traditional investments. Following is a general
discussion of important risk factors and issues concerning the use of
derivatives.

            -- Market Risk. This is the general risk attendant to all
            investments that the value of a particular investment will change in
            a way detrimental to the Fund's interest.

            -- Management Risk. Derivative products are highly specialized
            instruments that require investment expertise and risk analyses
            different from those associated with stocks and bonds. The use of a
            derivative requires an understanding not only of the underlying
            instrument but also of the derivative itself, without the benefit of
            observing the performance of the derivative under all possible
            market conditions. In particular, the use and complexity of
            derivatives require the maintenance of adequate controls to monitor
            the transactions entered into, the ability to assess the risk that a
            derivative adds to the Fund's investment portfolio, and the ability
            to forecast price, interest rate or currency exchange rate movements
            correctly.

            -- Credit Risk. This is the risk that a loss may be sustained by the
            Fund as a result of the failure of another party to a derivative
            (usually referred to as a "counterparty") to comply with the terms
            of the derivative contract. The credit risk for exchange-traded
            derivatives is generally less than for privately negotiated
            derivatives, since the clearinghouse, which is the issuer or
            counterparty to each exchange-traded derivative, provides a
            guarantee of performance. This guarantee is supported by a daily
            payment system (i.e., margin requirements) operated by the
            clearinghouse in order to reduce overall credit risk. For privately
            negotiated derivatives, there is no similar clearing agency
            guarantee. Therefore, the Fund considers the creditworthiness of
            each counterparty to a privately negotiated derivative in evaluating
            potential credit risk.

            -- Liquidity Risk. Liquidity risk exists when a particular
            instrument is difficult to purchase or sell. If a derivative
            transaction is particularly large or if the relevant market is
            illiquid (as is the case with many privately negotiated
            derivatives), it may not be possible to initiate a transaction or
            liquidate a position at an advantageous price.

            -- Leverage Risk. Since many derivatives have a leverage component,
            adverse changes in the value or level of the underlying asset, rate
            or index can result in a loss substantially greater than the amount
            invested in the derivative itself. In the case of swaps, the risk of
            loss generally is related to a notional principal amount, even if
            the parties have not made any initial investment. Certain
            derivatives have the potential for unlimited loss, regardless of the
            size of the initial investment.

            -- Risk of Potential Governmental Regulation of Derivatives. Recent
            legislation and regulatory developments will eventually require the
            use of clearinghouses for most over-the-counter derivatives
            investments. It is possible that new government regulation of
            various types of derivative instruments, including futures and swap
            agreements, may affect the Fund's ability to use such instruments as
            a part of its investment strategy.

            -- Other Risks. Other risks in using derivatives include the risk of
            mispricing or improper valuation of derivatives and the inability of
            derivatives to correlate perfectly with underlying assets, rates and
            indices. Many derivatives, in particular privately negotiated
            derivatives, are complex and often valued subjectively. Improper
            valuations can result in increased cash payment requirements to
            counterparties or a loss of value to the Fund. Derivatives do not
            always perfectly or even highly correlate or track the value of the
            assets, rates or indices they are designed to closely track.
            Consequently, the Fund's use of derivatives may not always be an
            effective means of, and sometimes could be counterproductive to,
            furthering the Fund's investment objective.

Use of Options, Futures, Forwards and Swaps by the Fund
--------------------------------------------------------

            --Forward Currency Exchange Contracts. A forward currency exchange
contract is an obligation by one party to buy, and the other party to sell, a
specific amount of a currency for an agreed upon price at a future date. A
forward currency exchange contract may result in the delivery of the underlying
asset upon maturity of the contract in return for the agreed upon payment. NDFs
specify a cash payment upon maturity. NDFs are normally used when the market for
physical settlement of the currency is underdeveloped, heavily regulated or
highly taxed.

            The Fund may, for example, enter into forward currency exchange
contracts to attempt to minimize the risk to the Fund from adverse changes in
the relationship between the U.S. Dollar and other currencies. The Fund may
purchase or sell forward currency exchange contracts for hedging purposes
similar to those described below in connection with its transactions in foreign
currency futures contracts. For instance, the Fund may enter into a forward
contract when it enters into a contract for the purchase or sale of a security
denominated in a foreign currency in order to "lock in" the U.S. Dollar price of
the security ("transaction hedge"). In addition, when the Fund believes that a
foreign currency may suffer a substantial decline against the U.S. Dollar, it
may enter into a forward sale contract to sell an amount of that foreign
currency approximating the value of some or all of the Fund's securities
denominated in such foreign currency, or when the Fund believes that the U.S.
Dollar may suffer a substantial decline against a foreign currency, it may enter
into a forward purchase contract to buy that foreign currency for a fixed dollar
amount ("position hedge"). If the Adviser were to forecast incorrectly the
direction of exchange rate movements, the Fund might be required to complete
such forward transactions at prices inferior to the then current market values.
The Fund may also purchase or sell forward currency exchange contracts for
non-hedging purposes as a means of making investments in foreign currencies, as
described below under "Currency Transactions".

            If a hedging transaction in forward currency exchange contracts is
successful, the decline in the value of portfolio securities or the increase in
the cost of securities to be acquired may be offset, at least in part, by
profits on the forward currency exchange contract. Nevertheless, by entering
into such forward currency exchange contracts, the Fund may be required to forgo
all or a portion of the benefits which otherwise could have been obtained from
favorable movements in exchange rates.

            The Fund may also use forward currency exchange contracts to seek to
increase total return when AllianceBernstein L.P., the Fund's Adviser (the
"Adviser") anticipates that a foreign currency will appreciate or depreciate in
value but securities denominated in that currency are not held by the Fund and
do not present attractive investment opportunities. For example, the Fund may
enter into a foreign currency exchange contract to purchase a currency if the
Adviser expects the currency to increase in value. The Fund would recognize a
gain if the market value of the currency is more than the contract value of the
currency at the time of settlement of the contract. Similarly, the Fund may
enter into a foreign currency exchange contract to sell a currency if the
Adviser expects the currency to decrease in value. The Fund would recognize a
gain if the market value of the currency is less than the contract value of the
currency at the time of settlement of the contract.

            The cost of engaging in forward currency exchange contracts varies
with such factors as the currencies involved, the length of the contract period
and the market conditions then prevailing. Since transactions in foreign
currencies are usually conducted on a principal basis, no fees or commissions
are involved.

            --Options on Securities. The Fund may write and purchase call and
put options on securities. In purchasing an option on securities, the Fund would
be in a position to realize a gain if, during the option period, the price of
the underlying securities increased (in the case of a call) or decreased (in the
case of a put) by an amount in excess of the premium paid; otherwise the Fund
would experience a loss not greater than the premium paid for the option. Thus,
the Fund would realize a loss if the price of the underlying security declined
or remained the same (in the case of a call) or increased or remained the same
(in the case of a put) or otherwise did not increase (in the case of a put) or
decrease (in the case of a call) by more than the amount of the premium. If a
put or call option purchased by the Fund were permitted to expire without being
sold or exercised, its premium would represent a loss to the Fund.

            The Fund may purchase call options to hedge against an increase in
the price of securities that the Fund anticipates purchasing in the future. If
such increase occurs, the call option will permit the Fund to purchase the
securities at the exercise price, or to close out the options at a profit. The
premium paid for the call option plus any transaction costs will reduce the
benefit, if any, realized by the Fund upon exercise of the option, and, unless
the price of the underlying security rises sufficiently, the option may expire
worthless to the Fund and the Fund will suffer a loss on the transaction to the
extent of the premium paid.

            The Fund may write a put or call option in return for a premium,
which is retained by the Fund whether or not the option is exercised. The Fund
may write covered options or uncovered options. A call option written by the
Fund is "covered" if the Fund owns the underlying security, has an absolute and
immediate right to acquire that security upon conversion or exchange of another
security it holds, or holds a call option on the underlying security with an
exercise price equal to or less than of the call option it has written. A put
option written by the Fund is covered if the Fund holds a put option on the
underlying securities with an exercise price equal to or greater than of the put
option it has written. Uncovered options or "naked options" are riskier than
covered options. For example, if the Fund wrote a naked call option and the
price of the underlying security increased, the Fund would have to purchase the
underlying security for delivery to the call buyer and sustain a loss equal to
the difference between the option price and the market price of the security.

            The Fund may also, as an example, write combinations of put and call
options on the same security, known as "straddles", with the same exercise and
expiration date. By writing a straddle, the Fund undertakes a simultaneous
obligation to sell and purchase the same security in the event that one of the
options is exercised. If the price of the security subsequently rises above the
exercise price, the call will likely be exercised and the Fund will be required
to sell the underlying security at or below market price. This loss may be
offset, however, in whole or part, by the premiums received on the writing of
the two options. Conversely, if the price of the security declines by a
sufficient amount, the put will likely be exercised. The writing of straddles
will likely be effective, therefore, only where the price of the security
remains relatively stable and neither the call nor the put is exercised. In
those instances where one of the options is exercised, the loss on the purchase
or sale of the underlying security may exceed the amount of the premiums
received.

            By writing a call option, the Fund limits its opportunity to profit
from any increase in the market value of the underlying security above the
exercise price of the option. By writing a put option, the Fund assumes the risk
that it may be required to purchase the underlying security for an exercise
price above its then current market value, resulting in a capital loss unless
the security subsequently appreciates in value. Where options are written for
hedging purposes, such transactions constitute only a partial hedge against
declines in the value of portfolio securities or against increases in the value
of securities to be acquired, up to the amount of the premium. The Fund may
purchase put options to hedge against a decline in the value of portfolio
securities. If such decline occurs, the put options will permit the Fund to sell
the securities at the exercise price or to close out the options at a profit. By
using put options in this way, the Fund will reduce any profit it might
otherwise have realized on the underlying security by the amount of the premium
paid for the put option and by transaction costs.

            The Fund may purchase or write options on securities of the types in
which they are permitted to invest in privately negotiated (i.e.,
over-the-counter) transactions. The Fund will effect such transactions only with
investment dealers and other financial institutions (such as commercial banks or
savings and loan institutions) deemed creditworthy by the Adviser, and the
Adviser has adopted procedures for monitoring the creditworthiness of such
entities. Options purchased or written in negotiated transactions may be
illiquid and it may not be possible for the Fund to effect a closing transaction
at a time when the Adviser believes it would be advantageous to do so.

            --Options on Securities Indices. An option on a securities index is
similar to an option on a security except that, rather than taking or making
delivery of a security at a specified price, an option on a securities index
gives the holder the right to receive, upon exercise of the option, an amount of
cash if the closing level of the chosen index is greater than (in the case of a
call) or less than (in the case of a put) the exercise price of the option.

            The Fund may write (sell) call and put options and purchase call and
put options on securities indices. If the Fund purchases put options on
securities indices to hedge its investments against a decline in the value of
portfolio securities, it will seek to offset a decline in the value of
securities it owns through appreciation of the put option. If the value of the
Fund's investments does not decline as anticipated, or if the value of the
option does not increase, the Fund's loss will be limited to the premium paid
for the option. The success of this strategy will largely depend on the accuracy
of the correlation between the changes in value of the index and the changes in
value of the Fund's security holdings.

            The purchase of call options on securities indices may be used by
the Fund to attempt to reduce the risk of missing a broad market advance, or an
advance in an industry or market segment, at a time when the Fund holds
uninvested cash or short-term debt securities awaiting investment. When
purchasing call options for this purpose, the Fund will also bear the risk of
losing all or a portion of the premium paid if the value of the index does not
rise. The purchase of call options on stock indices when the Fund is
substantially fully invested is a form of leverage, up to the amount of the
premium and related transaction costs, and involves risks of loss and of
increased volatility similar to those involved in purchasing call options on
securities the Fund owns.

            --Options on Foreign Currencies. The Fund may purchase and write
options on foreign currencies for hedging purposes. For example, a decline in
the dollar value of a foreign currency in which portfolio securities are
denominated will reduce the dollar value of such securities, even if their value
in the foreign currency remains constant. In order to protect against such
diminutions in the value of portfolio securities, the Fund may purchase put
options on the foreign currency. If the value of the currency does decline, the
Fund will have the right to sell such currency for a fixed amount in dollars and
could thereby offset, in whole or in part, the adverse effect on its portfolio
which otherwise would have resulted.

            Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Fund may purchase call options on the currency. The
purchase of such options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other types of options,
however, the benefit to the Fund from purchases of foreign currency options will
be reduced by the amount of the premium and related transaction costs. In
addition, where currency exchange rates do not move in the direction or to the
extent anticipated, the Fund could sustain losses on transactions in foreign
currency options which would require it to forgo a portion or all of the
benefits of advantageous changes in such rates.

            In addition, where the Fund anticipates a decline in the dollar
value of non-U.S. Dollar-denominated securities due to adverse fluctuations in
exchange rates it could, instead of purchasing a put option, write a call option
on the relevant currency. If the expected decline occurs, the option will most
likely not be exercised, and the diminution in value of portfolio securities
could be offset by the amount of the premium received.

            Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, the Fund
could write a put option on the relevant currency, which, if rates move in the
manner projected, will expire unexercised and allow the Fund to hedge such
increased cost up to the amount of the premium. As in the case of other types of
options, however, the writing of a foreign currency option will constitute only
a partial hedge up to the amount of the premium, and only if rates move in the
expected direction. If this does not occur, the option may be exercised and the
Fund will be required to purchase or sell the underlying currency at a loss
which may not be offset by the amount of the premium. Through the writing of
options on foreign currencies, the Fund also may be required to forgo all or a
portion of the benefits that might otherwise have been obtained from favorable
movements in exchange rates.

            In addition to using options for the hedging purposes described
above, the Fund may also invest in options on foreign currencies for non-hedging
purposes as a means of making investments in foreign currencies. The Fund may
use options on currency to seek to increase total return when the Adviser
anticipates that a foreign currency will appreciate or depreciate in value but
securities denominated in that currency are not held by the Fund and do not
present attractive investment opportunities. For example, the Fund may purchase
call options in anticipation of an increase in the market value of a currency.
The Fund would ordinarily realize a gain if, during the option period, the value
of such currency exceeded the sum of the exercise price, the premium paid and
transaction costs. Otherwise, the Fund would realize no gain or loss on the
purchase of the call option. Put options may be purchased by the Fund for the
purpose of benefiting from a decline in the value of a currency that the Fund
does not own. The Fund would normally realize a gain if, during the option
period, the value of the underlying currency decreased below the exercise price
sufficiently to more than cover the premium and transaction costs. Otherwise,
the Fund would realize no gain or loss on the purchase of the put option. For
additional information on the use of options on foreign currencies for
non-hedging purposes, see "Currency Transactions" below.

            Special Risks Associated with Options on Currencies. An
exchange-traded options position may be closed out only on an options exchange
that provides a secondary market for an option of the same series. Although the
Fund will generally purchase or sell options for which there appears to be an
active secondary market, there is no assurance that a liquid secondary market on
an exchange will exist for any particular option, or at any particular time. For
some options, no secondary market on an exchange may exist. In such event, it
might not be possible to effect closing transactions in particular options, with
the result that the Fund would have to exercise its options in order to realize
any profit and would incur transaction costs on the purchase or sale of the
underlying currency.

            --Futures Contracts and Options on Futures Contracts. Futures
contracts that the Fund may buy and sell may include futures contracts on
fixed-income or other securities, and contracts based on interest rates, foreign
currencies or financial indices, including any index of U.S. government
securities. The Fund may, for example, purchase or sell futures contracts and
options thereon to hedge against changes in interest rates, securities (through
index futures or options) or currencies.

            Interest rate futures contracts are purchased or sold for hedging
purposes to attempt to protect against the effects of interest rate changes on
the Fund's current or intended investments in fixed-income securities. For
example, if the Fund owned long-term bonds and interest rates were expected to
increase, the Fund might sell interest rate futures contracts. Such a sale would
have much the same effect as selling some of the long-term bonds in the Fund's
portfolio. However, the market for interest rate futures contracts may be more
liquid than the cash market for individual bonds, and the use of interest rate
futures contracts as a hedging technique allows the Fund to hedge its interest
rate risk without having to sell its portfolio securities. If interest rates
were to increase, the value of the debt securities in the portfolio would
decline, but the value of the Fund's interest rate futures contracts would be
expected to increase at approximately the same rate, thereby keeping the net
asset value, or NAV, of the Fund from declining as much as it otherwise would
have. On the other hand, if interest rates were expected to decline, interest
rate futures contracts could be purchased to hedge in anticipation of subsequent
purchases of long-term bonds at higher prices. Because the fluctuations in the
value of the interest rate futures contracts should be similar to those of
long-term bonds, the Fund could protect itself against the effects of the
anticipated rise in the value of long-term bonds without actually buying them
until the necessary cash becomes available or the market has stabilized. At that
time, the interest rate futures contracts could be liquidated and the Fund's
cash reserves could then be used to buy long-term bonds on the cash market.

            The Fund may purchase and sell foreign currency futures contracts
for hedging purposes in order to protect against fluctuations in currency
exchange rates. Such fluctuations could reduce the dollar value of portfolio
securities denominated in foreign currencies, or increase the cost of non-U.S.
Dollar-denominated securities to be acquired, even if the value of such
securities in the currencies in which they are denominated remains constant. The
Fund may sell futures contracts on a foreign currency, for example, when it
holds securities denominated in such currency and it anticipates a decline in
the value of such currency relative to the dollar. If such a decline were to
occur, the resulting adverse effect on the value of non-U.S. Dollar-denominated
securities may be offset, in whole or in part, by gains on the futures
contracts. However, if the value of the foreign currency increases relative to
the dollar, the Fund's loss on the foreign currency futures contract may or may
not be offset by an increase in the value of the securities because a decline in
the price of the security stated in terms of the foreign currency may be greater
than the increase in its value as a result of the change in exchange rates.

            Conversely, the Fund could protect against a rise in the dollar cost
of non-U.S. Dollar-denominated securities to be acquired by purchasing futures
contracts on the relevant currency, which could offset, in whole or in part, the
increased cost of such securities resulting from a rise in the dollar value of
the underlying currencies. When the Fund purchases futures contracts under such
circumstances, however, and the price in dollars of securities to be acquired
instead declines as a result of appreciation of the dollar, the Fund will
sustain losses on its futures position which could reduce or eliminate the
benefits of the reduced cost of portfolio securities to be acquired.

            The Fund may also engage in currency "cross hedging" when, in the
opinion of the Adviser, the historical relationship among foreign currencies
suggests that the Fund may achieve protection against fluctuations in currency
exchange rates similar to that described above at a reduced cost through the use
of a futures contract relating to a currency other than the U.S. Dollar or the
currency in which the foreign security is denominated. Such "cross hedging" is
subject to the same risks as those described above with respect to an
unanticipated increase or decline in the value of the subject currency relative
to the U.S. Dollar.

            The Fund may also use foreign currency futures contracts and options
on such contracts for non-hedging purposes. Similar to options on currencies
described above, the Fund may use foreign currency futures contracts and options
on such contracts to seek to increase total return when the Adviser anticipates
that a foreign currency will appreciate or depreciate in value but securities
denominated in that currency are not held by the Fund and do not present
attractive investment opportunities. The risks associated with foreign currency
futures contracts and options on futures are similar to those associated with
options on foreign currencies, as described above. For additional information on
the use of futures contracts on foreign currencies and options on such contracts
for non-hedging purposes, see "Currency Transactions" below.

            Purchases or sales of stock or bond index futures contracts may be
used for hedging purposes to attempt to protect the Fund's current or intended
investments from broad fluctuations in stock or bond prices. For example, the
Fund may sell stock or bond index futures contracts in anticipation of or during
a market decline to attempt to offset the decrease in market value of the Fund's
portfolio securities that might otherwise result. If such decline occurs, the
loss in value of portfolio securities may be offset, in whole or part, by gains
on the futures position. When the Fund is not fully invested in the securities
market and anticipates a significant market advance, it may purchase stock or
bond index futures contracts in order to gain rapid market exposure that may, in
whole or in part, offset increases in the cost of securities that the Fund
intends to purchase. As such purchases are made, the corresponding positions in
stock or bond index futures contracts will be closed out.

            The Fund has claimed an exclusion from the definition of the term
"commodity pool operator" under the Commodity Exchange Act and therefore is not
subject to registration or regulation as a pool operator under that Act.

            Options on futures contracts are options that call for the delivery
of futures contracts upon exercise. Options on futures contracts written or
purchased by the Fund will be traded on U.S. exchanges.

            The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the securities in the Fund's
portfolio. If the futures price at expiration of the option is below the
exercise price, the Fund will retain the full amount of the option premium,
which provides a partial hedge against any decline that may have occurred in the
Fund's portfolio holdings. The writing of a put option on a futures contract
constitutes a partial hedge against increasing prices of the securities or other
instruments required to be delivered under the terms of the futures contract. If
the futures price at expiration of the put option is higher than the exercise
price, the Fund will retain the full amount of the option premium, which
provides a partial hedge against any increase in the price of securities which
the Fund intends to purchase. If a put or call option the Fund has written is
exercised, the Fund will incur a loss which will be reduced by the amount of the
premium it receives. Depending on the degree of correlation between changes in
the value of its portfolio securities and changes in the value of its options on
futures positions, the Fund's losses from exercised options on futures may to
some extent be reduced or increased by changes in the value of portfolio
securities.

            The Fund may purchase options on futures contracts for hedging
purposes instead of purchasing or selling the underlying futures contracts. For
example, where a decrease in the value of portfolio securities is anticipated as
a result of a projected market-wide decline or changes in interest or exchange
rates, the Fund could, in lieu of selling futures contracts, purchase put
options thereon. In the event that such decrease were to occur, it may be
offset, in whole or part, by a profit on the option. If the anticipated market
decline were not to occur, the Fund will suffer a loss equal to the price of the
put. Where it is projected that the value of securities to be acquired by the
Fund will increase prior to acquisition due to a market advance or changes in
interest or exchange rates, the Fund could purchase call options on futures
contracts, rather than purchasing the underlying futures contracts. If the
market advances, the increased cost of securities to be purchased may be offset
by a profit on the call. However, if the market declines, the Fund will suffer a
loss equal to the price of the call, but the securities that the Fund intends to
purchase may be less expensive.

            --Swaps: Interest Rate Transactions. The Fund may enter into
interest rate swap, swaptions, cap or floor transactions, which may include
preserving a return or spread on a particular investment or portion of its
portfolio or protecting against an increase in the price of securities the Fund
anticipates purchasing at a later date. Unless there is a counterparty default,
the risk of loss to the Fund from interest rate transactions is limited to the
net amount of interest payments that the Fund is contractually obligated to
make. If the counterparty to an interest rate transaction defaults, the Fund may
lose the net amount of interest payments that it is contractually entitled to
receive.

            Interest rate swaps involve the exchange by the Fund with another
party of payments calculated by reference to specified interest rates (e.g., an
exchange of floating rate payments for fixed rate payments) computed based on a
contractually-based principal (or "notional") amount. Interest rate swaps are
entered into on a net basis (i.e., the two payment streams are netted out, with
the Fund receiving or paying, as the case may be, only the net amount of the two
payments).

            An option on a swap agreement, also called a "swaption", is an
option that gives the buyer the right, but not the obligation, to enter into a
swap on a future date in exchange for paying a market-based "premium". A
receiver swaption gives the owner the right to receive the total return of a
specified asset, reference rate, or index. A payer swaption gives the owner the
right to pay the total return of a specified asset, reference rate, or index.
Swaptions also include options that allow an existing swap to be terminated or
extended by one of the counterparties.

            Interest rate caps and floors are similar to options in that the
purchase of an interest rate cap or floor entitles the purchaser, to the extent
that a specified index exceeds (in the case of a cap) or falls below (in the
case of a floor) a predetermined interest rate, to receive payments of interest
on a notional amount from the party selling the interest rate cap or floor.

            Caps and floors are less liquid than swaps. These transactions do
not involve the delivery of securities or other underlying assets or principal.
The Fund will enter into interest rate swap, swaptions, cap or floor
transactions only with counterparties who have credit ratings of at least A- (or
the equivalent) from any one NRSRO or counterparties with guarantors with debt
securities having such a rating.

            --Credit Default Swap Agreements. The "buyer" in a credit default
swap contract is obligated to pay the "seller" a periodic stream of payments
over the term of the contract in return for a contingent payment upon the
occurrence of a credit event with respect to an underlying reference obligation.
Generally, a credit event means bankruptcy, failure to pay, obligation
acceleration or modified restructuring. The Fund may be either the buyer or
seller in the transaction. As a seller, the Fund receives a fixed rate of income
throughout the term of the contract, which typically is between one month and
five years, provided that no credit event occurs. If a credit event occurs, the
Fund typically must pay the contingent payment to the buyer. The contingent
payment will be either (i) the "par value" (face amount) of the reference
obligation, in which case the Fund will receive the reference obligation in
return, or (ii) an amount equal to the difference between the par value and the
current market value of the reference obligation. If the Fund is a buyer and no
credit event occurs, the Fund will lose its periodic stream of payments over the
term of the contract. However, if a credit event occurs, the buyer typically
receives the full notional value for a reference obligation that may have little
or no value.

            Credit default swaps may involve greater risks than if the Fund had
invested in the reference obligation directly. Credit default swaps are subject
to general market risk, liquidity risk and credit risk.

            --Total Return Swaps. The Fund may enter into total return swaps in
order to take a "long" or "short" position with respect to an underlying
referenced asset. The Fund is subject to market price volatility of the
referenced asset. A total return swap involves commitments to pay interest in
exchange for a market-linked return based on a notional amount. To the extent
that the total return of the security, group of securities or index underlying
the transaction exceeds or falls short of the offsetting interest obligation,
the Fund will receive a payment or make a payment to the counterparty.

            --Currency Swaps. The Fund may enter into currency swaps for hedging
purposes in an attempt to protect against adverse changes in exchange rates
between the U.S. Dollar and other currencies or for non-hedging purposes as a
means of making direct investments in foreign currencies, as described below
under "Currency Transactions". Currency swaps involve the exchange by the Fund
with another party of a series of payments in specified currencies. Since
currency swaps are typically individually negotiated, the Fund expects to
achieve an acceptable degree of correlation between its portfolio investments
and its currency swaps positions. Actual principal amounts of currencies may be
exchanged by the counterparties at the initiation and again upon termination of
the transaction. Therefore, the entire principal value of a currency swap is
subject to the risk that the other party to the swap will default on its
contractual delivery obligations. The Fund will not enter into any currency swap
unless the credit quality of the unsecured senior debt or the claims-paying
ability of the other party thereto is rated in the highest rating category of at
least one nationally recognized statistical rating organization at the time of
entering into the transaction. If there is a default by the other party to such
a transaction, the Fund will have contractual remedies pursuant to the
agreements related to the transactions.

            Special Risks Associated with Swaps. 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 Fund, and/or
the termination value at the end of the contract. Therefore, the Fund considers
the creditworthiness of each counterparty to a swap contract in evaluating
potential counterparty risk. The risk is mitigated by having a netting
arrangement between the Fund and the counterparty and by the posting of
collateral by the counterparty to the Fund to cover the Fund's exposure to the
counterparty. Additionally, risks may arise from unanticipated movements in
interest rates or in the value of the underlying securities. The Fund accrues
for the interim payments 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 on the
statement of operations, in addition to any realized gain/(loss) recorded upon
the termination of swap contracts. Fluctuations in the value of swap contracts
are recorded as a component of net change in unrealized
appreciation/depreciation of swap contracts on the statement of operations.

            --Synthetic Foreign Equity Securities. The Fund may invest in
different types of derivatives generally referred to as synthetic foreign equity
securities. These securities may include international warrants or local access
products. International warrants are financial instruments issued by banks or
other financial institutions, which may or may not be traded on a foreign
exchange. International warrants are a form of derivative security that may give
holders the right to buy or sell an underlying security or a basket of
securities representing an index from or to the issuer of the warrant for a
particular price or may entitle holders to receive a cash payment relating to
the value of the underlying security or index, in each case upon exercise by the
Fund. Local access products are similar to options in that they are exercisable
by the holder for an underlying security or a cash payment based upon the value
of that security, but are generally exercisable over a longer term than typical
options. These types of instruments may be American style, which means that they
can be exercised at any time on or before their expiration date, or European
style, which means that they may be exercised only on the expiration date.

            Other types of synthetic foreign equity securities in which the Fund
may invest include covered warrants and low exercise price warrants. Covered
warrants entitle the holder to purchase from the issuer, typically a financial
institution, upon exercise, common stock of an international company or receive
a cash payment (generally in U.S. Dollars). The issuer of the covered warrant
usually owns the underlying security or has a mechanism, such as owning equity
warrants on the underlying securities, through which they can obtain the
securities. The cash payment is calculated according to a predetermined formula,
which is generally based on the difference between the value of the underlying
security on the date of exercise and the strike price. Low exercise price
warrants are warrants with an exercise price that is very low relative to the
market price of the underlying instrument at the time of issue (e.g., one cent
or less). The buyer of a low exercise price warrant effectively pays the full
value of the underlying common stock at the outset. In the case of any exercise
of warrants, there may be a time delay between the time a holder of warrants
gives instructions to exercise and the time the price of the common stock
relating to exercise or the settlement date is determined, during which time the
price of the underlying security could change significantly. In addition, the
exercise or settlement date of the warrants may be affected by certain market
disruption events, such as difficulties relating to the exchange of a local
currency into U.S. Dollars, the imposition of capital controls by a local
jurisdiction or changes in the laws relating to foreign investments. These
events could lead to a change in the exercise date or settlement currency of the
warrants, or postponement of the settlement date. In some cases, if the market
disruption events continue for a certain period of time, the warrants may become
worthless resulting in a total loss of the purchase price of the warrants.

            The Fund will acquire synthetic foreign equity securities issued by
entities deemed to be creditworthy by the Adviser, which will monitor the
creditworthiness of the issuers on an ongoing basis. Investments in these
instruments involve the risk that the issuer of the instrument may default on
its obligation to deliver the underlying security or cash in lieu thereof. These
instruments may also be subject to liquidity risk because there may be a limited
secondary market for trading the warrants. They are also subject, like other
investments in foreign securities, to foreign risk and currency risk.

            International warrants also include equity warrants, index warrants,
and interest rate warrants. Equity warrants are generally issued in conjunction
with an issue of bonds or shares, although they also may be issued as part of a
rights issue or scrip issue. When issued with bonds or shares, they usually
trade separately from the bonds or shares after issuance. Most warrants trade in
the same currency as the underlying stock (domestic warrants), but also may be
traded in different currency (euro-warrants). Equity warrants are traded on a
number of foreign exchanges and in over-the-counter markets. Index warrants and
interest rate warrants are rights created by an issuer, typically a financial
institution, entitling the holder to purchase, in the case of a call, or sell,
in the case of a put, respectively, an equity index or a specific bond issue or
interest rate index at a certain level over a fixed period of time. Index
warrants transactions settle in cash, while interest rate warrants can typically
be exercised in the underlying instrument or settle in cash.

            The Fund also may invest in long-term options of, or relating to,
international issuers. Long-term options operate much like covered warrants.
Like covered warrants, long-term options are call options created by an issuer,
typically a financial institution, entitling the holder to purchase from the
issuer outstanding securities of another issuer. Long-term options have an
initial period of one year or more, but generally have terms between three and
five years. Unlike U.S. options, long-term European options do not settle
through a clearing corporation that guarantees the performance of the
counterparty. Instead, they are traded on an exchange and subject to the
exchange's trading regulations.

            --Eurodollar Instruments. Eurodollar instruments are essentially
U.S. Dollar-denominated futures contracts or options thereon that are linked to
the London Interbank Offered Rate and are subject to the same limitations and
risks as other futures contracts and options.

            --Currency Transactions. The Fund may invest in non-U.S.
Dollar-denominated securities on a currency hedged or un-hedged basis. The
Adviser may actively manage the Fund's currency exposures and may seek
investment opportunities by taking long or short positions in currencies through
the use of currency-related derivatives, including forward currency exchange
contracts, futures and options on futures, swaps and options. The Adviser may
enter into transactions for investment opportunities when it anticipates that a
foreign currency will appreciate or depreciate in value but securities
denominated in that currency are not held by the Fund and do not present
attractive investment opportunities. Such transactions may also be used when the
Adviser believes that it may be more efficient than a direct investment in a
foreign currency-denominated security. The Fund may also conduct currency
exchange contracts on a spot basis (i.e., for cash at the spot rate prevailing
in the currency exchange market for buying or selling currencies).

Forward Commitments and When-Issued and Delayed Delivery Securities
-------------------------------------------------------------------

            Forward commitments for the purchase or sale of securities may
include purchases on a "when-issued" basis or purchases or sales on a "delayed
delivery" basis. In some cases, a forward commitment may be conditioned upon the
occurrence of a subsequent event, such as approval and consummation of a merger,
corporate reorganization or debt restructuring (i.e., a "when, as and if issued"
trade). When forward commitment transactions are negotiated, the price is fixed
at the time the commitment is made. The Fund assumes the rights and risks of
ownership of the security, but the Fund does not pay for the securities until
they are received. If the Fund is fully or almost fully invested when forward
commitment purchases are outstanding, such purchases may result in a form of
leverage. Leveraging the portfolio in this manner may increase the Fund's
volatility of returns.

            The use of forward commitments enables the Fund to protect against
anticipated changes in interest rates and/or prices. When-issued securities and
forward commitments may be sold prior to the settlement date. If the Fund
chooses to dispose of the right to acquire a when-issued security prior to its
acquisition or dispose of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. Any significant commitment of Fund
assets to the purchase of securities on a when issued basis may increase the
volatility of the Fund's NAV.

            Forward commitments include "to be announced" ("TBA")
mortgage-backed securities, which are contracts for the purchase or sale of
mortgage-backed securities to be delivered at a future agreed-upon date, but
where the specific mortgage pool number or the number of pools that will be
delivered to fulfill the trade obligation or terms of the contract are unknown
at the time of the trade. Subsequent to the trade, a mortgage pool or pools
guaranteed by the Government National Mortgage Association, or GNMA, the Federal
National Mortgage Association, or FNMA, or the Federal Home Loan Mortgage
Association, or FHLMC (including fixed rate or variable rate mortgages) are
allocated to the TBA mortgage-backed securities transactions.

            At the time the Fund intends to enter into a forward commitment, it
will record the transaction and thereafter reflect the value of the security
purchased or, if a sale, the proceeds to be received, in determining its NAV.
Any unrealized appreciation or depreciation reflected in such valuation of a
"when, as and if issued" security would be canceled in the event that the
required conditions did not occur and the trade was canceled.

            Purchases of securities on a forward commitment or "when-issued"
basis may involve more risk than other types of purchases. For example, by
committing to purchase securities in the future, the Fund subjects itself to a
risk of loss on such commitments as well as on its portfolio securities. Also,
the Fund may have to sell assets which have been set aside in order to meet
redemptions. In addition, if the Fund determines it is advisable as a matter of
investment strategy to sell the forward commitment or "when-issued" or "delayed
delivery" securities before delivery, the Fund may incur a gain or loss because
of market fluctuations since the time the commitment to purchase such securities
was made. Any such gain or loss would be treated as a capital gain or loss for
tax purposes. When the time comes to pay for the securities to be purchased
under a forward commitment or on a "when-issued" or "delayed delivery" basis,
the Fund will meet its obligations from the then available cash flow or the sale
of securities, or, although it would not normally expect to do so, from the sale
of the forward commitment or "when-issued" or "delayed delivery" securities
themselves (which may have a value greater or less than the Fund's payment
obligation). No interest or dividends accrue to the purchaser prior to the
settlement date for securities purchased or sold under a forward commitment. In
addition, in the event the other party files for bankruptcy, becomes insolvent,
or defaults on its obligation, the Fund may be adversely affected.

Illiquid Securities
-------------------

            The Fund will not invest in illiquid securities if immediately after
such investment more than 15% or such other amount permitted by guidance
regarding the 1940 Act of the Fund's net assets would be invested in such
securities. For this purpose, illiquid securities include, among others, (a)
direct placements or other securities which are subject to legal or contractual
restrictions on resale or for which there is no readily available market (e.g.,
trading in the security is suspended or, in the case of unlisted securities,
market makers do not exist or will not entertain bids or offers), (b) options
purchased by the Fund over-the-counter and the cover for options written by the
Fund over-the-counter, and (c) repurchase agreements not terminable within seven
days. As discussed in more detail below, securities that have legal or
contractual restrictions on resale but have a readily available market are not
deemed illiquid for purposes of this limitation.

            Mutual funds do not typically hold a significant amount of
restricted securities (securities that are subject to restrictions on resale to
the general public) or other illiquid securities because of the potential for
delays on resale and uncertainty in valuation. Limitations on resale may have an
adverse effect on the marketability of portfolio securities and a mutual fund
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemptions within seven days. A mutual fund may also have to take certain steps
or wait a certain amount of time in order to remove the transfer restrictions
for such restricted securities in order to dispose of them, resulting in
additional expense and delay.

            Rule 144A under the Securities Act of 1933, as amended, (the
"Securities Act") allows a broader institutional trading market for securities
otherwise subject to restriction on resale to the general public. Rule 144A
establishes a "safe harbor" from the registration requirements of the Securities
Act for resales of certain securities to qualified institutional buyers. An
insufficient number of qualified institutional buyers interested in purchasing
certain restricted securities held by the Fund, however, could affect adversely
the marketability of such portfolio securities and the Fund might be unable to
dispose of such securities promptly or at reasonable prices.

            The Adviser, acting under the oversight of the Board, will monitor
the liquidity of restricted securities in the Fund that are eligible for resale
pursuant to Rule 144A. In reaching liquidity decisions, the Adviser will
consider, among others, the following factors: (1) the frequency of trades and
quotes for the security; (2) the number of dealers issuing quotations to
purchase or sell the security; (3) the number of other potential purchasers of
the security; (4) the number of dealers undertaking to make a market in the
security; (5) the nature of the security (including its unregistered nature) and
the nature of the marketplace for the security (e.g., the time needed to dispose
of the security, the method of soliciting offers and the mechanics of the
transfer); and (6) any applicable Securities and Exchange Commission ("SEC")
interpretation or position with respect to such type of securities.

Investment in Other Investment Companies
----------------------------------------


            The Fund may invest in the securities of other investment companies
to the extent permitted under the 1940 Act or the rules and regulations
thereunder (as such statute, rules or regulations may be amended from time to
time) or by guidance regarding, interpretations of, or exemptive orders under,
the 1940 Act or the rules or regulations thereunder published by appropriate
regulatory authorities. The Fund may invest uninvested cash balances in an
affiliated money market fund as permitted by Rule 12d1-1 under the 1940 Act. If
the Fund acquires shares in investment companies, shareholders would bear,
indirectly, the expenses of such investment companies (which may include
management and advisory fees), which are in addition to the Fund's expenses. The
Fund may also invest in exchange-traded funds, subject to the restrictions and
limitations of the 1940 Act or any applicable rules, exemptive orders or
regulatory guidance.


Lending of Portfolio Securities
-------------------------------


            The Fund may seek to increase income by lending portfolio securities
to brokers, dealers, and financial institutions ("borrowers") to the extent
permitted under the 1940 Act or the rules or regulations thereunder (as such
statute, rules, or regulations may be amended from time to time). Under the
securities lending program, all securities loans will be secured continually by
cash collateral. A principal risk in lending portfolio securities is that the
borrower will fail to return the loaned securities upon termination of the loan
and that the collateral will not be sufficient to replace the loaned securities
upon the borrower's default. In determining whether to lend securities to a
particular borrower, the Adviser (subject to oversight by the Board) will
consider all relevant facts and circumstances, including the creditworthiness of
the borrower. The loans would be made only to firms deemed by the Adviser to be
creditworthy, and when, in the judgment of the Adviser, the consideration that
can be earned currently from securities loans of this type justifies the
attendant risk. The Fund will be compensated for the loan from a portion of the
net return from the interest earned on the cash collateral after a rebate paid
to the borrower and payments for fees paid to the securities lending agent and
for certain other administrative expenses.

            The Fund will have the right to call a loan and obtain the
securities loaned on notice to the borrower within the normal and customary
settlement time for the securities. While securities are on loan, the borrower
will pay the Fund amounts equal to any income or other distribution from the
securities.

            The Fund will invest any cash collateral in a money market fund that
is advised by the Advisor. Any such investment of cash collateral will be
subject to the Fund's risk. The Fund may pay reasonable finders',
administrative, and custodial fees in connection with a loan.

            The Fund will not have the right to vote on any securities having
voting rights during the existence of the loan. The Fund will have the right to
regain record ownership of loaned securities or equivalent securities in order
to exercise voting or ownership rights.


Loan Participations and Assignments
-----------------------------------


            The Fund may invest in direct debt instruments, which are interests
in amounts owed to lenders or lending syndicates by corporate, governmental, or
other borrowers ("Loans"), either by participating as co-lender at the time the
Loan is originated ("Participations") or by buying an interest in the Loan in
the secondary market from a financial institution or institutional investor
("Assignments"). A loan is often administered by a bank, or other financial
institution, that acts as agent for all the holders. The financial status of the
agent interposed between the Fund and a borrower may affect the ability of the
Fund to receive principal and interest payments.

            The Fund's investment may depend on the skill with which an agent
bank administers the terms of the corporate loan agreements, monitors borrower
compliance with covenants, collects principal, interest and fee payments from
borrowers and, where necessary, enforces creditor remedies against borrowers.
Agent banks typically have broad discretion in enforcing loan agreements.


            The Fund's investment in Participations typically will result in the
Fund having a contractual relationship only with the financial institution
arranging the Loan with the borrower (the "Lender") and not with the borrower
directly. The Fund will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the Lender selling the
Participation and only upon receipt by the Lender of the payments from the
borrower. In connection with purchasing Participations, the Fund generally will
have no right to enforce compliance by the borrower with the terms of the loan
agreement relating to the Loan, nor any rights of set-off against the borrower,
and the Fund may not directly benefit from any collateral supporting the Loan in
which it has purchased the Participation. As a result, the Fund may be subject
to the credit risk of both the borrower and the Lender that is selling the
Participation. In the event of the insolvency of the Lender selling a
Participation, the Fund may be treated as a general creditor of the Lender and
may not benefit from any set-off between the Lender and the borrower. Certain
Participations may be structured in a manner designed to avoid purchasers of
Participations being subject to the credit risk of the Lender with respect to
the Participation; but even under such a structure, in the event of the Lender's
insolvency, the Lender's servicing of the Participation may be delayed and the
assignability of the Participation impaired. The Fund will acquire
Participations only if the Lender interpositioned between the Fund and the
borrower is a Lender having total assets of more than $25 billion and whose
senior unsecured debt is rated investment grade (i.e., Baa3 or higher by Moody's
or BBB- or higher by S&P) or higher.

            When the Fund purchases Assignments from Lenders it will acquire
direct rights against the borrower on the Loan. Because Assignments are arranged
through private negotiations between potential assignees and potential
assignors, however, the rights and obligations acquired by the Fund as the
purchaser of an assignment may differ from, and be more limited than, those held
by the assigning Lender. The assignability of certain obligations is restricted
by the governing documentation as to the nature of the assignee such that the
only way in which the Fund may acquire an interest in a Loan is through a
Participation and not an Assignment.

            The Fund may have difficulty disposing of Assignments and
Participations because to do so it will have to assign such securities to a
third party. Because there is no liquid market for such securities, the Fund
anticipates that such securities could be sold only to a limited number of
institutional investors. The lack of a liquid secondary market may have an
adverse impact on the value of such securities and the Fund's ability to dispose
of particular Assignments or Participations when necessary to meet the Fund's
liquidity needs in response to a specific economic event such as a deterioration
in the creditworthiness of the borrower. The lack of a liquid secondary market
for Assignments and Participations also may make it difficult for the Fund to
assign a value to these securities for purposes of valuing the Fund's portfolio
and calculating its asset value.


            These loans may include participations in "bridge loans", which are
Loans taken out by borrowers for a short period (typically less than six months)
pending arrangement of more permanent financing through, for example, the
issuance of bonds, frequently high-yield bonds issued for the purposes of
acquisitions. A Fund may also participate in unfunded loan commitments, which
are contractual obligations for future funding, and receive a commitment fee
based on the amount of the commitment.


Mortgage-Related Securities and Other Asset-Backed Securities
-------------------------------------------------------------

            The mortgage-related securities in which the Fund may invest
typically are securities representing interests in pools of mortgage loans made
by lenders such as savings and loan associations, mortgage bankers and
commercial banks and are assembled for sale to investors (such as the Fund) by
governmental, government-related or private organizations. Private organizations
include commercial banks, savings associations, mortgage companies, investment
banking firms, finance companies, special purpose finance entities (called
special purpose vehicles or SPVs) and other entities that acquire and package
loans for resales as mortgage-related securities. Specifically, these securities
may include pass-through mortgage-related securities, collateralized mortgage
obligations ("CMOs"), CMO residuals, adjustable-rate mortgage securities
("ARMS"), commercial mortgage-backed securities, "to be announced" ("TBA")
mortgage-backed securities, mortgage dollar rolls, collateralized obligations
and other securities that directly or indirectly represent a participation in or
are secured by and payable from mortgage loans on real property and other
assets.

            Pass-Through Mortgage-Related Securities. Interests in pools of
mortgage-related securities differ from other forms of debt securities, which
normally provide for periodic payment of interest in fixed amounts with
principal payments at maturity or specified call dates. Instead, these
securities provide a monthly payment consisting of both interest and principal
payments. In effect, these payments are a "pass-through" of the monthly payments
made by the individual borrowers on their residential mortgage loans, net of any
fees paid to the issuer or guarantor of such securities. Additional payments are
caused by repayments of principal resulting from the sale of the underlying
residential property, refinancing or foreclosure, net of fees or costs that may
be incurred. Some mortgage-related securities are described as "modified
pass-through." These securities entitle the holder to receive all interest and
principal payments owed on the mortgage pool, net of certain fees, regardless of
whether or not the mortgagor actually makes the payment.

            The average life of pass-through pools varies with the maturities of
the underlying mortgage instruments. In addition, a pool's term may be shortened
by unscheduled or early payments of principal and interest on the underlying
mortgages. The occurrence of mortgage prepayments is affected by factors
including the level of interest rates, general economic conditions, the location
and age of the mortgage and other social and demographic conditions. As
prepayment rates of individual pools vary widely, it is not possible to
accurately predict the average life of a particular pool. For pools of
fixed-rate 30-year mortgages, common industry practice is to assume that
prepayments will result in a 12-year average life. Pools of mortgages with other
maturities or different characteristics will have varying average life
assumptions. The assumed average life of pools of mortgages having terms of less
than 30 years, is less than 12 years, but typically not less than 5 years.

            Yields on pass-through securities are typically quoted by investment
dealers and vendors based on the maturity of the underlying instruments and the
associated average life assumption. In periods of falling interest rates, the
rate of prepayment tends to increase, thereby shortening the actual average life
of a pool of mortgage-related securities. Conversely, in periods of rising
interest rates the rate of prepayment tends to decrease, thereby lengthening the
actual average life of the pool. Historically, actual average life has been
consistent with the 12-year assumption referred to above. Actual prepayment
experience may cause the yield to differ from the assumed average life yield.
Reinvestment of prepayments may occur at higher or lower interest rates than the
original investment, thus affecting the yield of the Fund. The compounding
effect from reinvestment of monthly payments received by the Strategy will
increase the yield to shareholders compared with bonds that pay interest
semi-annually.

            The principal U.S. governmental (i.e., backed by the full faith and
credit of the United States Government) guarantor of mortgage-related securities
is GNMA. GNMA is a wholly-owned United States Government corporation within the
Department of Housing and Urban Development. GNMA is authorized to guarantee,
with the full faith and credit of the United States Government, the timely
payment of principal and interest on securities issued by institutions approved
by GNMA (such as savings and loan institutions, commercial banks and mortgage
bankers) and backed by pools of FHA-insured or VA-guaranteed mortgages.

            Government-related (i.e., not backed by the full faith and credit of
the United States Government) guarantors include FNMA and FHLMC. FNMA and FHLMC
are a government-sponsored corporation or corporate instrumentality of the U.S.
government, respectively (government-sponsored entities or "GSEs"), which were
owned entirely by private stockholders until 2008 when they were placed in
conservatorship by the U.S. Government. After being placed in conservatorship,
the GSEs issued senior preferred stock and common stock to the U.S. Treasury in
an amount equal to 79.9% of each GSE in return for certain funding and liquidity
arrangements. The GSEs continue to operate as going concerns while in
conservatorship and each remains liable for all of its obligations associated
with its mortgage-backed securities. The U.S. Treasury has provided additional
funding to the GSEs and their future is unclear as Congress is considering
whether to adopt legislation that would severely restrict or even terminate
their operations. FNMA purchases residential mortgages from a list of approved
seller/servicers, which include state and federally-chartered savings and loan
associations, mutual savings banks, commercial banks, credit unions and mortgage
bankers. Pass-through securities issued by FNMA are guaranteed as to timely
payment of principal and interest by FNMA and are now, in light of the funding
and liquidity arrangements referenced above, effectively backed by the full
faith and credit of the U.S. Government. Participation certificates issued by
FHLMC, which represent interests in mortgages from FHLMC's national portfolio,
are guaranteed by FHLMC as to the timely payment of interest and ultimate
collection of principal and are now, in effect, backed by the full faith and
credit of the United States Government.

            Commercial banks, savings and loan associations, private mortgage
insurance companies, mortgage bankers and other secondary market issuers create
pass-through pools of conventional residential mortgage loans. Securities
representing interests in pools created by non-governmental private issuers
generally offer a higher rate of interest than securities representing interests
in pools created by governmental issuers because there are no direct or indirect
governmental guarantees of the underlying mortgage payments. However, private
issuers sometimes obtain committed loan facilities, lines of credit, letters of
credit, surety bonds or other forms of liquidity and credit enhancement to
support the timely payment of interest and principal with respect to their
securities if the borrowers on the underlying mortgages fail to make their
mortgage payments. The ratings of such non-governmental securities are generally
dependent upon the ratings of the providers of such liquidity and credit support
and would be adversely affected if the rating of such an enhancer were
downgraded.

            The structuring of the pass-through pool may also provide credit
enhancement. Examples of such credit support arising out of the structure of the
transaction include the issue of senior and subordinated securities (e.g., the
issuance of securities by a SPV in multiple classes or "tranches", with one or
more classes being senior to other subordinated classes as to payment of
principal and interest, with the result that defaults on the underlying mortgage
loans are borne first by the holders of the subordinated class); creation of
"reserve funds" ( in which case cash or investments sometimes funded from a
portion of the payments on the underlying mortgage loans are held in reserve
against future losses); and "overcollateralization" (in which case the scheduled
payments on, or the principal amount of, the underlying mortgage loans exceeds
that required to make payment of the securities and pay any servicing or other
fees). There can be no guarantee that the credit enhancements, if any, will be
sufficient to prevent losses in the event of defaults on the underlying mortgage
loans.

            In addition, mortgage-related securities that are issued by private
issuers are not subject to the underwriting requirements for the underlying
mortgages that are applicable to those mortgage-related securities that have a
government or GSE guarantee. As a result, the mortgage loans underlying private
mortgage-related securities may, and frequently do, have less favorable
collateral, credit risk or other underwriting characteristics than government or
government-sponsored mortgage-related securities and have wider variances in a
number of terms, including interest rate, term, size, purposes and borrower
characteristics. Privately issued pools more frequently include second
mortgages, high loan-to-value mortgages and manufactured housing loans. The
coupon rates and maturities of the underlying mortgage loans in a private-label
mortgage-related pool may vary to a greater extent than those included in a
government guaranteed pool, and the pool may include subprime mortgage loans.
Subprime loans refer to loans made to borrowers with weakened credit histories
or with a lower capacity to make timely payments on their loans. For these
reasons, the loans underlying these securities have had in many cases higher
default rates than those loans that meet government underwriting requirements.

            Collateralized Mortgage Obligations. Another form of
mortgage-related security is a "pay-through" security, which is a debt
obligation of the issuer secured by a pool of mortgage loans pledged as
collateral that is legally required to be paid by the issuer, regardless of
whether payments are actually made on the underlying mortgages. CMOs are the
predominant type of "pay-through" mortgage-related security. In a CMO, a series
of bonds or certificates is issued in multiple classes. Each class of a CMO,
often referred to as a "tranche," is issued at a specific coupon rate and has a
stated maturity or final distribution date. Principal prepayments on collateral
underlying a CMO may cause one or more tranches of the CMO to be retired
substantially earlier than the stated maturities or final distribution dates of
the collateral. Although payment of the principal of, and interest on, the
underlying collateral securing privately issued CMOs may be guaranteed by GNMA,
FNMA or FHLMC, these CMOs represent obligations solely of the private issuer and
are not insured or guaranteed by GNMA, FNMA, FHLMC, any other governmental
agency or any other person or entity.

            Adjustable-Rate Mortgage Securities. Another type of
mortgage-related security, known as adjustable-rate mortgage securities
("ARMS"), bears interest at a rate determined by reference to a predetermined
interest rate or index. ARMS may be secured by fixed-rate mortgages or
adjustable-rate mortgages. ARMS secured by fixed-rate mortgages generally have
lifetime caps on the coupon rates of the securities. To the extent that general
interest rates increase faster than the interest rates on the ARMS, these ARMS
will decline in value. The adjustable-rate mortgages that secure ARMS will
frequently have caps that limit the maximum amount by which the interest rate or
the monthly principal and interest payments on the mortgages may increase. These
payment caps can result in negative amortization (i.e., an increase in the
balance of the mortgage loan). Furthermore, since many adjustable-rate mortgages
only reset on an annual basis, the values of ARMS tend to fluctuate to the
extent that changes in prevailing interest rates are not immediately reflected
in the interest rates payable on the underlying adjustable-rate mortgages.

            Commercial Mortgage-Backed Securities. Commercial mortgage-backed
securities are securities that represent an interest in, or are secured by,
mortgage loans secured by multifamily or commercial properties, such as
industrial and warehouse properties, office buildings, retail space and shopping
malls, and cooperative apartments, hotels and motels, nursing homes, hospitals
and senior living centers. Commercial mortgage-backed securities have been
issued in public and private transactions by a variety of public and private
issuers using a variety of structures, some of which were developed in the
residential mortgage context, including multi-class structures featuring senior
and subordinated classes. Commercial mortgage-backed securities may pay fixed or
floating rates of interest. The commercial mortgage loans that underlie
commercial mortgage-related securities have certain distinct risk
characteristics. Commercial mortgage loans generally lack standardized terms,
which may complicate their structure, tend to have shorter maturities than
residential mortgage loans, and may not be fully amortizing. Commercial
properties themselves tend to be unique and are more difficult to value than
single-family residential properties. In addition, commercial properties,
particularly industrial and warehouse properties, are subject to environmental
risks and the burdens and costs of compliance with environmental laws and
regulations.

            "To Be Announced" Mortgaged-Backed Securities. TBA mortgage-backed
securities are described in "Forward Commitments and When-Issued and Delayed
Delivery Securities" above.

            Certain Risks. The value of mortgage-related securities is affected
by a number of factors. Unlike traditional debt securities, which have fixed
maturity dates, mortgage-related securities may be paid earlier than expected as
a result of prepayments of underlying mortgages. Such prepayments generally
occur during periods of falling mortgage interest rates. If property owners make
unscheduled prepayments of their mortgage loans, these prepayments will result
in the early payment of the applicable mortgage-related securities. In that
event, the Fund may be unable to invest the proceeds from the early payment of
the mortgage-related securities in investments that provide as high a yield as
the mortgage-related securities. Early payments associated with mortgage-related
securities cause these securities to experience significantly greater price and
yield volatility than is experienced by traditional fixed-income securities. The
level of general interest rates, general economic conditions and other social
and demographic factors affect the occurrence of mortgage prepayments.
Conversely, during periods of rising interest rates, a reduction in prepayments
may increase the effective life of mortgage-related securities, subjecting them
to greater risk of decline in market value in response to rising interest rates.
If the life of a mortgage-related security is inaccurately predicted, the Fund
may not be able to realize the rate of return it expected.

            As with other fixed-income securities, there is also the risk of
nonpayment of mortgage-related securities, particularly for those securities
that are backed by mortgage pools that contain subprime loans. Market factors
adversely affecting mortgage loan repayments include a general economic
downturn, high unemployment, a general slowdown in the real estate market, a
drop in the market prices of real estate, or higher mortgage payments required
to be made by holders of adjustable rate mortgages due to scheduled increases or
higher interest rates.

            Subordinated mortgage-related securities may have additional risks.
The subordinated mortgage-related security may serve as credit support for the
senior securities purchased by other investors. In addition, the payments of
principal and interest on these subordinated securities generally will be made
only after payments are made to the holders of securities senior to the
subordinated securities. Therefore, if there are defaults on the underlying
mortgage loans, the holders of subordinated mortgage-related securities will be
less likely to receive payments of principal and interest and will be more
likely to suffer a loss.

            Commercial mortgage-related securities, like all fixed-income
securities, generally decline in value as interest rates rise. Moreover,
although generally the value of fixed-income securities increases during periods
of falling interest rates, this inverse relationship is not as marked in the
case of single-family residential mortgage-related securities, due to the
increased likelihood of prepayments during periods of falling interest rates,
and may not be as marked in the case of commercial mortgage-related securities.
The process used to rate commercial mortgage-related securities may focus on,
among other factors, the structure of the security, the quality and adequacy of
collateral and insurance, and the creditworthiness of the originators, servicing
companies and providers of credit support.

            Mortgage-related securities issued by certain private organizations
may not be readily marketable there may be a limited market for these
securities, especially when there is a perceived weakness in the mortgage and
real estate market sectors. In particular, the secondary market for CMOs may be
more volatile and less liquid than those for other mortgage-related securities,
thereby potentially limiting the Fund's ability to buy or sell those securities
at any particular time. Without an active trading market, mortgage-related
securities held in the Fund's portfolio may be particularly difficult to value
because of the complexities involved in the value of the underlying mortgages.
In addition, the rating agencies may have difficulties in rating commercial
mortgage-related securities through different economic cycles and in monitoring
such ratings on a longer-term basis.

            As with fixed-income securities generally, the value of
mortgage-related securities can also be adversely affected by increases in
general interest rates relative to the yield provided by such securities. Such
an adverse effect is especially possible with fixed-rate mortgage securities. If
the yield available on other investments rises above the yield of the fixed-rate
mortgage securities as a result of general increases in interest rate levels,
the value of the mortgage-related securities will decline.

            Other Asset-Backed Securities. The Fund may invest in other
asset-backed securities. The securitization techniques used to develop
mortgage-related securities are being applied to a broad range of financial
assets. Through the use of trusts and special purpose corporations, various
types of assets, including automobile loans and leases, credit card receivables,
home equity loans, equipment leases and trade receivables, are being securitized
in structures similar to the structures used in mortgage securitizations. For
example, the Fund may invest in collateralized debt obligations ("CDOs"), which
include collateralized bond obligations ("CBOs"), collateralized loan
obligations ("CLOs"), and other similarly structured securities. CBOs and CLOs
are types of asset-backed securities. A CBO is a trust, which is backed by a
diversified pool of high-risk, below investment grade fixed-income securities. A
CLO is a trust typically collateralized by a pool of loans, which may include,
among others, domestic and foreign senior secured loans, senior unsecured loans,
and subordinate corporate loans, including loans that may be rated below
investment grade or equivalent unrated loans. These asset-backed securities are
subject to risks associated with changes in interest rates, prepayment of
underlying obligations and defaults similar to the risks of investment in
mortgage-related securities discussed above.

            Each type of asset-backed security also entails unique risks
depending on the type of assets involved and the legal structure used. For
example, credit card receivables are generally unsecured obligations of the
credit card holder and these debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing the
balance due. There have also been proposals to cap the interest rate that a
credit card issuer may charge. In some transactions, the value of the
asset-backed security is dependent on the performance of a third party acting as
credit enhancer or servicer. Furthermore, in some transactions (such as those
involving the securitization of vehicle loans or leases) it may be
administratively burdensome to perfect the interest of the security issuer in
the underlying collateral and the underlying collateral may become damaged or
stolen.

Preferred Stock
---------------

            The Fund may invest in preferred stock. Preferred stock is an equity
security that has features of debt because it generally entitles the holder to
periodic payments at a fixed rate of return. Preferred stock is subordinated to
any debt the issuer has outstanding but has liquidation preference over common
stock. Accordingly, preferred stock dividends are not paid until all debt
obligations are first met. Therefore, preferred stock may be subject to more
fluctuations in market value, due to changes in market participants' perceptions
of the issuer's ability to continue to pay dividends, than debt of the same
issuer.

Real Estate Investment Trusts
-----------------------------

            Real Estate Investment Trusts ("REITs") are pooled investment
vehicles that invest primarily in income producing real estate or real estate
related loans or interests. REITs are generally classified as equity REITs,
mortgage REITs or a combination of equity and mortgage REITs. Equity REITs
invest the majority of their assets directly in real property and derive income
primarily from the collection of rents. Equity REITs can also realize capital
gains by selling properties that have appreciated in value. Mortgage REITs
invest the majority of their assets in real estate mortgages and derive income
from the collection of interest and principal payments. Similar to investment
companies such as the Fund, REITs are not taxed on income distributed to
shareholders provided they comply with several requirements of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The Fund will indirectly
bear its proportionate share of expenses incurred by REITs in which the Fund
invests in addition to the expenses incurred directly by the Fund.

            Investing in REITs involves certain unique risks in addition to
those risks associated with investing in the real estate industry in general.
Equity REITs may be affected by changes in the value of the underlying property
owned by the REITs, while mortgage REITs may be affected by the quality of any
credit extended. REITs are dependent upon management skills, are not
diversified, and are subject to heavy cash flow dependency, default by borrowers
and self-liquidation.

            Because REITs are often smaller capitalization companies, investing
in REITs may involve risks similar to those associated with investing in such
companies. REITs may have limited financial resources, may trade less frequently
and in a limited volume and may be subject to more abrupt or erratic price
movements than larger company securities. Historically, small capitalization
stocks, such as REITs, have had more price volatility than larger capitalization
stocks.

            REITs are subject to the possibilities of failing to qualify for
tax-free pass-through of income under the Code and failing to maintain their
exemptions from registration under the 1940 Act. REITs (especially mortgage
REITs) also are subject to interest rate risks. When interest rates decline, the
value of a REIT's investment in fixed-rate obligations can be expected to rise.
Conversely, when interest rates rise, the value of a REIT's investment in
fixed-rate obligations can be expected to decline. In contrast, as interest
rates on adjustable rate mortgage loans are reset periodically, yields on a
REIT's investments in such loans will gradually align themselves to reflect
changes in market interest rates, causing the value of such investments to
fluctuate less dramatically in response to interest rate fluctuations than would
investments in fixed rate obligations.

Repurchase Agreements and Buy/Sell Back Transactions
----------------------------------------------------

            A repurchase agreement is an agreement by which the Fund purchases a
security and obtains a simultaneous commitment from the seller to repurchase the
security at an agreed upon price and date, normally one day or a week later. The
purchase and repurchase obligations are transacted under one document. The
resale price is greater than the purchase price, reflecting an agreed-upon
"interest rate" that is effective for the period of time the buyer's money is
invested in the security, and which is related to the current market rate of the
purchased security rather than its coupon rate. During the term of the
repurchase agreement, the Fund monitors on a daily basis the market value of the
securities subject to the agreement and, if the market value of the securities
falls below the resale amount provided under the repurchase agreement, the
seller under the repurchase agreement is required to provide additional
securities or cash equal to the amount by which the market value of the
securities falls below the resale amount. Because a repurchase agreement permits
the Fund to invest temporarily available cash on a fully-collateralized basis,
repurchase agreements permit the Fund to earn a return on temporarily available
cash while retaining "overnight" flexibility in pursuit of investments of a
longer-term nature. Repurchase agreements may exhibit the characteristics of
loans by the Fund.

            The obligation of the seller under the repurchase agreement is not
guaranteed, and there is a risk that the seller may fail to repurchase the
underlying security, whether because of the seller's bankruptcy or otherwise. In
such event, the Fund would attempt to exercise its rights with respect to the
underlying security, including possible sale of the security. The Fund may incur
various expenses in connection with the exercise of its rights and may be
subject to various delays and risks of loss, including (a) possible declines in
the value of the underlying securities, (b) possible reduction in levels of
income and (c) lack of access to the securities (if they are held through a
third-party custodian) and possible inability to enforce the Fund's rights. The
Board has established procedures, which are periodically reviewed by the Board,
pursuant to which the Adviser monitors the creditworthiness of the dealers with
which the Fund enters into repurchase agreement transactions.

            The Fund may enter into repurchase agreements pertaining to U.S.
government securities with member banks of the Federal Reserve System or
"primary dealers" (as designated by the Federal Reserve Bank of New York) in
such securities. There is no percentage restriction on the Fund's ability to
enter into repurchase agreements. Currently, the Fund intends to enter into
repurchase agreements only with its custodian and such primary dealers.

            The Fund may enter into buy/sell back transactions, which are
similar to repurchase agreements. In this type of transaction, the Fund enters a
trade to buy securities at one price and simultaneously enters a trade to sell
the same securities at another price on a specified date. Similar to a
repurchase agreement, the repurchase price is higher than the sale price and
reflects current interest rates. Unlike a repurchase agreement, however, the
buy/sell back transactions, though done simultaneously, are two separate legal
agreements. A buy/sell back transaction also differs from a repurchase agreement
in that the seller is not required to provide margin payments if the value of
the securities falls below the repurchase price because the transaction is two
separate transactions. The Fund has the risk of changes in the value of the
purchased security during the term of the buy/sell back agreement although these
agreements typically provide for the repricing of the original transaction at a
new market price if the value of the security changes by a specific amount.

Reverse Repurchase Agreements
-----------------------------

            Reverse repurchase agreements involve sales by the Fund of portfolio
assets concurrently with an agreement by the Fund to repurchase the same assets
at a later date at a fixed price. During the reverse repurchase agreement
period, the Fund continues to receive principal and interest payments on these
securities. Generally, the effect of such a transaction is that the Fund can
recover all or most of the cash invested in the portfolio securities involved
during the term of the reverse repurchase agreement, while it will be able to
keep the interest income associated with those portfolio securities.

            Reverse repurchase agreements are considered to be a loan to the
Fund by the counterparty, collateralized by the assets subject to repurchase. By
entering into reverse repurchase agreements, the Fund obtains additional cash to
invest on other securities. The Fund may use reverse repurchase agreements for
borrowing purposes if it believes that the cost of this form of borrowing will
be lower than the cost of bank borrowing. Reverse repurchase agreements create
leverage and are speculative transactions because they allow the Fund to achieve
a return on a larger capital base relative to its NAV. The use of leverage
creates the opportunity for increased income for the Fund's shareholders when
the Fund achieves a higher rate of return on the investment of the reverse
repurchase agreement proceeds than it pays in interest on the reverse repurchase
transactions. However, there is the risk that returns could be reduced if the
rates of interest on the investment proceeds do not exceed the interest paid by
the Fund on the reverse repurchase transactions.

            Reverse repurchase agreements involve the risk that the market value
of the securities the Fund is obligated to repurchase under the agreement may
decline below the repurchase price. In the event the buyer of securities under a
reverse repurchase agreement files for bankruptcy or becomes insolvent, the
Fund's use of the proceeds of the agreement may be restricted pending a
determination by the other party, or its trustee or receiver, whether to enforce
the Fund's obligation to repurchase the securities.

Rights and Warrants
-------------------

            The Fund may invest in rights or warrants which entitle the holder
to buy equity securities at a specific price for a specific period of time, but
will do so only if the equity securities themselves are deemed appropriate by
the Adviser for inclusion in the Fund's portfolio. Rights and warrants may be
considered more speculative than certain other types of investments in that they
do not entitle a holder to dividends or voting rights with respect to the
securities which may be purchased nor do they represent any rights in the assets
of the issuing company. Also, the value of a right or warrant does not
necessarily change with the value of the underlying securities and a right or
warrant ceases to have value if it is not exercised prior to the expiration
date.

Securities Ratings
------------------

            The ratings of fixed-income securities by Moody's, S&P, and Fitch
Ratings ("Fitch"), Dominion Bond Rating Service Ltd. and A.M. Best Company are
generally accepted barometers of credit risk. They are, however, subject to
certain limitations from an investor's standpoint. The rating of an issuer is
heavily weighted by past developments and does not necessarily reflect probable
future conditions. There is frequently a lag between the time a rating is
assigned and the time it is updated. In addition, there may be varying degrees
of difference in credit risk of securities within each rating category.

            Securities rated BBB+, BBB, or BBB- by S&P or Baa1, Baa2 or Baa3 by
Moody's are considered by Moody's to have speculative characteristics. Sustained
periods of deteriorating economic conditions or rising interest rates are more
likely to lead to a weakening in the issuer's capacity to pay interest and repay
principal than in the case of higher-rated securities.

            Non-rated securities will also be considered for investment by the
Fund when the Adviser believes that the financial condition of the issuers of
such securities, or the protection afforded by the terms of the securities
themselves, limits the risk to the Fund to a degree comparable to that of rated
securities which are consistent with the Fund's objectives and policies.

            The Adviser generally uses ratings issued by S&P, Moody's, Fitch and
Dominion Bond Rating Service Ltd. Some securities are rated by more than one of
these ratings agencies, and the ratings assigned to the security by the rating
agencies may differ. In such an event, if a security is rated by two or more
rating agencies, the Adviser will deem the security to be rated at the highest
rating. For example, if a security is rated by Moody's and S&P only, with
Moody's rating the security as Ba and S&P as BBB, the Adviser will deem the
security to be rated as the equivalent of BBB (i.e., Baa by Moody's and BBB by
S&P). Or, if a security is rated by Moody's, S&P and Fitch, with Moody's rating
the security as Ba, S&P as BBB and Fitch as BB, the Adviser will deem the
security to be rated as the equivalent of BBB (i.e., Ba1 by Moody's, BBB by S&P
and BBB by Fitch).

            The Adviser will try to reduce the risk inherent in the Fund's
investment approach through credit analysis, diversification and attention to
current developments and trends in interest rates and economic conditions.
However, there can be no assurance that losses will not occur. In considering
investments in high-yielding securities for the Fund, the Adviser will attempt
to identify those high-yielding securities whose financial condition is adequate
to meet future obligations, has improved, or is expected to improve in the
future. The Adviser's analysis focuses on relative values based on such factors
as interest or dividend coverage, asset coverage, earnings prospects, and the
experience and managerial strength of the issuer.

            In the event that the credit rating of a security held by the Fund
is downgraded, the credit quality deteriorates after purchase, or the security
defaults, the Fund will not be obligated to dispose of that security and may
continue to hold the security if, in the opinion of the Adviser, such investment
is appropriate in the circumstances.

            Unless otherwise indicated, references to securities ratings by one
rating agency in this SAI shall include the equivalent rating by another rating
agency.

Short Sales
-----------


            The Fund may make short sales of securities or maintain a short
position. A short sale is effected by selling a security that the Fund does not
own, or if the Fund does own such security, it is not to be delivered upon
consummation of sale. A short sale is against the box to the extent that the
Fund contemporaneously owns or has the right to obtain securities identical to
those sold. A short sale of a security involves the risk that, instead of
declining, the price of the security sold short will rise. If the price of the
securities sold short increases between the time of a short sale and the time
the Fund replaces the borrowed security, the Fund will incur a loss; conversely,
if the price declines, the Fund will realize a gain. The potential for the price
of a fixed-income security sold short to rise is a function of both the
remaining maturity of the obligation, its creditworthiness and its yield. Unlike
short sales of equities or other instruments, the potential for the price of a
fixed-income security to rise may be limited due to the fact that the security
will be worth no more than par at maturity. However, the short sale of other
instruments or securities generally, including equity securities, fixed-income
securities convertible into equities or other instruments, or fixed-income
securities that are denominated in a currency other than the U.S. Dollar,
involves the possibility of a theoretically unlimited loss since there is a
theoretically unlimited potential for the market price of the security sold
short to increase. Short sales may be used in some cases by the Fund to defer
the realization of gain or loss for federal income tax purposes on securities
then owned by the Fund. See "Dividends, Distributions and Taxes-Tax Straddles"
for a discussion of certain special federal income tax considerations that may
apply to short sales which are entered into by the Fund.


Zero-Coupon and Payment-in-Kind Bonds
-------------------------------------

            The Fund may at times invest in so-called "zero-coupon" bonds and
"payment-in-kind" bonds. Zero-coupon bonds are issued at a significant discount
from their principal amount in lieu of paying interest periodically.
Payment-in-kind bonds allow the issuer, at its option, to make current interest
payments on the bonds either in cash or in additional bonds. Because zero-coupon
bonds do not pay current interest, their value is generally subject to greater
fluctuations in response to changes in market interest rates than bonds that pay
interest currently. Both zero-coupon and payment-in-kind bonds allow an issuer
to avoid the need to generate cash to meet current interest payments.
Accordingly, such bonds may involve greater credit risks than bonds paying
interest currently. Even though such bonds do not pay current interest in cash,
the Fund is nonetheless required to accrue interest income on such investments
and to distribute such amounts at least annually to shareholders. Thus, the Fund
could be required to liquidate other investments in order to satisfy its
dividend requirements at times when the Adviser would not otherwise deem it
advisable to do so.

Certain Risk and Other Considerations
-------------------------------------


            Borrowing and Use of Leverage. The Fund may use borrowings for
investment purposes subject to the restrictions of the 1940 Act. The Fund may
also use leverage for investment purposes by entering into transactions such as
reverse repurchase agreements and forward contracts and dollar rolls. This means
that the Fund uses the cash proceeds made available during the term of these
transactions to make investments in other securities.


            Borrowings by the Fund result in leveraging of the Fund's shares of
common stock. The proceeds of such borrowings will be invested in accordance
with the Fund's investment objective and policies. The Adviser anticipates that
the difference between the interest expense paid by the Fund on borrowings and
the rates received by the Fund from its investment portfolio issuers will
provide the Fund's shareholders with a potentially higher yield.

            Utilization of leverage, which is usually considered speculative,
however, involves certain risks to the Fund's shareholders. These include a
higher volatility of the NAV of the Fund's shares of common stock and the
relatively greater effect on the NAV of the shares caused by favorable or
adverse changes in market conditions or interest rates. So long as the Fund is
able to realize a net return on the leveraged portion of its investment
portfolio that is higher than the interest expense paid on borrowings or the
carrying costs of leveraged transactions, the effect of leverage will be to
cause the Fund's shareholders to realize higher current net investment income
than if the Fund were not leveraged. However, to the extent that the interest
expense on borrowings or the carrying costs of leveraged transactions approaches
the return on the leveraged portion of the Fund's investment portfolio, the
benefit of leverage to the Fund's shareholders will be reduced, and if the
interest expense on borrowings or the carrying costs of leveraged transactions
were to exceed such return, the Fund's use of leverage would result in a lower
rate of return than if the Fund were not leveraged. Similarly, the effect of
leverage in a declining market could be a greater decrease in NAV per share than
if the Fund were not leveraged. In an extreme case, if the Fund's current
investment income were not sufficient to meet the interest expense on borrowings
or the carrying costs of leveraged transactions, it could be necessary for the
Fund to liquidate certain of its investments, thereby reducing the NAV of the
Fund's shares.

            Certain transactions, such as derivatives transactions, forward
commitments, reverse repurchase agreements and short sales, involve leverage and
may expose the Fund to potential losses that, in some cases, may exceed the
amount originally invested by the Fund. When the Fund engages in such
transactions, it will, in accordance with guidance provided by the SEC or its
staff in, among other things, regulations, interpretative releases and no-action
letters, deposit in a segregated account certain liquid assets with a value at
least equal to the Fund's exposure, on a marked-to-market or other relevant
basis, to the transaction. Transactions for which assets have been segregated
will not be considered "senior securities" for purposes of the Fund's investment
restriction concerning senior securities. The segregation of assets is intended
to enable the Fund to have assets available to satisfy its obligations with
respect to these transactions, but will not limit the Fund's exposure to loss.

            Additional Risks of Futures Contracts, Options on Futures Contracts,
Forward Contracts and Options on Foreign Currencies. Unlike transactions entered
into by the Funds in futures contracts, options on foreign currencies and
forward contracts may not be traded on contract markets regulated by the
Commodity Futures Trading Commission ("CFTC") or (with the exception of certain
foreign currency options) by the SEC. Such instruments may be traded through
financial institutions acting as market makers, although foreign currency
options are also traded on certain national securities exchanges, such as the
Philadelphia Stock Exchange and the Chicago Board Options Exchange, subject to
SEC regulation. Similarly, options on currencies may be traded over-the-counter.
In an over-the-counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the purchaser of an
option cannot lose more than the amount of the premium plus related transaction
costs, this entire amount could be lost. Moreover, the option writer and a
trader of forward contracts could lose amounts substantially in excess of their
initial investments, due to the margin and collateral requirements associated
with such positions.

            Options on foreign currencies traded on national securities
exchanges are within the jurisdiction of the SEC, as are other securities traded
on such exchanges. As a result, many of the protections provided to traders on
organized exchanges will be available with respect to such transactions. In
particular, all foreign currency option positions entered into on a national
securities exchange are cleared and guaranteed by the Options Clearing
Corporation ("OCC"), thereby reducing the risk of counterparty default. Further,
a liquid secondary market in options traded on a national securities exchange
may be more readily available than in the over-the-counter market, potentially
permitting the Fund to liquidate open positions at a profit prior to exercise or
expiration, or to limit losses in the event of adverse market movements.

            However, the purchase and sale of exchange-traded foreign currency
options is subject to the risks of the availability of a liquid secondary market
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the orderly
settlement of foreign currency option exercises, or would result in undue
burdens on the OCC or its clearing member, impose special procedures on exercise
and settlement, such as technical changes in the mechanics of delivery of
currency, the fixing of dollar settlement prices or prohibitions on exercise.

            In addition, futures contracts, options on futures contracts,
forward contracts and options on foreign currencies may be traded on foreign
exchanges. Such transactions are subject to the risk of governmental actions
affecting trading in or the prices of foreign currencies or securities. The
value of such positions also could be adversely affected by (i) other complex
foreign political and economic factors, (ii) lesser availability than in the
U.S. of data on which to make trading decisions, (iii) delays in the Fund's
ability to act upon economic events occurring in foreign markets during
nonbusiness hours in the U.S., (iv) the imposition of different requirements
than in the U.S., and (v) lesser trading volume.

            Risks of Investments in Foreign Securities. Investors should
understand and consider carefully the substantial risks involved in securities
of foreign companies and governments of foreign nations, some of which are
referred to below, and which are in addition to the usual risks inherent in
domestic investments. Investing in securities of non-U.S. companies which are
generally denominated in foreign currencies, and utilization of derivative
investment products denominated in, or the value of which is dependent upon
movements in the relative value of, a foreign currency, involve certain
considerations comprising both risk and opportunity not typically associated
with investing in U.S. companies. These considerations include changes in
exchange rates and exchange control regulations, political and social
instability, expropriation, imposition of foreign taxes, less liquid markets and
less available information than are generally the case in the U.S., higher
transaction costs, less government supervision of exchanges, brokers and
issuers, difficulty in enforcing contractual obligations, lack of uniform
accounting and auditing standards and greater price volatility.

            There is generally less publicly available information about foreign
companies comparable to reports and ratings that are published about companies
in the United States. Foreign issuers are subject to accounting and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. issuers. In particular, the assets and profits appearing on
the financial statements of a foreign issuer may not reflect its financial
position or results of operations in the way they would be reflected had the
financial statement been prepared in accordance with U.S. generally accepted
accounting principles. In addition, for an issuer that keeps accounting records
in local currency, inflation accounting rules in some of the countries in which
the Fund may invest require, for both tax and accounting purposes, that certain
assets and liabilities be restated on the issuer's balance sheet in order to
express items in terms of currency of constant purchasing power. Inflation
accounting may indirectly generate losses or profits. Consequently, financial
data may be materially affected by restatements for inflation and may not
accurately reflect the real condition of those issuers and securities markets.
Substantially less information is publicly available about certain non-U.S.
issuers than is available about U.S. issuers.


            Foreign securities markets are generally not as developed or
efficient as those in the United States. While growing in volume, they usually
have substantially less volume than the New York Stock Exchange ("Exchange"),
and securities of some foreign companies are less liquid and more volatile than
securities of comparable U.S. companies. Similarly, volume and liquidity in most
foreign bond markets is less than in the U.S. and, at times, volatility of price
can be greater than in the United States. Commissions on foreign stock exchanges
are often higher than negotiated commissions on U.S. exchanges, although the
Fund will endeavor to achieve the most favorable net results on its portfolio
transactions. There is generally less government supervision and regulation of
stock exchanges, brokers and listed companies than in the United States.


            Expropriation, confiscatory taxation, nationalization, political,
economic or social instability or other similar developments, such as military
coups, have occurred in the past in countries in which the Fund may invest and
could adversely affect the Fund's assets should these conditions or events
recur.

            Foreign investment in the securities of companies in certain
countries is restricted or controlled to varying degrees. These restrictions or
controls may at times limit or preclude Fund investment in certain foreign
securities and increase the costs and expenses of the Fund. Certain countries in
which the Fund may invest require governmental approval prior to investments by
foreign persons, limit the amount of investment by foreign persons in a
particular issuer, limit the investment by foreign persons only to a specific
class of securities of an issuer that may have less advantageous rights than the
classes available for purchase by domiciliaries of the countries and/or impose
additional taxes on foreign investors.

            Certain countries may require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in a
country's balance of payments, the country could impose temporary restrictions
on foreign capital remittances.

            Income from certain investments held by the Fund could be reduced by
foreign income taxes, including withholding taxes. It is impossible to determine
the effective rate of foreign tax in advance. The Fund's NAV may also be
affected by changes in the rates or methods of taxation applicable to the Fund
or to entities in which the Fund has invested. The Adviser generally will
consider the cost of any taxes in determining whether to acquire any particular
investments, but can provide no assurance that the tax treatment of investments
held by the Fund will not be subject to change. A shareholder otherwise subject
to U.S. federal income taxes may, subject to certain limitations, be entitled to
claim a credit or deduction for U.S. federal income tax purposes for his or her
proportionate share of such foreign taxes paid by the Fund. See "United States
Federal Income Taxation of the Fund".

            Although the Fund may value its assets in terms of U.S. Dollars, the
Funds do not intend to convert their holdings of foreign currencies into U.S.
Dollars on a daily basis. The Fund will do so from time to time, and investors
should be aware of the costs of currency conversion. Although foreign exchange
dealers do not charge a fee for conversion, they do realize a profit based on
the difference (commonly known as the "spread") between the price at which they
are buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to the Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to resell that currency to the dealer. Investors
should understand that the expenses of a fund investing in foreign securities
may be higher than investment companies investing only in domestic securities
since, among other things, the cost of maintaining the custody of foreign
securities is higher and the purchase and sale of portfolio securities may be
subject to higher transaction charges, such as stamp duties and turnover taxes.

            For many foreign securities, there are U.S. Dollar-denominated ADRs
which are traded in the U.S. on exchanges or over-the-counter and are issued by
domestic banks or trust companies and for which market quotations are readily
available. ADRs do not lessen the foreign exchange risk inherent in investing in
the securities of foreign issuers. However, by investing in ADRs rather than
directly in stock of foreign issuers, the Fund can avoid currency risks which
might occur during the settlement period for either purchases or sales. The Fund
may purchase foreign securities directly, as well as through ADRs.

            Foreign Currency Transactions. The Fund may invest in securities
denominated in foreign currencies and a corresponding portion of the Fund's
revenues will be received in such currencies. In addition, the Fund may conduct
foreign currency transactions for hedging and non-hedging purposes on a spot
(i.e., cash) basis or through the use of derivatives transactions, such as
forward currency exchange contracts, currency futures and options thereon, and
options on currencies as described above. The dollar equivalent of the Fund's
net assets and distributions will be adversely affected by reductions in the
value of certain foreign currencies relative to the U.S. Dollar. Such changes
will also affect the Fund's income. The Fund will, however, have the ability to
attempt to protect itself against adverse changes in the values of foreign
currencies by engaging in certain of the investment practices listed above.
While the Fund has this ability, there is no certainty as to whether and to what
extent the Fund will engage in these practices.

            Currency exchange rates may fluctuate significantly over short
periods of time causing, along with other factors, the Fund's NAV to fluctuate.
Currency exchange rates generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of investments in
different countries, actual or anticipated changes in interest rates and other
complex factors, as seen from an international perspective. Currency exchange
rates also can be affected unpredictably by the intervention of U.S. or foreign
governments or central banks, or the failure to intervene, or by currency
controls or political developments in the U.S. or abroad. To the extent the
Fund's total assets (adjusted to reflect the Fund's net position after giving
effect to currency transactions) is denominated or quoted in the currencies of
foreign countries, the Fund will be more susceptible to the risk of adverse
economic and political developments within those countries.

            The Fund will incur costs in connection with conversions between
various currencies. The Fund may hold foreign currency received in connection
with investments when, in the judgment of the Adviser, it would be beneficial to
convert such currency into U.S. Dollars at a later date, based on anticipated
changes in the relevant exchange rate. If the value of the foreign currencies in
which the Fund receives its income falls relative to the U.S. Dollar between
receipt of the income and the making of Fund distributions, the Fund may have
insufficient cash in U.S. Dollars after the conversion of the foreign currencies
to meet its distribution requirements, and may be required to liquidate
securities in order to make distributions.

            If the value of the foreign currencies in which the Fund receives
income falls relative to the U.S. Dollar between receipt of the income and the
making of Fund distributions, the Fund may be required to liquidate securities
in order to make distributions if the Fund has insufficient cash in U.S. Dollars
to meet the distribution requirements that the Fund must satisfy to qualify as a
regulated investment company for federal income tax purposes. Similarly, if the
value of a particular foreign currency declines between the time the Fund incurs
expenses in U.S. Dollars and the time cash expenses are paid, the amount of the
currency required to be converted into U.S. Dollars in order to pay expenses in
U.S. Dollars could be greater than the equivalent amount of such expenses in the
currency at the time they were incurred. In light of these risks, the Fund may
engage in certain currency hedging transactions, which themselves, involve
certain special risks.

            Investments in Lower-Rated and Unrated Instruments. The Fund may
invest in lower-rated securities, which may include securities having the lowest
rating for non-subordinated debt securities (i.e., rated C by Moody's or CCC or
lower by S&P & Fitch), and unrated securities of equivalent investment quality.
Lower-rated debt securities are considered by the rating organizations to be
subject to greater risk of loss of principal and interest than higher-rated
securities and are considered to be predominantly speculative with respect to
the issuer's capacity to pay interest and repay principal, which may in any case
decline during sustained periods of deteriorating economic conditions or rising
interest rates. These securities are considered to have extremely poor prospects
of ever attaining any real investment standing, to have a current identifiable
vulnerability to default, to be unlikely to have the capacity to pay interest
and repay principal when due in the event of adverse business, financial or
economic conditions, and/or to be in default or not current in the payment of
interest or principal.

            Lower-rated securities generally are considered to be subject to
greater market risk than higher-rated securities in times of deteriorating
economic conditions. In addition, lower-rated securities may be more susceptible
to real or perceived adverse economic and competitive industry conditions than
investment grade securities, although the market values of securities rated
below investment grade and comparable unrated securities tend to react less to
fluctuations in interest rate levels than do those of higher-rated securities.
The market for lower-rated securities may be thinner and less active than that
for higher-quality securities, which can adversely affect the prices at which
these securities can be sold. To the extent that there is no established
secondary market for lower-rated securities, the Adviser may experience
difficulty in valuing such securities and, in turn, the Fund's assets. In
addition, adverse publicity and investor perceptions about lower-rated
securities, whether or not based on fundamental analysis, may tend to decrease
the market value and liquidity of such lower-rated securities. Transaction costs
with respect to lower-rated securities may be higher, and in some cases
information may be less available, than is the case with investment grade
securities.

            Many fixed-income securities contain call or buy-back features that
permit the issuer of the security to call or repurchase it. Such securities may
present risks based on payment expectations. If an issuer exercises such a "call
option" and redeems the security, the Fund may have to replace the called
security with a lower yielding security, resulting in a decreased rate of return
for the Fund.

            In seeking to achieve the Fund's investment objectives, there will
be times, such as during periods of rising interest rates, when depreciation and
realization of capital losses on fixed-income securities in the Fund's portfolio
will be unavoidable. Moreover, medium- and lower-rated securities and non-rated
securities of comparable quality may be subject to wider fluctuations in yield
and market values than higher-rated securities under certain market conditions.
Such fluctuations after a security is acquired do not affect the cash income
received from that security but are reflected in the NAV of the Fund.

            Sovereign Debt Obligations. No established secondary markets may
exist for many of the sovereign debt obligations in which the Fund may invest.
Reduced secondary market liquidity may have an adverse effect on the market
price and the Fund's ability to dispose of particular instruments when necessary
to meet its liquidity requirements or in response to specific economic events
such as a deterioration in the creditworthiness of the issuer. Reduced secondary
market liquidity for certain sovereign debt obligations may also make it
difficult for the Fund to obtain accurate market quotations for the purpose of
valuing its portfolio. Market quotations are generally available on many
sovereign debt obligations only from a limited number of dealers and may not
necessarily represent firm bids of those dealers or prices for actual sales.

            By investing in sovereign debt obligations, the Fund will be exposed
to the direct or indirect consequences of political, social and economic changes
in various countries. Political changes in a country may affect the willingness
of a foreign government to make or provide for timely payments of its
obligations. The country's economic status, as reflected in, among other things,
its inflation rate, the amount of external debt and its gross domestic product,
will also affect the government's ability to honor its obligations.

            Many countries providing investment opportunities for the Fund have
experienced substantial, and in some periods extremely high, rates of inflation
for many years. Inflation and rapid fluctuation in inflations rates have had and
may continue to have adverse effects on the economies and securities markets of
certain of these countries. In an attempt to control inflation, way and price
controls have been imposed in certain countries.

            Investing in sovereign debt obligations involves economic and
political risks. The sovereign debt obligations in which the Fund may invest in
most cases pertain to countries that are among the world's largest debtors to
commercial banks, foreign governments, international financial organizations and
other financial institutions. In recent years, the governments of some of these
countries have encountered difficulties in servicing their external debt
obligations, which led to defaults on certain obligations and the restructuring
of certain indebtedness. Restructuring arrangements have included, among other
things, obtaining new credit to finance interest payments. Certain governments
have not been able to make payments of interest on or principal of sovereign
debt obligations as those payments have come due. Obligations arising from past
restructuring agreements may affect the economic performance and political and
social stability of those issuers.

            Central banks and other governmental authorities which control the
servicing of sovereign debt obligations may not be willing or able to permit the
payment of the principal or interest when due in accordance with the terms of
the obligations. As a result, the issuers of sovereign debt obligations may
default on their obligations. Defaults on certain sovereign debt obligations
have occurred in the past. Holders of certain sovereign debt obligations may be
requested to participate in the restructuring and rescheduling of these
obligations and to extend further loans to the issuers. The interests of holders
of sovereign debt obligations could be adversely affected in the course of
restructuring arrangements or by certain other factors referred to below.
Furthermore, some of the participants in the secondary market for sovereign debt
obligations may also be directly involved in negotiating the terms of these
arrangements and may therefore have access to information not available to other
market participants.

            The ability of governments to make timely payments on their
obligations is likely to be influenced strongly by the issuer's balance of
payments, including export performance, and its access to international credits
and investments. A country whose exports are concentrated in a few commodities
could be vulnerable to a decline in the international prices of one or more of
those commodities. Increase protectionism on the part of a country's trading
partners could also adversely affect the country's exports and diminish its
trade account surplus, if any.

            To the extent that a country receives payment for its exports in
currencies other than dollars, its ability to make debt payments denominated in
dollars could be adversely affected. To the extent that a country develops a
trade deficit, it may need to depend on continuing loans from foreign
governments, multilateral organizations or private commercial banks, aid
payments from foreign governments and on inflows of foreign investment. The
access of a country to these forms of external funding may not be certain, and a
withdrawal of external funding could adversely affect the capacity of a
government to make payments on its obligations. In addition, the cost of
servicing debt obligations can be affected by a change in international interest
rates since the majority of these obligations carry interest rates that are
adjusted periodically based on international rates.

            Another factor bearing on the ability of a country to repay
sovereign debt obligations is the level of the country's international reserves.
Fluctuations in the level of these reserves can affect the amount of foreign
exchange readily available for external debt payments and, thus, could have a
bearing on the capacity of the country to make payments on its sovereign debt
obligations.

            The Fund is permitted to invest in sovereign debt obligations that
are not current in the payment of interest or principal or are in default, so
long as the Adviser believes it to be consistent with the Fund's investment
objectives. The Fund may have limited legal recourse in the event of a default
with respect to certain sovereign debt obligations it holds. For example,
remedies for defaults on certain sovereign debt obligations, unlike those on
private debt, must, in some cases, be pursued in the courts of the defaulting
party itself. Legal recourse therefore may be significantly diminished.
Bankruptcy, moratorium and other similar laws applicable to issuers of sovereign
debt obligations may be substantially different from those applicable to issuers
of private debt obligations. The political context, expressed as a willingness
of an issuer of sovereign debt obligations to meet the terms of the debt
obligation, for example, is of considerable importance. In addition, no
assurance can be given that the holders of commercial bank debt will not contest
payments to the holders of securities issued by foreign governments in the event
of default under commercial bank loan agreements.

--------------------------------------------------------------------------------

                            INVESTMENT RESTRICTIONS

--------------------------------------------------------------------------------

Fundamental Investment Policies
-------------------------------

            The following fundamental investment policies may not be changed
without approval by the vote of a majority of the Fund's outstanding voting
securities, which means the affirmative vote of (i) 67% or more of the shares of
the Fund represented at a meeting at which more than 50% of the outstanding
shares are present in person or by proxy, or (ii) more than 50% of the
outstanding shares of the Fund, whichever is less.

            As a matter of fundamental policy, the Fund may not:

                   (a) concentrate investments in an industry, as concentration
may be defined under the 1940 Act or the rules and regulations thereunder (as
such statute, rules or regulations may be amended from time to time) or by
guidance regarding, interpretations of, or exemptive orders under, the 1940 Act
or the rules or regulations thereunder published by appropriate regulatory
authorities;

                   (b) issue any senior security (as that term is defined in the
1940 Act) or borrow money, except to the extent permitted by the 1940 Act or the
rules and regulations thereunder (as such statute, rules or regulations may be
amended from time to time) or by guidance regarding, or interpretations of, or
exemptive orders under, the 1940 Act or the rules or regulations thereunder
published by appropriate regulatory authorities. For purposes of this
restriction, margin and collateral arrangements, including, for example, with
respect to permitted borrowings, options, futures contracts, options on futures
contracts and other derivatives such as swaps are not deemed to involve the
issuance of a senior security;

                   (c) make loans except through (i) the purchase of debt
obligations in accordance with its investment objective and policies; (ii) the
lending of portfolio securities; (iii) the use of repurchase agreements; or (iv)
the making of loans to affiliated funds as permitted under the 1940 Act, the
rules and regulations thereunder (as such statutes, rules or regulations may be
amended from time to time), or by guidance regarding, and interpretations of, or
exemptive orders under, the 1940 Act;

                   (d) purchase or sell real estate except that it may dispose
of real estate acquired as a result of the ownership of securities or other
instruments. This restriction does not prohibit the Fund from investing in
securities or other instruments backed by real estate or in securities of
companies engaged in the real estate business; or

                   (e) act as an underwriter of securities, except that the Fund
may acquire restricted securities under circumstances in which, if such
securities were sold, the Fund might be deemed to be an underwriter for purposes
of the Securities Act.

            As a fundamental policy, the Fund may purchase and sell commodities
to the extent allowed by applicable law.

            The Fund is a "non-diversified" investment company, which means the
Fund is not limited in the proportion of its assets that may be invested in the
securities of a single issuer. This policy may be changed without a shareholder
vote. However, the Fund intends to limit its investments so as to qualify to be
taxed as a "regulated investment company" for purposes of the Code, which will
relieve the Fund of any liability for federal income tax to the extent its
earnings are distributed to shareholders. To so qualify, among other
requirements, the Fund will limit its investment so that, at the close of each
quarter of the taxable year, (i) not more than 25% of the Fund's total assets
will be invested in the securities of a single issuer, and (ii) with respect to
50% of its total assets, not more than 5% of its total assets will be invested
in the securities of a single issuer and the Fund will not own more than 10% of
the outstanding voting securities of a single issuer. The Fund's investments in
U.S. Government securities are not subject to these limitations.

Non-Fundamental Investment Policy
---------------------------------

            The following is a description of an operating policy that the Fund
has adopted but that is not fundamental and is subject to change without
shareholder approval.

            The Fund may not purchase securities on margin, except (i) as
otherwise provided under rules adopted by the SEC under the 1940 Act or by
guidance regarding the 1940 Act, or interpretations thereof, and (ii) that the
Fund may obtain such short-term credits as are necessary for the clearance of
portfolio transactions, and the Fund may make margin payments in connection with
futures contracts, options, forward contracts, swaps, caps, floors, collars and
other financial instruments.

--------------------------------------------------------------------------------

                             MANAGEMENT OF THE FUND

--------------------------------------------------------------------------------

The Adviser
-----------

            The Adviser, a Delaware limited partnership with principal offices
at 1345 Avenue of the Americas, New York, New York 10105, has been retained
under an investment advisory agreement (the "Advisory Agreement") to provide
investment advice and, in general, to conduct the management and investment
program of the Fund under the supervision of the Board. The Adviser is an
investment adviser registered under the Investment Advisers Act of 1940, as
amended.


            The Adviser is a leading global investment management firm
supervising client accounts with assets as of June 30, 2011, totaling
approximately $461 billion. The Adviser provides management services for many of
the largest U.S. public and private employee benefit plans, endowments,
foundations, public employee retirement funds, banks, insurance companies and
high net worth individuals worldwide. The Adviser is also one of the largest
mutual fund sponsors, with a diverse family of globally distributed mutual fund
portfolios. As one of the world's leading global investment management
organizations, the Adviser is able to compete for virtually any portfolio
assignment in any developed capital market in the world.


            As of June 30, 2011, the direct ownership structure of the Adviser,
expressed as a percentage of general and limited partnership interests, was as
follows:

            AXA and its subsidiaries                60.9%
            AllianceBernstein Holding L.P.          37.5
            Unaffiliated holders                     1.6
                                             ------------
                                                   100.0%
                                             ============


            AXA is a societe anonyme organized under the laws of France and the
holding company for an international group of insurance and related financial
services companies, through certain of its subsidiaries ("AXA and its
subsidiaries"). AllianceBernstein Holding L.P. ("Holding") is a Delaware limited
partnership, the units of which ("Holding Units") are traded publicly on the
Exchange under the ticker symbol "AB". As of June 30, 2011, AXA also owned
approximately 1.4% of the issued and outstanding assignments of beneficial
ownership of Holding Units.

            AllianceBernstein Corporation (an indirect wholly-owned subsidiary
of AXA) is the general partner of both Holding and the Adviser.
AllianceBernstein Corporation owns 100,000 general partnership units in Holding
and a 1% general partnership interest in the Adviser. Including both the general
partnership and limited partnership interests in Holding and the Adviser, AXA
and its subsidiaries had an approximate 62.4% economic interest in the Adviser
as of June 30, 2011.


            AXA is a worldwide leader in financial protection and wealth
management. AXA operates primarily in Western Europe, North America and the
Asia/Pacific region and, to a lesser extent, in other regions including the
Middle East, Africa and South America. AXA has five operating business segments:
life and savings, property and casualty insurance, international insurance
(including reinsurance), asset management and other financial services. AXA
Financial, Inc. ("AXA Financial") is a wholly-owned subsidiary of AXA. AXA
Equitable Life Insurance Company is an indirect wholly-owned subsidiary of AXA
Financial.

Advisory Agreement and Expenses
-------------------------------

            The Adviser serves as investment manager and adviser of the Fund,
continuously furnishes an investment program for the Fund, and manages,
supervises and conducts the affairs of the Fund, subject to the Board's
oversight.

            Under the Fund's Advisory Agreement, the Adviser furnishes advice
and recommendations with respect to the Fund's portfolio of securities and
investments, and provides persons satisfactory to the Board to act as officers
of the Fund. Such officers or employees may be employees of the Adviser or of
its affiliates.

            The Adviser is, under the Fund's Advisory Agreement, responsible for
certain expenses incurred by the Fund, including, for example, office facilities
and certain administrative services, and any expenses incurred in promoting the
sale of shares of the Fund (other than the portion of the promotional expenses
borne by the Fund in accordance with an effective plan pursuant to Rule 12b-1
under the 1940 Act, and the costs of printing prospectuses of the Fund and other
reports to shareholders and fees related to registration with the SEC and with
state regulatory authorities).


            The Fund has, under the Advisory Agreement, assumed the obligation
for payment of all of its other expenses. As to the obtaining of services other
than those specifically provided to the Fund by the Adviser, the Fund may employ
its own personnel. For such services, it also may utilize personnel employed by
the Adviser or its affiliates and, in such event, the services will be provided
to the Fund at cost and the payments therefore must be specifically approved by
the Board. The Fund has not yet paid the Adviser in respect of such services
because the Fund has not yet commenced operations.


            Any material amendment to the Advisory Agreement must be approved by
the vote of a majority of the outstanding securities of the Fund and by the vote
of a majority of the Directors who are not interested persons of the Fund or the
Adviser. The Advisory Agreement is terminable without penalty on 60 days'
written notice by a vote of a majority of the outstanding voting securities of
the Fund, by a vote of a majority of the Directors, or by the Adviser on 60
days' written notice, and will automatically terminate in the event of its
assignment. The Advisory Agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence on the part of the Adviser, or of
reckless disregard of its obligations thereunder, the Adviser shall not be
liable for any action or failure to act in accordance with its duties
thereunder.

            Certain other clients of the Adviser may have investment objectives
and policies similar to those of the Fund. The Adviser may, from time to time,
make recommendations which result in the purchase or sale of the particular
security by its other clients simultaneously with a purchase or sale thereof by
the Fund. If transactions on behalf of more than one client during the same
period increase the demand for securities being purchase or the supply of
securities being sold, there may be an adverse effect on price. It is the policy
of the Adviser to allocate advisory rcommendations and the placing of orders in
a manner that is deemed equitable by the Adviser to the accounts involved,
including the Fund. When two or more of the Adviser's clients (including the
Fund) are purchasing or selling the same security on a given day through the
same broker or dealer, such transactions may be averaged as to price.


            Effective as of August 31, 2011, the Fund has contractually agreed
to pay a monthly fee to the Adviser at an annualized rate of 1.00% of the first
$1 billion, .95 of 1% of the excess over $1 billion up to $2 billion, .90 of 1%
of the excess over $2 billion up to $3 billion and .85 of 1% of the excess over
$3 billion of the average daily net assets of the Fund. The Adviser has not
received advisory fees from the Fund because the Fund has not yet commenced
operations. The Adviser has contractually agreed for the current fiscal year to
waive its fee and bear certain expenses so that total expenses do not exceed on
an annual basis 1.65%, 2.35%, 1.85%, 1.60%, 1.35% and 1.35% of average daily net
assets, respectively, for Class A, Class C, Class R, Class K, Class I and
Advisor Class shares. This fee waiver and/or expense reimbursement agreement may
not be terminated before March 31, 2015. Fees waived and expenses borne by the
Adviser are subject to reimbursement by the Fund until August 31, 2014, provided
that no reimbursement payment will be made that would cause the Fund's total
annual operating expenses to exceed 1.65%, 2.35%, 1.85%, 1.60%, 1.35% and 1.35%
of average daily net assets, respectively, for Class A, Class C, Class R, Class
K, Class I and Advisor Class shares or cause the total of the payments to exceed
the Fund's total initial offering expenses.

            The Advisory Agreement became effective on August 31, 2011. The
Advisory Agreement provides that it will continue in effect for two years from
its effective date and thereafter from year to year provided that its
continuance is specifically approved at least annually by majority vote of the
holders of the outstanding voting securities of the Fund or by the Directors,
and, in either case, by a majority of the Directors who are not parties to the
Advisory Agreement or "interested persons" of any such party at a meeting in
person called for the purpose of voting on such matter.




            The Adviser may act as an investment adviser to other persons, firms
or corporations, including investment companies, and is the investment adviser
to AllianceBernstein Balanced Shares, Inc., AllianceBernstein Blended Style
Series, Inc., AllianceBernstein Bond Fund, Inc., AllianceBernstein Core
Opportunities Fund, Inc., AllianceBernstein Corporate Shares, AllianceBernstein
Equity Income Fund, Inc., AllianceBernstein Exchange Reserves, AllianceBernstein
Fixed-Income Shares, Inc., AllianceBernstein Global Bond Fund, Inc.,
AllianceBernstein Global Real Estate Investment Fund, Inc., AllianceBernstein
Global Thematic Growth Fund, Inc., AllianceBernstein Greater China '97 Fund,
Inc., AllianceBernstein Growth and Income Fund, Inc., AllianceBernstein High
Income Fund, Inc., AllianceBernstein Institutional Funds, Inc.,
AllianceBernstein International Growth Fund, Inc., AllianceBernstein Large Cap
Growth Fund, Inc., AllianceBernstein Municipal Income Fund, Inc.,
AllianceBernstein Municipal Income Fund II, AllianceBernstein Small/Mid Cap
Growth Fund, Inc., AllianceBernstein Trust, AllianceBernstein Unconstrained Bond
Fund, Inc., AllianceBernstein Variable Products Series Fund, Inc., Sanford C.
Bernstein Fund, Inc., Sanford C. Bernstein Fund II, Inc., The AllianceBernstein
Pooling Portfolios and The AllianceBernstein Portfolios, all registered open-end
investment companies; and to AllianceBernstein Global High Income Fund, Inc.,
AllianceBernstein Income Fund, Inc., AllianceBernstein National Municipal Income
Fund, Inc., Alliance California Municipal Income Fund, Inc., Alliance New York
Municipal Income Fund, Inc., and The Ibero-America Fund, Inc., all registered
closed-end investment companies.



Board of Directors Information
------------------------------

            The business and affairs of the Fund are managed under the direction
of the Board. Certain information concerning the Directors is set forth below.



                                                                         OTHER PUBLIC
                                                           PORTFOLIOS    COMPANY
                               PRINCIPAL                   IN FUND       DIRECTORSHIPS
NAME, ADDRESS,*                OCCUPATION(S)               COMPLEX       HELD BY DIRECTOR
AGE AND                        DURING PAST                 OVERSEEN      IN THE PAST FIVE
(YEAR ELECTED**)               FIVE YEARS OR LONGER        BY DIRECTOR   YEARS
----------------               ---------------------       ------------  -----------------
                            

INDEPENDENT DIRECTORS

Chairman of the Board


William H. Foulk, Jr., #, ##   Investment Adviser and          101       None
78                             an Independent
(1998)                         Consultant since prior
                               to 2006.  Formerly, he
                               was Senior Manager of
                               Barrett Associates,
                               Inc., a registered
                               investment adviser. He
                               was formerly Deputy
                               Comptroller and Chief
                               Investment Officer of
                               the State of New York
                               and, prior thereto,
                               Chief Investment
                               Officer of the New York
                               Bank for Savings.  He
                               has served as a
                               director or trustee of
                               various
                               AllianceBernstein Funds
                               since 1983 and has been
                               Chairman of the
                               AllianceBernstein Funds
                               and of the Independent
                               Directors Committee of
                               such Funds since 2003.

John H. Dobkin, #              Independent Consultant          100       None
69                             since prior to 2006.
(1998)                         Formerly, President of
                               Save Venice, Inc.
                               (preservation
                               organization) from
                               2001-2002, Senior
                               Advisor from June
                               1999-June 2000 and
                               President of Historic
                               Hudson Valley (historic
                               preservation) from
                               December 1989-May 1999.
                               Previously, Director of
                               the National Academy of
                               Design. He has served
                               as a director or
                               trustee of various
                               AllianceBernstein Funds
                               since 1992.

Michael J. Downey, #           Private Investor since          100        Asia Pacific Fund,
67                             prior to 2006.                             Inc. and The
(2005)                         Formerly, managing                         Merger Fund since
                               partner of Lexington                       prior to 2006 and
                               Capital, LLC                               Prospect
                               (investment advisory                       Acquisition Corp.
                               firm) from December                        (financial
                               1997 until December                        services) from
                               2003.  From 1987 until                     2007 until 2009
                               1993, Chairman and CEO
                               of Prudential Mutual
                               Fund Management,
                               director of the
                               Prudential Mutual Funds
                               and member of the
                               Executive Committee of
                               Prudential Securities
                               Inc. He has served as a
                               director or trustee of
                               the AllianceBernstein
                               Funds since 2005.

D. James Guzy, #               Chairman of the Board           100        Cirrus Logic
75                             of PLX Technology                          Corporation
(2005)                         (semi-conductors) and                      (semi-conductors)
                               of SRC Computers Inc.,                     and PLX Technology,
                               with which he has been                     Inc. (semi-
                               associated since prior                     conductors)
                               to 2006. He was a                          since prior to 2006
                               Director of Intel                          and Intel
                               Corporation                                Corporation
                               (semi-conductors) from                     (semi-conductors)
                               1969 until 2008, and                       since prior to 2006
                               served as Chairman of                      until 2008
                               the Finance Committee
                               of such company for
                               several years until May
                               2008. He has served as
                               a director or trustee
                               of one or more of the
                               AllianceBernstein Funds
                               since 1982.

Nancy P. Jacklin, #            Professorial Lecturer           100        None
63                             at the Johns Hopkins
(2006)                         School of Advanced
                               International Studies
                               since 2008.  Formerly,
                               U.S. Executive Director
                               of the International
                               Monetary Fund (December
                               2002-May 2006);
                               Partner, Clifford
                               Chance (1992-2002);
                               Sector Counsel,
                               International Banking
                               and Finance, and
                               Associate General
                               Counsel, Citicorp
                               (1985-1992); Assistant
                               General Counsel
                               (International),
                               Federal Reserve Board
                               of Governors
                               (1982-1985); and
                               Attorney Advisor, U.S.
                               Department of the
                               Treasury (1973-1982).
                               Member of the Bar of
                               the District of
                               Columbia and New York;
                               and member of the
                               Council on Foreign
                               Relations.  She has
                               served as a director or
                               trustee of the
                               AllianceBernstein Funds
                               since 2006.

Garry L. Moody, #              Independent Consultant.         100        None
59                             Formerly, Partner,
(2008)                         Deloitte & Touche LLP
                               (1995-2008) where he
                               held a number of senior
                               positions, including
                               Vice Chairman, and U.S.
                               and Global Investment
                               Management Practice
                               Managing Partner;
                               President, Fidelity
                               Accounting and Custody
                               Services Company
                               (1993-1995); and
                               Partner, Ernst & Young
                               LLP (1975-1993), where
                               he served as the
                               National Director of
                               Mutual Fund Tax
                               Services. He is also a
                               member of the Governing
                               Council of the
                               Independent Directors
                               Council (IDC), an
                               organization of
                               independent directors
                               of mutual funds, and
                               serves on that
                               organization's
                               Education and
                               Communications
                               Committee. He has
                               served as a director or
                               trustee, and as
                               Chairman of the Audit
                               Committee, of most of
                               the AllianceBernstein
                               Funds since 2008.

Marshall C. Turner, Jr., #     Private Investor since          100        Xilinx, Inc.
69                             prior to 2006. Interim                     (programmable
(2005)                         CEO of MEMC Electronic                     logic semi-
                               Materials, Inc.                            conductors)
                               (semi-conductor and                        and MEMC
                               solar cell substrates)                     Electronic
                               from November 2008                         Materials, Inc.
                               until March 2009. He                       (semi-conductor
                               was Chairman and CEO of                    and solar cell
                               Dupont Photomasks, Inc.                    substrates) since
                               (components of                             prior to 2006
                               semi-conductor
                               manufacturing),
                               2003-2005, and
                               President and CEO,
                               2005-2006, after the
                               company was acquired
                               and renamed Toppan
                               Photomasks, Inc.  He
                               has extensive
                               experience in venture
                               capital investing
                               including prior service
                               as general partner of
                               three institutional
                               venture capital
                               partnerships, and
                               serves on the boards of
                               a number of education
                               and science-related
                               non-profit
                               organizations. He has
                               served as a director or
                               trustee of one or more
                               of the
                               AllianceBernstein Funds
                               since 1992.

Earl D. Weiner, #              Of Counsel, and Partner         100        None
72                             prior to January 2007,
(2007)                         of the law firm
                               Sullivan & Cromwell LLP
                               and member of ABA
                               Federal Regulation of
                               Securities Committee
                               Task Force to draft
                               editions of the Fund
                               Director's Guidebook.
                               He also serves as a
                               director or trustee of
                               various non-profit
                               organizations and has
                               served as Chairman or
                               Vice Chairman of a
                               number of them. He has
                               served as a director or
                               trustee of the
                               AllianceBernstein Funds
                               since 2007 and is
                               Chairman of the
                               Governance and
                               Nominating Committee of
                               most of the Funds.

INTERESTED DIRECTOR

Robert M. Keith, +, ++         Senior Vice President           101       None
51                             of the Adviser+++ and
(2010)                         head of
                               AllianceBernstein
                               Investments, Inc.
                               ("ABI")+++ since July
                               2008; Director of ABI
                               and President of the
                               AllianceBernstein
                               Mutual Funds.
                               Previously, he served
                               as Executive Managing
                               Director of ABI from
                               December 2006 to June
                               2008.  Prior to joining
                               ABI in 2006, Executive
                               Managing Director of
                               Bernstein Global Wealth
                               Management, and prior
                               thereto, Senior
                               Managing Director and
                               Global Head of Client
                               Service and Sales of
                               the Adviser's
                               institutional
                               investment management
                               business since 2004.
                               Prior thereto, Managing
                               Director and Head of
                               North American Client
                               Service and Sales in
                               the Adviser's
                               institutional
                               investment management
                               business.



--------
*     The address for each of the Fund's Directors is c/o AllianceBernstein
      L.P., Attention: Philip L. Kirstein, 1345 Avenue of the Americas, New
      York, NY 10105.

**    There is no stated term of office for the Fund's Directors.

#     Member of the Audit Committee, the Governance and Nominating Committee and
      the Independent Directors Committee.

##    Member of the Fair Value Pricing Committee.

+     Mr. Keith became a Director of the Fund as of December 16, 2010.

++    Mr. Keith is an "interested person", as defined in Section 2(a)(19) of the
      1940 Act, of the Fund due to his position as a Senior Vice President of
      the Adviser.

+++   The Adviser and ABI are affiliates of the Fund.

            The business and affairs of the Fund are managed under the direction
of the Board. Directors who are not "interested persons" of the Fund as defined
in the 1940 Act, are referred to as "Independent Directors", and Directors who
are "interested persons" of the Fund are referred to as "Interested Directors".
Certain information concerning the Fund's governance structure and each Director
is set forth below.

            Experience, Skills, Attributes, and Qualifications of the Fund's
Directors. The Governance and Nominating Committee of the Board, which is
composed of Independent Directors, reviews the experience, qualifications,
attributes and skills of potential candidates for nomination or election by the
Board, and conducts a similar review in connection with the proposed nomination
of current Directors for re-election by stockholders at any annual or special
meeting of stockholders. In evaluating a candidate for nomination or election as
a Director the Governance and Nominating Committee takes into account the
contribution that the candidate would be expected to make to the diverse mix of
experience, qualifications, attributes and skills that the Governance and
Nominating Committee believes contributes to good governance for the Fund.
Additional information concerning the Governance and Nominating Committee's
consideration of nominees appears in the description of the Committee below.

            The Board believes that, collectively, the Directors have balanced
and diverse experience, qualifications, attributes, and skills, which allow the
Board to operate effectively in governing the Fund and protecting the interests
of stockholders. The Board has concluded that, based on each Director's
experience, qualifications, attributes or skills on an individual basis and in
combination with those of the other Directors, each Director is qualified and
should continue to serve as such.

            In determining that a particular Director was and continues to be
qualified to serve as a Director, the Board has considered a variety of
criteria, none of which, in isolation, was controlling. In addition, the Board
has taken into account the actual service and commitment of each Director during
his or her tenure (including the Director's commitment and participation in
Board and committee meetings, as well as his or her current and prior leadership
of standing and ad hoc committees) in concluding that each should continue to
serve. Additional information about the specific experience, skills, attributes
and qualifications of each Director, which in each case led to the Board's
conclusion that the Director should serve (or continue to serve) as trustee or
director of the Fund, is provided in the table above and in the next paragraph.

            Among other attributes and qualifications common to all Directors
are their ability to review critically, evaluate, question and discuss
information provided to them (including information requested by the Directors),
to interact effectively with the Adviser, other service providers, counsel and
the Fund's independent registered public accounting firm, and to exercise
effective business judgment in the performance of their duties as Directors. In
addition to his or her service as a Director of the Fund and other
AllianceBernstein Funds as noted in the table above: Mr. Dobkin has experience
as an executive of a number of organizations and served as Chairman of the Audit
Committee of many of the AllianceBernstein Funds from 2001 to 2008; Mr. Downey
has experience in the investment advisory business including as Chairman and
Chief Executive Officer of a large fund complex and as director of a number of
non-AllianceBernstein funds and as Chairman of a non-AllianceBernstein
closed-end fund; Mr. Foulk has experience in the investment advisory and
securities businesses, including as Deputy Controller and Chief Investment
Officer of the State of New York (where his responsibilities included bond
issuances, cash management and oversight of the New York Common Retirement
Fund), has served as Chairman of the AllianceBernstein Funds and of the
Independent Directors Committee since 2003, and is active in a number of mutual
fund related organizations and committees; Mr. Guzy has experience as a
corporate director including as Chairman of a public company and Chairman of the
Finance Committee of a large public technology company; Ms. Jacklin has
experience as a financial services regulator including as U.S. Executive
Director of the International Monetary Fund, which is responsible for ensuring
the stability of the international monetary system, and as a financial services
lawyer in private practice; Mr. Keith has experience as an executive of the
Adviser with responsibility for, among other things, the AllianceBernstein
Funds; Mr. Moody has experience as a certified public accountant including
experience as Vice Chairman and U.S. and Global Investment Management Practice
Partner for a major accounting firm, is a member of the governing council of an
organization of independent directors of mutual funds, and has served as
Chairman of the Audit Committee of most of the AllianceBernstein Funds since
2008; Mr. Turner has experience as a director (including as Chairman and Chief
Executive Officer of a number of companies) and as a venture capital investor
including prior service as general partner of three institutional venture
capital partnerships; and Mr. Weiner has experience as a securities lawyer whose
practice includes registered investment companies and as Chairman, director or
trustee of a number of boards, and has served as Chairman of the Governance and
Nominating Committee of most of the AllianceBernstein Funds since 2007. The
disclosure herein of a director's experience, qualifications, attributes and
skills does not impose on such director any duties, obligations, or liability
that are greater than the duties, obligations and liability imposed on such
director as a member of the Board and any committee thereof in the absence of
such experience, qualifications, attributes and skills.

            Board Structure and Oversight Function. The Board is responsible for
oversight of the Fund. The Fund has engaged the Adviser to manage the Fund on a
day-to-day basis. The Board is responsible for overseeing the Adviser and the
Fund's other service providers in the operations of the Fund in accordance with
the Fund's investment objective and policies and otherwise in accordance with
its prospectus, the requirements of the 1940 Act and other applicable Federal,
state and other securities and other laws, and the Fund's charter and bylaws.
The Board typically meets in-person at regularly scheduled meetings eight times
throughout the year. In addition, the Directors may meet in-person or by
telephone at special meetings or on an informal basis at other times. The
Independent Directors also regularly meet without the presence of any
representatives of management. As described below, the Board has established
four standing committees - the Audit, Governance and Nominating, Independent
Directors, and Fair Value Pricing Committees - and may establish ad hoc
committees or working groups from time to time, to assist the Board in
fulfilling its oversight responsibilities. Each committee is composed
exclusively of Independent Directors. The responsibilities of each committee,
including its oversight responsibilities, are described further below. The
Independent Directors have also engaged independent legal counsel, and may from
time to time engage consultants and other advisors, to assist them in performing
their oversight responsibilities.

            An Independent Director serves as Chairman of the Board. The
Chairman's duties include setting the agenda for each Board meeting in
consultation with management, presiding at each Board meeting, meeting with
management between Board meetings, and facilitating communication and
coordination between the Independent Directors and management. The Directors
have determined that the Board's leadership by an Independent Director and its
committees composed exclusively of Independent Directors is appropriate because
they believe it sets the proper tone to the relationships between the Fund, on
the one hand, and the Adviser and other service providers, on the other, and
facilitates the exercise of the Board's independent judgment in evaluating and
managing the relationships. In addition, the Fund is required to have an
Independent Director as Chairman pursuant to certain 2003 regulatory settlements
involving the Adviser.

            Risk Oversight. The Fund is subject to a number of risks, including
investment, compliance and operational risks. Day-to-day risk management with
respect to the Fund resides with the Adviser or other service providers
(depending on the nature of the risk), subject to supervision by the Adviser.
The Board has charged the Adviser and its affiliates with (i) identifying events
or circumstances the occurrence of which could have demonstrable and material
adverse effects on the Fund; (ii) to the extent appropriate, reasonable or
practicable, implementing processes and controls reasonably designed to lessen
the possibility that such events or circumstances occur or to mitigate the
effects of such events or circumstances if they do occur; and (iii) creating and
maintaining a system designed to evaluate continuously, and to revise as
appropriate, the processes and controls described in (i) and (ii) above.

            Risk oversight forms part of the Board's general oversight of the
Fund's investment program and operations and is addressed as part of various
regular Board and committee activities. The Fund's investment management and
business affairs are carried out by or through the Adviser and other service
providers. Each of these persons has an independent interest in risk management
but the policies and the methods by which one or more risk management functions
are carried out may differ from the Fund's and each other's in the setting of
priorities, the resources available or the effectiveness of relevant controls.
Oversight of risk management is provided by the Board and the Audit Committee.
The Directors regularly receive reports from, among others, management
(including the Global Heads of Investment Risk and Trading Risk of the Adviser),
the Fund's Senior Officer (who is also the Fund's chief compliance officer), its
independent registered public accounting firm, counsel, and internal auditors
for the Adviser, as appropriate, regarding risks faced by the Fund and the
Adviser's risk management programs.

            Not all risks that may affect the Fund can be identified, nor can
controls be developed to eliminate or mitigate their occurrence or effects. It
may not be practical or cost-effective to eliminate or mitigate certain risks,
the processes and controls employed to address certain risks may be limited in
their effectiveness, and some risks are simply beyond the reasonable control of
the Fund or the Adviser, its affiliates or other service providers. Moreover, it
is necessary to bear certain risks (such as investment-related risks) to achieve
the Fund's goals. As a result of the foregoing and other factors the Fund's
ability to manage risk is subject to substantial limitations.

            Board Committees. The Board has four standing committees - an Audit
Committee, a Governance and Nominating Committee, a Fair Value Pricing Committee
and an Independent Directors Committee. The members of the Audit, Governance and
Nominating, Fair Value Pricing, and Independent Directors Committees are
identified above.


            None of these Committees have met in connection with the Fund
because it only recently commenced operations except the Independent Directors
Committee met on August 4, 2011 to approve the Advisory and Distribution
Services Agreements for the Fund.


            The function of the Audit Committee is to assist the Board in its
oversight of the Fund's financial reporting process. The Audit Committee has not
yet met.

            The function of the Governance and Nominating Committee includes the
nomination of persons to fill any vacancies or newly created positions on the
Board. The Governance and Nominating Committee has not yet met.

            The Board has adopted a charter for its Governance and Nominating
Committee. Pursuant to the charter, the Committee assists the Board in carrying
out its responsibilities with respect to governance of the Fund and identifies,
evaluates, selects and nominates candidates for the Board. The Committee may
also set standards or qualifications for Directors and reviews at least annually
the performance of each Director, taking into account factors such as attendance
at meetings, adherence to Board policies, preparation for and participation at
meetings, commitment and contribution to the overall work of the Board and its
committees, and whether there are health or other reasons that might affect the
Director's ability to perform his or her duties. The Committee may consider
candidates as Directors submitted by the Fund's current Board members, officers,
the Adviser, stockholders and other appropriate sources.

            The Governance and Nominating Committee will consider candidates for
nomination as a Director submitted by a shareholder or group of shareholders who
have beneficially owned at least 5% of the Fund's common stock or shares of
beneficial interest for at least two years prior to the time of submission and
who timely provide specified information about the candidates and the nominating
shareholder or group. To be timely for consideration by the Governance and
Nominating Committee, the submission, including all required information, must
be submitted in writing to the attention of the Secretary at the principal
executive offices of the Fund not less than 120 days before the date of the
proxy statement for the previous year's annual meeting of shareholders. If the
Fund did not hold an annual meeting of shareholders in the previous year, the
submission must be delivered or mailed and received within a reasonable amount
of time before the Fund begins to print and mail its proxy materials. Public
notice of such upcoming annual meeting of shareholders may be given in a
shareholder report or other mailing to shareholders or by other means deemed by
the Governance and Nominating Committee or the Board to be reasonably calculated
to inform shareholders.

            Shareholders submitting a candidate for consideration by the
Governance and Nominating Committee must provide the following information to
the Governance and Nominating Committee: (i) a statement in writing setting
forth (A) the name, date of birth, business address and residence address of the
candidate; (B) any position or business relationship of the candidate, currently
or within the preceding five years, with the shareholder or an associated person
of the shareholder as defined below; (C) the class or series and number of all
shares of the Fund owned of record or beneficially by the candidate; (D) any
other information regarding the candidate that is required to be disclosed about
a nominee in a proxy statement or other filing required to be made in connection
with the solicitation of proxies for election of Directors pursuant to Section
20 of the 1940 Act and the rules and regulations promulgated thereunder; (E)
whether the shareholder believes that the candidate is or will be an "interested
person" of the Fund (as defined in the 1940 Act) and, if believed not to be an
"interested person", information regarding the candidate that will be sufficient
for the Fund to make such determination; and (F) information as to the
candidate's knowledge of the investment company industry, experience as a
director or senior officer of public companies, directorships on the boards of
other registered investment companies and educational background; (ii) the
written and signed consent of the candidate to be named as a nominee and to
serve as a Director if elected; (iii) the written and signed agreement of the
candidate to complete a directors' and officers' questionnaire if elected; (iv)
the shareholder's consent to be named as such by the Fund; (v) the class or
series and number of all shares of the Fund owned beneficially and of record by
the shareholder and any associated person of the shareholder and the dates on
which such shares were acquired, specifying the number of shares owned
beneficially but not of record by each, and stating the names of each as they
appear on the Fund's record books and the names of any nominee holders for each;
and (vi) a description of all arrangements or understandings between the
shareholder, the candidate and/or any other person or persons (including their
names) pursuant to which the recommendation is being made by the shareholder.
"Associated Person of the shareholder" means any person who is required to be
identified under clause (vi) of this paragraph and any other person controlling,
controlled by or under common control with, directly or indirectly, (a) the
shareholder or (b) the associated person of the shareholder.

            The Governance and Nominating Committee may require the shareholder
to furnish such other information as it may reasonably require or deem necessary
to verify any information furnished pursuant to the nominating procedures
described above or to determine the qualifications and eligibility of the
candidate proposed by the shareholder to serve on the Board. If the shareholder
fails to provide such other information in writing within seven days of receipt
of written request from the Governance and Nominating Committee, the
recommendation of such candidate as a nominee will be deemed not properly
submitted for consideration, and will not be considered, by the Committee.

            The Governance and Nominating Committee will consider only one
candidate submitted by such a shareholder or group for nomination for election
at an annual meeting of shareholders. The Governance and Nominating Committee
will not consider self-nominated candidates. The Governance and Nominating
Committee will consider and evaluate candidates submitted by shareholders on the
basis of the same criteria as those used to consider and evaluate candidates
submitted from other sources. These criteria include the candidate's relevant
knowledge, experience, and expertise, the candidate's ability to carry out his
or her duties in the best interests of the Fund, and the candidate's ability to
qualify as an Independent Director or Director. When assessing a candidate for
nomination, the Committee considers whether the individual's background, skills,
and experience will complement the background, skills, and experience of other
nominees and will contribute to the diversity of the Board.

            The function of the Fair Value Pricing Committee is to consider, in
advance if possible, any fair valuation decision of the Adviser's Valuation
Committee relating to a security held by the Fund made under unique or highly
unusual circumstances not previously addressed by the Valuation Committee that
would result in a change in the Fund's NAV by more than $0.01 per share. The
Fair Value Pricing Committee has not yet met.


            The function of the Independent Directors Committee is to consider
and take action on matters that the Board or Committee believes should be
addressed in executive session of the Independent Directors, such as review and
approval of the Advisory and Distribution Services Agreements. The Independent
Directors Committee met on August 4, 2011 to approve the Advisory and
Distribution Services Agreement for the Fund.


            The dollar range of the Fund's securities owned by each Director and
the aggregate dollar range of securities owned in all of the registered
investment companies to which the Adviser provides investment advisory services
(collectively, the "AllianceBernstein Fund Complex") owned by each Director are
set forth below.

                                                        AGGREGATE DOLLAR
                           DOLLAR RANGE                 RANGE OF EQUITY
                           OF EQUITY                    SECURITIES IN THE
                           SECURITIES IN                ALLIANCEBERNSTEIN
                           THE FUND AS OF               FUND COMPLEX AS OF
                           DECEMBER 31, 2010            DECEMBER 31, 2010
                           -------------------          -------------------

John H. Dobkin               None                       Over $100,000
Michael J. Downey            None                       Over $100,000
William H. Foulk, Jr.        None                       Over $100,000
D. James Guzy                None                       Over $100,000
Nancy P. Jacklin             None                       Over $100,000
Robert M. Keith*             None                       Over $100,000
Garry L. Moody               None                       Over $100,000
Marshall C. Turner, Jr.      None                       Over $100,000
Earl D. Weiner               None                       Over $100,000

* With respect to Mr. Keith, unvested interests in certain deferred compensation
plans, including the Partner Compensation Plan are not included.

Officer Information
-------------------

            Certain information concerning the Fund's officers is set forth
below.

NAME, ADDRESS,*           POSITION(S) HELD         PRINCIPAL OCCUPATION
AND AGE                   WITH FUND                DURING PAST 5 YEARS
---------------           ----------------         --------------------


Robert M. Keith,          President and Chief      See above.
51                        Executive Officer


Philip L Kirstein,        Senior Vice President    Senior Vice President and
66                        and Independent          Independent Compliance
                          Compliance Officer       Officer of the
                                                   AllianceBernstein Funds,
                                                   with which he has been
                                                   associated since October
                                                   2004.  Prior thereto, he was
                                                   Of Counsel to Kirkpatrick &
                                                   Lockhart, LLP from October
                                                   2003 to October 2004, and
                                                   General Counsel of Merrill
                                                   Lynch Investment Managers,
                                                   L.P. since prior to March
                                                   2003.

Henry D'Auria,            Vice President           Senior Vice President of the
49                                                 Adviser,** with which he has
                                                   been associated since prior
                                                   to 2006.


Paul J. DeNoon,           Vice President           Senior Vice President of the
49                                                 Adviser,** with which he has
                                                   been associated since prior
                                                   to 2006.


Morgan Harting,           Vice President           Vice President of the
40                                                 Adviser,** with which he has
                                                   been associated since
                                                   February 2007.  Prior
                                                   thereto, he was Senior
                                                   Director at Fitch Ratings, a
                                                   securities rating
                                                   organization, beginning
                                                   prior to 2006.

Marco Santamaria,         Vice President           Vice President of the
45                                                 Adviser,** with which he has
                                                   been associated since June
                                                   2010.  Prior thereto, he was
                                                   a founding partner at Global
                                                   Securities Advisors, an
                                                   emerging-market-oriented
                                                   fixed-income hedge fund,
                                                   beginning prior to 2006.

Emilie D. Wrapp,          Secretary                Senior Vice President,
55                                                 Assistant General Counsel
                                                   and Assistant Secretary of
                                                   ABI,** with which she has
                                                   been associated since prior
                                                   to 2006.

Joseph J. Mantineo,       Treasurer and Chief      Senior Vice President of
55                        Financial Officer        ABIS,** with which he has
                                                   been associated since prior
                                                   to 2006.

Phyllis J. Clarke,        Controller               Vice President of ABIS,**
50                                                 with which she has been
                                                   associated since prior to
                                                   2006.

--------
*     The address for each of the Fund's Officers is 1345 Avenue of the
      Americas, New York, NY 10105.
**    The Adviser, ABI and ABIS are affiliates of the Fund.

            The Fund does not pay any fees to, or reimburse expenses of, its
Directors who are considered "interested persons" (as defined in Section
2(a)(19) of the 1940 Act) of the Fund. The estimated aggregate compensation that
will be paid to the Directors by the Fund for the fiscal year ending March 31,
2012, the aggregate compensation paid to each of the Directors during calendar
year 2010 by the AllianceBernstein Fund Complex, and the total number of
registered investment companies (and separate investment portfolios within the
companies) in the AllianceBernstein Fund Complex with respect to which each of
the Directors serves as a director or trustee, are set forth below. Neither the
Fund nor any other fund in the AllianceBernstein Fund Complex provides
compensation in the form of pension or retirement benefits to any of its
directors or trustees. Each of the Directors is a director or trustee of one or
more other registered investment companies in the AllianceBernstein Fund
Complex.




                                                   Total
                                                   Number           Total
                                                   of               Number
                                                   Registered       of
                                                   Investment       Investment
                                                   Companies        Portfolios
                                                   in the           within the
                                                   Alliance-        Alliance-
                                                   Bernstein        Bernstein
                                      Total        Fund             Fund
                                      Compensation Complex,         Complex,
                                      from the     Including        Including
                                      Alliance-    the Fund,        the Fund,
                        Estimated     Bernstein    as to            as to
                        Aggregate     Fund         which the        which the
                        Compensation  Complex,     Director is      Director is
Name of Director        from the      Including    a Director       a Director
of the Fund             Fund*         the Fund     or Trustee       or Trustee
----------------        ------------  ------------ -----------      -----------
                                                            
John H. Dobkin            $977         $236,900           33            100
Michael J. Downey         $977         $236,900           33            100
William H. Foulk, Jr.     $1,829       $482,300           34            101
D. James Guzy             $977         $236,900           33            100
Nancy P. Jacklin          $977         $236,900           33            100
Robert M. Keith**         $0           $0                 34            101
Garry L. Moody            $1,155       $264,900           33            100
Marshall C. Turner, Jr.   $977         $236,900           33            100
Earl D. Weiner            $1,155       $254,900           33            100



--------
*     Estimated compensation that will be paid by the Fund during the period
      July 1, 2011 through March 31, 2012.
**    Mr. Keith was elected as a Director of the Fund effective December 16,
      2010.


            As of June 30, 2011, the Directors and officers of the Fund as a
group owned less than 1% of the shares of the Fund.

Additional Information About the Fund's Portfolio Managers
----------------------------------------------------------

            The management of and investment decisions for the Fund's portfolio
are made by the Adviser's Emerging Markets Multi-Asset Team. Henry D'Auria, Paul
J. DeNoon, Morgan Harting and Marco Santamaria are the investment
professionals(2) primarily responsible for the day-to-day management of the
Fund's portfolio (the "Portfolio Managers"). For additional information about
the portfolio management of the Fund, see "Management of the Fund - Portfolio
Managers" in the Fund's Prospectuses.

            As of April 30, 2011, employees of the Adviser had approximately
$4,547,254 in shares of all AllianceBernstein Mutual Funds (excluding
AllianceBernstein money market funds) through their interests in certain
deferred compensation plans, including the Partners Compensation Plan, including
both vested and unvested amounts.


--------
(2)   Investment professionals at the Adviser include portfolio managers and
      research analysts. Investment professionals are part of investment groups
      (or teams) that service individual fund portfolios. The number of
      investment professionals assigned to a particular fund will vary from fund
      to fund.


            The following tables provide information regarding registered
investment companies other than the Fund, other pooled investment vehicles and
other accounts over which each Portfolio Manager also has day-to-day management
responsibilities. The tables provide the numbers of such accounts, the total
assets in such accounts and the number of accounts and total assets whose fees
are based on performance. The information is provided as of March 31, 2011.

--------------------------------------------------------------------------------

                         REGISTERED INVESTMENT COMPANIES
                              (excluding the Fund)

--------------------------------------------------------------------------------
                                                    Number of      Total Assets
                      Total        Total            Registered     of Registered
                      Number of    Assets of        Investment     Investment
                      Registered   Registered       Companies      Companies
                      Investment   Investment       Managed with   Managed with
                      Companies    Companies        Performance-   Performance-
Portfolio Manager     Managed      Managed          based Fees     based Fees
-----------------     --------     --------         -----------    -----------

Henry D'Auria           152        $31,431,000,000       3        $6,734,000,000

Paul J. DeNoon           13        $11,450,000,000       1              None

Morgan Harting          None            None           None             None

Marco Santamaria        None            None           None             None

--------------------------------------------------------------------------------

                        OTHER POOLED INVESTMENT VEHICLES

--------------------------------------------------------------------------------
                                                                   Total Assets
                                                    Number of      of Other
                      Total         Total           Other Pooled   Pooled
                      Number of     Assets of       Investment     Investment
                      Other Pooled  Other Pooled    Vehicles       Vehicles
                      Investment    Investment      Managed with   Managed with
                      Vehicles      Vehicles        Performance-   Performance-
Portfolio Manager     Managed       Managed         based Fees     based Fees
-----------------     -------       ------------    ------------   ------------

Henry D'Auria           258        $15,558,000,000    8           $1,049,000,000

Paul J. DeNoon           40        $32,621,000,000    1             $130,000,000

Morgan Harting           None            None         None            None

Marco Santamaria         10        $3,246,000,000     None            None

--------------------------------------------------------------------------------

                                 OTHER ACCOUNTS

--------------------------------------------------------------------------------
                                                   Number         Total Assets
                      Total        Total           of Other       of Other
                      Number       Assets          Accounts       Managed
                      of Other     of Other        Managed with   Accounts with
                      Accounts     Accounts        Performance-   Performance-
Portfolio Manager     Managed      Managed         based Fees     based Fees
-----------------     -------      -------         ----------     ----------

Henry D'Auria          32,727      $66,629,000,000    40          $5,463,000,000

Paul J. DeNoon           59        $24,860,000,000     4          $2,082,000,000

Morgan Harting          None            None           None           None

Marco Santamaria         5         $6,636,000,000      None           None
--------------------------------------------------------------------------------

Investment Professional Conflict of Interest Disclosure
-------------------------------------------------------

            As an investment adviser and fiduciary, the Adviser owes its clients
and shareholders an undivided duty of loyalty. We recognize that conflicts of
interest are inherent in our business and accordingly have developed policies
and procedures (including oversight monitoring) reasonably designed to detect,
manage and mitigate the effects of actual or potential conflicts of interest in
the area of employee personal trading, managing multiple accounts for multiple
clients, including AllianceBernstein Mutual Funds, and allocating investment
opportunities. Investment professionals, including portfolio managers and
research analysts, are subject to the above-mentioned policies and oversight
monitoring to ensure that all clients are treated equitably. We place the
interests of our clients first and expect all of our employees to meet their
fiduciary duties.

            Employee Personal Trading. The Adviser has adopted a Code of
Business Conduct and Ethics that is designed to detect and prevent conflicts of
interest when investment professionals and other personnel of the Adviser own,
buy or sell securities which may be owned by, or bought or sold for, clients.
Personal securities transactions by an employee may raise a potential conflict
of interest when an employee owns or trades in a security that is owned or
considered for purchase or sale by a client, or recommended for purchase or sale
by an employee to a client. Subject to the reporting requirements and other
limitations of its Code of Business Conduct and Ethics, the Adviser permits its
employees to engage in personal securities transactions, and also allows them to
acquire investments in the AllianceBernstein Mutual Funds through direct
purchase and/or notionally in connection with deferred incentive compensation
awards. The Adviser's Code of Ethics and Business Conduct requires disclosure of
all personal accounts and maintenance of brokerage accounts with designated
broker-dealers approved by the Adviser. The Code of Ethics and Business Conduct
also requires preclearance of all securities transactions (subject to certain
exceptions, including transactions in open-end mutual funds) and imposes a
90-day holding period for securities purchased by employees to discourage
short-term trading.

            Managing Multiple Accounts for Multiple Clients. The Adviser has
compliance policies and oversight monitoring in place to address conflicts of
interest relating to the management of multiple accounts for multiple clients.
Conflicts of interest may arise when an investment professional has
responsibilities for the investments of more than one account because the
investment professional may be unable to devote equal time and attention to each
account. The investment professional or investment professional teams for each
client may have responsibilities for managing all or a portion of the
investments of multiple accounts with a common investment strategy, including
other registered investment companies, unregistered investment vehicles, such as
hedge funds, pension plans, separate accounts, collective trusts and charitable
foundations. Among other things, the Adviser's policies and procedures provide
for the prompt dissemination to investment professionals of initial or changed
investment recommendations by analysts so that investment professionals are
better able to develop investment strategies for all accounts they manage. In
addition, investment decisions by investment professionals are reviewed for the
purpose of maintaining uniformity among similar accounts and ensuring that
accounts are treated equitably. No investment professional who manages client
accounts carrying performance fees is compensated directly or specifically based
on the performance of those accounts. As discussed further below under
"Portfolio Manager Compensation", investment professional compensation reflects
a broad contribution in multiple dimensions to long-term investment success for
our clients and is not tied specifically to the performance of any particular
client's account, nor is it directly tied to the level or change in level of
assets under management.

            Allocating Investment Opportunities. The Adviser has policies and
procedures intended to address conflicts of interest relating to the allocation
of investment opportunities. These policies and procedures are designed to
ensure that information relevant to investment decisions is disseminated
promptly within its portfolio management teams and investment opportunities are
allocated equitably among different clients. The investment professionals at the
Adviser routinely are required to select and allocate investment opportunities
among accounts. Portfolio holdings, position sizes, and industry and sector
exposures tend to be similar across similar accounts, which minimizes the
potential for conflicts of interest relating to the allocation of investment
opportunities. Nevertheless, investment opportunities may be allocated
differently among accounts due to the particular characteristics of an account,
such as size of the account, cash position, tax status, risk tolerance and
investment restrictions or for other reasons.

            The Adviser's procedures are also designed to address potential
conflicts of interest that may arise when the Adviser has a particular financial
incentive, such as a performance-based management fee, relating to an account.
An investment professional may perceive that he or she has an incentive to
devote more time to developing and analyzing investment strategies and
opportunities or allocating securities preferentially to accounts for which the
Adviser could share in investment gains.

            To address these conflicts of interest, the Adviser's policies and
procedures require, among other things, the prompt dissemination to investment
professionals of any initial or changed investment recommendations by analysts;
the aggregation of orders in appropriate circumstances to facilitate best
execution for all accounts; price averaging for all aggregated orders; objective
allocation for limited investment opportunities (e.g., on a rotational basis) to
ensure fair and equitable allocation among accounts; and limitations on short
sales of securities. These procedures also require documentation and review of
justifications for any decisions to make investments only for select accounts or
in a manner disproportionate to the size of the account.

Portfolio Manager Compensation
------------------------------

            The Adviser's compensation program for investment professionals is
designed to be competitive and effective in order to attract and retain the
highest caliber employees. The compensation program for investment professionals
is designed to reflect their ability to generate long-term investment success
for our clients, including shareholders of the AllianceBernstein Mutual Funds.
Investment professionals' annual compensation is comprised of the following:

            (i) Fixed base salary: This is generally the smallest portion of
compensation. The base salary is a relatively low, fixed salary within a similar
range for all investment professionals. The base salary is determined at the
outset of employment based on level of experience, does not change significantly
from year-to-year and hence, is not particularly sensitive to performance.

            (ii) Discretionary incentive compensation in the form of an annual
cash bonus: The Adviser's overall profitability determines the total amount of
incentive compensation available to investment professionals. This portion of
investment professional compensation is determined subjectively based on
qualitative and quantitative factors. In evaluating this component of an
investment professional's compensation, the Adviser considers the contribution
to his/her team or discipline as it relates to that team's overall contribution
to the long-term investment success, business results and strategy of the
Adviser. Quantitative factors considered include, among other things, relative
investment performance (e.g., by comparison to competitor or peer group funds or
similar styles of investments, and appropriate, broad-based or specific market
indices), and consistency of performance. There are no specific formulas used to
determine this part of an investment professional's compensation and the
compensation is not tied to any pre-determined or specified level of
performance. The Adviser also considers qualitative factors such as the
complexity and risk of investment strategies involved in the style or type of
assets managed by the investment professional; success of marketing/business
development efforts and client servicing; seniority/length of service with the
firm; management and supervisory responsibilities; and fulfillment of the
Adviser's leadership criteria.

            (iii) Discretionary incentive compensation in the form of awards
under the Adviser's Partners Compensation Plan ("deferred awards"): The
Adviser's overall profitability determines the total amount of deferred awards
available to investment professionals. The deferred awards are allocated among
investment professionals based on criteria similar to those used to determine
the annual cash bonus. There is no fixed formula for determining these amounts.
Deferred awards, for which, prior to 2009, there were various investment
options, vest over a four-year period and are generally forfeited if the
employee resigns or the Adviser terminates his/her employment. Prior to 2009,
investment options under the deferred awards plan included many of the same
AllianceBernstein Mutual Funds offered to mutual fund investors. Beginning in
2009, all deferred awards are in the form of the Adviser's publicly traded
equity securities. Prior to 2002, investment professional compensation also
included discretionary long-term incentive in the form of restricted grants of
AllianceBernstein's Master Limited Partnership Units.

           (iv) Contributions under the Adviser's Profit Sharing/401(k) Plan:
The contributions are based on the Adviser's overall profitability. The amount
and allocation of the contributions are determined at the sole discretion of the
Adviser.

           (v) Compensation under the Adviser's Special Option Program: Under
this program, certain investment professionals may be permitted to allocate a
portion of their deferred awards to options to buy the Adviser's publicly traded
equity securities, and to receive a two-for-one match of such allocated amount.
The determination of who may be eligible to participate in the Special Option
Program is made at the sole discretion of the Adviser.


--------------------------------------------------------------------------------

                              EXPENSES OF THE FUND

--------------------------------------------------------------------------------

Distribution Services Agreement
-------------------------------

            The Fund has entered into a Distribution Services Agreement (the
"Agreement") with ABI, the Fund's principal underwriter to permit ABI to
distribute the Fund's shares and to permit the Fund to pay distribution services
fees to defray expenses associated with distribution of its Class A shares,
Class C shares, Class R shares, Class K shares and Class 1 shares in accordance
with a plan of distribution that is included in the Agreement and that has been
duly adopted and approved in accordance with Rule 12b-1 adopted by the SEC under
the 1940 Act (the "Plan").

            In approving the Plan, the Directors determined that there was a
reasonable likelihood that the Plan would benefit the Fund and its shareholders.
The distribution services fee of a particular class will not be used to
subsidize the provision of distribution services with respect to any other
class.

            The Adviser may from time to time and from its own funds or such
other resources as may be permitted by rules of the SEC make payments for
distribution services to ABI; the latter may in turn pay part or all of such
compensation to brokers or other persons for their distribution assistance.

            The Plan will continue in effect with respect to the Fund and each
class of shares thereof for successive one-year periods provided that such
continuance is specifically approved at least annually by a majority of the
Independent Directors who have no direct or indirect financial interest in the
operation of the Plan or any agreement related thereto (the "Qualified
Directors") and by a vote of a majority of the entire Board at a meeting called
for that purpose.


            All material amendments to the Plan will become effective only upon
approval as provided in the preceding paragraph; and the Plan may not be amended
in order to increase materially the costs that the Fund may bear pursuant to the
Plan without the approval of a majority of the holders of the outstanding voting
shares of the Fund or the class or classes of the Fund. The Agreement may be
terminated (a) by the Fund without penalty at any time by a majority vote of the
holders of the Fund's outstanding voting securities, voting separately by class,
or by a majority vote of the Qualified Directors or (b) by ABI. To terminate the
Plan or the Agreement, any party must give the other parties 60 days' written
notice; except that the Fund may terminate the Plan without giving prior notice
to ABI. The Agreement will terminate automatically in the event of its
assignment. The Plan is of a type known as a "reimbursement plan", which means
that it reimburses the distributor for the actual costs of services rendered.


            In the event that the Plan is terminated by either party or not
continued with respect to the Class A, Class C, Class R ,Class K or Class 1
shares, (i) no distribution services fees (other than current amounts accrued
but not yet paid) would be owed by the Fund to ABI with respect to that class,
and (ii) the Fund would not be obligated to pay ABI for any amounts expended
under the Agreement not previously recovered by ABI from distribution services
fees or through deferred sales charges in respect of shares of such class.

            Distribution services fees are accrued daily and paid monthly and
are charged as expenses of the Fund as accrued. The distribution services fees
attributable to the Class C, Class R, Class K and Class 1 shares are designed to
permit an investor to purchase such shares through broker-dealers without the
assessment of an initial sales charge, and at the same time to permit ABI to
compensate broker-dealers in connection with the sale of such shares. In this
regard, the purpose and function of the combined contingent deferred sales
charge ("CDSC") and distribution services fees on the Class C shares and the
distribution services fees on the Class R, Class K and Class 1 shares are the
same as those of the initial sales charge and distribution services fee with
respect to the Class A shares in that in each case the sales charge and/or
distribution services fee provide for the financing of the distribution of the
relevant class of the Fund's shares.

            With respect to Class A shares of the Fund, distribution expenses
accrued by ABI in one fiscal year may not be paid from distribution services
fees received from the Fund in subsequent fiscal years. ABI's compensation with
respect to Class C, Class R, Class K and Class 1 shares under the Plan of the
Fund is directly tied to the expenses incurred by ABI. Actual distribution
expenses for Class C shares, Class R shares, Class K shares and Class 1 shares
for any given year, however, will probably exceed the distribution services fee
payable under the Plan with respect to the class involved and, in the case of
Class C shares, payments received from CDSCs. The excess will be carried forward
by ABI and reimbursed from distribution services fees subsequently payable under
the Plan with respect to the class involved and, in the case of Class C shares,
payments subsequently received through CDSCs, so long as the Plan is in effect.

Transfer Agency Agreement
-------------------------

            ABIS, an indirect wholly-owned subsidiary of the Adviser located
principally at 8000 IH 10 W, 4th Floor, San Antonio, Texas 78230, receives a
transfer agency fee per account holder of each of the Class A, Class C, Class R,
Class K, Class I, Class 1, Class 2 shares and Advisor Class shares of the Fund,
plus reimbursement for out-of-pocket expenses. The transfer agency fee with
respect to the Class C shares is higher than the transfer agency fee with
respect to the other classes of shares, reflecting the additional costs
associated with the Class C CDSCs. The Fund has not yet paid ABIS pursuant to
the Transfer Agency Agreement because the Fund has yet to commence operations.

            ABIS acts as the transfer agent for the Fund. ABIS, an indirect
wholly-owned subsidiary of the Adviser, registers the transfer, issuance and
redemption of Fund shares and disburses dividends and other distributions to
Fund shareholders.

            Many Fund shares are owned by selected dealers or selected agents,
as defined below, financial intermediaries or other financial representatives
("financial intermediaries") for the benefit of their customers. In those cases,
the Fund often does not maintain an account for you. Thus, some or all of the
transfer agency functions for these accounts are performed by the financial
intermediaries. The Fund, ABI and/or the Adviser pays to these financial
intermediaries, including those that sell shares of the AllianceBernstein Mutual
Funds, fees for sub-transfer agency and related recordkeeping services in
amounts ranging up to $19 per customer fund account per annum. Retirement plans
may also hold Fund shares in the name of the plan, rather than the participant.
Plan recordkeepers, who may have affiliated financial intermediaries who sell
shares of the Fund, may be paid for each plan participant fund account in
amounts up to $19 per account per annum and/or up to 0.25% per annum of the
average daily assets held in the plan. To the extent any of these payments for
recordkeeping services, transfer agency services or retirement plan accounts are
made by the Fund, they are included in your Prospectus in the Fund expense
tables under "Fees and Expenses of the Fund". In addition, financial
intermediaries may be affiliates of entities that receive compensation from the
Adviser or ABI for maintaining retirement plan "platforms" that facilitate
trading by affiliated and non-affiliated financial intermediaries and
recordkeeping for retirement plans.

            Because financial intermediaries and plan recordkeepers may be paid
varying amounts per class for sub-transfer agency and related recordkeeping
services, the service requirements of which may also vary by class, this may
create an additional incentive for financial intermediaries and their financial
advisors to favor one fund complex over another or one class of shares over
another.



--------------------------------------------------------------------------------

                               PURCHASE OF SHARES

--------------------------------------------------------------------------------

            The following information supplements that set forth in your
Prospectus under the heading "Investing in the Fund".

General
-------

            Shares of the Fund are offered on a continuous basis at a price
equal to their NAV plus an initial sales charge at the time of purchase ("Class
A shares"), without any initial sales charge and, as long as the shares are held
for one year or more, without any CDSC ("Class C shares"), to group retirement
plans, as defined below, eligible to purchase Class R shares, without any
initial sales charge or CDSC ("Class R shares"), to group retirement plans
eligible to purchase Class K shares, without any initial sales charge or CDSC
("Class K shares"), to group retirement plans and certain investment advisory
clients of, and certain other persons associated with, the Adviser and its
affiliates eligible to purchase Class I shares, without any initial sales charge
or CDSC ("Class I shares"), to private clients ("Clients") of Sanford C.
Bernstein & Co. LLC ("Bernstein") without any initial sales charge or CDSC (the
"Class 1 shares"), to institutional clients of the Adviser and Bernstein Clients
who have at least $3 million in fixed-income assets under management with
Bernstein without any initial sales charge or CDSC (the "Class 2 shares"), or to
investors eligible to purchase Advisor Class shares, without any initial sales
charge or CDSC ("Advisor Class shares"), in each case as described below. All of
the classes of shares of the Fund, except Class I and Advisor Class shares, are
subject to Rule 12b-1 asset-based sales charges. Shares of the Fund that are
offered subject to a sales charge are offered through (i) investment dealers
that are members of FINRA and have entered into selected dealer agreements with
ABI ("selected dealers"), (ii) depository institutions and other financial
intermediaries or their affiliates, that have entered into selected agent
agreements with ABI ("selected agents") and (iii) ABI.

            Investors may purchase shares of the Fund either through financial
intermediaries or directly through ABI. A transaction, service, administrative
or other similar fee may be charged by your financial intermediary with respect
to the purchase, sale or exchange of shares made through the financial
intermediary. Such financial intermediaries may also impose requirements with
respect to the purchase, sale or exchange of shares that are different from, or
in addition to, those imposed by the Fund, including requirements as to the
classes of shares available through that financial intermediary and the minimum
initial and subsequent investment amounts. The Fund is not responsible for, and
has no control over, the decision of any financial intermediary to impose such
differing requirements. Sales personnel of financial intermediaries distributing
the Fund's shares may receive differing compensation for selling different
classes of shares.

            In order to open your account, the Fund or your financial
intermediary is required to obtain certain information from you for
identification purposes. This information may include name, date of birth,
permanent residential address and social security/taxpayer identification
number. It will not be possible to establish your account without this
information. If the Fund or your financial intermediary is unable to verify the
information provided, your account may be closed and other appropriate action
may be taken as permitted by law.

            The public offering price of shares of the Fund is its NAV, plus, in
the case of Class A shares, a sales charge. On each Fund business day on which a
purchase or redemption order is received by the Fund and trading in the types of
securities in which the Fund invests might materially affect the value of Fund
shares, the NAV is computed as of the next close of regular trading on the
Exchange (currently 4:00 p.m., Eastern time) by dividing the value of the Fund's
total assets, less its liabilities, by the total number of its shares then
outstanding. A Fund business day is any day on which the Exchange is open for
trading.

            The respective NAVs of the various classes of shares of the Fund are
expected to be substantially the same. However, the NAVs of the Class C and
Class R shares will generally be slightly lower than the NAVs of the Class A,
Class K, Class I, Class 1, Class 2 and Advisor Class shares as a result of the
differential daily expense accruals of the higher distribution and, in some
cases, transfer agency fees applicable with respect to those classes of shares.

            The Fund will accept unconditional orders for its shares to be
executed at the public offering price equal to their NAV next determined (plus
applicable Class A sales charges), as described below. Orders received by ABIS
prior to the close of regular trading on the Exchange on each day the Exchange
is open for trading are priced at the NAV computed as of the close of regular
trading on the Exchange on that day (plus applicable Class A sales charges). In
the case of orders for purchase of shares placed through financial
intermediaries the applicable public offering price will be the NAV so
determined, but only if the financial intermediary receives the order prior to
the close of regular trading on the Exchange. The financial intermediary is
responsible for transmitting such orders by a prescribed time to the Fund or its
transfer agent. If the financial intermediary fails to do so, the investor will
not receive that day's NAV. If a financial intermediary or ABIS receives an
order after the close of regular trading on the Exchange, the price received by
the investor will be based on the NAV determined as of the close of regular
trading on the Exchange on the next day it is open for trading.

            The Fund may, at its sole option, accept securities as payment for
shares of the Fund if the Adviser believes that the securities are appropriate
investments for the Fund. The securities are valued by the method described
under "Net Asset Value" below as of the date the Fund receives the securities
and corresponding documentation necessary to transfer the securities to the
Fund. This is a taxable transaction to the shareholder.

            Following the initial purchase of Fund shares, a shareholder may
place orders to purchase additional shares by telephone if the shareholder has
completed the appropriate portion of the Mutual Fund Application or an "Autobuy"
application obtained by calling the "For Literature" telephone number shown on
the cover of this SAI. Except with respect to certain omnibus accounts,
telephone purchase orders with payment by electronic funds transfer may not
exceed $500,000. Payment for shares purchased by telephone can be made only by
electronic funds transfer from a bank account maintained by the shareholder at a
bank that is a member of the National Automated Clearing House Association
("NACHA"). Telephone purchase requests must be received before 4:00 p.m.,
Eastern time, on a Fund business day to receive that day's public offering
price. Telephone purchase requests received after 4:00 p.m., Eastern time, are
automatically placed the following Fund business day, and the applicable public
offering price will be the public offering price determined as of the close of
business on such following business day.

            Full and fractional shares are credited to a shareholder's account
in the amount of his or her subscription. As a convenience, and to avoid
unnecessary expense to the Fund, the Fund will not issue stock certificates
representing shares of the Fund. Ownership of the Fund's shares will be shown on
the books of the Fund's transfer agent.

            Each class of shares in the Fund represents an interest in the same
portfolio of investments of the Fund, has the same rights and is identical in
all respects, except that (i) Class A shares bear the expense of the initial
sales charge (or CDSC, when applicable) and Class C shares bear the expense of
the CDSC, (ii) Class C and Class R shares each bear the expense of a higher
distribution services fee than those borne by Class A, Class K and Class 1
shares, and Class I shares, Class 2 shares and Advisor Class shares do not bear
such a fee, (iii) Class C shares bear higher transfer agency costs than that
borne by the other classes of shares, and (iv) each of Class A, Class C, Class
R, Class K and Class 1 shares has exclusive voting rights with respect to
provisions of the Plan pursuant to which its distribution services fee is paid
and other matters for which separate class voting is appropriate under
applicable law, provided that, if the Fund submits to a vote of the Class A
shareholders an amendment to the Plan that would materially increase the amount
to be paid thereunder with respect to the Class A shares, then such amendment
will also be submitted to the Advisor Class shareholders because the Advisor
Class shares convert to Class A shares under certain circumstances and the Class
A shares and Advisor Class shareholders will vote separately by class. Each
class has different exchange privileges and certain different shareholder
service options available.

            The Directors have determined that currently no conflict of interest
exists between or among the classes of shares of the Fund. On an ongoing basis,
the Directors, pursuant to their fiduciary duties under the 1940 Act and state
law, will seek to ensure that no such conflict arises.

Frequent Purchases and Redemptions
----------------------------------

            The Board has adopted policies and procedures designed to detect and
deter frequent purchases and redemptions of Fund shares or excessive or
short-term trading that may disadvantage long-term Fund shareholders. These
policies are described below. There is no guarantee that the Fund will be able
to detect excessive or short-term trading and to identify shareholders engaged
in such practices, particularly with respect to transactions in omnibus
accounts. Shareholders should be aware that application of these policies may
have adverse consequences, as described below, and avoid frequent trading in
Fund shares through purchases, sales and exchanges of shares. The Fund reserves
the right to restrict, reject or cancel, without any prior notice, any purchase
or exchange order for any reason, including any purchase or exchange order
accepted by any shareholder's financial intermediary.

            Risks Associated With Excessive Or Short-Term Trading Generally.
While the Fund will try to prevent market timing by utilizing the procedures
described below, these procedures may not be successful in identifying or
stopping excessive or short-term trading in all circumstances. By realizing
profits through short-term trading, shareholders that engage in rapid purchases
and sales or exchanges of the Fund's shares dilute the value of shares held by
long-term shareholders. Volatility resulting from excessive purchases and sales
or exchanges of Fund shares, especially involving large dollar amounts, may
disrupt efficient portfolio management and cause the Fund to sell shares at
inopportune times to accommodate redemptions relating to short-term trading. In
particular, the Fund may have difficulty implementing its long-term investment
strategies if it is forced to maintain a higher level of its assets in cash to
accommodate significant short-term trading activity. In addition, the Fund may
incur increased administrative and other expenses due to excessive or short-term
trading, including increased brokerage costs and realization of taxable capital
gains.

            Funds that may invest significantly in foreign securities may be
particularly susceptible to short-term trading strategies. This is because
foreign securities are typically traded on markets that close well before the
time the Fund calculates its NAV at 4:00 p.m., Eastern time, which gives rise to
the possibility that developments may have occurred in the interim that would
affect the value of these securities. The time zone differences among
international stock markets can allow a shareholder engaging in a short-term
trading strategy to exploit differences in Fund share prices that are based on
closing prices of foreign securities established some time before the Fund
calculates its own share price (referred to as "time zone arbitrage"). The Fund
has procedures, referred to as fair value pricing, designed to adjust closing
market prices of foreign securities to reflect what is believed to be the fair
value of those securities at the time the Fund calculates its NAV. While there
is no assurance, the Fund expects that the use of fair value pricing, in
addition to the short-term trading policies discussed below, will significantly
reduce a shareholder's ability to engage in time zone arbitrage to the detriment
of other Fund shareholders.

            A shareholder engaging in a short-term trading strategy may also
target a fund that does not invest primarily in foreign securities. Any fund
that invests in securities that are, among other things, thinly traded, traded
infrequently or relatively illiquid has the risk that the current market price
for the securities may not accurately reflect current market values. A
shareholder may seek to engage in short-term trading to take advantage of these
pricing differences (referred to as "price arbitrage"). The Fund may be
adversely affected by price arbitrage trading strategies.

            Policy Regarding Short-Term Trading. Purchases and exchanges of
shares of the Fund should be made for investment purposes only. The Fund will
seek to prevent patterns of excessive purchases and sales or exchanges of Fund
shares. The Fund will seek to prevent such practices to the extent they are
detected by the procedures described below. The Fund reserves the right to
modify this policy, including any surveillance or account blocking procedures
established from time to time to effectuate this policy, at any time without
notice.

o     Transaction Surveillance Procedures. The Fund, through its agents, ABI and
      ABIS, maintains surveillance procedures to detect excessive or short-term
      trading in Fund shares. This surveillance process involves several
      factors, which include scrutinizing transactions in Fund shares that
      exceed certain monetary thresholds or numerical limits within a specified
      period of time. Generally, more than two exchanges of Fund shares during
      any 90-day period or purchases of shares followed by a sale within 90 days
      will be identified by these surveillance procedures. For purposes of these
      transaction surveillance procedures, the Fund may consider trading
      activity in multiple accounts under common ownership, control, or
      influence. Trading activity identified by either, or a combination, of
      these factors, or as a result of any other information available at the
      time, will be evaluated to determine whether such activity might
      constitute excessive or short-term trading. These surveillance procedures
      may be modified from time to time, as necessary or appropriate to improve
      the detection of excessive or short-term trading or to address specific
      circumstances.

o     Account Blocking Procedures. If the Fund determines, in its sole
      discretion, that a particular transaction or pattern of transactions
      identified by the transaction surveillance procedures described above is
      excessive or short-term trading in nature, the relevant Fund account(s)
      will be immediately "blocked" and no future purchase or exchange activity
      will be permitted. However, sales of Fund shares back to the Fund or
      redemptions will continue to be permitted in accordance with the terms of
      the Fund's current Prospectuses. As a result, unless the shareholder
      redeems his or her shares, which may have consequences if the shares have
      declined in value, a CDSC is applicable or adverse tax consequences may
      result, the shareholder may be "locked" into an unsuitable investment. In
      the event an account is blocked, certain account-related privileges, such
      as the ability to place purchase, sale and exchange orders over the
      internet or by phone, may also be suspended. A blocked account will
      generally remain blocked unless and until the account holder or the
      associated broker, dealer or other financial intermediary provides
      evidence or assurance acceptable to the Fund that the account holder did
      not or will not in the future engage in excessive or short-term trading.

o     Applications of Surveillance Procedures and Restrictions to Omnibus
      Accounts. Omnibus account arrangements are common forms of holding shares
      of the Fund, particularly among certain brokers, dealers and other
      financial intermediaries, including sponsors of retirement plans and
      variable insurance products. The Fund applies its surveillance procedures
      to these omnibus account arrangements. As required by SEC rules, the Fund
      has entered into agreements with all of its financial intermediaries that
      require the financial intermediaries to provide the Fund, upon the request
      of the Fund or its agents, with individual account level information about
      their transactions. If the Fund detects excessive trading through its
      monitoring of omnibus accounts, including trading at the individual
      account level, the financial intermediaries will also execute instructions
      from the Fund to take actions to curtail the activity, which may include
      applying blocks to accounts to prohibit future purchases and exchanges of
      Fund shares. For certain retirement plan accounts, the Fund may request
      that the retirement plan or other intermediary revoke the relevant
      participant's privilege to effect transactions in Fund shares via the
      internet or telephone, in which case the relevant participant must submit
      future transaction orders via the U.S. Postal Service (i.e., regular
      mail).

            Risks to Shareholders Resulting From Imposition of Account Blocks in
Response to Excessive Short-Term Trading Activity. A shareholder identified as
having engaged in excessive or short-term trading activity whose account is
"blocked" and who may not otherwise wish to redeem his or her shares effectively
may be "locked" into an investment in the Fund that the shareholder did not
intend to hold on a long-term basis or that may not be appropriate for the
shareholder's risk profile. To rectify this situation, a shareholder with a
"blocked" account may be forced to redeem Fund shares, which could be costly if,
for example, these shares have declined in value, the shareholder recently paid
a front-end sales charge or the shares are subject to a CDSC, or the sale
results in adverse tax consequences to the shareholder. To avoid this risk, a
shareholder should carefully monitor the purchases, sales, and exchanges of Fund
shares and avoid frequent trading in Fund shares.

            Limitations on Ability to Detect and Curtail Excessive Trading
Practices. Shareholders seeking to engage in excessive short-term trading
activities may deploy a variety of strategies to avoid detection and, despite
the efforts of the Fund and its agents to detect excessive or short duration
trading in Fund shares, there is no guarantee that the Fund will be able to
identify these shareholders or curtail their trading practices. In particular,
the Fund may not be able to detect excessive or short-term trading in Fund
shares attributable to a particular investor who affects purchase and/or
exchange activity in Fund shares through omnibus accounts. Also, multiple tiers
of these entities may exist, each utilizing an omnibus account arrangement,
which may further compound the difficulty of detecting excessive or short
duration trading activity in Fund shares.

            The Fund reserves the right to suspend the sale of its shares to the
public in response to conditions in the securities markets or for other reasons.
If the Fund suspends the sale of its shares, shareholders will not be able to
acquire its shares, including through an exchange.

Alternative Purchase Arrangements
---------------------------------

            Classes A and C Shares. Class A and Class C shares have the
following alternative purchase arrangements: Class A shares are generally
offered with an initial sales charge and Class C shares are sold to investors
choosing the asset-based sales charge alternative. Special purchase arrangements
are available for group retirement plans. See "Alternative Purchase Arrangements
- Group Retirement Plans and Tax-Deferred Accounts" below. "Group retirement
plans" are defined as 401(k) plans, 457 plans, employer-sponsored 403(b) plans,
profit sharing and money purchase pension plans, defined benefit plans, and
non-qualified deferred compensation plans where plan level or omnibus accounts
are held on the books of the Fund. See "Alternative Purchase Arrangements -
Group Retirement Plans and Tax-Deferred Accounts" below. These alternative
purchase arrangements permit an investor to choose the method of purchasing
shares that is most beneficial given the amount of the purchase, the length of
time the investor expects to hold the shares, and other circumstances. Investors
should consider whether, during the anticipated life of their investment in the
Fund the accumulated distribution services fee and CDSC on Class C shares would
be less than the initial sales charge and accumulated distribution services fee
on Class A shares purchased at the same time, and to what extent such
differential would be offset by the higher return of Class A shares. Class C
shares will normally not be suitable for the investor who qualifies to purchase
Class A shares at NAV. For this reason, ABI will reject any order for more than
$1,000,000 for Class C shares.

            Class A shares are subject to a lower distribution services fee and,
accordingly, pay correspondingly higher dividends per share than Class C shares.
However, because initial sales charges are deducted at the time of purchase,
most investors purchasing Class A shares would not have all their funds invested
initially and, therefore, would initially own fewer shares. Investors not
qualifying for reduced initial sales charges who expect to maintain their
investment for an extended period of time might consider purchasing Class A
shares because the accumulated continuing distribution charges on Class C shares
may exceed the initial sales charge on Class A shares during the life of the
investment. Again, however, such investors must weigh this consideration against
the fact that, because of such initial sales charges, not all their funds will
be invested initially.

            Other investors might determine, however, that it would be more
advantageous to purchase Class C shares in order to have all their funds
invested initially, although remaining subject to higher continuing distribution
charges and, being subject to a CDSC for a one-year period. For example, based
on current fees and expenses, an investor subject to the 4.25% initial sales
charge on Class A shares would have to hold his or her investment approximately
seven years for the Class C distribution services fee to exceed the initial
sales charge plus the accumulated distribution services fee of Class A shares.
In this example, an investor intending to maintain his or her investment for a
longer period might consider purchasing Class A shares. This example does not
take into account the time value of money, which further reduces the impact of
the Class C distribution services fees on the investment, fluctuations in NAV or
the effect of different performance assumptions.

            The Fund has not yet paid underwriting commission with respect to
shares of the Fund because the Fund has not yet commenced operations.

            Class A Shares. The public offering price of Class A shares is the
NAV plus a sales charge, as set forth below.

                                                 Sales Charge

                                                                Discount or
                                 As %           As %            Commission
                                of Net         of the         to Dealers or
                                Amount         Public        Agents of up to
Amount of Purchase             Invested    Offering Price  % of Offering Price
------------------             ---------   --------------- --------------------

Up to $100,000.................  4.44%         4.25%             4.00%
$100,000 up to $250,000........  3.36          3.25              3.00
$250,000 up to $500,000........  2.30          2.25              2.00
$500,000 up to $1,000,000*.....  1.78          1.75              1.50

-----------------
* There is no initial sales charge on transactions of $1,000,000 or more.

            All or a portion of the initial sales charge may be paid to your
financial representative. With respect to purchases of $1,000,000 or more, Class
A shares redeemed within one year of purchase may be subject to a CDSC of up to
1%. The CDSC on Class A shares will be waived on certain redemptions, as
described below under "-- Contingent Deferred Sales Charge". ABI's commission is
the sales charge shown above less any applicable discount or commission
"reallowed" to selected dealers and agents. ABI will reallow discounts to
selected dealers and agents in the amounts indicated in the table above. In this
regard, ABI may elect to reallow the entire sales charge to selected dealers and
agents for all sales with respect to which orders are placed with ABI. A
selected dealer who receives reallowance in excess of 90% of such a sales charge
may be deemed to be an "underwriter" under the Securities Act. The Fund receives
the total amount of an investor's purchase payment less the initial sales
charge.

            No initial sales charge is imposed on Class A shares issued (i)
pursuant to the automatic reinvestment of income dividends or capital gains
distributions or (ii) in exchange for Class A shares of other "AllianceBernstein
Mutual Funds" (as that term is defined under "Combined Purchase Privilege"
below), except that an initial sales charge will be imposed on Class A shares
issued in exchange for Class A shares of AllianceBernstein Exchange Reserves
that were purchased for cash without the payment of an initial sales charge and
without being subject to a CDSC.

            In addition to the circumstances described above, certain types of
investors may be entitled to pay no initial sales charge in certain
circumstances described below.

            Class A Shares--Sales at NAV. The Fund may sell its Class A shares
at NAV (i.e., without any initial sales charge) to certain categories of
investors including:

            (i)   investment management clients of the Adviser or its
                  affiliates, including clients and prospective clients of the
                  Adviser's AllianceBernstein Institutional Investment
                  Management Division;

            (ii)  officers, directors and present and full-time employees of
                  selected dealers or agents; or the spouse or domestic partner,
                  sibling, direct ancestor or direct descendant (collectively,
                  "Relatives") of any such person; or any trust, individual
                  retirement account or retirement plan account for the benefit
                  of any such person;

            (iii) the Adviser, ABI, ABIS and their affiliates; certain employee
                  benefit plans for employees of the Adviser, ABI, ABIS and
                  their affiliates;

            (iv)  persons participating in a fee-based program, sponsored and
                  maintained by a registered broker-dealer or other financial
                  intermediary and approved by ABI, under which such persons pay
                  an asset-based fee for service in the nature of investment
                  advisory or administrative services;

            (v)   certain retirement plan accounts as described under
                  "Alternative Purchase Arrangements--Group Retirement Plans and
                  Tax-Deferred Accounts"; and

            (vi)  current Class A shareholders of AllianceBernstein Mutual Funds
                  and investors who receive a "Fair Funds Distribution" (a
                  "Distribution") resulting from an SEC enforcement action
                  against the Adviser and current Class A shareholders of
                  AllianceBernstein Mutual Funds who receive a Distribution
                  resulting from any SEC enforcement action related to trading
                  in shares of AllianceBernstein Mutual Funds who, in each case,
                  purchase shares of an AllianceBernstein Mutual Fund from ABI
                  through deposit with ABI of the Distribution check.

            Class C Shares. Investors may purchase Class C shares at the public
offering price equal to the NAV per share of the Class C shares on the date of
purchase without the imposition of a sales charge either at the time of purchase
or, as long as the shares are held for one year or more, upon redemption. Class
C shares are sold without an initial sales charge so that the Fund will receive
the full amount of the investor's purchase payment and, as long as the shares
are held for one year or more, without a CDSC so that the investor will receive
as proceeds upon redemption the entire NAV of his or her Class C shares. The
Class C distribution services fee enables the Fund to sell Class C shares
without either an initial sales charge or CDSC, as long as the shares are held
for one year or more. Class C shares do not convert to any other class of shares
of the Fund and incur higher distribution services fees and transfer agency
costs than Class A shares and Advisor Class shares, and will thus have a higher
expense ratio and pay correspondingly lower dividends than Class A shares and
Advisor Class shares.

            Contingent Deferred Sales Charge. Class A share purchases of
$1,000,000 or more and Class C shares that in either case are redeemed within
one year of purchase will be subject to a CDSC of 1%, as are Class A share
purchases by certain group retirement plans (see "Alternative Purchase
Arrangements - Group Retirement Plans and Tax-Deferred Accounts" below). The
charge will be assessed on an amount equal to the lesser of the cost of the
shares being redeemed or their NAV at the time of redemption. Accordingly, no
sales charge will be imposed on increases in NAV above the initial purchase
price. In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions.

            In determining the CDSC applicable to a redemption of Class C
shares, it will be assumed that the redemption is, first, of any shares that are
not subject to a CDSC (for example, because the shares were acquired upon the
reinvestment of dividends or distributions) and, second, of shares held longest
during the time they are subject to the sales charge. When shares acquired in an
exchange are redeemed, the applicable CDSC and conversion schedules will be the
schedules that applied at the time of the purchase of shares of the
corresponding class of the AllianceBernstein Mutual Fund originally purchased by
the shareholder. If you redeem your shares and directly invest the proceeds in
units of CollegeBoundfund, the CDSC will apply to the units of CollegeBoundfund.

            Proceeds from the CDSC are paid to ABI and are used by ABI to defray
the expenses of ABI related to providing distribution-related services to the
Fund in connection with the sale of Fund shares, such as the payment of
compensation to selected dealers and agents for selling Fund shares. The
combination of the CDSC and the distribution services fee enables the Fund to
sell shares without a sales charge being deducted at the time of purchase.

            The CDSC is waived on redemptions of shares (i) following the death
or disability, as defined in the Code, of a shareholder, (ii) to the extent that
the redemption represents a minimum required distribution from an individual
retirement account or other retirement plan to a shareholder who has attained
the age of 70 1/2, (iii) that had been purchased by present or former Directors
of the Funds, by the Relative of any such person, by any trust, individual
retirement account or retirement plan account for the benefit of any such person
or Relative, or by the estate of any such person or Relative, (iv) pursuant to,
and in accordance with, a systematic withdrawal plan (see "Sales Charge
Reduction Programs - Systematic Withdrawal Plan" below), (v) to the extent that
the redemption is necessary to meet a plan participant's or beneficiary's
request for a distribution or loan from a group retirement plan or to
accommodate a plan participant's or beneficiary's direction to reallocate his or
her plan account among other investment alternatives available under a group
retirement plan, (vi) due to the complete termination of a trust upon the death
of the trustor/grantor, beneficiary or trustee but only if the trust termination
is specifically provided for in the trust document, or (vi) that had been
purchased with proceeds from a Distribution resulting from any SEC enforcement
action related to trading in shares of AllianceBernstein Mutual Funds through
deposit with ABI of the Distribution check. The CDSC is also waived for (i)
permitted exchanges of shares, (ii) holders of Class A shares who purchased
$1,000,000 or more of Class A shares where the participating broker or dealer
involved in the sale of such shares waived the commission it would normally
receive from ABI or (iii) Class C shares sold through programs offered by
financial intermediaries and approved by ABI where such programs offer only
shares that are not subject to a CDSC, where the financial intermediary
establishes a single omnibus account for each Fund or in the case of a group
retirement plan, a single account for each plan, and where no advance commission
is paid to any financial intermediary in connection with the purchase of such
shares.

            Class R Shares. Class R shares are offered only to group retirement
plans that have plan assets of up to $10 million. Class R shares are not
available to retail non-retirement accounts, traditional or Roth IRAs, Coverdell
Education Savings Accounts, SEPs, SAR-SEPs, SIMPLE IRAs, individual 403(b) plans
and to AllianceBernstein-sponsored retirement products. Class R shares incur a
..50% distribution services fee and thus have a higher expense ratio and pay
correspondingly lower dividends than Class A, Class K and Class I shares.

            Class K Shares. Class K shares are available at NAV to group
retirement plans that have plan assets of at least $1 million. Class K shares
are not available to retail non-retirement accounts, traditional and ROTH IRAs,
Coverdell Education Savings Accounts, SEPs, SAR-SEPs, SIMPLE IRAs, individual
403(b) plans and AllianceBernstein-sponsored retirement products. Class K shares
do not have an initial sales charge or CDSC but incur a .25% distribution
services fee and (i) thus have a lower expense ratio than Class R shares and pay
correspondingly higher dividends than Class R shares and (ii) have a higher
expense ratio than Class I shares and pay correspondingly lower dividends than
Class I shares.

            Class I Shares. Class I shares are available at NAV to all group
retirement plans that have plan assets in excess of $10 million (and to certain
related group retirement plans with plan assets of less than $10 million in
assets if the sponsor of such a plan has at least one group retirement plan with
plan assets in excess of $10 million that invests in Class I shares) and to
certain investment advisory clients of, and certain other persons associated
with, the Adviser and its affiliates. Class I shares generally are not available
to retail non-retirement accounts, traditional and ROTH IRAs, Coverdell
Education Savings Accounts, SEPs, SAR-SEPs, SIMPLE IRAs, individual 403(b) plans
and AllianceBernstein-sponsored retirement products. Class I shares do not incur
any distribution services fees and will thus have a lower expense ratio and pay
correspondingly higher dividends than Class R and Class K shares.

            Class 1 Shares. Class 1 shares are offered only to Bernstein
Clients. Class 1 shares incur a .25% distribution services fee and thus have a
lower expense ratio and pay correspondingly higher dividends than Class A share
and Class C shares.

            Class 2 Shares. Class 2 shares are offered only to institutional
clients of the Adviser and Bernstein Clients who meet certain minimum
requirements for assets under management with Bernstein after giving effect to
their investment in the Fund. Class 2 shares do not incur any distribution
services fees and will thus have a lower expense ratio and pay correspondingly
higher dividends than Class A, Class C and Class 1 shares.

            Advisor Class Shares. Advisor Class shares of the Fund may be
purchased and held solely (i) through accounts established under fee-based
programs, sponsored and maintained by registered broker-dealers or other
financial intermediaries and approved by ABI, (ii) through self-directed defined
contribution employee benefit plans (e.g., 401(k) plans) that have at least $10
million in assets and are purchased directly by the plan without the involvement
of a financial intermediary, (iii) officers and present or former Directors or
other investment companies managed by the Adviser, officers, directors and
present or retired full-time employees and former employees (for subsequent
investment in accounts established during the course of their employment) of the
Adviser, ABI, ABIS and their affiliates; or the Relatives of any such person; or
any trust, individual retirement account or retirement plan account for the
benefit of any such person; or (iv) by the categories of investors described in
clauses (i), (iii) and (iv) under "Class A Shares - Sales at NAV". Generally, a
fee-based program must charge an asset-based or other similar fee and must
invest at least $250,000 in Advisor Class shares of the Fund in order to be
approved by ABI for investment in Advisor Class shares. A transaction fee may be
charged by your financial intermediary with respect to the purchase, sale or
exchange of Advisor Class shares made through such financial intermediary.
Advisor Class shares do not incur any distribution services fees, and will thus
have a lower expense ratio and pay correspondingly higher dividends than Class
A, Class C, Class R, Class K or Class 1 shares.

Alternative Purchase Arrangements--Group Retirement Plans and Tax-Deferred
Accounts
---------------------------------------------------------------------------

            The Fund offers special distribution arrangements for group
retirement plans. However, plan sponsors, plan fiduciaries and other financial
intermediaries may establish requirements as to the purchase, sale or exchange
of shares of the Fund, including maximum and minimum initial investment
requirements, that are different from those described in this SAI. Group
retirement plans also may not offer all classes of shares of the Fund. In
addition, the Class A CDSC may be waived for investments made through certain
group retirement plans. Therefore, plan sponsors or fiduciaries may not adhere
to these share class eligibility standards as set forth in the Prospectuses and
this SAI. The Fund is not responsible for, and has no control over, the decision
of any plan sponsor or fiduciary to impose such differing requirements.

            Class A Shares. Class A shares are available at NAV to all
AllianceBernstein sponsored group retirement plans, regardless of size, and to
the AllianceBernstein Link, AllianceBernstein Individual 401(k) and
AllianceBernstein SIMPLE IRA plans with at least $250,000 in plan assets or 100
or more employees. Effective June 30, 2005, for purposes of determining whether
a SIMPLE IRA plan has at least $250,000 in plan assets, all of the SIMPLE IRAs
of an employer's employees are aggregated. ABI measures the asset levels and
number of employees in these plans once monthly. Therefore, if a plan that is
not eligible at the beginning of a month for purchases of Class A shares at NAV
meets the asset level or number of employees required for such eligibility later
in that month, all purchases by the plan will be subject to a sales charge until
the next monthly measurement of assets and employees. If a plan terminates the
Fund as an investment option within one year, then all plan purchases of Class A
shares will be subject to a 1%, 1-year CDSC on redemption. Class A shares are
also available at NAV to group retirement plans with plan assets in excess of
$10 million. The 1%, 1-year CDSC also generally applies. However, the 1%, 1-year
CDSC may be waived if the financial intermediary agrees to waive all commissions
or other compensation paid in connection with the sale of such shares (typically
up to a 1% advance payment for sales of Class A shares at NAV) other than the
service fee paid pursuant to the Fund's plan.

            Class C Shares. Class C shares are available to AllianceBernstein
Link, AllianceBernstein Individual 401(k) and AllianceBernstein SIMPLE IRA plans
with less than $250,000 in plan assets and less than 100 employees. Class C
shares are also available to group retirement plans with plan assets of less
than $1 million. If an AllianceBernstein Link, AllianceBernstein Individual
401(k) or AllianceBernstein SIMPLE IRA plan holding Class C shares becomes
eligible to purchase Class A shares at NAV, the plan sponsor or other
appropriate fiduciary of such plan may request ABI in writing to liquidate the
Class C shares and purchase Class A shares with the liquidation proceeds. Any
such liquidation and repurchase may not occur before the expiration of the
1-year period that begins on the date of the plan's last purchase of Class C
shares.

            Class R Shares. Class R shares are available to certain group
retirement plans with plan assets of up to $10 million. Class R shares are not
subject to a front-end sales charge or CDSC, but are subject to a .50%
distribution fee.

            Class K Shares. Class K shares are available to certain group
retirement plans with plan assets of at least $1 million. Class K shares are not
subject to a front-end sales charge or CDSC, but are subject to a .25%
distribution fee.

            Class I Shares. Class I shares are available to certain group
retirement plans with plan assets of at least $10 million and certain
institutional clients of the Adviser who invest at least $2 million in the Fund.
Class I shares are not subject to a front-end sales charge, CDSC or distribution
fee.

            Choosing a Class of Shares for Group Retirement Plans. Plan
sponsors, plan fiduciaries and other financial intermediaries may establish
requirements as to the purchase, sale or exchange of shares of the Fund,
including maximum and minimum initial investment requirements, that are
different from those described in this SAI. Plan fiduciaries should consider how
these requirements differ from the Fund's share class eligibility criteria
before determining whether to invest.

            Currently, the Fund makes its Class A shares available at NAV to
group retirement plans with plan assets in excess of $10 million. Unless waived
under the circumstances described above, a 1%, 1-year CDSC applies to the sale
of Class A shares by a plan. Because Class K shares have no CDSC and lower Rule
12b-1 distribution fees and Class I shares have no CDSC or Rule 12b-1
distribution fees, plans should consider purchasing Class K or Class I shares,
if eligible, rather than Class A shares.

            In selecting among the Class A, Class K and Class R shares, plans
purchasing shares through a financial intermediary that is not willing to waive
advance commission payments (and therefore are not eligible for the waiver of
the 1%, 1-year CDSC applicable to Class A shares) should weigh the following:

      o     the Rule 12b-1 distribution fees (0.30%) and the 1%, 1-year CDSC
            with respect to Class A shares;

      o     the higher Rule 12b-1 distribution fees (0.50%) and the absence of a
            CDSC with respect to Class R shares; and

      o     the lower Rule 12b-1 distribution fees (0.25%) and the absence of a
            CDSC with respect to Class K shares.

            Because Class A and Class K shares have lower Rule 12b-1
distribution fees than Class R shares, plans should consider purchasing Class A
or Class K shares, if eligible, rather than Class R shares.

Sales Charge Reduction Programs
-------------------------------

            The AllianceBernstein Mutual Funds offer shareholders various
programs through which shareholders may obtain reduced sales charges or
reductions in CDSC through participation in such programs. In order for
shareholders to take advantage of the reductions available through the combined
purchase privilege, rights of accumulation and letters of intent, the Fund must
be notified by the shareholder or his or her financial intermediary that they
qualify for such a reduction. If the Fund is not notified that a shareholder is
eligible for these reductions, the Fund will be unable to ensure that the
reduction is applied to the shareholder's account.

            Combined Purchase Privilege. Shareholders may qualify for the sales
charge reductions by combining purchases of shares of the Fund (and/or any other
AllianceBernstein Mutual Fund) into a single "purchase". By combining such
purchases, shareholders may be able to take advantage of the quantity discounts
described under "Alternative Purchase Arrangements--Class A Shares". A
"purchase" means a single purchase or concurrent purchases of shares of the Fund
or any other AllianceBernstein Mutual Fund, including AllianceBernstein
Institutional Funds, by (i) an individual, his or her spouse or domestic
partner, or the individual's children under the age of 21 years purchasing
shares for his, her or their own account(s), including certain CollegeBoundfund
accounts; (ii) a trustee or other fiduciary purchasing shares for a single
trust, estate or single fiduciary account with one or more beneficiaries
involved; or (iii) the employee benefit plans of a single employer. The term
"purchase" also includes purchases by any "company", as the term is defined in
the 1940 Act, but does not include purchases by any such company that has not
been in existence for at least six months or that has no purpose other than the
purchase of shares of the Fund or shares of other registered investment
companies at a discount. The term "purchase" does not include purchases by any
group of individuals whose sole organizational nexus is that the participants
therein are credit card holders of a company, policy holders of an insurance
company, customers of either a bank or broker-dealer or clients of an investment
adviser.

            Currently, the AllianceBernstein Mutual Funds include:


AllianceBernstein Balanced Shares, Inc.
AllianceBernstein Blended Style Series, Inc.
  -AllianceBernstein 2000 Retirement Strategy
  -AllianceBernstein 2005 Retirement Strategy
  -AllianceBernstein 2010 Retirement Strategy
  -AllianceBernstein 2015 Retirement Strategy
  -AllianceBernstein 2020 Retirement Strategy
  -AllianceBernstein 2025 Retirement Strategy
  -AllianceBernstein 2030 Retirement Strategy
  -AllianceBernstein 2035 Retirement Strategy
  -AllianceBernstein 2040 Retirement Strategy
  -AllianceBernstein 2045 Retirement Strategy
  -AllianceBernstein 2050 Retirement Strategy
  -AllianceBernstein 2055 Retirement Strategy
 AllianceBernstein Bond Fund, Inc.
  -AllianceBernstein Bond Inflation Strategy
  -AllianceBernstein Intermediate Bond Portfolio
  -AllianceBernstein Real Asset Strategy
  -AllianceBernstein Municipal Bond Inflation Strategy
AllianceBernstein Cap Fund, Inc.
  -AllianceBernstein Small Cap Growth Portfolio
  -AllianceBernstein U.S. Strategic Research Portfolio
  -AllianceBernstein Market Neutral Strategy-U.S.
  -AllianceBernstein Market Neutral Strategy-Global
  -AllianceBernstein International Discovery Equity Portfolio
  -AllianceBernstein International Focus 40 Portfolio
AllianceBernstein Core Opportunities Fund, Inc.
AllianceBernstein Equity Income Fund, Inc.
AllianceBernstein Exchange Reserves
AllianceBernstein Global Bond Fund, Inc.
AllianceBernstein Global Real Estate Investment Fund, Inc.
AllianceBernstein Global Thematic Growth Fund, Inc.
AllianceBernstein Greater China '97 Fund, Inc.
AllianceBernstein Growth and Income Fund, Inc.
AllianceBernstein High Income Fund, Inc.
AllianceBernstein International Growth Fund, Inc.
AllianceBernstein Large Cap Growth Fund, Inc.
AllianceBernstein Municipal Income Fund, Inc.
  -California Portfolio
  -National Portfolio
  -New York Portfolio
  -AllianceBernstein High Income Municipal Portfolio
AllianceBernstein Municipal Income Fund II
  -Arizona Portfolio
  -Massachusetts Portfolio
  -Michigan Portfolio
  -Minnesota Portfolio
  -New Jersey Portfolio
  -Ohio Portfolio
  -Pennsylvania Portfolio
  -Virginia Portfolio
AllianceBernstein Small/Mid Cap Growth Fund, Inc.
AllianceBernstein Trust
  -AllianceBernstein Global Value Fund
  -AllianceBernstein International Value Fund
  -AllianceBernstein Small/Mid Cap Value Fund
  -AllianceBernstein Value Fund
AllianceBernstein Unconstrained Bond Fund, Inc.
The AllianceBernstein Portfolios
  -AllianceBernstein Balanced Wealth Strategy
  -AllianceBernstein Conservative Wealth Strategy
  -AllianceBernstein Growth Fund
  -AllianceBernstein Tax-Managed Balanced Wealth Strategy
  -AllianceBernstein Tax-Managed Wealth Appreciation Strategy
  -AllianceBernstein Tax-Managed Conservative Wealth Strategy
  -AllianceBernstein Wealth Appreciation Strategy
Sanford C. Bernstein Fund, Inc.
  -AllianceBernstein Intermediate California Municipal Portfolio
  -AllianceBernstein Intermediate Diversified Municipal Portfolio
  -AllianceBernstein Intermediate New York Municipal Portfolio
  -AllianceBernstein International Portfolio
  -Overlay A Portfolio
  -Overlay B Portfolio
  -AllianceBernstein Short Duration Portfolio
  -Tax-Aware Overlay A Portfolio
  -Tax-Aware Overlay B Portfolio
  -Tax-Aware Overlay C Portfolio
  -Tax-Aware Overlay N Portfolio
  -AllianceBernstein Tax-Managed International Portfolio


            Prospectuses for the AllianceBernstein Mutual Funds may be obtained
without charge by contacting ABIS at the address or the "For Literature"
telephone number shown on the front cover of this SAI or on the Internet at
www.AllianceBernstein.com.

            Cumulative Quantity Discount (Right Of Accumulation). An investor's
purchase of additional Class A shares of the Fund may be combined with the value
of the shareholder's existing accounts, thereby enabling the shareholder to take
advantage of the quantity discounts described under "Alternative Purchase
Arrangements--Class A Shares". In such cases, the applicable sales charge on the
newly purchased shares will be based on the total of:

            (i)   the investor's current purchase;


            (ii)  the higher of cost or NAV (at the close of business on the
                  previous day) of (a) all shares of the Fund held by the
                  investor and (b) all shares held by the investor of any other
                  AllianceBernstein Mutual Fund, including AllianceBernstein
                  Institutional Funds and certain CollegeBoundfund accounts for
                  which the investor, his or her spouse or domestic partner, or
                  child under the age of 21 is the participant; and

            (iii) the higher of cost or NAV of all shares described in paragraph
                  (ii) owned by another shareholder eligible to combine his or
                  her purchase with that of the investor into a single
                  "purchase" (see above).

            The initial sales charge you pay on each purchase of Class A shares
will take into account your accumulated holdings in all shares of classes of
AllianceBernstein Mutual Funds. Your accumulated holdings will be calculated as
(a) the value of your existing holdings as of the day prior to your additional
investment or (b) the amount you have invested including reinvested
distributions but excluding appreciation less the amount of any withdrawals,
whichever is higher.

            For example, if an investor owned shares of an AllianceBernstein
Mutual Fund worth $190,000 at their then current NAV and, subsequently,
purchased Class A shares of the Fund worth an additional $100,000, the initial
sales charge for the $100,000 purchase would be at the 2.25% rate applicable to
a single $300,000 purchase of shares of the Fund, rather than the 3.25% rate.


            Letter of Intent. Class A investors may also obtain the quantity
discounts described under "Alternative Purchase Arrangements -Class A Shares" by
means of a written Letter of Intent, which expresses the investor's intention to
invest at least $100,000 in Class A shares of the Fund or any AllianceBernstein
Mutual Fund within 13 months. Each purchase of shares under a Letter of Intent
will be made at the public offering price or prices applicable at the time of
such purchase to a single transaction of the dollar amount indicated in the
Letter of Intent. At the investor's option, a Letter of Intent may include
purchases of shares of the Fund or any other AllianceBernstein Mutual Fund made
not more than 90 days prior to the date that the investor signs the Letter of
Intent, in which case the 13-month period during which the Letter of Intent is
in effect will begin on the date of that earliest purchase. However, sales
charges will not be reduced for purchases made prior to the date the Letter of
Intent is signed.

            Investors qualifying for the Combined Purchase Privilege described
above may purchase shares of the AllianceBernstein Mutual Funds under a single
Letter of Intent. For example, if at the time an investor signs a Letter of
Intent to invest at least $100,000 in Class A shares of the Fund, the investor
and the investor's spouse or domestic partner each purchase shares of the Fund
worth $20,000 (for a total of $40,000), it will only be necessary to invest a
total of $60,000 during the following 13 months in shares of the Fund or any
other AllianceBernstein Mutual Fund, to qualify for the 3.25% sales charge on
the total amount being invested (the sales charge applicable to an investment of
$100,000).

            The Letter of Intent is not a binding obligation upon the investor
to purchase the full amount indicated. The minimum initial investment under a
Letter of Intent is 5% of such amount. Shares purchased with the first 5% of
such amount will be held in escrow (while remaining registered in the name of
the investor) to secure payment of the higher sales charge applicable to the
shares actually purchased if the full amount indicated is not purchased, and
such escrowed shares will be involuntarily redeemed at their then NAV to pay the
additional sales charge, if necessary. Dividends on escrowed shares, whether
paid in cash or reinvested in additional Fund shares, are not subject to escrow.
When the full amount indicated has been purchased, the escrow will be released.

            Investors wishing to enter into a Letter of Intent in conjunction
with their initial investment in Class A shares of the Fund can obtain a form of
Letter of Intent by contacting ABIS at the address or telephone numbers shown on
the cover of this SAI.

            Reinstatement Privilege. A shareholder who has redeemed any or all
of his or her Class A shares may reinvest all or any portion of the proceeds
from that redemption in Class A shares of any AllianceBernstein Mutual Fund at
NAV without any sales charge, provided that (i) such reinvestment is made within
120 calendar days after the redemption or repurchase date. Shares are sold to a
reinvesting shareholder at the NAV next determined as described above. A
reinstatement pursuant to this privilege will not cancel the redemption or
repurchase transaction; therefore, any gain or loss so realized will be
recognized for federal income tax purposes except that no loss will be
recognized to the extent that the proceeds are reinvested in shares of the Fund
within 30 calendar days after the redemption or repurchase transaction.
Investors may exercise the reinstatement privilege by written request sent to
the Fund at the address shown on the cover of this SAI.

            Dividend Reinvestment Program. Shareholders may elect to have all
income and capital gains distributions from their account paid to them in the
form of additional shares of the same class of the Fund pursuant to the Fund's
Dividend Reinvestment Program. No initial sales charge or CDSC will be imposed
on shares issued pursuant to the Dividend Reinvestment Program. Shares issued
under this program will have an aggregate NAV as of the close of business on the
declaration date of the dividend or distribution equal to the cash amount of the
distribution. Investors wishing to participate in the Dividend Reinvestment
Program should complete the appropriate section of the Mutual Fund Application.
Current shareholders should contact ABIS to participate in the Dividend
Reinvestment Program.

            In certain circumstances where a shareholder has elected to receive
dividends and/or capital gain distributions in cash but the account has been
determined to be lost due to mail being returned to us by the Postal Service as
undeliverable, such shareholder will automatically be placed within the Dividend
Reinvestment Program for future distributions. No interest will accrue on
amounts represented by uncashed distribution checks.

            Dividend Direction Plan. A shareholder who already maintains
accounts in more than one AllianceBernstein Mutual Fund may direct that income
dividends and/or capital gains paid by one AllianceBernstein Mutual Fund be
automatically reinvested, in any amount, without the payment of any sales or
service charges, in shares of the same class of the other AllianceBernstein
Mutual Fund(s). Further information can be obtained by contacting ABIS at the
address or the "For Literature" telephone number shown on the cover of this SAI.
Investors wishing to establish a dividend direction plan in connection with
their initial investment should complete the appropriate section of the Mutual
Fund Application. Current shareholders should contact ABIS to establish a
dividend direction plan.

Systematic Withdrawal Plan
--------------------------

            General. Any shareholder who owns or purchases shares of the Fund
having a current NAV of at least $5,000 may establish a systematic withdrawal
plan under which the shareholder will periodically receive a payment in a stated
amount of not less than $50 on a selected date. The $5,000 account minimum does
not apply to a shareholder owning shares through an individual retirement
account or other retirement plan who has attained the age of 70 1/2 who wishes
to establish a systematic withdrawal plan to help satisfy a required minimum
distribution. For Class 1 and Class 2 shares, a systematic withdrawal plan is
available only to shareholders who own book-entry shares worth $25,000 or more.
Systematic withdrawal plan participants must elect to have their dividends and
distributions from the Fund automatically reinvested in additional shares of the
Fund.

            Shares of the Fund owned by a participant in the Fund's systematic
withdrawal plan will be redeemed as necessary to meet withdrawal payments and
such payments will be subject to any taxes applicable to redemptions and, except
as discussed below with respect to Class A and Class C shares, any applicable
CDSC. Shares acquired with reinvested dividends and distributions will be
liquidated first to provide such withdrawal payments and thereafter other shares
will be liquidated to the extent necessary, and depending upon the amount
withdrawn, the investor's principal may be depleted. A systematic withdrawal
plan may be terminated at any time by the shareholder or the Fund.

            Withdrawal payments will not automatically end when a shareholder's
account reaches a certain minimum level. Therefore, redemptions of shares under
the plan may reduce or even liquidate a shareholder's account and may subject
the shareholder to the Fund's involuntary redemption provisions. See "Redemption
and Repurchase of Shares--General". Purchases of additional shares concurrently
with withdrawals are undesirable because of sales charges applicable when
purchases are made. While an occasional lump-sum investment may be made by a
holder of Class A shares who is maintaining a systematic withdrawal plan, such
investment should normally be an amount equivalent to three times the annual
withdrawal or $5,000, whichever is less.

            Payments under a systematic withdrawal plan may be made by check or
electronically via the Automated Clearing House ("ACH") network. Investors
wishing to establish a systematic withdrawal plan in conjunction with their
initial investment in shares of the Fund should complete the appropriate portion
of the Mutual Fund Application, while current Fund shareholders desiring to do
so can obtain an application form by contacting ABIS at the address or the "For
Literature" telephone number shown on the cover of this SAI.

            CDSC Waiver for Class A Shares and Class C Shares. Under the
systematic withdrawal plan, up to 1% monthly, 2% bi-monthly or 3% quarterly of
the value at the time of redemption of the Class A or Class C shares in a
shareholder's account may be redeemed free of any CDSC.

            With respect to Class A and Class C shares, shares held the longest
will be redeemed first and will count toward the foregoing limitations.
Redemptions in excess of those limitations will be subject to any otherwise
applicable CDSC.

Automatic Sale
--------------

            Class 1 Shares. Under certain circumstances, Bernstein may redeem
your Class 1 shares of the Fund without your consent. Maintaining small
shareholder accounts is costly. Accordingly, if you make a sale that reduces the
value of your account to less than $1,000, we may, on at least 60 days' prior
written notice, sell your remaining Class 1 shares in the Fund and close your
account. We will not close your account if you increase your account balance to
$1,000 during the 60 day notice period.

            Class 2 Shares. Under certain circumstances, Bernstein may redeem
your Class 2 shares of the Fund without your consent. Maintaining small
shareholder accounts is costly. Accordingly, if you make a sale that reduces the
value of your account to less than $250,000, we may, on at least 60 days' prior
written notice, sell your remaining Class 2 shares in the Fund and close your
account. We will not close your account if you increase your account balance to
$250,000 during the 60 day notice period.

Payments to Financial Advisors and Their Firms
----------------------------------------------

            Financial intermediaries market and sell shares of the Fund. These
financial intermediaries employ financial advisors and receive compensation for
selling shares of the Fund. This compensation is paid from various sources,
including any sales charge, CDSC and/or Rule 12b-1 fee that you or the Fund may
pay. Your individual financial advisor may receive some or all of the amounts
paid to the financial intermediary that employs him or her.

            In the case of Class A shares, all or a portion of the initial sales
charge that you pay may be paid by ABI to financial intermediaries selling Class
A shares. ABI may also pay these financial intermediaries a fee of up to 1% on
purchases of $1 million or more. Additionally, up to 100% of the Rule 12b-1 fees
applicable to Class A shares each year may be paid to financial intermediaries,
including your financial intermediary, that sell Class A shares.

            In the case of Class C shares, ABI may pay, at the time of your
purchase, a commission to firms selling Class C shares in an amount equal to 1%
of your investment. Additionally, up to 100% of the Rule 12b-1 fee applicable to
Class C shares each year may be paid to financial intermediaries, including your
financial intermediary, that sell Class C shares.

            In the case of Class R, Class K and Class 1 shares, up to 100% of
the Rule 12b-1 fee applicable to Class R, Class K and Class 1 shares each year
may be paid to financial intermediaries, including your financial intermediary,
that sell Class R, Class K and Class 1 shares.

            In the case of Advisor Class shares, your financial advisor may
charge ongoing fees or transactional fees. ABI may pay a portion of "ticket" or
other transactional charges.

            Your financial advisor's firm receives compensation from the Fund,
ABI and/or the Adviser in several ways from various sources, which include some
or all of the following:

            o     upfront sales commissions;

            o     Rule 12b-1 fees;

            o     additional distribution support;

            o     defrayal of costs for educational seminars and training; and

            o     payments related to providing sub-accounting or shareholder
                  servicing.

            Please read your Prospectus carefully for information on this
compensation.

Other Payments for Distribution Services and Educational Support
----------------------------------------------------------------

            In addition to the commissions paid to financial intermediaries at
the time of sale and the fees described under "Asset-Based Sales Charges or
Distribution and/or Service (Rule 12b-1) Fees", in your Prospectus, some or all
of which may be paid to financial intermediaries (and, in turn, to your
financial advisor), ABI, at its expense, currently provides additional payments
to firms that sell shares of the AllianceBernstein Mutual Funds. Although the
individual components may be higher and the total amount of payments made to
each qualifying firm in any given year may vary, the total amount paid to a
financial intermediary in connection with the sale of shares of the
AllianceBernstein Mutual Funds 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 average daily net
assets attributable to that firm over the year. These sums include payments to
reimburse directly or indirectly the costs incurred by these firms and their
employees in connection with educational seminars and training efforts about the
AllianceBernstein Mutual Funds for the firms' employees and/or their clients and
potential clients. The costs and expenses associated with these efforts may
include travel, lodging, entertainment and meals.

            For 2011, ABI's additional payments to these firms for distribution
services and educational support related to the AllianceBernstein Mutual Funds
are expected to be approximately 0.04% of the average monthly assets of the
AllianceBernstein Mutual Funds, or approximately $18.0 million. In 2010, ABI
paid approximately 0.04% of the average monthly assets of the AllianceBernstein
Mutual Funds or approximately $16.5 million, for distribution services and
education support related to the AllianceBernstein Mutual Funds.

            A number of factors are considered in determining the additional
payments, including each firm's AllianceBernstein Mutual Fund sales, assets and
redemption rates, and the willingness and ability of the firm to give ABI access
to its financial advisors for educational and marketing purposes. In some cases,
firms will include the AllianceBernstein Mutual Funds on a "preferred list".
ABI's goal is to make the financial advisors who interact with current and
prospective investors and shareholders more knowledgeable about the
AllianceBernstein Mutual Funds so that they can provide suitable information and
advice about the funds and related investor services.

            The Fund and ABI also make payments for sub-accounting or
shareholder servicing to financial intermediaries that sell AllianceBernstein
Mutual Fund shares. Please see "Expenses of the Fund - Transfer Agency
Agreement" above. To the extent that these expenses are paid by the Fund, they
are included in "Other Expenses" under "Fees and Expenses of the Fund - Annual
Fund Operating Expenses" in your Prospectus.

            If one mutual fund sponsor makes greater distribution assistance
payments than another, your financial advisor and his or her firm may have an
incentive to recommend one fund complex over another. Similarly, if your
financial advisor or his or her firm receives more distribution assistance for
one share class versus another, then they may have an incentive to recommend
that class.

            Please speak with your financial advisor to learn more about the
total amounts paid to your financial advisor and his or her firm by the Fund,
the Adviser, ABI and by sponsors of other mutual funds he or she may recommend
to you. You should also consult disclosures made by your financial advisor at
the time of purchase.

            ABI anticipates that the firms that will receive additional payments
for distribution services and/or educational support include:

            Advisor Group, Inc.
            Ameriprise Financial Services
            AXA Advisors
            Bank of America
            Cadaret, Grant & Co.
            CCO Investment Services Corp.
            Chase Investment Services
            Commonwealth Financial Network
            Donegal Securities
            Financial Network Investment Company
            LPL Financial Corporation
            Merrill Lynch
            Morgan Stanley Smith Barney
            Multi-Financial Securities Corporation
            Northwestern Mutual Investment Services
            PrimeVest Financial Services
            Raymond James
            RBC Wealth Management
            Robert W. Baird
            UBS Financial Services
            Wells Fargo Advisors
            Wells Fargo Investments

            ABI expects that additional firms may be added to this list from
time to time.

            Although the Fund may use brokers and dealers who sell shares of the
Fund to effect portfolio transactions, the Fund does not consider the sale of
AllianceBernstein Mutual Fund shares as a factor when selecting brokers or
dealers to effect portfolio transactions.

--------------------------------------------------------------------------------

                      REDEMPTION AND REPURCHASE OF SHARES

--------------------------------------------------------------------------------

            The following information supplements that set forth in your
Prospectus under the heading "Investing in the Fund". If you are an Advisor
Class shareholder through an account established under a fee-based program your
fee-based program may impose requirements with respect to the purchase, sale or
exchange of Advisor Class shares of the Fund that are different from those
described herein. Similarly, if you are a shareholder through a group retirement
plan, your plan may impose requirements with respect to the purchase, sale or
exchange of shares of the Fund that are different from those described herein. A
transaction fee may be charged by your financial intermediary with respect to
the purchase, sale or exchange of Advisor Class shares made through such
financial intermediary. The Fund has authorized one or more brokers to receive
on its behalf purchase and redemption orders. Such brokers are authorized to
designate other intermediaries to receive purchase and redemption orders on the
Fund's behalf. In such cases, orders will receive the NAV next computed after
such order is properly received by the authorized broker or designee and
accepted by the Fund.

Redemption
----------

            Subject only to the limitations described below, the Charter of the
Company requires that the Fund redeem the shares tendered to it, as described
below, at a redemption price equal to their NAV as next computed following the
receipt of shares tendered for redemption in proper form. Except for any CDSC
which may be applicable to Class A or Class C shares, there is no redemption
charge. Payment of the redemption price normally will be made within seven days
after the Fund's receipt of such tender for redemption. If a shareholder is in
doubt about what documents are required by his or her fee-based program or
employee benefit plan, the shareholder should contact his or her financial
intermediary.

            The right of redemption may not be suspended or the date of payment
upon redemption postponed for more than seven days after shares are tendered for
redemption, except for any period during which the Exchange is closed (other
than customary weekend and holiday closings) or during which the SEC determines
that trading thereon is restricted, or for any period during which an emergency
(as determined by the SEC) exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or as a result of which it
is not reasonably practicable for the Fund fairly to determine the value of its
net assets, or for such other periods as the SEC may by order permit for the
protection of security holders of the Fund.

            Payment of the redemption price normally will be made in cash but
may be made, at the option of the Fund, in kind. No interest will accrue on
uncashed redemption checks. The value of a shareholder's shares on redemption or
repurchase may be more or less than the cost of such shares to the shareholder,
depending upon the market value of the Fund's portfolio securities at the time
of such redemption or repurchase. Redemption proceeds on Class A and Class C
shares will reflect the deduction of the CDSC, if any. Payment received by a
shareholder upon redemption or repurchase of his or her shares, assuming the
shares constitute capital assets in his or her hands, will result in long-term
or short-term capital gain (or loss) depending upon the shareholder's holding
period and basis in respect of the shares redeemed.

            To redeem shares of the Fund by mail, the registered owner or owners
should forward a letter to the Fund containing a request for redemption. The
Fund may require the signature or signatures on the letter to be Medallion
Signature Guaranteed. Please contact ABIS to confirm whether a Medallion
Signature Guarantee is needed.

            Telephone Redemption - Payment by Electronic Funds Transfer. Each
Fund shareholder is entitled to request redemption with payment by electronic
funds transfer by telephone at (800) 221-5672 if the shareholder has completed
the appropriate portion of the Mutual Fund Application or, if an existing
shareholder has not completed this portion, by an "Autosell" application
obtained from ABIS (except for certain omnibus accounts). A telephone redemption
request for payment by electronic funds transfer may not exceed $100,000, and
must be made by 4:00 p.m., Eastern time on a Fund business day as defined above.
Proceeds of telephone redemptions will be sent by electronic funds transfer to a
shareholder's designated bank account at a bank selected by the shareholder that
is a member of the NACHA.

            Telephone Redemption - Payment by Check. Each Fund shareholder is
eligible to request redemption with payment by check of Fund shares by telephone
at (800) 221-5672 before 4:00 p.m., Eastern time on a Fund business day in an
amount not exceeding $100,000. Proceeds of such redemptions are remitted by
check to the shareholder's address of record. A shareholder otherwise eligible
for telephone redemption by check may cancel the privilege by written
instruction to ABIS, or by checking the appropriate box on the Mutual Fund
Application.

            Telephone Redemptions--General. During periods of drastic economic,
market or other developments, such as the terrorist attacks on September 11,
2001, it is possible that shareholders would have difficulty in reaching ABIS by
telephone (although no such difficulty was apparent at any time in connection
with the attacks). If a shareholder were to experience such difficulty, the
shareholder should issue written instructions to ABIS at the address shown on
the cover of this SAI. The Fund reserves the right to suspend or terminate its
telephone redemption service at any time without notice. Telephone redemption is
not available with respect to shares (i) held in nominee or "street name"
accounts, (ii) held by a shareholder who has changed his or her address of
record within the preceding 30 calendar days or (iii) held in any retirement
plan account. Neither the Fund, the Adviser, ABI nor ABIS will be responsible
for the authenticity of telephone requests for redemptions that the Fund
reasonably believes to be genuine. The Fund will employ reasonable procedures in
order to verify that telephone requests for redemptions are genuine, including,
among others, recording such telephone instructions and causing written
confirmations of the resulting transactions to be sent to shareholders. If the
Fund did not employ such procedures, it could be liable for losses arising from
unauthorized or fraudulent telephone instructions. Financial intermediaries may
charge a commission for handling telephone requests for redemptions.

            The Fund may redeem shares through ABI or financial intermediaries.
The redemption price will be the NAV next determined after ABI receives the
request (less the CDSC, if any, with respect to the Class A and Class C shares),
except that requests placed through financial intermediaries before the close of
regular trading on the Exchange on any day will be executed at the NAV
determined as of such close of regular trading on that day if received by ABI
prior to its close of business on that day (normally 5:00 p.m., Eastern time).
The financial intermediary is responsible for transmitting the request to ABI by
5:00 p.m., Eastern time (certain financial intermediaries may enter into
operating agreements permitting them to transmit purchase and redemption
information that was received prior to the close of business to ABI after 5:00
p.m., Eastern time and receive that day's NAV.). If the financial intermediary
fails to do so, the shareholder's right to receive that day's closing price must
be settled between the shareholder and that financial intermediary. A
shareholder may offer shares of the Fund to ABI either directly or through a
financial intermediary. Neither the Fund nor ABI charges a fee or commission in
connection with the redemption of shares (except for the CDSC, if any, with
respect to Class A and Class C shares). Normally, if shares of the Fund are
offered through a financial intermediary, the redemption is settled by the
shareholder as an ordinary transaction with or through that financial
intermediary, who may charge the shareholder for this service. The redemption of
shares of the Fund as described above with respect to financial intermediaries
is a voluntary service of the Fund and the Fund may suspend or terminate this
practice at any time.

General
-------

            The Fund reserves the right to close out an account that has
remained below $1,000 for 90 days. No CDSC will be deducted from the proceeds of
this redemption. In the case of a redemption or repurchase of shares of the Fund
recently purchased by check, redemption proceeds will not be made available
until the Fund is reasonably assured that the check has cleared, normally up to
15 calendar days following the purchase date.

--------------------------------------------------------------------------------

                              SHAREHOLDER SERVICES

--------------------------------------------------------------------------------

            The following information supplements that set forth in your
Prospectus under the heading "Investing in the Fund". The shareholder services
set forth below are applicable to all classes of shares unless otherwise
indicated. If you are an Advisor Class shareholder through an account
established under a fee-based program or a shareholder in a group retirement
plan, your fee-based program or retirement plan may impose requirements with
respect to the purchase, sale or exchange of shares of the Fund that are
different from those described herein.

Automatic Investment Program
----------------------------

            Investors may purchase shares of the Fund through an automatic
investment program utilizing electronic funds transfer drawn on the investor's
own bank account. Under such a program, pre-authorized monthly drafts for a
fixed amount are used to purchase shares through the financial intermediary
designated by the investor at the public offering price next determined after
ABI receives the proceeds from the investor's bank. The monthly drafts must be
in minimum amounts of either $50 or $200, depending on the investor's initial
purchase. If an investor makes an initial purchase of at least $2,500, the
minimum monthly amount for pre-authorized drafts is $50. If an investor makes an
initial purchase of less than $2,500, the minimum monthly amount for
pre-authorized drafts is $200 and the investor must commit to a monthly
investment of at least $200 until the investor's account balance is $2,500 or
more. In electronic form, drafts can be made on or about a date each month
selected by the shareholder. Investors wishing to establish an automatic
investment program in connection with their initial investment should complete
the appropriate portion of the Mutual Fund Application. Current shareholders
should contact ABIS at the address or telephone numbers shown on the cover of
this SAI to establish an automatic investment program.

Exchange Privilege
------------------

            You may exchange your investment in the Fund for shares of the same
class of other AllianceBernstein Mutual Funds (including AllianceBernstein
Exchange Reserves, a money market fund managed by the Adviser) if the other
AllianceBernstein Mutual Fund in which you wish to invest offers shares of the
same class. In addition, (i) present officers and full-time employees of the
Adviser, (ii) present directors or trustees of any AllianceBernstein Mutual
Fund, (iii) certain employee benefit plans for employees of the Adviser, ABI,
ABIS and their affiliates and (iv) persons participating in a fee-based program,
sponsored and maintained by a registered broker-dealer or other financial
intermediary and approved by ABI, under which such persons pay an asset-based
fee for a service in the nature of investment advisory or administrative service
may, on a tax-free basis, exchange Class A or Class C shares of the Fund for
Advisor Class shares of the Fund. Exchanges of shares are made at the NAV next
determined and without sales or service charges. Exchanges may be made by
telephone or written request. In order to receive a day's NAV, ABIS must receive
and confirm a telephone exchange request by 4:00 p.m., Eastern time, on that
day.

            Shares will continue to age without regard to exchanges for purpose
of determining the CDSC, if any, upon redemption. When redemption occurs, the
CDSC applicable to the shares of the AllianceBernstein Mutual Fund you
originally purchased for cash is applied.

            Please read carefully the prospectus of the AllianceBernstein Mutual
Fund into which you are exchanging before submitting the request. Call ABIS at
(800) 221-5672 to exchange shares. Except with respect to exchanges of Class A
or Class C shares of the Fund for Advisor Class shares of the Fund, exchanges of
shares as described above in this section are taxable transactions for federal
income tax purposes. The exchange service may be modified, restricted or
terminated on 60 days' written notice.

            All exchanges are subject to the minimum investment requirements and
any other applicable terms set forth in the prospectus for the AllianceBernstein
Mutual Fund whose shares are being acquired. An exchange is effected through the
redemption of the shares tendered for exchange and the purchase of shares being
acquired at their respective NAVs as next determined following receipt by the
AllianceBernstein Mutual Fund whose shares are being exchanged of (i) proper
instructions and all necessary supporting documents as described in such fund's
prospectus, or (ii) a telephone request for such exchange in accordance with the
procedures set forth in the following paragraph. Exchanges involving the
redemption of shares recently purchased by check will be permitted only after
the AllianceBernstein Mutual Fund whose shares have been tendered for exchange
is reasonably assured that the check has cleared, normally up to 15 calendar
days following the purchase date. Exchanges of shares of AllianceBernstein
Mutual Funds will generally result in the realization of a capital gain or loss
for federal income tax purposes.

            Each Fund shareholder and the shareholder's financial intermediary
are authorized to make telephone requests for exchanges unless ABIS receives
written instruction to the contrary from the shareholder, or the shareholder
declines the privilege by checking the appropriate box on the Mutual Fund
Application. Shares acquired pursuant to a telephone request for exchange will
be held under the same account registration as the shares redeemed through such
exchange.

            Eligible shareholders desiring to make an exchange should telephone
ABIS with their account number and other details of the exchange, at (800)
221-5672 before 4:00 p.m., Eastern time on a Fund business day as defined above.
Telephone requests for exchange received before 4:00 p.m., Eastern time on a
Fund business day will be processed as of the close of business on that day.
During periods of drastic economic, market or other developments, such as the
terrorist attacks on September 11, 2001, it is possible that shareholders would
have difficulty in reaching ABIS by telephone (although no such difficulty was
apparent at any time in connection with the attacks). If a shareholder were to
experience such difficulty, the shareholder should issue written instructions to
ABIS at the address shown on the cover of this SAI.

            A shareholder may elect to initiate a monthly "Auto Exchange"
whereby a specified dollar amount's worth of his or her Fund shares (minimum
$25) is automatically exchanged for shares of another AllianceBernstein Mutual
Fund.

            None of the AllianceBernstein Mutual Funds, the Adviser, ABI or ABIS
will be responsible for the authenticity of telephone requests for exchanges
that the Fund reasonably believes to be genuine. The Fund will employ reasonable
procedures in order to verify that telephone requests for exchanges are genuine,
including, among others, recording such telephone instructions and causing
written confirmations of the resulting transactions to be sent to shareholders.
If the Fund did not employ such procedures, it could be liable for losses
arising from unauthorized or fraudulent telephone instructions. Financial
intermediaries may charge a commission for handling telephone requests for
exchanges.

            The exchange privilege is available only in states where shares of
the AllianceBernstein Mutual Fund being acquired may be legally sold. Each
AllianceBernstein Mutual Fund reserves the right, at any time on 60 days' notice
to its shareholders to reject any order to acquire its shares through exchange
or otherwise, to modify, restrict or terminate the exchange privilege.

Statements and Reports
----------------------

            Each shareholder of the Fund receives semi-annual and annual reports
which include a portfolio of investments, financial statements and, in the case
of the annual report, the report of the Fund's independent registered public
accounting firm, Ernst & Young LLP, as well as a confirmation of each purchase
and redemption. By contacting his or her financial intermediary or ABIS, a
shareholder can arrange for copies of his or her account statements to be sent
to another person.

--------------------------------------------------------------------------------

                                NET ASSET VALUE

--------------------------------------------------------------------------------

            The NAV of the Fund is computed at the next close of regular trading
on the Exchange (ordinarily 4:00 p.m., Eastern time) following receipt of a
purchase or redemption order by the Fund on each Fund business day on which such
an order is received and on such other days as the Board deems appropriate or
necessary in order to comply with Rule 22c-1 under the 1940 Act. The Fund's per
share NAV is calculated by dividing the value of the Fund's total assets, less
its liabilities, by the total number of its shares then outstanding. A business
day is any weekday on which the Exchange is open for trading.

            In accordance with applicable rules under the 1940 Act and the
Fund's pricing policies and procedures adopted by the Board (the "Pricing
Policies"), portfolio securities are valued at current market value or at fair
value as determined in accordance with procedures established by and under the
general supervision of the Board. The Board has delegated to the Adviser,
subject to the Board's continuing oversight, certain of its duties with respect
to the Pricing Policies.

            Whenever possible, securities are valued based on market information
on the business day as of which the value is being determined as follows:

            (a) a security listed on the Exchange, or on another national or
foreign exchange (other than securities listed on the Nasdaq Stock Exchange
("NASDAQ")), is valued at the last sale price reflected on the consolidated tape
at the close of the exchange. If there has been no sale on the relevant business
day, the security is valued at the mean of the closing bid and asked prices on
such day. If no bid or asked prices are quoted on that day, the security is
valued in good faith at fair value by, or in accordance with procedures approved
by, the Board;

            (b) a security traded on NASDAQ is valued at the NASDAQ Official
Closing Price;

            (c) a security traded on more than one exchange is valued in
accordance with paragraph (a) above by reference to the principal exchange on
which securities are traded;

            (d) a listed put or call option is valued at the last sale price. If
there has been no sale on the relevant business day, the security is valued at
the closing bid price on that day;

            (e) a currency option is valued using third party pricing models;

            (f) an open futures contract and any option thereon is valued at 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 relevant business
day, the security is valued at the last available closing settlement price;

            (g) a security traded in the over-the-counter market, including a
security listed on a national securities exchange whose principal market is
over-the-counter (as determined by the Adviser), is valued at the mean of the
current bid and asked prices as reported by the National Quotation Bureau or
other comparable source(s);

            (h) a right is valued at the last traded price provided by pricing
services;

            (i) a warrant is valued at the last traded price provided by pricing
services. In instances when a price cannot be obtained through such pricing
services warrants will be valued using the last traded price if available or
broker bids;

            (j) a U.S. government security and any other debt instrument having
60 days or less remaining until maturity generally is valued at amortized cost
if its original maturity was 60 days or less, or by amortizing its fair value as
of the 61st day prior to maturity if the original term to maturity exceeded 60
days, unless in either case the Adviser determines that this method does not
represent fair value;

            (k) a fixed-income security is valued on the basis of bid prices
provided by a pricing service when the Adviser believes that such prices reflect
the fair market value of the security. The prices provided by a pricing service
may take into account many factors, including institutional size trading in
similar groups of securities and any developments related to specific
securities. If the Adviser determines that an appropriate pricing service does
not exist for a security or prices for a security are not available from a
pricing source, the security is valued on the basis of a quoted bid price or
spread over the applicable yield curve (a bid spread) by a broker/dealer in such
security. The second highest price will be utilized whenever two or more quoted
bid prices are obtained;

            (l) a mortgage-backed or asset-backed security is valued on the
basis of bid prices obtained from pricing services or bid prices obtained from
multiple major broker-dealers in the security when the Adviser believes that
these prices reflect the market value of the security. In cases in which
broker-dealer quotes are obtained, the Adviser has procedures for using changes
in market yields or spreads to adjust, on a daily basis, a recently obtained
quoted bid price on a security. The second highest price will be utilized
whenever two or more quoted bid prices are obtained;

            (m) bank loans are valued on the basis of bid prices provided by a
pricing service;

            (n) forward and spot currency pricing is provided by pricing
services;

            (o) a swap is valued by the Adviser utilizing various external
sources to obtain inputs for variables in pricing models; and

            (p) open-end mutual funds are valued at the closing NAV per share
and closed-end funds and exchange-traded funds are valued at the closing market
price per share.

            The Fund values its securities at their current market value
determined on the basis of market quotations as set forth above or, if market
quotations are not readily available or are unreliable, at "fair value" as
determined in accordance with procedures established by and under the general
supervision of the Fund's Board. When the Fund uses fair value pricing, it may
take into account any factors it deems appropriate. The Fund may determine fair
value based upon developments related to a specific security, current valuations
of foreign stock indices (as reflected in U.S. futures markets) and/or U.S.
sector or broader stock market indices. The prices of securities used by the
Fund to calculate its NAV may differ from quoted or published prices for the
same securities. Fair value pricing involves subjective judgments and it is
possible that the fair value determined for a security is materially different
than the value that could be realized upon the sale of that security.

            The Fund expects to use fair value pricing for securities primarily
traded on U.S. exchanges only under very limited circumstances, such as the
early closing of the exchange on which a security is traded or suspension of
trading in the security. The Fund may use fair value pricing more frequently for
securities primarily traded in non-U.S. markets because, among other things,
most foreign markets close well before the Fund values its 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. The Fund believes that foreign security values may be
affected by events that occur after the close of foreign securities markets. To
account for this, the Fund may frequently value many of its foreign equity
securities using fair value prices based on third party vendor modeling tools to
the extent available.

            Subject to their oversight, the Directors have delegated
responsibility for valuing the Fund's assets to the Adviser. The Adviser has
established a Valuation Committee, which operates under the policies and
procedures approved by the Directors, to value the Fund's assets on behalf of
the Fund. The Valuation Committee values Fund assets as described above.

            The Board may suspend the determination of the Fund's NAV(and the
offering and sales of shares), subject to the rules of the SEC and other
governmental rules and regulations, at a time when: (1) the Exchange is closed,
other than customary weekend and holiday closings, (2) an emergency exists as a
result of which it is not reasonably practicable for the Fund to dispose of
securities owned by it or to determine fairly the value of its net assets, or
(3) for the protection of shareholders, the SEC by order permits a suspension of
the right of redemption or a postponement of the date of payment on redemption.

            For purposes of determining the Fund's NAV per share, all assets and
liabilities initially expressed in a foreign currency will be converted into
U.S. Dollars at the mean of the current bid and asked prices of such currency
against the U.S. Dollar last quoted by a major bank that is a regular
participant in the relevant foreign exchange market or on the basis of a pricing
service that takes into account the quotes provided by a number of such major
banks. If such quotations are not available as of the close of the Exchange, the
rate of exchange will be determined in good faith by, or under the direction of,
the Board.

            The assets attributable to each class of shares will be invested
together in a single portfolio for the Fund. The NAV of each class will be
determined separately by subtracting the liabilities allocated to that class
from the assets belonging to that class in conformance with the provisions of a
plan adopted by the Fund in accordance with Rule 18f-3 under the 1940 Act.

--------------------------------------------------------------------------------

                       DIVIDENDS, DISTRIBUTIONS AND TAXES

--------------------------------------------------------------------------------

            Dividends paid by the Fund, if any, with respect to Class A, Class
C, Class R, Class K, Class I and Advisor Class shares will be calculated in the
same manner at the same time on the same day and will be in the same amount,
except that the distribution services fee applicable to a class of shares (if
any), and the transfer agency costs relating to a class of shares, will be borne
exclusively by the class to which they relate.

            The following summary addresses only the principal U.S. federal
income tax considerations pertinent to the Fund and to shareholders of the Fund.
This summary does not address the U.S. federal income tax consequences of owning
shares to all categories of investors, some of which may be subject to special
rules. This summary is based upon the advice of counsel for the Fund and upon
current law and interpretations thereof. No confirmation has been obtained from
the relevant tax authorities. There is no assurance that the applicable laws and
interpretations will not change.

            In view of the individual nature of tax consequences, each
shareholder is advised to consult the shareholder's own tax adviser with respect
to the specific tax consequences of being a shareholder of the Fund, including
the effect and applicability of federal, state, local, foreign and other tax
laws and the effects of changes therein.

United States Federal Income Taxation of Dividends and Distributions
--------------------------------------------------------------------

General
-------

            The Fund intends for each taxable year to qualify to be taxed as a
"regulated investment company" under the Code. To so qualify, the Fund must,
among other things, (i) derive at least 90% of its gross income in each taxable
year from dividends, interest, payments with respect to securities loans, gains
from the sale or other disposition of stock, securities or foreign currency,
certain other income (including, but not limited to, gains from options, futures
or forward contracts) derived with respect to its business of investing in
stock, securities or currency or net income derived from interests in certain
qualified publicly traded partnerships; and (ii) diversify its holdings so that,
at the end of each quarter of its taxable year, the following two conditions are
met: (a) at least 50% of the value of the Fund's assets is represented by cash,
cash items, U.S. Government securities, securities of other regulated investment
companies and other securities with respect to which the Fund's investment is
limited, in respect of any one issuer, to an amount not greater than 5% of the
value of the Fund's assets and to not more than 10% of the outstanding voting
securities of such issuer and (b) not more than 25% of the value of the Fund's
assets is invested in securities of any one issuer (other than U.S. Government
securities or securities of other regulated investment companies), securities
(other than securities of other regulated investment companies) of any two or
more issuers which the Fund controls and which are engaged in the same or
similar trades or businesses or related trades or businesses, or securities of
one or more qualified publicly traded partnerships.

            If the Fund qualifies as a regulated investment company for any
taxable year and makes timely distributions to its shareholders of 90% or more
of its investment company taxable income for that year (calculated without
regard to its net capital gain, i.e., the excess of its net long-term capital
gain over its net short-term capital loss) it will not be subject to federal
income tax on the portion of its taxable income for the year (including any net
capital gain) that it distributes to shareholders.

            The Fund will also avoid the 4% federal excise tax that would
otherwise apply to certain undistributed income for a given calendar year if it
makes timely distributions to the shareholders equal to at least the sum of (i)
98% of its ordinary income for that year, (ii) 98.2% of its capital gain net
income for the twelve-month period ending on October 31 that year or, if later
during the calendar year, the last day of the Fund's taxable year (i.e.,
November 30 or December 31) if the Fund so elects, and (iii) any ordinary income
or capital gain net income from the preceding calendar year that was not
distributed during that year. Special rules apply to foreign currency gains and
certain income derived from passive foreign investment companies for which the
Fund has made a "mark-to-market" election. For this purpose, income or gain
retained by the Fund that is subject to corporate income tax will be considered
to have been distributed by the Fund during such year. For federal income and
excise tax purposes, dividends declared and payable to shareholders of record as
of a date in October, November or December of a given year but actually paid
during the immediately following January will be treated as if paid by the Fund
on December 31 of such earlier calendar year, and will be taxable to these
shareholders in the year declared, and not in the year in which the shareholders
actually receive the dividend.

            The information set forth in the Prospectus and the following
discussion relate solely to the significant U.S. federal income taxes on
dividends and distributions by the Fund and assume that the Fund qualifies to be
taxed as a regulated investment company. An investor should consult his or her
own tax advisor with respect to the specific tax consequences of being a
shareholder in the Fund, including the effect and applicability of federal,
state, local and foreign tax laws to his or her own particular situation and the
possible effects of changes therein.

Dividends and Distributions
---------------------------

            The Fund intends to make timely distributions of the Fund's taxable
income (including any net capital gain) so that the Fund will not be subject to
federal income and excise taxes. Dividends of the Fund's net ordinary income and
distributions of any net realized short-term capital gain are taxable to
shareholders as ordinary income. The investment objective of the Fund is such
that only a small portion, if any, of the Fund's distributions is expected to
qualify for the dividends-received deduction for corporate shareholders.

            Some or all of the distributions from the Fund may be treated as
"qualified dividend income", taxable to individuals, trusts and estates at a
maximum rate of 15% (5% for individuals, trusts and estates in lower tax
brackets), if paid on or before December 31, 2012. A distribution from the Fund
will be treated as qualified dividend income to the extent that it is comprised
of dividend income received by the Fund from taxable domestic corporations and
certain qualified foreign corporations, and provided that the Fund meets certain
holding period and other requirements with respect to the security paying the
dividend. In addition, the shareholder must meet certain holding period
requirements with respect to the shares of the Fund in order to take advantage
of this preferential tax rate. To the extent distributions from the Fund are
attributable to other sources, such as taxable interest or short-term capital
gains, dividends paid by the Fund will not be eligible for the lower rates. The
Fund will notify shareholders as to how much of the Fund's distributions, if
any, would qualify for the reduced tax rate, assuming that the shareholder also
satisfies the holding period requirements.

            Distributions of net capital gain are taxable as long-term capital
gain, regardless of how long a shareholder has held shares in the Fund. Any
dividend or distribution received by a shareholder on shares of the Fund will
have the effect of reducing the NAV of such shares by the amount of such
dividend or distribution. Furthermore, a dividend or distribution made shortly
after the purchase of such shares by a shareholder, although in effect a return
of capital to that particular shareholder, would be taxable to him or her as
described above. Dividends are taxable in the manner discussed regardless of
whether they are paid to the shareholder in cash or are reinvested in additional
shares of the Fund.

            After the end of the calendar year, the Fund will notify
shareholders of the federal income tax status of any distributions made by the
Fund to shareholders during such year.

            Sales and Redemptions. Any gain or loss arising from a sale or
redemption of Fund shares generally will be capital gain or loss if the Fund
shares are held as a capital asset, and will be long-term capital gain or loss
if the shareholder has held such shares for more than one year at the time of
the sale or redemption; otherwise it will be short-term capital gain or loss. If
a shareholder has held shares in the Fund for six months or less and during that
period has received a distribution of net capital gain, any loss recognized by
the shareholder on the sale of those shares during the six-month period will be
treated as a long-term capital loss to the extent of the distribution. In
determining the holding period of such shares for this purpose, any period
during which a shareholder's risk of loss is offset by means of options, short
sales or similar transactions is not counted.

            Any loss realized by a shareholder on a sale or exchange of shares
of the Fund will be disallowed to the extent the shares disposed of are
reacquired within a period of 61 days beginning 30 days before and ending 30
days after the shares are sold or exchanged. For this purpose, acquisitions
pursuant to the Dividend Reinvestment Plan would constitute a reacquisition if
made within the period. If a loss is disallowed, then such loss will be
reflected in an upward adjustment to the basis of the shares acquired.

            Qualified Plans. A dividend or capital gains distribution with
respect to shares of the Fund held by a tax-deferred or qualified plan, such as
an individual retirement account, section 403(b)(7) retirement plan or corporate
pension or profit-sharing plan, generally will not be taxable to the plan.
Distributions from such plans will be taxable to individual participants under
applicable tax rules without regard to the character of the income earned by the
qualified plan.

            Backup Withholding. Any distributions and redemption proceeds
payable to a shareholder may be subject to "backup withholding" tax (currently
at a rate of 28% through 2012) if such shareholder fails to provide the Fund
with his or her correct taxpayer identification number, fails to make required
certifications, or is notified by the Internal Revenue Service (the "IRS") that
he or she is subject to backup withholding. Corporate shareholders and certain
other shareholders specified in the Code are exempt from such backup
withholding. Backup withholding is not an additional tax; any amounts so
withheld may be credited against a shareholder's U.S. federal income tax
liability or refunded by filing a refund claim with the IRS, provided that the
required information is furnished to the IRS.

            The backup withholding tax rate will be 28% for amounts paid through
December 31, 2012. The backup withholding rate is currently scheduled to
increase to 31% for amounts paid after December 31, 2012.

            Foreign Income Taxes. Investment income received by the Fund from
sources within foreign countries may be subject to foreign income taxes,
including taxes withheld at the source. The United States has entered into tax
treaties with many foreign countries which entitle the Fund to a reduced rate of
such taxes or exemption from taxes on such income. It is impossible to determine
the effective rate of foreign tax in advance since the amount of the Fund's
assets to be invested within various countries is not known.

            If more than 50% of the value of the Fund's total assets at the
close of its taxable year consists of the stock or securities of foreign
corporations, the Fund may elect to "pass through" to the Fund's shareholders
the amount of foreign income taxes paid by the Fund. Pursuant to such election,
shareholders would be required: (i) to include in gross income (in addition to
taxable dividends actually received), their respective pro-rata shares of
foreign taxes paid by the Fund; (ii) treat their pro rata share of such foreign
taxes as having been paid by them; and (iii) either to deduct their pro rata
share of foreign taxes in computing their taxable income, or to use it as a
foreign tax credit against federal income taxes (but not both). No deduction for
foreign taxes could be claimed by a shareholder who does not itemize deductions.
In addition, certain shareholders may be subject to rules which limit their
ability to fully deduct, or claim a credit for, their pro rata share of the
foreign taxes paid by the Fund. A shareholder's foreign tax credit with respect
to a dividend received from the Fund will be disallowed unless the shareholder
holds shares in the Fund on the ex-dividend date and for at least 15 other days
during the 30-day period beginning 15 days prior to the ex-dividend date.

            Each shareholder will be notified within 60 days after the close of
each taxable year of the Fund whether the foreign taxes paid by the Fund will
"pass through" for that year, and, if so, the amount of each shareholder's
pro-rata share (by country) of (i) the foreign taxes paid, and (ii) the Fund's
gross income from foreign sources. Shareholders who are not liable for federal
income taxes, such as retirement plans qualified under section 401 of the Code,
will not be affected by any such "pass through" of foreign taxes.

            The federal income tax status of each year's distributions by the
Fund will be reported to shareholders and to the IRS. The foregoing is only a
general description of the treatment of foreign taxes under the United States
federal income tax laws. Because the availability of a foreign tax credit or
deduction will depend on the particular circumstances of each shareholder,
potential investors are advised to consult their own tax advisers.

United States Federal Income Taxation of the Fund
-------------------------------------------------

            The following discussion relates to certain significant U.S. federal
income tax consequences to the Fund with respect to the determination of its
"investment company taxable income" each year. This discussion assumes that the
Fund will be taxed as a regulated investment company for each of its taxable
years.

            Passive Foreign Investment Companies. If the Fund owns shares in a
foreign corporation that constitutes a "passive foreign investment company" (a
"PFIC") for federal income tax purposes and the Fund does not elect or is unable
to elect to either treat such foreign corporation as a "qualified electing fund"
within the meaning of the Code or "mark-to-market" the stock of such foreign
corporation, the Fund may be subject to United States federal income taxation on
a portion of any "excess distribution" it receives from the PFIC or any gain it
derives from the disposition of such shares, even if such income is distributed
as a taxable dividend by the Fund to its shareholders. The Fund may also be
subject to additional interest charges in respect of deferred taxes arising from
such distributions or gains. Any tax paid by the Fund as a result of its
ownership of shares in a PFIC will not give rise to a deduction or credit to the
Fund or to any shareholder. A foreign corporation will be treated as a PFIC if,
for the taxable year involved, either (i) such foreign corporation derives at
least 75% of its gross income from "passive income" (including, but not limited
to, interest, dividends, royalties, rents and annuities), or (ii) on average, at
least 50% of the value (or adjusted tax basis, if elected) of the assets held by
the corporation produce or are held for production of "passive income". In some
cases, the Fund may be able to elect to "mark-to-market" stock in a PFIC. If the
Fund makes such an election, the Fund would include in its taxable income each
year an amount equal to the excess, if any, of the fair market value of the PFIC
stock as of the close of the taxable year over the Fund's adjusted basis in the
PFIC stock. The Fund would be allowed a deduction for the excess, if any, of the
adjusted basis of the PFIC stock over the fair market value of the PFIC stock as
of the close of the taxable year, but only to the extent of any net
mark-to-market gains included in the Fund's taxable income for prior taxable
years. The Fund's adjusted basis in the PFIC stock would be adjusted to reflect
the amounts included in, or deducted from, income under this election. Amounts
included in income pursuant to this election, as well as gain realized on the
sale or other disposition of the PFIC stock, would be treated as ordinary
income. The deductible portion of any mark-to-market loss, as well as loss
realized on the sale or other disposition of the PFIC stock to the extent that
such loss does not exceed the net mark-to-market gains previously included by
the Fund, would be treated as ordinary loss. The Fund generally would not be
subject to the deferred tax and interest charge provisions discussed above with
respect to PFIC stock for which a mark-to-market election has been made. If the
Fund purchases shares in a PFIC and the Fund elects to treat the foreign
corporation as a "qualified electing fund" under the Code, the Fund may be
required to include in its income each year a portion of the ordinary income and
net capital gains of such foreign corporation, even if this income is not
distributed to the Fund. Any such income would be subject to the 90% and
calendar year distribution requirements described above.

            Options, Futures Contracts, and Forward Foreign Currency Contracts.
Certain listed options, regulated futures contracts, and forward foreign
currency contracts are considered "section 1256 contracts" for federal income
tax purposes. Section 1256 contracts held by the Fund at the end of each taxable
year will be "marked to market" and treated for federal income tax purposes as
though sold for fair market value on the last business day of such taxable year.
Gain or loss realized by the Fund on section 1256 contracts other than forward
foreign currency contracts will be considered 60% long-term and 40% short-term
capital gain or loss. Gain or loss realized by the Fund on forward foreign
currency contracts will be treated as section 988 gain or loss and will
therefore be characterized as ordinary income or loss and will increase or
decrease the amount of the Fund's net investment income available to be
distributed to shareholders as ordinary income, as described above. The Fund can
elect to exempt its section 1256 contracts which are part of a "mixed straddle"
(as described below) from the application of section 1256.

            Gain or loss realized by the Fund on the lapse or sale of put and
call options on foreign currencies which are traded over-the-counter or on
certain foreign exchanges will be treated as section 988 gain or loss and will
therefore be characterized as ordinary income or loss and will increase or
decrease the amount of the Fund's net investment income available to be
distributed to shareholders as ordinary income, as described above. The amount
of such gain or loss shall be determined by subtracting the amount paid, if any,
for or with respect to the option (including any amount paid by the Fund upon
termination of an option written by the Fund) from the amount received, if any,
for or with respect to the option (including any amount received by the Fund
upon termination of an option held by the Fund). In general, if the Fund
exercises such an option on a foreign currency, or if such an option that the
Fund has written is exercised, gain or loss on the option will be recognized in
the same manner as if the Fund had sold the option (or paid another person to
assume the Fund's obligation to make delivery under the option) on the date on
which the option is exercised, for the fair market value of the option. The
foregoing rules will also apply to other put and call options which have as
their underlying property foreign currency and which are traded over-the-counter
or on certain foreign exchanges to the extent gain or loss with respect to such
options is attributable to fluctuations in foreign currency exchange rates.

            Tax Straddles. Any option, futures contract or other position
entered into or held by the Fund in conjunction with any other position held by
the Fund may constitute a "straddle" for federal income tax purposes. A straddle
of which at least one, but not all, the positions are section 1256 contracts may
constitute a "mixed straddle". In general, straddles are subject to certain
rules that may affect the character and timing of the Fund's gains and losses
with respect to straddle positions by requiring, among other things, that (i)
loss realized on disposition of one position of a straddle not be recognized to
the extent that the Fund has unrealized gains with respect to the other position
in such straddle; (ii) the Fund's holding period in straddle positions be
suspended while the straddle exists (possibly resulting in gain being treated as
short-term capital gain rather than long-term capital gain); (iii) losses
recognized with respect to certain straddle positions which are part of a mixed
straddle and which are non-section 1256 positions be treated as 60% long-term
and 40% short-term capital loss; (iv) losses recognized with respect to certain
straddle positions which would otherwise constitute short-term capital losses be
treated as long-term capital losses; and (v) the deduction of interest and
carrying charges attributable to certain straddle positions may be deferred.
Various elections are available to the Fund which may mitigate the effects of
the straddle rules, particularly with respect to mixed straddles. In general,
the straddle rules described above do not apply to any straddles held by the
Fund all of the offsetting positions of which consist of section 1256 contracts.

            Currency Fluctuations -- "Section 988" Gains or Losses. Under the
Code, gains or losses attributable to fluctuations in exchange rates which occur
between the time the Fund accrues interest or other receivables or accrues
expenses or other liabilities denominated in a foreign currency and the time the
Fund actually collects such receivables or pays such liabilities are treated as
ordinary income or ordinary loss. Similarly, gains or losses from the
disposition of foreign currencies, from the disposition of debt securities
denominated in a foreign currency, or from the disposition of a forward contract
denominated in a foreign currency which are attributable to fluctuations in the
value of the foreign currency between the date of acquisition of the asset and
the date of disposition also are treated as ordinary income or loss. These gains
or losses, referred to under the Code as "section 988" gains or losses, increase
or decrease the amount of the Fund's investment company taxable income available
to be distributed to its shareholders as ordinary income, rather than increasing
or decreasing the amount of the Fund's net capital gain. Because section 988
losses reduce the amount of ordinary dividends the Fund will be allowed to
distribute for a taxable year, such section 988 losses may result in all or a
portion of prior dividend distributions for such year being recharacterized as a
non-taxable return of capital to shareholders, rather than as an ordinary
dividend, reducing each shareholder's basis in his or her Fund shares. To the
extent that such distributions exceed such shareholder's basis, each will be
treated as a gain from the sale of shares.

Other Taxes
-----------

            The Fund may be subject to other state and local taxes.

Taxation of Foreign Stockholders
--------------------------------

            Taxation of a shareholder who, under the Code, is a nonresident
alien individual, foreign trust or estate, foreign corporation or foreign
partnership ("foreign shareholder"), depends on whether the income from the Fund
is "effectively connected" with a U.S. trade or business carried on by the
foreign shareholder.

            If the income from the Fund is not effectively connected with the
foreign shareholder's U.S. trade or business, then, except as discussed below,
distributions of the Fund attributable to ordinary income and short-term capital
gain paid to a foreign shareholder by the Fund will be subject to U.S.
withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount
of the distribution. However, distributions of the Fund attributable to
short-term capital gains and U.S. source portfolio interest income paid during
taxable years of the Fund beginning before January 1, 2012 will not be subject
to this withholding tax.

            A foreign shareholder generally would be exempt from federal income
tax on distributions of the Fund attributable to net long-term capital gain and
on gain realized from the sale or redemption of shares of the Fund. Special
rules apply in the case of a shareholder that is a foreign trust or foreign
partnership.

            If the income from the Fund is effectively connected with a foreign
shareholder's U.S. trade or business, then ordinary income distributions,
capital gain distributions, and any gain realized upon the sale of shares of the
Fund will be subject to federal income tax at the rates applicable to U.S.
citizens or U.S. corporations.

            The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein.

            The tax rules of other countries with respect to an investment in
the Fund can differ from the federal income taxation rules described above.
These foreign rules are not discussed herein. Foreign shareholders are urged to
consult their own tax advisors as to the consequences of foreign tax rules with
respect to an investment in the Fund.

--------------------------------------------------------------------------------

                             PORTFOLIO TRANSACTIONS

--------------------------------------------------------------------------------

            Subject to the general oversight of the Board, the Adviser is
responsible for the investment decisions and the placing of orders for portfolio
transactions for the Fund. The Adviser determines the broker or dealer to be
used in each specific transaction with the objective of negotiating a
combination of the most favorable commission (for transactions on which a
commission is payable) and the best price obtainable on each transaction
(generally defined as "best execution"). The Fund does not consider sales of
shares of the Fund or other investment companies managed by the Adviser as a
factor in the selection of brokers and dealers to effect portfolio transactions
and has adopted a policy and procedures reasonably designed to preclude such
consideration.

            When consistent with the objective of obtaining best execution,
brokerage may be directed to persons or firms supplying investment information
to the Adviser. In these cases, the transaction cost charged by the executing
broker may be greater than that which another broker may charge if the Fund
determines in good faith that the amount of such transaction cost is reasonable
in relation to the value of the brokerage, research and statistical services
provided by the executing broker.

            Neither the Fund nor the Adviser has entered into agreements or
understandings with any brokers regarding the placement of securities
transactions because of research services they provide. To the extent that such
persons or firms supply investment information to the Adviser for use in
rendering investment advice to the Fund, such information may be supplied at no
cost to the Adviser and, therefore, may have the effect of reducing the expenses
of the Adviser in rendering advice to the Fund. While it is impracticable to
place an actual dollar value on such investment information, its receipt by the
Adviser probably does not reduce the overall expenses of the Adviser to any
material extent.

            The investment information provided to the Adviser is of the type
described in Section 28(e)(3) of the Securities Exchange Act of 1934 and is
designed to augment the Adviser's own internal research and investment strategy
capabilities. Research services furnished by brokers through which the Fund
effects securities transactions are used by the Adviser in carrying out its
investment management responsibilities with respect to all its client accounts.
Research services furnished by broker-dealers as a result of the placement of
Fund brokerage could be useful and of value to the Adviser in servicing its
other clients as well as the Fund; but, on the other hand, certain research
services obtained by the Adviser as a result of the placement of portfolio
brokerage of other clients could be useful and of value to it in servicing the
Fund.

            The Fund may deal in some instances in securities that are not
listed on a national stock exchange but are traded in the over-the-counter
market. The Fund may also purchase listed securities through the third market,
i.e., from a dealer that is not a member of the exchange on which a security is
listed. Where transactions are executed in the over-the-counter market or third
market, the Fund will seek to deal with the primary market makers; but when
necessary in order to obtain the best price and execution, it will utilize the
services of others. In all cases, the Fund will attempt to negotiate best
execution.

            Investment decisions for the Fund are made independently from those
for other investment companies and other advisory accounts managed by the
Adviser. It may happen, on occasion, that the same security is held in the
portfolio of the Fund and one or more of such other companies or accounts.
Simultaneous transactions are likely when several funds or accounts are managed
by the same Adviser, particularly when a security is suitable for the investment
objectives of more than one of such companies or accounts. When two or more
companies or accounts managed by the Adviser are simultaneously engaged in the
purchase or sale of the same security, the transactions are allocated to the
respective companies or accounts both as to amount and price, in accordance with
a method deemed equitable to each company or account. In some cases this system
may adversely affect the price paid or received by the Fund or the size of the
position obtainable for the Fund.

            Allocations are made by the officers of the Fund or of the Adviser.
Purchases and sales of portfolio securities are determined by the Adviser and
are placed with broker-dealers by the order department of the Adviser.

            Many of the Fund's portfolio transactions in equity securities will
occur on foreign stock exchanges. Transactions on stock exchanges involve the
payment of brokerage commissions. On many foreign stock exchanges these
commissions are fixed. Securities traded in foreign over-the-counter markets
(including most fixed-income securities) are purchased from and sold to dealers
acting as principal. Over-the-counter transactions generally do not involve the
payment of a stated commission, but the price usually includes an undisclosed
commission or markup. The prices of underwritten offerings, however, generally
include a stated underwriter's discount. The Adviser expects to effect the bulk
of its transactions in securities of companies based in foreign countries
through brokers, dealers or underwriters located in such countries. U.S.
Government or other U.S. securities constituting permissible investments will be
purchased and sold through U.S. brokers, dealers or underwriters.

            The Fund may from time to time place orders for the purchase or sale
of securities (including listed call options) with SCB & Co., an affiliate of
the Adviser (the "Affiliated Broker"). In such instances the placement of orders
with such broker would be consistent with the Fund's objective of obtaining best
execution and would not be dependent upon the fact that the Affiliated Broker is
an affiliate of the Adviser. With respect to orders placed with the Affiliated
Broker for execution on a national securities exchange, commissions received
must conform to Section 17(e)(2)(A) of the 1940 Act and Rule 17e-1 thereunder,
which permit an affiliated person of a registered investment company (such as
the Fund), or any affiliated person of such person, to receive a brokerage
commission from such registered investment company provided that such commission
is reasonable and fair compared to the commissions received by other brokers in
connection with comparable transactions involving similar securities during a
comparable period of time.

Disclosure of Portfolio Holdings
--------------------------------

            The Fund believes that the ideas of the Adviser's investment staff
should benefit the Fund and its shareholders, and does not want to afford
speculators an opportunity to profit by anticipating Fund trading strategies or
using Fund information for stock picking. However, the Fund also believes that
knowledge of the Fund's portfolio holdings can assist shareholders in monitoring
their investment, making asset allocation decisions, and evaluating portfolio
management techniques.

            The Adviser has adopted, on behalf of the Fund, policies and
procedures relating to disclosure of the Fund's portfolio securities. The
policies and procedures relating to disclosure of the Fund's portfolio
securities are designed to allow disclosure of portfolio holdings information
where necessary to the Fund's operation or useful to the Fund's shareholders
without compromising the integrity or performance of the Fund. Except when there
are legitimate business purposes for selective disclosure and other conditions
(designed to protect the Fund and its shareholders) are met, the Fund does not
provide or permit others to provide information about the Fund's portfolio
holdings on a selective basis.

            The Fund includes portfolio holdings information as required in
regulatory filings and shareholder reports, discloses portfolio holdings
information as required by federal or state securities laws and may disclose
portfolio holdings information in response to requests by governmental
authorities. In addition, the Adviser posts portfolio holdings information on
the Adviser's website (www.AllianceBernstein.com). The Adviser posts on the
website a complete schedule of the Fund's portfolio securities, as of the last
day of each calendar month, approximately 30 days after the end of that month.
This posted information generally remains accessible on the website for three
months. For each portfolio security, the posted information includes its name,
the number of shares held by the Fund, the market value of the Fund's holdings,
and the percentage of the Fund's assets represented by the portfolio security.
In addition to the schedule of portfolio holdings, the Adviser posts information
about the number of securities the Fund holds, a summary of the Fund's top ten
holdings (including name and the percentage of the Fund's assets invested in
each holding), and a percentage breakdown of the Fund's investments by credit
risk or securities type, as applicable, approximately 45 days after the end of
the month. The day after portfolio holdings information is publicly available on
the website, it may be mailed, e-mailed or otherwise transmitted to any person.

            The Adviser may distribute or authorize the distribution of
information about the Fund's portfolio holdings that is not publicly available,
on the website or otherwise, to the Adviser's employees and affiliates that
provide services to the Fund. In addition, the Adviser may distribute or
authorize distribution of information about the Fund's portfolio holdings that
is not publicly available, on the website or otherwise, (i) to the Fund's
service providers who require access to the information in order to fulfill
their contractual duties relating to the Fund (including, without limitation,
pricing services and proxy voting services), (ii) to facilitate the review of
the Fund by rating agencies, (iii) for the purpose of due diligence regarding a
merger or acquisition, or (iv) for the purpose of effecting in-kind redemption
of securities to facilitate orderly redemption of portfolio assets and minimal
impact on remaining Fund shareholders. The Adviser does not expect to disclose
information about the Fund's portfolio holdings to individual or institutional
investors in the Fund or to intermediaries that distribute the Fund's shares
without making such information public as described herein. Information may be
disclosed with any frequency and any lag, as appropriate.

            Before any non-public disclosure of information about the Fund's
portfolio holdings is permitted, however, the Adviser's Chief Compliance Officer
(or his designee) must determine that the Fund has a legitimate business purpose
for providing the portfolio holdings information, that the disclosure is in the
best interests of the Fund's shareholders, and that the recipient agrees or has
a duty to keep the information confidential and agrees not to trade directly or
indirectly based on the information or to use the information to form a specific
recommendation about whether to invest in the Fund or any other security. Under
no circumstances may the Adviser or its affiliates receive any consideration or
compensation for disclosing the information.

            The Adviser has established procedures to ensure that the Fund's
portfolio holdings information is only disclosed in accordance with these
policies. Only the Adviser's Chief Compliance Officer (or his designee) may
approve the disclosure, and then only if he or she and a designated senior
officer in the Adviser's product management group determines that the disclosure
serves a legitimate business purpose of the Fund and is in the best interest of
the Fund's shareholders. The Adviser's Chief Compliance Officer (or his
designee) approves disclosure only after considering the anticipated benefits
and costs to the Fund and its shareholders, the purpose of the disclosure, any
conflicts of interest between the interests of the Fund and its shareholders and
the interests of the Adviser or any of its affiliates, and whether the
disclosure is consistent with the policies and procedures governing disclosure.
Only someone approved by the Adviser's Chief Compliance Officer (or his
designee) may make approved disclosures of portfolio holdings information to
authorized recipients. The Adviser reserves the right to request certifications
from senior officers of authorized recipients that the recipient is using the
portfolio holdings information only in a manner consistent with the Adviser's
policy and any applicable confidentiality agreement. The Adviser's Chief
Compliance Officer or another member of the compliance team reports all
arrangements to disclose portfolio holdings information to the Board on a
quarterly basis. If the Board determines that disclosure was inappropriate, the
Adviser will promptly terminate the disclosure arrangement.

            In accordance with these procedures, each of the following third
parties have been approved to receive information concerning the Fund's
portfolio holdings: (i) the Fund's independent registered public accounting
firm, for use in providing audit opinions; (ii) RR Donnelley Financial, Data
Communique International and, from time to time, other financial printers, for
the purpose of preparing Fund regulatory filings; (iii) the Fund's custodian in
connection with its custody of the Fund's assets; (iv) Risk Metrics for proxy
voting services; and (v) data aggregators, such as Vestek. Information may be
provided to these parties at any time with no time lag. Each of these parties is
contractually and ethically prohibited from sharing the Fund's portfolio
holdings information unless specifically authorized.

--------------------------------------------------------------------------------

                              GENERAL INFORMATION

--------------------------------------------------------------------------------

            The Fund is a series of AllianceBernstein Cap Fund, Inc., a Maryland
corporation. The Fund was organized in 2011 under the name "AllianceBernstein
Emerging Markets Multi-Asset Portfolio".

            The Board is authorized to reclassify and issue any unissued shares
to any number of additional series and classes without shareholder approval.
Accordingly, the Board may create additional series of shares in the future, for
reasons such as the desire to establish one or more additional portfolios of the
Fund with different investment objectives, policies or restrictions. Any
issuance of shares of another series would be governed by the 1940 Act and the
laws of the State of Maryland.

            It is anticipated that annual shareholder meetings will not be held;
shareholder meetings will be held only when required by federal or state law.
Shareholders have available certain procedures for the removal of Directors.

            A shareholder will be entitled to share pro rata with other holders
of the same class of shares all dividends and distributions arising from the
Fund's assets and, upon redeeming shares, will receive the then current NAV of
the Fund represented by the redeemed shares less any applicable CDSC. The Fund
is empowered to establish, without shareholder approval, additional portfolios
and additional classes of shares within the Fund. If an additional portfolio or
an additional class within the Fund were established , each share of the
portfolio or class would normally be entitled to one vote for all purposes.
Generally, shares of each portfolio and class would vote together as a single
class on matters, such as the election of Directors, that affect each portfolio
and class in substantially the same manner. As to matters affecting each
portfolio differently, such as approval of the Advisory Agreement and changes in
investment policy, shares of each portfolio would vote as separate series.

            Each class of shares of the Fund represents an interest in the same
portfolio of investments and has the same rights and is identical in all
respects, except that each class of shares bears its own Rule 12b-1 fees (if
any) and transfer agency expenses. Each class of shares of the Fund votes
separately with respect to the Fund's Rule 12b-1 distribution plan and other
matters for which separate class voting is appropriate under applicable law.
Shares are freely transferable, are entitled to dividends as determined by the
Directors and, in liquidation of the Fund, are entitled to receive the net
assets of the Fund.

Custodian and Accounting Agent
------------------------------


            Brown Brothers Harriman & Co. ("Brown Brothers"), 40 Water Street,
Boston, Massachusetts 02109, acts as the Fund's custodian for the assets of the
Fund but plays no part in deciding on the purchase or sale of portfolio
securities. Subject to the supervision of the Fund's Directors, Brown Brothers
may enter into subcustodial agreements for the holding of the Fund's foreign
securities.


Principal Underwriter
---------------------

            ABI, an indirect wholly-owned subsidiary of the Adviser, located at
1345 Avenue of the Americas, New York, New York 10105, is the principal
underwriter of shares of the Fund, and as such may solicit orders from the
public to purchase shares of the Fund. Under the Distribution Services
Agreement, the Fund has agreed to indemnify ABI, in the absence of its willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, against certain civil liabilities, including liabilities
under the Securities Act.

Counsel
-------

            Legal matters in connection with the issuance of the shares of the
Fund offered hereby will be passed upon by Seward & Kissel LLP, New York, New
York.

Independent Registered Public Accounting Firm
---------------------------------------------

            Ernst & Young LLP, 5 Times Square, New York, NY 10034, has been
selected as the independent registered public accounting firm for the Fund.


Code of Ethics and Proxy Voting Policies and Procedures
-------------------------------------------------------

            The Fund, the Adviser and ABI have each adopted codes of ethics
pursuant to Rule 17j-1 of the 1940 Act. These codes of ethics permit personnel
subject to the codes to invest in securities, including securities that may be
purchased or held by the Fund.

            The Fund has adopted the Adviser's proxy voting policies and
procedures. The Adviser's proxy voting policies and procedures are attached as
Appendix A.

            Information regarding how the Fund voted proxies related to
portfolio securities during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 227-4618; or on or
through the Fund's website at www.AllianceBernstein.com; or both; and (2) on the
SEC's website at www.sec.gov.


Additional Information
----------------------

            Shareholder inquiries may be directed to the shareholder's financial
intermediary or to ABIS at the address or telephone numbers shown on the front
cover of this SAI. This SAI does not contain all the information set forth in
the Registration Statement filed by the Fund with the SEC under the Securities
Act. Copies of the Registration Statement may be obtained at a reasonable charge
from the SEC or may be examined, without charge, at the offices of the SEC in
Washington, D.C. or on the Internet at www.AllianceBernstein.com.



--------------------------------------------------------------------------------

        FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT REGISTERED PUBLIC
                                ACCOUNTING FIRM

--------------------------------------------------------------------------------

The financial statements of the Fund for the fiscal year end is not available
because the Fund has not yet commenced operations.



--------------------------------------------------------------------------------
                                  APPENDIX A:

                           STATEMENT OF POLICIES AND
                          PROCEDURES FOR PROXY VOTING

--------------------------------------------------------------------------------

1.    Introduction

      As a registered investment adviser, AllianceBernstein L.P.
      ("AllianceBernstein", "we" or "us") has a fiduciary duty to act solely in
      the best interests of our clients. We recognize that this duty requires us
      to vote client securities in a timely manner and make voting decisions
      that are intended to maximize shareholder value. We consider ourselves
      shareholder advocates and take this responsibility very seriously.
      Consistent with these obligations, we will disclose our clients' voting
      records only to them and as required by mutual fund vote disclosure
      regulations. In addition, the proxy committees may, after careful
      consideration, choose to respond to surveys regarding past votes.

      This statement is intended to comply with Rule 206(4)-6 of the Investment
      Advisers Act of 1940. It sets forth our policies and procedures for voting
      proxies for our discretionary investment advisory clients, including
      investment companies registered under the Investment Company Act of 1940.
      This statement applies to AllianceBernstein's investment groups investing
      on behalf of clients in both U.S. and non-U.S. securities.

2.    Proxy Policies

      Our proxy voting policies are principle-based rather than rules-based. We
      adhere to a core set of principles that are described in this Statement
      and in our Proxy Voting Manual. We assess each proxy proposal in light of
      those principles. Our proxy voting "litmus test" will always be what we
      view as most likely to maximize shareholder value. We believe that
      authority and accountability for setting and executing corporate policies,
      goals and compensation should generally rest with the board of directors
      and senior management. In return, we support strong investor rights that
      allow shareholders to hold directors and management accountable if they
      fail to act in the best interests of shareholders. In addition, when a
      company engages in illegal activities or other anti-social behavior, we
      exercise our proxy voting rights considering such behavior.

      This statement is designed to be responsive to the wide range of proxy
      voting subjects that can have a significant effect on the investment value
      of the securities held in our clients' accounts. These policies are not
      exhaustive due to the variety of proxy voting issues that we may be
      required to consider. AllianceBernstein reserves the right to depart from
      these guidelines in order to make voting decisions that are in our
      clients' best interests. In reviewing proxy issues, we will apply the
      following general policies:

      2.1.  Corporate Governance

            AllianceBernstein's proxy voting policies recognize the importance
            of good corporate governance in ensuring that management and the
            board of directors fulfill their obligations to shareholders. We
            favor proposals promoting transparency and accountability within a
            company. We support the appointment of a majority of independent
            directors on key committees and generally support separating the
            positions of chairman and chief executive officer, except in cases
            where a company has sufficient counter-balancing governance in
            place. Because we believe that good corporate governance requires
            shareholders to have a meaningful voice in the affairs of the
            company, we generally will support shareholder proposals which
            request that companies amend their by-laws to provide that director
            nominees be elected by an affirmative vote of a majority of the
            votes cast. Furthermore, we have written to the U.S. Securities and
            Exchange Commission ("SEC") in support of shareholder access to
            corporate proxy statements under specified conditions with the goal
            of serving the best interests of all shareholders.

      2.2.  Elections of Directors

            Unless there is a proxy fight for seats on the Board or we determine
            that there are other compelling reasons for withholding votes for
            directors, we will vote in favor of the management proposed slate of
            directors. That said, we believe that directors have a duty to
            respond to shareholder actions that have received significant
            shareholder support. Therefore, we may withhold votes for directors
            (or vote against directors in non-U.S. markets) who fail to act on
            key issues such as failure to implement proposals to declassify
            boards, failure to implement a majority vote requirement, failure to
            submit a rights plan to a shareholder vote or failure to act on
            tender offers where a majority of shareholders have tendered their
            shares. (We may vote against directors under these circumstances if
            the company has adopted a majority voting policy because, if a
            company has adopted such a policy, withholding votes from directors
            is not possible.) In addition, we will withhold votes for directors
            who fail to attend at least seventy-five percent of board meetings
            within a given year without a reasonable excuse, and we may abstain
            or vote against directors of non-U.S. issuers where there is
            insufficient information about the nominees disclosed in the proxy
            statement. Also, we will generally not withhold votes for directors
            who meet the definition of independence promulgated by the primary
            exchange on which the company's shares are traded or set forth in
            the code we determine to be best practice in the country where the
            subject company is domiciled. Finally, because we believe that
            cumulative voting in single shareholder class structures provides a
            disproportionately large voice to minority shareholders in the
            affairs of a company, we will generally vote against such proposals
            and vote for management proposals seeking to eliminate cumulative
            voting. However, in dual class structures (such as A&B shares) where
            the shareholders with a majority economic interest have a minority
            voting interest, we will generally vote in favor of cumulative
            voting.

      2.3.  Appointment of Auditors

            AllianceBernstein believes that the company is in the best position
            to choose its auditors, so we will generally support management's
            recommendation. However, we recognize that there are inherent
            conflicts when a company's independent auditor performs substantial
            non-audit services for the company. The Sarbanes-Oxley Act of 2002
            prohibits certain categories of services by auditors to U.S.
            issuers, making this issue less prevalent in the U.S. Nevertheless,
            in reviewing a proposed auditor, we will consider the fees paid for
            non-audit services relative to total fees and whether there are
            other reasons for us to question the independence or performance of
            the auditors.

      2.4.  Changes in Legal and Capital Structure

            Changes in a company's charter, articles of incorporation or by-laws
            are often technical and administrative in nature. Absent a
            compelling reason to the contrary, AllianceBernstein will cast its
            votes in accordance with management's recommendations on such
            proposals. However, we will review and analyze on a case-by-case
            basis any non-routine proposals that are likely to affect the
            structure and operation of the company or have a material economic
            effect on the company. For example, we will generally support
            proposals to increase authorized common stock when it is necessary
            to implement a stock split, aid in a restructuring or acquisition,
            or provide a sufficient number of shares for an employee savings
            plan, stock option plan or executive compensation plan. However, a
            satisfactory explanation of a company's intentions must be disclosed
            in the proxy statement for proposals requesting an increase of
            greater than 100% of the shares outstanding. We will oppose
            increases in authorized common stock where there is evidence that
            the shares will be used to implement a poison pill or another form
            of anti-takeover device. We will support shareholder proposals that
            seek to eliminate dual class voting structures.

      2.5.  Corporate Restructurings, Mergers and Acquisitions

            AllianceBernstein believes proxy votes dealing with corporate
            reorganizations are an extension of the investment decision.
            Accordingly, we will analyze such proposals on a case-by-case basis,
            weighing heavily the views of our research analysts that cover the
            company and our investment professionals managing the portfolios in
            which the stock is held.

      2.6.  Proposals Affecting Shareholder Rights

            AllianceBernstein believes that certain fundamental rights of
            shareholders must be protected. We will generally vote in favor of
            proposals that give shareholders a greater voice in the affairs of
            the company and oppose any measure that seeks to limit those rights.
            However, when analyzing such proposals we will weigh the financial
            impact of the proposal against the impairment of shareholder rights.

      2.7.  Anti-Takeover Measures

            AllianceBernstein believes that measures that impede corporate
            transactions (such as takeovers) or entrench management not only
            infringe on the rights of shareholders but may also have a
            detrimental effect on the value of the company. Therefore, we will
            generally oppose proposals, regardless of whether they are advanced
            by management or shareholders, when their purpose or effect is to
            entrench management or excessively or inappropriately dilute
            shareholder ownership. Conversely, we support proposals that would
            restrict or otherwise eliminate anti-takeover or anti-shareholder
            measures that have already been adopted by corporate issuers. For
            example, we will support shareholder proposals that seek to require
            the company to submit a shareholder rights plan to a shareholder
            vote. We will evaluate, on a case-by-case basis, proposals to
            completely redeem or eliminate such plans. Furthermore, we will
            generally oppose proposals put forward by management (including the
            authorization of blank check preferred stock, classified boards and
            supermajority vote requirements) that appear to be anti-shareholder
            or intended as management entrenchment mechanisms.

      2.8.  Executive Compensation

            AllianceBernstein believes that company management and the
            compensation committee of the board of directors should, within
            reason, be given latitude to determine the types and mix of
            compensation and benefits offered to company employees. Whether
            proposed by a shareholder or management, we will review proposals
            relating to executive compensation plans on a case-by-case basis to
            ensure that the long-term interests of management and shareholders
            are properly aligned. In general, we will analyze the proposed plan
            to ensure that shareholder equity will not be excessively diluted
            taking into account shares available for grant under the proposed
            plan as well as other existing plans. We generally will oppose plans
            that allow stock options to be granted with below market value
            exercise prices on the date of issuance or permit re-pricing of
            underwater stock options without shareholder approval. Other factors
            such as the company's performance and industry practice will
            generally be factored into our analysis. In markets where
            remuneration reports are not required for all companies (for
            instance, in the U.S. such reports are required only for companies
            that received funds from the Troubled Asset Relief Program ("TARP")
            but not other companies), we will generally support shareholder
            proposals asking the board to adopt a policy (i.e., "say on pay")
            that the company's shareholders be given the opportunity to vote on
            an advisory resolution to approve the compensation committee's
            report. Although "say on pay" votes are by nature only broad
            indications of shareholder views, they do lead to more
            compensation-related dialogue between management and shareholders
            and help ensure that the important common objective of management
            and shareholders is met, which is maximizing the value of the
            company. In markets where votes to approve remuneration reports are
            required, we review the reports on a case-by-case basis. With
            respect to companies that have received governmental assistance
            through government programs such as TARP, we will generally oppose
            shareholder proposals that seek to impose greater executive
            compensation restrictions on subject companies than are required
            under the applicable program because such restrictions could create
            a competitive disadvantage for the subject company. We believe the
            SEC took appropriate steps to ensure more complete and transparent
            disclosure of executive compensation and corporate governance
            disclosure rules in 2006 and February 2010. Therefore, while we will
            consider them on a case-by-case basis, we generally vote against
            shareholder proposals seeking additional disclosure of executive and
            director compensation, including proposals that seek to specify the
            measurement of performance-based compensation, if the company is
            subject to SEC rules. Finally, we will support requiring a
            shareholder vote on management proposals to provide severance
            packages that exceed 2.99 times the sum of an executive officer's
            base salary plus bonus that are triggered by a change in control.
            Finally, we will support shareholder proposals requiring a company
            to expense compensatory employee stock options (to the extent the
            jurisdiction in which the company operates does not already require
            it) because we view this form of compensation as a significant
            corporate expense that should be appropriately accounted for.

      2.9.  Social and Corporate Responsibility

            These types of shareholder proposals often raise complex and
            controversial issues that may have both a financial and
            non-financial effect on the company. They reflect increasing
            shareholder concern about Socially Responsible Investing, which may
            include environmental, social and governance-related issues, as well
            as other forms of responsible investing and proxy voting. These
            proposals present a special set of challenges because, beyond
            distinctions between legal and illegal activity, perspectives on
            social good vary widely, not only across borders but also from
            shareholder to shareholder.

            Maximizing long-term shareholder value is the overriding concern in
            considering these proposals, so AllianceBernstein will review and
            analyze them on a case-by-case basis to determine what effect, if
            any, they will have on the future earnings of the company. We will
            vote against proposals that are unduly burdensome or result in
            unnecessary and excessive costs to the company with no discernable
            benefits to shareholders. We may abstain from voting on social
            proposals that do not have a readily determinable financial impact
            on shareholder value.

3.    Proxy Voting Procedures

      3.1.  Proxy Voting Committees

            Our growth and value investment groups have formed separate proxy
            voting committees to establish general proxy policies for
            AllianceBernstein and consider specific proxy voting matters as
            necessary. These committees periodically review these policies and
            new types of corporate governance issues, and decide how we should
            vote on proposals not covered by these policies. When a proxy vote
            cannot be clearly decided by an application of our stated policy,
            the proxy committee will evaluate the proposal. In addition, the
            committees, in conjunction with the analyst that covers the company,
            may contact corporate management, interested shareholder groups and
            others as necessary to discuss proxy issues. Members of the
            committees include senior investment personnel and representatives
            of the Legal and Compliance Department. The committees may also
            evaluate proxies where we face a potential conflict of interest (as
            discussed below). Finally, the committees monitor adherence to these
            policies.

      3.2.  Conflicts of Interest

            AllianceBernstein recognizes that there may be a potential conflict
            of interest when we vote a proxy solicited by an issuer whose
            retirement plan we manage, or we administer, who distributes
            AllianceBernstein-sponsored mutual funds, or with whom we have, or
            one of our employees has, a business or personal relationship that
            may affect (or may be reasonably viewed as affecting) how we vote on
            the issuer's proxy. Similarly, AllianceBernstein may have a
            potentially material conflict of interest when deciding how to vote
            on a proposal sponsored or supported by a shareholder group that is
            a client. We believe that centralized management of proxy voting,
            oversight by the proxy voting committees and adherence to these
            policies ensures that proxies are voted based solely on our clients'
            best interests. Additionally, we have implemented procedures to
            ensure that our votes are not the product of a material conflict of
            interest, including: (i) on an annual basis, the proxy committees
            taking reasonable steps to evaluate (A) the nature of
            AllianceBernstein's and our employees' material business and
            personal relationships (and those of our affiliates) with any
            company whose equity securities are held in client accounts and (B)
            any client that has sponsored or has a material interest in a
            proposal upon which we will be eligible to vote; (ii) requiring
            anyone involved in the decision making process to disclose to the
            chairman of the appropriate proxy committee any potential conflict
            that he or she is aware of (including personal relationships) and
            any contact that he or she has had with any interested party
            regarding a proxy vote; (iii) prohibiting employees involved in the
            decision making process or vote administration from revealing how we
            intend to vote on a proposal in order to reduce any attempted
            influence from interested parties; and (iv) where a material
            conflict of interests exists, reviewing our proposed vote by
            applying a series of objective tests and, where necessary,
            considering the views of third party research services to ensure
            that our voting decision is consistent with our clients' best
            interests.

            Because under certain circumstances AllianceBernstein considers the
            recommendation of third party research services, the proxy
            committees take reasonable steps to verify that any third party
            research service is, in fact, independent taking into account all of
            the relevant facts and circumstances. This includes reviewing the
            third party research service's conflict management procedures and
            ascertaining, among other things, whether the third party research
            service (i) has the capacity and competency to adequately analyze
            proxy issues, and (ii) can make recommendations in an impartial
            manner and in the best interests of our clients.

      3.3.  Proxies of Certain Non-U.S. Issuers

            Proxy voting in certain countries requires "share blocking".
            Shareholders wishing to vote their proxies must deposit their shares
            shortly before the date of the meeting with a designated depositary.
            During this blocking period, shares that will be voted at the
            meeting cannot be sold until the meeting has taken place and the
            shares are returned to the clients' custodian banks. Absent
            compelling reasons to the contrary, AllianceBernstein believes that
            the benefit to the client of exercising the vote is outweighed by
            the cost of voting (i.e., not being able to sell the shares during
            this period). Accordingly, if share blocking is required we
            generally choose not to vote those shares.

            In addition, voting proxies of issuers in non-US markets may give
            rise to a number of administrative issues that may prevent
            AllianceBernstein from voting such proxies. For example,
            AllianceBernstein may receive meeting notices without enough time to
            fully consider the proxy or after the cut-off date for voting. Other
            markets require AllianceBernstein to provide local agents with power
            of attorney prior to implementing AllianceBernstein's voting
            instructions. Although it is AllianceBernstein's policy to seek to
            vote all proxies for securities held in client accounts for which we
            have proxy voting authority, in the case of non-US issuers, we vote
            proxies on a best efforts basis.

      3.4.  Loaned Securities

            Many clients of AllianceBernstein have entered into securities
            lending arrangements with agent lenders to generate additional
            revenue. AllianceBernstein will not be able to vote securities that
            are on loan under these types of arrangements. However, under rare
            circumstances, for voting issues that may have a significant impact
            on the investment, we may request that clients recall securities
            that are on loan if we determine that the benefit of voting
            outweighs the costs and lost revenue to the client or fund and the
            administrative burden of retrieving the securities.

      3.5.  Proxy Voting Records

            Clients may obtain information about how we voted proxies on their
            behalf by contacting their AllianceBernstein administrative
            representative. Alternatively, clients may make a written request
            for proxy voting information to: Mark R. Manley, Senior Vice
            President & Chief Compliance Officer, AllianceBernstein L.P., 1345
            Avenue of the Americas, New York, NY 10105.

            [ALTERNATIVE LANGUAGE FOR U.S. MUTUAL FUNDS]

            You may obtain information regarding how the Fund voted proxies
            relating to portfolio securities during the most recent 12-month
            period ended June 30, without charge. Simply visit
            AllianceBernstein's web site at www.alliancebernstein.com, go to the
            SEC's web site at www.sec.gov or call AllianceBernstein at (800)
            227-4618.


                                     PART C
                               OTHER INFORMATION

ITEM 28.     Exhibits

      (a)   (1)   Articles of Amendment and Restatement of Articles of
                  Incorporation of Registrant dated May 11, 2011 and filed May
                  16, 2011 - Incorporated by reference to Exhibit (a) to
                  Post-Effective Amendment No. 96 of Registrant's Registration
                  Statement on Form N-1A (File Nos. 2-29901 and 811-1716), filed
                  with the Securities and Exchange Commission on June 3, 2011.

            (2)   Articles Supplementary to Articles of Incorporation of
                  Registrant, dated June 15, 2011 and filed June 16, 2011 -
                  Incorporated by reference to Exhibit (a)(2) to Post-Effective
                  Amendment No. 97 of Registrant's Registration Statement on
                  Form N-1A (File Nos. 2-29901 and 811-1716), filed with the
                  Securities and Exchange Commission on June 17, 2011.

      (b)   Amended and Restated By-Laws of Registrant - Incorporated by
            reference to Exhibit (b) to Post-Effective Amendment No. 81 of
            Registrant's Registration Statement on Form N-1A (File Nos. 2-29901
            and 811-1716), filed with the Securities and Exchange Commission on
            August 30, 2006.

      (c)   Not applicable.


      (d)   Form of Investment Advisory Contract between the Registrant and
            AllianceBernstein L.P., dated July 22, 1992, as amended September 7,
            2004, December 15, 2004, December 23, 2009, August 2, 2010, October
            26, 2010, July 6, 2011 and August [__], 2011 - Filed herewith.


      (e)   (1)   Distribution Services Agreement between the Registrant and
                  AllianceBernstein Investments, Inc. (formerly known as
                  Alliance Fund Distributors, Inc.), dated July 22, 1992 -
                  Incorporated by reference to Exhibit 6(a) to Post-Effective
                  Amendment No. 63 of Registrant's Registration Statement on
                  Form N-1A (File Nos. 2-29901 and 811-1716), filed with the
                  Securities and Exchange Commission on January 30, 1998.

            (2)   Amendment to Distribution Services Agreement between the
                  Registrant and AllianceBernstein Investments, Inc. (formerly
                  known as Alliance Fund Distributors, Inc.) dated July 19, 1996
                  - Incorporated by reference to Exhibit 6 to Post-Effective
                  Amendment No. 61 of Registrant's Registration Statement on
                  Form N-1A (File Nos. 2-29901 and 811-1716), filed with the
                  Securities and Exchange Commission on February 3, 1997.

            (3)   Form of Amendment to Distribution Services Agreement between
                  the Registrant and AllianceBernstein Investments, Inc.
                  (formerly known as Alliance Fund Distributors, Inc.), dated
                  March 1, 2005 - Incorporated by reference to Exhibit (e)(3) to
                  Post-Effective Amendment No. 79 of Registrant's Registration
                  Statement on Form N-1A (File Nos. 2-29901 and 811-1716), filed
                  with the Securities and Exchange Commission on February 28,
                  2005.

            (4)   Form of Amendment to Distribution Services Agreement between
                  the Registrant and AllianceBernstein Investments, Inc., dated
                  June 14, 2006 - Incorporated by reference to Exhibit (e)(4) to
                  Post-Effective Amendment No. 82 of Registrant's Registration
                  Statement on Form N-1A (File Nos. 2-29901 and 811-1716), filed
                  with the Securities and Exchange Commission on October 31,
                  2006.

            (5)   Distribution Services Agreement between the Registrant and
                  AllianceBernstein Investments, Inc. (formerly known as
                  Alliance Fund Distributors, Inc.), dated July 22, 1992, as
                  amended as of April 30, 1993 - Incorporated by reference to
                  Exhibit (e)(5) to Post-Effective Amendment No. 86 of
                  Registrant's Registration Statement on Form N-1A (File Nos.
                  2-29901 and 811-1716), filed with the Securities and Exchange
                  Commission on October 6, 2009.

            (6)   Form of Selected Dealer Agreement between AllianceBernstein
                  Investments, Inc. and selected dealers offering shares of the
                  Registrant - Incorporated by reference to Exhibit (e)(6) to
                  Post-Effective Amendment No. 39 of the Registration Statement
                  on Form N-1A of AllianceBernstein Large Cap Growth Fund, Inc.
                  (File Nos. 33-49530 and 811-6730), filed with the Securities
                  and Exchange Commission on October 15, 2009.

            (7)   Form of Selected Agent Agreement between AllianceBernstein
                  Investments, Inc. (formerly known as AllianceBernstein
                  Investment Research Management, Inc.) and selected agents
                  making available shares of the Registrant - Incorporated by
                  reference to Exhibit (e)(4) to Post-Effective Amendment No. 34
                  of the Registration Statement on Form N-1A of
                  AllianceBernstein Municipal Income Fund, Inc. (File Nos.
                  33-7812 and 811-04791), filed with the Securities and Exchange
                  Commission on January 28, 2005.

            (8)   Selected Dealer Agreement between AllianceBernstein
                  Investments, Inc. and Merrill Lynch, Pierce, Fenner & Smith
                  Incorporated making available shares of the Registrant
                  effective April 30, 2009 - Incorporated by reference to
                  Exhibit (e)(8) to Post-Effective Amendment No. 39 of the
                  Registration Statement on Form N-1A of AllianceBernstein Large
                  Cap Growth Fund, Inc. (File Nos. 33-49530 and 811-6730), filed
                  with the Securities and Exchange Commission on October 15,
                  2009.

            (9)   Load Fund Operating Agreement between AllianceBernstein
                  Investments, Inc. and Charles Schwab & Co., Inc. making
                  available shares of the Registrant, dated as of June 1, 2007 -
                  Incorporated by reference to Exhibit (e)(9) to Post-Effective
                  Amendment No. 39 of the Registration Statement on Form N-1A of
                  AllianceBernstein Large Cap Growth Fund, Inc. (File Nos.
                  33-49530 and 811-6730), filed with the Securities and Exchange
                  Commission on October 15, 2009.

            (10)  Cooperation Agreement between AllianceBernstein Investments,
                  Inc. (formerly known as AllianceBernstein Research Management,
                  Inc.) and UBS AG, dated November 1, 2005 - Incorporated by
                  reference to Exhibit (e)(10) to Post-Effective Amendment No.
                  39 of the Registration Statement on Form N-1A of
                  AllianceBernstein Large Cap Growth Fund, Inc. (File Nos.
                  33-49530 and 811-6730), filed with the Securities and Exchange
                  Commission on October 15, 2009.

      (f)   Not applicable.

      (g)   (1)   Master Custodian Agreement between the Registrant and State
                  Street Bank and Trust Company, effective August 3, 2009 -
                  Incorporated by reference to Exhibit (g) to Post-Effective
                  Amendment No. 51 of the Registration Statement on Form N-1A of
                  AllianceBernstein Variable Products Series Fund, Inc. (File
                  Nos. 33-18647 and 811-5398), filed with the Securities and
                  Exchange Commission on April 29, 2010.

            (2)   Amendment to Master Custodian Agreement between the Registrant
                  and State Street Bank and Trust Company, regarding the
                  AllianceBernstein International Discovery Equity Portfolio,
                  effective October 15, 2010 - Incorporated by reference to
                  Exhibit (g)(2) to Post-Effective Amendment No. 92 of
                  Registrant's Registration Statement on Form N-1A (File Nos.
                  2-29901 and 811-1716), filed with the Securities and Exchange
                  Commission on October 25, 2010.

      (h)   (1)   Transfer Agency Agreement between the Registrant and
                  AllianceBernstein Investor Services, Inc. - Incorporated by
                  reference to Exhibit 9 to Post-Effective Amendment No. 63 of
                  Registrant's Registration Statement on Form N-1A (File Nos.
                  2-29901 and 811-1716), filed with the Securities and Exchange
                  Commission on January 30, 1998.

            (2)   Form of Amendment to Transfer Agency Agreement between the
                  Registrant and AllianceBernstein Investor Services, Inc. -
                  Incorporated by reference to Exhibit (h)(2) to Post-Effective
                  Amendment No. 82 of Registrant's Registration Statement on
                  Form N-1A (File Nos. 2-29901 and 811-1716), filed with the
                  Securities and Exchange Commission on October 31, 2006.

            (3)   Form of Expense Limitation Agreement, dated July 6, 2011
                  between the Registrant, on behalf of AllianceBernstein
                  International Focus 40 Portfolio, and AllianceBernstein L.P. -
                  Incorporated by reference to Exhibit (h)(3) to Post-Effective
                  Amendment No. 99 of Registrant's Registration Statement on
                  Form N-1A (File Nos. 2-29901 and 811-1716), filed with the
                  Securities and Exchange Commission on July 6, 2011.


      (i)   Opinion and Consent of Seward & Kissel LLP - Filed herewith.


      (j)   Not applicable.

      (k)   Not applicable.

      (l)   Not applicable.

      (m)   Rule 12b-1 Plan - See Exhibit (e)(1) hereto.

      (n)   Amended and Restated Rule 18f-3 Plan, dated March 9, 2011, -
            Incorporated by reference to Exhibit (n) to Post-Effective Amendment
            No. 95 of Registrant's Pos-Ex filing to Registration Statement on
            Form N-1A (File Nos. 2-29901 and 811-1716), filed with the
            Securities and Exchange Commission on May 26, 2011.

      (o)   Not applicable.

      (p)   (1)   Code of Ethics for the Fund - Incorporated by reference to
                  Exhibit (p)(1) to Post-Effective Amendment No. 74 of the
                  Registration Statement on Form N-1A of AllianceBernstein Bond
                  Fund, Inc. (File Nos. 2-48227 and 811-2383), filed with the
                  Securities and Exchange Commission on October 6, 2000, which
                  is substantially identical in all material respects except as
                  to the party which is the Registrant.

            (2)   Code of Ethics for the AllianceBernstein L.P. and
                  AllianceBernstein Investments, Inc. - Incorporated by
                  reference to Exhibit (p)(2) to Post-Effective Amendment No. 39
                  of the Registration Statement on Form N-1A of
                  AllianceBernstein Large Cap Growth Fund, Inc. (File Nos.
                  33-49530 and 811-6730), filed with the Securities and Exchange
                  Commission on October 15, 2009.

Other Exhibits:

            Powers of Attorney for: John H. Dobkin, Michael J. Downey, William
            H. Foulk, Jr., D. James Guzy, Nancy P. Jacklin, Robert M. Keith,
            Garry L. Moody, Marshall C. Turner, Jr. and Earl D. Weiner -
            Incorporated by reference to Other Exhibits to Post-Effective
            Amendment No. 101 of Registrant's Registration Statement on Form
            N-1A (File Nos. 2-29901 and 811-1716), filed with the Securities and
            Exchange Commission on August 5, 2011.

ITEM 29.    Persons Controlled by or under Common Control with Registrant.

            None.

ITEM 30.    Indemnification

      It is the Registrant's policy to indemnify its directors and officers,
employees and other agents to the maximum extent permitted by Section 2-418 of
the General Corporation Law of the State of Maryland, which is incorporated by
reference herein, and as set forth in Article NINTH of Registrant's Articles of
Restatement of Articles of Incorporation, filed as Exhibit (a) in response to
Item 28, Article IX of the Registrant's Amended and Restated By-Laws filed as
Exhibit (b) in response to Item 28 and Section 10 of the Distribution Services
Agreement filed as Exhibit (e)(1) in response to Item 28, all as set forth
below. The liability of the Registrant's directors and officers is dealt with in
Article NINTH of Registrant's articles of Restatement of Articles of
Incorporation, as set forth below. The Adviser's liability for any loss suffered
by the Registrant or its shareholders is set forth in Section 4 of the
Investment Advisory Contract filed as Exhibit (d) in response to Item 28, as set
forth below.

      ARTICLE NINTH OF THE REGISTRANT'S ARTICLES OF RESTATEMENT OF ARTICLES OF
INCORPORATION READS AS FOLLOWS:

      NINTH: (a) To the fullest extent that limitations on the liability of
directors and officers are permitted by the Maryland General Corporation Law, no
director or officer of the Corporation shall have any liability to the
Corporation or its stockholders for damages. This limitation on liability
applies to events occurring at the time a person serves as a director or officer
of the Corporation whether or not such person is a director or officer at the
time of any proceeding in which liability is asserted.

      (b) The Corporation shall indemnify and advance expenses to its currently
acting and its former directors to the fullest extent that indemnification of
directors is permitted by the Maryland General Corporation Law. The Corporation
shall indemnify and advance expenses to its officers to the same extent as its
directors and to such further extent as is consistent with the law. The Board of
Directors may by By-Law, resolution or agreement make further provisions for
indemnification of directors, officers, employees and agents to the fullest
extent permitted by the Maryland General Corporation Law.

      (c) No provision of this Article shall be effective to protect or purport
to protect any director or officer of the Corporation against any liability to
the Corporation or its security holders to which he would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.

      (d) References to the Maryland General Corporation Law in this Article are
to the law as from time to time amended. No further amendment to the Articles of
Incorporation of the Corporation shall effect any right of any person under this
Article based on any event, omission or proceeding prior to such amendment.

      ARTICLE IX OF THE REGISTRANT'S AMENDED AND RESTATED BY-LAWS READS AS
FOLLOWS:

            To the maximum extent permitted by Maryland law in effect from time
      to time, the Corporation shall indemnify and, without requiring a
      preliminary determination of the ultimate entitlement to indemnification,
      shall pay or reimburse reasonable expenses in advance of final disposition
      of a proceeding to (a) any individual who is a present or former director
      or officer of the Corporation and who is made or threatened to be made a
      party to the proceeding by reason of his or her service in any such
      capacity or (b) any individual who, while a director or officer of the
      Corporation and at the request of the Corporation, serves or has served as
      a director, officer, partner or trustee of another corporation, real
      estate investment trust, partnership, joint venture, trust, employee
      benefit plan or other enterprise and who is made or threatened to be made
      a party to the proceeding by reason of his or her service in any such
      capacity. The Corporation may, with the approval of its Board of Directors
      or any duly authorized committee thereof, provide such indemnification and
      advance for expenses to a person who served a predecessor of the
      Corporation in any of the capacities described in (a) or (b) above and to
      any employee or agent of the Corporation or a predecessor of the
      Corporation. The termination of any claim, action, suit or other
      proceeding involving any person, by judgment, settlement (whether with or
      without court approval) or conviction or upon a plea of guilty or nolo
      contendere, or its equivalent, shall not create a presumption that such
      person did not meet the standards of conduct required for indemnification
      or payment of expenses to be required or permitted under Maryland law,
      these Bylaws or the Charter. Any indemnification or advance of expenses
      made pursuant to this Article shall be subject to applicable requirements
      of the 1940 Act. The indemnification and payment of expenses provided in
      these Bylaws shall not be deemed exclusive of or limit in any way other
      rights to which any person seeking indemnification or payment of expenses
      may be or may become entitled under any bylaw, regulation, insurance,
      agreement or otherwise.

            Neither the amendment nor repeal of this Article, nor the adoption
      or amendment of any other provision of the Bylaws or Charter inconsistent
      with this Article, shall apply to or affect in any respect the
      applicability of the preceding paragraph with respect to any act or
      failure to act which occurred prior to such amendment, repeal or adoption.

            The Investment Advisory Contract between the Registrant and
      AllianceBernstein L.P. provides that AllianceBernstein L.P. will not be
      liable under such agreements for any mistake of judgment or in any event
      whatsoever, except for lack of good faith, and that nothing therein shall
      be deemed to protect, or purport to protect, AllianceBernstein L.P.
      against any liability to Registrant or its security holders to which it
      would otherwise be subject by reason of reckless disregard of its
      obligations and duties thereunder.

            The Distribution Services Agreement between the Registrant and
      AllianceBernstein Investments, Inc. ("ABI") provides that Registrant will
      indemnify, defend and hold ABI and any person who controls it within the
      meaning of Section 15 of the Securities Act of 1933, as amended (the
      "Securities Act"), free and harmless from and against any and all claims,
      demands, liabilities and expenses which ABI or any such controlling person
      may incur arising out of or based upon any alleged untrue statement of a
      material fact contained in Registrant's registration statement, Prospectus
      or Statement of Additional Information or arising out of, or based upon
      any alleged omission to state a material fact required to be stated in any
      one of the foregoing or necessary to make the statements in any one of the
      foregoing not misleading, provided that nothing therein shall be so
      construed as to protect ABI against any liability to the Registrant or its
      security holders to which it would otherwise be subject by reason of
      willful misfeasance, bad faith, or gross negligence with the performance
      of its duties thereunder, or by reason of reckless disregard of its
      obligation and duties thereunder.

            The foregoing summaries are qualified by the entire text of
      Registrant's articles of Restatement of Articles of Incorporation, Amended
      and Restated By-Laws, the Investment Advisory Contact between the
      Registrant and AllianceBernstein L.P. and the Distribution Services
      Agreement between the Registrant and ABI.

            Insofar as indemnification for liabilities arising under the
      Securities Act may be permitted to directors, officers and controlling
      persons of the Registrant pursuant to the foregoing provisions, or
      otherwise, the Registrant has been advised that, in the opinion of the
      Securities and Exchange Commission, such indemnification is against public
      policy as expressed in the Securities Act and is, therefore,
      unenforceable. In the event that a claim for indemnification against such
      liabilities (other than the payment by the Registrant of expenses incurred
      or paid by a director, officer or controlling person of the Registrant in
      the successful defense of any action, suit or proceeding) is asserted by
      such director, officer or controlling person in connection with the
      securities being registered, the Registrant will, unless in the opinion of
      its counsel the matter has been settled by controlling precedent, submit
      to a court of appropriate jurisdiction the question of whether such
      indemnification by it is against public policy as expressed in the
      Securities Act and will be governed by the final adjudication of such
      issue.

            In accordance with Release No. IC-11330 (September 2, 1980), the
      Registrant will indemnify its directors, officers, investment adviser and
      principal underwriters only if (1) a final decision on the merits was
      issued by the court or other body before whom the proceeding was brought
      that the person to be indemnified (the "indemnitee") was not liable by
      reason of willful misfeasance, bad faith, gross negligence or reckless
      disregard of the duties involved in the conduct of his office ("disabling
      conduct") or (2) a reasonable determination is made, based upon a review
      of the facts, that the indemnitee was not liable by reason of disabling
      conduct, by (a) the vote of a majority of a quorum of the directors who
      are neither "interested persons" of the Registrant as defined in section
      2(a)(19) of the Investment Company Act of 1940 nor parties to the
      proceeding ("disinterested, non-party directors"), or (b) an independent
      legal counsel in a written opinion. The Registrant will advance attorneys
      fees or other expenses incurred by its directors, officers, investment
      adviser or principal underwriters in defending a proceeding, upon the
      undertaking by or on behalf of the indemnitee to repay the advance unless
      it is ultimately determined that he is entitled to indemnification and, as
      a condition to the advance, (1) the indemnitee shall provide a security
      for his undertaking, (2) the Registrant shall be insured against losses
      arising by reason of any lawful advances, or (3) a majority of a quorum of
      disinterested, non-party directors of the Registrant, or an independent
      legal counsel in a written opinion, shall determine, based on a review of
      readily available facts (as opposed to a full trial-type inquiry), that
      there is reason to believe that the indemnitee ultimately will be found
      entitled to indemnification.

ITEM 31.    Business and Other Connections of Investment Adviser.

            The descriptions of AllianceBernstein L.P. under the captions
            "Management of the Fund" in the Prospectus and in the Statement of
            Additional Information constituting Parts A and B, respectively, of
            this Registration Statement are incorporated by reference herein.

            The information as to the directors and executive officers of
            AllianceBernstein Corporation, the general partner of
            AllianceBernstein L.P., set forth in AllianceBernstein L.P.'s Form
            ADV filed with the Securities and Exchange Commission on April 21,
            1988 (File No. 801-32361) and amended through the date hereof, is
            incorporated by reference.

ITEM 32.    Principal Underwriters.

            (a) ABI, the Registrant's Principal Underwriter in connection with
            the sale of shares of the Registrant. ABI is the Principal
            Underwriter or Distributor for the following investment companies:

               AllianceBernstein Balanced Shares, Inc.
               AllianceBernstein Blended Style Series, Inc.
               AllianceBernstein Bond Fund, Inc.
               AllianceBernstein Core Opportunities Fund, Inc.
               AllianceBernstein Corporate Shares
               AllianceBernstein Equity Income Fund, Inc.
               AllianceBernstein Exchange Reserves
               AllianceBernstein Fixed-Income Shares, Inc.
               AllianceBernstein Global Bond Fund, Inc.
               AllianceBernstein Global Growth Fund, Inc.
               AllianceBernstein Global Real Estate Investment Fund, Inc.
               AllianceBernstein Global Thematic Growth Fund, Inc.
               AllianceBernstein Greater China '97 Fund, Inc.
               AllianceBernstein Growth and Income Fund, Inc.
               AllianceBernstein High Income Fund, Inc.
               AllianceBernstein Institutional Funds, Inc.
               AllianceBernstein Intermediate California Municipal Portfolio(1)
               AllianceBernstein Intermediate Diversified Municipal Portfolio(1)
               AllianceBernstein Intermediate New York Municipal Portfolio(1)
               AllianceBernstein International Portfolio(1)
               AllianceBernstein International Growth Fund, Inc.
               AllianceBernstein Large Cap Growth Fund, Inc.
               AllianceBernstein Municipal Income Fund, Inc.
               AllianceBernstein Municipal Income Fund II
               AllianceBernstein Short Duration Portfolio(1)
               AllianceBernstein Small/Mid Cap Growth Fund, Inc.
               AllianceBernstein Tax-Managed International Portfolio(1)
               AllianceBernstein Trust
               AllianceBernstein Unconstrained Bond Fund, Inc.
               AllianceBernstein Variable Products Series Fund, Inc.
               Sanford C. Bernstein Fund II, Inc.
               The AllianceBernstein Pooling Portfolios
               The AllianceBernstein Portfolios

--------
(1)   This is a retail Portfolio of Sanford C. Bernstein Fund, Inc. which
      consists of Classes A, B and C shares.

            (b) The following are the Directors and Officers of ABI, the
            principal place of business of which is 1345 Avenue of the Americas,
            New York, New York, 10105.

                               POSITIONS AND                POSITIONS AND
                               OFFICES WITH                 OFFICES WITH
NAME                           UNDERWRITER                  REGISTRANT
-----                          --------------               --------------

Directors
---------

Robert M. Keith                Director and President       President and Chief
                                                            Executive Officer

Mark R. Manley                 Director and Secretary

Officers
--------

Emilie D. Wrapp                Senior Vice President,       Secretary
                               Assistant General Counsel
                               and Assistant Secretary

Kenneth F. Barkoff             Senior Vice President

Laurence H. Bertan             Senior Vice President
                               and Assistant Secretary

Peter G. Callahan              Senior Vice President

Kevin T. Cannon                Senior Vice President

Russell R. Corby               Senior Vice President

John W. Cronin                 Senior Vice President

John C. Endahl                 Senior Vice President

Adam E. Engelhardt             Senior Vice President

John Edward English            Senior Vice President

Edward J. Farrell              Senior Vice President
                               and Controller

Michael Foley                  Senior Vice President

Mark D. Gersten                Senior Vice President

Mark A. Gessner                Senior Vice President

Kenneth L. Haman               Senior Vice President

Michael S. Hart                Senior Vice President

Joseph P. Healy                Senior Vice President

Mary V. Kralis Hoppe           Senior Vice President

Harold Hughes                  Senior Vice President

Scott Hutton                   Senior Vice President

Ajai M. Kaul                   Senior Vice President

Georg Kyd-Rebenburg            Senior Vice President

Eric L. Levinson               Senior Vice President

James M. Liptrot               Senior Vice President
                               and Assistant Controller

William Marsalise              Senior Vice President

Joanna D. Murray               Senior Vice President

Daniel A. Notto                Senior Vice President,
                               Counsel and Assistant
                               Secretary

John J. O'Connor               Senior Vice President

Suchet Padhye (Pandurang)      Senior Vice President

Mark A. Pletts                 Senior Vice President

Guy Prochilo                   Senior Vice President

Miguel A. Rozensztroch         Senior Vice President

Stephen C. Scanlon             Senior Vice President

John P. Schmidt                Senior Vice President

Gregory K. Shannahan           Senior Vice President

Elizabeth M. Smith             Senior Vice President

Mark Sullivan                  Senior Vice President

Peter J. Szabo                 Senior Vice President

Joseph T. Tocyloski            Senior Vice President

Derek Yung                     Senior Vice President

William G. Beagle              Vice President

DeAnna D. Beedy                Vice President

Christopher M. Berenbroick     Vice President

Chris Boeker                   Vice President

Brandon W. Born                Vice President

James J. Bracken               Vice President

Richard A. Brink               Vice President

Shaun D. Bromley               Vice President

Brian Buehring                 Vice President

Michael A. Capella             Vice President

Alice L. Chan                  Vice President

Laura A. Channell              Vice President

Nelson Kin Hung Chow           Vice President

Flora Chuang                   Vice President

Peter T. Collins               Vice President

Michael C. Conrath             Vice President

Dwight P. Cornell              Vice President

Robert A. Craft                Vice President

Silvio Cruz                    Vice President

Walter F. Czaicki              Vice President

John M. D'Agostino             Vice President

Christine M. Dehil             Vice President

Giuliano De Marchi             Vice President

Ralph A. DiMeglio              Vice President

Joseph T. Dominguez            Vice President

Barbara Anne Donovan           Vice President

Robert Dryzgula                Vice President

Daniel Ennis                   Vice President

Gregory M. Erwinski            Vice President

Michael J. Ferraro             Vice President

Yuko Funato                    Vice President

Kevin T. Gang                  Vice President

Mark C. Glatley                Vice President

Stefanie M. Gonzalez           Vice President

Kimberly A. Collins Gorab      Vice President

Tetsuya Hada                   Vice President

Brian P. Hanna                 Vice President

Kenneth Handler                Vice President

Terry L. Harris                Vice President

Oliver Herson                  Vice President

Lia A. Horii                   Vice President

Vincent Huang                  Vice President

Eric S. Indovina               Vice President

Tina Kao                       Vice President

Hiroshi Kimura                 Vice President

Scott M. Krauthamer            Vice President

Stephen J. Laffey              Vice President and
                               Counsel                      Assistant Secretary

Jeffrey J. Lamb                Vice President

Christopher J. Larkin          Vice President

Chang Hyun Lee                 Vice President

Jonathan M. Liang              Vice President

Karen (Yeow Ping) Lim          Vice President

Laurel E. Lindner              Vice President

Darren L. Luckfield            Vice President

Todd Mann                      Vice President

Silvia Manz                    Vice President

Osama Mari                     Vice President

Russell B. Martin              Vice President

Nicola Meotti                  Vice President

Yuji Mihashi                   Vice President

Bart D. Miller                 Vice President

David Mitchell                 Vice President

Thomas F. Monnerat             Vice President

Paul S. Moyer                  Vice President

Juan Mujica                    Vice President

Jennifer A. Mulhall            Vice President

John F. Multhauf               Vice President

Robert D. Nelms                Vice President

Jamie A. Nieradka              Vice President

Suzanne E. Norman              Vice President

Alex E. Pady                   Vice President

David D. Paich                 Vice President

Kimchu Perrington              Vice President

Leo J. Peters IV               Vice President

Thomas C. Pfeifer              Vice President

Jeffrey Pietragallo            Vice President

Joseph J. Proscia              Vice President

John D. Prosperi               Vice President

Carol H. Rappa                 Vice President

Jessie A. Reich                Vice President

James A. Rie                   Vice President

Lauryn A. Rivello              Vice President

Patricia A. Roberts            Vice President

Claudio Rondolini              Vice President

Gregory M. Rosta               Vice President and
                               Assistant Secretary

Craig Schorr                   Vice President

Kristin M. Seabold             Vice President

William D. Shockley            Vice President

Karen Sirett                   Vice President

John F. Skahan                 Vice President

Orlando Soler                  Vice President

Daniel L. Stack                Vice President

Jason P. Stevens               Vice President

Peter Stiefel                  Vice President

Sharon Su                      Vice President

Atsuko Takeuchi                Vice President

Scott M. Tatum                 Vice President

Jay D. Tini                    Vice President

William Tohme                  Vice President

Keri-Ann S. Toritto            Vice President

Laura L. Tocchet               Vice President

Louis L. Tousignant            Vice President

Ming (Ming Kai) Tung           Vice President

Christian B. Verlingo          Vice President

Christian G. Wilson            Vice President

Stephen M. Woetzel             Vice President

Chapman Tsan Man Wong          Vice President

Joanna Wong (Chun-Yen)         Vice President

Yoshinari Yagi                 Vice President

Isabelle (Hsin-I) Yen          Vice President

Oscar Zarazua                  Vice President

Martin J. Zayac                Vice President

Aimee K. Alan                  Assistant Vice
                               President

Constantin L. Andreae          Assistant Vice
                               President

Steven D. Barbesh              Assistant Vice
                               President

Claudio Roberto Bello          Assistant Vice
                               President

Roy C. Bentzen                 Assistant Vice
                               President


Robert A. Brazofsky            Assistant Vice
                               President

James M. Broderick             Assistant Vice
                               President

Erik Carell                    Assistant Vice
                               President

Christopher J. Carrelha        Assistant Vice
                               President

Mikhail Cheskis                Assistant Vice
                               President

Daisy (Sze Kie) Chung          Assistant Vice
                               President

Francesca Dattola              Assistant Vice
                               President

Marc J. Della Pia              Assistant Vice
                               President

Arend J. Elston                Assistant Vice
                               President

Robert A. Fiorentino           Assistant Vice
                               President

Cecilia N. Gomes               Assistant Vice
                               President

Friederike Grote               Assistant Vice
                               President

Joseph Haag                    Assistant Vice
                               President

Brian M. Horvath               Assistant Vice
                               President

Sylvia Hsu                     Assistant Vice
                               President

Isabelle Husson                Assistant Vice
                               President

Jang Joong Kim                 Assistant Vice
                               President

Junko Kimura                   Assistant Vice
                               President

Aaron S. Kravitz               Assistant Vice
                               President

Edward G. Lamsback             Assistant Vice
                               President

Ginnie Li                      Assistant Vice
                               President

Jim Liu                        Assistant Vice
                               President

Mark J. Maier                  Assistant Vice
                               President

Matthew J. Malvey              Assistant Vice
                               President

David G. Mitchell              Assistant Vice
                               President

Rachel A. Moon                 Assistant Vice
                               President

Nora E. Murphy                 Assistant Vice
                               President

William N. Parker              Assistant Vice
                               President

Brian W. Paulson               Assistant Vice
                               President

Steven Pavlovic                Assistant Vice
                               President

Pablo Perez                    Assistant Vice
                               President

Anthony W. Piccola             Assistant Vice
                               President

Jared M. Piche                 Assistant Vice
                               President

Mark A. Quarno                 Assistant Vice
                               President

Jennifer B. Robinson           Assistant Vice
                               President

Jennifer R. Rolf               Assistant Vice
                               President

Richard A. Schwam              Assistant Vice
                               President

Michael J. Shavel              Assistant Vice
                               President

Chizu Soga                     Assistant Vice
                               President

Chang Min Song                 Assistant Vice
                               President

Matthew M. Stebner             Assistant Vice
                               President

Michiyo Tanaka                 Assistant Vice
                               President

Miyako Taniguchi               Assistant Vice
                               President

Laurence Vandecasteele         Assistant Vice
                               President

Annabelle C. Watson            Assistant Vice
                               President

Wendy Weng                     Assistant Vice
                               President

Jeffrey Western                Assistant Vice
                               President

William Wielgolewski           Assistant Vice
                               President

Colin T. Burke                 Assistant Secretary


            (c)   Not applicable.

ITEM 33.    Location of Accounts and Records.

            The majority of the accounts, books and other documents required to
            be maintained by Section 31(a) of the Investment Company Act of 1940
            and the Rules thereunder are maintained as follows: journals,
            ledgers, securities records and other original records are
            maintained principally at the offices of AllianceBernstein Investor
            Services, Inc., P.O. Box 786003, San Antonio, Texas 78278-6003 and
            at the offices of State Street Bank and Trust Company, One Lincoln
            Street, Boston, Massachusetts 02111. All other records so required
            to be maintained are maintained at the offices of AllianceBernstein
            L.P., 1345 Avenue of the Americas, New York, New York 10105.

ITEM 34.    Management Services.

            Not applicable.

ITEM 35.    Undertakings.

            Not applicable.


                                   SIGNATURE


      Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant certifies
that it meets all of the requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, duly authorized, in the City and State of New
York, on the 30th day of August, 2011.


                                          ALLIANCEBERNSTEIN CAP FUND, INC.

                                          By: Robert M. Keith *
                                              ------------------
                                              Robert M. Keith
                                              President


      Pursuant to the requirements of the Securities Act of l933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:


            Signature                    Title                    Date
            ---------                    -----                    ----

(1) Principal Executive Officer:

    Robert M. Keith*                   President and Chief     August 30, 2011
    ---------------                    Executive Officer
    Robert M. Keith

(2) Principal Financial and
    Accounting Officer:

    /s/ Joseph J. Mantineo             Treasurer and           August 30, 2011
    ----------------------             Chief Financial
        Joseph J. Mantineo             Officer


(3) All of the Directors:
    ---------------------

    John H. Dobkin*
    Michael J. Downey*
    William H. Foulk, Jr.*
    D. James Guzy*
    Nancy P. Jacklin*
    Garry L. Moody*
    Robert M. Keith*
    Marshall C. Turner, Jr.*
    Earl D. Weiner*

    *By:  /s/ Stephen J. Laffey                                August 30, 2011
          ----------------------
              Stephen J. Laffey
              (Attorney-in-fact)



                               Index to Exhibits
                              ------------------

Exhibit No.     Description of Exhibits
-----------    ------------------------

(d)             Form of Investment Advisory Contact

(i)             Opinion and Consent of Seward & Kissel LLP



SK 00250 0467 1216441

EX-99.D

                          INVESTMENT ADVISORY CONTRACT


                        ALLIANCEBERNSTEIN CAP FUND, INC.

                          1345 Avenue of the Americas
                            New York, New York 10105




                                      July 22, 1992, as amended
                                      September 7, 2004, December 15, 2004,
                                      December 23, 2009, August 2, 2010, October
                                      26, 2010, July 6, 2011 and [    ], 2011

AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York 10105

Dear Sirs:

      We herewith confirm our agreement with you as follows:

      1. We are currently authorized to issue separate classes of shares and our
Board of Directors is authorized to reclassify and issue any unissued shares to
any number of additional classes or series (Portfolios) each having its own
investment objective, policies and restrictions, all as more fully described in
the prospectus and statement of additional information constituting parts of our
Registration Statement on Form N-1A filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended (the "Registration Statement").
We are engaged in the business of investing and reinvesting our capital of each
of our Portfolios in securities of the type and in accordance with the
limitations specified in our Certificate of Incorporation, By-Laws, Registration
Statement, and any representation made in our Prospectus, all in such manner and
to such extent as may from time to time be authorized by our Board of Directors.
We enclose copies of the documents listed above and will from time to time
furnish you with any amendments thereof. We will also keep you currently advised
as to the make-up of the portfolio of securities in each of our Portfolios.

      2.    (a) We hereby employ you to advise us in respect of investing and
reinvestment of our capital in each of our Portfolios as above specified, and,
without limiting the generality of the foregoing, to provide management and
other services specified below.

            (b) You on your own motion will advise us whenever in your opinion
conditions are such as to make it desirable that a specific security or group of
securities be eliminated from the portfolio of securities of a Portfolio or
added to it. You will also keep us in touch with important developments
affecting any Portfolio and on your own initiative will furnish us from time to
time with such information as you may believe appropriate for this purpose,
whether concerning the individual companies whose securities are included in our
Portfolios, or the industries in which they engage, or the economy generally.
Similar information is to be furnished us with reference to securities which you
may believe desirable for inclusion in a Portfolio. You will also furnish us
with such statistical information with respect to the securities in each of our
Portfolios which we may hold or contemplate purchasing as you may believe
appropriate or as we reasonably may request. In advising us, you will bear in
mind the limitations imposed by our Certificate of Incorporation and statement
of policy included in our Registration Statement and the limitations in the
Investment Company Act and of the Internal Revenue Code in respect of regulated
investment companies for each of our Portfolios.

            (c) It is understood that you will from time to time employ or
associate with yourselves such persons as you believe to be particularly fitted
to assist you in the execution of this contract, the compensation of such
persons to be paid by you. No obligation may be incurred on our behalf in any
such respect. During the continuance of this agreement you will provide persons
satisfactory to our Board of Directors to serve as our officers. You or your
affiliates will also provide persons, who may be our officers, to render such
clerical, accounting, administrative and other services to us as we may from
time to time request of you. Such personnel may be employees of you and your
affiliates. We will pay to you or your affiliates the cost of such personnel for
rendering such services to us at such rates as shall from time to time be agreed
upon between us, provided that all time devoted to the investment or
reinvestment of securities in each of our Portfolios shall be for your account.
Nothing contained herein shall be construed to restrict our right to hire our
own employees or to contract for services to be performed by third parties.
Furthermore, you or your affiliates (other than us) shall furnish us without
charge with such management supervision and assistance and such office
facilities as you may believe appropriate or as we may reasonably request
subject to the requirements of any regulatory authority to which you may be
subject.

      3. It is further agreed that, except as provided in paragraph 2(c) hereof,
you shall be responsible for the following expenses incurred by us during each
year or portion thereof that this agreement is in effect between us: (i) the
compensation of any of our directors, officers, and employees who devote less
than all of their time to our affairs and who devote part of their time to the
affairs of you and your affiliates, (ii) expenses of computing the net asset
value of the shares of each of our Portfolios to the extent such computation is
required under applicable Federal securities laws, (iii) expenses of office
rental, and (iv) clerical and bookkeeping expenses. We shall be responsible and
hereby assume the obligation for payment of all our other expenses including (a)
brokerage and commission expenses, (b) Federal, State or local taxes, including
issue and transfer taxes, incurred by or levied on us, (c) interest charges on
borrowing, (d) fees and expenses of registering the shares of each of our
Portfolios under the appropriate Federal securities laws (other than expenses
relative to the initial registration) and of qualifying the shares of each of
our Portfolios under applicable State securities laws, including expenses
attendant upon renewing and increasing such registrations and qualifications,
(e) expenses of printing and distributing our prospectuses and other reports to
stockholders, (f) costs of proxy solicitations, (g) charges and expenses
incurred by us in acting as transfer agent and registrar of the shares of each
of our Portfolios, (h) charges and expenses of our custodian, (i) compensation
of our officers, directors and employees who do not devote any part of their
time to the affairs of you or your affiliates, (j) legal and auditing expenses,
(k) payment of all investment advisory fees (including the fees payable to you
hereunder), (1) costs of stationery and supplies, (m) and such promotional
expenses as may be contemplated by an effective plan pursuant to Rule 12b-1
under the Act; provided, however, that our payment of such promotional expenses
shall be in the amounts, and in accordance with the procedures, set forth in
such plan.

      4. We shall expect of you, and you will give us the benefit of, your best
judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you shall not be liable
hereunder for any mistake of judgment or in any event whatsoever, except for
lack of good faith, provided that nothing herein shall be deemed to protect, or
purport to protect, you against any liability to us or to our security holders
to which you would otherwise be subject by reason of your reckless disregard of
your obligations and duties hereunder.

      5.    (a) In consideration of the foregoing we will pay you, in the case
of the Small Cap Growth Portfolio, a monthly fee at an annualized rate of .75 of
1.00% of the first $2.5 billion, .65 of 1.00% of the excess over $2.5 billion up
to $5 billion and .60 of 1.00% of the excess over $5 billion of the average
daily net assets of the Small Cap Growth Portfolio managed by you. In the event
of any termination of this agreement, your compensation will be calculated on
the basis of a period ending on the last day on which this agreement is in
effect, subject to proration based on the number of days elapsed in the current
period as a percentage of the total number of days in such period.

            (b) In consideration of the foregoing we will pay you, in the case
of the U.S. Strategic Research Portfolio, a monthly fee at an annualized rate of
..75 of 1% of the first $2.5 billion, .65 of 1% of the excess over $2.5 billion
up to $5 billion and .60 of 1% of the excess over $5 billion of the average
daily net assets of the U.S. Strategic Research Portfolio managed by you. Your
compensation for the period from the date hereof through the last day of the
month in which the effective date hereof occurs shall be prorated according to
the proportion which such period bears to such full month. In the event of any
termination of this agreement, your compensation will be calculated on the basis
of a period ending on the last day on which this agreement is in effect, subject
to proration based on the number of days elapsed in the current period as a
percentage of the total number of days in such period.

            (c) In consideration of the foregoing we will pay you, in the case
of the AllianceBernstein Market Neutral Strategy-U.S., a monthly fee at an
annualized rate of 1.25% of the average daily net assets of the
AllianceBernstein Market Neutral Strategy-U.S. managed by you. Your compensation
for the period from the date hereof through the last day of the month in which
the effective date hereof occurs shall be prorated according to the proportion
which such period bears to such full month. In the event of any termination of
this agreement, your compensation will be calculated on the basis of a period
ending on the last day on which this agreement is in effect, subject to
proration based on the number of days elapsed in the current period as a
percentage of the total number of days in such period.

            (d) In consideration of the foregoing we will pay you, in the case
of the AllianceBernstein Market Neutral Strategy-Global, a monthly fee at an
annualized rate of 1.25% of the average daily net assets of the
AllianceBernstein Market Neutral Strategy-Global managed by you. Your
compensation for the period from the date hereof through the last day of the
month in which the effective date hereof occurs shall be prorated according to
the proportion which such period bears to such full month. In the event of any
termination of this agreement, your compensation will be calculated on the basis
of a period ending on the last day on which this agreement is in effect, subject
to proration based on the number of days elapsed in the current period as a
percentage of the total number of days in such period.

            (e) In consideration of the foregoing we will pay you, in the case
of the AllianceBernstein International Discovery Equity Portfolio, a monthly fee
at an annualized rate of 1% of the first $1 billion, .95 of 1% of the excess
over $1 billion up to $2 billion, .90 of 1% of the excess over $2 billion up to
$3 billion and .85 of 1% of the excess over $3 billion of the average daily net
assets of the AllianceBernstein International Discovery Equity Portfolio managed
by you. Your compensation for the period from the date hereof through the last
day of the month in which the effective date hereof occurs shall be prorated
according to the proportion which such period bears to such full month. In the
event of any termination of this agreement, your compensation will be calculated
on the basis of a period ending on the last day on which this agreement is in
effect, subject to proration based on the number of days elapsed in the current
period as a percentage of the total number of days in such period.

            (f) In consideration of the foregoing we will pay you, in the case
of the AllianceBernstein International Focus 40 Portfolio, a monthly fee at an
annualized rate of 1% of the first $1 billion, .95 of 1% of the excess over $1
billion up to $2 billion, .90 of 1% of the excess over $2 billion up to $3
billion and .85 of 1% of the excess over $3 billion of the average daily net
assets of the AllianceBernstein International Focus 40 Portfolio managed by you.
Your compensation for the period from the date hereof through the last day of
the month in which the effective date hereof occurs shall be prorated according
to the proportion which such period bears to such full month. In the event of
any termination of this agreement, your compensation will be calculated on the
basis of a period ending on the last day on which this agreement is in effect,
subject to proration based on the number of days elapsed in the current period
as a percentage of the total number of days in such period.

            (g) In consideration of the foregoing we will pay you, in the case
of the AllianceBernstein Emerging Markets Multi-Asset Portfolio, a monthly fee
at an annualized rate of 1% of the first $1 billion, .95 of 1% of the excess
over $1 billion up to $2 billion, .90 of 1% of the excess over $2 billion up to
$3 billion and .85 of 1% of the excess over $3 billion of the average daily net
assets of the AllianceBernstein Emerging Markets Multi-Asset Portfolio managed
by you. Your compensation for the period from the date hereof through the last
day of the month in which the effective date hereof occurs shall be prorated
according to the proportion which such period bears to such full month. In the
event of any termination of this agreement, your compensation will be calculated
on the basis of a period ending on the last day on which this agreement is in
effect, subject to proration based on the number of days elapsed in the current
period as a percentage of the total number of days in such period.

      6. This agreement shall become effective on the date hereof and shall
continue in force until September 30, 1992 with respect to the Small Cap Growth
Portfolio, December 23, 2011 with respect to the U.S. Strategic Research
Portfolio, August 2, 2012 with respect to the AllianceBernstein Market Neutral
Strategy-U.S. and the AllianceBernstein Market Neutral Strategy-Global, October
26, 2012 with respect to AllianceBernstein International Discovery Equity
Portfolio, July 6, 2013 with respect to AllianceBernstein International Focus 40
Portfolio and [ ], 2013 with respect to AllianceBernstein Emerging Markets
Multi-Asset Portfolio and continue in effect thereafter with respect to a
Portfolio provided that such continuance is specifically approved at least
annually by our Board of Directors (including a majority of our directors who
are not parties to this agreement or interested persons, as defined in the
Investment Company Act, of any such party), or by vote of a majority of our
outstanding voting securities (as defined in the Investment Company Act) of each
Portfolio. This agreement may be terminated with respect to any Portfolio at any
time, without the payment of any penalty, by vote of a majority of the
outstanding voting securities (as so defined) of such Portfolio, or by a vote of
a majority of our entire Board of Directors on sixty days' written notice to
you, or by you with respect to any Portfolio on sixty days' written notice to
us.

      7. This agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged and this agreement shall terminate automatically in the
event of any such transfer, assignment, sale, hypothecation or pledge. The terms
"transfer", "assignment", and "sale" as used in this paragraph shall have the
meanings ascribed thereto by governing and any interpretation thereof contained
in rules or regulations promulgated by the Commission thereunder.

      8.    (a) Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, or
the right of any of your employees, or any of the Directors of AllianceBernstein
Corporation, general partner, who may also be a director, officer or employee of
ours, or persons otherwise interested persons with respect to us (within the
meaning of the Investment Company Act of 1940) to engage in any other business
or to devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, firm, individual or association.

            (b) You will notify us of any change in the general partners of your
partnership within a reasonable time after such change.

      9. It is understood that, whether or not we follow the investment advice
and recommendations given by you to us hereunder, the provisions contained
herein concerning your compensation hereunder shall be binding on you and us.

      If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.


                                           Very truly yours,


                                           ALLIANCEBERNSTEIN CAP FUND, INC.



                                           By:
                                              ----------------------------------
                                              Name:  Stephen J. Laffey
                                              Title:    Assistant Secretary


Accepted: As of July 22, 1992, as amended September 7, 2004, December 15, 2004,
December 23, 2009, August 2, 2010, October 26, 2010, July 6, 2011 and [ ], 2011

AllianceBernstein L.P.


By:
   ------------------------------------
   Name:   Emilie D. Wrapp
   Title:     Assistant Secretary

EX-99.I

                              SEWARD & KISSEL LLP
                               1200 G STREET, NW
                                   SUITE 350
                              WASHINGTON, DC 20005

                           Telephone: (202) 737-8833
                           Facsimile: (202) 737-5184
                                 www.sewkis.com


                                                    August 30, 2011


AllianceBernstein Cap Fund, Inc.
1345 Avenue of the Americas
New York, New York  10105

Ladies and Gentlemen:

      We have acted as counsel for AllianceBernstein Cap Fund, Inc., a Maryland
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of an indefinite
number of shares, par value $.002 per share, of Class A Common Stock, Class C
Common Stock, Class R Common Stock, Class K Common Stock, Class I Common Stock
and Advisor Class Common Stock, as applicable, (each a "Class" and collectively
the "Shares") of AllianceBernstein Emerging Markets Multi-Asset Portfolio, a
portfolio of the Company (the "Portfolio"). The Company is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company.

      As counsel for the Company, we have participated in the preparation of the
Post-Effective Amendment to the Company's Registration Statement on Form N-1A to
be filed with the Securities and Exchange Commission (the "Commission") to
become effective on August 31, 2011, pursuant to paragraph (b) of Rule 485 under
the Securities Act (as so amended, the "Registration Statement") in which this
letter is included as Exhibit (i). We have examined the Charter and By-Laws of
the Company and all amendments and supplements thereto and have relied upon such
corporate records of the Company and such other documents and certificates as to
factual matters as we have deemed to be necessary to render the opinion
expressed herein.

      Based on such examination, we are of the opinion that the Shares to be
offered for sale pursuant to the Registration Statement are, to the extent of
the number of Shares of the relevant Classes of the Portfolio authorized to be
issued by the Company in its Charter, duly authorized, and, when sold, issued
and paid for as contemplated by the Registration Statement, will have been
validly issued and will be fully paid and nonassessable under the laws of the
State of Maryland.

      We do not express an opinion with respect to any laws other than the laws
of Maryland applicable to the due authorization, valid issuance and
nonassessability of shares of common stock of corporations formed pursuant the
provisions of the Maryland General Corporation Law. Accordingly, our opinion
does not extend to, among other laws, the federal securities laws or the
securities or "blue sky" laws of Maryland or any other jurisdiction. Members of
this firm are admitted to the bars of the State of New York and the District of
Columbia.

      We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement and to the reference to our firm under the
caption "General Information-Counsel" in Part B thereof. In giving this consent,
we do not thereby admit that we are included in the category of persons whose
consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission.


                                                    Very truly yours,

                                                    /s/ Seward & Kissel LLP



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