This is filed pursuant Rule 497(e).
Files Nos. 33-18647 and 811-05398.


[LOGO]                              ALLIANCEBERNSTEIN VARIABLE
                                    PRODUCTS SERIES FUND, INC.

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

c/o Alliance Global Investor Services, Inc.
P. O. Box 786003, San Antonio, Texas 78278-6003
Toll Free (800) 221-5672

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

               STATEMENT OF ADDITIONAL INFORMATION
                           May 3, 2004
                  (as amended October 12, 2004)

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

          This Statement of Additional Information ("SAI") is not
a prospectus but supplements and should be read in conjunction
with the Prospectus dated May 3, 2004 for AllianceBernstein
Variable Products Series Fund, Inc. (the "Fund") that offers
Class A shares. A separate Prospectus and SAI relates to the
Fund's Class B shares. Financial Statements for each Portfolio of
the Fund for the year ended December 31, 2003 are included in
each Portfolio's annual report to shareholders and are
incorporated into this SAI by reference. Copies of the
Prospectuses of the Fund and the annual reports for the
Portfolios of the Fund may be obtained by contacting Alliance
Global Investor Services, Inc. ("AGIS") at the address or
telephone number shown above.

                        TABLE OF CONTENTS

                                                                       PAGE

Introduction...............................................
Investment Policies and Restrictions.......................
      AllianceBernstein Money Market Portfolio.............
      AllianceBernstein Premier Growth Portfolio...........
      AllianceBernstein Growth and Income Portfolio........
      AllianceBernstein U.S. Government/High Grade
         Securities Portfolio..............................
      AllianceBernstein High Yield Portfolio...............
      AllianceBernstein Total Return Portfolio.............
      AllianceBernstein International Portfolio............
      AllianceBernstein Global Bond Portfolio..............
      AllianceBernstein Americas Government Income
         Portfolio.........................................
      AllianceBernstein Global Dollar Government
         Portfolio.........................................
      AllianceBernstein Utility Income Portfolio...........
      AllianceBernstein Growth Portfolio...................
      AllianceBernstein Worldwide Privatization
         Portfolio.........................................
      AllianceBernstein Technology Portfolio...............
      AllianceBernstein Small Cap Growth Portfolio.........
      AllianceBernstein Real Estate Investment Portfolio...
      AllianceBernstein International Value Portfolio......
      AllianceBernstein Small Cap Value Portfolio..........
      AllianceBernstein Value Portfolio....................
      AllianceBernstein U.S. Large Cap Blended
         Style Portfolio...................................
      AllianceBernstein Wealth Appreciation
         Strategy Portfolio................................
      AllianceBernstein Balanced Wealth Strategy
         Portfolio.........................................
      Other Investment Policies............................
      Management of the Fund...............................
      Purchase and Redemption of Shares....................
      Net Asset Value......................................
      Portfolio Transactions...............................
      Dividends, Distributions and Taxes...................
      General Information..................................
      Financial Statements and Report of Independent
         Auditors..........................................
Appendix A - Description of Obligations Issued
   or Guaranteed by U.S. Government Agencies or
Instrumentalities..........................................A-1
Appendix B - Futures Contracts and Options on
   Futures Contracts and Foreign Currencies................B-1
Appendix C - Options.......................................C-1
Appendix D - Additional Information About the
   United Kingdom, Japan, Canada, Mexico and
Argentina..................................................D-1
Appendix E - Statement of Policies and Procedures
   for Voting Proxies......................................E-1

- ------------------
SM:  This is a service mark used under license from the owner.





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

                           INTRODUCTION

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

     The Fund is an open-end series investment company designed
to fund variable annuity contracts and variable life insurance
policies offered by the separate accounts of certain life
insurance companies. The Fund currently offers an opportunity to
choose among the separately managed pools of assets (the
"Portfolios") described in the Fund's Prospectus which have
differing investment objectives and policies. The Fund currently
has twenty-two Portfolios, all of which are described in this
SAI. All of the Portfolios are diversified, except for
AllianceBernstein Global Bond Portfolio, AllianceBernstein Global
Dollar Government Portfolio, AllianceBernstein Americas
Government Income Portfolio and AllianceBernstein Worldwide
Privatization Portfolio. The diversified Portfolios are
diversified as a matter of fundamental policy, and these policies
will not be changed without a shareholder vote.

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

               INVESTMENT POLICIES AND RESTRICTIONS

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

          The following investment policies and restrictions
supplement, and should be read in conjunction with, the
information regarding the investment objectives, policies and
restrictions of each Portfolio set forth in the Fund's
Prospectus. Except as noted below, the investment policies
described below are not fundamental and may be changed by the
Board of Directors of the Fund without the approval of the
shareholders of the affected Portfolio or Portfolios; however,
shareholders will be notified prior to a material change in such
policies.

          Whenever any investment policy or restriction states a
minimum or maximum percentage of a Portfolio's assets which may
be invested in any security or other asset, it is intended that
such minimum or maximum percentage limitation be determined
immediately after and as a result of such Portfolio's acquisition
of such security or other asset. Accordingly, any later increase
or decrease in percentage beyond the specified limitations
resulting from a change in value or net assets will not be
considered a violation.

ALLIANCEBERNSTEIN MONEY MARKET PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          The Portfolio may make the following investments
diversified by maturities and issuers:

          1. Marketable obligations of, or guaranteed by, the
United States Government, its agencies or instrumentalities.
These include issues of the U.S. Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of
agencies and instrumentalities established under the authority of
an act of Congress. The latter issues include, but are not
limited to, obligations of the Bank for Cooperatives, Federal
Financing Bank, Federal Home Loan Bank, Federal Intermediate
Credit Banks, Federal Land Banks, Federal National Mortgage
Association and Tennessee Valley Authority. Some of the
securities are supported by the full faith and credit of the U.S.
Treasury, others are supported by the right of the issuer to
borrow from the U.S. Treasury, and still others are supported
only by the credit of the agency or instrumentality.

          2. Certificates of deposit, bankers' acceptances and
interest-bearing savings deposits issued or guaranteed by banks
or savings and loan associations having total assets of more than
$1 billion and which are members of the Federal Deposit Insurance
Corporation. Certificates of deposit are receipts issued by a
depository institution in exchange for the deposit of funds. The
issuer agrees to pay the amount deposited plus interest to the
bearer of the receipt on the date specified on the certificate.
Such certificates may include, for example, those issued by
foreign subsidiaries of such banks which are guaranteed by them.
The certificate usually can be traded in the secondary market
prior to maturity. Bankers' acceptances typically arise from
short-term credit arrangements designed to enable businesses to
obtain funds to finance commercial transactions. Generally, an
acceptance is a time draft drawn on a bank by an exporter or an
importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then accepted by a bank that, in
effect, unconditionally guarantees to pay the face value of the
instrument on its maturity date. The acceptance may then be held
by the accepting bank as an earning asset or it may be sold in
the secondary market at the going rate of discount for a specific
maturity. Although maturities for acceptances can be as long as
270 days, most acceptances have maturities of six months or less.

          3. Commercial paper, including variable amount master
demand notes, of prime quality rated A-1+ or A-1 by Standard &
Poor's Corporation ("S&P"), Prime-1 by Moody's Investors Service,
Inc. ("Moody's") or F1 by Fitch Ratings ("Fitch") or, if not
rated, issued by domestic and foreign companies which have an
outstanding debt issue rated AAA or AA by S&P or Fitch, or Aaa or
Aa by Moody's. For a description of such ratings see Appendix A
to the Prospectus. Commercial paper consists of short-term
(usually from 1 to 270 days) unsecured promissory notes issued by
corporations in order to finance their current operations. A
variable amount master demand note represents a direct borrowing
arrangement involving periodically fluctuating rates of interest
under a letter agreement between a commercial paper issuer and an
institutional lender pursuant to which the lender may determine
to invest varying amounts.

          4. Repurchase agreements are collateralized fully as
that term is defined in Rule 2a-7 under the Investment Company
Act of 1940 (the "1940 Act"). Repurchase agreements may be
entered into with member banks of the Federal Reserve System or
primary dealers (as designated by the Federal Reserve Bank of New
York) in U.S. Government securities or the Fund's custodian. It
is the Portfolio's current practice, which may be changed at any
time without shareholder approval, to enter into repurchase
agreements only with such primary dealers or the Fund's
custodian. While the maturities of the underlying collateral may
exceed one year, the term of the repurchase agreement is always
less than one year. Repurchase agreements not terminable within
seven days will be limited to no more than 10% of the Portfolio's
total assets.

          For additional information regarding repurchase
agreements, see "Other Investment Policies -- Repurchase
Agreements," below.

          REVERSE REPURCHASE AGREEMENTS. While the Portfolio has
no current plans to do so, it may enter into reverse repurchase
agreements, which involve the sale of money market securities
held by the Portfolio with an agreement to repurchase the
securities at an agreed-upon price, date and interest payment.
The Fund's custodian will place cash not available for investment
or securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities ("U.S. Government Securities") or
other liquid high-quality debt securities in a separate account
of the Fund having a value equal to the aggregate amount of the
Portfolio's commitments in reverse repurchase agreements.

          LIQUID RESTRICTED SECURITIES. The Portfolio may
purchase restricted securities eligible for resale under Rule
144A of the Securities Act of 1933, as amended (the "Securities
Act") that are determined by Alliance Capital Management L.P.
(the "Adviser" or "Alliance") to be liquid in accordance with
procedures adopted by the Directors. Restricted securities are
securities subject to contractual or legal restrictions on
resale, such as those arising from an issuer's reliance upon
certain exemptions from registration under the Securities Act.

          In recent years, a large institutional market has
developed for certain types of restricted securities including,
among others, private placements, repurchase agreements,
commercial paper, foreign securities and corporate bonds and
notes. These instruments are often restricted securities because
they are sold in transactions not requiring registration. For
example, commercial paper issues in which the Portfolio may
invest include, among others, securities issued by major
corporations without registration under the Securities Act in
reliance on the exemption from registration afforded by Section
3(a)(3) of such Act and commercial paper issued in reliance on
the private placement exemption from registration which is
afforded by Section 4(2) of the Securities Act ("Section 4(2)
paper"). Section 4(2) paper is restricted as to disposition under
the Federal securities laws in that any resale must also be made
in an exempt transaction. Section 4(2) paper is normally resold
to other institutional investors through or with the assistance
of investment dealers who make a market in Section 4(2) paper,
thus providing liquidity. Institutional investors, rather than
selling these instruments to the general public, often depend on
an efficient institutional market in which such restricted
securities can be readily resold in transactions not involving a
public offering. In many instances, therefore, the existence of
contractual or legal restrictions on resale to the general public
does not, in practice, impair the liquidity of such investments
from the perspective of institutional holders.

          In 1990, in part to enhance the liquidity in the
institutional markets for restricted securities, the Securities
and Exchange Commission (the "Commission") adopted Rule 144A
under the Securities Act to establish a safe harbor from the
Securities Act's registration requirements for resale of certain
restricted securities to qualified institutional buyers. Section
4(2) paper that is issued by a company that files reports under
the Securities Exchange Act of 1934 (the "Exchange Act") is
generally eligible to be resold in reliance on the safe harbor of
Rule 144A. Pursuant to Rule 144A, the institutional restricted
securities markets may provide both readily ascertainable values
for restricted securities and the ability to liquidate an
investment in order to satisfy share redemption orders on a
timely basis. An insufficient number of qualified institutional
buyers interested in purchasing certain restricted securities
held by the Portfolio, however, could affect adversely the
marketability of such portfolio securities and the Portfolio
might be unable to dispose of such securities promptly or at
reasonable prices. Rule 144A has already produced enhanced
liquidity for many restricted securities, and market liquidity
for such securities may continue to expand as a result of Rule
144A and the consequent inception of the PORTAL System sponsored
by the National Association of Securities Dealers, Inc. ("NASD"),
an automated system for the trading, clearance and settlement of
unregistered securities. The Portfolio's investments in Rule 144A
eligible securities are not subject to the limitations described
above on securities issued under Section 4(2).

          The Fund's Directors have the ultimate responsibility
for determining whether specific securities are liquid or
illiquid. The Directors have delegated the function of making
day-to-day determinations of liquidity to the Adviser, pursuant
to guidelines approved by the Directors. The Adviser takes into
account a number of factors in determining whether a restricted
security being considered for purchase is liquid, including at
least the following:

               (i)  the frequency of trades and quotations for
                    the security;

               (ii) the number of dealers making quotations to
                    purchase or sell the security;

              (iii) the number of other potential purchasers of
                    the security;

               (iv) the number of dealers undertaking to make a
                    market in the security;

               (v)  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
                    transfer); and

               (vi) any applicable Commission interpretation or
                    position with respect to such types of
                    securities.

          Following the purchase of a restricted security by the
Portfolio, the Adviser monitors continuously the liquidity of
such security and reports to the Directors regarding purchases of
liquid restricted securities.

          MONEY MARKET REQUIREMENTS. While there are many kinds
of short-term securities used by money market investors, the
Portfolio, in keeping with its primary investment objective of
safety of principal, restricts its portfolio to the types of
investments listed above. Of note, the Portfolio does not invest
in issues of savings and loan associations, letters of credit, or
issues of foreign banks. The Portfolio may make investments in
certificates of deposit issued by, and time deposits maintained
at, foreign branches of domestic banks specified above, prime
quality dollar-denominated commercial paper issued by foreign
companies meeting the rating criteria specified above, and in
certificates of deposit and bankers' acceptances denominated in
U.S. dollars that are issued by U.S. branches of foreign banks
having total assets of at least $1 billion that are believed by
the Adviser to be of quality equivalent to that of other such
investments in which the Portfolio may invest. To the extent that
the Portfolio invests in such instruments, consideration is given
to their domestic marketability, the lower reserve requirements
generally mandated for overseas banking operations, the possible
impact of interruptions in the flow of international currency
transactions, potential political and social instability or
expropriation, imposition of foreign taxes, less government
supervision of issuers, difficulty in enforcing contractual
obligations and lack of uniform accounting standards. As even the
safest of securities involve some risk, there can be no
assurance, as is true with all investment companies, that the
Portfolio's objective will be achieved. The market value of the
Portfolio's investments tends to decrease during periods of
rising interest rates and to increase during intervals of falling
rates.

          The Portfolio intends to comply with Rule 2a-7 as
amended from time to time, including the diversification, quality
and maturity conditions imposed by the Rule. Accordingly, in any
case in which there is a variation between the conditions imposed
by the Rule and the Portfolio's investment policies and
restrictions, the Portfolio will be governed by the more
restrictive of the two requirements.

          Currently, pursuant to Rule 2a-7, the Portfolio may
invest only in U.S. denominated "Eligible Securities," (as that
term is defined in the Rule) that have been determined by the
Adviser to present minimal credit risks pursuant to procedures
approved by the Board of Directors. Generally, an eligible
security is a security that (i) has a remaining maturity of 397
days or less and (ii) is rated, or is issued by an issuer with
short-term debt outstanding that is rated, in one of the two
highest rating categories by two nationally recognized
statistical rating organizations ("NRSROs") or, if only one NRSRO
has issued a rating, by that NRSRO. A security that originally
had a maturity of greater than 397 days is an eligible security
if the issuer has outstanding short-term debt that would be an
eligible security. Unrated securities may also be eligible
securities if the Adviser determines that they are of comparable
quality to a rated eligible security pursuant to guidelines
approved by the Board of Directors. A description of the ratings
of some NRSROs appears in Appendix A to the Prospectus.

          Under Rule 2a-7, the Portfolio may not invest more than
5% of its assets in the first tier securities of any one issuer
other than the United States Government, its agencies and
instrumentalities. Generally, a first tier security is an
Eligible Security that has received a short-term rating from the
requisite NRSROs in the highest short-term rating category for
debt obligations, or is an unrated security deemed to be of
comparable quality. U.S. Government Securities are also
considered to be first tier securities. In addition, the
Portfolio may not invest in a security that has received, or is
deemed comparable in quality to a security that has received, the
second highest rating by the requisite number of NRSROs (a second
tier security) if immediately after the acquisition thereof that
Portfolio would have invested more than (A) the greater of 1% of
its total assets or one million dollars in securities issued by
that issuer which are second tier securities, or (B) 5% of its
total assets in second tier securities.

          INVESTMENT RESTRICTIONS. The following restrictions,
which are applicable to the Portfolio, supplement those set forth
above and may not be changed without Shareholder Approval, as
defined under the caption "General Information," below.

          The Portfolio may not:

          1. invest in securities of any one issuer (including
repurchase agreements with any one entity) other than U.S.
Government Securities, if immediately after such purchases more
than 5% of the value of its total assets would be invested in
such issuer, except that 25% of the value of the total assets of
a Portfolio may be invested without regard to such 5% limitation;

          2. acquire more than 10% of any class of the
outstanding securities of any issuer (for this purpose, all
preferred stock of an issuer shall be deemed a single class, and
all indebtedness of an issuer shall be deemed a single class);

          3. invest more than 25% of the value of its total
assets at the time an investment is made in the securities of
issuers conducting their principal business activities in any one
industry, except that there is no such limitation with respect to
U.S. Government Securities or certificates of deposit, bankers'
acceptances and interest-bearing deposits (for purposes of this
investment restriction, the electric, gas, telephone and water
business shall each be considered as a separate industry);

          4. borrow money, except that the Portfolio may borrow
money only for extraordinary or emergency purposes and then only
in amounts not exceeding 15% of its total assets at the time of
borrowing;

          5. mortgage, pledge or hypothecate any of its assets,
except as may be necessary in connection with permissible
borrowings described in paragraph 4 above (in an aggregate amount
not to exceed 15% of total assets of the Portfolio);

          6. invest in illiquid securities if immediately after
such investment more than 10% of the Portfolio's total assets
(taken at market value) would be invested in such securities;

          7. invest more than 10% of the value of its total
assets in repurchase agreements not terminable within seven days;

          8. purchase any security which has a maturity date more
than one year from the date of the Portfolio's purchase;

          9. make investments for the purpose of exercising
control;

          10. purchase securities of other investment companies,
except in connection with a merger, consolidation, acquisition or
reorganization;

          11. invest in real estate (other than money market
securities secured by real estate or interests therein or money
market securities issued by companies which invest in real estate
or interests therein), commodities or commodity contracts,
interests in oil, gas and other mineral exploration or other
development programs;

          12. make short sales of securities or maintain a short
position or write, purchase or sell puts, calls, straddles,
spreads or combinations thereof; or

          13. purchase or retain securities of any issuers if
those officers and directors of the Fund and officers and
directors of the Adviser who own individually more than 1/2% of
the outstanding securities of such issuer together own more than
5% of the securities of such issuer.

ALLIANCEBERNSTEIN PREMIER GROWTH PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          RESTRICTED SECURITIES. The Portfolio may invest in both
listed and unlisted domestic and foreign securities, and in
restricted securities, and in other assets having no ready
market, but not more than 10% of the Portfolio's total assets may
be invested in all such restricted or not readily marketable
assets at any one time. Restricted securities may be sold only in
privately negotiated transactions or in a public offering with
respect to which a registration statement is in effect under the
Securities Act, or pursuant to Rule 144 promulgated under such
Act. Where registration is required, the Portfolio may be
obligated to pay all or part of the registration expense, and a
considerable period may elapse between the time of the decision
to sell and the time the Portfolio may be permitted to sell a
security under an effective registration statement. If during
such a period adverse market conditions were to develop, the
Portfolio might obtain a less favorable price than that which
prevailed when it decided to sell. Restricted securities and
other not readily marketable assets will be valued in such a
manner as the Board of Directors of the Fund in good faith deems
appropriate to reflect their fair market value. See "Other
Investment Policies -- Illiquid Securities," below, for a more
detailed discussion of the Portfolio's investment policy on
restricted securities and securities with legal or contractual
restrictions on resale.

          SPECIAL SITUATIONS. The Portfolio will invest in
special situations from time to time. A special situation arises
when, in the opinion of the Adviser, the securities of a
particular company will, within a reasonably estimable period of
time, be accorded market recognition at an appreciated value
solely by reason of a development particularly or uniquely
applicable to that company, and regardless of general business
conditions or movements of the market as a whole. Developments
creating special situations might include, among others,
liquidations, reorganizations, recapitalizations or mergers,
material litigation, technological breakthroughs and new
management or management policies. Although large and well-known
companies may be involved, special situations often involve much
greater risk than is inherent in ordinary investment securities.

          SHORT SALES. The Portfolio may not sell securities
short, except that it may make short sales against the box. Such
sales may be used in some cases by the Portfolio to defer the
realization of gain or loss for federal income tax purposes on
securities then owned by the Portfolio. However, if the Portfolio
has unrealized gain with respect to a security and enters into a
short sale with respect to such security, the Portfolio generally
will be deemed to have sold the appreciated security and thus
will recognize gain for tax purposes.

          OPTIONS. The Portfolio may write call options and may
purchase and sell put and call options written by others,
combinations thereof, or similar options. The Portfolio may not
write put options. A put option gives the buyer of such option,
upon payment of a premium, the right to deliver a specified
number of shares of a stock to the writer of the option on or
before a fixed date at a predetermined price. A call option gives
the purchaser of the option, upon payment of a premium, the right
to call upon the writer to deliver a specified number of shares
of a specified stock on or before a fixed date, at a
predetermined price, usually the market price at the time the
contract is negotiated. A call option written by the Portfolio is
covered if the Portfolio owns the underlying security covered by
the call or has an absolute and immediate right to acquire that
security without additional cash consideration (or for additional
cash, U.S. Government Securities or other liquid high grade debt
obligation held in a segregated account by the Fund's custodian)
upon conversion or exchange of other securities held in its
portfolio. A call option is also covered if the Portfolio holds a
call on the same security and in the same principal amount as the
call written where the exercise price of the call held (a) is
equal to or less than the exercise price of the call written or
(b) is greater than the exercise price of the call written if the
difference is maintained by the Portfolio in cash in a segregated
account with the Fund's custodian. The premium paid by the
purchaser of an option will reflect, among other things, the
relationship of the exercise price to the market price and
volatility of the underlying security, the remaining term of the
option, supply and demand and interest rates.

          The writing of call options will, therefore, involve a
potential loss of opportunity to sell securities at high prices.
In exchange for the premium received by it, the writer of a fully
collateralized call option assumes the full downside risk of the
securities subject to such option. In addition, the writer of the
call gives up the gain possibility of the stock protecting the
call. Generally, the opportunity for profit from the writing of
options occurs when the stocks involved are lower priced or
volatile, or both. While an option that has been written is in
force, the maximum profit that may be derived from the optioned
stock is the premium less brokerage commissions and fees.

          It is the Portfolio's policy not to write a call option
if the premium to be received by the Portfolio in connection with
such options would not produce an annualized return of at least
15% of the then market value of the securities subject to the
option. Commissions, stock transfer taxes and other expenses of
the Portfolio must be deducted from such premium receipts. Option
premiums vary widely depending primarily on supply and demand.
Calls written by the Portfolio will ordinarily be sold either on
a national securities exchange or through put and call dealers,
most, if not all, of which are members of a national securities
exchange on which options are traded, and will in such case be
endorsed or guaranteed by a member of a national securities
exchange or qualified broker-dealer, which may be Sanford C.
Bernstein & Co. ("SCB & Co."), an affiliate of the Adviser. The
endorsing or guaranteeing firm requires that the option writer
(in this case the Portfolio) maintain a margin account containing
either corresponding stock or other equity as required by the
endorsing or guaranteeing firm.

          The Portfolio will not sell a call option written or
guaranteed by it if, as a result of such sale, the aggregate of
the Portfolio's securities subject to outstanding call options
(valued at the lower of the option price or market value of such
securities) would exceed 15% of the Portfolio's total assets. The
Portfolio will not sell any call option if such sale would result
in more than 10% of the Portfolio's assets being committed to
call options written by the Portfolio which, at the time of sale
by the Portfolio, have a remaining term of more than 100 days.

          INVESTMENT RESTRICTIONS. The following restrictions,
which are applicable to the Portfolio, supplement those set forth
above and may not be changed without Shareholder Approval, as
defined under the caption "General Information," below.

          The Portfolio may not:

          1. invest in securities of any one issuer (including
repurchase agreements with any one entity) other than U.S.
Government Securities, if immediately after such purchases more
than 5% of the value of its total assets would be invested in
such issuer, except that 25% of the value of the total assets of
a Portfolio may be invested without regard to such 5% limitation;

          2. acquire more than 10% of any class of the
outstanding securities of any issuer (for this purpose, all
preferred stock of an issuer shall be deemed a single class, and
all indebtedness of an issuer shall be deemed a single class);

          3. invest more than 25% of the value of its total
assets at the time an investment is made in the securities of
issuers conducting their principal business activities in any one
industry, except that there is no such limitation with respect to
U.S. Government Securities or certificates of deposit, bankers'
acceptances and interest-bearing deposits (for purposes of this
investment restriction, the electric, gas, telephone and water
business shall each be considered as a separate industry);

          4. borrow money, except that the Portfolio may borrow
money only for extraordinary or emergency purposes and then only
in amounts not exceeding 15% of its total assets at the time of
borrowing;

          5. mortgage, pledge or hypothecate any of its assets,
except as may be necessary in connection with permissible
borrowings described in paragraph 4 above (in an aggregate amount
not to exceed 15% of total assets of the Portfolio), or as
permitted in connection with short sales of securities "against
the box" by the Portfolio, as described above;

          6. invest in illiquid securities if immediately after
such investment more than 10% of the Portfolio's total assets
(taken at market value) would be invested in such securities;

          7. invest more than 10% of the value of its total
assets in repurchase agreements not terminable within seven days;

          8. write put options;

          9. make investments for the purpose of exercising
control;

          10. except as permitted in connection with short sales
of securities against the box described under the heading "Short
Sales" above, make short sales of securities;

          11. buy or hold securities of any issuer if any officer
or director of the Fund, the Adviser or any officer, director or
10% shareholder of the Adviser owns individually 1/2 of 1% of a
class of securities of such issuer, and such persons together own
beneficially more than 5% of such securities; or

          12. buy or sell any real estate or interests therein,
commodities or commodity contracts, including commodity futures
contracts.

ALLIANCEBERNSTEIN GROWTH AND INCOME PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

          The Portfolio may invest whenever the economic outlook
is unfavorable for common stock investments in other types of
securities, such as bonds, convertible bonds, preferred stocks
and convertible preferred stocks. The Portfolio engages primarily
in holding securities for investment and not for trading
purposes. Purchases and sales of portfolio securities are made at
such times and in such amounts as are deemed advisable in the
light of market, economic and other conditions, irrespective of
the volume of portfolio turnover.

          The Portfolio may invest in foreign securities.
Although not a fundamental policy, the Portfolio will not make
any such investments unless such securities are listed on a
national securities exchange.

          It is the Portfolio's policy not to concentrate its
investments in any one industry by investment of more than 25% of
the value of its total assets in such industry, underwrite
securities issued by other persons, purchase any securities as to
which it might be deemed a statutory underwriter under the
Securities Act, purchase or sell commodities or commodity
contracts or engage in the business of purchasing and selling
real estate.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          OPTIONS. The Portfolio may write covered call options,
provided that the option is listed on a domestic securities
exchange and that no option will be written if, as a result, more
than 25% of the Portfolio's assets are subject to call options.
For a discussion of options, see "AllianceBernstein Premier
Growth Portfolio - Options," above.

          The Portfolio will purchase call options only to close
out a position in an option written by it. In order to close out
a position, the Portfolio will make a closing purchase
transaction if such is available. In such a transaction, the
Portfolio will purchase a call option on the same security option
that it has previously written. When a security is sold from the
Portfolio against which a call option has been written, the
Portfolio will effect a closing purchase transaction so as to
close out any existing call option on that security. The
Portfolio will realize a profit or loss from a closing purchase
transaction if the amount paid to purchase a call option is less
or more than the amount received as a premium for the writing
thereof. A closing purchase transaction cannot be made if trading
in the option has been suspended.

          The premium received by the Portfolio upon writing a
call option will increase the Portfolio's assets, and a
corresponding liability will be recorded and subsequently
adjusted from day to day to the current value of the option
written. For example, if the current value of the option exceeds
the premium received, the excess would be an unrealized loss and,
conversely, if the premium exceeds the current value, such excess
would be an unrealized gain. The current value of the option will
be the last sales price on the principal exchange on which the
option is traded or, in the absence of any transactions, the mean
between the closing bid and asked price.

          INVESTMENT RESTRICTIONS. The following investment
restrictions, which are applicable to the Portfolio, supplement
those set forth above and may not be changed without Shareholder
Approval, as defined under the caption "General Information,"
below.

          The Portfolio may not:

          1. invest in securities of any one issuer (including
repurchase agreements with any one entity) other than U.S.
Government Securities, if immediately after such purchases more
than 5% of the value of its total assets would be invested in
such issuer, except that 25% of the value of the total assets of
a Portfolio may be invested without regard to such 5% limitation;

          2. acquire more than 10% of any class of the
outstanding securities of any issuer (for this purpose, all
preferred stock of an issuer shall be deemed a single class, and
all indebtedness of an issuer shall be deemed a single class);

          3. invest more than 25% of the value of its total
assets at the time an investment is made in the securities of
issuers conducting their principal business activities in any one
industry, except that there is no such limitation with respect to
U.S. Government Securities or certificates of deposit, bankers'
acceptances and interest-bearing deposits (for purposes of this
investment restriction, the electric, gas, telephone and water
business shall each be considered as a separate industry);

          4. borrow money, except that the Portfolio may borrow
money only for extraordinary or emergency purposes and then only
in amounts not exceeding 15% of its total assets at the time of
borrowing;

          5. mortgage, pledge or hypothecate any of its assets,
except as may be necessary in connection with permissible
borrowings described in paragraph 4 above (in an aggregate amount
not to exceed 15% of total assets of the Portfolio);

          6. invest in illiquid securities if immediately after
such investment more than 10% of the Portfolio's total assets
(taken at market value) would be invested in such securities;

          7. invest more than 10% of the value of its total
assets in repurchase agreements not terminable within seven days;

          8. purchase the securities of any other investment
company except in a regular transaction on the open market;

          9. purchase the securities of any issuer if directors
or officers of the Fund or certain other interested persons own
more than 5% of such securities; or

          10. invest in the securities of any company for the
purpose of exercising control of management.

ALLIANCEBERNSTEIN U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          The Portfolio is subject to the diversification
requirements imposed by the Internal Revenue Code of 1986, as
amended (the "Code"), which, among other things, limits the
Portfolio to investing no more than 55% of its total assets in
any one investment. For purposes of this test, (i) all securities
of the same issuer are treated as a single investment, and (ii)
in the case of securities issued or guaranteed by the United
States or an agency or instrumentality of the United States, each
government agency or instrumentality is considered a separate
issuer.. Consistent with this limitation, the Portfolio, as a
matter of fundamental policy, invests at least 45% of its total
assets in U.S. Government Securities. Nevertheless, the Portfolio
reserves the right to modify the percentage of its investments in
U.S. Government Securities in order to comply with all applicable
tax requirements.

          U.S. GOVERNMENT SECURITIES. U.S. Government Securities,
include: (i) U.S. Treasury obligations, which differ only in
their interest rates, maturities and times of issuance, U.S.
Treasury bills (maturity of one year or less), U.S. Treasury
notes (maturities of one to 10 years), and U.S. Treasury bonds
(generally maturities of greater than 10 years), all of which are
backed by the full faith and credit of the United States; and
(ii) obligations issued or guaranteed by U.S. Government agencies
or instrumentalities, including government guaranteed
mortgage-related securities, some of which are backed by the full
faith and credit of the U.S. Treasury (e.g., direct pass-through
certificates of the Government National Mortgage Association),
some of which are supported by the right of the issuer to borrow
from the U.S. Government (e.g., obligations of Federal Home Loan
Banks), and some of which are backed only by the credit of the
issuer itself (e.g., obligations of the Student Loan Marketing
Association). See Appendix A for a description of obligations
issued or guaranteed by U.S. Government agencies or
instrumentalities.

          U.S. GOVERNMENT GUARANTEED MORTGAGE-RELATED SECURITIES
- -- GENERAL. Mortgages backing the U.S. Government guaranteed
mortgage-related securities purchased by the Portfolio include,
among others, conventional 30-year fixed rate mortgages,
graduated payment mortgages, 15-year mortgages and adjustable
rate mortgages. All of these mortgages can be used to create
pass-through securities. A pass-through security is formed when
mortgages are pooled together and undivided interests in the pool
or pools are sold. The cash flow from the mortgages is passed
through to the holders of the securities in the form of periodic
payments of interest, principal and prepayments (net of a service
fee). Prepayments occur when the holder of an individual mortgage
prepays the remaining principal before the mortgage's scheduled
maturity date. As a result of the pass-through of prepayments of
principal on the underlying securities, mortgage-backed
securities are often subject to more rapid prepayment of
principal than their stated maturity would indicate. Because the
prepayment characteristics of the underlying mortgages vary, it
is not possible to predict accurately the realized yield or
average life of a particular issue of pass-through certificates.
Prepayment rates are important because of their effect on the
yield and price of the securities. Accelerated prepayments
adversely impact yields for pass-throughs purchased at a premium
(i.e., a price in excess of principal amount) and may involve
additional risk of loss of principal because the premium may not
be fully amortized at the time the obligation is repaid. The
opposite is true for pass-throughs purchased at a discount. The
Portfolio may purchase mortgage-related securities at a premium
or at a discount. Principal and interest payments on the
mortgage-related securities are government guaranteed to the
extent described below. Such guarantees do not extend to the
value or yield of the mortgage-related securities themselves or
of the Portfolio's shares of common stock.

          GNMA CERTIFICATES. Certificates of the Government
National Mortgage Association ("GNMA Certificates") are
mortgage-related securities, which evidence an undivided interest
in a pool or pools of mortgages. GNMA Certificates that the
Portfolio may purchase are the modified pass-through type, which
entitle the holder to receive timely payment of all interest and
principal payments due on the mortgage pool, net of fees paid to
the issuer and GNMA, regardless of whether or not the mortgagors
actually make mortgage payments when due.

          The National Housing Act authorizes GNMA to guarantee
the timely payment of principal and interest on securities backed
by a pool or mortgages insured by the Federal Housing
Administration ("FHA") or guaranteed by the Veterans
Administration ("VA"). The GNMA guarantee is backed by the full
faith and credit of the United States Government. GNMA is also
empowered to borrow without limitation from the U.S. Treasury if
necessary to make any payments required under its guarantee.

          The average life of a GNMA Certificate is likely to be
substantially shorter than the original maturity of the mortgages
underlying the securities. Prepayments of principal by mortgagors
and mortgage foreclosures will usually result in the return of
the greater part of principal investment long before the maturity
of the mortgages in the pool. Foreclosures impose no risk to
principal investment because of the GNMA guarantee, except to the
extent that the Portfolio has purchased the certificates above
par in the secondary market.

          FHLMC SECURITIES. The Federal Home Loan Mortgage
Corporation ("FHLMC") was created in 1970 through enactment of
Title III of the Emergency Home Finance Act of 1970. Its purpose
is to promote development of a nationwide secondary market in
conventional residential mortgages.

          The FHLMC issues two types of mortgage-related pass-
through securities ("FHLMC Certificates"), mortgage participation
certificates ("PCs") and guaranteed mortgage securities ("GMCs").
PCs resemble GNMA Certificates in that each PC represents a pro
rata share of all interest and principal payments made and owed
on the underlying pool. The FHLMC guarantees timely monthly
payment of interest on PCs and the ultimate payment of principal.

          GMCs also represent a pro rata interest in a pool of
mortgages. However, these instruments pay interest semi-annually
and return principal once a year in guaranteed minimum payments.
The expected average life of these securities is approximately
ten years. The FHLMC guarantee is not backed by the full faith
and credit of the United States.

          FNMA SECURITIES. The Federal National Mortgage
Association ("FNMA") was established in 1938 to create a
secondary market in mortgages insured by the FHA. FNMA issues
guaranteed mortgage pass-through certificates ("FNMA
Certificates"). FNMA Certificates resemble GNMA Certificates in
that each FNMA Certificate represents a pro rata share of all
interest and principal payments made and owed on the underlying
pool. FNMA guarantees timely payment of interest and principal on
FNMA Certificates. The FNMA guarantee is not backed by the full
faith and credit of the United States.

          ZERO COUPON TREASURY SECURITIES. The Portfolio may
invest in zero coupon Treasury securities, which are U.S.
Treasury bills, notes and bonds which have been stripped of their
unmatured interest coupons and receipts or certificates
representing interests in such stripped debt obligations and
coupons. A zero coupon security is a debt obligation that does
not entitle the holder to any periodic payments prior to maturity
but, instead, is issued and traded at a discount from its face
amount. The discount varies depending on the time remaining until
maturity, prevailing interest rates, liquidity of the security
and perceived credit quality of the issuer. The market prices of
zero coupon securities are generally more volatile than those of
interest-bearing securities, and are likely to respond to changes
in interest rates to a greater degree than otherwise comparable
securities that do pay periodic interest. Current federal tax law
requires that a holder (such as the Portfolio) of a zero coupon
security accrue a portion of the discount at which the security
was purchased as income each year, even though the holder
receives no interest payment on the security during the year. As
a result, in order to make the distributions necessary for the
Portfolio not to be subject to federal income or excise taxes,
the Portfolio might be required to pay out as an income
distribution each year an amount, obtained by liquidation of
portfolio securities if necessary, greater than the total amount
of cash that the Portfolio has actually received as interest
during the year. The Adviser believes, however, that it is highly
unlikely that it would be necessary to liquidate any portfolio
securities for this purpose.

          Currently the only U.S. Treasury security issued
without coupons is the Treasury bill. Although the U.S. Treasury
does not itself issue treasury notes and bonds without coupons,
under the U.S. Treasury STRIPS program interest and principal on
certain long term treasury securities may be maintained
separately in the Federal Reserve book entry system and may be
separately traded and owned. However, in the last few years a
number of banks and brokerage firms have separated ("stripped")
the principal portions ("corpus") from the coupon portions of the
U.S. Treasury bonds and notes and sold them separately in the
form of receipts or certificates representing undivided interests
in these instruments (which instruments are generally held by a
bank in a custodial or trust account). The Staff of the
Commission has indicated that these receipts or certificates
representing stripped corpus interests in U.S. Treasury
securities sold by banks and brokerage firms should be considered
as securities issued by the bank or brokerage firm involved and,
therefore, should not be included in the Portfolio's
categorization of U.S. Government Securities for purposes of the
Portfolio's investing at least 45% of its assets in U.S.
Government Securities. The Fund disagrees with the Staff's
interpretation but has undertaken, until final resolution of the
issue, to include the Portfolio's purchases of such securities in
the non-U.S. Government Securities portion of the Portfolio's
investments which may be as much as 55% of its total assets.
However, if such securities are deemed to be U.S. Government
Securities, the Portfolio will include them as such for purposes
of determining the 55% limitation on U.S. Government Securities.

          REPURCHASE AGREEMENTS. The Portfolio 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. Currently the Portfolio plans to enter into
repurchase agreements only with the Fund's custodian and such
primary dealers. For a general discussion of repurchase
agreements, see "Other Investment Policies -- Repurchase
Agreements," below.

          GENERAL. U.S. Government Securities do not generally
involve the credit risks associated with other types of interest
bearing securities. As a result, the yields available from U.S.
Government Securities are generally lower than the yields
available from other interest-bearing securities. Like other
fixed-income securities, however, the values of U.S. Government
Securities change as interest rates fluctuate. When interest
rates decline, the values of U.S. Government Securities can be
expected to increase and when interest rates rise, the values of
U.S. Government Securities can be expected to decrease.

          HIGH GRADE DEBT SECURITIES. High grade debt securities
which, together with U.S. Government Securities, constitute at
least 65% of the Portfolio's assets include:

          1. debt securities which are rated AAA, AA, or A by S&P
or Fitch or Aaa, Aa or A by Moody's;

          2. obligations of, or guaranteed by, national or state
bank holding companies, which obligations, although not rated as
a matter of policy by either S&P or Moody's, are rated AAA, AA or
A by Fitch;

          3. commercial paper rated A-1+, A-1, A-2 or A-3 by S&P,
F1, F2 or F3 by Fitch or Prime-1, Prime-2 or Prime-3 by Moody's;
and

          4. bankers' acceptances or negotiable certificates of
deposit issued by banks rated AAA, AA or A by Fitch.

          INVESTMENT IN HIGH GRADE DEBT SECURITIES. With respect
to the Portfolio's investment in high grade debt securities, the
Portfolio does not acquire common stocks or equities exchangeable
for or convertible into common stock or rights or warrants to
subscribe for or purchase common stock, except that with respect
to convertible debt securities, the Portfolio may acquire common
stock through the exercise of conversion rights in situations
where it believes such exercise is in the best interest of the
Portfolio and its shareholders. In such event, the Portfolio will
sell the common stock resulting from such conversion as soon as
practical. The Portfolio may acquire debt securities and
nonconvertible preferred stock which may have voting rights, but
in no case will the Portfolio acquire more than 10% of the voting
securities of any one issuer. The relative size of the
Portfolio's investments in any grade or type of security will
vary from time to time. Critical factors that are considered in
the selection of securities relate to other investment
alternatives as well as trends in the determinants of interest
rates, corporate profits and management capabilities and
practices.

          SECURITIES RATINGS. The ratings of fixed-income
securities by S&P, Moody's and Fitch are a generally accepted
barometer 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.

          RESTRICTED SECURITIES. Consistent with its investment
restrictions, the Portfolio may acquire restricted securities.
Restricted securities may be sold only in privately negotiated
transactions or in a public offering with respect to which a
registration statement is in effect under the Securities Act or
pursuant to Rule 144 promulgated under such Act. Where
registration is required, the Portfolio may be obligated to pay
all or part of the registration expense, and a considerable
period may elapse between the time of the decision to sell and
the time the Portfolio may be permitted to sell a security under
an effective registration statement. If during such a period
adverse market conditions were to develop, the Portfolio might
obtain a less favorable price than prevailed when it decided to
sell. Restricted securities will be valued in such manner as the
Board of Directors of the Fund in good faith deem appropriate to
reflect their fair market value. If through the appreciation of
restricted securities or the depreciation of unrestricted
securities, the Portfolio should be in a position where more than
10% of the value of its total assets is invested in illiquid
assets, including restricted securities, the Portfolio will take
appropriate steps to protect liquidity. See "Other Investment
Policies -- Illiquid Securities" below, for a more detailed
discussion of the Portfolio's investment policy in securities
with legal or contractual restrictions on resale.

          OTHER SECURITIES. While the Portfolio's investment
strategy emphasizes U.S. Government Securities and high grade
debt securities, the Portfolio may, consistent with its
investment objectives, invest up to 20% of its net assets in
securities other than U.S. Government Securities and high grade
debt securities, including (i) investment grade corporate debt
securities of a type other than the high grade debt securities
described above (including collateralized mortgage obligations),
(ii) certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of
more than $1 billion and which are members of the Federal Deposit
Insurance Corporation and (iii) put and call options, futures
contracts and options thereon. Investment grade debt securities
are those rated Baa or higher by Moody's or BBB or higher by S&P
or Fitch or, if not so rated, of equivalent investment quality in
the opinion of the Adviser. Securities rated Baa by Moody's or
BBB by S&P or Fitch normally provide higher yields but are
considered to have speculative characteristics. Sustained periods
of deteriorating economic conditions or rising interest rates are
more likely to lead to a weakening in the issuers capacity to pay
interest and repay principal than in the case of higher-rated
securities. See Appendix A to the Prospectus for a description of
corporate debt ratings.

          COLLATERALIZED MORTGAGE OBLIGATIONS. Collateralized
mortgage obligations ("CMOs") are debt obligations issued
generally by finance subsidiaries or trusts that are secured by
mortgage-backed certificates, including, in many cases, GNMA
Certificates, FHLMC Certificates and FNMA Certificates, together
with certain funds and other collateral.

          Scheduled distributions on the mortgage-backed
certificates pledged to secure the CMOs, together with certain
funds and other collateral, will be sufficient to make timely
payments of interest on the CMOs and to retire the CMOs not later
than their stated maturity. Since the rate of payment of
principal of the CMOs depends on the rate of payment (including
prepayments) of the principal of the underlying mortgage-backed
certificates, the actual maturity of the CMOs could occur
significantly earlier than their stated maturity. The CMOs may be
subject to redemption under certain circumstances. CMOs bought at
a premium (i.e., a price in excess of principal amount) may
involve additional risk of loss of principal in the event of
unanticipated prepayments of the underlying mortgages because the
premium may not have been fully amortized at the time the
obligation is repaid.

          Although payment of the principal of and interest on
the mortgage-backed certificates pledged to secure the CMOs may
be guaranteed by GNMA, FHLMC, or FNMA, the CMOs represent
obligations solely of the issuer and are not insured or
guaranteed by GNMA, FHLMC, FNMA or any other governmental agency,
or by any other person or entity. The issuers of CMOs typically
have no significant assets other than those pledged as collateral
for the obligations.

          The Staff of the Commission currently takes the
position, in a reversal of its former view, that certain issuers
of CMOs are not investment companies for purposes of Section
12(d)(i) of the 1940 Act, which limits the ability of one
investment company to invest in another investment company. The
Staff of the Commission has determined that certain issuers of
CMOs are investment companies for purposes of the 1940 Act. In
reliance on a recent Staff interpretation, the Portfolio's
investments in certain qualifying CMOs, including CMOs that have
elected to be treated as real estate mortgage investment conduits
(REMICs), are not subject to the 1940 Act's limitation on
acquiring interests in other investment companies. In order to be
able to rely on the Staff's interpretation, the CMOs and REMICs
must be unmanaged, fixed-asset issuers, that (a) invest primarily
in mortgage-backed securities, (b) do not issue redeemable
securities, (c) operate under general exemptive orders exempting
them from all provisions of the 1940 Act, and (d) are not
registered or regulated under the 1940 Act as investment
companies. To the extent that the Portfolio selects CMOs or
REMICs that do not meet the above requirements, the Portfolio may
not invest more than 10% of its assets in all such entities and
may not acquire more than 3% of the voting securities of any
single such entity.

          OPTIONS ON U.S. GOVERNMENT SECURITIES. In an effort to
increase current income and to reduce fluctuations in net asset
value, the Portfolio intends to write covered put and call
options and purchase put and call options on U.S. Government
Securities that are traded on United States securities exchanges
and over the counter. The Portfolio may also write such call
options that are not covered for cross-hedging purposes. There
are no specific percentage limitations on the Portfolio's
investments in options.

          The Portfolio intends to write call options for cross-
hedging purposes. A call option is for cross-hedging purposes if
it is designed to provide a hedge against a decline in value in
another security which the Portfolio owns or has the right to
acquire. In such circumstances, the Portfolio collateralizes the
option by maintaining in a segregated account with the custodian,
cash or U.S. Government Securities in an amount not less than the
market value of the underlying security, marked to market daily.

          In purchasing a call option, the Portfolio would be in
a position to realize a gain if, during the option period, the
price of the security increased by an amount in excess of the
premium paid. It would realize a loss if the price of the
security declined or remained the same or did not increase during
the period by more than the amount of the premium. In purchasing
a put option, the Portfolio would be in a position to realize a
gain if, during the option period, the price of the security
declined by an amount in excess of the premium paid. It would
realize a loss if the price of the security increased or remained
the same or did not decrease during that period by more than the
amount of the premium. If a put or call option purchased by the
Portfolio were permitted to expire without being sold or
exercised, its premium would be lost by the Portfolio.

          If a put option written by the Portfolio were
exercised, the Portfolio would be obligated to purchase the
underlying security at the exercise price. If a call option
written by the Portfolio were exercised, the Portfolio would be
obligated to sell the underlying security at the exercise price.
The risk involved in writing a put option is that there could be
a decrease in the market value of the underlying security caused
by rising interest rates or other factors. If this occurred, the
option could be exercised and the underlying security would then
be sold to the Portfolio at a higher price than its current
market value. The risk involved in writing a call option is that
there could be an increase in the market value of the underlying
security caused by declining interest rates or other factors. If
this occurred, the option could be exercised and the underlying
security would then be sold by the Portfolio at a lower price
than its current market value. The Portfolio retains the premium
received from writing a put or call option whether or not the
option is exercised.

          Over-the-counter options are purchased or written by
the Portfolio in privately negotiated transactions. Such options
are illiquid and it may not be possible for the Portfolio to
dispose of any option it has purchased or terminate its
obligations under an option it has written at a time when the
Adviser believes it would be advantageous to do so.

          For additional information on the use, risks and costs
of options, see Appendix C.

          FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The
Portfolio may enter into contracts for the purchase or sale for
future delivery of fixed-income securities or contracts based on
financial indices including any index of U.S. Government
Securities (futures contracts) and may purchase and write options
to buy or sell futures contracts (options on futures contracts).
Options on futures contracts to be written or purchased by the
Portfolio will be traded on U.S. exchanges or over the counter.
These investment techniques will be used only to hedge against
anticipated future changes in interest or exchange rates which
otherwise might either adversely affect the value of the
Portfolio's securities or adversely affect the prices of
securities which the Portfolio intends to purchase at a later
date. The successful use of such instruments draws upon the
Adviser's special skills and experience with respect to such
instrumentalities and usually depends on the Adviser's ability to
forecast interest rate movements correctly. Should interest rates
move in an unexpected manner, the Portfolio may not achieve the
anticipated benefits of futures contracts or options on futures
contracts or may realize losses and thus will be in a worse
position than if such strategies had not been used. In addition,
the correlation between movements in the price of futures
contracts or options on futures contracts and movements in the
price of securities hedged or used for cover will not be perfect.

          A sale of a futures contract means the acquisition of a
contractual obligation to deliver the securities called for by
the contract at a specified price on a specified date. A purchase
of a futures contract means the acquisition of a contractual
obligation to acquire the securities called for by the contract
at a specified price on a specified date. The purchaser of a
futures contract on an index agrees to take or make delivery of
an amount of cash equal to the difference between a specified
dollar multiple of the value of the index on the expiration date
of the contract and the price at which the contract was
originally struck.

          The Portfolio enters into futures contracts which are
based on U.S. Government Securities, such as long-term U.S.
Treasury bonds, Treasury notes, GNMA modified pass-through
mortgage-backed securities and three-month U.S. Treasury bills.
The Portfolio may also enter into futures contracts which are
based on non-U.S. Government bonds.

          The Portfolio's ability to engage in the options and
futures strategies described above depends on the availability of
liquid markets in such instruments. Markets in options and
futures with respect to U.S. Government Securities are relatively
new and still developing. It is impossible to predict the amount
of trading interest that may exist in various types of options or
futures. Therefore no assurance can be given that the Portfolio
will be able to utilize these instruments effectively for the
purposes set forth above. Furthermore, the Portfolio's ability to
engage in options and futures transactions may be limited by tax
considerations.

          The Portfolio has claimed an exclusion from the
definition of "commodity pool operator" under the Commodity
Exchange Act and therefore is not subject to registration or
regulation as a pool operator under that Act. In general, the
Portfolio adheres to two percentage restrictions on the use of
futures contracts. The first restriction is that the Portfolio
will not enter into any futures contracts and options on futures
contracts if immediately thereafter the amount of initial margin
deposits on all the futures contracts of the Portfolio and
premiums paid on options on futures contracts would exceed 5% of
the total assets of the Portfolio. The second restriction is that
the aggregate market value of the futures contracts held by the
Portfolio not exceed 50% of the total assets of the Portfolio.
Neither of these restrictions will be changed by the Portfolio
without considering the policies and concerns of the various
applicable federal and state regulatory agencies.

          For additional information on the use, risks and costs
of future contracts and options on future contracts, see Appendix
B.

          LENDING OF PORTFOLIO SECURITIES. In order to increase
income, the Portfolio may from time to time lend its securities
to brokers, dealers and financial institutions and receive
collateral in the form of cash or U.S. Government Securities.
Under the Portfolio's procedures, collateral for such loans must
be maintained at all times in an amount equal to at least 100% of
the current market value of the loaned securities (including
interest accrued on the loaned securities). The interest accruing
on the loaned securities will be paid to the Portfolio and the
Portfolio will have the right, on demand, to call back the loaned
securities. The Portfolio may pay fees to arrange the loans. The
Portfolio will not lend its securities in excess of 30% of the
value of its total assets, nor will the Portfolio lend its
securities to any officer, director, employee or affiliate of the
Fund or the Adviser.

          WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS. The
Portfolio may enter into forward commitments for the purchase or
sale of securities. Such transactions 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 such transactions are negotiated, the price, which
is generally expressed in yield terms, is fixed at the time the
commitment is made, but delivery and payment for the securities
take place at a later date. Normally, the settlement date occurs
within two months after the transaction, but delayed settlements
beyond two months may be negotiated. Securities purchased or sold
under a forward commitment are subject to market fluctuation, and
no interest (or dividend) accrues to the purchaser prior to the
settlement date. At the time the Portfolio enters 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 net asset value. Any
unrealized appreciation or depreciation reflected in such
valuation of a when, as and if issued security would be cancelled
in the event that the required condition did not occur and the
trade was cancelled.

          The use of when-issued transactions and forward
commitments enables the Portfolio to protect against anticipated
changes in interest rates and prices. For instance, in periods of
rising interest rates and falling bond prices, the Portfolio
might sell its securities on a forward commitment basis to limit
its exposure to falling prices. In periods of falling interest
rates and rising bond prices, the Portfolio might sell a security
and purchase the same or a similar security on a when-issued or
forward commitment basis, thereby obtaining the benefit of
currently higher cash yields. However, if the Adviser were to
forecast incorrectly the direction of interest rate movements,
the Portfolio might be required to complete such when-issued or
forward transactions at prices inferior to then current market
values. No when-issued transactions or forward commitments will
be made by the Portfolio if, as a result, the Portfolio's
aggregate commitments under such transactions would be more than
30% of the then current value of the Portfolio's total assets.

          When-issued and forward commitments may be sold prior
to the settlement date, but the Portfolio enters into forward
commitments only with the intention of actually receiving or
delivering the securities, as the case may be. To facilitate such
transactions, the custodian will maintain, in the separate
account, cash, U.S. Government Securities or other liquid, high-
grade debt obligations, having value equal to, or greater than,
any commitments to purchase securities on a when-issued or
forward commitment basis and, with respect to forward commitments
to sell the Portfolio's securities themselves. If the Adviser,
however, chooses to dispose of its right to acquire a when-issued
security prior to its acquisition or dispose of its right to
receive or deliver a security subject to a forward commitment
prior to the settlement date of the transaction, the Portfolio
can incur a gain or loss. At the time the Portfolio makes the
commitment to purchase or sell a security on a when-issued or
forward commitment basis, it records the transaction and reflects
the value of the security purchased or, if a sale, the proceeds
to be received, in determining its net asset value. In the event
the other party to a forward commitment transaction were to
default, the Portfolio might lose the opportunity to invest money
at favorable rates or to dispose of securities at favorable
prices.

          FUTURE DEVELOPMENTS. The Portfolio may, following
written notice thereof to its shareholders, take advantage of
opportunities in the area of options and futures contracts and
options on futures contracts which are not presently contemplated
for use by the Portfolio or which are not currently available but
which may be developed, to the extent such opportunities are both
consistent with the Portfolio's investment objective and legally
permissible for the Portfolio. Such opportunities, if they arise,
may involve risks which exceed those involved in the options and
futures activities described above.

          INTEREST RATE TRANSACTIONS (SWAPS, CAPS AND FLOORS).
The Portfolio may enter into interest rate swap, cap or floor
transactions for hedging purposes, 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 Portfolio anticipates purchasing at a later date.
The Adviser does not intend to use these transactions in a
speculative manner.

          Interest rate swaps involve the exchange by the
Portfolio with another party of their respective commitments to
pay or receive interest (e.g., an exchange of 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 Portfolio receiving or paying,
as the case may be, only the net amount of the two payments).
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. The
Portfolio may enter into interest rate swaps, caps and floors on
either an asset-based or liability-based basis, depending upon
whether it is hedging its assets or liabilities.

          The swap market has grown substantially in recent
years, with a large number of banks and investment banking firms
acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become well
established and relatively liquid. Caps and floors are less
liquid than swaps. These transactions do not involve the delivery
of securities or other underlying assets or principal.
Accordingly, unless there is a counterparty default, the risk of
loss to the Portfolio from interest rate transactions is limited
to the net amount of interest payments that the Portfolio is
contractually obligated to make. The Portfolio will enter into
interest rate swap, 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 referenced obligation. Generally, a
credit event means bankruptcy, failure to pay, obligation
acceleration or modified restructuring. The Portfolio may be
either the buyer or the seller in the transaction. As a seller,
the Portfolio 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 Portfolio typically must pay the contingent payment
to the buyer, which is typically the "par value" (full notional
value) of the reference obligation. The contingent payment may be
a cash settlement or by physical delivery of the reference
obligation in return for payment of the face amount of the
obligation. If the Portfolio is a buyer and no credit event
occurs, the Portfolio may lose its investment and recover
nothing. 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 Portfolio had invested in the reference obligation directly.
Credit default swaps are subject to general market risk,
liquidity risk and credit risk. As noted above, if the Portfolio
is a buyer and no credit event occurs, it will lose its
investment. In addition, if a credit event occurs, the value of
the reference obligation received by the Portfolio as a seller
coupled with the periodic payments previously received, may be
less than the full notional value it pays to the buyer, resulting
in a loss of value to the Portfolio.

          The Portfolio will not enter into a credit default swap
if the swap provides for settlement by physical delivery and such
delivery would result in the Portfolio investing (i) less than
80% of its net assets in U.S. Government or high-grade (AAA, AA
or A, or Aaa, Aa or A) securities, or (ii) more than 20% of its
net assets in investment grade corporate debt securities.

          INVESTMENT RESTRICTIONS. The following investment
restrictions, which are applicable to the Portfolio, supplement
those set forth above and may not be changed without Shareholder
Approval, as defined under the caption "General Information,"
below.

          The Portfolio may not:

          1. invest in securities of any one issuer (including
repurchase agreements with any one entity) other than U.S.
Government Securities, if immediately after such purchases more
than 5% of the value of its total assets would be invested in
such issuer, except that 25% of the value of the total assets of
the Portfolio may be invested without regard to such 5%
limitation;

          2. acquire more than 10% of any class of the
outstanding securities of any issuer (for this purpose, all
preferred stock of an issuer shall be deemed a single class, and
all indebtedness of an issuer shall be deemed a single class);

          3. invest more than 25% of the value of its total
assets at the time an investment is made in the securities of
issuers conducting their principal business activities in any one
industry, except that there is no such limitation with respect to
U.S. Government Securities or certificates of deposit, bankers'
acceptances and interest-bearing deposits (for purposes of this
investment restriction, the electric, gas, telephone and water
business shall each be considered as a separate industry);

          4. borrow money, except that the Portfolio may borrow
money only for extraordinary or emergency purposes and then only
in amounts not exceeding 15% of its total assets at the time of
borrowing;

          5. mortgage, pledge or hypothecate any of its assets,
except as may be necessary in connection with permissible
borrowings described in paragraph 4 above (in an aggregate amount
not to exceed 15% of total assets of the Portfolio);

          6. invest in illiquid securities if immediately after
such investment more than 10% of the Portfolio's total assets
(taken at market value) would be invested in such securities;

          7. invest more than 10% of the value of its total
assets in repurchase agreements not terminable within seven days;

          8. participate on a joint or joint and several basis in
any securities trading account;

          9. invest in companies for the purpose of exercising
control;

          10. issue senior securities, except in connection with
permitted borrowing for extraordinary emergency purposes or loans
of portfolio securities;

          11. sell securities short or maintain a short position,
unless at all times when a short position is open it owns an
equal amount of such securities or securities convertible into or
exchangeable for, without payment of any further consideration,
securities of the same issue as, and equal in amount to, the
securities sold short (short sales against the box), and unless
not more than 10% of the Portfolio's net assets (taken at market
value) is held as collateral for such sales at any one time (it
is the Portfolio's present intention to make such sales only for
the purpose of deferring realization of gain or loss for federal
income tax purposes);

          12. invest more than 5% of the value of its total
assets at the time an investment is made in the nonconvertible
preferred stock of issuers whose nonconvertible preferred stock
is not readily marketable;

          13. invest in the securities of any investment company,
except in connection with a merger, consolidation, acquisition of
assets or other reorganization approved by the Fund's
shareholders;

          14. invest more than 25% of the value of its total
assets at the time of investment in the aggregate of:

               (a) nonconvertible preferred stock of issuers
whose senior debt securities are rated Aaa, Aa, or A by Moody's
or AAA, AA or A by S&P, provided that in no event may such
nonconvertible preferred stocks exceed in the aggregate 20% of
the value of the Portfolio's total assets at the time of
investment;

               (b) debt securities of foreign issuers which are
rated Aaa, Aa or A by Moody's or AAA, AA or A by S&P; and

               (c) convertible debt securities which are rated
Aaa, Aa or A by Moody's, or AAA, AA or A by S&P, provided that in
no event may such securities exceed in the aggregate 10% of the
value of the Portfolio's total assets at the time of investment;

          15. purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in real
estate or interests therein;

          16. purchase or sell commodities or commodity contracts
(except currencies, currency futures, forward contracts or
contracts for the future acquisition or delivery of fixed-income
securities and related options) and other similar contracts; or

          17. purchase securities on margin, except for such
short-term credits as may be necessary for the clearance of
transactions.

ALLIANCEBERNSTEIN HIGH YIELD PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          The ratings of fixed-income securities by Moody's, S&P,
and Fitch are a generally accepted barometer of credit risk. They
are, however, subject to certain limitations from an investor's
standpoint. For a description of credit ratings see Appendix A to
the Prospectus. Such limitations include the following: 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; and there may be varying degrees of
difference in credit risk of securities in each rating category.
The Adviser attempts to reduce the overall portfolio credit risk
through diversification and selection of portfolio securities
based on considerations mentioned below.

          While ratings provide a generally useful guide to
credit risks, they do not, nor do they purport to, offer any
criteria for evaluating interest rate risk. Changes in the
general level of interest rates cause fluctuations in the prices
of fixed-income securities already outstanding and will therefore
result in fluctuation in net asset value of the Portfolio's
shares. The extent of the fluctuation is determined by a complex
interaction of a number of factors. The Adviser evaluates those
factors it considers relevant and makes portfolio changes when it
deems it appropriate in seeking to reduce the risk of
depreciation in the value of the Portfolio. For a description of
credit ratings, see Appendix A to the Prospectus.

          PUBLIC UTILITIES. The Portfolio's investments in public
utilities, if any, may be subject to certain risks. Such
utilities may have difficulty meeting environmental standards and
obtaining satisfactory fuel supplies at reasonable costs. During
an inflationary period, public utilities also face increasing
fuel, construction and other costs and may have difficulty
realizing an adequate return on invested capital. There is no
assurance that regulatory authorities will grant sufficient rate
increases to cover expenses associated with the foregoing
difficulties as well as debt service requirements. In addition,
with respect to utilities engaged in nuclear power generation,
there is the possibility that federal, state or municipal
governmental authorities may from time to time impose additional
regulations or take other governmental action which might cause
delays in the licensing, construction, or operation of nuclear
power plants, or suspension of operation of such plants which
have been or are being financed by proceeds of the fixed-income
securities in the Portfolio.

          MORTGAGE-RELATED SECURITIES. The mortgage-related
securities in which the Portfolio may invest provide funds for
mortgage loans made to residential home buyers. These include
securities which represent interests on pools of mortgage loans
made by lenders such as savings and loan institutions, mortgage
bankers, commercial banks and others. Pools of mortgage loans are
assembled for sale to investors (such as the Portfolio) by
various governmental, government-related and private
organizations.

          Government-related (i.e., not backed by the full faith
and credit of the United States Government) guarantors include
FNMA and FHLMC. For a description of FNMA and FHLMC and the
securities they issue see above, "AllianceBernstein U.S.
Government/High Grade Securities Portfolio -- U.S. Government
Securities, FHLMC Securities and FNMA Securities."

          Yields on mortgage-related 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 issued average life yield. Reinvestment of
prepayments may occur at higher or lower interest rates than the
original investment, thus affecting the yield of the Portfolio.
The compounding effect from reinvestment of monthly payments
received by the Portfolio will increase the yield to shareholders
compared to bonds that pay interest semi-annually.

          DIRECT INVESTMENT IN MORTGAGES. The Portfolio may
invest up to 5% of its total assets directly in residential
mortgages securing residential real estate (i.e., the Portfolio
becomes the mortgagee). Such investments are not mortgage-related
securities as described above. They are normally available from
lending institutions which group together a number of mortgages
for resale (usually from 10 to 50 mortgages) and which act as
serving agent for the purchaser with respect to, among other
things, the receipt of principal and interest payments. (Such
investments are also referred to as whole loans.) The vendor of
such mortgages receives a fee from the Portfolio for acting a
servicing agent. The vendor does not provide any insurance or
guarantees covering the repayment of principal or interest on the
mortgages. At present, such investments are considered to be
illiquid by the Adviser. The Portfolio will invest in such
mortgages only if the Adviser has determined through an
examination of the mortgage loans and their originators (which
may include an examination of such factors as percentage of
family income dedicated to loan service and relationship between
loan value and market value) that the purchase of the mortgages
should not present a significant risk of loss to the Portfolio.
The Portfolio has no present intention of making direct
investments in mortgages.

          WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS. The
Portfolio may purchase securities offered on a when-issued basis
and may purchase or sell securities on a forward commitment
basis. For a general description of when-issued securities and
forward commitments, see above, "AllianceBernstein U.S.
Government/High Grade Portfolio -- Investment Practices --
When-Issued Securities and Forward Commitments." No when-issued
or forward commitments will be made by the Portfolio if, as a
result, more than 20% of the value of the Portfolio's total
assets would be committed to such transactions.

          The Portfolio may purchase securities on a when, as and
if issued basis as described above in "AllianceBernstein U.S.
Government/High Grade Portfolio -- Investment Practices --
When-Issued Securities and Forward Commitments." The commitment
for the purchase of any such security will not be recognized in
the Portfolio until the Adviser determines that issuance of the
security is probable. At such time, the Portfolio will record the
transaction and, in determining its net asset value, will reflect
the value of the security daily. At such time, the Portfolio will
also establish a segregated account with its custodian bank in
which it will maintain U.S. Government Securities, cash or cash
equivalents or other high grade debt portfolio securities equal
in value to recognized commitments for such securities. The value
of the Portfolio's commitments to purchase the securities of any
one issuer, together with the value of all securities of such
issuer owned by the Portfolio, may not exceed 5% of the value of
the Portfolio's total assets at the time the initial commitment
to purchase such securities is made. Subject to the foregoing
restrictions, the Portfolio may purchase securities on such basis
without limit. An increase in the percentage of the Portfolio's
assets committed to the purchase of securities on a when, as and
if issued basis may increase the volatility of its net asset
value. The Adviser and the Directors of the Fund do not believe
that the net asset value of the Portfolio will be adversely
affected by its purchase of securities on such basis.

          FUTURES CONTRACTS AND OPTIONS ON FUTURES. The Portfolio
may invest in financial futures contracts (futures contracts) and
related options thereon. The Portfolio may sell a futures
contract or a call option thereon or purchase a put option on
such futures contract if the Adviser anticipates that interest
rates will rise, as a hedge against a decrease in the value of
the Portfolio's securities. If the Adviser anticipates that
interest rates will decline, the Portfolio may purchase a futures
contract or a call option thereon to protect against an increase
in the price of the securities the Portfolio intends to purchase.
These futures contracts and related options thereon will be used
only as a hedge against anticipated interest rate changes. For a
general discussion of futures contracts and options thereon,
including their risks, see "AllianceBernstein U.S.
Government/High Grade Securities Portfolio -- Investment
Practices -- Futures Contracts and Options on Futures Contracts,"
above, and Appendix B.

          Currently, futures contracts can be purchased on debt
securities such as U.S. Treasury bills and bonds, U.S. Treasury
notes with maturities between 6 l/2 years and 10 years, GNMA
Certificates and bank certificates of deposit. The Portfolio may
invest in futures contracts covering these types of financial
instruments as well as in new types of such contracts that may
become available.

          Financial futures contracts are traded in an auction
environment on the floors of several exchanges principally the
Chicago Board of Trade, the Chicago Mercantile Exchange and the
New York Futures Exchange. Each exchange guarantees performance
under contract provisions through a clearing corporation, a
nonprofit organization managed by the exchange membership that is
also responsible for handling daily accounting of deposits or
withdrawals of margin.

          The Portfolio has claimed an exclusion from the
definition of "commodity pool operator" under the Commodity
Exchange Act and therefore is not subject to registration or
regulation as a pool operator under that Act. The Portfolio may
not enter into futures contracts or related options thereon if
immediately thereafter the amount committed to margin plus the
amount paid for option premiums exceeds 5% of the Portfolio's
total assets. In instances involving the purchase of futures
contracts by the Portfolio, an amount equal to the market value
of the futures contract will be deposited in a segregated account
of cash and cash equivalents to collateralize the position and
thereby insure that the use of such futures contract is
unleveraged.

          PUT AND CALL OPTIONS. The Portfolio may purchase put
and call options written by others and write put and call options
covering the types of securities in which the Portfolio may
invest. For a description of put and call options, including
their risks, see above, "AllianceBernstein U.S. Government/High
Grade Securities Portfolio -- Investment Practices -- Options on
U.S. and Foreign Government Securities." The Portfolio will not
purchase any option if, immediately thereafter, the aggregate
cost of all outstanding options purchased by the Portfolio would
exceed 2% of the value of its total assets; the Portfolio will
not write any option (other than options on futures contracts)
if, immediately thereafter, the aggregate value of its portfolio
securities subject to outstanding options would exceed 15% of its
total assets.

          FOREIGN SECURITIES. The Portfolio may purchase foreign
securities provided the value of issues denominated in foreign
currency shall not exceed 20% of the Portfolio's total assets and
the value of issues denominated in United States currency shall
not exceed 25% of the Portfolio's total assets. For the risks
associated with investments in foreign debt securities, see
above, "AllianceBernstein U.S. Government/High Grade Securities
Portfolio -- High Grade Debt Securities -- Foreign Securities."

          FOREIGN CURRENCY TRANSACTIONS. Since investments in
foreign companies usually involve currencies of foreign
countries, and since the Portfolio may temporarily hold funds in
bank deposits in foreign currencies during the completion of
investment programs, the value of the assets of the Portfolio as
measured in United States dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Portfolio may incur costs
in connection with conversions between various currencies. The
Portfolio conducts its foreign currency exchange transactions
either on a spot (i.e., cash) basis at the spot rate prevailing
in the foreign currency exchange market, or through entering into
forward contracts to purchase or sell foreign currencies. A
forward foreign currency exchange contract involves an obligation
to purchase or sell a specific currency at a future date, which
may be any fixed number of days (usually less than one year) from
the date of the contract agreed upon by the parties, at a price
set at the time of the contract. These contracts are traded in
the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward
contract generally has no deposit requirement, and no commissions
are charged at any stage for trades. Although foreign exchange
dealers do not charge a fee for conversion, they do realize a
profit based on the difference (the spread) between the price at
which they are buying and selling various currencies.

          The Portfolio may enter into forward foreign currency
exchange contracts only under two circumstances. First, when the
Portfolio enters into a contract for the purchase or sale of a
security denominated in a foreign currency, it may desire to
"lock in" the U.S. Dollar price of the security. By entering into
a forward contract for the purchase or sale, for a fixed amount
of dollars, of the amount of foreign currency involved in the
underlying security transactions, the Portfolio will be able to
protect itself against a possible loss resulting from an adverse
change in the relationship between the U.S. Dollar and the
subject foreign currency during the period between the date the
security is purchased or sold and the date on which payment is
made or received.

          Second, when the Adviser believes that the currency of
a particular foreign country may suffer a substantial decline
against the U.S. Dollar, the Portfolio may enter into a forward
contract to sell for a fixed amount of dollars the amount of
foreign currency approximating the value of some or all of the
Portfolio's investment portfolio securities denominated in such
foreign currency. The precise matching of the forward contract
amounts and the value of the securities involved will not
generally be possible since the future value of such securities
in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the
forward contract is entered into and the date it matures. The
projection of short-term currency market movement is extremely
difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. The Adviser does not intend to
enter into such forward contracts under this second set of
circumstances on a regular or continuous basis, and will not do
so if, as a result, the Portfolio will have more than 5% of the
value of its total assets committed to the consummation of such
contracts.

          The Portfolio will also not enter into such forward
contracts or maintain a net exposure to such contracts where the
consummation of the contracts would obligate the Portfolio to
deliver an amount of foreign currency in excess of the value of
the securities in the Portfolio or other assets denominated in
that currency. At the consummation of such a forward contract,
the Portfolio may either make delivery of the foreign currency or
terminate its contractual obligation to deliver the foreign
currency by purchasing an offsetting contract obligating it to
purchase, at the same maturity date, the same amount of such
foreign currency. If the Portfolio chooses to make delivery of
the foreign currency, it may be required to obtain such currency
through the sale of portfolio securities denominated in such
currency or through conversion of other assets of the Portfolio
into such currency. If the Portfolio engages in an offsetting
transaction, the Portfolio will incur a gain or a loss to the
extent that there has been a change in forward contract prices.

          Under normal circumstances, consideration of the
prospect for currency parities will be incorporated in a longer
term investment decision made with regard to overall
diversification strategies. However, the Adviser believes that it
is important to have the flexibility to enter into such forward
contract when it determines that the best interest of the
Portfolio will be served.

          The Fund's custodian bank places liquid assets in a
separate account of the Portfolio in an amount equal to the value
of the Portfolio's total assets committed to the consummation of
forward foreign currency exchange contracts entered into under
the second set of circumstances, as set forth above. If the value
of the securities placed in the separate account declines,
additional cash or securities will be placed in the account on a
daily basis so that the value of the account will equal the
amount of the Portfolio's commitments with respect to such
contracts.

          The Portfolio's dealing in forward foreign currency
exchange contracts is limited to the transactions described
above. Of course, the Portfolio is not required to enter into
such transactions with regard to its foreign currency-denominated
securities and will not do so unless deemed appropriate by the
Adviser. It also should be realized that this method of
protecting the value of the Portfolio's portfolio securities
against a decline in the value of a currency does not eliminate
fluctuations in the underlying prices of the securities. It
simply establishes a rate of exchange that can be achieved at
some future point in time. Additionally, although such contracts
tend to minimize the risk of loss due to a decline in the value
of the hedged currency, at the same time they tend to limit any
potential gain that might result should the value of such
currency increase.

          RESTRICTED SECURITIES. The Portfolio may acquire
restricted securities within the limits set forth in the
Prospectus. For a description of such securities including their
risks, see above, "AllianceBernstein U.S. Government/High Grade
Securities Portfolio -- Restricted Securities" and "Other
Investment Policies -- Illiquid Securities," below. If through
the appreciation of restricted securities or the depreciation of
unrestricted securities the Portfolio should be in a position
where more than 10% of the value of its total assets is invested
in illiquid assets, including restricted securities, the
Portfolio will take appropriate steps to protect liquidity.

          REPURCHASE AGREEMENTS. The Portfolio may invest in
repurchase agreements terminable within seven days and pertaining
to issues of the United States Treasury with member banks of the
Federal Reserve System or primary dealers in U.S. Government
Securities, so long as such investments do not in the aggregate
exceed the Investment Restrictions as set forth in the
Prospectus. Such investments would be made in accordance with
procedures established by the Portfolio to require that the
securities serving as collateral for each repurchase agreement be
delivered either physically or in book entry form to the Fund's
custodian and to require that such collateral be marked to the
market with sufficient frequency to ensure that each such
agreement is fully collateralized at all times. The Portfolio
follows established procedures, which are periodically reviewed
by the Fund's Board of Directors, pursuant to which the Adviser
will monitor the creditworthiness of the dealers with which the
Portfolio enters into repurchase agreement transactions. For a
discussion of repurchase agreements, see "Other Investment
Policies -- Repurchase Agreements," below.

          LENDING OF PORTFOLIO SECURITIES. Consistent with
applicable regulatory requirements, the Portfolio may loan its
portfolio securities where such loans are continuously secured by
cash collateral equal to no less than the market value,
determined daily, of the securities loaned. In loaning its
portfolio securities, the Portfolio requires that interest or
dividends on securities loaned be paid to the Portfolio. Where
voting or consent rights with respect to loaned securities pass
to the borrower, the Portfolio follows the policy of calling the
loan, in whole or in part as may be appropriate, to permit it to
exercise such voting or consent rights if the exercise of such
rights involves issues having a material effect on the
Portfolio's investment in the securities loaned. Although the
Portfolio cannot at the present time determine the types of
borrowers to whom it may lend its portfolio securities, the
Portfolio anticipates that such loans will be made primarily to
bond dealers.

          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 Portfolio may be
either the buyer or the seller in the transaction. As a seller,
the Portfolio 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 Portfolio typically must pay the contingent payment
to the buyer, which is typically the "par value" (full notional
value) of the reference obligation. The contingent payment may be
a cash settlement or by physical delivery of the reference
obligation in return for payment of the face amount of the
obligation. If the Portfolio is a buyer and no credit event
occurs, the Portfolio may lose its investment and recover
nothing. 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 Portfolio had invested in the reference obligation directly.
Credit default swaps are subject to general market risk,
liquidity risk and credit risk. As noted above, if the Portfolio
is a buyer and no credit event occurs, it will lose its
investment. In addition, if a credit event occurs, the value of
the reference obligation received by the Portfolio as a seller
coupled with the periodic payments previously received, may be
less than the full notional value it pays to the buyer, resulting
in a loss of value to the Portfolio.

          The Portfolio will not enter into a credit default swap
if the swap provides for settlement by physical delivery and such
delivery would result in the Portfolio investing less than 80% of
its net assets in high yield fixed-income securities.

          INVESTMENT RESTRICTIONS. The following restrictions,
which are applicable to the Portfolio, supplement those set forth
above and may not be changed without Shareholder Approval, as
defined under the caption "General Information," below.

          The Portfolio may not:

          1. invest in securities of any one issuer (including
repurchase agreements with any one entity) other than U.S.
Government Securities, if immediately after such purchases more
than 5% of the value of its total assets would be invested in
such issuer, except that 25% of the value of the total assets of
the Portfolio may be invested without regard to such 5%
limitation;

          2. acquire more than 10% of any class of the
outstanding securities of any issuer (for this purpose, all
preferred stock of an issuer shall be deemed a single class, and
all indebtedness of an issuer shall be deemed a single class);

          3. invest more than 25% of the value of its total
assets at the time an investment is made in the securities of
issuers conducting their principal business activities in any one
industry, except that there is no such limitation with respect to
U.S. Government Securities or certificates of deposit, bankers'
acceptances and interest-bearing deposits (for purposes of this
investment restriction, the electric, gas, telephone and water
business shall each be considered as a separate industry);

          4. borrow money, except that the Portfolio may borrow
money only for extraordinary or emergency purposes and then only
in amounts not exceeding 15% of its total assets at the time of
borrowing;

          5. mortgage, pledge or hypothecate any of its assets,
except as may be necessary in connection with permissible
borrowings described in paragraph 4 above (in an aggregate amount
not to exceed 15% of total assets of the Portfolio);

          6. invest in illiquid securities if immediately after
such investment more than 10% of the Portfolio's total assets
(taken at market value) would be invested in such securities;
(illiquid securities purchased by the Portfolio may include (a)
subordinated debentures or other debt securities issued in the
course of acquisition financing such as that associated with
leveraged buyout transactions, and (b) participation interests in
loans to domestic companies, or to foreign companies and
governments, originated by commercial banks and supported by
letters of credit or other credit facilities offered by such
banks or other financial institutions);

          7. invest more than 10% of the value of its total
assets in repurchase agreements not terminable within seven days;

          8. invest more than 5% of the value of its total assets
at the time an investment is made in the non-convertible
preferred stock of issuers whose non-convertible preferred stock
is not readily marketable;

          9. act as securities underwriter or invest in
commodities or commodity contracts, except that the Portfolio (i)
may acquire restricted or not readily marketable securities under
circumstances where, if such securities are sold, the Portfolio
might be deemed to be an underwriter for purposes of the
Securities Act, and (ii) may purchase financial futures as
described in the Prospectus and above;

          10. engage in the purchase or sale of real estate,
except that the Portfolio may invest in securities secured by
real estate or interests therein or issued by companies,
including real estate investment trusts, which deal in real
estate or interests therein;

          11. invest in companies for the purpose of exercising
control of management;

          12. issue any senior securities as defined in the 1940
Act (except to the extent that when-issued securities
transactions, forward commitments or stand-by commitments, or
loans of portfolio securities may be considered senior
securities);

          13. participate on a joint, or on a joint and several,
basis in any trading account in securities;

          14. effect a short sale of any security;

          15. purchase securities on margin, but it may obtain
such short-term credits as may be necessary for the clearance of
purchases and sales of securities; or

          16. invest in the securities of any other investment
company except in connection with a merger, consolidation,
acquisition of assets or other reorganization.

ALLIANCEBERNSTEIN TOTAL RETURN PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

          The Portfolio has adopted, as a fundamental policy,
that it be a "balanced fund." This fundamental policy cannot be
changed without Shareholder Approval, as defined under the
caption "General Information," below. The Portfolio engages
primarily in holding securities for investment and not for
trading purposes. Purchases and sales of portfolio securities are
made at such times and in such amounts as are deemed advisable in
the light of market, economic and other conditions, irrespective
of the volume of portfolio turnover.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          OPTIONS. Subject to market conditions, the Portfolio
may also try to realize income by writing covered call options
listed on a domestic securities exchange. In so doing, the
Portfolio foregoes the opportunity to profit from an increase in
the market price in the underlying security above the exercise
price of the option in return for the premium it received from
the purchaser of the option. The Adviser believes that such
premiums will increase the Portfolio's distributions without
subjecting it to substantial risks. No option will be written by
the Portfolio if, as a result, more than 25% of the Portfolio's
assets are subject to call options. For a discussion of covered
call options see "AllianceBernstein High Yield Portfolio -- Put
and Call Options" above. The Portfolio purchases call options
only to close out a position in an option written by it. In order
to close out a position, the Portfolio will make a closing
purchase transaction if such is available. Except as stated
above, the Portfolio may not purchase or sell puts or calls or
combinations thereof.

          FOREIGN SECURITIES. Although the Portfolio may invest
in foreign securities, it has no present intention to do so.

          INVESTMENT RESTRICTIONS. The following restrictions,
which are applicable to the Portfolio, supplement those set forth
above and may not be changed without Shareholder Approval, as
defined under the caption "General Information," below.

          The Portfolio may not:

          1. invest in securities of any one issuer (including
repurchase agreements with any one entity) other than U.S.
Government Securities, if immediately after such purchases more
than 5% of the value of its total assets would be invested in
such issuer, except that 25% of the value of the total assets of
a Portfolio may be invested without regard to such 5% limitation;

          2. acquire more than 10% of any class of the
outstanding securities of any issuer (for this purpose, all
preferred stock of an issuer shall be deemed a single class, and
all indebtedness of an issuer shall be deemed a single class);

          3. invest more than 25% of the value of its total
assets at the time an investment is made in the securities of
issuers conducting their principal business activities in any one
industry, except that there is no such limitation with respect to
U.S. Government Securities or certificates of deposit, bankers'
acceptances and interest-bearing deposits (for purposes of this
investment restriction, the electric, gas, telephone and water
business shall each be considered as a separate industry);

          4. borrow money, except that the Portfolio may borrow
money only for extraordinary or emergency purposes and then only
in amounts not exceeding 15% of its total assets at the time of
borrowing;

          5. mortgage, pledge or hypothecate any of its assets,
except as may be necessary in connection with permissible
borrowings described in paragraph 4 above (in an aggregate amount
not to exceed 15% of total assets of the Portfolio);

          6. invest in illiquid securities if immediately after
such investment more than 10% of the Portfolio's total assets
(taken at market value) would be invested in such securities;

          7. invest more than 10% of the value of its total
assets in repurchase agreements not terminable within seven days;

          8. purchase the securities of any other investment
company except in a regular transaction in the open market;

          9. retain investments in the securities of any issuer
if directors or officers of the Fund or certain other interested
persons own more than 5% of such securities;

          10. invest in other companies for the purchase of
exercising control of management;

          11. purchase securities on margin, borrow money, or
sell securities short, except that the Portfolio may borrow in an
amount up to 10% of its total assets to meet redemption requests
and for the clearance of purchases and sales of portfolio
securities (this borrowing provision is not for investment
leverage but solely to enable the Portfolio to meet redemption
requests where the liquidation of portfolio securities is deemed
to be disadvantageous or inconvenient and to obtain such
short-term credits as may be necessary for the clearance of
purchases and sales of portfolio securities; all borrowings at
any time outstanding will be repaid before any additional
investments are made; the Portfolio will not mortgage, pledge or
hypothecate any assets in connection with any such borrowing in
excess of 15% of the Portfolio's total assets);

          12. underwrite securities issued by other persons;

          13. purchase any securities as to which it would be
deemed a statutory underwriter under the Securities Act;

          14 purchase or sell commodities or commodity contracts;
or

          15 issue any securities senior to the capital stock
offered hereby.

ALLIANCEBERNSTEIN INTERNATIONAL PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

          There is no limitation on the percent or amount of the
Portfolio's assets which may be invested for growth or income,
and therefore, at any point in time, the investment emphasis may
be placed solely or primarily on growth of capital or solely or
primarily on income. Ordinarily, the annual portfolio turnover
rate will not exceed 100%. In determining whether the Portfolio
will be invested for capital appreciation or for income or any
combination of both, the Adviser regularly analyzes a broad range
of international equity and fixed-income markets in order to
assess the degree of risk and level of return that can be
expected from each market. Based upon the current assessment of
the Adviser, the Portfolio expects that its objective will, over
the long term, be met principally through investing in the equity
securities of established international companies which, in the
opinion of the Adviser, have potential for growth of capital.
However, the Portfolio can be expected during certain periods to
place substantial emphasis on income through investment in
foreign debt securities when it appears that the total return
from such securities will equal or exceed the return on equity
securities.

          Investments may be made from time to time in companies
in, or governments of, developing countries as well as developed
countries. Although there is no universally accepted definition,
a developing country is generally considered to be a country
which is in the initial stages of its industrialization cycle
with a low per capita gross national product. Historical
experience indicates that the markets of developing countries
have been more volatile than the markets of the more mature
economies of developed countries; however, such markets often
have provided higher rates of return to investors. The Adviser at
present does not intend to invest more than 10% of the
Portfolio's total assets in companies in, or governments of,
developing countries.

          The Adviser, in determining the composition of the
Portfolio, will initially seek the appropriate distribution of
investments among various countries and geographic regions.
Accordingly, the Adviser considers the following factors in
making investment decisions on this basis: prospects for relative
economic growth between foreign countries; expected levels of
inflation; government policies influencing business conditions;
the outlook for currency relationships; and the range of
individual investment opportunities available to the
international portfolio investor. For a description of Japan and
the United Kingdom, see Appendix D.

          The Adviser, in analyzing individual companies for
investment, looks for one or more of the following
characteristics: an above average earnings growth per share; high
return on invested capital; healthy balance sheet; sound
financial and accounting policies and overall financial strength;
strong competitive advantages; effective research and product
development and marketing; efficient service; pricing
flexibility; strength of management; and general operating
characteristics which enables the companies to compete
successfully in their marketplace. While current dividend income
is not a prerequisite in the selection of portfolio companies,
the companies in which the Portfolio invests normally have
records of paying dividends for at least one year, and will
generally are expected to increase the amounts of such dividends
in future years as earnings increase.

          It is expected that the Portfolio's investments will
ordinarily be traded on exchanges located in the respective
countries in which the various issuers of such securities are
principally based and in some case on other exchanges. As much as
25% of the value of the Portfolio's total assets may be invested
in the securities of issuers having their principal business
activities in the same industry.

          Under exceptional economic or market conditions abroad,
the Portfolio may temporarily invest for defensive purposes all
or a major portion of its assets in U.S. government obligations
or debt obligations of companies incorporated in and having their
principal activities in the United States. As discussed below,
the Portfolio may also from time to time invest its temporary
cash balances in United States short-term money market
instruments.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          SECURITIES LENDING. The Portfolio may seek to increase
income by lending portfolio securities. The Portfolio has the
right to call a loan to obtain the securities loaned at any time
on five days notice or such shorter period as may be necessary to
vote the securities. During the existence of a loan the Portfolio
will receive the income earned on investment of the collateral.
The Portfolio does not, however, have the right to vote any
securities having voting rights during the existence of the loan,
but the Portfolio will call the loan in anticipation of an
important vote to be taken among holders of the securities or the
giving or withholding of their consent on a material matter
affecting the investment. As with other extensions of credit
there are risks of delay in recovery or even loss of rights in
the collateral should the borrower of the securities fail
financially. However, the loans would be made only to firms
deemed by the Adviser to be in good standing, and when, in its
judgment, the amount which may be earned currently from
securities loans of this type justifies the attendant risk. The
value of the securities loaned will not exceed 30% of the value
of the Portfolio's total assets.

          WARRANTS. The Portfolio may invest in warrants which
entitle the holder to buy equity securities at a specific price
for a specific period of time. 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 the warrant does not necessarily change with the
value of the underlying securities and a warrant ceases to have
value if it is not exercised prior to the expiration date.

          SPECIAL RISK CONSIDERATIONS. 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.

          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
companies are also generally not subject to uniform accounting
and auditing and financial reporting standards, practices and
requirements comparable to those applicable to United States
companies.

          It is contemplated that foreign securities will be
purchased in over-the-counter markets or on stock exchanges
located in the countries in which the respective principal
offices of the issuers of the various securities are located, if
that is the best available market. 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 (the "Exchange"),
and securities of some foreign companies are less liquid and more
volatile than securities of comparable United States companies.
Similarly, volume and liquidity in most foreign bond markets is
less than in the United States and, at times, volatility of price
can be greater than in the United States. Fixed commissions on
foreign stock exchanges are generally higher than negotiated
commissions on United States exchanges, although the Portfolio
will endeavor to achieve the most favorable net results on its
portfolio transactions. There is generally less government
supervision and regulation of foreign stock exchanges, brokers
and listed companies than in the United States.

          With respect to certain foreign countries, there is the
possibility of adverse changes in investment or exchange control
regulations and interest rates, expropriation or confiscatory
taxation, limitations on the removal of funds or other assets of
the Portfolio, political or social instability, or diplomatic
developments which could affect United States investments in
those countries. Moreover, individual foreign economies may
differ favorably or unfavorably from the United States economy in
such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and
balance of payments position.

          The dividends and interest payable on certain of the
Portfolio's foreign securities may be subject to foreign
withholding taxes, thus reducing the net amount of income
available for distribution to the Portfolio's shareholders. 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 Portfolio.

          Although the Portfolio values its assets daily in terms
of U.S. Dollars, its does not intend to convert its holdings of
foreign currencies into U.S. Dollars on a daily basis. It 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, 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 Portfolio at one rate,
while offering a lesser rate of exchange should the Portfolio
desire to resell that currency to the dealer.

          Investors should understand that the expense ratio of
the Portfolio can be expected to be higher than investment
companies investing 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.

          Investors should further understand that all
investments have a risk factor. There can be no guarantee against
loss resulting from an investment in the Portfolio, and there can
be no assurance that the Portfolio's investment objective will be
attained. The Portfolio is designed for investors who wish to
diversify beyond the United States in an actively researched and
managed portfolio. The Portfolio may not be suitable for all
investors and is intended for long-term investors who can accept
the risks entailed in seeking long-term growth of capital through
investment in foreign securities as described above.

          FOREIGN CURRENCY TRANSACTIONS. Since investments in
foreign companies usually involve currencies of foreign
countries, and since the Portfolio may temporarily hold funds in
bank deposits in foreign currencies during the completion of
investment programs, the value of the assets of the Portfolio as
measured in United States dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Portfolio may incur costs
in connection with conversions between various currencies. The
Portfolio will conduct its foreign currency exchange transactions
either on a spot (i.e., cash) basis at the spot rate prevailing
in the foreign currency exchange market, or through entering into
forward contracts to purchase or sell foreign currencies. For a
discussion of forward foreign currency exchange contracts which
also apply to the Portfolio, see "AllianceBernstein High Yield
Portfolio -- Foreign Currency Transactions," above.

          INVESTMENT RESTRICTIONS. The following restrictions,
which are applicable to the Portfolio, supplement those set forth
above and may not be changed without Shareholder Approval, as
defined under the caption "General Information," below.

          The Portfolio may not:

          1. invest in securities of any one issuer (including
repurchase agreements with any one entity) other than U.S.
Government Securities, if immediately after such purchases more
than 5% of the value of its total assets would be invested in
such issuer, except that 25% of the value of the total assets of
a Portfolio may be invested without regard to such 5% limitation;

          2. acquire more than 10% of any class of the
outstanding securities of any issuer (for this purpose, all
preferred stock of an issuer shall be deemed a single class, and
all indebtedness of an issuer shall be deemed a single class);

          3. invest more than 25% of the value of its total
assets at the time an investment is made in the securities of
issuers conducting their principal business activities in any one
industry, except that there is no such limitation with respect to
U.S. Government Securities or certificates of deposit, bankers'
acceptances and interest-bearing deposits (for purposes of this
investment restriction, the electric, gas, telephone and water
business shall each be considered as a separate industry);

          4. borrow money, except that the Portfolio may borrow
money only for extraordinary or emergency purposes and then only
in amounts not exceeding 15% of its total assets at the time of
borrowing;

          5. mortgage, pledge or hypothecate any of its assets,
except as may be necessary in connection with permissible
borrowings described in paragraph 4 above (in an aggregate amount
not to exceed 15% of total assets of a Portfolio);

          6. invest in illiquid securities if immediately after
such investment more than 10% of the Portfolio's total assets
(taken at market value) would be invested in such securities;

          7. invest more than 10% of the value of its total
assets in repurchase agreements not terminable within seven days;

          8. purchase a security if, as a result, the Portfolio
would own any securities of an open-end investment company or
more than 3% of the total outstanding voting stock of any
closed-end investment company, or more than 5% of the value of
the Portfolio's total assets would be invested in securities of
any closed-end investment company or more than 10% of such value
in closed-end investment companies in general, unless the
security is acquired pursuant to a plan of reorganization or an
offer of exchange;

          9. purchase or sell real estate (although it may
purchase securities secured by real estate or interest therein,
or issued by companies or investment trusts which invest in real
estate or interest therein);

          10. purchase or sell commodity contracts, provided,
however, that this policy does not prevent the Portfolio from
entering into forward foreign currency exchange contracts;

          11. purchase securities on margin, except for use of
the short-term credit necessary for clearance of purchases of
portfolio securities;

          12. effect short sales of securities;

          13. act as an underwriter of securities, except insofar
as it might be deemed to be such for purposes of the Securities
Act with respect to the disposition of certain portfolio
securities acquired within the limitations of restriction 4
above;

          14. purchase or retain the securities of any issuer if,
to the knowledge of the Adviser, the officers and directors of
the Fund and of the Adviser, who each own beneficially more than
1/2 of 1% of the outstanding securities of such issuer, and
together own beneficially more than 5% of the securities of such
issuer;

          15. invest in companies for the purpose of exercising
management or control; or

          16. issue senior securities except as permitted by the
1940 Act.

ALLIANCEBERNSTEIN GLOBAL BOND PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          U.S. GOVERNMENT SECURITIES. See Appendix A for a
description of U.S. Government Securities.

          FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The
Portfolio may enter into futures contracts and options on futures
contracts. The successful use of such instruments draws upon the
Adviser's special skills and experience with respect to such
instruments and usually depends on the Adviser's ability to
forecast interest rate and currency exchange rate movements
correctly. Should interest or exchange rates move in an
unexpected manner, the Portfolio may not achieve the anticipated
benefits of futures contracts or options on futures contracts or
may realize losses and thus will be in a worse position than if
such strategies had not been used. In addition, the correlation
between movements in the price of futures contracts or options on
futures contracts and movements in the price of the securities
and currencies hedged or used for cover will not be perfect and
could produce unanticipated losses. The Fund's custodian will
place cash not available for investment in U.S. Government
Securities or other liquid high-quality debt securities in a
separate account of the Portfolio having a value equal to the
aggregate amount of, the Portfolio's commitments in futures and
options on futures contracts.

          The Portfolio has claimed an exclusion from the
definition of "commodity pool operator" under the Commodity
Exchange Act and therefore is not subject to registration or
regulation as a pool operator under that Act. In general, the
Portfolio adheres to two percentage restrictions on the use of
futures contracts. The first restriction is that the Portfolio
will not enter into any futures contracts or options on futures
contracts if immediately thereafter the amount of margin deposits
on all the futures contracts of the Portfolio and premiums paid
on options on futures contracts would exceed 5% of the total
assets of the Portfolio. The second restriction is that the
aggregate market value of the outstanding futures contracts
purchased by the Portfolio not exceed 50% of the total assets of
the Portfolio. Neither of these restrictions will be changed by
the Board of Directors without considering the policies and
concerns of the various applicable federal and state regulatory
agencies.

          For additional information on the use, risks and costs
of futures contracts and options on futures contracts, see
Appendix B.

          OPTIONS ON FOREIGN CURRENCIES. For additional
information on the use, risks and costs of options on foreign
currencies, see Appendix B.

          FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The
Portfolio may purchase or sell forward foreign currency exchange
contracts ("forward contracts"). Forward contracts reduce the
potential gain from a positive change in the relationship between
the U.S. Dollar and foreign currencies. Unanticipated changes in
currency prices may result in poorer overall performance for the
Portfolio than if it had not entered into such contracts. The use
of foreign currency forward contracts will not eliminate
fluctuations in the underlying U.S. Dollar equivalent value of
the prices of or rates of return on the Portfolio's foreign
currency-denominated portfolio securities and the use of such
techniques will subject the Portfolio to certain risks.

          The matching of the increase in value of a forward
contract and the decline in the U.S. Dollar equivalent value of
the foreign currency-denominated asset that is the subject of the
hedge generally will not be precise. In addition, the Portfolio
may not always be able to enter into foreign currency forward
contracts at attractive prices and this will limit the
Portfolio's ability to use such contracts to hedge or cross-hedge
its assets. Also, with regard to the Portfolio's use of cross-
hedges, there can be no assurance that historical correlations
between the movement of certain foreign currencies relative to
the U.S. Dollar will continue. Thus, at any time poor correlation
may exist between movements in the exchange rates of the foreign
currencies underlying the Portfolio's cross-hedges and the
movements in the exchange rates of the foreign currencies in
which the Portfolio's assets that are the subject of such
cross-hedges are denominated.

          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 referenced obligation. Generally, a
credit event means bankruptcy, failure to pay, obligation
acceleration or modified restructuring. The Portfolio may be
either the buyer or the seller in the transaction. As a seller,
the Portfolio 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 Portfolio typically must pay the contingent payment
to the buyer, which is typically the "par value" (full notional
value) of the reference obligation. The contingent payment may be
a cash settlement or by physical delivery of the reference
obligation in return for payment of the face amount of the
obligation. If the Portfolio is a buyer and no credit event
occurs, the Portfolio may lose its investment and recover
nothing. 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 Portfolio had invested in the reference obligation directly.
Credit default swaps are subject to general market risk,
liquidity risk and credit risk. As noted above, if the Portfolio
is a buyer and no credit event occurs, it will lose its
investment. In addition, if a credit event occurs, the value of
the reference obligation received by the Portfolio as a seller
coupled with the periodic payments previously received, may be
less than the full notional value it pays to the buyer, resulting
in a loss of value to the Portfolio.

          The Portfolio will not enter into a credit default swap
if the swap provides for settlement by physical delivery and such
delivery would result in the Portfolio investing inconsistently
with its policy of investing in high-quality debt securities.

          INVESTMENT RESTRICTIONS. The following restrictions,
which are applicable to the Portfolio, supplement those set forth
above and may not be changed without Shareholder Approval, as
defined under the caption "General Information," below.

          The Portfolio may not:

          1. invest 25% or more of its total assets in securities
of companies engaged principally in any one industry except that
this restriction does not apply to U.S. Government Securities;

          2. borrow money except from banks for temporary or
emergency purposes, including the meeting of redemption requests
which might require the untimely disposition of securities;
borrowing in the aggregate may not exceed 15%, and borrowing for
purposes other than meeting redemptions may not exceed 5% of the
value of the Portfolio's total assets (including the amount
borrowed) less liabilities (not including the amount borrowed) at
the time the borrowing is made; securities will not be purchased
while borrowings in excess of 5% of the value of the Portfolio's
total assets are outstanding;

          3. pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings;

          4. invest in illiquid securities if immediately after
such investment more than 10% of the Portfolio's total assets
(taken at market value) would be invested in such securities;

          5. make loans except through (a) the purchase of debt
obligations in accordance with its investment objectives and
policies; (b) the lending of portfolio securities; or (c) the use
of repurchase agreements;

          6. participate on a joint or joint and several basis in
any securities trading account;

          7. invest in companies for the purpose of exercising
control;

          8. make short sales of securities or maintain a short
position, unless at all times when a short position is open it
owns an equal amount of such securities or securities convertible
into or exchangeable for, without payment of any further
consideration, securities of the same issue as, and equal in
amount to, the securities sold short (short sales against the
box), and unless not more than 10% of the Portfolio's net assets
(taken at market value) is held as collateral for such sales at
any one time (it is the Portfolio's present intention to make
such sales only for the purpose of deferring realization of gain
or loss for Federal income tax purposes);

          9. purchase a security if, as a result (unless the
security is acquired pursuant to a plan of reorganization or an
offer of exchange), the Portfolio would own any securities of an
open-end investment company or more than 3% of the total
outstanding voting stock of any closed-end investment company or
more than 5% of the value of the Portfolio's total assets would
be invested in securities of any one or more closed-end
investment companies; or

          10. (a) purchase or sell real estate, except that it
may purchase and sell securities of companies which deal in real
estate or purchase and sell securities of companies which deal in
real estate or interests therein; (b) purchase or sell
commodities or commodity contracts (except currencies, futures
contracts on currencies and related options, forward contracts or
contracts for the future acquisition or delivery of fixed-income
securities and related options, futures contracts and options on
futures contracts and other similar contracts); (c) invest in
interests in oil, gas, or other mineral exploration or
development programs; (d) purchase securities on margin, except
for such short-term credits as may be necessary for the clearance
of transactions; and (e) act as an underwriter of securities,
except that the Portfolio may acquire restricted securities under
circumstances in which, if such securities were sold, the
Portfolio might be deemed to be an underwriter for purposes of
the Securities Act.

          In addition to the restrictions set forth above, in
connection with the qualification of its shares for sale in
certain states, the Portfolio may not invest in warrants if, such
warrants valued at the lower cost or market, would exceed 5% of
the value of the Portfolio's net assets.

ALLIANCEBERNSTEIN AMERICAS GOVERNMENT INCOME PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          U.S. GOVERNMENT SECURITIES. For a general description
of U.S. Government Securities, see Appendix A.

          U.S. GOVERNMENT GUARANTEED MORTGAGE-RELATED SECURITIES
- -- GENERAL. For information regarding U.S. Government guaranteed
mortgage-related securities, see "AllianceBernstein U.S.
Government/High Grade Securities Portfolio -- U.S. Government
Guaranteed Mortgage-Related Securities -- General," above.

          GNMA CERTIFICATES. For information regarding GNMA
Certificates, see "AllianceBernstein U.S. Government/High Grade
Securities Portfolio -- GNMA Certificates," above.

          FHLMC SECURITIES. For information regarding FHLMC
Securities, see "AllianceBernstein U.S. Government/High Grade
Securities Portfolio -- FHLMC Securities," above.

          FNMA SECURITIES. For information regarding FNMA
Securities, see "AllianceBernstein U.S. Government/High Grade
Securities Portfolio -- FNMA Securities," above.

          ZERO COUPON TREASURY SECURITIES. The Portfolio may
invest in zero coupon Treasury securities. Currently the only
U.S. Treasury security issued without coupons is the Treasury
bill. Although the U.S. Treasury does not itself issue Treasury
notes and bonds without coupons, under the U.S. Treasury STRIPS
program interest and principal payments on certain long term
treasury securities may be maintained separately in the Federal
Reserve book entry system and may be separately traded and owned.
In addition, in the last few years a number of banks and
brokerage firms have stripped the corpus from the coupon portions
of the U.S. Treasury bonds and notes and sold them separately in
the form of receipts or certificates representing undivided
interests in these instruments (which instruments are generally
held by a bank in a custodial or trust account). The Staff of the
Commission has indicated that in its view, these receipts or
certificates should be considered as securities issued by the
bank or brokerage firm involved and, therefore, should not be
included in the Portfolio's categorization of U.S. Government
Securities. The Portfolio disagrees with the Staff's
interpretation, but will not treat such securities as U.S.
Government Securities until final resolution of the issue.

          Zero coupon Treasury securities do not entitle the
holder to any periodic payments of interest prior to maturity.
Accordingly, such securities usually trade at a deep discount
from their face or par value and will be subject to greater
fluctuations of market value in response to changing interest
rates than debt obligations of comparable maturities which make
current distributions of interest. Current federal tax law
requires that a holder (such as the Portfolio) of a zero coupon
security accrue a portion of the discount at which the security
was purchased as income each year even though the Portfolio
receives no interest payment in cash on the security during the
year.

          CANADIAN GOVERNMENT GUARANTEED MORTGAGE-RELATED
SECURITIES. Canadian mortgage-related securities may be issued in
several ways, the most common of which is a modified pass-
through vehicle issued pursuant to the program (the "NHA MBS
Program") established under the National Housing Act of Canada
("NHA"). Certificates issued pursuant to the NHA MBS Program
("NHA Mortgage-Related Securities") benefit from the guarantee of
the Canada Mortgage and Housing Corporation ("CMHC"), a federal
Crown corporation that is (except for certain limited purposes)
an agent of the Government of Canada whose guarantee (similar to
that of GNMA in the United States) is an unconditional obligation
of the Government of Canada except as described below. The NHA
currently provides that the aggregate principal amount of all
issues of NHA Mortgage-Related Securities in respect of which
CMHC may give a guarantee must not exceed $60 billion.

          NHA Mortgage-Related Securities are backed by a pool of
insured mortgages that satisfy the requirements established by
the NHA. Issuers that wish to issue NHA Mortgage-Related
Securities must meet the status and other requirements of CMHC
and submit the necessary documentation to become an approved
issuer. When an approved issuer wishes to issue NHA Mortgage-
Related Securities in respect of a particular pool of mortgages,
it must seek the approval of CMHC. Such mortgages must, among
other things, be first mortgages that are insured under the NHA,
not be in default and provide for equal monthly payments
throughout their respective terms.

          The mortgages in each NHA Mortgage-Related Securities
pool are assigned to CMHC which, in turn, issues a guarantee of
timely payment of principal and interest that is shown on the
face of the certificates representing the NHA Mortgage-Related
Securities (the "NHA MBS Certificates"). NHA Mortgage-Related
Securities do not constitute any liability of, nor evidence any
recourse against, the issuer of the NHA Mortgage-Related
Securities, but in the event of any failure, delay or default
under the terms of NHA MBS Certificates, the holder has recourse
to CMHC in respect of its guarantee set out on the NHA MBS
Certificates.

          In any legal action or proceeding or otherwise, CMHC
has agreed not to contest or defend against a demand for the
timely payment of the amount set forth and provided for in, and
unpaid on, any duly and validly issued NHA MBS Certificate,
provided that such payment is sought and claimed by or on behalf
of a bona fide purchaser of and investor in such security,
without actual notice at the time of the purchase of the basis or
grounds for contesting or defending against that demand for
timely payment.

          While most Canadian Mortgage-Related Securities are
subject to voluntary prepayments, some pools are not and function
more like a traditional bond. The typical maturity of Canadian
Mortgage-Related Securities is five years, as most Canadian
residential mortgages provide for a five-year maturity with equal
monthly blended payments of interest and principal based on a
twenty-five year amortization schedule. Pursuant to recent
changes adopted by CMHC, maturities of NHA Mortgaged-Related
Securities may be as short as six months or as long as eighteen
years.

          ILLIQUID SECURITIES. The Portfolio has adopted the
following investment policy which may be changed by the vote of
the Board of Directors.

          The Portfolio will not invest in illiquid securities if
immediately after such investment more than 15% of the
Portfolio's net assets (taken at market value) would be invested
in such securities. For this purpose, illiquid securities
include, among others, (a) securities that are illiquid by virtue
of the absence of a readily available market or legal or
contractual restriction on resale, (b) options purchased by the
Portfolio over-the-counter and the cover for options written by
the Portfolio over-the-counter and (c) repurchase agreements not
terminable within seven days.

          See "Other Investment Policies -- Illiquid Securities,"
below, for a more detailed discussion of the Portfolio's
investment policy on restricted securities and securities with
legal or contractual restrictions on resale.

          FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The
Portfolio may enter into futures contracts and options on futures
contracts. The successful use of such instruments draws upon the
Adviser's special skills and experience with respect to such
instruments and usually depends on the Adviser's ability to
forecast interest rate and currency exchange rate movements
correctly. Should interest or exchange rates move in an
unexpected manner, the Portfolio may not achieve the anticipated
benefits of futures contracts or options on futures contracts or
may realize losses and thus will be in a worse position than if
such strategies had not been used. In addition, the correlation
between movements in the price of futures contracts or options on
futures and movements in the price of the securities and
currencies hedged or used for cover will not be perfect and could
produce unanticipated losses.

          The Portfolio has claimed an exclusion from the
definition of "commodity pool operator" under the Commodity
Exchange Act and therefore is not subject to registration or
regulation as a pool operator under that Act. The Portfolio will
not enter into any futures contracts or options on futures
contracts if immediately thereafter the aggregate of the market
value of the outstanding futures contracts of the Portfolio and
the market value of the currencies and futures contracts subject
to outstanding options written by the Portfolio would exceed 50%
of the market value of the total assets of the Portfolio. These
restrictions will not be changed by the Fund's Board of Directors
without considering the policies and concerns of the various
applicable federal and state regulatory agencies.

          For additional information on the use, risks and costs
of futures contracts and options on futures contracts, see
Appendix B.

          OPTIONS ON FOREIGN CURRENCIES. For additional
information on the use, risks and costs of options on foreign
currencies, see Appendix B.

          FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The
Portfolio may purchase or sell forward foreign currency exchange
contracts. The Portfolio may enter into a forward contract, for
example, 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).
Additionally, for example, when the Portfolio 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 Portfolio's securities denominated in such foreign
currency, or, when the Portfolio 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 U.S. Dollar amount (position hedge). In this
situation the Portfolio may, in the alternative, enter into a
forward contract to sell a different foreign currency for a fixed
U.S. Dollar amount where the Portfolio believes that the U.S.
Dollar value of the currency to be sold pursuant to the forward
contract will fall whenever there is a decline in the U.S. Dollar
value of the currency in which portfolio securities of the
Portfolio are denominated (cross-hedge). The Fund's custodian
will place cash not available for investment or liquid high-grade
government securities in a segregated account of the Portfolio
having a value equal to the aggregate amount of the Portfolio's
commitments under forward contracts entered into with respect to
position hedges and cross-hedges. If the value of the securities
placed in the segregated account declines, additional cash or
liquid high-grade government securities will be placed in the
account on a daily basis so that the value of the account will
equal the amount of the Portfolio's commitments with respect to
such contracts. As an alternative to maintaining all or part of
the segregated account, the Portfolio may purchase a call option
permitting the Portfolio to purchase the amount of foreign
currency being hedged by a forward sale contract at a price no
higher than the forward contract price or the Portfolio may
purchase a put option permitting the Portfolio to sell the amount
of foreign currency subject to a forward purchase contract at a
price as high or higher than the forward contract price.

          Forward contracts will reduce the potential gain from a
positive change in the relationship between the U.S. Dollar and
foreign currencies. Unanticipated changes in currency prices may
result in poorer overall performance for the Portfolio than if it
had not entered into such contracts. The use of foreign currency
forward contracts will not eliminate fluctuations in the
underlying U.S. Dollar equivalent value of the proceeds of or
rates of return on the Portfolio's foreign currency denominated
portfolio securities and the use of such techniques will subject
the Portfolio to certain risks.

          The matching of the increase in value of a forward
contract and the decline in the U.S. Dollar equivalent value of
the foreign currency denominated asset that is the subject of the
hedge generally will not be precise. In addition, the Portfolio
may not always be able to enter into foreign currency forward
contracts at attractive prices and this will limit the
Portfolio's ability to use such contracts to hedge its assets.
Also, with regard to the Portfolio's use of cross-hedges, there
can be no assurance that historical correlations between the
movement of certain foreign currencies relative to the U.S.
Dollar will continue. Thus, at any time poor correlation may
exist between movements in the exchange rates of the foreign
currencies underlying the Portfolio's cross-hedges and the
movements in the exchange rates of the foreign currencies in
which the Portfolio's assets that are the subject of such
cross-hedges are denominated.

          OPTIONS ON U.S. GOVERNMENT SECURITIES AND FOREIGN
GOVERNMENT SECURITIES. For additional information on the use,
risks and costs of options in U.S. Government Securities and
foreign government securities, see Appendix A.

          REPURCHASE AGREEMENTS. The Portfolio may invest in
repurchase agreements pertaining to the types of securities in
which it invests. For additional information regarding repurchase
agreements, see "Other Investment Policies -- Repurchase
Agreements," below.

          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 referenced obligation. Generally, a
credit event means bankruptcy, failure to pay, obligation
acceleration or modified restructuring. The Portfolio may be
either the buyer or the seller in the transaction. As a seller,
the Portfolio 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 Portfolio typically must pay the contingent payment
to the buyer, which is typically the "par value" (full notional
value) of the reference obligation. The contingent payment may be
a cash settlement or by physical delivery of the reference
obligation in return for payment of the face amount of the
obligation. If the Portfolio is a buyer and no credit event
occurs, the Portfolio may lose its investment and recover
nothing. 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 Portfolio had invested in the reference obligation directly.
Credit default swaps are subject to general market risk,
liquidity risk and credit risk. As noted above, if the Portfolio
is a buyer and no credit event occurs, it will lose its
investment. In addition, if a credit event occurs, the value of
the reference obligation received by the Portfolio as a seller
coupled with the periodic payments previously received, may be
less than the full notional value it pays to the buyer, resulting
in a loss of value to the Portfolio.

          The Portfolio will not enter into a credit default swap
if the swap provides for settlement by physical delivery and such
delivery would result in the Portfolio investing (i) less than
80% of its net assets in investment grade securities, or (ii)
more than 20% of its net assets in non-investment grade
securities rated, at the time of investment, at least B- or B3.

          INVESTMENT RESTRICTIONS

          The following restrictions, which are applicable to the
Portfolio, supplement those set forth above and may not be
changed without Shareholder Approval, as defined under the
caption "General Information," below.

          The Portfolio may not:

          1. invest 25% or more of its total assets in securities
of companies engaged principally in any one industry except that
this restriction does not apply to U.S. Government Securities;

          2. borrow money, except (a) the Portfolio may, in
accordance with provisions of the 1940 Act, borrow money from
banks for temporary or emergency purposes, including the meeting
of redemption requests which might require the untimely
disposition of securities; borrowing in the aggregate may not
exceed 15%, and borrowing for purposes other than meeting
redemptions may not exceed 5% of the value of the Portfolio's
total assets (including the amount borrowed) at the time the
borrowing is made; outstanding borrowings in excess of 5% of the
value of the Portfolio's total assets will be repaid before any
subsequent investments are made and (b) the Portfolio may enter
into reverse repurchase agreements and dollar rolls;

          3. pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings;

          4. make loans except through (a) the purchase of debt
obligations in accordance with its investment objectives and
policies; (b) the lending of portfolio securities; or (c) the use
of repurchase agreements;

          5. participate on a joint or joint and several basis in
any securities trading account;

          6. invest in companies for the purpose of exercising
control;

          7. make short sales of securities or maintain a short
position, unless at all times when a short position is open it
owns an equal amount of such securities or securities convertible
into or exchangeable for, without payment of any further
consideration, securities of the same issue as, and equal in
amount to, the securities sold short (short sales against the
box), and unless not more than 10% of the Portfolio's net assets
(taken at market value) is held as collateral for such sales at
any one time (it is the Portfolio's present intention to make
such sales only for the purpose of deferring realization of gain
or loss for federal income tax purposes);

          8. purchase a security if, as a result (unless the
security is acquired pursuant to a plan of reorganization or an
offer of exchange), the Portfolio would own any securities of an
open-end investment company or more than 3% of the total
outstanding voting stock of any closed-end investment company or
more than 5% of the value of the Portfolio's total assets would
be invested in securities of any one or more closed-end
investment companies; or

          9. (a) purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in real
estate or purchase and sell securities of companies which deal in
real estate or interests therein; (b) purchase or sell
commodities or commodity contracts (except currencies, futures
contracts on currencies and related options, forward contracts or
contracts for the future acquisition or delivery of fixed-income
securities and related options, futures contracts and options on
futures contracts and other similar contracts); (c) invest in
interests in oil, gas, or other mineral exploration or
development programs; (d) purchase securities on margin, except
for such short-term credits as may be necessary for the clearance
of transactions; and (e) act as an underwriter of securities,
except that the Portfolio may acquire restricted securities under
circumstances in which, if such securities were sold, the
Portfolio might be deemed to be an underwriter for purposes of
the Securities Act.

          In addition to the restrictions set forth above, in
connection with the qualification of its shares for sale in
certain states, the Portfolio may not invest in warrants if such
warrants valued at the lower of cost or market would exceed 5% of
the value of the Portfolio's net assets. Included within such
amount, but not to exceed 2% of the Portfolio's net assets may be
warrants which are not listed on the Exchange or the American
Stock Exchange. Warrants acquired by the Portfolio in units or
attached to securities may be deemed to be without value. The
Portfolio will also not purchase puts, calls, straddles, spreads
and any combination thereof if by reason thereof the value of its
aggregate investment in such classes of securities will exceed 5%
of its total assets.

          For additional information about Canada, Mexico and
Argentina, see Appendix D.

ALLIANCEBERNSTEIN GLOBAL DOLLAR GOVERNMENT PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

          In selecting and allocating assets among countries, the
Adviser develops a long-term view of those countries and analyzes
sovereign risk by focusing on factors such as a country's public
finances, monetary policy, external accounts, financial markets,
stability of exchange rate policy and labor conditions. In
selecting and allocating assets among corporate issuers within a
given country, the Adviser considers the relative financial
strength of issuers and expects to emphasize investments in
securities of issuers that, in the Adviser's opinion, are
undervalued within each market sector. The Portfolio is not
required to invest any specified minimum amount of its total
assets in the securities or obligations of issuers located in any
particular country.

          Sovereign Debt Obligations held by the Portfolio take
the form of bonds, notes, bills, debentures, warrants, short-term
paper, loan participations, loan assignments and interests issued
by entities organized and operated for the purpose of
restructuring the investment characteristics of other Sovereign
Debt Obligations. Sovereign Debt Obligations held by the
Portfolio generally are not traded on a securities exchange. The
U.S. and non-U.S. corporate fixed-income securities held by the
Portfolio include debt securities, convertible securities and
preferred stocks of corporate issuers.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          BRADY BONDS. Brady Bonds are created through the
exchange of existing commercial bank loans to foreign entities
for new obligations in connection with debt restructurings under
a plan introduced by former U.S. Secretary of the Treasury,
Nicholas F. Brady (the "Brady Plan"). They may be collateralized
or uncollateralized and issued in various currencies (although
most are dollar-denominated) and they are actively traded in the
over-the-counter secondary market.

          U.S. Dollar-denominated, Collateralized Brady Bonds,
which may be fixed rate par bonds or floating rate discount
bonds, are generally collateralized in full as to principal due
at maturity by U.S. Treasury zero coupon obligations that have
the same maturity as the Brady Bonds. Interest payments on these
Brady Bonds generally are collateralized by cash or securities in
an amount that, in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments based on the
applicable interest rate at that time and is adjusted at regular
intervals thereafter. Certain Brady Bonds are entitled to value
recovery payments in certain circumstances, which in effect
constitute supplemental interest payments but generally are not
collateralized. Brady Bonds are often viewed as having up to four
valuation components: (i) collateralized repayment of principal
at final maturity; (ii) collateralized interest payments; (iii)
uncollateralized interest payments; and (iv) any uncollateralized
repayment of principal at maturity (these uncollateralized
amounts constitute the residual risk). In the event of a default
with respect to Collateralized Brady Bonds as a result of which
the payment obligations of the issuer are accelerated, the U.S.
Treasury zero coupon obligations held as collateral for the
payment of principal will not be distributed to investors, nor
will such obligations be sold and the proceeds distributed. The
collateral will be held by the collateral agent to the scheduled
maturity of the defaulted Brady Bonds which will continue to be
outstanding, at which time the face amount of the collateral will
equal the principal payments that would have then been due on the
Brady Bonds in the normal course. In addition, in light of the
residual risk of Brady Bonds and, among other factors, the
history of defaults with respect to commercial bank loans by
public and private entities of countries issuing Brady Bonds,
investments in Brady Bonds are to be viewed as speculative.

          STRUCTURED SECURITIES. The Portfolio may invest up to
25% of its total assets in interests in entities organized and
operated solely for the purpose of restructuring the investment
characteristics of Sovereign 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 Brady Bonds) and the issuance by that
entity of one or more classes of securities ("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 on the underlying instruments. Because
Structured Securities of the type in which the Portfolio
anticipates it will invest typically involve no credit
enhancement, their credit risk generally will be equivalent to
that of the underlying instruments.

          The Portfolio is permitted to invest in a class of
Structured Securities that is either subordinated or
unsubordinated to the right of payment of another class.
Subordinated Structured Securities typically have higher yields
and present greater risks than unsubordinated Structured
Securities.

          Certain issuers of Structured Securities may be deemed
to be investment companies as defined in the 1940 Act. As a
result, the Portfolio's investment in these Structured Securities
may be limited by the restrictions contained in the 1940 Act
described in the Prospectus under "Investment in Other Investment
Companies."

          LOAN PARTICIPATIONS AND ASSIGNMENTS. The Portfolio may
invest in fixed and floating rate loans ("Loans") arranged
through private negotiations between an issuer of Sovereign Debt
Obligations and one or more financial institutions ("Lenders").
The Portfolio's investments in Loans are expected in most
instances to be in the form of participations in Loans
("Participations") and assignments of all or a portion of Loans
("Assignments") from third parties. The Portfolio may invest up
to 25% of its total assets in Participations and Assignments. The
government that is the borrower on the Loan will be considered by
the Portfolio to be the Issuer of a Participation or Assignment
for purposes of the Portfolio's fundamental investment policy
that it will not invest 25% or more of its total assets in
securities of issuers conducting their principal business
activities in the same industry (i.e., foreign government). The
Portfolio's investment in Participations typically will result in
the Portfolio having a contractual relationship only with the
Lender and not with the borrower. The Portfolio 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
Portfolio 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
Portfolio may not directly benefit from any collateral supporting
the Loan in which it has purchased the Participation. As a
result, the Portfolio 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 Portfolio 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 Portfolio will acquire Participations
only if the Lender is interpositioned between the Portfolio and
the borrower is a Lender having total assets of more than $25
billion and whose senior unsecured debt is rated investment grade
or higher (i.e. Baa or higher by Moody's or BBB or higher by S&P,
or Fitch).

          When the Portfolio 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 Portfolio as the purchaser
of an assignment may differ from, and be more limited than, those
held by the assigning Lender. The assignability of certain
Sovereign Debt Obligations is restricted by the governing
documentation as to the nature of the assignee such that the only
way in which the Portfolio may acquire an interest in a Loan is
through a Participation and not an Assignment. The Portfolio 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 Portfolio 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 Portfolio's ability to
dispose of particular Assignments or Participations when
necessary to meet the Portfolio'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 more
difficult for the Portfolio to assign a value to these securities
for purposes of valuing the Portfolio's portfolio and calculating
its asset value.

          U.S. AND NON-U.S. CORPORATE FIXED INCOME SECURITIES.
U.S. and non-U.S. corporate fixed-income securities include debt
securities, convertible securities and preferred stocks of
corporate issuers. Differing yields on fixed-income securities of
the same maturity are a function of several factors, including
the relative financial strength of the issuers. Higher yields are
generally available from securities in the lower rating
categories. When the spread between the yields of lower rated
obligations and those of more highly rated issues is relatively
narrow, the Portfolio may invest in the latter since they may
provide attractive returns with somewhat less risk. The Portfolio
expects to invest in investment grade securities (i.e. securities
rated Baa or better by Moody's or BBB or better by S&P, or
Fitch), in high yield, high risk lower rated securities (i.e.,
securities rated lower than Baa by Moody's or BBB by S&P, or
Fitch) and in unrated securities of comparable credit quality.
Unrated securities are considered for investment by the Portfolio
when the Adviser believes that the financial condition of the
issuers of such obligations and the protection afforded by the
terms of the obligations themselves limit the risk to the
Portfolio to a degree comparable to that of rated securities
which are consistent with the Portfolio's investment objectives
and policies. The ratings of fixed-income securities by S&P,
Moody's, and Fitch are a generally accepted barometer 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. See "Certain Risk
Considerations," below, for a discussion of the risks associated
with the Portfolio's investments in U.S. and non-U.S. corporate
fixed-income securities.

          INTEREST RATE TRANSACTIONS. The Portfolio may enter
into interest rate swaps and may purchase or sell interest rate
caps and floors. The use of interest rate swaps is a highly
specialized activity which involves investment techniques and
risks different from those associated with ordinary portfolio
securities transactions. If the Adviser is incorrect in its
forecasts of market values, interest rates and other applicable
factors, the investment performance of the Portfolio would
diminish compared with what it would have been if these
investment techniques were not used. Moreover, even if the
Adviser is correct in its forecasts, there is a risk that the
swap position may correlate imperfectly with the price of the
asset or liability being hedged.

          There is no limit on the amount of interest rate swap
transactions that may be entered into by the Portfolio. These
transactions do not involve the delivery of securities or other
underlying assets of principal. Accordingly, the risk of loss
with respect to interest rate swaps is limited to the net amount
of interest payments that the Portfolio is contractually
obligated to make. If the other party to an interest rate swap
defaults, the Portfolio's risk of loss consists of the net amount
of interest payments that the Portfolio contractually is entitled
to receive. The Portfolio may purchase and sell (i.e., write)
caps and floors without limitation, subject to the segregated
account requirement described in the Prospectus under "Other
Investment Policies and Techniques -- Interest Rate
Transactions."

          FORWARD COMMITMENTS. The Portfolio may enter into
forward commitments for the purchase or sale of securities. Such
transactions 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).

          OPTIONS. The Portfolio may write covered put and call
options and purchase put and call options on securities of the
types in which it is permitted to invest that are traded on U.S.
and foreign securities exchanges. The Portfolio may also write
call options for cross-hedging purposes. There are no specific
limitations on the Portfolio's writing and purchasing of options.

          If a put option written by the Portfolio were
exercised, the Portfolio would be obligated to purchase the
underlying security at the exercise price. If a call option
written by the Portfolio were exercised, the Portfolio would be
obligated to sell the underlying security at the exercise price.
For additional information on the use, risks and costs of
options, see Appendix C.

          The Portfolio may purchase or write options on
securities of the types in which it is permitted to invest in
privately negotiated (i.e., over-the-counter) transactions. The
Portfolio 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 by the Portfolio in negotiated transactions
are illiquid and it may not be possible for the Portfolio to
effect a closing transaction at a time when the Adviser believes
it would be advantageous to do so. See "Description of the Fund
- -- Additional Investment Policies and Practices -- Illiquid
Securities" in the Fund's Prospectus.

          OPTIONS ON SECURITIES INDICES. The Portfolio may
purchase and sell exchange-traded index options on any securities
index composed of the types of securities in which it may invest.
An option on a securities index is similar to an option on a
security except that, rather than the right to take or make
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.
There are no specific limitations on the Portfolio's purchasing
and selling of options on securities indices.

          Through the purchase of listed index options, the
Portfolio could achieve many of the same objectives as through
the use of options on individual securities. Price movements in
the Portfolio's investment portfolio securities probably will not
correlate perfectly with movements in the level of the index and,
therefore, the Portfolio would bear a risk of loss on index
options purchased by it if favorable price movements of the
hedged portfolio securities do not equal or exceed losses on the
options or if adverse price movements of the hedged portfolio
securities are greater than gains realized from the options.

          WARRANTS. The Portfolio may invest in warrants, which
are option securities permitting their holder to subscribe for
other securities. The Portfolio may invest in warrants for debt
securities or warrants for equity securities that are acquired in
connection with debt instruments. Warrants do not carry with them
dividend or voting rights with respect to the securities that
they entitle their holder to purchase, and they do not represent
any rights in the assets of the issuer. As a result, an
investment in warrants may be considered more speculative than
certain other types of investments. In addition, the value of a
warrant does not necessarily change with the value of the
underlying securities, and a warrant ceases to have value if it
is not exercised prior to its expiration date. The Portfolio does
not intend to retain in its investment portfolio any common stock
received upon the exercise of a warrant and will sell the common
stock as promptly as practicable and in a manner that it believes
will reduce its risk of a loss in connection with the sale. The
Portfolio does not intend to retain in its investment portfolio
any warrant for equity securities acquired as a unit with a debt
instrument, if the warrant begins to trade separately from the
related debt instrument.

          REPURCHASE AGREEMENTS. For information regarding
repurchase agreements, see "Other Investment Policies -
Repurchase Agreements," below.

          ILLIQUID SECURITIES. The Portfolio has adopted the
following investment policy on behalf of the Portfolio which may
be changed by the vote of the Board of Directors.

          The Portfolio will not invest in illiquid securities if
immediately after such investment more than 15% of the
Portfolio's net assets (taken at market value) would be invested
in such securities. For this purpose, illiquid securities
include, among others, securities that are illiquid by virtue of
the absence of a readily available market or legal or contractual
restriction on resale.

          For additional information regarding illiquid
securities, see "Other Investment Policies -- Illiquid
Securities," below.

          INVESTMENT IN CLOSED-END INVESTMENT COMPANIES. The
Portfolio may invest in other investment companies whose
investment objectives and policies are consistent with those of
the Portfolio. In accordance with the 1940 Act, the Portfolio may
invest up to 10% of its assets in securities of other investment
companies. In addition, under the 1940 Act, the Portfolio may not
own more than 3% of the total outstanding voting stock of any
investment company and not more than 5% of the Portfolio's total
assets may be invested in the securities of any investment
company. If the Portfolio acquires shares in investment
companies, shareholders would bear both their proportionate share
of expenses in the Portfolio (including advisory fees) and,
indirectly, the expenses of such investment companies (including
management and advisory fees).

CERTAIN RISK CONSIDERATIONS

          RISKS OF FOREIGN INVESTMENTS. 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 Portfolio may invest require, for both tax and
accounting purposes, that certain assets and liabilities be
restated on the issuers 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.

          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 Portfolio invests and could adversely
affect the Portfolio's assets should these conditions or events
recur.

          Foreign investment in certain foreign securities is
restricted or controlled to varying degrees. These restrictions
or controls may at times limit or preclude foreign investment in
certain foreign securities and increase the costs and expenses of
the Portfolio. Certain countries in which the Portfolio invests
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 other than those on which the
Portfolio focuses its investments 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. The Portfolio could be adversely
affected by delays in, or a refusal to grant, any required
governmental approval for repatriation of capital, as well as by
the application to the Portfolio of any restrictions on
investments. Investing in local markets may require the Portfolio
to adopt special procedures, seek local governmental approvals or
take other actions, each of which may involve additional costs to
the Portfolio.

          Income from certain investments held by the Portfolio
could be reduced by foreign income taxes, including withholding
taxes. It is impossible to determine the effective rate of
foreign tax in advance. The Portfolio's net asset value may also
be affected by changes in the rates or methods of taxation
applicable to the Portfolio or to entities in which the Portfolio
has invested. The Adviser generally considers 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 Portfolio will not be subject to
change.

          SOVEREIGN DEBT OBLIGATIONS. Established secondary
markets may not exist for many of the Sovereign Debt Obligations
in which the Portfolio will invest. Reduced secondary market
liquidity may have an adverse effect on the market price and the
Portfolio'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 Portfolio to obtain accurate market
quotations for 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
Portfolio is 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, among
other things, in its inflation rate, the amount of its external
debt and its gross domestic product, also affects the governments
ability to honor its obligations.

          Many countries providing investment opportunities for
the Portfolio have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and
rapid fluctuations in inflation 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, wage 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 Portfolio will invest in most cases pertain to
countries that are among the worlds 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, reducing and rescheduling interest and
principal payments by negotiating new or amended credit
agreements or converting outstanding principal and unpaid
interest to Brady Bonds, and 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 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.
Increased 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 will 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 upon 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 in its
Sovereign Debt Obligations.

          The Portfolio 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 Portfolio's investment objectives. The
Portfolio 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 the 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.

          U.S. CORPORATE FIXED INCOME SECURITIES. The U.S.
corporate fixed-income securities in which the Portfolio invests
may include securities issued in connection with corporate
restructurings such as takeovers or leveraged buyouts, which may
pose particular risks. Securities issued to finance corporate
restructuring may have special credit risks due to the highly
leveraged conditions of the issuer. In addition, such issuers may
lose experienced management as a result of the restructuring.
Finally, the market price of such securities may be more volatile
to the extent that expected benefits from the restructuring do
not materialize. The Portfolio may also invest in U.S. corporate
fixed-income securities that are not current in the payment of
interest or principal or are in default, so long as the Adviser
believes such investment is consistent with the Portfolio's
investment objectives. The Portfolio's rights with respect to
defaults on such securities will be subject to applicable U.S.
bankruptcy, moratorium and other similar laws.

          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 referenced obligation. Generally, a
credit event means bankruptcy, failure to pay, obligation
acceleration or modified restructuring. The Portfolio may be
either the buyer or the seller in the transaction. As a seller,
the Portfolio 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 Portfolio typically must pay the contingent payment
to the buyer, which is typically the "par value" (full notional
value) of the reference obligation. The contingent payment may be
a cash settlement or by physical delivery of the reference
obligation in return for payment of the face amount of the
obligation. If the Portfolio is a buyer and no credit event
occurs, the Portfolio may lose its investment and recover
nothing. 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 Portfolio had invested in the reference obligation directly.
Credit default swaps are subject to general market risk,
liquidity risk and credit risk. As noted above, if the Portfolio
is a buyer and no credit event occurs, it will lose its
investment. In addition, if a credit event occurs, the value of
the reference obligation received by the Portfolio as a seller
coupled with the periodic payments previously received, may be
less than the full notional value it pays to the buyer, resulting
in a loss of value to the Portfolio.

          The Portfolio will not enter into a credit default swap
if the swap provides for settlement by physical delivery and such
delivery would result in the Portfolio investing less than 65% of
its total assets in sovereign debt obligations or in investments
inconsistent with its restrictions on investing in specific
countries.

          INVESTMENT RESTRICTIONS. The following restrictions,
which are applicable to the Portfolio, supplement those set forth
above and in the Prospectus, and may not be changed without
Shareholder Approval, as defined under the caption "General
Information," below.

          The Portfolio may not:

          1. invest 25% or more of its total assets in securities
of companies engaged principally in any one industry except that
this restriction does not apply to U.S. Government Securities;

          2. borrow money, except (a) the Portfolio may, in
accordance with provisions of the 1940 Act, borrow money from
banks for temporary or emergency purposes, including the meeting
of redemption requests which might require the untimely
disposition of securities; borrowing in the aggregate may not
exceed 15%, and borrowing for purposes other than meeting
redemptions may not exceed 5% of the value of the Portfolio's
total assets (including the amount borrowed) at the time the
borrowing is made; outstanding borrowings in excess of 5% of the
value of the Portfolio's total assets will be repaid before any
subsequent investments are made and (b) the Portfolio may enter
into reverse repurchase agreements and dollar rolls;

          3. pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings;

          4. make loans except through (a) the purchase of debt
obligations in accordance with its investment objectives and
policies; (b) the lending of portfolio securities; or (c) the use
of repurchase agreements;

          5. invest in companies for the purpose of exercising
control;

          6. make short sales of securities or maintain a short
position, unless at all times when a short position is open it
owns an equal amount of such securities or securities convertible
into or exchangeable for (without payment of any further
consideration) securities of the same issue as, and equal in
amount to, the securities sold short (short sales against the
box), and unless not more than 10% of the Portfolio's net assets
(taken at market value) is held as collateral for such sales at
any one time (it being the Portfolio's present intention to make
such sales only for the purpose of deferring realization of gain
or loss for federal income tax purposes); or

          7. (a) purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in real
estate or interests therein and securities that are secured by
real estate, provided such securities are securities of the type
in which the Portfolio may invest; (b) purchase or sell
commodities or commodity contracts, including futures contracts
(except forward commitment contracts or contracts for the future
acquisition or delivery of debt securities); (c) invest in
interests in oil, gas, or other mineral exploration or
development programs; (d) purchase securities on margin, except
for such short-term credits as may be necessary for the clearance
of transactions; and (e) act as an underwriter of securities,
except that the Portfolio may acquire restricted securities under
circumstances in which, if such securities were sold, the
Portfolio might be deemed to be an underwriter for purposes of
the Securities Act.

ALLIANCEBERNSTEIN UTILITY INCOME PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

          The utilities industry consists of companies engaged in
(i) the manufacture, production, generation, provision,
transmission, sale and distribution of gas and electric energy,
and communications equipment and services, including telephone,
telegraph, satellite, microwave and other companies providing
communication facilities for the public, or (ii) the provision of
other utility or utility related goods and services, including,
but not limited to, entities engaged in water provision,
cogeneration, waste disposal system provision, solid waste
electric generation, independent power producers and non-utility
generators. In evaluating particular issuers, the Adviser
considers a number of factors, including historical growth rates
and rates of return on capital, financial condition and
resources, management skills and such industry factors as
regulatory environment and energy sources. With respect to
investments in equity securities, the Adviser considers the
prospective growth in earnings and dividends in relation to
price/earnings ratios, yield and risk. The Adviser believes that
above-average dividend returns and below-average price/earnings
ratios are factors that not only provide current income but also
generally tend to moderate risk and to afford opportunity for
appreciation of securities owned by the Portfolio.

          The Portfolio invests in equity securities, such as
common stocks, securities convertible into common stocks and
rights and warrants to subscribe for the purchase of common
stocks and in fixed-income securities, such as bonds and
preferred stocks. The Portfolio may vary the percentage of assets
invested in any one type of security based upon the Adviser's
evaluation as to the appropriate portfolio structure for
achieving the Portfolio's investment objective under prevailing
market, economic and financial conditions. Certain securities
(such as fixed-income securities) will be selected on the basis
of their current yield, while other securities may be purchased
for their growth potential.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          CONVERTIBLE SECURITIES. Convertible securities include
bonds, debentures, corporate notes and preferred stocks that are
convertible at a stated exchange rate into 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. The price of
a convertible security will normally vary with changes in the
price of the underlying stock although the higher yield tends to
make the convertible security less volatile than the underlying
common stock. As with debt securities, the market value of
convertible securities tends to decrease as interest rates rise
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 offer investors the potential 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 are
consequently of higher quality and 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. The Portfolio may invest up to 30% of its net assets in
the convertible securities of companies whose common stocks are
eligible for purchase by the Portfolio under the investment
policies described above and in the Prospectus.

          RIGHTS OR WARRANTS. The Portfolio may invest up to 5%
of its net assets 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 Portfolio's investment portfolio. Rights and warrants entitle
the holder to buy equity securities at a specific price for a
specific period of time. Rights are similar to warrants except
that they have a substantially shorter duration. 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 underlying
securities nor do they represent any rights in the assets of the
issuing company. The value of a right or warrant does not
necessarily change with the value of the underlying security,
although the value of a right or warrant may decline because of a
decrease in the value of the underlying security, the passage of
time or a change in perception as to the potential of the
underlying security, or any combination thereof. If the market
price of the underlying security is below the exercise price set
forth in the warrant on the expiration date, the warrant will
expire worthless. Moreover, a right or warrant ceases to have
value if it is not exercised prior to the expiration date.

          U.S. GOVERNMENT SECURITIES. For a general description
of U.S. Government Securities, see Appendix A.

          OPTIONS. For additional information on the use, risks
and costs of options, see Appendix C.

          OPTIONS ON SECURITIES INDICES. The Portfolio may
purchase and sell exchange-traded index options on any securities
index composed of the types of securities in which it may invest.
An option on a securities index is similar to an option on a
security except that, rather than the right to take or make
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.
There are no specific limitations on the Portfolio's purchasing
and selling of options on securities indices.

          Through the purchase of listed index options, the
Portfolio could achieve many of the same objectives as through
the use of options on individual securities. Price movements in
the Portfolio's portfolio securities probably will not correlate
perfectly with movements in the level of the index and,
therefore, the Portfolio would bear a risk of loss on index
options purchased by it if favorable price movements of the
hedged portfolio securities do not equal or exceed losses on the
options or if adverse price movements of the hedged portfolio
securities are greater than gains realized from the options.

          FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. For
a discussion regarding futures contracts and options on futures
contracts, see "AllianceBernstein Americas Government Income
Portfolio -- Futures Contracts" and "Options on Futures
Contracts," above.

          For additional information on the use, risks and costs
of futures contracts and options on futures contracts, see
Appendix B.

          OPTIONS ON FOREIGN CURRENCIES. For additional
information on the use, risks and costs of options on foreign
currencies, see Appendix B.

          FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The
Portfolio may purchase or sell forward foreign currency exchange
contracts (forward contracts). For a discussion regarding forward
foreign currency exchange contracts, see "AllianceBernstein
Americas Government Income Portfolio -- Forward Foreign Currency
Exchange Contracts," above.

          REPURCHASE AGREEMENTS. The Portfolio may invest in
repurchase agreements pertaining to the types of securities in
which it invests. For additional information regarding repurchase
agreements, see "Other Investment Policies -- Repurchase
Agreements," below.

          ILLIQUID SECURITIES. The Portfolio has adopted the
following investment policy on behalf of the Portfolio which may
be changed by the vote of the Board of Directors. The Portfolio
will not invest in illiquid securities if immediately after such
investment more than 15% of the Portfolio's net assets (taken at
market value) would be invested in such securities. For this
purpose, illiquid securities include, among others, securities
that are illiquid by virtue of the absence of a readily available
market or legal or contractual restriction on resale. See "Other
Investment Policies -- Illiquid Securities," below, for a more
detailed discussion of the Portfolio's investment policy on
restricted securities and securities with legal or contractual
restrictions on resale.

          INVESTMENT IN CLOSED-END INVESTMENT COMPANIES. The
Portfolio may invest in closed-end companies whose investment
objectives and policies are consistent with those of the
Portfolio. The Portfolio may invest up to 5% of its net assets in
securities of closed-end investment companies. However, the
Portfolio may not own more than 3% of the total outstanding
voting stock of any closed-end investment company. If the
Portfolio acquires shares in closed-end investment companies,
shareholders would bear both their proportionate share of
expenses in the Portfolio (including advisory fees) and,
indirectly, the expenses of such investment companies (including
management and advisory fees).

CERTAIN RISK CONSIDERATIONS

          UTILITY COMPANY RISKS. Utility companies may be subject
to a variety of risks depending, in part, on such factors as the
type of utility involved and its geographic location. The
revenues of domestic and foreign utilities companies generally
reflect the economic growth and development in the geographic
areas in which they do business. The Adviser takes into account
anticipated economic growth rates and other economic developments
when selecting securities of utility companies. Some of the risks
involved in investing in the principal sectors of the utilities
industry are discussed below.

          Telecommunications regulation typically limits rates
charged, returns earned, providers of services, types of
services, ownership, areas served and terms for dealing with
competitors and customers. Telecommunications regulation
generally has tended to be less stringent for newer services,
such as mobile services, than for traditional telephone service,
although there can be no assurances that such newer services will
not be heavily regulated in the future. Regulation may limit
rates based on an authorized level of earnings, a price index, or
some other formula. Telephone rate regulation may include
government-mandated cross-subsidies that limit the flexibility of
existing service providers to respond to competition. Telephone
utilities are still experiencing the effect of the break-up of
American Telephone & Telegraph Company, including increased
competition and rapidly developing technologies with which
traditional telephone companies now compete. Regulation may also
limit the use of new technologies and hamper efficient
depreciation of existing assets. If regulation limits the use of
new technologies by established carriers or forces
cross-subsidies, large private networks may emerge.

          Declines in the price of alternative fuels have
adversely affected gas utilities. Many gas utilities generally
have been adversely affected by oversupply conditions, and by
increased competition from other providers of utility services.
In addition, some gas utilities entered into long-term contracts
with respect to the purchase or sale of gas at fixed prices,
which prices have since changed significantly in the open market.
In many cases, such price changes have been to the disadvantage
of the gas utility. Gas utilities are particularly susceptible to
supply and demand imbalances due to unpredictable climate
conditions and other factors and are subject to regulatory risks
as well.

          Although there can be no assurance that increased
competition and other structural changes will not adversely
affect the profitability of gas and telephone utilities, or that
other negative factors will not develop in the future, in
Alliance's opinion, increased competition and change may provide
better positioned utility companies with opportunities for
enhanced profitability.

          Electric utilities that utilize coal in connection with
the production of electric power are particularly susceptible to
environmental regulation, including the requirements of the
federal Clean Air Act and of similar state laws. Such regulation
may necessitate large capital expenditures in order for the
utility to achieve compliance. Due to the public, regulatory and
governmental concern with the cost and safety of nuclear power
facilities in general, certain electric utilities with
uncompleted nuclear power facilities may have problems completing
and licensing such facilities. Regulatory changes with respect to
nuclear and conventionally fueled generating facilities could
increase costs or impair the ability of such electric utilities
to operate such facilities, thus reducing their ability to
service dividend payments with respect to the securities they
issue. Furthermore, rates of return of utility companies
generally are subject to review and limitation by state public
utilities commissions and tend to fluctuate with marginal
financing costs. Electric utilities that utilize nuclear power
facilities must apply for recommissioning from the Nuclear
Regulatory Commission after 40 years. Failure to obtain
recommissioning could result in an interruption of service or the
need to purchase more expensive power from other entities and
could subject the utility to significant capital construction
costs in connection with building new nuclear or alternative-fuel
power facilities, upgrading existing facilities or converting
such facilities to alternative fuels.

          INVESTMENTS IN LOWER-RATED FIXED-INCOME SECURITIES.
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. The Adviser tries to reduce the risk inherent
in investment in lower-rated securities through credit analysis,
diversification and attention to current developments and trends
in interest rates and economic and political conditions. However,
there can be no assurance that losses will not occur. Since the
risk of default is higher for lower-rated securities, the
Adviser's research and credit analysis are a correspondingly
important aspect of its program for managing the Portfolio's
securities than would be the case if the Portfolio did not invest
in lower-rated securities. In considering investments for the
Portfolio, the Adviser attempts to identify those high-risk,
high-yield 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.

          Non-rated securities are also considered for investment
by the Portfolio 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 Portfolio to a degree comparable to that of rated
securities which are consistent with the Portfolio's objective
and policies.

          In seeking to achieve the Portfolio's objective, there
will be times, such as during periods of rising interest rates,
when depreciation and realization of capital losses on securities
in the 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 net asset value of the Portfolio.

          INVESTMENT RESTRICTIONS. The following restrictions
which are applicable to the Portfolio, supplement those set forth
above and may not be changed without Shareholder Approval, as
defined under the caption "General Information," below.

          The Portfolio may not:

          1. invest more than 5% of its total assets in the
securities of any one issuer except the U.S. Government, although
with respect to 25% of its total assets it may invest in any
number of issuers;

          2. invest 25% or more of its total assets in the
securities of issuers conducting their principal business
activities in any one industry, other than the utilities
industry, except that this restriction does not apply to U.S.
Government Securities;

          3. purchase more than 10% of any class of the voting
securities of any one issuer;

          4. borrow money except from banks for temporary or
emergency purposes, including the meeting of redemption requests
which might require the untimely disposition of securities;
borrowing in the aggregate may not exceed 15%, and borrowing for
purposes other than meeting redemptions may not exceed 5% of the
value of the Portfolio's total assets (including the amount
borrowed) less liabilities (not including the amount borrowed) at
the time the borrowing is made; outstanding borrowings in excess
of 5% of the value of the Portfolio's total assets will be repaid
before any subsequent investments are made;

          5. purchase a security if, as a result (unless the
security is acquired pursuant to a plan of reorganization or an
offer of exchange), the Portfolio would own any securities of an
open-end investment company or more than 3% of the total
outstanding voting stock of any closed-end investment company or
more than 5% of the value of the Portfolio's net assets would be
invested in securities of any one or more closed-end investment
companies;

          6. make loans except through (a) the purchase of debt
obligations in accordance with its investment objectives and
policies; (b) the lending of portfolio securities; or (c) the use
of repurchase agreements;

          7. participate on a joint or joint and several basis in
any securities trading account;

          8. invest in companies for the purpose of exercising
control;

          9. issue any senior security within the meaning of the
Act except that the Portfolio may write put and call options or
make loans of portfolio securities;

          10. make short sales of securities or maintain a short
position, unless at all times when a short position is open it
owns an equal amount of such securities or securities convertible
into or exchangeable for (without payment of any further
consideration) securities of the same issue as, and equal in
amount to, the securities sold short (short sales against the
box), and unless not more than 10% of the Portfolio's net assets
(taken at market value) is held as collateral for such sales at
any one time (it is the Portfolio's present intention to make
such sales only for the purpose of deferring realization of gain
or loss for Federal income tax purposes); or

          11. (a) purchase or sell real estate, except that it
may purchase and sell securities of companies which deal in real
estate or interests therein; (b) purchase or sell commodities or
commodity contracts (except currencies, futures contracts on
currencies and related options, forward contracts or contracts
for the future acquisition or delivery of securities and related
options, futures contracts and options on futures contracts and
options on futures contracts and other similar contracts); (c)
invest in interests in oil, gas, or other mineral exploration or
development programs; (d) purchase securities on margin, except
for such short-term credits as may be necessary for the clearance
of transactions; and (e) act as an underwriter of securities,
except that the Portfolio may acquire restricted securities under
circumstances in which, if such securities were sold, the
Portfolio might be deemed to be an underwriter for purposes of
the Securities Act.

ALLIANCEBERNSTEIN GROWTH PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          REPURCHASE AGREEMENTS. Repurchase agreements are
agreements by which the Portfolio purchases a security and
obtains a simultaneous commitment from the seller to repurchase
the security at an agreed upon price and date. The resale price
is in excess of the purchase price and reflects an agreed upon
market rate unrelated to the coupon rate on the purchased
security. The purchased security serves as collateral for the
obligation of the seller to repurchase the security and the value
of the purchased security is initially greater than or equal to
the amount of the repurchase obligation. The seller is required
to furnish additional collateral on a daily basis in order to
maintain with the purchaser securities with a value greater than
or equal to the amount of the repurchase obligation. Such
transactions afford the Portfolio the opportunity to earn a
return on temporarily available cash. While at times the
underlying security may be a bill, certificate of indebtedness,
note, or bond issued by an agency, authority or instrumentality
of the U.S. Government, the obligation of the seller is not
guaranteed by the U.S. Government 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 Portfolio would attempt to exercise its rights with respect
to the underlying security, including possible disposition in the
market. However, the Portfolio may be subject to various delays
and risks of loss, including (a) possible declines in the value
of the underlying security (b) possible reduced levels of income
and lack of access to income during this period and (c) possible
inability to enforce rights. The Portfolio has established
standards for the creditworthiness of parties with which it may
enter into repurchase agreements, and those standards, as
modified from time to time, will be implemented and monitored by
the Adviser.

          NON-PUBLICLY TRADED SECURITIES. The Portfolio may
invest in securities which are not publicly traded, including
securities sold pursuant to Rule 144A under the Securities Act
("Rule 144A Securities"). The sale of these securities is usually
restricted under federal securities laws, and market quotations
may not be readily available. As a result, the Portfolio may not
be able to sell these securities (other than Rule 144A
Securities) unless they are registered under applicable Federal
and state securities laws, or may have to sell such securities at
less than fair market value. Investment in these securities is
restricted to 5% of the Portfolio's total assets (excluding, to
the extent permitted by applicable law, Rule 144A Securities) and
is also subject to the restriction against investing more than
15% of total assets in illiquid securities. To the extent
permitted by applicable law, Rule 144A Securities will not be
treated as illiquid for purposes of the foregoing restriction so
long as such securities meet the liquidity guidelines established
by the Fund's Board of Directors. Pursuant to these guidelines,
the Adviser will monitor the liquidity of the Portfolio's
investment in Rule 144A Securities and, in reaching liquidity
decisions, will consider: (1) the frequency of trades and quotes
for the security; (2) the number of dealers wishing to purchase
or sell the security and the number of other potential
purchasers; (3) dealer undertakings to make a market in the
security; and (4) the nature of the security and the nature of
the marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers and the mechanics of
the transfer).

          FOREIGN SECURITIES. The Portfolio may invest without
limit in securities of foreign issuers which are not publicly
traded in the United States, although the Portfolio generally
will not invest more than 20% of its total assets in such
securities. Investment in foreign issuers or securities
principally outside the United States may involve certain special
risks due to foreign economic, political, diplomatic and legal
developments, including favorable or unfavorable changes in
currency exchange rates, exchange control regulations (including
currency blockage), expropriation of assets or nationalization,
confiscatory taxation, imposition of withholding taxes on
dividend or interest payments, and possible difficulty in
obtaining and enforcing judgments against foreign entities.
Furthermore, issuers of foreign securities are subject to
different, often less comprehensive, accounting, reporting and
disclosure requirements than domestic issuers. The securities of
some foreign companies and foreign securities markets are less
liquid and at times more volatile than securities of comparable
U.S. companies and U.S. securities markets. Foreign brokerage
commissions and other fees are also generally higher than in the
United States. There are also special tax considerations which
apply to securities of foreign issuers and securities principally
traded overseas.

DESCRIPTION OF CERTAIN MONEY MARKET
SECURITIES IN WHICH THE PORTFOLIO MAY INVEST

          CERTIFICATES OF DEPOSIT, BANKERS' ACCEPTANCES AND BANK
TIME DEPOSITS. Certificates of deposit are receipts issued by a
bank in exchange for the deposit of funds. The issuer agrees to
pay the amount deposited plus interest to the bearer of the
receipt on the date specified on the certificate. The certificate
usually can be traded in the secondary market prior to maturity.

          Bankers' acceptances typically arise from short-term
credit arrangements designed to enable businesses to obtain funds
to finance commercial transactions. Generally, an acceptance is a
time draft drawn on a bank by an exporter or an importer to
obtain a stated amount of funds to pay for specific merchandise.
The draft is then accepted by another bank that, in effect,
unconditionally guarantees to pay the face value of the
instrument on its maturity date. The acceptance may then be held
by the accepting bank as an earning asset or it may be sold in
the secondary market at the going rate of discount for a specific
maturity. Although maturities for acceptances can be as long as
270 days, most maturities are six months or less.

          Bank time deposits are funds kept on deposit with a
bank for a stated period of time in an interest bearing account.
At present, bank time deposits maturing in more than seven days
are not considered by the Adviser to be readily marketable.

          COMMERCIAL PAPER. Commercial paper consists of short-
term (usually from 1 to 270 days) unsecured promissory notes
issued by entities in order to finance their current operations.

          VARIABLE NOTES. Variable amount master demand notes and
variable amount floating rate notes are obligations that permit
the investment of fluctuating amounts by the Portfolio at varying
rates of interest pursuant to direct arrangements between the
Portfolio, as lender, and the borrower. Master demand notes
permit daily fluctuations in the interest rate while the interest
rate under variable amount floating rate notes fluctuate on a
weekly basis. These notes permit daily changes in the amounts
borrowed. The Portfolio has the right to increase the amount
under these notes at any time up to the full amount provided by
the note agreement, or to decrease the amount, and the borrower
may repay up to the full amount of the notes without penalty.
Because these types of notes are direct lending arrangements
between the lender and the borrower, it is not generally
contemplated that such instruments will be traded and there is no
secondary market for these notes. Master demand notes are
redeemable (and, thus, immediately repayable by the borrower) at
face value plus accrued interest at any time. Variable amount
floating rate notes are subject to next-day redemption for 14
days after the initial investment therein. With both types of
notes, therefore, the Portfolio's right to redeem depends on the
ability of the borrower to pay principal and interest on demand.
In connection with both types of note arrangements, the Portfolio
considers earning power, cash flow and other liquidity ratios of
the issuer. These notes, as such, are not typically rated by
credit rating agencies. Unless they are so rated, the Portfolio
may invest in them only if, at the time of an investment, the
issuer has an outstanding issue of unsecured debt rated Aa or
better by Moody's or AA or better by S&P, or Fitch.

          The ratings of fixed-income securities by S&P, Moody's,
and Fitch are a generally accepted barometer 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.

          A description of Moody's, S&P's, and Fitch short-term
note ratings is included as Appendix A to the Prospectus.

          LENDING OF SECURITIES. The Portfolio may seek to
increase its income by lending portfolio securities. Under
present regulatory policies, including those of the Board of
Governors of the Federal Reserve System and the Commission, such
loans may be made only to member firms of the Exchange, and would
be required to be secured continuously by collateral in cash,
cash equivalents, or U.S. Treasury Bills maintained on a current
basis at an amount at least equal to the market value of the
securities loaned. The Portfolio would have the right to call a
loan and obtain the securities loaned at any time on five days
notice. During the existence of a loan, the Portfolio would
continue to receive the equivalent of the interest or dividends
paid by the issuer on the securities loaned and would also
receive compensation based on investment of the collateral. The
Portfolio would not, however, have the right to vote any
securities having voting rights during the existence of the loan,
but would call the loan in anticipation of an important vote to
be taken among holders of the securities or of the giving or
withholding of their consent on a material matter affecting the
investment. As with other extensions of credit, there are risks
of delay in recovery or even loss of rights in the collateral
should the borrower of the securities fail financially. However,
the loans would be made only to firms deemed by the Adviser to be
of good standing, and when, in the judgment of the Adviser, the
consideration which can be earned currently from securities loans
of this type justifies the attendant risk. If the Adviser
determines to make securities loans, it is not intended that the
value of the securities loaned would exceed 25% of the value of
the Portfolio's total assets.

          FORWARD COMMITMENTS AND WHEN-ISSUED AND DELAYED
DELIVERY SECURITIES. The Portfolio may enter into forward
commitments for the purchase of securities and may purchase
securities on a when-issued or delayed delivery basis. Agreements
for such purchases might be entered into, for example, when the
Portfolio anticipates a decline in interest rates and is able to
obtain a more advantageous yield by committing currently to
purchase securities to be issued later. When the Portfolio
purchases securities in this manner (i.e., on a forward
commitment, when-issued or delayed delivery basis), it does not
pay for the securities until they are received. The Portfolio is
required to create a segregated account with the Fund's custodian
and to maintain in that account cash, U.S. Government Securities
or other liquid high-grade debt obligations in an amount equal to
or greater than, on a daily basis, the amount of the Portfolio's
forward commitments and when-issued or delayed delivery
commitments.

          The Portfolio enters into forward commitments and makes
commitments to purchase securities on a when-issued or delayed
delivery basis only with the intention of actually acquiring the
securities. However, the Portfolio may sell these securities
before the settlement date if it is deemed advisable as a matter
of investment strategy.

          Although the Portfolio does not intend to make such
purchases for speculative purposes and the Portfolio intends to
adhere to the provisions and policies of the Commission,
purchases of securities on such bases may involve more risk than
other types of purchases. For example, by committing to purchase
securities in the future, the Portfolio subjects itself to a risk
of loss on such commitments as well as on its portfolio
securities. Also, the Portfolio may have to sell assets which
have been set aside in order to meet redemptions. In addition, if
the Portfolio 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 Portfolio 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 and
would be treated for tax purposes as such. 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 Portfolio 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 Portfolio's payment obligation).

          OPTIONS. As noted in the Prospectus, the Portfolio may
write call and put options and may purchase call and put options
on securities. The Portfolio intends to write only covered
options. This means that so long as the Portfolio is obligated as
the writer of a call option, it will own the underlying
securities subject to the option or securities convertible into
such securities without additional consideration (or for
additional cash consideration held in a segregated account by the
custodian). In the case of call options on U.S. Treasury Bills,
the Portfolio might own U.S. Treasury Bills of a different series
from those underlying the call option, but with a principal
amount and value corresponding to the option contract amount and
a maturity date no later than that of the securities deliverable
under the call option. The Portfolio is considered covered with
respect to a put option it writes, if, so long as it is obligated
as the writer of a put option, it deposits and maintains in a
segregated account with the Fund's custodian, cash, U.S.
Government Securities or other liquid high-grade debt obligations
having a value equal to or greater than the exercise price of the
option.

          Effecting a closing transaction in the case of a
written call option will permit the Portfolio to write another
call option on the underlying security with either a different
exercise price or expiration date or both, or in the case of a
written put option will permit the Portfolio to write another put
option to the extent that the exercise price thereof is secured
by deposited cash or short-term securities. Such transactions
permit the Portfolio to generate additional premium income, which
may partially offset declines in the value of portfolio
securities or increases in the cost of securities to be acquired.
Also, effecting a closing transaction permits the cash or
proceeds from the concurrent sale of any securities subject to
the option to be used for other investments by the Portfolio,
provided that another option on such security is not written. If
the Portfolio desires to sell a particular security from its
portfolio on which it has written a call option, it will effect a
closing transaction in connection with the option prior to or
concurrent with the sale of the security.

          The Portfolio will realize a profit from a closing
transaction if the premium paid in connection with the closing of
an option written by the Portfolio is less than the premium
received from writing the option, or if the premium received in
connection with the closing of an option purchased by the
Portfolio is more than the premium paid for the original
purchase. Conversely, the Portfolio will suffer a loss if the
premium paid or received in connection with a closing transaction
is more or less, respectively, than the premium received or paid
in establishing the option position. Because increases in the
market price of a call option will generally reflect increases in
the market price of the underlying security, any loss resulting
from the repurchase of a call option previously written by the
Portfolio is likely to be offset in whole or in part by
appreciation of the underlying security owned by the Portfolio.

          The Portfolio may purchase a security and then write a
call option against that security, or it may purchase a security
and concurrently write an option on it. The exercise price of the
call the Portfolio determines to write will depend upon the
expected price movement of the underlying security. The exercise
price of a call option may be below (in-the-money), equal to
(at-the-money) or above (out-of-the-money) the current value of
the underlying security at the time the option is written.
In-the-money call options may be used when it is expected that
the price of the underlying security will decline moderately
during the option period. Out-of-the-money call options may be
written when it is expected that the premiums received from
writing the call option plus the appreciation in the market price
of the underlying security up to the exercise price will be
greater than the appreciation in the price of the underlying
security alone. If the call options are exercised in such
transactions, the Portfolio's maximum gain will be the premium
received by it for writing the option, adjusted upwards or
downwards by the difference between the Portfolio's purchase
price of the security and the exercise price. If the options are
not exercised and the price of the underlying security declines,
the amount of such decline will be offset in part, or entirely,
by the premium received.

          The writing of covered put options is similar in terms
of risk/return characteristics to buy-and-write transactions. If
the market price of the underlying security rises, or is
otherwise above the exercise price, the put option will expire
worthless and the Portfolio's gain will be limited to the premium
received. If the market price of the underlying security
declines, or is otherwise below the exercise price the Portfolio
may elect to close the position or retain the option until it is
exercised, at which time the Portfolio will be required to take
delivery of the security at the exercise price. The Portfolio's
return will be the premium received from the put option minus the
amount by which the market price of the security is below the
exercise price, which could result in a loss. Out-of-the-money
put options may be written when it is expected that the price of
the underlying security will decline moderately during the option
period. In-the-money put options may be used when it is expected
that the premiums received from writing the put option plus the
appreciation in the market price of the underlying security up to
the exercise price will be greater than the appreciation in the
price of the underlying security alone.

          The Portfolio may also 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
Portfolio 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 Portfolio will be required to sell the underlying security at
a 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 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 Portfolio 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 Portfolio 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 increases in the value of
securities to be acquired, up to the amount of the premium.

          The Portfolio 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 Portfolio 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 Portfolio will
reduce any profit it might otherwise have realized in the
underlying security by the amount of the premium paid for the put
option and by transaction costs.

          The Portfolio may purchase call options to hedge
against an increase in the price of securities that the Portfolio
anticipates purchasing in the future. If such increase occurs,
the call option will permit the Portfolio 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 Portfolio upon exercise of the option, and, unless the price
of the underlying security rises sufficiently, the option may
expire worthless to the Portfolio and the Portfolio will suffer a
loss on the transaction to the extent of the premium paid.

          OPTIONS ON SECURITIES INDEXES. The Portfolio may write
(sell) covered call and put options on securities indexes and
purchase call and put options on securities indexes. A call
option on a securities index is considered covered if, so long as
the Portfolio is obligated as the writer of the call, the
Portfolio holds in its portfolio securities the price changes of
which are, in the option of the Adviser, expected to replicate
substantially the movement of the index or indexes upon which the
options written by the Portfolio are based. A put on a securities
index written by the Portfolio will be considered covered if, so
long as it is obligated as the writer of the put, the Portfolio
segregates with the Fund's custodian cash, U.S. Government
Securities or other liquid high-grade debt obligations having a
value equal to or greater than the exercise price of the option.

          The Portfolio may also purchase put options on
securities indexes to hedge its investments against a decline in
value. By purchasing a put option on a securities index, the
Portfolio seeks to offset a decline in the value of securities it
owns through appreciation of the put option. If the value of the
Portfolio's investments does not decline as anticipated, or if
the value of the option does not increase, the Portfolio'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 Portfolio's security holdings.

          The purchase of call options on securities indexes may
be used by the Portfolio 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 Portfolio holds uninvested cash or
short-term debt securities awaiting investment. When purchasing
call options for this purpose, the Portfolio also bears 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
indexes when the Portfolio 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 calls on
securities the Portfolio owns.

          FUTURES AND RELATED OPTIONS. The Portfolio may enter
into stock futures contracts, and may enter into foreign currency
futures contracts. (Unless otherwise specified, stock index
futures contracts and foreign currency futures contracts are
collectively referred to as "Futures Contracts".) Such investment
strategies will be used as a hedge and not for speculation.

          Purchases or sales of stock or bond index futures
contracts are used for hedging purposes to attempt to protect the
Portfolio's current or intended investments from broad
fluctuations in stock or bond prices. For example, the Portfolio
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 Portfolio's securities portfolio 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 Portfolio 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 part or
entirely, offset increases in the cost of securities that the
Portfolio intends to purchase. As such purchases are made, the
corresponding positions in stock or bond index futures contracts
will be closed out. The Portfolio generally intends to purchase
such securities upon termination of the futures position, but
under unusual market conditions a long futures position may be
terminated without a related purchase of securities.

          Interest rate futures contracts are purchased or sold
for hedging purposes to attempt to protect against the effects of
interest rate changes on the Portfolio's current or intended
investments in fixed-income securities. For example, if the
Portfolio owned long-term bonds and interest rates were expected
to increase, the Portfolio 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 Portfolio's portfolio.
However, since the futures market is more liquid than the cash
market, the use of interest rate futures contracts as a hedging
technique allows the Portfolio to hedge its interest rate risk
without having to sell its portfolio securities. If interest
rates did increase, the value of the debt securities in the
portfolio would decline, but the value of the Portfolio's
interest rate futures contracts would be expected to increase at
approximately the same rate, thereby keeping the net asset value
of the Portfolio 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 Portfolio 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 became
available or the market had stabilized. At that time, the
interest rate futures contracts could be liquidated and the
Portfolio's cash reserves could then be used to buy long-term
bonds on the cash market.

          The Portfolio may purchase and sell foreign currency
futures contracts for hedging purposes to attempt to protect its
current or intended investments from fluctuations in currency
exchange rates. Such fluctuations could reduce the dollar value
of portfolio securities denominated in foreign currencies, or
increase the cost of foreign-denominated securities to be
acquired, even if the value of such securities in the currencies
in which they are denominated remains constant. The Portfolio 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. In the event such decline occurs, the resulting
adverse effect on the value of foreign-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 Portfolio'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 value as a result of the change
in exchange rates.

          Conversely, the Portfolio could protect against a rise
in the dollar cost of foreign-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 Portfolio purchases
futures contracts under such circumstances, however, and the
price of securities to be acquired instead declines as a result
of appreciation of the dollar, the Portfolio sustains losses on
its futures position which could reduce or eliminate the benefits
of the reduced cost of portfolio securities to be acquired.

          The Portfolio may also engage in currency cross hedging
when, in the opinion of the Adviser, the historical relationship
among foreign currencies suggests that the Portfolio 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 risk as
those described above with respect to an unanticipated increase
or decline in the value of the subject currency relative to the
dollar.

          The Portfolio may purchase and write options on stock
index futures contracts and on foreign currency futures
contracts. (Unless otherwise specified, options on securities
index futures contracts and options on foreign currency futures
contracts are collectively referred to as "Options on Futures
Contracts.")

          The writing of a call option on a Futures Contract
constitutes a partial hedge against declining prices of the
securities in the Portfolio's portfolio. If the futures price at
expiration of the option is below the exercise price, the
Portfolio will retain the full amount of the option premium,
which provides a partial hedge against any decline that may have
occurred in the Portfolio'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 Portfolio will retain the full
amount of the option premium, providing a partial hedge against
any increase in the price of securities which the Portfolio
intends to purchase. If a put or call option the Portfolio has
written is exercised, the Portfolio 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 Portfolio's losses from exercised options
on futures may to some extent be reduced or increased by changes
in the value of portfolio securities.

          The Portfolio 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 Portfolio could, in lieu of selling Futures Contracts,
purchase put options thereon. In the event that such decrease
occurs, it may be offset, in whole or part, by a profit on the
option. If the market decline does not occur, the Portfolio 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
Portfolio will increase prior to acquisition due to a market
advance or changes in interest or exchange rates, the Portfolio
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 Portfolio will suffer a loss equal to the price of the call,
but the securities which the Portfolio intends to purchase may be
less expensive.

          FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The
Portfolio may enter into forward foreign currency exchange
contracts ("Forward Contracts") to attempt to minimize the risk
to the Portfolio from adverse changes in the relationship between
the U.S. Dollar and foreign currencies. The Portfolio intends to
enter into Forward Contracts for hedging purposes similar to
those described above in connection with its transactions in
foreign currency futures contracts. In particular, a Forward
Contract to sell a currency may be entered into in lieu of the
sale of a foreign currency futures contract where the Portfolio
seeks to protect against an anticipated increase in the exchange
rate for a specific currency that could reduce the dollar value
of portfolio securities denominated in such currency. Conversely,
the Portfolio may enter into a Forward Contract to purchase a
given currency to protect against a projected increase in the
dollar value of securities denominated in such currency which the
Portfolio intends to acquire. The Portfolio also may enter into a
Forward Contract in order to assure itself of a predetermined
exchange rate in connection with a fixed-income security
denominated in a foreign currency. The Portfolio may engage in
currency cross hedging when, in the opinion of the Adviser, the
historical relationship among foreign currencies suggests that
the Portfolio may achieve the same protection for a foreign
security at a reduced cost through the use of a Forward Contract
relating to a currency other than the U.S. Dollar or the foreign
currency in which the security is denominated.

          If a hedging transaction in Forward 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 Contract.
Nevertheless, by entering into such Forward Contracts, the
Portfolio may be required to forego all or a portion of the
benefits which otherwise could have been obtained from favorable
movements in exchange rates. The Portfolio does not presently
intend to hold Forward Contracts entered into until maturity, at
which time the Portfolio would be required to deliver or accept
delivery of the underlying currency, but will seek in most
instances to close out positions in such contracts by entering
into offsetting transactions. Such transactions will serve to fix
the Portfolio's profit or loss based upon the value of the
Contracts at the time the offsetting transaction is executed.

          The Portfolio has established procedures consistent
with Commission policies concerning purchases of foreign currency
through Forward Contracts. Accordingly, the Portfolio will
segregate liquid assets in an amount least equal to the
Portfolio's obligations under any Forward Contract.

          OPTIONS ON FOREIGN CURRENCIES. The Portfolio 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 Portfolio may purchase put options on the foreign currency.
If the value of the currency does decline, the Portfolio 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 the 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
Portfolio may purchase call options thereon. 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 Portfolio deriving
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 Portfolio could sustain losses on
transactions in foreign currency options which would require it
to forego a portion or all of the benefits of advantageous
changes in such rates.

          The Portfolio may write options on foreign currencies
for the same types of hedging purposes or to increase return. For
example, where the Portfolio anticipates a decline in the dollar
value of foreign-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 Portfolio could write a put option on the
relevant currency. If rates move in the manner projected, the put
option will expire unexercised and allow the Portfolio 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 Portfolio will be required to purchase or sell the
underlying currency at a loss that may not be offset by the
amount of the premium. Through the writing of options on foreign
currencies, the Portfolio also may be required to forego all or a
portion of the benefits that might otherwise have been obtained
from favorable movements in exchange rates.

          RISK FACTORS IN OPTIONS FUTURES AND FORWARD
TRANSACTIONS. The Portfolio's abilities to effectively to hedge
all or a portion of its portfolio through transactions in
options, Futures Contracts, Options on Futures Contracts, Forward
Contracts and options on foreign currencies-depend on the degree
to which price movements in the underlying index or instrument
correlate with price movements in the relevant portion of the
Portfolio's portfolio, or the securities the Portfolio intends to
purchase. In the case of futures and options based on an index,
the Portfolio will not duplicate the components of the index. In
the case of futures and options on fixed-income securities, the
Portfolio securities which are being hedged may not be the same
type of obligation underlying such contract. As a result, the
correlation probably will not be exact. Consequently, the
Portfolio bears the risk that the price of the portfolio
securities being hedged will not move by the same amount, or in
the same direction, as the underlying index or obligation.

          For example, if the Portfolio purchases a put option on
an index, and the index decreases less than the value of the
hedged securities, the Portfolio will experience a loss that is
not completely offset by the put option. It is also possible that
there may be a negative correlation between the index or
obligation underlying an option or Futures Contract in which the
Portfolio has a position and the portfolio securities that the
Portfolio is attempting to hedge, which could result in a loss on
both the Portfolio and the hedging instrument.

          It should be noted that stock index futures contracts
or options based upon a narrower index of securities, such as
those of a particular industry group, may present greater risk
than options or futures based on a broad market index. This is
because a narrower index is more susceptible to rapid and extreme
fluctuations as a result of changes in the value of a small
number of securities.

          The trading of futures and options entails the
additional risk of imperfect correlation between movements in the
futures or option price and the price of the underlying index or
obligation. The anticipated spread between the prices may be
distorted due to the differences in the nature of the markets,
such as differences in margin requirements, the liquidity of such
markets and the participation of speculators in the futures
market. In this regard, trading by speculators in futures and
options has occasionally resulted in market distortions which may
be difficult or impossible to predict, particularly near the
expiration of such contracts.

          The trading of Options on Futures Contracts also
entails the risk that changes in the value of the underlying
Futures Contract will not be fully reflected in the value of the
option. The risk of imperfect correlation, however, generally
tends to diminish as the maturity date of the Futures Contract or
expiration date of the option approaches.

          Further, with respect to options on securities, options
on foreign currencies, options on stock indexes and Options on
Futures Contracts, the Portfolio is subject to the risk of market
movements between the time that the option is exercised and the
time of performance thereunder. This could increase the extent of
any loss suffered by the Portfolio in connection with such
transactions.

          If the Portfolio purchases futures or options in order
to hedge against a possible increase in the price of securities
before the Portfolio is able to invest its cash in such
securities, the Portfolio faces the risk that the market may
instead decline. If the Portfolio does not then invest in such
securities because of concern as to possible further market
declines or for other reasons, the Portfolio may realize a loss
on the futures or option contract that is not offset by a
reduction in the price of securities purchased.

          In writing a call option on a security, foreign
currency, index or futures contract, the Portfolio also incurs
the risk that changes in the value of the assets used to cover
the position will not correlate closely with changes in the value
of the option or underlying index or instrument. For example,
when the Portfolio writes a call option on a stock index, the
securities used as cover may not match the composition of the
index, and the Portfolio may not be fully covered. As a result,
the Portfolio could suffer a loss on the call which is not
entirely offset or offset at all by an increase in the value of
the Portfolio's securities.

          The writing of options on securities, options on stock
indexes or Options on Futures Contracts constitutes only a
partial hedge against fluctuations in the value of the
Portfolio's portfolio. When the Portfolio writes an option, it
will receive premium income in return for the holder's purchase
of the right to acquire or dispose of the underlying security or
future or, in the case of index options, cash. In the event that
the price of such obligation does not rise sufficiently above the
exercise price of the option (in the case of a call) or fall
below the exercise price (in the case of a put) the option will
not be exercised and the Portfolio will retain the amount of the
premium. This will constitute a partial hedge against any decline
that may have occurred in the Portfolio's holdings, or against
the increase in the cost of the instruments to be acquired.

          When the price of the underlying obligation moves
sufficiently in favor of the holder to warrant exercise of the
option and the option is exercised, the Portfolio will incur a
loss which may only be partially offset by the amount of the
premium it received. Moreover, by writing an option, the
Portfolio may be required to forego the benefits which might
otherwise have been obtained from an increase in the value of
portfolio securities or a decline in the value of securities to
be acquired.

          In the event of the occurrence of any of the foregoing
adverse market events, the Portfolio's overall return may be
lower than if it had not engaged in the transactions described
above.

          With respect to the writing of straddles on securities,
the Portfolio incurs the risk that the price of the underlying
security will not remain stable, that one of the options written
will be exercised and that the resulting loss will not be offset
by the amount of the premiums received. Such transactions, while
creating an opportunity for increased return by providing the
Portfolio with two simultaneous premiums on the same security,
nonetheless involve additional risk, because the Portfolio may
have an option exercised against it regardless of whether the
price of the security increases or decreases.

          Prior to exercise or expiration, a futures or option
position can be terminated only by entering into a closing
purchase or sale transaction. This requires a secondary market
for such instruments on the exchange on which the initial
transaction was entered into. While the Portfolio enters into
options or futures positions only if there appears to be a liquid
secondary market therefor, there can be no assurance that such a
market will exist for any particular contracts at any specific
time. In that event, it may not be possible to close out a
position held by the Portfolio, and the Portfolio could be
required to purchase or sell the instrument underlying an option,
make or receive a cash settlement or meet ongoing variation
margin requirements. Under such circumstances, if the Portfolio
has insufficient cash available to meet margin requirements, it
may be necessary to liquidate portfolio securities at a time when
it is disadvantageous to do so. The inability to close out
options and futures positions could have an adverse impact on the
Portfolio's ability to effectively hedge its securities, and
could result in trading losses.

          The liquidity of a secondary market in a Futures
Contract or option thereon may be adversely affected by daily
price fluctuation limits, established by exchanges, which limit
the amount of fluctuation in the price of a contract during a
single trading day. Once the daily limit has been reached in the
contract, no trades may be entered into at a price beyond the
limit. This prevents the liquidation of open futures or option
positions and requires traders to make additional margin
deposits. Prices have in the past moved to the daily limit on a
number of consecutive trading days.

          The trading of Futures Contracts and options (including
Options on Futures Contracts) is also subject to the risk of
trading halts, suspensions, exchange or clearing house equipment
failures, government intervention, insolvency of a brokerage firm
or clearing house or other disruptions of normal trading activity
that could at times make it difficult or impossible to liquidate
existing positions or to recover excess variation margin
payments.

          The Staff of the Commission had taken the position that
over-the-counter options and the assets used as cover for
over-the-counter options are illiquid securities, unless certain
arrangements are made with the other party to the option contract
permitting the prompt liquidation of the option position. The
Portfolio will enter into those special arrangements only with
primary U.S. Government Securities dealers recognized by the
Federal Reserve Bank of New York ("primary dealers"). In
connection with these special arrangements, the Portfolio will
establish standards for the creditworthiness of the primary
dealers with which it may enter into over-the-counter option
contracts and those standards, as modified from time to time,
will be implemented and monitored by the Adviser. Under these
special arrangements, the Portfolio will enter into contracts
with primary dealers which provide that the Portfolio has the
absolute right to repurchase an option it writes at any time at a
repurchase price which represents fair market value, as
determined in good faith through negotiation between the parties,
but which in no event will exceed a price determined pursuant to
a formula contained in the contract. Although the specific
details of the formula may vary between contracts with different
primary dealers, the formula will generally be based on a
multiple of the premium received by the Portfolio for writing the
option, plus the amount, if any, by which the option is
in-the-money. The formula will also include a factor to account
for the difference between the price of the security and the
strike price of the option if the option is written
out-of-the-money. Under such circumstances the Portfolio will
treat as illiquid the securities used as cover for
over-the-counter options it has written only to the extent
described in the Prospectus. Although each agreement will provide
that the Portfolio's repurchase price shall be determined in good
faith (and that it shall not exceed the maximum determined
pursuant to the formula), the formula price will not necessarily
reflect the market value of the option written; therefore, the
Portfolio might pay more to repurchase the option contract than
the Portfolio would pay to close out a similar exchange-traded
option.

          Because of low initial margin deposits made upon the
opening of a futures position and the writing of an option, such
transactions involve substantial leverage. As a result,
relatively small movements in the price of the contract can
result in substantial unrealized gains or losses. To the extent
the Portfolio purchases or sells Futures Contracts and Options on
Futures Contracts and purchases and writes options on securities
and securities indexes for hedging purposes, any losses incurred
in connection therewith should, if the hedging strategy is
successful, be offset, in whole or in part, by increases in the
value of securities held by the Portfolio or decreases in the
prices of securities the Portfolio intends to acquire. When the
Portfolio writes options on securities or options on stock
indexes for other than hedging purposes, the margin requirements
associated with such transactions could expose the Portfolio to
greater risk.

          The exchanges on which futures and options are traded
may impose limitations governing the maximum number of positions
on the same side of the market and involving the same underlying
instrument which may be held by a single investor, whether acting
alone or in concert with others (regardless of whether such
contracts are held on the same or different exchanges or held or
written in one or more accounts or through one or more brokers).
In addition, the CFTC and the various contract markets have
established limits referred to as speculative position limits on
the maximum net long or net short position which any person may
hold or control in a particular futures or option contract. An
exchange may order the liquidation of positions found to be in
violation of these limits and may impose other sanctions or
restrictions. The Adviser does not believe that these trading and
position limits will have any adverse impact on the strategies
for hedging the Portfolio.

          The amount of risk the Portfolio assumes when it
purchases an option on a Futures Contract is the premium paid for
the option, plus related transaction costs. In order to profit
from an option purchased, however, it may be necessary to
exercise the option and to liquidate the underlying Futures
Contract, subject to the risks of the availability of a liquid
offset market described herein. The writer of an option on a
Futures Contract is subject to the risks of commodity futures
trading, including the requirement of initial and variation
margin payments, as well as the additional risk that movements in
the price of the option may not correlate with movements in the
price of the underlying security, index, currency or Futures
Contract.

          Transactions in Forward Contracts, as well as futures
and options on foreign currencies, are subject to all of the
correlation, liquidity and other risks outlined above. In
addition, however, such transactions are subject to the risk of
governmental actions affecting trading in or the prices of
currencies underlying such contracts, which could restrict or
eliminate trading and could have a substantial adverse effect on
the value of positions held by the Portfolio. In addition, the
value of such positions could be adversely affected by a number
of other complex political and economic factors applicable to the
countries issuing the underlying currencies.

          Further, unlike trading in most other types of
instruments, there is no systematic reporting of last sale
information with respect to the foreign currencies underlying
contracts thereon. As a result, the available information on
which trading decisions will be based may not be as complete as
the comparable data on which the Portfolio makes investment and
trading decisions in connection with other transactions. Because
the foreign currency market is a global, twenty-four hour market,
events could occur on that market which will not be reflected in
the forward, futures or options markets until the following day,
thereby preventing the Portfolio from responding to such events
in a timely manner.

          Settlements of exercises of over-the-counter Forward
Contracts or foreign currency options generally must occur within
the country issuing the underlying currency. This, in turn
requires traders to accept or make delivery of such currencies in
conformity with any United States or foreign restrictions and
regulations regarding the maintenance of foreign banking
relationships and fees, taxes or other charges.

          Unlike Futures Contracts and exchange-traded options
entered into by the Portfolio, options on foreign currencies,
Forward Contracts and over-the-counter options on securities are
not traded on contract markets regulated by the CFTC or (with the
exception of certain foreign currency options) the Commission.
Such instruments are instead 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 regulation by the Commission. 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 could lose amounts substantially in excess of the initial
investment, due to the margin and collateral requirements
associated with such positions.

          Over-the-counter transactions can be entered into only
with a financial institution willing to take the opposite side,
as principal, of the Portfolio's position, unless the institution
acts as broker and is able to find another counterparty willing
to enter into the transaction with the Portfolio. Where no such
counterparty is available, it will not be possible to enter into
a desired transaction. There also may be no liquid secondary
market in the trading of over-the-counter contracts, and the
Portfolio could be required to retain options purchased or
written, or Forward Contracts entered into, until exercise,
expiration or maturity. This could limit the Portfolio's ability
to profit from open positions or to reduce losses experienced,
and could result in greater losses.

          Over-the-counter transactions are not subject to the
guarantee of an exchange clearing house, and the Portfolio will
therefore be subject to the risk of default by, or the bankruptcy
of, the financial institution serving as its counterparty. One or
more such institutions also may decide to discontinue their role
as market-makers in a particular currency or security, thereby
restricting the Portfolio's ability to enter into desired hedging
transactions. The Portfolio will enter into an over-the-counter
transaction only with parties whose creditworthiness has been
reviewed and found satisfactory by the Adviser.

          Transactions in over-the-counter options on foreign
currencies are subject to a number of conditions regarding the
commercial purpose of the purchaser of such option. The Portfolio
is not able to determine at this time whether or to what extent
additional restrictions on the trading of over-the- counter
options on foreign currencies may be imposed at some point in the
future, or the effect that any such restrictions may have on the
hedging strategies to be implemented by them.

          The Portfolio has claimed an exclusion from the
definition of "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 foreign currencies traded on national
securities exchanges are within the jurisdiction of the
Commission, 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
Portfolio to liquidate open positions at a profit prior to
exercise or expiration, or to limit losses in the event of
adverse market movements.

          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, the 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, if the OCC
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, it may 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.

          RESTRICTIONS ON THE USE OF FUTURES AND OPTION
CONTRACTS. Under applicable regulations of the CFTC, when the
Portfolio enters into transactions in Futures Contracts and
Options on Futures Contracts other than for bona fide hedging
purposes, the Portfolio maintains with the Fund's custodian a
segregated liquid assets account which, together with any initial
margin deposits or other liquid assets, is equal to the aggregate
market value of the Futures Contracts and Options on Futures
Contracts that it purchases.

          The Portfolio has adopted the restriction that it will
not enter into a Futures Contract if, immediately thereafter, the
value of securities and other obligations underlying all such
Futures Contracts would exceed 50% of the value of the
Portfolio's total assets. Moreover, the Portfolio will not
purchase put and call options, if as a result, more than 10% of
its total assets would be invested in such options.

          When the Portfolio purchases a Futures Contract, an
amount of cash and cash equivalents will be deposited in a
segregated account with the Fund's custodian so that the amount
so segregated will at all times equal the value of the Futures
Contract, thereby insuring that the use of such futures is
unleveraged.

          ECONOMIC EFFECTS AND LIMITATIONS. Income earned by the
Portfolio from its hedging activities is treated as capital gain
and, if not offset by net realized capital losses incurred by the
Portfolio, is distributed to shareholders in taxable
distributions. Although gain from futures and options
transactions may hedge against a decline in the value of the
Portfolio's securities, that gain, to the extent not offset by
losses, is distributed in light of certain tax considerations and
constitutes a distribution of that portion of the value preserved
against decline.

          The Portfolio will not over-hedge, or maintain open
short positions in futures or options contracts if, in the
aggregate, the market value of its open positions exceeds the
current market value of its securities portfolio plus or minus
the unrealized gain or loss on such open positions, adjusted for
the historical volatility relationship between the portfolio and
futures and options contracts.

          The Portfolio's ability to employ the options and
futures strategies described above depends on the availability of
liquid markets in such instruments. Markets in financial futures
and related options are still developing. It is impossible to
predict the amount of trading interest that may hereafter exist
in various types of options or futures. Therefore no assurance
can be given that the Portfolio will be able to use these
instruments effectively for the purposes set forth above. In
addition, the Portfolio's ability to engage in options and
futures transactions may be materially limited by tax
considerations.

          The Portfolio's ability to use options, futures and
forward contracts may be limited by tax considerations. In
particular, tax rules might affect the length of time for which
the Portfolio can hold such contracts and the character of the
income earned on such contracts. In addition, differences between
the Portfolio's book income (upon the basis of which
distributions are generally made) and taxable income arising from
its hedging activities may result in return of capital
distributions, and in some circumstances, distributions in excess
of the Portfolio's book income may be required in order to meet
tax requirements.

          FUTURE DEVELOPMENTS. The above discussion relates to
the Portfolio's proposed use of futures contracts, options and
options on futures contracts currently available. As noted above,
the relevant markets and related regulations are still in the
developing stage. In the event of future regulatory or market
developments, the Portfolio may also use additional types of
futures contracts or options and other investment techniques for
the purposes set forth above.

          The following restrictions, which are applicable to the
Portfolio, supplement those set forth above and may not be
changed without Shareholder Approval, as defined under the
caption "General Information," below.

          The Portfolio will not:

          1. invest more than 5% of its total assets in the
securities of any one issuer (other than U.S. Government
Securities and repurchase agreements relating thereto), although
up to 25% of the Portfolio's total assets may be invested without
regard to this restriction;

          2. invest 25% or more of its total assets in the
securities of any one industry. (Obligations of a foreign
government and its agencies or instrumentalities constitute a
separate "industry" from those of another foreign government);

          3. borrow money in excess of 15% of the value (taken at
the lower of cost or current value) of its total assets (not
including the amount borrowed) at the time the borrowing is made,
and then only from banks as a temporary measure to facilitate the
meeting of redemption requests (not for leverage) which might
otherwise require the untimely disposition of portfolio
investments or pending settlement of securities transactions or
for extraordinary or emergency purposes;

          4. underwrite securities issued by other persons except
to the extent that, in connection with the disposition of its
portfolio investments, it may be deemed to be an underwriter
under certain federal securities laws;

          5. purchase or retain real estate or interests in real
estate, although the Portfolio may purchase securities which are
secured by real estate and securities of companies which invest
in or deal in real estate;

          6. make loans to other persons except by the purchase
of obligations in which the Portfolio may invest consistent with
its investment policies and by entering into repurchase
agreements, or by lending its portfolio securities representing
not more than 25% of its total assets; or

          7. issue any senior security (as that term is defined
in the 1940 Act), if such issuance is specifically prohibited by
the 1940 Act or the rules and regulations promulgated thereunder.
For the purposes of this restriction, loans of portfolio
securities, collateral arrangements with respect to options,
Futures Contracts and Options on Futures Contracts and collateral
arrangements with respect to initial and variation margins are
not deemed to be the issuance of a senior security. (There is no
intention to issue senior securities except as set forth in
paragraph 3 above.)

          It is also a fundamental policy of the Portfolio that
it may purchase and sell futures contracts and related options.

          In addition, the following is a description of
operating policies which the Fund has adopted on behalf of the
Portfolio but which are not fundamental and are subject to change
without shareholder approval.

          The Portfolio will not:

          (a) pledge, mortgage, hypothecate or otherwise encumber
an amount of its assets taken at current value in excess of 15%
of its total assets (taken at the lower of cost or current value)
and then only to secure borrowings permitted by restriction (1)
above. For the purpose of this restriction, the deposit of
securities and other collateral arrangements with respect to
reverse repurchase agreements, options, Futures Contracts,
Forward Contracts and options on foreign currencies, and payments
of initial and variation margin in connection therewith are not
considered pledges or other encumbrances.

          (b) purchase securities on margin, except that the
Portfolio may obtain such short-term credits as may be necessary
for the clearance of purchases and sales of securities, and
except that the Portfolio may make margin payments in connection
with Futures Contracts, Options on Futures Contracts, options,
Forward Contracts or options on foreign currencies.

          (c) make short sales of securities or maintain a short
position for the account of the Portfolio unless at all times
when a short position is open it owns an equal amount of such
securities or unless by virtue of its ownership of other
securities it has at all such times a right to obtain securities
(without payment of further consideration) equivalent in kind and
amount to the securities sold, provided that if such right is
conditional the sale is made upon equivalent conditions and
further provided that the Portfolio will not make such short
sales with respect to securities having a value in excess of 5%
of its total assets.

          (d) write, purchase or sell any put or call option or
any combination thereof, provided that this shall not prevent the
Portfolio from writing, purchasing and selling puts, calls or
combinations thereof with respect to securities, indexes of
securities or foreign currencies, and with respect to Futures
Contracts.

          (e) purchase voting securities of any issuer if the
purchase, at the time thereof, would cause more than 10% of the
outstanding voting securities of such issuer to be held by the
Portfolio; or purchase securities of any issuer if such purchase
at the time thereof would cause more than 10% of any class of
securities of such issuer to be held by the Portfolio. For this
purpose all indebtedness of an issuer shall be deemed a single
class and all preferred stock of an issuer shall be deemed a
single class.

          (f) invest in securities of any issuer if, to the
knowledge of the Fund, officers and Directors of such Fund and
officers and directors of the Adviser who beneficially own more
than 0.5% of the shares of securities of that issuer together own
more than 5%.

          (g) purchase securities issued by any other registered
investment company or investment trust except (A) by purchase in
the open market where no commission or profit to a sponsor or
dealer results from such purchase other than the customary
brokers commission, or (B) where no commission or profit to a
sponsor or dealer results from such purchase, or (C) when such
purchase, though not made in the open market, is part of a plan
of merger or consolidation; provided, however, that the Portfolio
will not purchase such securities if such purchase at the time
thereof would cause more than 5% of its total assets (taken at
market value) to be invested in the securities of such issuers;
and, provided further, that the Portfolio's purchases of
securities issued by an open-end investment company will be
consistent with the provisions of the 1940 Act.

          (h) make investments for the purpose of exercising
control or management.

          (i) participate on a joint or joint and several basis
in any trading account in securities.

          (j) invest in interests in oil, gas, or other mineral
exploration or development programs, although the Portfolio may
purchase securities which are secured by such interests and may
purchase securities of issuers which invest in or deal in oil,
gas or other mineral exploration or development programs.

          (k) purchase warrants, if, as a result, the Portfolio
would have more than 5% of its total assets invested in warrants
or more than 2% of its total assets invested in warrants that are
not listed on the Exchange or the American Stock Exchange.

          (l) purchase commodities or commodity contracts,
provided that this shall not prevent the Portfolio from entering
into securities index futures contracts, foreign currency futures
contracts, forward foreign currency exchange contracts and
options (including options on any of the foregoing) to the extent
such action is consistent with the Portfolio's investment
objective and policies.

          (m) purchase additional securities in excess of 5% of
the value of its total assets until all of the Portfolio's
outstanding borrowings (as permitted and described in restriction
number 1 above) have been repaid.

          Whenever any investment restriction states a maximum
percentage of the Portfolio's assets which may be invested in any
security or other asset, it is intended that such maximum
percentage limitation be determined immediately after and as a
result of the Portfolio's acquisition of such securities or other
assets. Accordingly, any later increase or decrease beyond the
specified limitation resulting from a change in value or net
asset value will not be considered a violation of such percentage
limitation.

ALLIANCEBERNSTEIN WORLDWIDE PRIVATIZATION PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

          Equity securities in which the Portfolio invests
include common stock, preferred stock, rights or warrants to
subscribe for or purchase common or preferred stock, securities
(including debt securities) convertible into common or preferred
stock and securities that give the holder the right to acquire
common or preferred stock.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          DEBT SECURITIES AND CONVERTIBLE DEBT SECURITIES. The
Portfolio may invest up to 35% of its total assets in debt
securities and convertible debt securities of issuers whose
common stocks are eligible for purchase by the Portfolio under
the investment policies described above. Debt securities include
bonds, debentures, corporate notes and preferred stocks.
Convertible debt securities are such instruments that are
convertible at a stated exchange rate into 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. The market
value of debt securities and convertible debt securities tends to
decline as interest rates increase and, conversely, to increase
as interest rates decline. While convertible securities generally
offer lower interest 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 in an
issuer's capital structure. They are consequently of higher
quality and 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.

          The Portfolio may maintain not more than 5% of its net
assets in debt securities rated below Baa by Moody's and BBB by
S&P, or Fitch, or, if not rated, determined by the Adviser to be
of equivalent quality. The Portfolio will not purchase a debt
security that, at the time of purchase, is rated below B by
Moody's, Fitch and S&P, or determined by the Adviser to be of
equivalent quality, but may retain a debt security the rating of
which drops below B. See "Special Risk Considerations," below.

          OPTIONS. The Portfolio may write covered put and call
options and purchase put and call options on securities of the
types in which it is permitted to invest that are traded on U.S.
and foreign securities exchanges and over-the-counter, including
options on market indices. The Portfolio will only write covered
put and call options, unless such options are written for
cross-hedging purposes. There are no specific limitations on the
Portfolio's writing and purchasing of options.

          If a put option written by the Portfolio were
exercised, the Portfolio would be obligated to purchase the
underlying security at the exercise price. If a call option
written by the Portfolio were exercised, the Portfolio would be
obligated to sell the underlying security at the exercise price.
For additional information on the use, risks and costs of
options, see Appendix C.

          The Portfolio may purchase or write options on
securities of the types in which it is permitted to invest in
privately negotiated (i.e., over-the-counter) transactions. The
Portfolio 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 by the Portfolio in negotiated transactions
are illiquid and it may not be possible for the Portfolio to
effect a closing transaction at a time when the Adviser believes
it would be advantageous to do so. See "Description of the
Portfolio -- Additional Investment Policies and Practices --
Illiquid Securities" in the Prospectus.

          FUTURES AND RELATED OPTIONS. For a discussion regarding
futures contracts and options on futures contracts, see
"AllianceBernstein Americas Government Income Portfolio --
Futures Contracts and Options on Futures Contracts," above.

          For additional information on the use, risks and costs
of futures contracts and options on futures contracts, see
Appendix B.

          OPTIONS ON FOREIGN CURRENCIES. For additional
information on the use, risks and costs of options on foreign
currencies, see Appendix B.

          FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. For a
discussion regarding forward foreign currency exchange contracts,
see "AllianceBernstein Americas Government Income Portfolio --
Forward Foreign Currency Exchange Contracts," above.

          FORWARD COMMITMENTS. No forward commitments will be
made by the Portfolio if, as a result, the Portfolio's aggregate
commitments under such transactions would be more than 30% of the
then current value of the Portfolio's total assets. For a
discussion regarding forward commitments, see "Other Investment
Policies -- Forward Commitments," below.

          SECURITIES NOT READILY MARKETABLE. The Portfolio may
invest up to 15% of its net assets in illiquid securities that
include, among others, securities for which there is no readily
available market. The Portfolio may therefore not be able to
readily sell such securities. Such securities are unlike
securities which are traded in the open market and which can be
expected to be sold immediately if the market is adequate. The
sale price of securities not readily marketable may be lower or
higher than the Adviser's most recent estimate of their fair
value. Generally, less public information is available with
respect to the issuers of such securities than with respect to
companies whose securities are traded on an exchange. Securities
not readily marketable are more likely to be issued by small
businesses and therefore subject to greater economic, business
and market risks than the listed securities of more
well-established companies. Adverse conditions in the public
securities markets may at certain times preclude a public
offering of an issuer's securities. To the extent that the
Portfolio makes any privately negotiated investments in state
enterprises, such investments are likely to be in securities that
are not readily marketable. It is the intention of the Portfolio
to make such investments when the Adviser believes there is a
reasonable expectation that the Portfolio would be able to
dispose of its investment within three years. There is no law in
a number of the countries in which the Portfolio may invest
similar to the Securities Act requiring an issuer to register the
public sale of securities with a governmental agency or imposing
legal restrictions on resales of securities, either as to length
of time the securities may be held or manner of resale. However,
there may be contractual restrictions on resale of securities. In
addition, many countries do not have informational disclosure
requirements similar in scope to those required under the
Exchange Act.

          REPURCHASE AGREEMENTS. The Portfolio may invest in
repurchase agreements pertaining to U.S. Government Securities.
For additional information regarding repurchase agreements, see
"Other Investment Policies -- Repurchase Agreements," below.

SPECIAL RISK CONSIDERATIONS

          Investment in the Portfolio involves the special risk
considerations described below.

RISKS OF FOREIGN INVESTMENT

          PARTICIPATION IN PRIVATIZATIONS. The governments of
certain foreign countries have, to varying degrees, embarked on
privatization programs contemplating the sale of all or part of
their interests in state enterprises. In certain jurisdictions,
the ability of foreign entities, such as the Portfolio, to
participate in privatizations may be limited by local law, or the
price or terms on which the Portfolio may be able to participate
may be less advantageous than for local investors. Moreover,
there can be no assurance that governments that have embarked on
privatization programs will continue to divest their ownership of
state enterprises, that proposed privatizations will be
successful or that governments will not re-nationalize
enterprises that have been privatized.

          RISK OF SALE OR CONTROL BY MAJOR STOCKHOLDERS. In the
case of the enterprises in which the Portfolio may invest, large
blocks of the stock of those enterprises may be held by a small
group of stockholders, even after the initial equity offerings by
those enterprises. The sale of some portion or all of those
blocks could have an adverse effect on the price of the stock of
any such enterprise.

          RECENT MANAGEMENT REORGANIZATION. Prior to making an
initial equity offering, most state enterprises or former state
enterprises go through an internal reorganization of management.
Such reorganizations are made in an attempt to better enable
these enterprises to compete in the private sector. However,
certain reorganizations could result in a management team that
does not function as well as the enterprise's prior management
and may have a negative effect on such enterprise. In addition,
the privatization of an enterprise by its government may occur
over a number of years, with the government continuing to hold a
controlling position in the enterprise even after the initial
equity offering for the enterprise.

          LOSS OF GOVERNMENT SUPPORT. Prior to privatization,
most of the state enterprises in which the Portfolio may invest
enjoy the protection of and receive preferential treatment from
the respective sovereigns that own or control them. After making
an initial equity offering, these enterprises may no longer have
such protection or receive such preferential treatment and may
become subject to market competition from which they were
previously protected. Some of these enterprises may not be able
to effectively operate in a competitive market and may suffer
losses or experience bankruptcy due to such competition.

          CURRENCY CONSIDERATIONS. Because substantially all of
the Portfolio's assets will be invested in securities denominated
in foreign currencies and a corresponding portion of the
Portfolio's revenues will be received in such currencies, the
dollar equivalent of the Portfolio'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 Portfolio's income. The Portfolio however, has
the ability to protect itself against adverse changes in the
values of foreign currencies by engaging in certain of the
investment practices listed above. If the value of the foreign
currencies in which the Portfolio receives its income falls
relative to the U.S. Dollar between receipt of the income and the
making of Portfolio distributions, the Portfolio may be required
to liquidate securities in order to make distributions if the
Portfolio has insufficient cash in U.S. Dollars to meet
distribution requirements. Similarly, if an exchange rate
declines between the time the Portfolio 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.

          MARKET CHARACTERISTICS. 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. Consequently, the Portfolio's investment portfolio
may experience greater price volatility and significantly lower
liquidity than a portfolio invested in equity securities of U.S.
companies. 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 settlements may in some
instances be subject to delays and related administrative
uncertainties.

          INVESTMENT AND REPATRIATION RESTRICTIONS. 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 Portfolio. As illustrations, certain countries
require governmental approval prior to investments by foreign
persons, or limit the amount of investment by foreign persons in
a particular company, or limit the investment by foreign persons
to only a specific class of securities of a company which may
have less advantageous terms than securities of the company
available for purchase by nationals or impose additional taxes on
foreign investors. The national policies of certain countries may
restrict investment opportunities in issuers deemed sensitive to
national interests. In addition, the repatriation of investment
income, capital or the proceeds of sales of securities from
certain of the countries is controlled under regulations,
including in some cases the need for certain advance government
notification or authority. In addition, if a deterioration occurs
in a country's balance of payments, the country could impose
temporary restrictions on foreign capital remittances. The
Portfolio 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. The liquidity of the Portfolio's investments in any
country in which any of these factors exist could be affected and
the Adviser will monitor the affect of any such factor or factors
on the Portfolio's investments. Investing in local markets may
require the Portfolio to adopt special procedures, seek local
governmental approvals or other actions, any of which may involve
additional costs to the Portfolio.

          CORPORATE DISCLOSURE STANDARDS. Issues 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 from U.S. standards in
important respects, and less information may be available to
investors in foreign securities than to investors in U.S.
securities.

          Foreign issuers are subject to accounting, auditing 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 statements 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 Portfolio will invest require, for both tax and
accounting purposes, that certain assets and liabilities be
restated on the issuers 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.

          TRANSACTION COSTS. 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.

          U.S. AND FOREIGN TAXES. Foreign taxes paid by the
Portfolio may be creditable or deductible by U.S. shareholders
for U.S. income tax purposes. No assurance can be given that
applicable tax laws and interpretations will not change in the
future. Moreover, non-U.S. investors may not be able to credit or
deduct such foreign taxes. Investors should review carefully the
information discussed under the heading "Dividends, Distributions
and Taxes," below, and should discuss with their tax advisers the
specific tax consequences of investing in the Portfolio.

          ECONOMIC POLITICAL AND LEGAL RISKS. 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 or diplomatic
developments could affect adversely the economy of a foreign
country or the Portfolio's investments in such country. In the
event of expropriation, nationalization or other confiscation,
the Portfolio could lose its entire investment 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 Portfolio than
that provided by U.S. laws. The Portfolio intends to spread its
portfolio investments among the capital markets of a number of
countries and, under normal market conditions, will invest in the
equity securities of issuers based in at least four, and normally
considerably more, countries. There is no restriction, however,
on the percentage of the Portfolio's assets that may be invested
in countries within any one region of the world. To the extent
that the Portfolio's assets are invested within any one region,
the Portfolio may be subject to any special risks that may be
associated with that region.

          NON-DIVERSIFIED STATUS. The Portfolio is a non-
diversified investment company, which means the Portfolio is not
limited in the proportion of its assets that may be invested in
the securities of a single issuer. However, the Portfolio intends
to conduct its operations so as to qualify to be taxed as a
regulated investment company for purposes of the Code, which will
relieve the Portfolio of any liability for federal income tax to
the extent its earnings are distributed to shareholders. See
"Dividends, Distribution and Taxes -- United States Federal
Income Taxes--General," below. To so qualify, among other
requirements, the Portfolio limits its investments so that, at
the close of each quarter of the taxable year, (i) not more than
25% of the market value of the Portfolio's total assets will be
invested in the securities of a single issuer, and (ii) with
respect to 50% of the market value of its total assets, not more
than 5% of the market value of its total assets will be invested
in the securities of a single issuer and the Portfolio will not
own more than 10% of the outstanding voting securities of a
single issuer. Investments in U.S. Government Securities are not
subject to these limitations. Because the Portfolio, as a
non-diversified investment company, may invest in a smaller
number of individual issuers than a diversified investment
company, an investment in the Portfolio may, under certain
circumstances, present greater risk to an investor than an
investment in a diversified investment company.

          Securities issued or guaranteed by foreign governments
are not treated like U.S. Government Securities for purposes of
the diversification tests described in the preceding paragraph,
but instead are subject to these tests in the same manner as the
securities of non-governmental issuers.

          INVESTMENTS IN LOWER-RATED DEBT SECURITIES. Debt
securities rated below investment grade, i.e., Ba and lower by
Moody's or BB and lower by S&P, and Fitch (lower-rated
securities), or, if not rated, determined by the Adviser to be of
equivalent quality, are 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. They are also
generally 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.
Debt securities rated Ba by Moody's or BB by S&P, and Fitch are
judged to have speculative characteristics or to be predominantly
speculative with respect to the issuer's ability to pay interest
and repay principal. Debt securities rated B by Moody's, S&P, and
Fitch are judged to have highly speculative characteristics or to
be predominantly speculative. Such securities may have small
assurance of interest and principal payments. Debt securities
having the lowest ratings for non-subordinated debt instruments
assigned by Moody's, S&P, or Fitch (i.e., rated C by Moody's or
CCC and lower by S&P, or Fitch) 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.

          Ratings of fixed-income securities by Moody's, S&P, or
Fitch are a generally accepted barometer of credit risk. They
are, however, subject to certain limitations from an investor's
standpoint. The rating of a security 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 the credit risk of securities
within each rating category. See Appendix A in the Prospectus for
a description of Moody's, S&P, and Fitch bond and commercial
paper ratings.

          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. The Adviser tries to reduce the risk
inherent in investment in lower-rated securities through credit
analysis, diversification and attention to current developments
and trends in interest rates and economic and political
conditions. However, there can be no assurance that losses will
not occur. Since the risk of default is higher for lower-rated
securities, the Adviser's research and credit analysis are a
correspondingly important aspect of its program for managing the
Portfolio's securities than would be the case if the Portfolio
did not invest in lower-rated securities. In considering
investments for the Portfolio, the Adviser attempts to identify
those high-risk, high-yield 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.

          Non-rated securities will also be considered for
investment by the Portfolio 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 Portfolio to a degree comparable to that
of rated securities which are consistent with the Portfolio's
objective and policies.

INVESTMENT RESTRICTIONS

          The following restrictions, which are applicable to the
Portfolio, supplement those set forth above and may not be
changed without Shareholder Approval, as defined under the
caption "General Information," below.

            The Portfolio may not:

          1. invest 25% or more of its total assets in securities
of issuers conducting their principal business activities in the
same industry, except that this restriction does not apply to (a)
U.S. Government Securities; or (b) the purchase of securities of
issuers whose primary business activity is in the national
commercial banking industry, so long as the Fund's Board of
Directors determines, on the basis of factors such as liquidity,
availability of investments and anticipated returns, that the
Portfolio's ability to achieve its investment objective would be
adversely affected if the Portfolio were not permitted to invest
more than 25% of its total assets in those securities, and so
long as the Portfolio notifies its shareholders of any decision
by the Board of Directors to permit or cease to permit the
Portfolio to invest more than 25% of its total assets in those
securities, such notice to include a discussion of any increased
investment risks to which the Portfolio may be subjected as a
result of the Board's determination;

          2. borrow money, except the Portfolio may, in
accordance with the provisions of the 1940 Act, borrow money from
banks for temporary or emergency purposes, including the meeting
of redemption requests which might require the untimely
disposition of securities; borrowing in the aggregate may not
exceed 15%, and borrowing for purposes other than meeting
redemptions may not exceed 5% of the value of the Portfolio's
total assets (including the amount borrowed) less liabilities
(not including the amount borrowed) at the time the borrowing is
made; outstanding borrowings in excess of 5% of the value of the
Portfolio's total assets will be repaid before any investments
are made;

          3. pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings,

          4. make loans except through (a) the purchase of debt
obligations in accordance with its investment objectives and
policies; (b) the lending of portfolio securities; or (c) the use
of repurchase agreements;

          5. participate on a joint or joint and several basis in
any securities trading account;

          6. invest in companies for the purpose of exercising
control;

          7. issue any senior security within the meaning of the
Act except that the Portfolio may make loans of portfolio
securities and write put and call options;

          8. make short sales of securities or maintain a short
position, unless at all times when a short position is open the
Portfolio owns an equal amount of such securities or securities
convertible into or exchangeable for, without payment of any
further consideration, securities of the same issue as, and equal
in amount to, the securities sold short (short sales against the
box), and unless not more than 10% of the Portfolio's net assets
(taken at market value) is held as collateral for such sales at
any one time (it is the Portfolio's present intention to make
such sales only for the purpose of deferring realization of gain
or loss for Federal income tax purposes); or

          9. (a) purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in real
estate or interests therein; (b) purchase or sell commodities or
commodity contracts including futures contracts (except foreign
currencies, foreign currency options and futures, options and
futures on securities and securities indices and forward
contracts or contracts for the future acquisition or delivery of
securities and foreign currencies and related options on futures
contracts and similar contracts); (c) invest in interests in oil,
gas, or other mineral exploration or development programs; (d)
purchase securities on margin, except for such short-term credits
as may be necessary for the clearance of transactions; and (e)
act as an underwriter of securities, except that the Portfolio
may acquire restricted securities under circumstances in which,
if such securities were sold, the Portfolio might be deemed to be
an underwriter for purposes of the Securities Act.

ALLIANCEBERNSTEIN TECHNOLOGY PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

          Critical factors which are considered in the selection
of securities include the economic and political outlook, the
value of individual securities relative to other investment
alternatives, trends in the determinants of corporate profits,
and management capability and practices. Generally speaking,
disposal of a security will be based upon factors such as (i)
actual or potential deterioration of the issuer's earning power
which the Portfolio believes may adversely affect the price of
its securities, (ii) increases in the price level of the security
or of securities generally that the Portfolio believes are not
fully warranted by the issuers earning power, and (iii) changes
in the relative opportunities offered by various securities.

          Companies in which the Portfolio invests include those
whose processes, products or services are anticipated by the
Adviser to significantly benefit by the utilization or commercial
application of scientific discoveries or developments in such
fields as, for example, aerospace, aerodynamics, astrophysics,
biochemistry, chemistry, communications, computers, conservation,
electricity, electronics (including radio, television and other
media), energy (including development, production and service
activities), geology, health care, mechanical engineering,
medicine, metallurgy, nuclear physics, oceanography and plant
physiology.

          The Portfolio endeavors to invest in companies where
the expected benefits to be derived from the utilization of
technology significantly enhance the prospects of the company as
a whole (including, in the case of a conglomerate, affiliated
companies). The Portfolio's investment objective permits the
Portfolio to seek securities having potential for capital
appreciation in a variety of industries.

          Certain of the companies in which the Portfolio invests
may allocate greater than usual amounts to research and product
development. The securities of such companies may experience
above-average price movements associated with the perceived
prospects of success of the research and development programs. In
addition, companies in which the Portfolio invests could be
adversely affected by lack of commercial acceptance of a new
product or products or by technological change and obsolescence.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          OPTIONS. The Portfolio may write call options and may
purchase and sell put and call options written by others,
combinations thereof, or similar options. The Portfolio may not
write put options. A put option gives the buyer of such option,
upon payment of a premium, the right to deliver a specified
number of shares of a stock to the writer of the option, on or
before a fixed date, at a predetermined price. A call option
gives the purchaser of the option, upon payment of a premium, the
right to call upon the writer to deliver a specified number of
shares of a specified stock on or before a fixed date, at a
predetermined price, usually the market price at the time the
contract is negotiated. A call option written by the Portfolio is
covered if the Portfolio owns the underlying security covered by
the call or has an absolute and immediate right to acquire that
security without additional cash consideration (or for additional
cash, U.S. Government Securities or other liquid high grade debt
obligation held in a segregated account by the Fund's custodian)
upon conversion or exchange of other securities held in its
portfolio. A call option is also covered if the Portfolio holds a
call on the same security and in the same principal amount as the
call written where the exercise price of the call held (a) is
equal to or less than the exercise price of the call written or
(b) is greater than the exercise price of the call written if the
difference is maintained by the Portfolio in cash in a segregated
account with the Fund's custodian. The premium paid by the
purchaser of an option will reflect, among other things, the
relationship of the exercise price to the market price and
volatility of the underlying security, the remaining term of the
option, supply and demand and interest rates.

          The writing of call options, therefore, involves a
potential loss of opportunity to sell securities at high prices.
In exchange for the premium received by it, the writer of a fully
collateralized call option assumes the full downside risk of the
securities subject to such option. In addition, the writer of the
call gives up the gain possibility of the stock protecting the
call. Generally, the opportunity for profit from the writing of
options occurs when the stocks involved are lower priced or
volatile, or both. While an option that has been written is in
force, the maximum profit that may be derived from the optioned
stock is the premium, less brokerage commissions and fees.

          It is the Portfolio's policy not to write a call option
if the premium to be received by the Portfolio in connection with
such options would not produce an annualized return of at least
15% of the then market value of the securities subject to the
option. Commissions, stock transfer taxes and other expenses of
the Portfolio must be deducted from such premium receipts. Option
premiums vary widely depending primarily on supply and demand.
Calls written by the Portfolio are ordinarily sold either on a
national securities exchange or through put and call dealers,
most, if not all, of which are members of a national securities
exchange on which options are traded, and in such case are
endorsed or guaranteed by a member of a national securities
exchange or qualified broker-dealer, which may be SCB & Co. The
endorsing or guaranteeing firm requires that the option writer
(in this case the Portfolio) maintain a margin account containing
either corresponding stock or other equity as required by the
endorsing or guaranteeing firm.

          The Portfolio will not sell a call option written or
guaranteed by it if, as a result of such sale, the aggregate of
the Portfolio's securities subject to outstanding call options
(valued at the lower of the option price or market value of such
securities) would exceed 15% of the Portfolio's total assets. The
Portfolio will not sell any call option if such sale would result
in more than 10% of the Portfolio's assets being committed to
call options written by the Portfolio which, at the time of sale
by the Portfolio, have a remaining term of more than 100 days.

          OPTIONS ON MARKET INDICES. Options on securities
indices are similar to options on a security except that, rather
than the right to take or make 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.

          Through the purchase of listed index options, the
Portfolio could achieve many of the same objectives as through
the use of options on individual securities. Price movements in
the Portfolio's investment portfolio securities probably will not
correlate perfectly with movements in the level of the index and,
therefore, the Portfolio would bear a risk of loss on index
options purchased by it if favorable price movements of the
hedged portfolio securities do not equal or exceed losses on the
options or if adverse price movements of the hedged portfolio
securities are greater than gains realized from the options.

          RIGHTS AND WARRANTS. The Portfolio may invest up to 10%
of its total assets in rights and warrants which entitle the
holder to buy equity securities at a specific price for a
specific period of time. 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.

          FOREIGN INVESTMENTS. The Portfolio will not purchase a
foreign security if such purchase at the time thereof would cause
25% or more of the value of the Portfolio's total assets to be
invested in foreign securities. 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 Portfolio invests 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.

          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 Portfolio may invest and could
adversely affect the Portfolio's assets should these conditions
or events recur.

          Foreign investment in certain foreign securities is
restricted or controlled to varying degrees. These restrictions
or controls may at times limit or preclude foreign investment in
certain foreign securities and increase the costs and expenses of
the Portfolio. Certain countries in which the Portfolio 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.

          ILLIQUID SECURITIES. The Portfolio will not maintain
more than 15% of its total assets (taken at market value) in
illiquid securities. For this purpose, illiquid securities
include, among others, (a) securities that are illiquid by virtue
of the absence of a readily available market or legal or
contractual restriction or resale, (b) options purchased by the
Portfolio over-the-counter and the cover for options written by
the Portfolio over-the-counter and (c) repurchase agreements not
terminable within seven days.

          See "Other Investment Policies -- Illiquid Securities,"
below, for a more detailed discussion of the Portfolio's
investment policy on restricted securities and securities with
legal or contractual restrictions on resale.

          LENDING OF PORTFOLIO SECURITIES. In order to increase
income, the Portfolio may from time to time lend its securities
to brokers, dealers and financial institutions and receive
collateral in the form of cash or U.S. Government Securities.
Under the Portfolio's procedures, collateral for such loans must
be maintained at all times in an amount equal to at least 100% of
the current market value of the loaned securities (including
interest accrued on the loaned securities). The interest accruing
on the loaned securities will be paid to the Portfolio and the
Portfolio has the right, on demand, to call back the loaned
securities. The Portfolio may pay fees to arrange the loans. The
Portfolio will not lend its securities in excess of 30% of the
value of its total assets, nor will the Portfolio lend its
securities to any officer, director, employee or affiliate of the
Fund or the Adviser.

          Within this basic framework, the policy of the
Portfolio is to invest in any company and industry and in any
type of security which are believed to offer possibilities for
capital appreciation. Investments may be made in well-known and
established companies as well as in new and unseasoned companies.
Since securities fluctuate in value due to general economic
conditions, corporate earnings and many other factors, the shares
of the Portfolio will increase or decrease in value accordingly,
and there can be no assurance that the Portfolio will achieve its
investment goal or be successful.

          INVESTMENT RESTRICTIONS

          The following restrictions, which are applicable to the
Portfolio, supplement those set forth above and may not be
changed without Shareholder Approval, as defined under the
caption "General Information," below.

          To maintain portfolio diversification and reduce
investment risk, as a matter of fundamental policy, the Portfolio
may not:

          1. with respect to 75% of its total assets, have such
assets represented by other than: (a) cash and cash items, (b)
securities issued or guaranteed as to principal or interest by
the U.S. Government or its agencies or instrumentalities, or (c)
securities of any one issuer (other than the U.S. Government and
its agencies or instrumentalities) not greater in value than 5%
of the Portfolio's total assets, and not more than 10% of the
outstanding voting securities of such issuer;

          2. purchase the securities of any one issuer, other
than the U.S. Government and its agencies or instrumentalities,
if immediately after and as a result of such purchase (a) the
value of the holdings of the Portfolio in the securities of such
issuer exceeds 25% of the value of the Portfolio's total assets,
or (b) the Portfolio owns more than 25% of the outstanding
securities of any one class of securities of such issuer;

          3. concentrate its investments in any one industry, but
the Portfolio has reserved the right to invest up to 25% of its
total assets in a particular industry;

          4. invest in the securities of any issuer which has a
record of less than three years of continuous operation
(including the operation of any predecessor) if such purchase at
the time thereof would cause 10% or more of the value of the
total assets of the Portfolio to be invested in the securities of
such issuer or issuers;

          5. make short sales of securities or maintain a short
position or write put options;

          6. mortgage, pledge or hypothecate or otherwise
encumber its assets, except as may be necessary in connection
with permissible borrowings mentioned in investment restriction
(14) listed below;

          7. purchase the securities of any other investment
company or investment trust, except when such purchase is part of
a merger, consolidation or acquisition of assets;

          8. purchase or sell real property (including limited
partnership interests but excluding readily marketable interests
in real estate investment trusts or readily marketable securities
of companies which invest in real estate) commodities or
commodity contracts;

          9. purchase participations or other direct interests in
oil, gas, or other mineral exploration or development programs;

          10. participate on a joint or joint and several basis
in any securities trading account;

          11. invest in companies for the purpose of exercising
control;

          12. purchase securities on margin, but it may obtain
such short-term credits from banks as may be necessary for the
clearance of purchases and sales of securities;

          13. make loans of its assets to any other person, which
shall not be considered as including the purchase of portion of
an issue of publicly-distributed debt securities; except that the
Portfolio may purchase non-publicly distributed securities
subject to the limitations applicable to restricted or not
readily marketable securities and except for the lending of
portfolio securities as discussed under "Other Investment
Policies and Techniques - Loans of Portfolio Securities" in the
Prospectus;

          14. borrow money except for the short-term credits from
banks referred to in paragraph (12) above and except for
temporary or emergency purposes and then only from banks and in
an aggregate amount not exceeding 5% of the value of its total
assets at the time any borrowing is made. Money borrowed by the
Portfolio will be repaid before the Portfolio makes any
additional investments;

          15. act as an underwriter of securities of other
issuers, except that the Portfolio may acquire restricted or not
readily marketable securities under circumstances where, if sold,
the Portfolio might be deemed to be an underwriter for purposes
of the Securities Act (the Portfolio will not invest more than
10% of its net assets in aggregate in restricted securities and
not readily marketable securities); or

          16. purchase or retain the securities of any issuer if,
to the knowledge of the Portfolio's management, those officers
and directors of the Portfolio, and those employees of the
Adviser, who each owns beneficially more than one-half of 1% of
the outstanding securities of such issuer together own more than
5% of the securities of such issuer.

ALLIANCEBERNSTEIN SMALL CAP GROWTH PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

          It is the policy of the Portfolio to invest principally
in equity securities (common stocks, securities convertible into
common stocks or rights or warrants to subscribe for or purchase
common stocks); however, it may also invest to a limited degree
in non-convertible bonds and preferred stocks when, in the
judgment of Alliance, such investments are warranted to achieve
the Portfolio's investment objective. When business or financial
conditions warrant, a more defensive position may be assumed and
the Portfolio may invest in short-term fixed-income securities,
in investment grade debt securities or preferred stocks, or it
may hold its assets in cash.

          The Portfolio may invest in both listed and unlisted
domestic and foreign securities, in restricted securities, and in
other assets having no ready market, but not more than 15% of the
Portfolio's total assets may be invested in all such restricted
or not readily marketable assets at any one time. Restricted
securities may be sold only in privately negotiated transactions
or in a public offering with respect to which a registration
statement is in effect under Rule 144 or 144A promulgated under
the Securities Act. Where registration is required, the Portfolio
may be obligated to pay all or part of the registration expense,
and a considerable period may elapse between the time of the
decision to sell and the time the Portfolio may be permitted to
sell a security under an effective registration statement. If,
during such a period adverse market conditions were to develop,
the Portfolio might obtain a less favorable price than that which
prevailed when it decided to sell. Restricted securities and
other not readily marketable assets will be valued in such manner
as the Board of Directors of the Fund in good faith deems
appropriate to reflect their fair market value.

          The Portfolio intends to invest in special situations
from time to time. A special situation arises when, in the
opinion of the Portfolio's management, the securities of a
particular company will, within a reasonably estimable period of
time, be accorded market recognition at an appreciated value
solely by reason of a development particularly or uniquely
applicable to that company and regardless of general business
conditions or movements of the market as a whole. Developments
creating special situations might include, among others, the
following: liquidations, reorganizations, recapitalizations or
mergers, material litigation, technological breakthroughs and new
management or management policies. Although large and well-known
companies may be involved, special situations often involve much
greater risk than is inherent in ordinary investment securities.
The Portfolio will not, however, purchase securities of any
company with a record of less than three years continuous
operation (including that of predecessors) if such purchase would
cause the Portfolio's investments in such companies, taken at
cost, to exceed 25% of the value of the Portfolio's total assets.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following additional investment policies supplement
those set forth in the Prospectus.

          GENERAL. In seeking to attain its investment objective
of growth of capital, the Portfolio supplements customary
investment practices by engaging in a broad range of investment
techniques including short sales against the box, writing call
options, purchases and sales of put and call options written by
others and investing in special situations. These techniques are
speculative, may entail greater risk, may be considered of a more
short-term nature, and to the extent used, may result in greater
turnover of the Portfolio's portfolio and a greater expense than
is customary for most investment companies. Consequently, the
Portfolio is not a complete investment program and is not a
suitable investment for those who cannot afford to take such
risks or whose objective is income or preservation of capital. No
assurance can be given that the Portfolio will achieve its
investment objective. However, by buying shares in the Portfolio
an investor may receive advantages he would not readily obtain as
an individual, including professional management and continuous
supervision of investments. The Portfolio is subject to the
overall limitation (in addition to the specific restrictions
referred to below) that the aggregate value of all restricted and
not readily marketable securities of the Portfolio, and of all
cash and securities covering outstanding call options written or
guaranteed by the Portfolio, shall at no time exceed 15% of the
value of the total assets of the Portfolio.

          There is also no assurance that the Portfolio will at
any particular time engage in all or any of the investment
activities in which it is authorized to engage. In the opinion of
the Portfolio's management, however, the power to engage in such
activities provides an opportunity that is deemed to be desirable
in order to achieve the Portfolio's investment objective.

          SHORT SALES. The Portfolio may only make short sales of
securities against the box. A short sale is effected by selling a
security that the Portfolio does not own, or if the Portfolio
does own such security, it is not to be delivered upon
consummation of the sale. A short sale is against the box to the
extent that the Portfolio contemporaneously owns or has the right
to obtain securities identical to those sold short without
payment. Short sales may be used in some cases by the Portfolio
to defer the realization of gain or loss for federal income tax
purposes on securities then owned by the Portfolio. However, if
the Portfolio has unrealized gain with respect to a security and
enters into a short sale with respect to such security, the
Portfolio generally will be deemed to have sold the appreciated
security and thus will recognize gain for tax purposes.

          PUTS AND CALLS. The Portfolio may write call options
and may purchase and sell put and call options written by others,
combinations thereof, or similar options. The Portfolio may not
write put options. A put option gives the buyer of such option,
upon payment of a premium, the right to deliver a specified
number of shares of a stock to the writer of the option on or
before a fixed date at a predetermined price. A call option gives
the purchaser of the option, upon payment of a premium, the right
to call upon the writer to deliver a specified number of shares
of a specified stock on or before a fixed date, at a
predetermined price, usually the market price at the time the
contract is negotiated. When calls written by the Portfolio are
exercised, the Portfolio will be obligated to sell stocks below
the current market price.

          The writing of call options will, therefore, involve a
potential loss of opportunity to sell securities at higher
prices. In exchange for the premium received, the writer of a
fully collateralized call option assumes the full downside risk
of the securities subject to such option. In addition, the writer
of the call gives up the gain possibility of the stock protecting
the call. Generally, the opportunity for profit from the writing
of options is higher, and consequently the risks are greater when
the stocks involved are lower priced or volatile, or both. While
an option that has been written is in force, the maximum profit
that may be derived from the optioned stock is the premium less
brokerage commissions and fees. For a discussion regarding
certain tax consequences of the writing of call options by the
Portfolio, see "Dividends, Distributions and Taxes," below.

          Writing, purchasing and selling call options are highly
specialized activities and entail greater than ordinary
investment risks. It is the Portfolio's policy not to write a
call option if the premium to be received by the Portfolio in
connection with such option would not produce an annualized
return of at least 15% of the then market value of the securities
subject to option. Commissions, stock transfer taxes and other
expenses of the Portfolio must be deducted from such premium
receipts. Option premiums vary widely depending primarily on
supply and demand. Calls written by the Portfolio will ordinarily
be sold either on a national securities exchange or through put
and call dealers, most, if not all, of whom are members of a
national securities exchange on which options are traded, and
will in such cases be endorsed or guaranteed by a member of a
national securities exchange or qualified broker-dealer, which
may be SCB & Co. The endorsing or guaranteeing firm requires that
the option writer (in this case the Portfolio) maintain a margin
account containing either corresponding stock or other equity as
required by the endorsing or guaranteeing firm. A call written by
the Portfolio will not be sold unless the Portfolio at all times
during the option period owns either (a) the optioned securities,
or securities convertible into or carrying rights to acquire the
optioned securities or (b) an offsetting call option on the same
securities.

          The Portfolio will not sell a call option written or
guaranteed by it if, as a result of such sale, the aggregate of
the Portfolio's securities subject to outstanding call options
(valued at the lower of the option price or market value of such
securities) would exceed 15% of the Portfolio's total assets. The
Portfolio will not sell any call option if such sale would result
in more than 10% of the Portfolio's assets being committed to
call options written by the Portfolio, which, at the time of sale
by the Portfolio, have a remaining term of more than 100 days.
The aggregate cost of all outstanding options purchased and held
by the Portfolio shall at no time exceed 10% of the Portfolio's
total assets.

          In buying a call, the Portfolio would be in a position
to realize a gain if, during the option period, the price of the
shares increased by an amount in excess of the premium paid and
commissions payable on exercise. It would realize a loss if the
price of the security declined or remained the same or did not
increase during the period by more than the amount of the premium
and commissions payable on exercise. By buying a put, the
Portfolio would be in a position to realize a gain if, during the
option period, the price of the shares declined by an amount in
excess of the premium paid and commissions payable on exercise.
It would realize a loss if the price of the security increased or
remained the same or did not decrease during that period by more
than the amount of the premium and commissions payable on
exercise. In addition, the Portfolio could realize a gain or loss
on such options by selling them.

          As noted above, the Portfolio may purchase and sell put
and call options written by others, combinations thereof, or
similar options. There are markets for put and call options
written by others and the Portfolio may from time to time sell or
purchase such options in such markets. If an option is not sold
and is permitted to expire without being exercised, its premium
would be lost by the Portfolio.

          INVESTMENT RESTRICTIONS

          The following restrictions, which are applicable to the
Portfolio, supplement those set forth above and may not be
changed without Shareholder Approval, as defined under the
caption "General Information," below.

          As a matter of fundamental policy, the Portfolio may
not:

          1. purchase the securities of any one issuer, other
than the U.S. Government or any of its agencies or
instrumentalities, if immediately after such purchase more than
5% of the value of its total assets would be invested in such
issuer or the Portfolio would own more than 10% of the
outstanding voting securities of such issuer, except that up to
25% of the value of the Portfolio's total assets may be invested
without regard to such 5% and 10% limitations;

          2. invest more than 25% of the value of its total
assets in any particular industry;

          3. borrow money except for temporary or emergency
purposes in an amount not exceeding 5% of its total assets at the
time the borrowing is made;

          4. purchase or sell real estate;

          5. participate on a joint or joint and several basis in
any securities trading account;

          6. invest in companies for the purpose of exercising
control;

          7. except as permitted in connection with short sales
of securities against the box described under the heading "Short
Sales," above, make short sales of securities;

          8. make loans of its funds or assets to any other
person, which shall not be considered as including the purchase
of a portion of an issue of publicly distributed debt securities,
whether or not the purchase was made upon the original issuance
of the securities; except that the Portfolio may purchase
non-publicly distributed securities subject to the limitations
applicable to restricted securities and except for the lending of
portfolio securities;

          9. except as permitted in connection with short sales
of securities or writing of call options, described under the
headings "Short Sales" and "Puts and Calls," above, pledge,
mortgage or hypothecate any of its assets;

          10. except as permitted in connection with short sales
of securities against the box described under the heading
"Additional Investment Policies and Practices," above, make short
sales of securities; or

          11. purchase securities on margin, but it may obtain
such short-term credits as may be necessary for the clearance of
purchases and sales of securities.

          It is a non-fundamental policy of the Portfolio that
(i) the Portfolio utilize futures and options thereon only for
hedging purposes, (ii) the Portfolio will not enter into any
futures contracts or options on futures contracts if immediately
thereafter the market values of the outstanding futures contracts
of the Portfolio and the futures contracts subject to outstanding
options written by the Portfolio would exceed 50% of its total
assets, (iii) the Portfolio will not purchase or sell a stock
index future if immediately thereafter more than 30% of its total
assets would be hedged by stock index futures, and (iv) the
Portfolio will not purchase or sell a stock index future if,
immediately thereafter, the sum of the amount of margin deposit
on the Portfolio's existing futures positions would exceed 5% of
the market value of the Portfolio's total assets.

ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          To the extent not described in the Portfolio's
Prospectus, set forth below is additional information regarding
the Portfolio's investment policies and practices.

          CONVERTIBLE SECURITIES. The Portfolio may invest up to
15% of its net assets in convertible securities of issuers whose
common stocks are eligible for purchase by the Portfolio under
the investment policies described above. Convertible securities
include bonds, debentures, corporate notes and preferred stocks.
Convertible securities are instruments that are convertible at a
stated exchange rate into common stock. Prior to their
conversion, convertible securities have the same general
characteristics as non-convertible securities that provide a
stable stream of income with generally higher yields than those
of equity securities of the same or similar issuers. The market
value of convertible securities tends to decrease as interest
rates rise and, conversely, to increase as interest rates
decline. While convertible securities generally offer lower
interest yields than non-convertible debt securities of similar
quality, they offer investors the potential from increases in the
market price of the underlying common stock. Convertible debt
securities that are rated Baa or lower by Moody's or BBB or lower
by S&P, or Fitch and comparable unrated securities as determined
by the Adviser may share some or all of the risk of
non-convertible debt securities with those ratings.

          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 in an
issuer's capital structure. They are consequently of higher
quality and 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.

          FORWARD COMMITMENTS. No forward commitments will be
made by the Portfolio if, as a result, the Portfolio's aggregate
commitments under such transactions would be more than 30% of the
then current value of the Portfolio's total assets. For a general
discussion of forward commitments, see "Other Investment
Practices - - Forward Commitments," below.

          STANDBY COMMITMENT AGREEMENTS. The purchase of a
security subject to a standby commitment agreement and the
related commitment fee will be recorded on the date on which the
security can reasonably be expected to be issued, and the value
of the security will thereafter be reflected in the calculation
of the Portfolio's net asset value. The cost basis of the
security will be adjusted by the amount of the commitment fee. In
the event the security is not issued, the commitment fee will be
recorded as income on the expiration date of the standby
commitment. The Portfolio will at all times maintain a segregated
account with the Fund's custodian of cash and/or securities in an
aggregate amount equal to the purchase price of the securities
underlying the commitment.

          There can be no assurance that the securities subject
to a standby commitment will be issued, and 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
underlying the commitment is at the option of the issuer, the
Portfolio will bear the risk of capital loss in the event the
value of the security declines, and it 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 Portfolio.

          REPURCHASE AGREEMENTS. The Portfolio 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
Portfolio's ability to enter into repurchase agreements. For a
general discussion of repurchase agreements, see "Other
Investment Practices - - Repurchase Agreements," below.

          SHORT SALES. When engaging in a short sale, in addition
to depositing collateral with a broker-dealer, the Portfolio is
currently required under the 1940 Act to establish a segregated
account with the Fund's custodian and to maintain therein cash or
securities in an amount that, when added to cash or securities
deposited with the broker-dealer, will at all times equal at
least 100% of the current market value of the security sold
short.

          DEFENSIVE POSITION. For temporary defensive purposes,
the Portfolio may vary from its investment objectives during
periods in which conditions in securities markets or other
economic or political conditions warrant. During such periods,
the Portfolio may increase without limit its position in short-
term, liquid, high-grade debt securities, which may include U.S.
Government Securities, bank deposit, money market instruments,
short-term (for this purpose, securities with a remaining
maturity of one year or less) debt securities, including notes
and bonds, and short-term foreign currency denominated debt
securities rated A or higher by Moody's, S&P, or Fitch or, if not
so rated, of equivalent investment quality as determined by the
Adviser.

          Subject to its policy of investing at least 80% of its
net assets in equity securities of real estate investment trusts
and other real estate industry companies, the Portfolio may also
at any time temporarily invest funds awaiting reinvestment or
held as reserves for dividends and other distributions to
shareholders in money market instruments referred to above.

RISK FACTORS ASSOCIATED WITH THE REAL ESTATE INDUSTRY

          REITS. 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. REITs are also 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.

          Investing in REITs involves risks similar to those
associated with investing in small capitalization 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
been more volatile in price than the larger capitalization stocks
included in the S&P 500.

          MORTGAGED-BACKED SECURITIES. Investing in
Mortgage-Backed Securities involves certain unique risks in
addition to those risks associated with investment in the real
estate industry in general. These risks include the failure of a
counterparty to meet its commitments, adverse interest rate
changes and the effects of prepayments on mortgage cash flows.
When interest rates decline, the value of an investment in fixed
rate obligations can be expected to rise. Conversely, when
interest rates rise, the value of an 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 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.

          Further, the yield characteristics of Mortgage-Backed
Securities, such as those in which the Portfolio may invest,
differ from those of traditional fixed-income securities. The
major differences typically include more frequent interest and
principal payments (usually monthly), the adjustability of
interest rates, and the possibility that prepayments of principal
may be made substantially earlier than their final distribution
dates.

          Prepayment rates are influenced by changes in current
interest rates and a variety of economic, geographic, social and
other factors, and cannot be predicted with certainty. Both
adjustable rate mortgage loans and fixed rate mortgage loans may
be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of
principal prepayments in an increasing interest rate environment.
Early payment associated with Mortgage-Backed Securities causes
these securities to experience significantly greater price and
yield volatility than that experienced by traditional
fixed-income securities. Under certain interest rate and
prepayment rate scenarios, the Portfolio may fail to recoup fully
its investment in Mortgage-Backed Securities notwithstanding any
direct or indirect governmental or agency guarantee. When the
Portfolio reinvests amounts representing payments and unscheduled
prepayments of principal, it may receive a rate of interest that
is lower than the rate on existing adjustable rate mortgage
pass-through securities. Thus, Mortgage-Backed Securities, and
adjustable rate mortgage pass-through securities in particular,
may be less effective than other types of U.S. Government
Securities as a means of "locking in" interest rates.

          A REMIC is a CMO that qualifies for special tax
treatment under the Code and invests in certain mortgages
primarily secured by interests in real property and other
permitted investments. Investors may purchase "regular" and
"residual" interest shares of beneficial interest in REMIC
trusts, although the Portfolio does not intend to invest in
residual interests.

          The Portfolio may invest in guaranteed mortgage
pass-through securities which represent participation interests
in pools of residential mortgage loans and are issued by U.S.
governmental or private lenders and guaranteed by the U.S.
Government or one of its agencies or instrumentalities, including
Ginnie Mae.

          GENERAL. Although the Portfolio does not invest
directly in real estate, it invests primarily in Real Estate
Equity Securities and has a policy of concentration of its
investments in the real state industry. Therefore, an investment
in the Portfolio is subject to certain risks associated with the
direct ownership of real estate and with the real estate industry
in general. These risks include, among others: possible declines
in the value of real estate; risks related to general and local
economic conditions; possible lack of availability of mortgage
funds; overbuilding; extended vacancies of properties; increases
in competition, property taxes and operating expenses; changes in
zoning laws; costs resulting from the clean-up of, and liability
to third parties for damages resulting from, environmental
problems; casualty or condemnation losses; uninsured damages from
floods, earthquakes or other natural disasters; limitations on
and variations in rents; and changes in interest rates. To the
extent that assets underlying the Portfolio's investments are
concentrated geographically, by property type or in certain other
respects, the Portfolio may be subject to certain of the
foregoing risks to a greater extent.

          In addition, if the Portfolio receives rental income or
income from the disposition of real property acquired as a result
of a default on securities the Portfolio owns, the receipt of
such income may adversely affect the Portfolio's ability to
retain its tax status as a regulated investment company.
Investments by the Portfolio in securities of companies providing
mortgage servicing will be subject to the risks associated with
refinancings and their impact on servicing rights.

          INVESTMENT RESTRICTIONS

          The following restrictions, which are applicable to the
Portfolio, supplement those set forth above and may not be
changed without Shareholder Approval, as defined under the
caption "General Information," below.

          As a matter of fundamental policy, the Portfolio may
not:

          1. with respect to 75% of its total assets, have such
assets represented by other than: (a) cash and cash items, (b)
U.S. Government Securities, or (c) securities of any one issuer
(other than the U.S. Government and its agencies or
instrumentalities) not greater in value than 5% of the
Portfolio's total assets, and not more than 10% of the
outstanding voting securities of such issuer;

          2. purchase the securities of any one issuer, other
than the U.S. Government and its agencies or instrumentalities,
if as a result (a) the value of the holdings of the Portfolio in
the securities of such issuer exceeds 25% of its total assets, or
(b) the Portfolio owns more than 25% of the outstanding
securities of any one class of securities of such issuer;

          3. invest 25% or more of its total assets in the
securities of issuers conducting their principal business
activities in any one industry, other than the real estate
industry, in which the Portfolio will invest at least 25% or more
of its total assets, except that this restriction does not apply
to U.S. Government Securities;

          4. purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in real
estate or interests therein, including Real Estate Equity
Securities;

          5. borrow money except for temporary or emergency
purposes or to meet redemption requests, in an amount not
exceeding 5% of the value of its total assets at the time the
borrowing is made;

          6. pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings;

          7. make loans except through (a) the purchase of debt
obligations in accordance with its investment objectives and
policies; (b) the lending of portfolio securities; or (c) the use
of repurchase agreements;

          8. participate on a joint or joint and several basis in
any securities trading account;

          9. invest in companies for the purpose of exercising
control;

          10. issue any senior security within the meaning of the
1940 Act except that the Portfolio may lend portfolio securities
in accordance with applicable law;

          11. make short sales of securities or maintain a short
position, unless at all times when a short position is open not
more than 25% of the Portfolio's net assets (taken at market
value) is held as collateral for such sales at any one time; or

          12. (a) purchase or sell commodities or commodity
contracts including futures contracts; (b) invest in interests in
oil, gas, or other mineral exploration or development programs;
(c) purchase securities on margin, except for such short-term
credits as may be necessary for the clearance of transactions;
and (d) act as an underwriter of securities, except that the
Portfolio may acquire restricted securities under circumstances
in which, if such securities were sold, the Portfolio might be
deemed to be an underwriter for purposes of the Securities Act.

ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO
ALLIANCEBERNSTEIN SMALL CAP VALUE PORTFOLIO
ALLIANCEBERNSTEIN VALUE PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Portfolio's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following information about each Portfolio's
investment policies and practices supplements the information set
forth in each Portfolio's Prospectus.

          CURRENCY SWAPS. The Portfolios may enter into currency
swaps for hedging purposes. Currency swaps involve the exchange
by a Portfolio with another party of a series of payments in
specified currencies. Since currency swaps are individually
negotiated, each Portfolio expects to achieve an acceptable
degree of correlation between its portfolio investments and its
currency swaps positions. A currency swap may involve the
delivery at the end of the exchange period of a substantial
amount of one designated currency in exchange for the other
designated currency. 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
net amount of the excess, if any, of a Portfolio's obligations
over its entitlements with respect to each currency swap will be
accrued on a daily basis, and an amount of liquid assets having
an aggregate net asset value at least equal to the accrued excess
will be maintained in a segregated account for the relevant
Portfolio by the Fund's custodian. No Portfolio will 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 rating organization at the time of entering
into the transaction. If there is a default by the other party to
such a transaction, a Portfolio entering into a currency swap
will have contractual remedies pursuant to the agreements related
to the transactions.

          FORWARD COMMITMENTS. The Portfolios may enter into
forward commitments for the purchase or sale of securities. Such
transactions 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, which is generally expressed in yield terms, is fixed
at the time the commitment is made, but delivery and payment for
the securities take place at a later date, normally within four
months after the transaction, although delayed settlements beyond
four months may be negotiated. Securities purchased or sold under
a forward commitment are subject to market fluctuation, and no
interest accrues to the purchaser prior to the settlement date.
At the time a Portfolio enters 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 net asset value. 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.

          The use of forward commitments enables the Portfolios
to protect against anticipated changes in interest rates and
prices. For instance, in periods of rising interest rates and
falling bond prices, a Portfolio might sell a security in its
portfolio on a forward commitment basis to limit its exposure to
falling bond prices. In periods of falling interest rates and
rising bond prices, a Portfolio might sell a security in its
portfolio and purchase the same or a similar security on a
when-issued or forward commitment basis, thereby obtaining the
benefit of currently higher cash yields. However, if the Adviser
to each of the Portfolios were to forecast incorrectly the
direction of interest rate movements, a Portfolio might be
required to complete such when-issued or forward transactions at
prices less favorable than current market values.

          A Portfolio's right to receive or deliver a security
under a forward commitment may be sold prior to the settlement
date, but a Portfolio will enter into forward commitments only
with the intention of actually receiving or delivering the
securities, as the case may be. To facilitate such transactions,
the Fund's custodian will maintain, in the separate account of
the relevant Portfolio, liquid assets having value equal to, or
greater than, any commitments to purchase securities on a forward
commitment basis. If a Portfolio, however, chooses to dispose of
the right to receive or deliver a security subject to a forward
commitment prior to the settlement date of the transaction, it
can incur a gain or loss. In the event the other party to a
forward commitment transaction were to default, a Portfolio might
lose the opportunity to invest money at favorable rates or to
dispose of securities at favorable prices.

          Although each Portfolio intends to make such purchases
for speculative purposes, purchases of securities on such bases
may involve more risk than other types of purchases. For example,
by committing to purchase securities in the future, a Portfolio
subjects itself to a risk of loss on such commitments as well as
on its portfolio securities. Also, a Portfolio may have to sell
assets that have been set aside in order to meet redemptions. In
addition, if a Portfolio determines it is advisable as a matter
of investment strategy to sell the forward commitment or
when-issued or delayed delivery securities before delivery, that
Portfolio 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 and would be treated for tax purposes as such. 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, that
Portfolio 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 Portfolio's payment
obligation).

          FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Each
Portfolio may purchase or sell forward foreign currency exchange
contracts ("forward contracts") to attempt to minimize the risk
to the Portfolio of adverse changes in the relationship between
the U.S. Dollar and foreign currencies. A forward contract is an
obligation to purchase or sell a specific currency for an agreed
price at a future date which is individually negotiated and
privately traded by currency traders and their customers.

          A Portfolio may enter into a forward contract, for
example, 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").
The Portfolios may not engage in transaction hedges with respect
to the currency of a particular country to an extent greater than
the aggregate amount of the Portfolio's transactions in that
currency. Additionally, for example, when a Portfolio 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 that Portfolio's securities denominated in such
foreign currency, or when a Portfolio 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"). No Portfolio will position hedge with respect to a
particular currency to an extent greater than the aggregate
market value (at the time of making such sale) of the securities
held in its portfolio denominated or quoted in that currency. In
this situation, a Portfolio may, in the alternative, enter into a
forward contract to sell a different foreign currency for a fixed
U.S. Dollar amount where the Portfolio believes that the U.S.
Dollar value of the currency to be sold pursuant to the forward
contract will fall whenever there is a decline in the U.S. Dollar
value of the currency in which portfolio securities of the
Portfolio are denominated ("cross-hedge").

          To the extent required by applicable law, the Fund's
custodian will place liquid assets in a separate account of the
relevant Portfolio having a value equal to the aggregate amount
of that Portfolio's commitments under forward contracts entered
into with respect to position hedges and cross-hedges. If the
value of the assets placed in a Portfolio's separate account
declines, additional liquid assets will be placed in the account
on a daily basis so that the value of the account will equal the
amount of that Portfolio's commitments with respect to such
contracts. As an alternative to maintaining all or part of the
separate account, a Portfolio may purchase a call option
permitting that Portfolio to purchase the amount of foreign
currency being hedged by a forward sale contract at a price no
higher than the forward contract price, or the Portfolio may
purchase a put option permitting that Portfolio to sell the
amount of foreign currency subject to a forward purchase contract
at a price as high or higher than the forward contract price. In
addition, each Portfolio may use such other methods of "cover" as
are permitted by applicable law.

          The Portfolios will not speculate in forward currency
contracts. The Portfolios will only enter forward foreign
currency exchange contracts with counterparties that, in the
opinion of the Adviser, do not present undue credit risk.
Generally, such forward contracts will be for a period of less
than three months.

          Hedging against a decline in the value of a currency
does not eliminate fluctuations in the prices of portfolio
securities or prevent losses if the prices of securities decline.
These transactions also preclude the opportunity for gain if the
value of the hedge currency should rise. Moreover, it may not be
possible for a Portfolio to hedge against a devaluation that is
so generally anticipated that the Portfolio is not able to
contract to sell the currency at a price above the anticipated
devaluation level. Unanticipated changes in currency prices may
result in poorer overall performance for a Portfolio than if it
had not entered into such contracts. The matching of the increase
in value of a forward contract and the decline in the U.S. Dollar
equivalent value of the foreign currency-denominated asset that
is the subject of the hedge generally will not be precise. In
addition, a Portfolio may not always be able to enter into
foreign currency forward contracts at attractive prices and this
will limit that Portfolio's ability to use such contract to hedge
or cross-hedge its assets. Also, with regard to a Portfolio's use
of cross-hedges, there can be no assurance that historical
correlations between the movement of certain foreign currencies
relative to the U.S. Dollar will continue. Thus, at any time poor
correlation may exist between movements in the exchange rates of
the foreign currencies underlying a Portfolio's cross-hedges and
the movements in the exchange rates of the foreign currencies in
which the Portfolio's assets that are the subject of such
cross-hedges are denominated.

          LENDING OF PORTFOLIO SECURITIES. Consistent with
applicable regulatory requirements, each Portfolio may lend its
portfolio securities provided the loan is continuously secured by
cash, marketable securities issued or guaranteed by the U.S.
Government or its agencies, or a standby letter of credit issued
by qualified banks equal to no less than the market value,
determined daily, of the securities loaned. In lending its
portfolio securities, a Portfolio will require that interest or
dividends on securities loaned be paid to the Portfolio. Where
voting or consent rights with respect to loaned securities pass
to the borrower, a Portfolio will follow the policy of calling
the loan, in whole or in part as may be appropriate, to permit it
to exercise such voting or consent rights if the exercise of such
rights involves issues having a material effect on the
Portfolio's investment in the securities loaned. Loans will be
made only to firms deemed by the Adviser to be of good standing
and will not be made unless, in the judgment of the Adviser, the
consideration to be earned from such loans would justify the
risk. The Portfolios may invest any cash collateral in portfolio
securities and earn additional income, or receive an agreed-upon
amount of income from a borrower who has delivered equivalent
collateral. The Portfolios will have the right to regain record
ownership of loaned securities to exercise beneficial rights such
as voting rights, subscription rights, and rights to dividends,
interest or distributions. The Portfolios may pay reasonable
finders', administrative, and custodial fees in connection with a
loan.

          OPTIONS. Each Portfolio may purchase put and call
options written by others and write covered put and call options
overlying the types of securities in which the Portfolio may
invest. A put option (sometimes called a "standby commitment")
gives the purchaser of the option, upon payment of a premium, the
right to deliver a specified amount of a security to the writer
of the option on or before a fixed date at a predetermined price.
A call option (sometimes called a "reverse standby commitment")
gives the purchaser of the option, upon payment of a premium, the
right to call upon the writer to deliver a specified amount of a
security on or before a fixed date at a predetermined price.

          The Portfolios may purchase put and call options to
provide protection against adverse price or yield effects from
anticipated changes in prevailing interest rates. For instance,
in periods of rising interest rates and falling bond prices, a
Portfolio might purchase a put option to limit its exposure to
falling prices. In periods of falling interest rates and rising
bond prices, a Portfolio might purchase a call option. In
purchasing a call option, a Portfolio would be in a position to
realize a gain if, during the option period, the price of the
security increased by an amount in excess of the premium paid. It
would realize a loss if the price of the security declined or
remained the same or did not increase during the period by more
than the amount of the premium. By purchasing a put option, a
Portfolio would be in a position to realize a gain if, during the
option period, the price of the security declined by an amount in
excess of the premium paid. It would realize a loss if the price
of the security increased or remained the same or did not
decrease during that period by more than the amount of the
premium. If a put or call option purchased by a Portfolio were
permitted to expire without being sold or exercised, its premium
would represent a loss to that Portfolio.

          When a Portfolio writes a put option, it must either
own at all times during the option period an offsetting put
option on the same security, or maintain in a segregated account
cash or liquid assets in an amount adequate to purchase the
underlying security should the put be exercised. When a Portfolio
writes a call option it must own at all times during the option
period either the underlying securities or an offsetting call
option on the same securities. If a put option written by a
Portfolio were exercised, the Portfolio would be obligated to
purchase the underlying security at the exercise price. If a call
option written by a Portfolio were exercised, that Portfolio
would be obligated to sell the underlying security at the
exercise price.

          The Portfolios may write put options either to earn
additional income in the form of option premiums (anticipating
that the price of the underlying security will remain stable or
rise during the option period and the option will therefore not
be exercised) or to acquire the underlying security at a net cost
below the current value (e.g., the option is exercised because of
a decline in the price of the underlying security, but the amount
paid by a Portfolio, offset by the option premium, is less than
the current price).

          Each Portfolio will write covered call options both to
reduce the risks associated with certain of its respective
investments and to increase total investment return through the
receipt of premiums. In return for the premium income, the
Portfolios will give up the opportunity to profit from an
increase in the market price of the underlying security above the
exercise price so long as its obligations under the contract
continue, except insofar as the premium represents a profit.
Moreover, in writing the call options, the Portfolios will retain
the risk of loss should the price of the security decline. The
premium is intended to offset that loss in whole or in part.
Unlike the situation in which a Portfolio owns securities not
subject to call options, a Portfolio, in writing call options,
must assume that the call may be exercised at any time prior to
the expiration of its obligation as a writer, and that in such
circumstances the net proceeds realized from the sale of the
underlying securities pursuant to the call may be substantially
below the prevailing market price.

          The risk involved in writing a put option is that there
could be a decrease in the market value of the underlying
security caused by rising interest rates or other factors. If
this occurred, the option could be exercised and the underlying
security would then be sold to a Portfolio at a higher price than
its current market value. The risk involved in writing a call
option is that there could be an increase in the market value of
the underlying security caused by declining interest rates or
other factors. If this occurred, the option could be exercised
and the underlying security would then be sold by the respective
Portfolio at a lower price than its current market value. These
risks could be reduced by entering into a closing transaction as
described below. A Portfolio retains the premium received from
writing a put or call option whether or not the option is
exercised.

          The Portfolios may also write covered call options for
cross-hedging purposes. A call option is for cross-hedging
purposes if it is designed to provide a hedge against a decline
in value in another security which a Portfolio owns or has the
right to acquire. In such circumstances, a Portfolio
collateralizes the option by maintaining, in a segregated account
with the custodian, liquid assets in an amount not less than the
market value of the underlying security, marked to market daily.

          Each Portfolio may dispose of an option which it has
purchased by entering into a "closing sale transaction" with the
writer of the option. A closing sale transaction terminates the
obligation of the writer of the option and does not result in the
ownership of an option. A Portfolio realizes a profit or loss
from a closing sale transaction if the premium received from the
transaction is more than or less than the cost of the option.

          Each Portfolio may terminate its obligation to the
holder of an option written by a Portfolio through a "closing
purchase transaction." A Portfolio may not, however, effect a
closing purchase transaction with respect to such an option after
it has been notified of the exercise of such option. A Portfolio
realizes a profit or loss from a closing purchase transaction if
the cost of the transaction is more than or less than the premium
received by that Portfolio from writing the option. A closing
purchase transaction for exchange-traded options may be made only
on a national securities exchange. There is no assurance that a
liquid secondary market on a national securities exchange will
exist for any particular option, or at any particular time, and
for some options, such as over-the-counter options, no secondary
market on a national securities exchange may exist. If a
Portfolio is unable to effect a closing purchase transaction,
that Portfolio will not sell the underlying security until the
option expires or the Portfolio delivers the underlying security
upon exercise.

          The Portfolios may purchase or write options in
negotiated transactions. The Portfolios may 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
also adopted procedures for monitoring the creditworthiness of
such entities. Options traded in the over-the-counter market may
not be as actively traded as those traded on an exchange.
Accordingly, it may be more difficult to value such options.
Options purchased or written by a Portfolio in negotiated
transactions may be considered illiquid and it may not be
possible for the Portfolio to effect a closing purchase
transaction at a time when the Adviser believes it would be
advantageous to do so.

          The Portfolios may enter into contracts (or amend
existing contracts) with primary dealer(s) with whom they write
over-the-counter options. The contracts will provide that the
relevant Portfolio has the absolute right to repurchase an option
it writes at any time at a repurchase price which represents the
fair market value, as determined in good faith through
negotiation between the parties, but which in no event will
exceed a price determined pursuant to a formula contained in the
contract. Although the specific details of the formula may vary
between contracts with different primary dealers, the formula
will generally be based on a multiple of the premium received by
a Portfolio for writing the option, plus the amount, if any, of
the option's intrinsic value (i.e., the amount the option is
"in-the-money"). The formula will also include a factor to
account for the difference between the price of the security and
the strike price of the option if the option is written
"out-of-the-money." Although each Portfolio has established
standards of creditworthiness for these primary dealers, a
Portfolio may still be subject to the risk that firms
participating in such transactions will fail to meet their
obligations. With respect to agreements concerning the
over-the-counter options a Portfolio has written, a Portfolio
will treat as illiquid only securities equal in amount to the
formula price described above less the amount by which the option
is "in-the-money," i.e., the amount by which the price of the
option exceeds the exercise price.

          OPTIONS ON SECURITIES INDICES. Each Portfolio may
purchase put and call options and write covered put and call
options on securities indexes for the purpose of hedging against
the risk of unfavorable price movements adversely affecting the
value of a Portfolio's securities or securities it intends to
purchase. An option on a securities index is similar to an option
on a security except that, rather than the right to take or make
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. A
call option on a securities index is considered covered, for
example, if, so long as a Portfolio is obligated as the writer of
the call, it holds securities the price changes of which are, in
the opinion of the Adviser, expected to replicate substantially
the movement of the index or indexes upon which the options
written by the Portfolio are based. A put on a securities index
written by a Portfolio will be considered covered if, so long as
it is obligated as the writer of the put, a Portfolio segregates
with the Fund's custodian liquid assets having a value equal to
or greater than the exercise price of the option.

          Through the purchase of listed index options, a
Portfolio could achieve many of the same objectives as through
the use of options on individual securities. Price movements in a
Portfolio's securities probably will not correlate perfectly with
movements in the level of the index and, therefore, a Portfolio
would bear a risk of loss on index options it purchased if
favorable price movements of the hedged portfolio securities do
not equal or exceed losses on the options or if adverse price
movements of the hedged portfolio securities are greater than
gains realized from the options.

          OPTIONS ON FOREIGN CURRENCIES. The Portfolios may
purchase and write put and call options on foreign currencies for
the purpose of protecting against declines in the U.S. Dollar
value of foreign currency-denominated portfolio securities and
against increases in the U.S. Dollar cost of such securities to
be acquired. As in the case of other kinds of options, however,
the writing of an option on a foreign currency constitutes only a
partial hedge, up to the amount of the premium received, and a
Portfolio could be required to purchase or sell foreign
currencies at disadvantageous exchange rates, thereby incurring
losses. The purchase of an option on a foreign currency may
constitute an effective hedge against fluctuations in exchange
rates although, in the event of rate movements adverse to a
Portfolio's position, it may forfeit the entire amount of the
premium plus related transaction costs. Options on foreign
currencies to be written or purchased by the Portfolios are
exchange-traded or traded over-the-counter. The Portfolios will
write options on foreign currencies only if they are "covered."

          The Portfolios will not speculate in foreign currency
options. Accordingly, the Portfolios will not hedge a currency
substantially in excess of the market value of the securities
denominated in that currency which it owns or the expected
acquisition price of securities which it anticipates purchasing.

          See Appendix B for further discussion of the use, risks
and costs of options on foreign currencies.

          FUTURES CONTRACTS AND OPTIONS THEREON. The Portfolios
may purchase and sell futures contracts and related options on
debt securities and on indexes of debt securities to hedge
against anticipated changes in interest rates that might
otherwise have an adverse effect on the value of its assets or
assets it intends to acquire. Each Portfolio may also enter into
futures contracts and related options on foreign currencies in
order to limit its exchange rate risk. A "sale" of a futures
contract means the acquisition of a contractual obligation to
deliver the securities called for by the contract at a specified
price on a specified date. A "purchase" of a futures contract
means the incurring of a contractual obligation to acquire the
securities called for by the contract at a specified price on a
specified date. The purchaser of a futures contract on an index
agrees to take or make delivery of an amount of cash equal to the
difference between a specified dollar multiple of the value of
the index on the expiration date of the contract and the price at
which the contract was originally struck. All futures contracts
and related options will be traded on exchanges that are licensed
and regulated by the CFTC. The Portfolios will only write options
on futures contracts which are "covered." These investment
techniques will be used only to hedge against anticipated future
changes in interest or exchange rates which otherwise might
either adversely affect the value of a Portfolio's securities or
adversely affect the prices of securities which the Portfolio
intends to purchase at a later date. These investment techniques
will not be used for speculation.

          The Portfolios have claimed an exclusion from the
definition of the term "commodity pool operator" under the
Commodity Exchange Act and therefore are not subject to
regulation as a pool operator under that Act. In general, each
Portfolio will limit its use of futures contracts and options on
futures contracts so that either (i) the contracts or options
thereon are for "bona fide hedging" purposes as defined under
regulations of the CFTC or (2) if for other purposes, no more
than 5% of the liquidation value of the respective Portfolio's
total assets will be used for initial margin of option premiums
required to establish non-hedging positions. These instruments
will be used for hedging purposes and not for speculation or to
leverage a Portfolio.

          In instances involving the purchase of futures
contracts or the writing of put options thereon by a Portfolio,
an amount of liquid assets equal to the cost of such futures
contracts or options written (less any related margin deposits)
will be deposited in a segregated account with the Fund's
custodian, thereby insuring that the use of such futures
contracts and options is unleveraged. In instances involving the
sale of futures contracts or the writing of call options thereon
by a Portfolio, the securities underlying such futures contracts
or options will at all times be maintained by the Portfolio or,
in the case of index futures and related options, the Portfolio
will own securities the price changes of which are, in the
opinion of the Adviser, expected to replicate substantially the
movement of the index upon which the futures contract or option
is based.

          Positions taken in the futures markets are not normally
held until delivery or cash settlement is required, but are
instead liquidated through offsetting transactions that may
result in a gain or a loss. While futures positions taken by the
Portfolios will usually be liquidated in this manner, each
Portfolio may instead make or take delivery of underlying
securities whenever it appears economically advantageous to do
so.

          Positions in futures contracts may be closed out only
on an exchange or a board of trade that provides the market for
such futures. Although each Portfolio intends to purchase or sell
futures only on exchanges or boards of trade where there appears
to be an active market, there is no guarantee that such will
exist for any particular contract or at any particular time. If
there is not a liquid market at a particular time, it may not be
possible to close a futures position at such time, and, in the
event of adverse price movements, a Portfolio would continue to
be required to make daily cash payments of maintenance margin.
However, in the event that futures positions are used to hedge
portfolio securities, the securities will not be sold until the
futures positions can be liquidated. In such circumstances, an
increase in the price of securities, if any, may partially or
completely offset losses on the futures contracts.

          See Appendix B for further discussion of the use, risks
and costs of futures contracts and options on futures contracts.

          REPURCHASE AGREEMENTS. The Portfolios 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
Portfolios' ability to enter into repurchase agreements.
Currently, each Portfolio intends to enter into repurchase
agreements only with the Fund's custodian and such primary
dealers. For a general discussion of repurchase agreements, see
"Other Investment Practices -- Repurchase Agreements," below.

          ILLIQUID SECURITIES. None of the Portfolios will invest
more than 15% of its net assets in illiquid securities. For this
purpose, illiquid securities are securities restricted as to
disposition under federal securities laws and 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),
and (b) repurchase agreements not terminable within seven days.
Securities that have legal or contractual restrictions on resale
but have a readily available market are not deemed illiquid for
purposes of this limitation. For a general discussion of illiquid
securities see "Other Investment Practices -- Illiquid
Securities," below.

          RIGHTS AND WARRANTS. The Portfolios may invest in
rights and 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 Portfolios'
investment portfolio. Rights and warrants may entitle the holder
to buy equity securities at a specific price for a specific
period of time. Rights are similar to warrants except that they
have a substantially shorter duration. 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 underlying securities nor do
they represent any rights in the assets of the issuing company.
The value of right or warrant does not necessarily change with
the value of the underlying security, although the value of a
right or warrant may decline because of a decrease in the value
of the underlying security, the passage of time or a change in
perception as to the potential of the underlying security, or any
combination thereof. If the market price of the underlying
security is below the exercise price set forth in the warrant on
the expiration date, the warrant will expire worthless. Moreover,
a right or warrant ceases to have value if it is not exercised
prior to the expiration date.

          PORTFOLIO TURNOVER. Because each Portfolio will
actively use trading to achieve its investment objective and
policies, a Portfolio may be subject to a greater degree of
turnover and, thus, a higher incidence of short-term capital
gains taxable as ordinary income than might be expected from
investment companies which invest substantially all of their
portfolios on a long-term basis, and correspondingly larger
mark-up charges can be expected to be borne by a Portfolio.
Management anticipates that the annual turnover in each Portfolio
may be in excess of 100%. An annual turnover rate of 100% occurs,
for example, when all of the securities in a Portfolio are
replaced one time in a period of one year.

          The value of a Portfolio's shares will be influenced by
the factors that generally affect securities, such as the
economic and political outlook, earnings, dividends and the
supply and demand for various classes of securities. There can
be, of course, no assurance that a Portfolio's investment
objective will be achieved.

CERTAIN RISK CONSIDERATIONS

          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-United States
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 United States 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 United
States, 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 auditing and financial
reporting standards, practices 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
Portfolios will 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.

          It is contemplated that foreign securities will be
purchased in over-the-counter markets or on stock exchanges
located in the countries in which the respective principal
offices of the issuers of the various securities are located, if
that is the best available market. 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 Exchange, and securities of some foreign
companies are less liquid and more volatile than securities of
comparable United States companies. Similarly, volume and
liquidity in most foreign bond markets is less than in the United
States and, at times, volatility of price can be greater than in
the United States. Fixed commissions on foreign stock exchanges
are generally higher than negotiated commissions on United States
exchanges, although the Portfolios 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 Portfolios will invest and could
adversely affect a Portfolio's assets should these conditions or
events recur.

          Foreign investment in certain foreign securities is
restricted or controlled to varying degrees. These restrictions
or controls may at times limit or preclude foreign investment in
certain foreign securities and increase the costs and expenses of
the Portfolios. Certain countries in which the Portfolios will
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 a Portfolio
could be reduced by foreign income taxes, including withholding
taxes. It is impossible to determine the effective rate of
foreign tax in advance. A Portfolio's net asset value may also be
affected by changes in the rates or methods of taxation
applicable to that Portfolio or to entities in which that
Portfolio 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 a Portfolio 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
Portfolio. See "Dividends, Distributions and Taxes," below.

          Although a Portfolio may value its assets in terms of
U.S. dollars, the Portfolios do not intend to convert their
holdings of foreign currencies into U.S. dollars on a daily
basis. The Portfolios 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 a Portfolio at one rate, while offering a
lesser rate of exchange should that Portfolio desire to resell
that currency to the dealer. Investors should understand that the
expense ratio of a Portfolio 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 American Depository Receipts ("ADRs") which
are traded in the United States on exchanges or over-the-counter,
are issued by domestic banks or trust companies and 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 Portfolios can avoid currency risks
which might occur during the settlement period for either
purchases or sales. The Portfolios may purchase foreign
securities directly, as well as through ADRs.

          SECURITIES RATINGS. The ratings of fixed-income
securities by Moody's and S&P are a generally accepted barometer
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.

          The Adviser will try to reduce the risk inherent in
each Portfolio'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 for each Portfolio, 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.

          Non-rated securities will also be considered for
investment by each Portfolio 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 a Portfolio to a degree comparable to that of
rated securities which are consistent with that Portfolio's
objectives and policies.

          1940 ACT RESTRICTIONS. Under the 1940 Act a Portfolio
is not permitted to borrow unless immediately after such
borrowing there is "asset coverage," as that term is defined and
used in the 1940 Act, of at least 300% for all borrowings of that
Portfolio. In addition, under the 1940 Act, in the event asset
coverage falls below 300%, a Portfolio must within three days
reduce the amount of its borrowing to such an extent that the
asset coverage of its borrowings is at least 300%. Assuming, for
example, outstanding borrowings representing not more than
one-third of a Portfolio's total assets less liabilities (other
than such borrowings), the asset coverage of that Portfolio's
portfolio would be 300%; while outstanding borrowings
representing 25% of the total assets less liabilities (other than
such borrowings), the asset coverage of the Portfolio's portfolio
would be 400%. Each Portfolio will maintain asset coverage of
outstanding borrowings of at least 300% and if necessary will, to
the extent possible, reduce the amounts borrowed by making
repayments from time to time in order to do so. Such repayments
could require a Portfolio to sell portfolio securities at times
considered disadvantageous by the Adviser and such sales could
cause a Portfolio to incur related transaction costs and to
realize taxable gains.

          Under the 1940 Act, each Portfolio may invest not more
than 10% of its total assets in securities of other investment
companies. In addition, under the 1940 Act each Portfolio may not
own more than 3% of the total outstanding voting stock of any
investment company and not more than 5% of the value of each
Portfolio's total assets may be invested in the securities of any
investment company.

          The Portfolios may emphasize investments in particular
industries or sectors as a by-product of the stock selection
process rather than as the result of assigned targets or ranges.

CERTAIN FUNDAMENTAL INVESTMENT POLICIES

          Each Portfolio has adopted the following investment
restrictions, which may not be changed without Shareholder
Approval, as defined under the caption "General Information,"
below.

          Each Portfolio may not:

          1. make loans except through (a) the purchase of debt
obligations in accordance with its investment objective and
policies; (b) the lending of portfolio securities; or (c) the use
of repurchase agreements;

          2. borrow money or issue senior securities except to
the extent permitted by the 1940 Act;

          3. pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings;

          4. invest in companies for the purpose of exercising
control;

          5. (a) purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in real
estate or interests therein and securities that are secured by
real estate, provided such securities are securities of the type
in which a Portfolio may invest; (b) purchase or sell commodities
or commodity contracts, including futures contracts (except
foreign currencies, futures on securities, currencies and
securities indices and forward contracts or contracts for the
future acquisition or delivery of securities and foreign
currencies and other similar contracts and options on the
foregoing); and (c) act as an underwriter of securities, except
that a Portfolio may acquire restricted securities under
circumstances in which, if such securities were sold, that
Portfolio might be deemed to be an underwriter for purposes of
the Securities Act; or

          6. concentrate more than 25% of its assets in any
particular industry or group of industries.

ALLIANCEBERNSTEIN U.S. LARGE CAP BLENDED STYLE PORTFOLIO

          For a general description of the Portfolio's investment
policies and practices

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

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

          CONVERTIBLE SECURITIES. The Portfolio may invest up to
10% of its net assets in the convertible securities of companies
whose common stocks are eligible for purchase by the Portfolio
under the investment policies described above. For a discussion
regarding convertible securities, see "AllianceBernstein Utility
Income Portfolio -- Convertible Securities," above.

          Depositary Receipts. 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. ADRs
are depositary receipts typically issued by an U.S. bank or trust
company that evidence ownership of underlying securities issued
by a foreign corporation. GDRs and other types of depositary
receipts are typically issued by foreign banks or trust companies
and evidence ownership of underlying securities issued by either
a foreign or an U.S. company. 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 foreign securities markets. For purposes of determining
the country of issuance, investments in depositary receipts of
either type are deemed to be investments in the underlying
securities.

          Forward Commitments. The Portfolio may enter into
forward commitments for the purchase or sale of securities. Such
transactions 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, which is generally expressed in yield terms, is fixed
at the time the commitment is made, but delivery and payment for
the securities take place at a later date, normally within four
months after the transaction, although delayed settlements beyond
four months may be negotiated. Securities purchased or sold under
a forward commitment are subject to market fluctuation, and no
interest accrues to the purchaser prior to the settlement date.
At the time the Portfolio enters 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 net asset value. 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.

          The Portfolio's right to receive or deliver a security
under a forward commitment may be sold prior to the settlement
date, but the Portfolio will enter into forward commitments only
with the intention of actually receiving or delivering the
securities, as the case may be. To facilitate such transactions,
the Fund's custodian will maintain, in the separate account of
the Portfolio, liquid assets having value equal to, or greater
than, any commitments to purchase securities on a forward
commitment basis. If the Portfolio, however, chooses to dispose
of the right to receive or deliver a security subject to a
forward commitment prior to the settlement date of the
transaction, it can incur a gain or loss. In the event the other
party to a forward commitment transaction were to default, the
Portfolio might lose the opportunity to invest money at favorable
rates or to dispose of securities at favorable prices.

          Although the Portfolio intends to make such purchases
for speculative purposes, purchases of securities on such bases
may involve more risk than other types of purchases. For example,
by committing to purchase securities in the future, the Portfolio
subjects itself to a risk of loss on such commitments as well as
on its portfolio securities. Also, the Portfolio may have to sell
assets that have been set aside in order to meet redemptions. In
addition, if the Portfolio 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
Portfolio 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 and would be treated for tax purposes as such. 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
Portfolio 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 Portfolio's payment
obligation).

          Forward Foreign Currency Exchange Contracts. The
Portfolio may purchase or sell forward foreign currency exchange
contracts ("forward contracts") to attempt to minimize the risk
to the Portfolio of adverse changes in the relationship between
the U.S. Dollar and foreign currencies. A forward contract is an
obligation to purchase or sell a specific currency for an agreed
price at a future date which is individually negotiated and
privately traded by currency traders and their customers.

          The Portfolio may enter into a forward contract, for
example, 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").
The Portfolio may not engage in transaction hedges with respect
to the currency of a particular country to an extent greater than
the aggregate amount of the Portfolio's transactions in that
currency. Additionally, for example, when the Portfolio 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 Portfolio's securities denominated in such
foreign currency, or when the Portfolio 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"). The Portfolio will not position hedge with respect to a
particular currency to an extent greater than the aggregate
market value (at the time of making such sale) of the securities
held in its portfolio denominated or quoted in that currency. In
this situation the Portfolio may, in the alternative, enter into
a forward contract to sell a different foreign currency for a
fixed U.S. Dollar amount where the Portfolio believes that the
U.S. Dollar value of the currency to be sold pursuant to the
forward contract will fall whenever there is a decline in the
U.S. Dollar value of the currency in which portfolio securities
of the Portfolio are denominated ("cross-hedge").

          To the extent required by applicable law, the Fund's
custodian will place liquid assets in a separate account of the
Portfolio having a value equal to the aggregate amount of the
Portfolio's commitments under forward contracts entered into with
respect to position hedges and cross-hedges. If the value of the
assets placed in a separate account declines, additional liquid
assets will be placed in the account on a daily basis so that the
value of the account will equal the amount of the Portfolio's
commitments with respect to such contracts. As an alternative to
maintaining all or part of the separate account, the Portfolio
may purchase a call option permitting the Portfolio to purchase
the amount of foreign currency being hedged by a forward sale
contract at a price no higher than the forward contract price or
the Portfolio may purchase a put option permitting the Portfolio
to sell the amount of foreign currency subject to a forward
purchase contract at a price as high or higher than the forward
contract price. In addition, the Portfolio may use such other
methods of "cover" as are permitted by applicable law.

          The Portfolio will not speculate in forward currency
contracts. The Portfolio will only enter forward foreign currency
exchange contracts with counterparties that, in the opinion of
the Adviser, do not present undue credit risk.

          Hedging against a decline in the value of a currency
does not eliminate fluctuations in the prices of portfolio
securities or prevent losses if the prices of securities decline.
These transactions also preclude the opportunity for gain if the
value of the hedge currency should rise. Moreover, it may not be
possible for the Portfolio to hedge against a devaluation that is
so generally anticipated that the Portfolio is not able to
contract to sell the currency at a price above the anticipated
devaluation level. Unanticipated changes in currency prices may
result in poorer overall performance for the Portfolio than if it
had not entered into such contracts. The matching of the increase
in value of a forward contract and the decline in the U.S. Dollar
equivalent value of the foreign currency-denominated asset that
is the subject of the hedge generally will not be precise. In
addition, the Portfolio may not always be able to enter into
foreign currency forward contracts at attractive prices and this
will limit the Portfolio's ability to use such contract to hedge
or cross-hedge its assets. Also, with regard to the Portfolio's
use of cross-hedges, there can be no assurance that historical
correlations between the movement of certain foreign currencies
relative to the U.S. Dollar will continue. Thus, at any time poor
correlation may exist between movements in the exchange rates of
the foreign currencies underlying the Portfolio's cross-hedges
and the movements in the exchange rates of the foreign currencies
in which the Portfolio's assets that are the subject of such
cross-hedges are denominated.

          Futures Contracts and Options on Futures Contracts. The
Portfolio may enter into contracts for the purchase or sale for
future delivery of fixed-income securities or foreign currencies,
or contracts based on financial indices, including any index of
U.S. Government Securities, securities issued by foreign
government entities, or common stocks ("futures contracts") and
may purchase and write put and call options to buy or sell
futures contracts ("options on futures contracts"). For a
discussion regarding futures contracts and options on futures
contracts, see "AllianceBernstein U.S. Government/High Grade
Securities Portfolio -- Futures Contracts and Options on Futures
Contracts," above. The Fund's custodian will place liquid assets
in a segregated account of the Portfolio having a value equal to
the aggregate amount of the Portfolio's commitments under futures
contracts.

          For additional information on the use, risks and costs
of futures contracts and options on futures contracts, see
Appendix B.

          Illiquid Securities. The Portfolio will not invest more
than 15% of its net assets in illiquid securities. For this
purpose, illiquid securities are securities restricted as to
disposition under federal securities laws and 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) over-the-counter options and assets used to cover
over-the-counter options, and (c) repurchase agreements not
terminable within seven days. See, "Other Investment Policies --
Illiquid Securities," below, for a more detailed discussion of
the Portfolio's investment policy on restricted securities and
securities with legal or contractual restrictions on resale.

          Loans of Portfolio Securities. The Portfolio may make
secured loans of its portfolio securities to brokers, dealers and
financial institutions provided that liquid assets, or bank
letters of credit equal to at least 100% of the market value of
the securities loaned are deposited and maintained by the
borrower with the Portfolio. A principal risk in lending
portfolio securities, as with other extensions of credit,
consists of possible loss of rights in the collateral should the
borrower fail financially. In addition, the Portfolio will be
exposed to the risk that the sale of any collateral realized upon
a borrower's default will not yield proceeds sufficient to
replace the loaned securities. In determining whether to lend
securities to a particular borrower, the Adviser (subject to
review by the Board of Directors) will consider all relevant
facts and circumstances, including the creditworthiness of the
borrower. While securities are on loan, the borrower will pay the
Portfolio any income earned thereon and the Portfolio may invest
any cash collateral in portfolio securities, thereby earning
additional income, or receive an agreed-upon amount of income
from a borrower who has delivered equivalent collateral. Any such
investment of cash collateral will be subject to the Portfolio's
investment risks. The Portfolio will have the right to regain
record ownership of loaned securities or equivalent securities in
order to exercise ownership rights such as voting rights,
subscription rights and rights to dividends, interest or other
distributions. The Portfolio may pay reasonable finders,
administrative and custodial fees in connection with a loan. The
Portfolio will not lend its portfolio securities to any officer,
director, employee or affiliate of the Portfolio or the Adviser.
The Board of Directors will monitor the Portfolio's lending of
portfolio securities.

          Options on Currencies. As in the case of other kinds of
options, the writing of an option on a currency constitutes only
a partial hedge, up to the amount of the premium received, and
the Portfolio could be required to purchase or sell foreign
currencies at disadvantageous exchange rates and incur losses.
The purchase of an option on a currency may constitute an
effective hedge against fluctuations in exchange rates although,
in the event of rate movements adverse to the Portfolio's
position, the Portfolio may forfeit the entire amount of the
premium plus related transaction costs.

          For additional information on the use, risks and costs
of Currency Options, see Appendix B.

          Options on Market Indices. The Portfolio may purchase
and sell exchange-traded index options. An option on a securities
index is similar to an option on a security except that, rather
than the right to take or make 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.

          Through the purchase of listed index options, the
Portfolio could achieve many of the same objectives as through
the use of options on individual securities. Price movements in
the Portfolio's portfolio securities probably will not correlate
perfectly with movements in the level of the index and,
therefore, the Portfolio would bear a risk of loss on index
options purchased by it if favorable price movements of the
hedged portfolio securities do not equal or exceed losses on the
options or if adverse price movements of the hedged portfolio
securities are greater than gains realized from the options.

          Puts and Calls. The Portfolio may write exchange-traded
call options on common stocks, for which it will receive a
purchase premium from the buyer, and may purchase and sell
exchange-traded call and put options on common stocks written by
others or combinations thereof. The Portfolio will not write put
options. Writing, purchasing and selling call options are highly
specialized activities and entail greater than ordinary
investment risks. A call option gives the purchaser of the
option, in exchange for paying the writer a premium, the right to
call upon the writer to deliver a specified number of shares of a
specified stock on or before a fixed date, at a predetermined
price. A put option gives the buyer of the option, in exchange
for paying the writer a premium, the right to deliver a specified
number of shares of a stock to the writer of the option on or
before a fixed date at a predetermined price.

          The writing of call options will, therefore, involve a
potential loss of opportunity to sell securities at higher
prices. In exchange for the premium received, the writer of a
fully collateralized call option assumes the full downside risk
of the securities subject to such option. In addition, the writer
of the call gives up the gain possibility of the stock protecting
the call. Generally, the opportunity for profit from the writing
of options is higher, and consequently the risks are greater when
the stocks involved are lower priced or volatile, or both. While
an option that has been written is in force, the maximum profit
that may be derived from the optioned stock is the premium less
brokerage commissions and fees. The Portfolio will not sell a
call written by it unless the Portfolio at all times during the
option period owns either (a) the optioned securities or has an
absolute and immediate right to acquire that security without
additional cash consideration (or for additional cash
consideration held in a segregated account by the Fund's
custodian) upon conversion or exchange of other securities held
in its portfolio or (b) a call option on the same security and in
the same principal amount as the call written where the exercise
price of the call held (i) is equal to or less than the exercise
price of the call written or (ii) is greater than the exercise
price of the call written if the difference is maintained by the
Portfolio in liquid assets in a segregated account with the
Fund's custodian.

          Premiums received by the Portfolio in connection with
writing call options will vary widely depending primarily on
supply and demand. Commissions, stock transfer taxes and other
expenses of the Portfolio must be deducted from such premium
receipts. Calls written by the Portfolio will ordinarily be sold
either on a national securities exchange or through put and call
dealers, most, if not all, of whom are members of a national
securities exchange on which options are traded, and will in such
cases be endorsed or guaranteed by a member of a national
securities exchange or qualified broker-dealer, which may be SCB
& Co., an affiliate of the Adviser. The endorsing or guaranteeing
firm requires that the option writer (in this case the Portfolio)
maintain a margin account containing either corresponding stock
or other equity as required by the endorsing or guaranteeing
firm.

          The Portfolio may purchase or write options on
securities of the types in which it is permitted to invest in
privately negotiated (i.e., over-the-counter) transactions. The
Portfolio 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.

          In buying a call, the Portfolio would be in a position
to realize a gain if, during the option period, the price of the
shares increased by an amount in excess of the premium paid and
commissions payable on exercise. It would realize a loss if the
price of the security declined or remained the same or did not
increase during the period by more than the amount of the premium
and commissions payable on exercise. By buying a put, the
Portfolio would be in a position to realize a gain if, during the
option period, the price of the shares declined by an amount in
excess of the premium paid and commissions payable on exercise.
It would realize a loss if the price of the security increased or
remained the same or did not decrease during that period by more
than the amount of the premium and commissions payable on
exercise. In addition, the Portfolio could realize a gain or loss
on such options by selling them.

          Stock Index Futures. The Portfolio may purchase and
sell stock index futures contracts. A stock index assigns
relative values to the common stocks comprising the index. A
stock index futures contract is a bilateral agreement pursuant to
which two parties agree to take or make delivery of an amount of
liquid assets equal to a specified dollar amount multiplied by
the difference between the stock index value at the close of the
last trading day of the contract and the price at which the
futures contract is originally struck. No physical delivery of
the underlying stocks in the index is made. The Portfolio will
not purchase and sell options on stock index futures contacts.

          The Portfolio may not purchase or sell a stock index
future if, immediately thereafter, more than 30% of its total
assets would be hedged by stock index futures. In connection with
its purchase of stock index futures contracts the Portfolio will
deposit in a segregated account with the Fund's custodian an
amount of liquid assets equal to the market value of the futures
contracts less any amounts maintained in a margin account with
the Portfolio's broker. The Portfolio may not purchase or sell a
stock index future if, immediately thereafter, the sum of the
amount of margin deposits on the Portfolio's existing futures
positions would exceed 5% of the market value of the Portfolio's
total assets.

          For more detailed description of stock index futures
contracts, see Appendix B.

          Repurchase Agreements. The Portfolio may enter into
repurchase agreements. A repurchase agreement arises when a buyer
purchases a security and simultaneously agrees to resell it to
the vendor at an agreed-upon future date, normally a day or a few
days later. 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 Portfolio to keep all of its assets at work while retaining
overnight flexibility in pursuit of investments of a longer-term
nature. If a vendor defaults on its repurchase obligation, the
Portfolio would suffer a loss to the extent that the proceeds
from the sale of the collateral were less than the repurchase
price. If a vendor goes bankrupt, the Portfolio might be delayed
in or prevented from, selling the collateral for its benefit. The
Adviser monitors the creditworthiness of the vendors with which
the Portfolio enters into repurchase agreements.

          Rights and Warrants. The Portfolio may invest up to 5%
of its total assets 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 Portfolio'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.

          Short Sales. The Portfolio may make short sales of
securities or maintain a short position, provided that at all
times when a short position is open not more than 33% of the
Portfolio's net assets (taken at market value) is held as
collateral for such sales. Pursuant to the Taxpayer Relief Act of
1997, if the Portfolio has an unrealized gain with respect to a
security and enters into a short sale with respect to such
security, the Portfolio generally will be deemed to have sold the
appreciated security and thus will recognize a gain for tax
purposes. If the price of the security sold short increases
between the time of the short sale and the time the Portfolio
replaces the borrowed security, the Portfolio will incur a loss;
conversely, if the price declines, the Portfolio will realize a
capital gain. Certain special federal income tax considerations
may apply to short sales which are entered into by the Portfolio.

          General. The successful use of the foregoing investment
practices, which may be used as a hedge against changes in the
values of securities resulting from market conditions, draws upon
the Adviser's special skills and experience with respect to such
instruments and usually depends on the Adviser's ability to
forecast movements of specific securities or stock indices
correctly. Should these securities or indices move in an
unexpected manner, the Portfolio may not achieve the anticipated
benefits of options and stock index futures contracts or may
realize losses and, thus, be in a worse position than if such
strategies had not been used. In addition, the correlation
between movements in the prices of such instruments and movements
in the price of securities being hedged or used for cover will
not be perfect and could produce unanticipated losses. The
Portfolio's ability to dispose of its position in options and
stock index futures will depend on the availability of liquid
markets in these instruments. No assurance can be given that the
Portfolio will be able to close a particular option or stock
index futures position.

Certain Fundamental Investment Policies

          The Portfolio is also subject to the following
restrictions in implementing its investment policies which cannot
be changed without Shareholder Approval, as defined under the
caption "General Information," below.

          As a matter of fundamental policy, the Portfolio may
not:

          1. with respect to 75% of its assets (i) have more than
5% of its assets invested in any one issuer and (ii) own more
than 10% of the outstanding voting securities of any one issuer;

          2. invest 25% or more of the value of its total assets
in the same industry (except that this restriction does not apply
to securities issued or guaranteed by the U.S. Government, its
agencies and instrumentalities);

          3. mortgage, pledge or hypothecate or otherwise
encumber its assets, except as may be necessary in connection
with permissible borrowings;

          4. purchase securities on margin, but it may obtain
such short-term credits from banks as may be necessary for the
clearance of purchases and sales of securities;

          5. issue senior securities or borrow money, except as
permitted by the 1940 Act and the regulations and interpretations
thereunder;

          6. make loans to other persons, except that the
Portfolio may lend its portfolio securities in accordance with
applicable law. The acquisition of investment securities or other
investment instruments shall not be deemed the making of a loan;

          7. purchase or sell real estate unless acquired as a
result of the ownership of securities or other instruments;
provided that this restriction shall not prohibit the Portfolio
from investing in securities or other instruments backed by real
estate or in securities of companies engaged in the real estate
business;

          8. purchase or sell physical commodities unless
acquired as a result of the ownership of securities or
instruments; provided that this restriction shall not prohibit
the Portfolio from (i) engaging in permissible options and
futures transactions and forward foreign currency contracts in
accordance with the Portfolio's investment policies, or (ii)
investing in securities of any kind; or

          9. act as an underwriter of securities, except that the
Portfolio may acquire restricted securities or securities in
private placements under circumstances in which, if such
securities were sold, the Portfolio might be deemed to be an
underwriter within the meaning of the Securities Act.

          Whenever any investment restriction states a maximum
percentage of the Portfolio's assets which may be invested in any
security or other asset, it is intended that such maximum
percentage limitation be determined immediately after and as a
result of the Portfolio's acquisition of such securities or other
assets. Accordingly, any later increase or decrease in percentage
beyond the specified limitation resulting from a change in values
or net assets will not be considered a violation of any such
maximum.

ALLIANCEBERNSTEIN WEALTH APPRECIATION STRATEGY PORTFOLIO
ALLIANCEBERNSTEIN BALANCED WEALTH STRATEGY PORTFOLIO

          For a general description of the Portfolios' investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following additional investment policies supplement
those set forth in the Prospectus for the Portfolios.

          STRIPPED MORTGAGE-RELATED SECURITIES. Each Portfolio
may invest in stripped mortgage-related securities ("SMRS"). SMRS
are derivative multi-class mortgage-related securities. SMRS may
be issued by the U.S. Government, its agencies or
instrumentalities, or by private originators of, or investors in,
mortgage loans, including savings and loan associations, mortgage
banks, commercial banks, investment banks and special purpose
subsidiaries of the foregoing.

          SMRS are usually structured with two classes that
receive different proportions of the interest and principal
distributions on a pool of GNMA, FNMA or FHLMC certificates,
whole loans or private pass-through mortgage-related securities
("Mortgage Assets"). A common type of SMRS will have one class
receiving some of the interest and most of the principal from the
Mortgage Assets, while the other class will receive most of the
interest and the remainder of the principal. In the most extreme
case, one class will receive all of the interest (the
interest-only or "IO" class), while the other class will receive
all of the principal (the principal-only or "PO" class). The
yield to maturity on an IO class is extremely sensitive to the
rate of principal payments (including prepayments) on the related
underlying Mortgage Assets, and a rapid rate of principal
prepayments may have a material adverse effect on the yield to
maturity of the IO class. The rate of principal prepayment will
change as the general level of interest rates fluctuates. If the
underlying Mortgage Assets experience greater than anticipated
principal prepayments, the Portfolio may fail to fully recoup its
initial investment in these securities. Due to their structure
and underlying cash flows, SMRS may be more volatile than
mortgage-related securities that are not stripped.

          Although SMRS are purchased and sold by institutional
investors through several investment banking firms acting as
brokers or dealers, these securities were only recently
developed. As a result, established trading markets have not yet
developed for these securities and, accordingly, they may be
illiquid.

          FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Each Portfolio
may engage in foreign currency exchange transactions to protect
against uncertainty in the level of future currency exchange
rates. The Adviser expects to engage in foreign currency exchange
transactions in connection with the purchase and sale of
portfolio securities ("transaction hedging") and to protect
against changes in the value of specific portfolio positions
("position hedging").

          The Portfolios may engage in transaction hedging to
protect against a change in foreign currency exchange rates
between the date on which the Portfolio contracted to purchase or
sell a security and the settlement date, or to "lock in" the U.S.
dollar equivalent of a dividend or interest payment in a foreign
currency. The Portfolios may purchase or sell a foreign currency
on a spot (or cash) basis at the prevailing spot rate in
connection with the settlement of transactions in portfolio
securities denominated in that foreign currency.

          If conditions warrant, the Portfolios may also enter
into contracts to purchase or sell foreign currencies at a future
date ("forward contracts") and may purchase and sell foreign
currency futures contracts as hedges against changes in foreign
currency exchange rates between the trade and settlement dates on
particular transactions and not for speculation. A foreign
currency forward contract is a negotiated agreement to exchange
currency at a future time at a rate or rates that may be higher
or lower than the spot rate. Foreign currency futures contracts
are standardized exchange-traded contracts and have margin
requirements.

          For transaction hedging purposes, the Portfolios may
also purchase and sell call and put options on foreign currency
futures contracts and on foreign currencies.

          Each Portfolio may engage in position hedging to
protect against a decline in value relative to the U.S. dollar of
the currencies in which its portfolio securities are denominated
or quoted (or an increase in value of a currency in which
securities the Portfolio intends to buy are denominated, when the
Portfolio holds cash or short-term investments). For position
hedging purposes, each Portfolio may purchase or sell foreign
currency futures contracts, foreign currency forward contracts,
and options on foreign currency futures contracts and on foreign
currencies. In connection with position hedging, the Portfolios
may also purchase or sell foreign currency on a spot basis.

          A Portfolio's currency hedging transactions may call
for the delivery of one foreign currency in exchange for another
foreign currency and may at times not involve currencies in which
its portfolio securities are then denominated. The Adviser will
engage in such "cross hedging" activities when it believes that
such transactions provide significant hedging opportunities for a
Portfolio.

          REPURCHASE AGREEMENTS. The repurchase agreements
referred to in each Portfolio's Prospectus are agreements by
which a Portfolio purchases a security and obtains a simultaneous
commitment from the seller to repurchase the security at an
agreed upon price and date. The resale price is in excess of the
purchase price and reflects an agreed upon market rate unrelated
to the coupon rate on the purchased security. The purchased
security serves as collateral for the obligation of the seller to
repurchase the security and the value of the purchased security
is initially greater than or equal to the amount of the
repurchase obligation and the seller is required to furnish
additional collateral on a daily basis in order to maintain with
the purchaser securities with a value greater than or equal to
the amount of the repurchase obligation. Such transactions afford
the Portfolios the opportunity to earn a return on temporarily
available cash. While at times the underlying security may be a
bill, certificate of indebtedness, note, or bond issued by an
agency, authority or instrumentality of the U.S. Government, the
obligation of the seller is not guaranteed by the U.S. Government
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 Portfolios would attempt to
exercise their rights with respect to the underlying security,
including possible disposition in the market. However, the
Portfolios may incur various expenses in the attempted
enforcement and may be subject to various delays and risks of
loss, including (a) possible declines in the value of the
underlying security, (b) possible reductions in levels of income
and (c) lack of access to and possible inability to enforce
rights.

          Certificates of Deposit, Bankers' Acceptances and Bank
Time Deposits. Certificates of deposit are receipts issued by a
bank in exchange for the deposit of funds. The issuer agrees to
pay the amount deposited plus interest to the bearer of the
receipt on the date specified on the certificate. The certificate
usually can be traded in the secondary market prior to maturity.

          Bankers' acceptances typically arise from short-term
credit arrangements designed to enable businesses to obtain funds
to finance commercial transactions. Generally, an acceptance is a
time draft drawn on a bank by an exporter or an importer to
obtain a stated amount of funds to pay for specific merchandise.
The draft is then "accepted" by another bank that, in effect,
unconditionally guarantees to pay the face value of the
instrument on its maturity date. The acceptance may then be held
by the accepting bank as an earning asset or it may be sold in
the secondary market at the going rate of discount for a specific
maturity. Although maturities for acceptances can be as long as
270 days, most maturities are six months or less.

          Bank time deposits are funds kept on deposit with a
bank for a stated period of time in an interest bearing account.
At present, bank time deposits maturing in more than seven days
are not considered by the Adviser to be readily marketable.

          Commercial Paper. Commercial paper consists of
short-term (usually from 1 to 270 days) unsecured promissory
notes issued by entities in order to finance their current
operations.

          Variable Notes. Variable amount master demand notes and
variable amount floating rate notes are obligations that permit
the investment of fluctuating amounts by a Portfolio at varying
rates of interest pursuant to direct arrangements between a
Portfolio, as lender, and the borrower. Master demand notes
permit daily fluctuations in the interest rate while the interest
rate under variable amount floating rate notes fluctuates on a
weekly basis. These notes permit daily changes in the amounts
borrowed. The Portfolios have the right to increase the amount
under these notes at any time up to the full amount provided by
the note agreement, or to decrease the amount, and the borrower
may repay up to the full amount of the note without penalty.
Because these types of notes are direct lending arrangements
between the lender and the borrower, it is not generally
contemplated that such instruments will be traded and there is no
secondary market for these notes. Master demand notes are
redeemable (and, thus, immediately repayable by the borrower) at
face value, plus accrued interest, at any time. Variable amount
floating rate notes are subject to next-day redemption 14 days
after the initial investment therein. With both types of notes,
therefore, the Portfolios' right to redeem depends on the ability
of the borrower to pay principal and interest on demand. In
connection with both types of note arrangements, the Portfolios
consider earning power, cash flow and other liquidity ratios of
the issuer. These notes, as such, are not typically rated by
credit rating agencies. Unless they are so rated, a Portfolio may
invest in them only if at the time of an investment the issuer
has an outstanding issue of unsecured debt rated Aa or better by
Moody's or AA or better by S&P or Fitch.

          ASSET-BACKED SECURITIES. The Portfolios may invest in
asset-backed securities (unrelated to first mortgage loans),
which represent fractional interests in pools of retail
installment loans, leases or revolving credit receivables, both
secured (such as Certificates for Automobile Receivables or
"CARS") and unsecured (such as Credit Card Receivable Securities
or "CARDS").

          The Staff of the Commission is of the view that certain
asset-backed securities may constitute investment companies under
the 1940 Act. The Portfolios intend to conduct their operations
in a manner consistent with this view; therefore, the Portfolios
generally may not invest more than 10% of their total assets in
such securities without obtaining appropriate regulatory relief.

          INVESTMENT IN OTHER INVESTMENT COMPANIES. Each of the
Portfolios currently invests directly in portfolio securities,
but may also, with the approval of the Portfolios' Directors and
upon obtaining such exemptive relief from the Commission as may
be necessary, invest in shares of one or more other investment
companies advised by Alliance that, in turn, invest directly in
portfolio securities. If the Portfolios' Directors approve
investments by the Portfolios in other investment companies
advised by Alliance, no shareholder approval would be required.
Investing in shares of other investment companies advised by
Alliance involves substantially the same risks as investing
directly in the underlying instruments, but may involve
additional expenses similar to those borne directly by the
Portfolios, including advisory fees and other operating expenses.
The Portfolios would invest in other investment companies advised
by Alliance only if Alliance were to determine that such
additional expenses would likely be outweighed by the benefits of
such investments relative to direct investments in portfolio
securities, such as increased diversification and reduced
transaction costs.

          LENDING OF PORTFOLIO SECURITIES. The Portfolios may
seek to increase income by lending portfolio securities. Under
present regulatory policies, including those of the Board of
Governors of the Federal Reserve System and the Commission, such
loans may be made only to member firms of the Exchange and would
be required to be secured continuously by collateral in cash,
cash equivalents, or U.S. Treasury Bills maintained on a current
basis at an amount at least equal to the market value of the
securities loaned. A Portfolio would have the right to call a
loan and obtain the securities loaned at any time on five days'
notice. During the existence of a loan, a Portfolio would
continue to receive the equivalent of the interest or dividends
paid by the issuer on the securities loaned and would also
receive compensation based on investment of the collateral. A
Portfolio would not, however, have the right to vote any
securities having voting rights during the existence of the loan
but would call the loan in anticipation of an important vote to
be taken among holders of the securities or of the giving or
withholding of their consent on a material matter affecting the
investment. As with other extensions of credit there are risks of
delay in recovery or even loss of rights in the collateral should
the borrower of the securities fail financially. However, the
loans would be made only to firms deemed by the Adviser to be of
good standing, 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. At the time any such
loan is made, the value of the securities loaned will not exceed
33 1/3% of a Portfolio's total assets.

          FORWARD COMMITMENTS AND WHEN-ISSUED AND DELAYED
DELIVERY SECURITIES. Each Portfolio may enter into forward
commitments for the purchase of securities and may purchase
securities on a "when-issued" or "delayed delivery" basis.
Agreements for such purchases might be entered into, for example,
when a Portfolio anticipates a decline in interest rates and is
able to obtain a more advantageous yield by committing currently
to purchase securities to be issued later. When a Portfolio
purchases securities in this manner (i.e., on a forward
commitment, "when-issued" or "delayed delivery" basis), it does
not pay for the securities until they are received, and the
Portfolio is required to create a segregated account with the
Fund's custodian and to maintain in that account liquid assets in
an amount equal to or greater than, on a daily basis, the amount
of the Portfolio's forward commitments and "when-issued" or
"delayed delivery" commitments. At the time a Portfolio 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 net asset value. 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.

          A Portfolio will enter into forward commitments and
make commitments to purchase securities on a "when-issued" or
"delayed delivery" basis only with the intention of actually
acquiring the securities. However, a Portfolio may sell these
securities before the settlement date if, in the opinion of the
Adviser, it is deemed advisable as a matter of investment
portfolio.

          Although neither of the Portfolios intends to make such
purchases for speculative purposes and each Portfolio intends to
adhere to the provisions of the Commission's policies, purchases
of securities on such bases may involve more risk than other
types of purchases. For example, by committing to purchase
securities in the future, a Portfolio subjects itself to a risk
of loss on such commitments as well as on its portfolio
securities. Also, a Portfolio may have to sell assets which have
been set aside in order to meet redemptions. In addition, if a
Portfolio determines it is advisable as a matter of investment
portfolio to sell the forward commitment or "when-issued" or
"delayed delivery" securities before delivery, that Portfolio 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, a Portfolio 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 a Portfolio's payment obligation).

          Options on Securities. Each Portfolio may write and
purchase call and put options on securities. Each Portfolio
intends to write only covered options. This means that so long as
a Portfolio is obligated as the writer of a call option, it will
own the underlying securities subject to the option or securities
convertible into such securities without additional consideration
(or for additional cash consideration held in a segregated
account by the custodian). In the case of call options on U.S.
Treasury Bills, a Portfolio might own U.S. Treasury Bills of a
different series from those underlying the call option, but with
a principal amount and value corresponding to the option contract
amount and a maturity date no later than that of the securities
deliverable under the call option. A Portfolio will be considered
"covered" with respect to a put option it writes, if, so long as
it is obligated as the writer of the put option, it deposits and
maintains with its custodian in a segregated account liquid
assets having a value equal to or greater than the exercise price
of the option.

          Each of the Portfolios may also 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, a Portfolio 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 Portfolio 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 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, a Portfolio 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, a Portfolio 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.

          Each of the Portfolios 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 Portfolio to
sell the securities at the exercise price or to close out the
options at a profit. By using put options in this way, a
Portfolio 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.

          A Portfolio may purchase call options to hedge against
an increase in the price of securities that the Portfolio
anticipates purchasing in the future. If such increase occurs,
the call option will permit the Portfolio 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 a
Portfolio upon exercise of the option, and, unless the price of
the underlying security rises sufficiently, the option may expire
worthless to the Portfolio and the Portfolio will suffer a loss
on the transaction to the extent of the premium paid.

          Each Portfolio may purchase or write options on
securities of the types in which it is permitted to invest in
privately negotiated (i.e., over-the-counter) transactions. Each
Portfolio 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.

          For additional information regarding options on
securities, see Appendix C.

          Options on Securities Indexes. Each Portfolio may write
(sell) covered call and put options and purchase call and put
options on securities indexes. A call option on a securities
index is considered covered if, so long as a Portfolio is
obligated as the writer of the call option, the Portfolio holds
securities the price changes of which are expected by the Adviser
to replicate substantially the movement of the index or indexes
upon which the options written by the Portfolio are based. A put
option on a securities index written by a Portfolio will be
considered covered if, so long as it is obligated as the writer
of the put option, the Portfolio maintains with its custodian in
a segregated account liquid assets having a value equal to or
greater than the exercise price of the option.

          A Portfolio may also purchase put options on securities
indexes to hedge its investments against a decline in the value
of portfolio securities. By purchasing a put option on a
securities index, a Portfolio will seek to offset a decline in
the value of securities it owns through appreciation of the put
option. If the value of a Portfolio's investments does not
decline as anticipated, or if the value of the option does not
increase, the Portfolio's loss will be limited to the premium
paid for the option. The success of this portfolio will largely
depend on the accuracy of the correlation between the changes in
value of the index and the changes in value of a Portfolio's
security holdings.

          The purchase of call options on securities indexes may
be used by a Portfolio 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 Portfolio holds uninvested cash or
short-term debt securities awaiting investment. When purchasing
call options for this purpose, a Portfolio 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
indexes when a Portfolio 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 Portfolio owns.

          Futures Contracts. Each Portfolio may enter into
interest rate futures contracts, index futures contracts and
foreign currency futures contracts. (Unless otherwise specified,
interest rate futures contracts, index futures contracts and
foreign currency futures contracts are collectively referred to
as "Futures Contracts.") Such investment portfolios will be used
as a hedge and not for speculation.

          Purchases or sales of stock or bond index futures
contracts are used for hedging purposes to attempt to protect a
Portfolio's current or intended investments from broad
fluctuations in stock or bond prices. For example, a Portfolio
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 Portfolio'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 a Portfolio 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
Portfolio intends to purchase. As such purchases are made, the
corresponding positions in stock or bond index futures contracts
will be closed out.

          Interest rate futures contracts are purchased or sold
for hedging purposes to attempt to protect against the effects of
interest rate changes on a Portfolio's current or intended
investments in fixed income securities. Each Portfolio 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 foreign-denominated securities to be
acquired, even if the value of such securities in the currencies
in which they are denominated remains constant. Each Portfolio
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 foreign-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 Portfolio'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 value as a result of the change
in exchange rates.

          Conversely, the Portfolios could protect against a rise
in the dollar cost of foreign-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 a Portfolio 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 Portfolio 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 Portfolios may also engage in currency "cross
hedging" when, in the opinion of the Adviser, the historical
relationship among foreign currencies suggests that a Portfolio
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.

          For additional information regarding futures contracts,
see Appendix B.

          Options on Futures Contracts. The Portfolios 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, a
Portfolio 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
Portfolio will suffer a loss equal to the price of the put. Where
it is projected that the value of securities to be acquired by a
Portfolio will increase prior to acquisition due to a market
advance or changes in interest or exchange rates, a Portfolio
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 Portfolio will suffer a loss equal to the price of the call,
but the securities which the Portfolio intends to purchase may be
less expensive.

          FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Each
Portfolio may enter into forward foreign currency exchange
contracts ("Forward Contracts") to attempt to minimize the risk
to the Portfolio from adverse changes in the relationship between
the U.S. dollar and foreign currencies. The Portfolios intend to
enter into Forward Contracts for hedging purposes similar to
those described above in connection with its transactions in
foreign currency futures contracts. In particular, a Forward
Contract to sell a currency may be entered into in lieu of the
sale of a foreign currency futures contract where a Portfolio
seeks to protect against an anticipated increase in the exchange
rate for a specific currency which could reduce the dollar value
of portfolio securities denominated in such currency. Conversely,
a Portfolio may enter into a Forward Contract to purchase a given
currency to protect against a projected increase in the dollar
value of securities denominated in such currency which the
Portfolio intends to acquire. A Portfolio also may enter into a
Forward Contract in order to assure itself of a predetermined
exchange rate in connection with a security denominated in a
foreign currency. The Portfolios may engage in currency "cross
hedging" when, in the opinion of the Adviser, the historical
relationship among foreign currencies suggests that a Portfolio
may achieve the same protection for a foreign security at a
reduced cost through the use of a Forward Contract relating to a
currency other than the U.S. dollar or the foreign currency in
which the security is denominated.

          If a hedging transaction in Forward 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 Contract.
Nevertheless, by entering into such Forward Contracts, a
Portfolio may be required to forego all or a portion of the
benefits which otherwise could have been obtained from favorable
movements in exchange rates.

          Each Portfolio has established procedures consistent
with the Commission's policies concerning purchases of foreign
currency through Forward Contracts. Accordingly, a Portfolio will
segregate and mark to market liquid assets in an amount at least
equal to the Portfolio's obligations under any Forward Contracts.

          OPTIONS ON FOREIGN CURRENCIES. Each Portfolio may
purchase and write options on foreign currencies for hedging
purposes or to increase return.

          For additional information on options on foreign
currencies, see Appendix B.

RISK FACTORS IN OPTIONS, FUTURES AND FORWARD TRANSACTIONS

          Risk of Imperfect Correlation of Hedging Instruments
With a Portfolio's PORTFOLIO. The Portfolios' abilities to hedge
all or a portion of their portfolios effectively through
transactions in options, Futures Contracts, options on Futures
Contracts, Forward Contracts and options on foreign currencies
depend on the degree to which price movements in the underlying
index or instrument correlate with price movements in the
securities that are the subject of the hedge. In the case of
futures and options based on an index, the portfolio will not
duplicate the components of the index, and in the case of futures
and options on fixed income securities, the portfolio securities
which are being hedged may not be the same type of obligation
underlying such contract. As a result, the correlation, to the
extent it exists, probably will not be exact.

          It should be noted that stock index futures contracts
or options based upon a narrower index of securities, such as
those of a particular industry group, may present greater risk
than options or futures based on a broad market index. This is
because a narrower index is more susceptible to rapid and extreme
fluctuations as a result of changes in the value of a small
number of securities.

          The trading of futures and options entails the
additional risk of imperfect correlation between movements in the
futures or option price and the price of the underlying index or
instrument. The anticipated spread between the prices may be
distorted due to the differences in the nature of the markets,
such as differences in margin requirements, the liquidity of such
markets and the participation of speculators in the futures
market. In this regard, trading by speculators in futures and
options has in the past occasionally resulted in market
distortions, which may be difficult or impossible to predict,
particularly near the expiration of such contracts.

          The trading of options on Futures Contracts also
entails the risk that changes in the value of the underlying
Futures Contract will not be fully reflected in the value of the
option.

          Further, with respect to options on securities, options
on foreign currencies, options on stock indexes and options on
Futures Contracts, the Portfolios are subject to the risk of
market movements between the time that the option is exercised
and the time of performance thereunder. This could increase the
extent of any loss suffered by a Portfolio in connection with
such transactions.

          If a Portfolio purchases futures or options in order to
hedge against a possible increase in the price of securities
before the Portfolio is able to invest its cash in such
securities, the Portfolio faces the risk that the market may
instead decline. If the Portfolio does not then invest in such
securities because of concern as to possible further market
declines or for other reasons, the Portfolio may realize a loss
on the futures or option contract that is not offset by a
reduction in the price of securities purchased.

          In writing a call option on a security, foreign
currency, index or Futures Contract, a Portfolio also incurs the
risk that changes in the value of the assets used to cover the
position will not correlate closely with changes in the value of
the option or underlying index or instrument. For example, when a
Portfolio writes a call option on a stock index, the securities
used as "cover" may not match the composition of the index, and
the Portfolio may not be fully covered. As a result, the
Portfolio could suffer a loss on the call which is not entirely
offset, or not offset at all, by an increase in the value of the
Portfolio's portfolio securities.

          The writing of options on securities, options on stock
indexes or options on Futures Contracts constitutes only a
partial hedge against fluctuations in the value of a Portfolio's
portfolio. When a Portfolio writes an option, it will receive
premium income in return for the holder's purchase of the right
to acquire or dispose of the underlying security or future or, in
the case of index options, cash. In the event that the price of
such an obligation does not rise sufficiently above the exercise
price of the option, in the case of a call, or fall below the
exercise price, in the case of a put, the option will not be
exercised and the Portfolio will retain the amount of the
premium, which will constitute a partial hedge against any
decline that may have occurred in the Portfolio's portfolio
holdings, or against the increase in the cost of the instruments
to be acquired.

          When the price of the underlying obligation moves
sufficiently in favor of the holder to warrant exercise of the
option, however, and the option is exercised, the Portfolio will
incur a loss which may only be partially offset by the amount of
the premium the Portfolio receives. Moreover, by writing an
option, a Portfolio may be required to forego the benefits which
might otherwise have been obtained from an increase in the value
of portfolio securities or a decline in the value of securities
to be acquired.

          In the event of the occurrence of any of the foregoing
adverse market events, a Portfolio's overall return may be lower
than if it had not engaged in the transactions described above.

          With respect to the writing of straddles on securities,
a Portfolio incurs the risk that the price of the underlying
security will not remain stable, that one of the options written
will be exercised and that the resulting loss will not be offset
by the amount of the premiums received. Such transactions,
therefore, while creating an opportunity for increased return by
providing a Portfolio with two simultaneous premiums on the same
security, nonetheless involve additional risk, because the
Portfolio may have an option exercised against it regardless of
whether the price of the security increases or decreases.

          If any of the foregoing adverse market events occurs, a
Portfolio's overall return may be lower than if it had not
engaged in the transactions described above.

          Potential Lack of a Liquid Secondary Market. Prior to
exercise or expiration, a futures or option position can be
terminated only by entering into a closing transaction. This
requires a liquid secondary market for such instruments on the
exchange, if any, on which the initial transaction was entered
into. There can be no assurance that a liquid secondary market
will exist for any particular contracts at any specific time. In
the absence of a liquid secondary market, it may not be possible
to close out a position held by a Portfolio, and the Portfolio
could be required to purchase or sell the instrument underlying
an option, make or receive a cash settlement or meet ongoing
variation margin requirements. Under such circumstances, if the
Portfolio has insufficient cash available to meet margin
requirements, it may be necessary to liquidate portfolio
securities at a time when, in the opinion of the Adviser, it is
otherwise disadvantageous to do so. The inability to close out
options and futures positions, therefore, could have an adverse
impact on the Portfolios' ability to hedge their portfolios
effectively, and could result in trading losses.

          The liquidity of a secondary market in a Futures
Contract or option thereon may be adversely affected by "daily
price fluctuation limits," established by exchanges, which limit
the amount of fluctuation in the price of a contract during a
single trading day. Once the daily limit has been reached in the
contract, no trades may be entered into at a price beyond the
limit, thus preventing the liquidation of open futures or option
positions and requiring traders to make additional margin
deposits. Prices of some Futures Contracts have in the past moved
to the daily limit on a number of consecutive trading days.

          The trading of Futures Contracts and options (including
options on Futures Contracts) is also subject to the risk of
trading halts, suspensions, exchange or clearing house equipment
failures, government intervention, insolvency of a brokerage firm
or clearing house and other disruptions of normal trading
activity, which could at times make it difficult or impossible to
liquidate existing positions or to recover excess variation
margin payments.

          The Staff of the Commission has taken the position that
over-the-counter options and the assets used as cover for
over-the-counter options are illiquid securities, unless certain
arrangements are made with the other party to the option contract
permitting the prompt liquidation of the option position. The
Portfolios will enter into those special arrangements only with
primary U.S. Government securities dealers recognized by the
Federal Reserve Bank of New York ("primary dealers"). Under these
special arrangements, the Fund will enter into contracts with
primary dealers which provide that each Portfolio has the
absolute right to repurchase an option it writes at any time at a
repurchase price which represents fair market value, as
determined in good faith through negotiation between the parties,
but which in no event will exceed a price determined pursuant to
a formula contained in the contract. Although the specific
details of the formula may vary between contracts with different
primary dealers, the formula will generally be based on a
multiple of the premium received by the Portfolio for writing the
option, plus the amount, if any, by which the option is
"in-the-money." The formula will also include a factor to account
for the difference between the price of the security and the
strike price of the option if the option is written
"out-of-the-money." Under such circumstances, the Portfolio only
needs to treat as illiquid that amount of the "cover" assets
equal to the amount by which (i) the formula price exceeds (ii)
any amount by which the market value of the security subject to
the option exceeds the exercise price of the option (the amount
by which the option is "in-the-money"). Although each agreement
will provide that the Portfolio's repurchase price shall be
determined in good faith (and that it shall not exceed the
maximum determined pursuant to the formula), the formula price
will not necessarily reflect the market value of the option
written; therefore, the Portfolio might pay more to repurchase
the option contract than the Portfolio would pay to close out a
similar exchange-traded option.

          Margin. Because of low initial margin deposits made
upon the opening of a futures position and the writing of an
option, such transactions involve substantial leverage. As a
result, relatively small movements in the price of the contract
can result in substantial unrealized gains or losses. However, to
the extent the Portfolios purchase or sell Futures Contracts and
options on Futures Contracts and purchase and write options on
securities and securities indexes for hedging purposes, any
losses incurred in connection therewith should, if the hedging
portfolio is successful, be offset, in whole or in part, by
increases in the value of securities held by the Portfolio or
decreases in the prices of securities the Portfolio intends to
acquire. When a Portfolio writes options on securities or options
on stock indexes for other than hedging purposes, the margin
requirements associated with such transactions could expose the
Portfolio to greater risk.

          Trading and Position Limits. The exchanges on which
futures and options are traded may impose limitations governing
the maximum number of positions on the same side of the market
and involving the same underlying instrument which may be held by
a single investor, whether acting alone or in concert with others
(regardless of whether such contracts are held on the same or
different exchanges or held or written in one or more accounts or
through one or more brokers). In addition, the CFTC and the
various contract markets have established limits referred to as
"speculative position limits" on the maximum net long or net
short position which any person may hold or control in a
particular futures or option contract. An exchange may order the
liquidation of positions found to be in violation of these limits
and may impose other sanctions or restrictions.

          Risks of Options on Futures Contracts. The amount of
risk a Portfolio assumes when it purchases an option on a Futures
Contract is the premium paid for the option, plus related
transaction costs. In order to profit from an option purchased,
however, it may be necessary to exercise the option and to
liquidate the underlying Futures Contract, subject to the risks
of the availability of a liquid offset market described herein.
The writer of an option on a Futures Contract is subject to the
risks of commodity futures trading, including the requirement of
initial and variation margin payments, as well as the additional
risk that movements in the price of the option may not correlate
with movements in the price of the underlying security, index,
currency or Futures Contract.

          Risks of Forward Contracts, Foreign Currency Futures
Contracts and Options Thereon, Options on Foreign Currencies and
Over-the-Counter Options on Securities. Each Portfolio 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 such Act. Transactions in Forward Contracts, as well as
futures and options on foreign currencies, are subject to all of
the correlation, liquidity and other risks outlined above. In
addition, however, such transactions are subject to the risk of
governmental actions affecting trading in or the prices of
currencies underlying such contracts, which could restrict or
eliminate trading and could have a substantial adverse effect on
the value of positions held by a Portfolio. In addition, the
value of such positions could be adversely affected by a number
of other complex political and economic factors applicable to the
countries issuing the underlying currencies.

          Further, unlike trading in most other types of
instruments, there is no systematic reporting of last sale
information with respect to the foreign currencies underlying
contracts thereon. As a result, the available information on
which trading decisions will be based may not be as complete as
the comparable data on which a Portfolio makes investment and
trading decisions in connection with other transactions.
Moreover, because the foreign currency market is a global,
twenty-four hour market, events could occur on that market but
will not be reflected in the forward, futures or options markets
until the following day, thereby preventing the Portfolios from
responding to such events in a timely manner.

          Settlements of exercises of over-the-counter Forward
Contracts or foreign currency options generally must occur within
the country issuing the underlying currency, which in turn
requires traders to accept or make delivery of such currencies in
conformity with any U.S. or foreign restrictions and regulations
regarding the maintenance of foreign banking relationships and
fees, taxes or other charges.

          Unlike transactions entered into by the Portfolios in
Futures Contracts and exchange-traded options, options on foreign
currencies, Forward Contracts and over-the-counter options on
securities and securities indexes are not traded on contract
markets regulated by the CFTC or (with the exception of certain
foreign currency options) the Commission. Such instruments are
instead 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, that are subject to Commission regulation. 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 could lose amounts substantially in excess of the initial
investment due to the margin and collateral requirements
associated with such positions.

          In addition, over-the-counter transactions can be
entered into only with a financial institution willing to take
the opposite side, as principal, of a Portfolio's position unless
the institution acts as broker and is able to find another
counterparty willing to enter into the transaction with the
Portfolio. Where no such counterparty is available, it will not
be possible to enter into a desired transaction. There also may
be no liquid secondary market in the trading of over-the-counter
contracts, and a Portfolio could be required to retain options
purchased or written, or Forward Contracts entered into, until
exercise, expiration or maturity. This in turn could limit the
Portfolio's ability to profit from open positions or to reduce
losses experienced, and could result in greater losses.

          Further, over-the-counter transactions are not subject
to the guarantee of an exchange clearing house, and a Portfolio
will therefore be subject to the risk of default by, or the
bankruptcy of, the financial institution serving as its
counterparty. A Portfolio will enter into an over-the-counter
transaction only with parties whose creditworthiness has been
reviewed and found to be satisfactory by the Adviser.

          Transactions in over-the-counter options on foreign
currencies are subject to a number of conditions regarding the
commercial purpose of the purchaser of such option. The
Portfolios are not able to determine at this time whether or to
what extent additional restrictions on the trading of
over-the-counter options on foreign currencies may be imposed at
some point in the future, or the effect that any such
restrictions may have on the hedging strategies to be implemented
by them.

          For additional information regarding the risks of
forward contracts, foreign currency futures contracts and options
thereon, options on foreign currencies and over-the-counter
options on securities, see Appendix B.

          RESTRICTIONS ON THE USE OF FUTURES AND OPTION
CONTRACTS. Under applicable regulations, when a Portfolio enters
into transactions in Futures Contracts and options on Futures
Contracts, that Portfolio is required to segregate liquid assets
with its custodian which, together with any initial margin
deposits, are equal to the aggregate market value of the Futures
Contracts and options on Futures Contracts that it purchases.
Each Portfolio has adopted the additional restriction that it
will not enter into a Futures Contract if, immediately
thereafter, the value of securities and other obligations
underlying all such Futures Contracts would exceed 50% of a
Portfolio's total assets. Moreover, a Portfolio will not purchase
put and call options if as a result more than 10% of its total
assets would be invested in such options.

          For additional information regarding restrictions on
the use of futures and options contracts, see Appendix B.

          ECONOMIC EFFECTS AND LIMITATIONS. Income earned by a
Portfolio from its hedging activities will be treated as capital
gains and, if not offset by net realized capital losses incurred
by a Portfolio, will be distributed to shareholders in taxable
distributions. Although a gain from such transactions may hedge
against a decline in the value of a Portfolio's portfolio
securities, that gain, to the extent not offset by losses, will
be distributed in light of certain tax considerations and will
constitute a distribution of that portion of the value preserved
against decline.

          No Portfolio will "over-hedge," that is, a Portfolio
will not maintain open short positions in futures or options
contracts if, in the aggregate, the market value of its open
positions exceeds the current market value of its securities
portfolio plus or minus the unrealized gain or loss on such open
positions, adjusted for the historical volatility relationship
between the portfolio and futures and options contracts.

          Each Portfolio's ability to employ the options and
futures strategies described above will depend in part on the
availability of liquid markets in such instruments. Markets in
financial futures and related options are still developing. It is
impossible to predict the amount of trading interest that may
hereafter exist in various types of options or futures. Therefore
no assurance can be given that a Portfolio will be able to use
these instruments effectively for the purposes set forth above.

          The Portfolios' ability to use options, futures and
forward contracts may be limited by tax considerations. In
particular, tax rules might accelerate or adversely affect the
character of the income earned on such contracts. In addition,
differences between each Portfolio's book income (upon the basis
of which distributions are generally made) and taxable income
arising from its hedging activities may result in returns of
capital distributions, and in some circumstances, distributions
in excess of a Portfolio's book income may be required to be made
in order to meet tax requirements.

          FUTURE DEVELOPMENTS. The foregoing discussion relates
to each Portfolio's proposed use of Futures Contracts, Forward
Contracts, options, and options on Futures Contracts currently
available. As noted above, the relevant markets and related
regulations are evolving. In the event of future regulatory or
market developments, each Portfolio may also use additional types
of futures contracts or options and other investment techniques
for the purposes set forth above.

INVESTMENT RESTRICTIONS

          Except as described below and except as otherwise
specifically stated in the Prospectus or this SAI, the investment
policies of each Portfolio set forth in the Prospectus and in
this SAI are not fundamental and may be changed without
shareholder approval.

          Each Portfolio has adopted the following fundamental
investment restrictions, which may not be changed without
Shareholder Approval, as defined in the caption "General
Information," below.

          Neither the AllianceBernstein Wealth Appreciation
Strategy Portfolio nor the AllianceBernstein Balanced Wealth
Strategy Portfolio will:

          1. make loans except through (a) the purchase of debt
obligations in accordance with its investment objective and
policies; (b) the lending of portfolio securities; or (c) the use
of repurchase agreements;

          2. borrow money or issue senior securities except to
the extent permitted by the 1940 Act;

          3. pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings;

          4. invest in companies for the purpose of exercising
control;

          5. (a) purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in real
estate or interests therein and securities that are secured by
real estate, provided such securities are securities of the type
in which a Portfolio may invest; (b) purchase or sell commodities
or commodity contracts, including futures contracts (except
foreign currencies, futures on securities, currencies and
securities indices and forward contracts or contracts for the
future acquisition or delivery of securities and foreign
currencies and other similar contracts and options on the
foregoing); or (c) act as an underwriter of securities, except
that a Portfolio may acquire restricted securities under
circumstances in which, if such securities were sold, that
Portfolio might be deemed to be an underwriter for purposes of
the Securities Act; or

          6. (a) invest more than 5% of its total assets in the
securities of any one issuer (other than U.S. Government
securities, repurchase agreements relating thereto, and
securities of other investment companies), although up to 25% of
a Portfolio's total assets may be invested without regard to this
restriction; or (b) invest more than 25% or more of its total
assets in the securities of any one industry.

          Whenever any investment restriction states a maximum
percentage of a Portfolio's assets which may be invested in any
security or other asset, it is intended that such maximum
percentage limitation be determined immediately after and as a
result of such Portfolio's acquisition of such securities or
other assets. Accordingly, any later increase or decrease beyond
the specified limitation resulting from a change in value or net
asset value will not be considered a violation of such percentage
limitation.

OTHER INVESTMENT POLICIES

          REPURCHASE AGREEMENTS. Each Portfolio, except the
AllianceBernstein Total Return Portfolio and the
AllianceBernstein Technology Portfolio, may invest in repurchase
agreements pertaining to the types of securities in which it
invests. A repurchase agreement arises when a buyer purchases a
security and simultaneously agrees to resell it to the vender at
an agreed-upon future date, normally one day or a few days later.
The resale price is greater than the purchase price, reflecting
an agreed-upon market rate which is effective for the period of
time the buyer's money is invested in the security and which is
not related to the coupon rate on the purchased security. Such
agreements permit a Portfolio to keep all of its assets at work
while retaining overnight flexibility in pursuit of investments
of a longer-term nature. Each Portfolio requires continual
maintenance of collateral held by the Fund's custodian in an
amount equal to, or in excess of, the market value of the
securities that are the subject of the agreement. In the event
that a vendor defaulted on its repurchase obligation, a Portfolio
might suffer a loss to the extent that the proceeds from the sale
of the collateral were less than the repurchase price. If the
vendor became bankrupt, the Portfolio might be delayed in, or
prevented from, selling the collateral. Repurchase agreements may
be entered into with member banks of the Federal Reserve System
or primary dealers (as designated by the Federal Reserve Bank of
New York) in U.S. Government Securities. Repurchase agreements
often are for short periods such as one day or a week, but may be
longer.

          ILLIQUID SECURITIES. The following investment policy,
which is not fundamental and may be changed by the vote of the
Board of Directors, is applicable to each of the Fund's
Portfolios.

          A Portfolio will not invest in illiquid securities if
immediately after such investment more than 10% or, in the case
of the AllianceBernstein Americas Government Income Portfolio,
AllianceBernstein Global Dollar Government Portfolio,
AllianceBernstein Utility Income Portfolio, AllianceBernstein
Technology Portfolio, AllianceBernstein Small Cap Growth
Portfolio, AllianceBernstein Real Estate Investment Portfolio,
AllianceBernstein Wealth Appreciation Strategy Portfolio and
AllianceBernstein Balanced Wealth Strategy Portfolio, 15%, of the
Portfolio's total assets (taken at market value) would be
invested in such securities. For this purpose, illiquid
securities include, among others, (a) securities that are
illiquid by virtue of the absence of a readily available market
or legal or contractual restriction or resale, (b) options
purchased by the Portfolio over-the-counter and the cover for
options written by the Portfolio over-the-counter and (c)
repurchase agreements not terminable within seven days.

          Securities that have legal or contractual restrictions
on resale but have a readily available market are not deemed
illiquid for purposes of this limitation. The Adviser will
monitor the liquidity of such restricted securities under the
supervision of the Board of Directors.

          Historically, illiquid securities have included
securities subject to contractual or legal restrictions on resale
because they have not been registered under the Securities Act,
securities that are otherwise not readily marketable and
repurchase agreements having a maturity of longer than seven
days. Securities which have not been registered under the
Securities Act are referred to as private placements or
restricted securities and are purchased directly from the issuer
or in the secondary market. Mutual funds do not typically hold a
significant amount of these restricted 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 might also have to register such restricted
securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a
public offering of securities.

          In recent years, however, a large institutional market
has developed for certain securities that are not registered
under the Securities Act, including repurchase agreements,
commercial paper, foreign securities, municipal securities and
corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security
can be readily resold or on an issuer's ability to honor a demand
for repayment. The fact that there are contractual or legal
restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such
investments.

          During the coming year, each Portfolio may invest up to
5% of its total assets in restricted securities issued under
Section 4(2) of the Securities Act, which exempts from
registration transactions by an issuer not involving any public
offering. Section 4(2) instruments are restricted in the sense
that they can only be resold through the issuing dealer and only
to institutional investors; they cannot be resold to the general
public without registration.

          Rule 144A under 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 a Portfolio could, however, affect adversely
the marketability of such portfolio securities, and the Portfolio
might be unable to dispose of such securities promptly or at
reasonable prices. Rule 144A has already produced enhanced
liquidity for many restricted securities, and market liquidity
for such securities may continue to expand as a result of this
regulation and the consequent inception of the PORTAL System
sponsored by the NASD. A Portfolio's investments in Rule 144A
eligible securities are not subject to the limitations described
above under Section 4(2).

          The Adviser, acting under the supervision of the Board
of Directors, will monitor the liquidity of restricted securities
in each of the Fund's Portfolios that are eligible for resale
pursuant to Rule 144A. In reaching liquidity decisions, the
Adviser will consider, among others, the following factors: (i)
the frequency of trades and quotes for the security; (ii) the
number of dealers making quotations to purchase or sell the
security; (iii) the number of other potential purchasers of the
security; (iv) the number of dealers undertaking to make a market
in the security; (v) the nature of the security 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 (vi) any applicable Commission
interpretation or position with respect to such type of
securities.

          FORWARD COMMITMENTS. The use of forward commitments
enables the Fund's Portfolios to protect against anticipated
changes in interest rates and prices. For instance, in periods of
rising interest rates and falling bond prices, a Portfolio might
sell securities in its portfolio on a forward commitment basis to
limit its exposure to falling prices. In periods of falling
interest rates and rising bond prices, a Portfolio might sell a
security in its portfolio and purchase the same or a similar
security on a when-issued or forward commitment basis, thereby
obtaining the benefit of currently higher cash yields. However,
if the Adviser were to forecast incorrectly the direction of
interest rate movements, a Portfolio might be required to
complete such when-issued or forward transactions at prices
inferior to then current market values.

          A Portfolio's right to receive or deliver a security
under a forward commitment may be sold prior to the settlement
date, but the Portfolio will enter into forward commitments only
with the intention of actually receiving or delivering the
securities, as the case may be. To facilitate such transactions,
the Fund's custodian will maintain, in the separate account of
each Portfolio, cash or liquid high-grade Government Securities
having value equal to, or greater than, any commitments to
purchase securities on a forward commitment basis and, with
respect to forward commitments to sell portfolio securities of a
Portfolio, the portfolio securities themselves.

          UNRATED SECURITIES. Unrated securities will also be
considered by certain Portfolios when Alliance 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 Portfolio to a degree comparable to that
of rated securities which are consistent with the Portfolio's
objective and policies.

          GENERAL. Whenever any investment policy or restriction
states a minimum or maximum percentage of a Portfolio's assets
which may be invested in any security or other asset, it is
intended that such minimum or maximum percentage limitation be
determined immediately after and as a result of the Portfolio's
acquisition of such security or other asset. Accordingly, any
later increase or decrease in percentage beyond the specified
limitations resulting from a change in values or net assets will
not be considered a violation.

          The Fund has voluntarily agreed that each Portfolio
with the ability to invest in foreign issuers will adhere to the
foreign security diversification guidelines promulgated by
certain State Insurance Departments. Pursuant to these
guidelines, each such Portfolio will invest in issuers from a
minimum of five different foreign countries. This minimum will be
reduced to four different foreign countries when foreign
securities comprise less than 80% of the Portfolio's net asset
value, three different foreign countries when foreign securities
comprise less than 60% of the Portfolio's net asset value, two
different foreign countries when foreign securities comprise less
than 40% of the Portfolio's net asset value and one foreign
country when foreign securities comprise less than 20% of the
Portfolio's net asset value. The Fund has also voluntarily agreed
that each Portfolio that may invest in foreign securities will
limit its investment in the securities of issuers located in any
one country to 20% of the Portfolio's net asset value, except
that the Portfolio may have an additional 15% of its net asset
value invested in securities of issuers located in Australia,
Canada, France, Japan, the United Kingdom or Germany.

          In addition, the Fund has adopted an investment policy,
which is not designated a "fundamental policy" within the meaning
of the 1940 Act, of intending to have each Portfolio comply at
all times with the diversification requirements prescribed in
Section 817(h) of the Code or any successor thereto and the
applicable Treasury Regulations thereunder. This policy may be
changed upon notice to shareholders of the Fund, but without
their approval.

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

                      MANAGEMENT OF THE FUND

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

Board of Directors Information

          The business and affairs of the Fund are managed under
the direction of the Board of Directors. Certain information
concerning the Fund's Directors is set forth below.

                                                    PORTFOLIOS
                                                    IN FUND         OTHER
NAME, AGE AND               PRINCIPAL               COMPLEX         DIRECTOR-
ADDRESS OF DIRECTOR         OCCUPATIONS(S)          OVERSEEN        SHIPS HELD
(YEARS OF SERVICE*)         DURING PAST 5 YEARS     BY DIRECTOR     BY DIRECTOR
- -------------------         -------------------     -----------     -----------

DISINTERESTED DIRECTORS

Chairman of the Board
William H. Foulk, Jr.,#+    Investment adviser      116             None
71,                         and an independent
2 Sound View Drive,         consultant.  He was
Suite 100                   formerly Senior
Greenwich, CT 06830 (14)    Manager of Barrett
                            Associates, Inc., a
                            registered investment
                            adviser, with which he
                            had been associated
                            since prior to 1999.
                            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.

Ruth Block,#+ 73,           Formerly Executive      96              None
500 S.E. Mizner Blvd.,      Vice President and
Boca Raton, FL 33432        Chief Insurance
(12)                        Officer of The
                            Equitable Life
                            Assurance Society of
                            the United States;
                            Chairman and Chief
                            Executive Officer of
                            Evlico; Director of
                            Avon, BP (oil and
                            gas), Ecolab
                            Incorporated
                            (specialty chemicals),
                            Tandem Financial Group
                            and Donaldson, Lufkin
                            & Jenrette Securities
                            Corporation; former
                            Governor at Large,
                            National Association
                            of Securities Dealers,
                            Inc.

David H. Dievler,#+ 74,     Independent             100             None
P.O. Box 167,               consultant.  Until
Spring Lake, NJ 07762       December 1994 he was
(14)                        Senior Vice President
                            of Alliance Capital
                            Management Corporation
                            ("ACMC") responsible for
                            mutual fund administration.
                            Prior to joining ACMC
                            in 1984 he was Chief
                            Financial Officer of
                            Eberstadt Asset Management
                            since 1968. Prior to
                            that he was a Senior
                            Manager at Price
                            Waterhouse & Co. Member
                            of American Institute of
                            Certified Public Accountants
                            since 1953.

John H. Dobkin,#+ 62,       Consultant.  Formerly   98              None
P.O. Box 12,                President of Save
Annandale, NY 12504         Venice, Inc. (preservation
(12)                        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 and during
                            1988-1992, Director and
                            Chairman of the Audit
                            Committee of ACMC.

Clifford L. Michel,#+ 64,   Senior Counsel of the   97              Placer Dome,
15 St. Bernard's Road,      law firm of Cahill                      Inc.
Gladstone, NJ 07934         Gordon & Reindel since
(12)                        February 2001, and a
                            partner of that firm for
                            more than twenty-five
                            years prior thereto. He
                            is President and Chief
                            Executive Officer of
                            Wenonah Development
                            Company (investments)
                            and a Director of the
                            Placer Dome, Inc. (mining).

Donald J. Robinson,#+ 69,   Senior Counsel to the   96              None
98 Hell's Peak Road,        law firm of Orrick,
Weston, VT 05161            Herrington & Sutcliffe
(8)                         LLP since prior to 1999.
                            Formerly a  senior
                            partner and a member of
                            the Executive Committee
                            of that firm. He was
                            also a member and
                            Chairman of the Municipal
                            Securities Rulemaking
                            Board and Trustee of the
                            Museum of the City of New York.

- ---------------
*     There is no stated term of office for the Fund's Directors.
#     Member of the Audit Committee.
+     Member of the Nominating Committee.

          The Fund's Board of Directors has two standing
committees of the Board -- an Audit Committee and a Nominating
Committee. The members of the Audit and Nominating Committees are
identified above. The function of the Audit Committee is to
assist the Board of Directors in its oversight of the Fund's
financial reporting process. The Audit Committee met four times
during the Fund's most recently completed fiscal year. The
function of the Nominating Committee is to nominate persons to
fill any vacancies or newly created positions on the Board of
Directors. The Nominating Committee did not meet during the
Fund's most recently completed fiscal year.

          The Nominating Committee has a charter and, pursuant to
the charter, the Nominating Committee will consider candidates
for nomination as a director submitted by a shareholder or group
of shareholders who have owned at least 5% of a Portfolio's
common stock for at least two years at 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 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 Fund will make a public
notice specifying the deadline for the submission. The Fund will
make the public notice at least 30 days prior to the deadline for
the submission, which is expected to be approximately 120 days
prior to the anticipated date of the proxy statement for the
annual meeting. The Fund may make the public notice in a
shareholder report or other mailing to shareholders or by other
means deemed by the Nominating Committee or the Board to be
reasonably calculated to inform shareholders.

          Shareholders submitting a candidate for consideration
by the Nominating Committee must provide the following
information to the 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 a Portfolio 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 a Portfolio 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 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 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 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 Nominating
Committee will not consider self-nominated candidates. The
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,
the candidate's ability to qualify as a disinterested Director
and such other criteria as the Nominating Committee determines to
be relevant in light of the existing composition of the Board and
any anticipated vacancies or other factors.

          In approving the most recent annual continuance of the
Fund's Advisory Agreement, the Directors considered all
information they deemed reasonably necessary to evaluate the
terms of the Advisory Agreement. The principal areas of review by
the Directors were the nature and quality of the services
provided by the Adviser and the reasonableness of the fees
charged for those services. These matters were considered by the
disinterested directors meeting separately from the full Board
with experienced counsel that is independent of the Adviser.

          The Directors' evaluation of the quality of the
Adviser's services took into account their knowledge and
experience gained through meetings with and reports of the
Adviser's senior management, portfolio managers and
administrative personnel over the course of the preceding year.
Both short-term and long-term investment performance of each
Portfolio, as well as senior management's attention to any
Portfolio management issues, were considered. Each Portfolio's
current and longer-term performance were compared to its
performance benchmark and to that of competitive funds and other
funds with similar investment objectives. The Directors also
considered the expense limitation agreements for certain
Portfolios that set expense caps on overall Portfolio expenses
and provide for waiver of fees by the Adviser or reimbursement if
needed to meet such caps, the scope and quality of the in-house
research capability of the Adviser and other resources dedicated
to performing its services. The quality of administrative and
other services, including the Adviser's role in coordinating the
activities of the Fund's other service providers, were considered
in light of on-going reports by management as to compliance with
investment policies and applicable laws and regulations and of
related reports by management and the Fund's independent auditors
in periodic meetings with the Fund's Audit Committee.

          In reviewing the fees payable under the Advisory
Agreement, the Directors compared the fees and overall expense
levels of each Portfolio to those of competitive funds and other
funds with similar investment objectives. The information on
advisory fees and expense ratios, as well as performance data,
included both information compiled by the Adviser and information
compiled by an independent data service. The Directors also
considered the fees of each Portfolio as a percentage of assets
at different asset levels and possible economies of scale to the
Adviser. The Directors considered information provided by the
Adviser concerning the Adviser's profitability with respect to
each Portfolio, including the assumptions and methodology used in
preparing the profitability information, in light of applicable
case law relating to advisory fees. For these purposes, the
Directors took into account not only the fees paid by each
Portfolio, but also so-called fallout benefits to the Adviser,
such as the engagement of affiliates of the Adviser to provide
distribution, brokerage and transfer agency services to the Fund,
the benefits of research made available to the Adviser by reason
of brokerage commissions generated by the Fund's securities
transactions and that the Advisory Agreement provides that the
Fund reimburses the Adviser for the cost of providing certain
administrative services. In evaluating each Portfolio's advisory
fees, the Directors also took into account the demands,
complexity and quality of the investment management of the
Portfolios.

          The Directors also considered the business reputation
of the Adviser and its financial resources. The Directors
evaluated the procedures and systems adopted by the Adviser that
are designed to fulfill the Adviser's fiduciary duty to each
Portfolio with respect to possible conflicts of interest,
including the Adviser's code of ethics (regulating the personal
trading of its officers and employees) and the allocation of
trades among its various investment advisory clients. The
Directors also considered information concerning policies and
procedures of the Adviser with respect to the execution of
portfolio transactions.

          No single factor was considered in isolation or to be
determinative to the decision of the Directors to approve
continuance of the Advisory Agreement. Rather, the Directors
concluded in light of a weighing and balancing of all factors
considered that it was in the best interests of each Portfolio to
continue its Advisory Agreement without modification to its
terms, including the fees charged for services thereunder.

          The dollar range of the Fund's securities owned by each
Director and the aggregate dollar range of securities of 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 Range of
                        Dollar Range of Equity   Equity Securities in the
                        Securities in the Fund   AllianceBernstein Fund
                        as of December 31, 2003  Complex as of December 31, 2003
                        -----------------------  -------------------------------

Ruth Block              None                     Over $100,000
David H. Dievler        None                     Over $100,000
John H. Dobkin          None                     Over $100,000
William H. Foulk, Jr.   None                     Over $100,000
Clifford L. Michel      None                     Over $100,000
Donald J. Robinson      None                     Over $100,000

Officer Information

Certain information concerning the Fund's officers is set forth
below.

                              Position(s)            Principal Occupation
Name, Address* and (Age)      Held with Fund         During Past 5 Years
- ------------------------      --------------         -------------------

Marc O. Mayer, (41)           President              Executive Vice President of
                                                     ACMC** since 2001; prior
                                                     thereto, he was Chief
                                                     Executive Officer of SCB &
                                                     Co. and its predecessor
                                                     since prior to 1999.

Kathleen A. Corbet, (44)      Senior Vice President  Executive Vice President of
                                                     ACMC,** with which she has
                                                     been associated since prior
                                                     to 1999.

Andrew M. Aran, (47)          Vice President         Senior Vice President
                                                     of ACMC,** with which he
                                                     has been associated since
                                                     prior to 1999.

Bruce K. Aronow, (37)         Vice President         Vice President of ACMC,**
                                                     with which he has been
                                                     associated since 1999.
                                                     Prior thereto, he was a
                                                     Vice President at INVESCO.

Edward D. Baker, III, (53)    Vice President         Senior Vice President and
                                                     Chief Investment Officer -
                                                     Emerging Markets of ACMC,**
                                                     with which he has been
                                                     associated since prior to
                                                     1999.

Michael R. Baldwin, (46)      Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Thomas J. Bardong, (59)       Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Stephen Beinhacker, (39)      Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Matthew D. W. Bloom, (47)     Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Russell I. Brody, (37)        Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Frank V. Caruso, (47)         Vice President         Senior Vice President of
                                                     Shields/ACMC,** with which
                                                     he has been associated
                                                     since prior to 1999.

John F. Chiodi, (38)          Vice President         Vice President of ACMC,**
                                                     with which he has been
                                                     associated since prior to
                                                     1999.

Michael P. Curcio, (38)       Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Henry S. D'Auria, (42)        Vice President         Senior Vice President of
                                                     ACMC** since October 2000
                                                     and Chief Investment
                                                     Officer of Emerging Markets
                                                     Value Equities and Co-Chief
                                                     Investment Officer of
                                                     International Value
                                                     Equities since June 2003.
                                                     Prior thereto, he was
                                                     Director of Research-Small
                                                     Cap Value Equities and
                                                     Director of
                                                     Research-Emerging Markets
                                                     Value Equities of Sanford
                                                     C. Bernstein & Co., Inc.
                                                     ("SCB") since prior to
                                                     1999.

Paul J. DeNoon, (42)          Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Joseph C. Dona, (43)          Vice President         Vice President of ACMC,**
                                                     with which he has been
                                                     associated since prior to
                                                     1999.

Marilyn G. Fedak, (57)        Vice President         Senior Vice President and
                                                     Chief Investment Officer -
                                                     U.S. Value Equities and an
                                                     Executive Vice President at
                                                     ACMC** since October 2000.
                                                     Prior thereto, she was
                                                     Chief Investment Officer
                                                     and Chairman of the U.S.
                                                     Equity Investment Policy
                                                     Group at SCB & Co. since
                                                     prior to 1999.

Norman M. Fidel, (57)         Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Eric J. Franco, (44)          Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Gina M. Griffin, (44)         Vice President         Senior Vice President of
                                                     ACMC,** with which she has
                                                     been associated since prior
                                                     to 1999.

Geoffrey Hauck, (39)          Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

William Johnston, (43)        Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Thomas Kamp, (42)             Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

James E. Kennedy, Jr., (43)   Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

David A. Kruth, (40)          Vice President         Vice President of ACMC,**
                                                     with which he has been
                                                     associated since 1999.

Susanne M. Lent, (34)         Vice President         Vice President of ACMC,**
                                                     with which she has been
                                                     associated since 1999.

Alan E. Levi, (54)            Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Michael J. Levy, (34)         Vice President         Assistant Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Giulio A. Martini, (48)       Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Seth J. Masters, (44)         Vice President         Senior Vice President of
                                                     ACMC** and Chief Investment
                                                     Officer of Style Blend and
                                                     Core Equity Services and
                                                     headed U.S. and Global
                                                     Style Blend teams at ACMC**
                                                     since October 2000.  Prior
                                                     thereto, he was Chief
                                                     Investment Officer for
                                                     Emerging Markets Value at
                                                     SCB since prior to 1999.

Melanie A. May, (34)          Vice President         Vice President of ACMC**
                                                     since 2000; prior thereto,
                                                     she was as Assistant Vice
                                                     President at SCB since
                                                     prior to 1999.

Michael Mon, (35)             Vice President         Vice President of ACMC,**
                                                     with which he has been
                                                     associated since June
                                                     1999.  Prior thereto, he
                                                     was a Portfolio Manager at
                                                     Brundage, Story and Rose
                                                     since 1999.

Ranji H. Nagaswami, (40)      Vice President         Senior Vice President of
                                                     ACMC** since 1999.  Prior
                                                     thereto, she was a managing
                                                     director and co-head of
                                                     U.S. Fixed Income at UBS
                                                     Brinson since prior to
                                                     1999.

Daniel Nordby, (60)           Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Jimmy K. Pang, (30)           Vice President         Vice President of ACMC,**
                                                     with which he has been
                                                     associated since prior to
                                                     1999.

Raymond J. Papera, (48)       Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Joseph G. Paul, (44)          Vice President         Senior Vice President of
                                                     ACMC** and Chief Investment
                                                     Officer - Small Cap Value
                                                     Equities since 2002.  He is
                                                     also Chief Investment
                                                     Officer of Advanced Value
                                                     at ACMC** since October
                                                     2000 and held the same
                                                     position at SCB since prior
                                                     to 1999.

Douglas J. Peebles, (38)      Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Jeffrey S. Phlegar, (37)      Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Daniel G. Pine, (52)          Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Michael J. Reilly, (39)       Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Paul C. Rissman, (47)         Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Thomas A. Schmitt, (46)       Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Jane Scheirov, (34)           Vice President         Senior Vice President of
                                                     ACMC,** with which she has
                                                     been associated since prior
                                                     to 1999.

Karen Sesin, (45)             Vice President         Senior Vice President of
                                                     ACMC,** with which she has
                                                     been associated since
                                                     1999.  Prior thereto, she
                                                     was a Chief Investment
                                                     Officer for Waycrosse,
                                                     Inc., an investment company
                                                     affiliated with Cargill,
                                                     Inc., since prior to 1999.

Lawrence J. Shaw, (53)        Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Kevin F. Simms, (38)          Vice President         Senior Vice President and
                                                     Director of Research for
                                                     International Value and
                                                     Global Value Equities at
                                                     ACMC** since October 2000.
                                                     Prior thereto, he was
                                                     Director of Research of SCB
                                                     & Co. since 1999.

Michael A. Snyder, (42)       Vice President         Senior Vice President of
                                                     ACMC** since May, 2001.
                                                     Prior thereto, he was a
                                                     Managing Director in the
                                                     high yield asset management
                                                     group at Donaldson, Lufkin
                                                     & Jenrette Corporation
                                                     since prior to 1999.

Annie C. Tsao, (51)           Vice President         Senior Vice President of
                                                     ACMC,** with which she has
                                                     been associated since prior
                                                     to 1999.

Francis X. Souzzo, (46)       Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Christopher M. Toub, (44)     Vice President         Senior Vice President of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Jean Van De Walle, (45)       Vice President         Vice President of ACMC,**
                                                     with which he has been
                                                     associated since prior to
                                                     1999.

Richard A. Winge, (52)        Vice President         Senior Vice President and
                                                     Managing Director of
                                                     AllianceBernstein
                                                     Investment and Research
                                                     Management, Inc.
                                                     ("ABIRM"),** with which he
                                                     has been associated since
                                                     prior to 1999.

Aaron J. Hoffman, (31)        Assistant Vice         Vice President of ACMC,**
                              President              with which he has been
                                                     associated since prior to
                                                     1999.

Patricia Post, (35)           Assistant Vice         Assistant Vice President of
                              President              ACMC,** with which she has
                                                     been associated since prior
                                                     to 1999.

Mark D. Gersten, (53)         Treasurer and          Senior Vice President of
                              Chief Financial        AGIS** and Vice President
                              Officer                of ABIRM,** with which he
                                                     has been associated since
                                                     prior to 1999.

Mark R. Manley, (41)          Secretary              Senior Vice President and
                                                     Acting General Counsel of
                                                     ACMC,** with which he has
                                                     been associated since prior
                                                     to 1999.

Andrew L. Gangolf, (49)       Assistant Secretary    Senior Vice President and
                                                     Assistant General Counsel
                                                     of ABIRM,** with which he
                                                     has been associated since
                                                     prior to 1999.

Thomas R. Manley, (52)        Controller             Vice President of ACMC,**
                                                     with which he has been
                                                     associated since prior to
                                                     1999.

- -------------------
*     The address for each of the Fund's officers is 1345 Avenue
      of the Americas, New York, NY 10105.
**    ACMC, ABIRM and AGIS are affiliates of the Fund.

          The Fund does not pay any fees to, or reimburse
expenses of, its Directors who are considered "interested
persons" of the Fund. The aggregate compensation paid by the Fund
to each of the Directors during the Fund's fiscal year ended
December 31, 2003, the aggregate compensation paid to each of the
Directors during calendar year 2003 by the AllianceBernstein Fund
Complex, and the total number of registered investment companies
(and separate investment portfolios within those 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 registered investment
company in the AllianceBernstein Fund Complex provides
compensation in the form of pension or retirement benefits to any
of its directors or trustees.

                                                    TOTAL          TOTAL
                                                    NUMBER OF      NUMBER OF
                                                    REGISTERED     INVESTMENT
                                                    INVESTMENT     PORTFOLIOS
                                                    COMPANIES IN   IN THE
                                                    THE ALLIANCE-  ALLIANCE-
                                     TOTAL          BERNSTEIN      BERNSTEIN
                                     COMPENSATION   FUND  COMPLEX, FUND COMPLEX,
                                     FROM THE       INCLUDING THE  INCLUDING THE
                                     ALLIANCE-      FUND, AS TO    FUND, AS TO
                                     BERNSTEIN      WHICH THE      WHICH THE
                       AGGREGATE     FUND COMPLEX,  DIRECTOR IS A  DIRECTOR IS
                       COMPENSATION  INCLUDING      DIRECTOR       A DIRECTOR
NAME OF DIRECTOR       FROM THE FUND THE FUND       OR TRUSTEE     OR TRUSTEE
- ----------------       ------------- --------       ----------     ----------

Ruth Block             $3,947        $205,550       43              96
David H. Dievler       $3,937        $264,400       47             100
John H. Dobkin         $3,937        $234,550       45              98
William H. Foulk, Jr.  $3,942        $248,650       48             116
Clifford L. Michel     $3,933        $209,550       44              97
Donald J. Robinson     $3,938        $205,347       43              96

          As of April 5, 2004 the Directors and officers of the
Fund as a group owned less than 1% of the shares of the Fund.

ADVISER

          Alliance, 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 Fund's Board of Directors (see
"Management of the Fund" in the Prospectus).

          Alliance is a leading global investment management firm
supervising client accounts with assets as of December 31, 2003,
totaling approximately $475 billion. Alliance 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. Alliance 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, Alliance is able to compete
for virtually any portfolio assignment in any developed capital
market in the world.

          Alliance is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended. As of March 31,
2004, Alliance Capital Management Holding L.P. ("Holding"), a
Delaware limited partnership, owned approximately 31.5% of the
issued and outstanding units of limited partnership interest in
Alliance ("Alliance Units"). Units representing assignments of
beneficial ownership of limited partnership interests in holding
("Holding Units") trade publicly on the New York Stock Exchange
under the ticker symbol "AC". Alliance Units do not trade
publicly and are subject to significant restrictions on transfer.
ACMC is the general partner of both Alliance and Holding. ACMC
owns 100,000 general partnership units in Holding and a 1%
general partnership interest in Alliance. ACMC is an indirect
wholly-owned subsidiary of AXA Financial, Inc. ("AXA Financial"),
a Delaware corporation.

          As of March 31, 2004, AXA, AXA Financial, The Equitable
Life Assurance Society of the United States ("Equitable") and
certain subsidiaries of Equitable beneficially owned
approximately 57.3% of the issued and outstanding Alliance Units
and approximately 1.8% of the issued and outstanding Holding
Units which, including the general partnership interests in
Alliance and Holding, represent an economic interest of
approximately 58.4% in Alliance. As of March 31, 2004, SCB
Partners Inc., a wholly-owned subsidiary of SCB Inc.,
beneficially owned approximately 9.7% of the issued and
outstanding Alliance Units.

          AXA, a French company, is the holding company for an
international group of companies and 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 is a
wholly-owned subsidiary of AXA. Equitable is an indirect
wholly-owned subsidiary of AXA Financial.

          Based on information provided by AXA, as of February 1,
2004, approximately 16.89% of the issued ordinary shares
(representing 27.55% of the voting power) of AXA were owned
directly and indirectly by Finaxa, a French holding company. As
of February 1, 2004, 71.11% of the shares (representing 80.36% of
the voting power) of Finaxa were owned by three French mutual
insurance companies (the "Mutuelles AXA") and 21.32% of the
shares of Finaxa (representing 12.80% of the voting power) were
owned by BNP Paribas, a French bank. As of February 1, 2004, the
Mutuelles AXA owned directly or indirectly through intermediate
holding companies (including Finaxa) approximately 20.17% of the
issued ordinary shares (representing 32.94% of the voting power)
of AXA.

          The Advisory Agreement became effective on July 22,
1992. The Advisory Agreement was approved by the unanimous vote,
cast in person, of the Fund's Directors including the Directors
who are not parties to the Advisory Agreement or interested
persons as defined in the Act, of any such party, at a meeting
called for the purpose and held on September 10, 1991. At a
meeting held on June 11, 1992, a majority of the outstanding
voting securities of the Fund approved the Advisory Agreement.
The Advisory Agreement was amended as of June 2, 1994 to provide
for the addition of the AllianceBernstein Americas Government
Income Portfolio, the AllianceBernstein Global Dollar Government
Portfolio and the AllianceBernstein Utility Income Portfolio. The
amendment to the Advisory Agreement was approved by the unanimous
vote, cast in person, of the disinterested Directors at a meeting
called for that purpose and held on December 7, 1993. The
Advisory Agreement was amended as of October 24, 1994 to provide
for the addition of the AllianceBernstein Growth Portfolio and
the AllianceBernstein Worldwide Privatization Portfolio. The
amendment to the Advisory Agreement was approved by the unanimous
vote, cast in person of the disinterested Directors at a meeting
called for that purpose and held on June 14, 1994. The Advisory
Agreement was amended as of February 1, 1996 to provide for the
addition of the AllianceBernstein Technology Portfolio. The
amendment to the Advisory Agreement was approved by the unanimous
vote, cast in person, of the disinterested Directors at a meeting
called for that purpose and held on November 28, 1995. The
Advisory Agreement was amended as of July 22, 1996 to provide for
the addition of the AllianceBernstein Small Cap Growth Portfolio.
The amendment to the Advisory Agreement was approved by the
unanimous vote, cast in person, of the disinterested Directors at
a meeting called for that purpose and held on June 4, 1996. The
Advisory Agreement was amended as of December 31, 1996 to provide
for the addition of the AllianceBernstein Real Estate Investment
Portfolio. The amendment to the Advisory Agreement was approved
by the unanimous vote, cast in person, of the disinterested
Directors at a meeting called for that purpose and held on
September 10, 1996. The Advisory Agreement was amended as of May
1, 1997 to provide for the addition of the AllianceBernstein High
Yield Portfolio. The amendment to the Advisory Agreement was
approved by the unanimous vote, cast in person, of the
disinterested Directors at a meeting called for that purpose and
held on April 12, 1997. The Advisory Agreement was amended as of
May 1, 2001 to provide for the addition of the AllianceBernstein
Small Cap Value Portfolio, the AllianceBernstein Value Portfolio
and the AllianceBernstein International Value Portfolio. The
amendment to the Advisory Agreement was approved by the unanimous
vote, cast in person, of the disinterested Directors at a meeting
called for that purpose and held on January 31, 2001. The
Advisory Agreement was amended as of May 1, 2003 to provide for
the addition of the AllianceBernstein U.S. Large Cap Blended
Style Portfolio. The amendment to the Advisory Agreement was
approved by the unanimous vote, cast in person, of the
disinterested Directors at a meeting called for that purpose and
held on April 15-17, 2003. The Advisory Agreement was amended as
of May 1, 2004 to provide for the addition of the
AllianceBernstein Wealth Appreciation Strategy Portfolio and the
AllianceBernstein Balanced Wealth Strategy Portfolio. The
amendment to the Advisory Agreement was approved by the unanimous
vote, cast in person, of the disinterested Directors at a meeting
called for that purpose and held on March 16-18, 2004.

          The Adviser provides investment advisory services and
order placement facilities for each of the Fund's Portfolios and
pays all compensation of Directors and officers of the Fund who
are affiliated persons of the Adviser. The Adviser or its
affiliates also furnish the Fund, without charge, management
supervision and assistance and office facilities and provide
persons satisfactory to the Fund's Board of Directors to serve as
the Fund's officers.

          The Fund has, under the Advisory Agreement, assumed
obligation to pay for all 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, the Fund may also 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 Fund's Board of Directors. The
following table shows, for the Portfolios listed, the amounts the
Adviser received for such services during the fiscal year ended
December 31, 2003.

               Portfolio                                  Amount Received
               ---------                                  ---------------

AllianceBernstein Money Market Portfolio                      $75,000
AllianceBernstein Premier Growth Portfolio                    $75,000
AllianceBernstein Growth and Income Portfolio                 $75,000
AllianceBernstein U.S. Government/High Grade
       Securities Portfolio                                   $75,000
AllianceBernstein High Yield Portfolio                        $75,000
AllianceBernstein Total Return Portfolio                      $75,000
AllianceBernstein International Portfolio                     $75,000
AllianceBernstein Global Bond Portfolio                       $75,000
AllianceBernstein Americas Government
        Income Portfolio                                      $75,000
AllianceBernstein Global Dollar
        Government Portfolio                                  $75,000
AllianceBernstein Utility Income Portfolio                    $75,000
AllianceBernstein Growth Portfolio                            $75,000
AllianceBernstein Worldwide Privatization
        Portfolio                                             $75,000
AllianceBernstein Technology Portfolio                        $75,000
AllianceBernstein Small Cap Growth
       Portfolio                                              $75,000
AllianceBernstein Real Estate Investment
       Portfolio                                              $75,000
AllianceBernstein International Value Portfolio                    $0
AllianceBernstein Small Cap Value Portfolio                        $0
AllianceBernstein Value Portfolio                             $75,000
AllianceBernstein U.S. Large Cap Blended
        Style Portfolio                                            $0

          The following table sets forth the contractual annual
percentage rate of average daily net asset value that each of the
Portfolios pays the Adviser and, effective as of January 1, 2004,
the annual percentage rate of average daily net asset value under
the Advisor's waiver of a portion of its advisory fee, which is
expected to continue for a period of at least five years:

                                                                Advisor's Fee
                                               Contractual Fee  After Waiver
                                               ---------------  ------------

      AllianceBernstein Money Market Portfolio      .500%           0.45%
      AllianceBernstein Premier
         Growth Portfolio                          1.000%           0.75%
      AllianceBernstein Growth and Income
         Portfolio                                  .625%           0.55%
      AllianceBernstein U.S. Government/High
         Grade Securities Portfolio                 .600%           0.45%
      AllianceBernstein High Yield Portfolio        .750%           0.50%
      AllianceBernstein Total Return Portfolio      .625%           0.55%
      AllianceBernstein International
         Portfolio                                 1.000%           0.75%
      AllianceBernstein Global Bond Portfolio       .650%           0.45%
      AllianceBernstein Americas Government
         Income Portfolio                           .650%           0.50%
      AllianceBernstein Global Dollar
         Government Portfolio                       .750%           0.50%
      AllianceBernstein Utility Income
         Portfolio                                  .750%           0.55%
      AllianceBernstein Growth Portfolio            .750%           0.75%
      AllianceBernstein Worldwide
         Privatization Portfolio                   1.000%           0.75%
      AllianceBernstein Technology Portfolio       1.000%           0.75%
      AllianceBernstein Small Cap Growth
         Portfolio                                 1.000%           0.75%
      AllianceBernstein Real Estate
         Investment Portfolio                       .900%           0.55%
      AllianceBernstein International Value
         Portfolio                                 1.000%           0.75%
      AllianceBernstein Small Cap Value
         Portfolio                                 1.000%           0.75%
      AllianceBernstein Value Portfolio             .750%           0.55%
      AllianceBernstein U.S. Large Cap
         Blended Style Portfolio                    .950%           0.65%
      AllianceBernstein Wealth Appreciation
         Strategy Portfolio                         .650%           0.65%
      AllianceBernstein Balanced Wealth
         Strategy Portfolio                         .550%           0.55%

          The following table shows, for each Portfolio, the
amounts the Adviser received for such services for the last three
fiscal years (or since commencement of operations).

                                            FISCAL YEAR END
                PORTFOLIO                     DECEMBER 31      AMOUNT RECEIVED
                ---------                     -----------      ---------------

AllianceBernstein Money Market
Portfolio
                                                  2001               $840,656
                                                  2002               $821,456
                                                  2003               $653,243

AllianceBernstein Premier Growth
Portfolio
                                                  2001            $22,390,203
                                                  2002            $16,947,980
                                                  2003            $14,586,714

AllianceBernstein Growth and Income
Portfolio
                                                  2001             $6,879,681
                                                  2002            $10,145,603
                                                  2003            $11,253,144

AllianceBernstein U.S. Government/High
Grade Securities Portfolio
                                                  2001               $487,416
                                                  2002               $868,142
                                                  2003             $1,019,094

AllianceBernstein High Yield
   Portfolio
                                                  2001               $120,638
                                                  2002               $226,146
                                                  2003               $348,733

AllianceBernstein Total Return
   Portfolio
                                                  2001               $897,414
                                                  2002             $1,131,591
                                                  2003             $1,211,176

AllianceBernstein International
   Portfolio
                                                  2001               $413,047
                                                  2002               $459,783
                                                  2003               $481,191

AllianceBernstein Global Bond
   Portfolio
                                                  2001               $344,820
                                                  2002               $374,114
                                                  2003               $442,328

AllianceBernstein Americas Government
Income Portfolio
                                                  2001               $259,998
                                                  2002               $383,817
                                                  2003               $477,054

AllianceBernstein Global Dollar
Government Portfolio
                                                  2001                $94,598
                                                  2002                $94,598
                                                  2003               $203,386

AllianceBernstein Utility Income
   Portfolio
                                                  2001               $481,671
                                                  2002               $369,511
                                                  2003               $307,994

AllianceBernstein Growth
   Portfolio
                                                  2001             $2,556,187
                                                  2002             $1,867,303
                                                  2003             $1,640,872

AllianceBernstein Worldwide
   Privatization Portfolio
                                                  2001               $208,119
                                                  2002               $265,507
                                                  2003               $327,976

AllianceBernstein Technology
   Portfolio
                                                  2001             $4,253,751
                                                  2002             $2,856,689
                                                  2003             $2,458,125

AllianceBernstein Small Cap Growth
   Portfolio
                                                  2001             $1,683,682
                                                  2002             $1,235,887
                                                  2003               $872,356

AllianceBernstein Real Estate
   Investment Portfolio
                                                  2001               $203,342
                                                  2002               $464,560
                                                  2003               $762,421

AllianceBernstein Small Cap Value
   Portfolio                                      2001                     $0
                                                  2002               $485,292
                                                  2003             $1,070,349

AllianceBernstein Value Portfolio                 2001                     $0
                                                  2002               $333,082
                                                  2003               $657,864

AllianceBernstein International
   Value Portfolio                                2001                     $0
                                                  2002                $61,842
                                                  2003               $667,175

AllianceBernstein U.S. Large Cap
   Blended Style Portfolio                        2003                     $0

          The Adviser has contractually agreed to waive its fees
and bear certain expenses so that total Portfolio expenses do not
exceed on an annual basis 1.20% of average daily net assets for
Class A Shares of the AllianceBernstein U.S. Large Cap Blended
Style Portfolio, the AllianceBernstein Wealth Appreciation
Strategy Portfolio and the AllianceBernstein Balanced Wealth
Strategy Portfolio. This waiver extends through May 1, 2005 for
the AllianceBernstein U.S. Large Cap Blended Style Portfolio and
May 1, 2006 for the AllianceBernstein Wealth Appreciation
Strategy Portfolio and the AllianceBernstein Balanced Wealth
Strategy Portfolio and may be extended by Alliance for additional
one-year terms.

          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 the 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.
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 or dealer, such
transactions may be averaged as to price.

          The Advisory Agreement is terminable with respect to
any Portfolio without penalty on 60 days' written notice by a
vote of a majority of the outstanding voting securities of such
Portfolio or by a vote of a majority of the Fund's 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.

          The Advisory Agreement continues in effect until each
December 31, and thereafter for successive twelve month periods
computed from each January 1, provided that such continuance is
specifically approved at least annually by a vote of a majority
of the Fund's outstanding voting securities or by the Fund's
Board of Directors, including in either case approval by a
majority of the Directors who are not parties to the Advisory
Agreement or interested persons of such parties as defined by the
1940 Act. Most recently, continuance of the Agreement was
approved for an additional annual term by the Board of Directors,
including a majority of the Directors who are not parties to the
Advisory Agreement or interested persons of any such party, at a
Meeting held on November 17, 2003.

          The Adviser may act as an investment adviser to other
persons, firms or corporations, including investment companies,
and is investment adviser to the following registered investment
companies: AllianceBernstein All-Asia Investment Fund, Inc.,
AllianceBernstein Americas Government Income Trust, Inc.,
AllianceBernstein Balanced Shares, Inc., AllianceBernstein
Blended Style Series, Inc., AllianceBernstein Bond Fund, Inc.,
AllianceBernstein Capital Reserves, AllianceBernstein Disciplined
Growth Fund, Inc., AllianceBernstein Disciplined Value Fund,
Inc., AllianceBernstein Dynamic Growth Fund, Inc.,
AllianceBernstein Emerging Market Debt Fund, Inc.,
AllianceBernstein Exchange Reserves, AllianceBernstein Global
Research Growth Fund, Inc., AllianceBernstein Global Small Cap
Fund, Inc., AllianceBernstein Global Strategic Income Trust,
Inc., AllianceBernstein Government Reserves, AllianceBernstein
Greater China '97 Fund, Inc., AllianceBernstein Growth and Income
Fund, Inc., AllianceBernstein Institutional Reserves, Inc.,
AllianceBernstein Health Care Fund, Inc., AllianceBernstein High
Yield Fund, Inc., AllianceBernstein Institutional Funds, Inc.,
AllianceBernstein International Premier Growth Fund, Inc.,
AllianceBernstein Mid-Cap Growth Fund, Inc., AllianceBernstein
Multi-Market Strategy Trust, Inc., AllianceBernstein Municipal
Income Fund, Inc., AllianceBernstein Municipal Income Fund II,
AllianceBernstein Municipal Trust, AllianceBernstein New Europe
Fund, Inc., AllianceBernstein Premier Growth Fund, Inc.,
AllianceBernstein Real Estate Investment Fund, Inc.,
AllianceBernstein Select Investor Series, Inc., AllianceBernstein
Small Cap Growth Fund, Inc., AllianceBernstein Technology Fund,
Inc., AllianceBernstein Trust, AllianceBernstein Utility Income
Fund, Inc., The AllianceBernstein Portfolios, Sanford C.
Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc., all
registered open-end investment companies; and to ACM Government
Opportunity Fund, Inc., ACM Income Fund, Inc., ACM Managed Income
Fund, Inc., ACM Managed Dollar Income Fund, Inc., ACM Municipal
Securities Income Fund, Inc., Alliance All-Market Advantage Fund,
Inc., Alliance California Municipal Income Fund, Inc., Alliance
National Municipal Income Fund, Inc., Alliance New York Municipal
Income Fund, Inc., Alliance World Dollar Government Fund, Inc.,
Alliance World Dollar Government Fund II, Inc. and The Spain
Fund, Inc., all registered closed-end investment companies.

          In providing advisory services to the Fund and other
clients investing in real estate securities, Alliance has access
to the research services of CB Richard Ellis, Inc. ("CBRE"),
which acts as a consultant to Alliance with respect to the real
estate market. As a consultant, CBRE provides to Alliance, at
Alliance's expense, such in-depth information regarding the real
estate market, the factors influencing regional valuations and
analysis of recent transactions in office, retail, industrial and
multi-family properties as Alliance shall from time to time
request. CBRE will not furnish investment advice or make
recommendations regarding the purchase or sale of securities by
the Fund nor will it be responsible for making investment
decisions involving Fund assets.

          CBRE is a publicly held company and the largest real
estate services company in the United States. CBRE's business
includes real estate brokerage, property and facilities
management, and real estate finance and investment advisory
activities. The universe of property owning real estate industry
firms consists of approximately 153 companies of sufficient size
and quality to merit consideration for investment by the
Portfolio. As consultant to Alliance, CBRE provides access to its
proprietary model, REIT-Score, which analyzes the approximately
22,000 properties owned by these 153 companies. Using proprietary
databases and algorithms, CBRE analyzes local market rent,
expenses, occupancy trends, market specific transaction pricing,
demographic and economic trends, and leading indicators of real
estate supply such as building permits. Over 1,000 asset-type
specific geographic markets are analyzed and ranked on a relative
scale by CBRE in compiling its REIT-Score database. The relative
attractive of these real estate industry companies is similarly
ranked based on the composite rankings of the properties they
own.

          Once the universe of real estate industry companies has
been distilled through the market research process, CBRE's local
market presence provides the capability to perform site specific
inspections of key properties. This analysis examines specific
location, condition, and sub-market trends. CBRE's use of locally
based real estate professionals provides Alliance with a window
on the operations of the portfolio companies as information can
immediately be put in the context of local market events. Only
those companies whose specific property portfolios reflect the
promise of their general markets will be considered for
investment by the Portfolio.

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

                PURCHASE AND REDEMPTION OF SHARES

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

          The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares."

          Shares of each Portfolio are offered at net asset value
on a continuous basis to the separate accounts of certain life
insurance companies (the "Insurers") without any sales or other
charge. The separate accounts of insurance companies place orders
to purchase shares based on, among other things, the amount of
premium payments to be invested and surrendered and transfer
requests to be effected pursuant to variable contracts funded by
shares of the Portfolio. The Fund reserves the right to suspend
the sale of its shares in response to conditions in the
securities markets or for other reasons. See the prospectus of
the separate account of the participating insurance company for
more information on the purchase of shares.

          The Insurers maintain omnibus account arrangements with
the Fund in respect of one or more Portfolios and place aggregate
purchase, redemption and exchange orders for shares of a
Portfolio corresponding to orders placed by the Insurer's
customers ("Contractholders") who have purchased contracts from
the Insurers, in each case, in accordance with the terms and
conditions of the relevant contract. Omnibus account arrangements
maintained by the Insurers are discussed below under "Limitations
on Ability to Detect and Curtail Excessive Trading Practices".

          Right to Restrict, Reject or Cancel Purchase and
Exchange Orders. The Fund reserves the right to restrict, reject
or cancel, without any prior notice, any purchase or exchange
order placed by an Insurer for any reason.

          Policy Regarding Excessive or Short Duration Trading.
Purchases and exchanges of shares of the Portfolios should be
made for long term investment purposes only. The Fund, as a
matter of policy, seeks to prevent excessive purchases and sales
or exchanges of shares of the Portfolios. Such practices are
commonly referred to as "market timing" or "short duration
trading." The Fund will seek to prevent such practices to the
extent they are detected by the procedures described below,
subject to the Fund's ability to monitor purchase, sale and
exchange activity, and subject to such limitations as may result
from the terms and conditions contained in certain of the
contracts as described below. The Fund, Alliance, ABIRM and AGIS
each 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, ABIRM and AGIS, maintains surveillance procedures
     with respect to purchase, sale and exchange activity in
     shares of the Portfolios. These surveillance procedures
     involve scrutinizing individual Insurers' omnibus
     transaction activity in shares of the Portfolios in order to
     seek to ascertain whether any such activity attributable to
     one or more Contractholders might constitute market timing
     or short duration trading. Insurers' omnibus transaction
     activity identified by these surveillance procedures, or as
     a result of any other information actually available at the
     time, will be evaluated to determine whether such activity
     might indicate excessive or short duration trading activity
     attributable to one or more Contractholders.

o    Account Blocking Procedures. When a particular transaction
     or pattern of transactions identified by the surveillance
     procedures described above is determined by the Fund, ABIRM
     or AGIS, in its sole discretion, to be excessive or short
     duration trading in nature, the relevant Insurers' omnibus
     account(s) in respect of shares of the relevant Portfolio(s)
     will be promptly "blocked" with respect to any future
     purchase or exchange activity, except to the extent the
     Fund, ABIRM or AGIS has been informed in writing that the
     terms and conditions of a particular contract may limit the
     Fund's ability to apply its market timing policy to
     Contractholder activity as discussed below. As a result, any
     Contractholder seeking to engage through an Insurer in
     purchase or exchange activity in shares of one or more
     Portfolios under a particular contract will be prevented
     from doing so. However, sales of shares of a Portfolio back
     to the Fund will continue to be permitted in accordance with
     the terms of the Portfolio's prospectus. Insurers' omnibus
     accounts that are so blocked will generally remain blocked
     unless and until an Insurer provides evidence or assurance
     acceptable to the Fund, ABIRM or AGIS that one or more
     Contractholders did not or will not in the future engage in
     excessive or short duration trading.

          Limitations on Ability to Detect and Curtail Excessive
Trading Practices. Insurers utilizing omnibus account
arrangements may not identify to the Fund, ABIRM or AGIS
Contractholders' transaction activity relating to shares of a
particular Portfolio on an individual basis. Consequently, the
Fund, ABIRM and AGIS may not be able to detect excessive or short
duration trading in shares of a Portfolio attributable to a
particular Contractholder who effects purchase and redemption
and/or exchange activity in shares of the Portfolio through an
Insurer acting in an omnibus capacity. In seeking to prevent
excessive or short duration trading in shares of the Portfolios,
including the maintenance of any transaction surveillance or
account blocking procedures, the Fund, ABIRM and AGIS consider
the information actually available to them at the time.

          Contractholders should be aware that, even if the Fund,
ABIRM or AGIS, in its sole discretion, determines that a
particular Insurer's omnibus transaction activity in shares of a
Portfolio attributable to one or more other Contractholders may
constitute excessive or short duration trading, the terms and
conditions of the relevant contract may limit the ability of the
Fund, ABIRM or AGIS, or the Insurer to curtail the
Contractholder's activity. This means that even after the
detection of such possible Contractholder activity, the affected
Portfolio may continue to suffer the effects of excessive or
short duration trading.

          Risks Associated with Excessive or Short Duration
Trading Generally. While the Fund, ABIRM and AGIS will try to
prevent market timing by utilizing the procedures described
above, these procedures may not be successful in identifying or
stopping excessive or short duration trading attributable to
particular Contractholders in all circumstances. Excessive
purchases and sales or exchanges of shares of Portfolios may
adversely affect a Portfolio's performance and the interests of
those Contractholders pursuing a long-term investment strategy.
Volatility resulting from excessive purchases and sales or
exchanges of shares of a Portfolio, especially involving large
dollar amounts, may disrupt efficient portfolio management. In
particular, a Portfolio may have difficulty implementing
long-term investment strategies if it is unable to anticipate
what portion of its assets it should retain in cash to provide
liquidity to the Insurers in connection with Contractholders'
transaction activity under the contracts. Also, excessive
purchases and sales or exchanges of shares of a Portfolio may
force a particular Portfolio to maintain a disadvantageously
large cash position to accommodate short duration trading
activity. Further, excessive purchases and sales or exchanges of
a Portfolio's shares may force a particular Portfolio to sell
portfolio securities at inopportune times to raise cash to
accommodate short duration trading activity.

          In addition, a Portfolio may incur increased expenses
if one or more Contractholders engage in excessive purchase and
sale or exchange activity. For example, if a Portfolio is forced
to liquidate investments due to short duration trading activity
attributable to one or more Contractholders, it may incur
increased brokerage costs without attaining any investment
advantage. Similarly, a Portfolio may bear increased
administrative costs as a result of the asset level and
investment volatility that accompanies patterns of short duration
trading activity.

          Investments in foreign securities may be particularly
susceptible to short duration trading strategies. This is because
time zone differences among international stock markets can allow
a Contractholder engaging in a short duration strategy to exploit
a particular Portfolio's share prices that are based on closing
prices of foreign securities established some time before the
Fund, or its agents, calculates the share price of the relevant
Portfolio. In addition, a Contractholder engaging in a short
duration strategy may target a Portfolio that does not invest
primarily in foreign securities. For example, investments in
certain fixed-income securities such as high yield bonds or
certain asset-backed securities may also constitute an effective
vehicle for a Contractholder's short duration trading strategy.

          Risks Resulting from Imposition of Account Blocks in
Response to Excessive or Short Duration Trading Activity. If,
pursuant to the transaction surveillance and account blocking
procedures described above, the Fund or its agents, ABIRM or
AGIS, in its sole discretion, blocks a particular Insurer's
omnibus account with the Fund in respect of one or more
Portfolios, Contractholders seeking to engage in purchase or
exchange activity in shares of the affected Portfolio(s) will be
prevented from doing so. Further, as a result of any account
block, a Contractholder will be prevented from engaging in
purchase and exchange activity that otherwise may be permitted
pursuant to a particular contract regardless of whether the
Contractholder has actually engaged in the market timing or short
duration trading activity resulting in such account block. As
described above, sales of shares of a Portfolio back to the Fund
or redemptions will continue to be permitted in accordance with
the terms of the Fund's prospectus. However, it could be
disadvantageous for a Contractholder to redeem a Portfolio's
shares if the shares have declined in value. A Contractholder who
does not wish to redeem his or her shares effectively may be
"locked" into an investment in shares of one or more of the
Portfolios that the Contractholder did not intend to hold on a
long-term basis or that may not be appropriate for the
Contractholder's risk profile.

REDEMPTION OF SHARES

          An insurance company separate account may redeem all or
any portion of the shares in its account at any time at the net
asset value next determined after a redemption request in the
proper form is furnished to the Fund. Any certificates
representing shares being redeemed must be submitted with the
redemption request. Shares do not earn dividends on the day they
are redeemed, regardless of whether the redemption request is
received before or after the time of computation of net asset
value that day. There is no redemption charge. The redemption
proceeds will normally be sent within seven days.

          The right of redemption may be suspended or the date or
payment may be postponed for any period during which the Exchange
is closed (other than customary weekend and holiday closings) or
during which the Commission determines that trading thereon is
restricted, or for any period during which an emergency (as
determined by the Commission) exists as a result of which
disposal by the Fund of securities owned by a Portfolio is not
reasonably practicable or as a result of which it is not
reasonably practicable for the Fund fairly to determine the value
of a Portfolio's net assets, or for such other periods as the
Commission may by order permit for the protection of security
holders of the Fund. For information regarding how to redeem
shares in the Fund, please see your insurance company's separate
account prospectus.

          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
Portfolio's securities at the time of such redemption or
repurchase. Payment either in cash or in portfolio securities
received by a shareholder upon redemption or repurchase of his
shares, assuming the shares constitute capital assets in his
hands, will result in long-term or short-term capital gains (or
loss) depending upon the shareholder's holding period and basis
in respect of the shares redeemed.

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

                         NET ASSET VALUE

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

          For all of the Portfolios, with the exception of
AllianceBernstein Money Market Portfolio, the per share net asset
value 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 a Portfolio on each Portfolio
business day on which such an order is received and on such other
days as the Board of Directors deems appropriate or necessary in
order to comply with Rule 22c-1 under the 1940 Act. Each
Portfolio's per share net asset value is calculated by dividing
the value of a Portfolio's total assets, less its liabilities, by
the total number of its shares then outstanding. A Portfolio
business day is any weekday on which the Exchange is open for
trading.

          In accordance with applicable rules under the 1940 Act
and the Portfolio's pricing policies and procedures adopted by
the Board of Directors (the "Pricing Policies"), portfolio
securities are valued at current market value or at fair value.
The Board of Directors has delegated to the Adviser, subject to
the Board's continuing oversight, certain of its duties with
respect to the following Pricing Policies.

          With respect to securities for which market quotations
are readily available, the market value of a security will be
determined as follows:

          (a) securities listed on the Exchange or on a foreign
securities exchange are valued at the last sale price reflected
on the consolidated tape at the close of the Exchange or foreign
securities exchange on the business day as of which such value is
being determined. If there has been no sale on such day, the
securities are valued at the mean of the closing bid and asked
prices on such day. If no bid or asked prices are quoted on such
day, then the security is valued in good faith at fair value by,
or in accordance with procedures established by, the Board of
Directors;

          (b) securities not listed on the Exchange or on a
foreign securities exchange but listed on other national
securities exchanges are valued in accordance with paragraph (a)
above, and securities traded on The Nasdaq Stock Market, Inc.
("NASDAQ") are valued in accordance with the NASDAQ Official
Closing Price;

          (c) securities traded on the Exchange or on a foreign
securities exchange and on one or more other national or foreign
securities exchanges, and securities not traded on the Exchange
but traded on one or more other national or foreign securities
exchanges, are valued in accordance with paragraph (a) above by
reference to the principal exchange on which the securities are
traded;

          (d) listed put or call options purchased by a Portfolio
are valued at the last sale price. If there has been no sale on
that day, such securities will be valued at the closing bid
prices on that day;

          (e) open futures contracts and options thereon will be
valued using the closing settlement price or, in the absence of
such a price, the most recent quoted bid price. If there are no
quotations available for the day of valuations, the last
available closing settlement price will be used;

          (f) securities traded in the over-the-counter market,
including securities listed on a national securities exchange
whose primary market is believed to be over-the-counter (but
excluding securities traded on NASDAQ) are valued at the mean of
the current bid and asked prices as reported by the National
Quotation Bureau or other comparable sources;

          (g) U.S. Government securities and other debt
instruments having 60 days or less remaining until maturity are
valued at amortized cost if their original maturity was 60 days
or less, or by amortizing their fair value as of the 61st day
prior to maturity if their original term to maturity exceeded 60
days (unless in either case it is determined, in accordance with
procedures established by the Board of Directors, that this
method does not represent fair value);

          (h) fixed-income securities may be valued on the basis
of prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities. The
prices provided by a pricing service take into account many
factors, including institutional size, trading in similar groups
of securities and any developments related to specific
securities. For securities where the Adviser has determined that
an appropriate pricing service does not exist, such securities
may be valued on the basis of a quoted bid price or spread from a
major broker-dealer in such security;

          (i) mortgage-backed and asset-backed securities may be
valued at prices obtained from a bond pricing service or at a
price obtained from one or more of the major broker-dealers in
such securities when such prices are believed to reflect the fair
market value of such securities. In cases where broker-dealer
quotes are obtained, the Adviser may establish procedures whereby
changes in market yields or spreads are used to adjust, on a
daily basis, a recently obtained quoted bid price on a security;

          (j) OTC and other derivatives are valued on the basis
of a quoted bid price or spread from a major broker-dealer in
such security; and

          (k) all other securities will be valued in accordance
with readily available market quotations as determined in
accordance with procedures established by the Board of Directors.

          With respect to securities for which market quotations
are not readily available, the security will be valued at fair
value in accordance with policies and procedures adopted by the
Board of Directors.

          Trading in securities on Far Eastern and European
securities exchanges and over-the-counter markets is normally
completed well before the close of business of each Portfolio
business day. In addition, trading in foreign markets may not
take place on all Portfolio business days. Furthermore, trading
may take place in various foreign markets on days that are not
Portfolio business days. Each Portfolio's calculation of the net
asset value per share, therefore, does not always take place
contemporaneously with the most recent determination of the
prices of portfolio securities in these markets. Events affecting
the values of these portfolio securities that occur between the
time their prices are determined in accordance with the above
procedures and the close of the Exchange will not be reflected in
the Portfolio's calculation of net asset value unless it is
believed that these prices do not reflect current market value,
in which case the securities will be valued in good faith by, or
in accordance with procedures established by, the Board of
Directors at fair value.

          Each Portfolio may suspend the determination of its net
asset value (and the offering and sale of shares), subject to the
rules of the Commission 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 Portfolio 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 Commission by order permits a
suspension of the right of redemption or a postponement of the
date of payment on redemption.

          For purposes of determining a Portfolio's net asset
value 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 of Directors.

          The assets attributable to the Class A shares and Class
B shares will be invested together in a single portfolio. The net
asset value 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 each Portfolio in accordance with Rule 18f-3
under the 1940 Act (the "18f-3 Plan").

          The AllianceBernstein Money Market Portfolio utilizes
the amortized cost method of valuation of portfolio securities in
accordance with the provisions of Rule 2a-7 under the Act. The
amortized cost method involves valuing an instrument at its cost
and thereafter applying a constant amortization to maturity of
any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. The Fund
maintains procedures designed to stabilize, to the extent
reasonably possible, the price per share of the Portfolio as
computed for the purpose of sales and redemptions at $1.00. Such
procedures include review of the Portfolio's investment portfolio
holdings by the Directors at such intervals as they deem
appropriate to determine whether and to what extent the net asset
value of the Portfolio calculated by using available market
quotations or market equivalents deviates from net asset value
based on amortized cost. If such deviation as to the Portfolio
exceeds 1/2 of 1%, the Directors will promptly consider what
action, if any, should be initiated. In the event the Directors
determine that such a deviation may result in material dilution
or other unfair results to new investors or existing
shareholders, they will consider corrective action which might
include (1) selling instruments held by the Portfolio prior to
maturity to realize capital gains or losses or to shorten average
portfolio maturity; (2) withholding dividends of net income on
shares of the Portfolio; or (3) establishing a net asset value
per share of the Portfolio by using available market quotations
or equivalents. The net asset value of the shares of the
Portfolio is determined as of the close of business each Fund
business day (generally 4:00 p.m. Eastern time).

          The assets attributable to the Class A shares and Class
B shares of the Portfolio, will be invested together in a single
portfolio. The net asset value 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 the 18f-3 Plan.

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

                      PORTFOLIO TRANSACTIONS

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

          Neither the Fund nor the Adviser has entered into
agreements or understandings with any brokers or dealers
regarding the placement of securities transactions because of
research or statistical 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 impossible
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 Exchange Act and
is designed to augment the Adviser's own internal research and
investment strategy capabilities. Research and statistical
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 but not all such services may be utilized by
the Adviser in connection with the Fund.

          The Fund will deal in some instances in equity
securities which are not listed on a national stock exchange but
are traded in the over-the-counter market. In addition, most
transactions for the AllianceBernstein U.S. Government/High-Grade
Securities Portfolio and the AllianceBernstein Money Market
Portfolio are executed in the over-the-counter market. Where
transactions are executed in the over-the-counter 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.

          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 and the Fund's
distributor, for which SCB & Co. may receive a portion of the
brokerage commission. With respect to orders placed with SCB &
Co. 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.

          The following table shows the brokerage commission paid
on investment transactions for the last three fiscal years:

                                                                   Brokerage
                                   Fiscal         Aggregate       Commission
                                 Year Ended       Brokerage        Paid to
          Portfolio             December 31    Commission Paid    SCB & Co.
          ---------             -----------    ---------------    ---------

AllianceBernstein
Growth Portfolio
                                    2001            $905,366       $35,136
                                    2002            $464,895       $ 2,815
                                    2003            $300,559       $ 1,240

AllianceBernstein Growth and
   Income Portfolio
                                    2001          $3,126,377       $22,990
                                    2002          $5,089,476     $ 318,196
                                    2003          $3,904,261     $ 260,705

AllianceBernstein
   Global Bond Portfolio
                                    2001                $  0          $  0
                                    2002                $  0          $  0
                                    2003                $  0          $  0

AllianceBernstein
   Global Dollar Government
   Portfolio
                                    2001                $  0          $  0
                                    2002                $  0          $  0
                                    2003                $  0          $  0

AllianceBernstein
   High Yield Portfolio
                                    2001                $  0          $  0
                                    2002                $  0          $  0
                                    2003                $  0          $  0

AllianceBernstein
   International Portfolio
                                    2001            $145,026          $  0
                                    2002            $168,020         $ 233
                                    2003            $164,709          $  0

AllianceBernstein
   Money Market Portfolio
                                    2001                $  0          $  0
                                    2002                $  0          $  0
                                    2003                $  0          $  0

AllianceBernstein
   Americas Government
   Income Portfolio
                                    2001                $  0          $  0
                                    2002                $  0          $  0
                                    2003                $  0          $  0

AllianceBernstein
   Premier Growth Portfolio
                                    2001          $2,349,330     $ 134,699
                                    2002          $6,596,311     $ 311,635
                                    2003          $4,045,107     $ 188,480

AllianceBernstein
   Small Cap Growth
   Portfolio
                                    2001            $363,862          $  0
                                    2002            $720,495       $ 3,444
                                    2003            $433,127          $  0

AllianceBernstein
   Real Estate Investment
   Portfolio
                                    2001            $ 62,066          $  0
                                    2002            $113,189       $ 1,365
                                    2003            $101,093          $  0

AllianceBernstein
   Technology Portfolio
                                    2001            $333,394       $14,540
                                    2002            $963,875       $32,458
                                    2003          $1,053,536       $30,500

AllianceBernstein
   Total Return Portfolio
                                    2001            $259,491          $  0
                                    2002            $259,136          $  0
                                    2003            $141,292          $  0

AllianceBernstein
   U.S. Government/High
   Grade Securities
Portfolio
                                    2001                $  0          $  0
                                    2002                $  0          $  0
                                    2003                $  0          $  0

AllianceBernstein
   Utility Income Portfolio
                                    2001            $ 94,324       $ 6,212
                                    2002            $178,592       $ 2,780
                                    2003            $148,510       $ 6,140

AllianceBernstein
   Worldwide Privatization
   Portfolio
                                    2001            $ 88,420          $  0
                                    2002            $ 90,266          $  0
                                    2003            $ 74,728          $  0

AllianceBernstein Small Cap
   Value Portfolio
                                    2001            $ 36,583       $17,701
                                    2002            $229,834     $ 115,881
                                    2003            $201,066     $ 114,816

AllianceBernstein Value
   Portfolio
                                    2001            $ 34,797       $15,649
                                    2002            $123,903       $73,126
                                    2003            $139,185       $87,949

AllianceBernstein
   International Value
   Portfolio                        2001             $ 8,341         $ 842
                                    2002            $ 65,592       $ 3,988
                                    2003            $162,924       $16,922

AllianceBernstein U.S. Large
   Cap Blended Style Portfolio      2003            $ 11,112       $ 5,579

          During the most recent fiscal year, the percentage of
the aggregate brokerage commission, stated above, paid by each
Portfolio to SCB & Co. and the percentage of each Portfolio's
aggregate dollar amount of transactions involving the payment of
commissions through SCB & Co. was as follows:

                                                            % of Aggregate
                                                            Dollar Amount of
                                                            Transactions
                                                            Involving the
                                    % of Aggregate          Payment of
                                    Brokerage Commission    Commissions
Portfolio                           Paid to SCB & Co.       Through SCB & Co.
- ---------                           -----------------       -----------------

AllianceBernstein
   Growth Portfolio                     0.40%                 0.13%
AllianceBernstein
   Growth and Income Portfolio          6.68%                 0.18%
AllianceBernstein
   Global Bond Portfolio                   0%                    0%
AllianceBernstein
   Global Dollar Government
   Portfolio                               0%                    0%
AllianceBernstein
   High Yield Portfolio                    0%                    0%
AllianceBernstein
   International Portfolio                 0%                    0%
AllianceBernstein
   Money Market Portfolio                  0%                    0%
AllianceBernstein
   Americas Government Income
   Portfolio                               0%                    0%
AllianceBernstein
   Premier Growth Portfolio             4.66%                 0.12%
AllianceBernstein Small Cap Growth
   Portfolio                               0%                    0%
AllianceBernstein
   Real Estate Investment
   Portfolio                               0%                    0%
AllianceBernstein
   Technology Portfolio                 2.90%                 0.25%
AllianceBernstein
   Total Return Portfolio                  0%                    0%
AllianceBernstein
   U.S. Government/High
   Grade Securities Portfolio              0%                    0%
AllianceBernstein
   Utility Income Portfolio             4.13%                 0.40%
AllianceBernstein
   Worldwide Privatization
   Portfolio                               0%                    0%
AllianceBernstein
   Small Cap Value Portfolio           57.10%                 0.26%
AllianceBernstein Value
   Portfolio                           63.19%                 0.19%
AllianceBernstein
   International Value Portfolio       10.39%                 0.31%
AllianceBernstein U.S. Large
   Cap Blended Style Portfolio         50.21%                 0.14%

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

                DIVIDENDS, DISTRIBUTIONS AND TAXES

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

          Each Portfolio of the Fund qualified and intends to
continue to qualify to be taxed as a regulated investment company
under the Code. If so qualified, each Portfolio will not be
subject to federal income and excise taxes on its investment
company taxable income and net capital gain to the extent such
investment company taxable income and net capital gain are
distributed to the separate accounts of insurance companies which
hold its shares. Under current tax law, capital gains or
dividends from any Portfolio are not currently taxable to the
holder of a variable annuity or variable life insurance contract
when left to accumulate within such variable annuity or variable
life insurance contract. Distributions of net investment income
and net short-term capital gains will be treated as ordinary
income and distributions of net long-term capital gains will be
treated as long-term capital gain in the hands of the insurance
companies.

          Investment income received by a Portfolio from sources
within foreign countries may be subject to foreign income taxes
withheld at the source. If more than 50% of the value of a
Portfolio's total assets at the close of its taxable year
consists of stocks or securities of foreign corporations (which
for this purpose should include obligations issued by foreign
governments), such Portfolio will be eligible to file an election
with the Internal Revenue Service to pass through to its
shareholders the amount of foreign taxes paid by the Portfolio.
If eligible, each such Portfolio intends to file such an
election, although there can be no assurance that such Portfolio
will be able to do so.

          Section 817(h) of the Code requires that the
investments of a segregated asset account of an insurance company
be adequately diversified, in accordance with Treasury
Regulations promulgated thereunder, in order for the holders of
the variable annuity contracts or variable life insurance
policies underlying the account to receive the tax-deferred or
tax-free treatment generally afforded holders of annuities or
life insurance policies under the Code. The Department of the
Treasury has issued Regulations under section 817(h) that, among
other things, provide the manner in which a segregated asset
account will treat investments in a regulated investment company
for purposes of the applicable diversification requirements.
Under the Regulations, if a regulated investment company
satisfies certain conditions, a segregated asset account owning
shares of the regulated investment company will not be treated as
a single investment for these purposes, but rather the account
will be treated as owning its proportionate share of each of the
assets of the regulated investment company. Each Portfolio plans
to satisfy these conditions at all times so that the shares of
such Portfolio owned by a segregated asset account of a life
insurance company will be subject to this treatment under the
Code.

          For information concerning the federal income tax
consequences for the holders of variable annuity contracts and
variable life insurance policies, such holders should consult the
prospectus used in connection with the issuance of their
particular contracts or policies.
- ----------------------------------------------------------------

                       GENERAL INFORMATION

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

CAPITALIZATION

          The Fund was organized as a Maryland corporation in
1987 under the name "Alliance Variable Products Series Fund,
Inc." The name of the Fund became "AllianceBernstein Variable
Products Series Fund, Inc." on May 1, 2003. Each Portfolio's name
was changed on May 1, 2003. Prior thereto, the Portfolios were
known as: Alliance Money Market Portfolio, Alliance Premier
Growth Portfolio, Alliance Growth and Income Portfolio, Alliance
U.S. Government/High Grade Securities Portfolio, Alliance High
Yield Portfolio, Alliance Total Return Portfolio, Alliance
International Portfolio, Alliance Global Bond Portfolio, Alliance
Americas Government Income Portfolio, Alliance Global Dollar
Government Portfolio, Alliance Utility Income Portfolio, Alliance
Growth Portfolio, Alliance Worldwide Privatization Portfolio,
Alliance Technology Portfolio, Alliance Quasar Portfolio and
Alliance Real Estate Investment Portfolio. The AllianceBernstein
Quasar Portfolio's name was changed again on May 3, 2004 to the
AllianceBernstein Small Cap Growth Portfolio.

          The Fund's shares have non-cumulative voting rights,
which means that the holders of more than 50% of the shares
voting for the election of Directors can elect 100% of the
Directors if they choose to do so, and in such election of
Directors will not be able to elect any person or persons to the
Board of Directors.

          All shares of the Fund when duly issued will be fully
paid and nonassessable. The Board of Directors is authorized to
reclassify any unissued shares into any number of additional
series and classes without shareholder approval. Accordingly, the
Board of Directors in the future, for reasons such as the desire
to establish one or more additional Portfolio's with different
investment objectives, policies or restrictions or to establish
additional channels of distribution, may create additional series
and classes of shares. Any issuance of shares of such additional
series and classes would be governed by the 1940 Act and the laws
of the State of Maryland.

          If shares of another series were issued in connection
with the creation of the new portfolio, each share of any of the
Fund's Portfolios would normally be entitled to one vote for all
purposes. Generally, shares of each Portfolio would vote as a
single series for the election of directors and on any other
matter that affected each Portfolio 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.
Moreover, the Class B shares of each Portfolio will vote
separately with respect to matters relating to the 12b-1 Plan(s)
adopted in accordance with Rule 12b-1 under the 1940 Act.
Meetings of shareholders may be called by 10% of the Fund's
outstanding shareholders.

          The outstanding voting shares of each outstanding
Portfolio of the Fund as of April 12, 2004 consisted of the
following numbers of Class A common stock: AllianceBernstein
Money Market Portfolio, 52,490,780; AllianceBernstein Premier
Growth Portfolio, 34,988,344; AllianceBernstein Growth and Income
Portfolio, 28,009,632; AllianceBernstein U.S. Government/High
Grade Securities Portfolio, 9,360,733; AllianceBernstein
International Portfolio, 4,087,846; AllianceBernstein Total
Return Portfolio, 10,756,324; AllianceBernstein Global Bond
Portfolio, 4,166,403; AllianceBernstein Americas Government
Income Portfolio, 4,485,694; AllianceBernstein Global Dollar
Government Portfolio, 1,697,289; AllianceBernstein Utility Income
Portfolio, 2,823,178; AllianceBernstein Growth Portfolio,
8,511,928; AllianceBernstein Worldwide Privatization Portfolio,
1,974,398; AllianceBernstein Technology Portfolio, 8,725,629;
AllianceBernstein Small Cap Growth Portfolio, 5,940,901;
AllianceBernstein Real Estate Investment Portfolio, 4,370,254;
AllianceBernstein High Yield Portfolio, 5,664,117;
AllianceBernstein International Value Portfolio, 2,481,568;
AllianceBernstein Small Cap Value Portfolio, 6,454,149;
AllianceBernstein Value Portfolio, 21; and AllianceBernstein U.S.
Large Cap Blended Style Portfolio, 100,000. To the knowledge of
the Fund, the following persons owned of record or beneficially
5% or more of the outstanding Class A shares of the Fund's
Portfolios as of April 12, 2004.

                                                       NUMBER OF     % OF
                                                       CLASS A       CLASS A
PORTFOLIO            NAME AND ADDRESS                  SHARES        SHARES
- ---------            ----------------                  ------        ------

AllianceBernstein    AIG Life Insurance Company
Money Market         ("AIG")
                     Attn: Ed Bacon
                     600 N. King Street
                     Wilmington, DE 19801               34,063,480   65.77%

                     American International Life
                     Insurance Company of New York
                     ("American")
                     Attn: Ed Bacon
                     2727 A-Allen Parkway
                     Houston, TX 77019                   4,865,776    9.39%

                     Fortis Benefits ("Fortis")
                     Attn:  Bruce Fiedler
                     P.O. Box 64284
                     St. Paul, MN 55164                 10,096,034   19.49%

AllianceBernstein
Premier Growth       AIG                                 8,048,734   23.02%

                     Keyport Life
                     Insurance Co.
                     ("Keyport")
                     Attn: James Joseph
                     P.O. Box 9133
                     Wellesley Hills, MA 02481-9133      2,338,198    6.69%

                     Merrill Lynch, Pierce, Fenner
                     & Smith, Inc.
                     For the Sole Benefit of Its
                     Customers
                     ("Merrill Lynch")
                     4800 Deer Lake Dr., E.
                     Jacksonville, FL 32246             16,812,655   48.09%

AllianceBernstein
Growth and Income    AIG                                11,645,375   41.60%

                     American                            1,486,165   5.31%

                     Lincoln Life Variable Annuity
                     ("Lincoln Life")
                     Account N-6 H02 Fund Accounting
                     1300 S. Clinton Street
                     Fort Wayne, IN 46802                3,509,354   12.54%

                     Merrill Lynch                       2,312,701    8.26%

                     ING Life Insurance and
                     Annuity Company ("ING")
                     151 Farmington Avenue, #TN41
                     Hartford, CT 06156                  4,625,013   16.52%

AllianceBernstein
U.S. Government/
High Grade           AIG                                 7,692,439   85.12%

                     American                              867,016   9.27%

AllianceBernstein
Total Return         AIG                                 9,310,705   86.56%

                     American                              723,360    6.72%

AllianceBernstein
International        AIG                                 3,132,234   76.29%

                     American                              412,565   10.05%

AllianceBernstein
Global Bond          AIG                                 1,224,425   29.40%

                     National Union Fire
                     Insurance Co.
                     c/o American
                     80 Pine Street
                     New York, NY 10005                    867,641   20.83%

                     Keyport                             1,378,814   33.11%

AllianceBernstein
Americas
Government Income    AIG                                 3,893,831   86.99%

                     American                              360,686    8.06%

AllianceBernstein
Global Dollar
Government           AIG                                 1,382,695   81.67%

                     American                              237,054   14.00%

AllianceBernstein
Utility Income       AIG                                 2,352,723   83.34%

                     American                              250,409    8.87%

AllianceBernstein
Growth               AIG                                 6,049,052   71.06%

                     American                            1,018,378   11.96%

AllianceBernstein
Worldwide
Privatization        AIG                                 1,611,476   81.73%

                     American                              269,422   13.66%

AllianceBernstein
Technology           AIG                                 5,318,649   60.99%

                     American                              949,382   10.89%

                     Lincoln Life                        1,462,631   16.77%

                     Merrill Lynch                         480,860    5.51%

AllianceBernstein
Small Cap Growth     AIG                                 4,536,919   76.30%

                     American                              571,962    9.62%

                     ING                                   424,530    7.14%

AllianceBernstein
Real Estate          AIG                                 2,367,172   54.19%

                     American                              242,270    5.55%

                     MetLife Investors
                     Variable Annuity
                     Account One
                     Attn: Shar Nevenhoven
                     4700 Westown Parkway
                     Suite 200
                     West Des Moines, IA 50266             827,092   18.93%

                     Great West Life & Annuity
                     Insurance Company
                     FBO Schwab Annuities
                     8515 E. Orchard Road
                     Attn: Investment Division 2T2
                     Englewood, CO 80111                   613,002   14.03%

AllianceBernstein
High Yield           AIG                                 4,975,166   87.85%

                     American                              409,577    7.23%

AllianceBernstein
International Value  AIG                                 1,716,839  69.17%

                     Nationwide Insurance Co.
                     NWPPVA2
                     C/O IPO Portfolio Accounting
                     P.O. Box 182029
                     Columbus, OH 43218                    565,730   22.79%

AllianceBernstein
Small Cap Value      Lincoln Life                        2,186,460   33.84%

                     AIG                                 3,624,030   56.09%

AllianceBernstein    Anchor National
Value                Life Insurance Co.
                     P.O. Box 54299
                     Los Angeles, CA 90054                      21  100.00%

AllianceBernstein    Alliance Capital Management LP
U.S. Large Cap       Attn:  Controller
Blended Style        1345 Avenue of the Americas
                     New York, NY  10105-0302              100,000  100.00%

CODE OF ETHICS AND PROXY VOTING POLICIES AND PROCEDURES

          The Fund, the Adviser and the Principal Underwriter
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 E.

CUSTODIAN

          State Street Bank and Trust Company ("State Street"),
225 Franklin Street, Boston, Massachusetts 02110, acts as
custodian for the securities and cash of the Fund but plays no
part in deciding the purchase or sale of portfolio securities.
Subject to the supervision of the Fund's Directors, State Street
may enter into sub-custodial agreements for the holding of the
Fund's foreign securities.

PRINCIPAL UNDERWRITER

          ABIRM, 1345 Avenue of the Americas, New York, New York
10105, serves as the Fund's Principal Underwriter.

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 AUDITORS

          Ernst & Young LLP, 5 Times Square, New York, New York
10036, has been appointed as independent auditors for the Fund.

SHAREHOLDER APPROVAL

          The capitalized term "Shareholder Approval," as used in
this SAI means (1) the vote of 67% or more of the shares of that
Portfolio represented at a meeting at which more than 50% of the
outstanding shares are represented or (2) more than 50% of the
outstanding shares of that Portfolio, whichever is less.





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

     FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT AUDITORS

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

          The financial statements of AllianceBernstein Variable
Products Series Fund, Inc. for the fiscal year ended December 31,
2003 and the report of Ernst & Young LLP, the independent
auditors, are incorporated herein by reference to the Fund's
annual report. The annual report was filed with the Commission on
Form N-CSR on March 10, 2004. It is available without charge upon
request by calling AGIS at (800) 227-4618.





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

                           APPENDIX A:

         DESCRIPTION OF OBLIGATIONS ISSUED OR GUARANTEED
         BY U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES

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

          FEDERAL FARM CREDIT SYSTEM NOTES AND BONDS--are bonds
issued by a cooperatively owned nationwide system of banks and
associations supervised by the Farm Credit Administration, an
independent agency of the U.S. Government. These bonds are not
guaranteed by the U.S. Government.

          MARITIME ADMINISTRATION BONDS--are bonds issued and
provided by the Department of Transportation of the U.S.
Government and are guaranteed by the U.S. Government.

          FHA DEBENTURES--are debentures issued by the Federal
Housing Administration of the U.S. Government and are guaranteed
by the U.S. Government.

          GNMA CERTIFICATES--are mortgage-backed securities that
represent a partial ownership interest in a pool of mortgage
loans issued by lenders such as mortgage bankers, commercial
banks and savings and loan associations. Each mortgage loan
included in the pool is either insured by the Federal Housing
Administration or guaranteed by the Veterans Administration.

          FHLMC BONDS--are bonds issued and guaranteed by the
Federal Home Loan Mortgage Corporation.

          FNMA BONDS--are bonds issued and guaranteed by the
Federal National Mortgage Association.

          FEDERAL HOME LOAN BANK NOTES AND BONDS--are notes and
bonds issued by the Federal Home Loan Bank System and are not
guaranteed by the U.S. Government.

          STUDENT LOAN MARKETING ASSOCIATION (SALLIE MAE) NOTES
AND BONDS--are notes and bonds issued by the Student Loan
Marketing Association.

          Although this list includes a description of the
primary types of U.S. Government agency or instrumentality
obligations in which certain Portfolios of the Fund intend to
invest, Portfolios may invest in obligations of U.S. Government
agencies or instrumentalities other than those listed above.





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

                           APPENDIX B:

             FUTURES CONTRACTS AND OPTIONS ON FUTURES
                 CONTRACTS AND FOREIGN CURRENCIES

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

FUTURES CONTRACTS

          Portfolios of the Fund may enter into contracts for the
purchase or sale for future delivery of fixed-income securities
or foreign currencies, or contracts based on financial or stock
indices including any index of U.S. Government Securities,
Foreign Government Securities, corporate debt securities or
common stock. U.S. futures contracts have been designed by
exchanges which have been designated contracts markets by the
Commodity Futures Trading Commission ("CFTC"), and must be
executed through a futures commission merchant, or brokerage
firm, which is a member of the relevant contract market. Futures
contracts trade on a number of exchange markets, and, through
their clearing corporations, the exchanges guarantee performance
of the contracts as between the clearing members of the exchange.

          At the same time a futures contract is purchased or
sold, a Portfolio must allocate cash or securities as a deposit
payment (initial deposit). It is expected that the initial
deposit would be approximately 1 1/2%-5% of a contract's face
value. Daily thereafter, the futures contract is valued and the
payment of variation margin may be required, since each day the
Portfolio would provide or receive cash that reflects any decline
or increase in the contract's value.

          At the time of delivery of securities pursuant to such
a contract, adjustments are made to recognize differences in
value arising from the delivery of securities with a different
interest rate from that specified in the contract. In some (but
not many) cases, securities called for by a futures contract may
not have been issued when the contract was written.

          Although futures contracts by their terms call for the
actual delivery or acquisition of securities, in most cases the
contractual obligation is fulfilled before the date of the
contract without having to make or take delivery of the
securities. The offsetting of a contractual obligation is
accomplished by buying (or selling, as the case may be) on a
commodities exchange an identical futures contract calling for
delivery in the same month. Such a transaction, which is effected
through a member of an exchange, cancels the obligation to make
or take delivery of the securities. Since all transactions in the
futures market are made, offset or fulfilled through a
clearinghouse associated with the exchange on which the contracts
are traded, a Portfolio will incur brokerage fees when it
purchases or sells futures contracts.

INTEREST RATE FUTURES

          The purpose of the acquisition or sale of a futures
contract, in the case of a portfolio such as a Portfolio of the
Fund, which holds or intends to acquire fixed-income securities,
is to attempt to protect the Portfolio from fluctuations in
interest or foreign exchange rates without actually buying or
selling fixed-income securities or foreign currency. For example,
if interest rates were expected to increase, the Portfolio might
enter into futures contracts for the sale of debt securities.
Such a sale would have much the same effect as selling an
equivalent value of the debt securities owned by the Portfolio.
If interest rates did increase, the value of the debt securities
in the portfolio would decline, but the value of the futures
contracts to the Portfolio would increase at approximately the
same rate, thereby keeping the net asset value of the Portfolio
from declining as much as it otherwise would have. The Portfolio
could accomplish similar results by selling debt securities and
investing in bonds with short maturities when interest rates are
expected to increase. However, since the futures market is more
liquid than the cash market, the use of futures contracts as an
investment technique allows a Portfolio to maintain a defensive
position without having to sell its portfolio securities.

          Similarly, when it is expected that interest rates may
decline, futures contracts may be purchased to attempt to hedge
against anticipated purchases of debt securities at higher
prices. Since the fluctuations in the value of futures contracts
should be similar to those of debt securities, the Portfolio
could take advantage of the anticipated rise in the value of debt
securities without actually buying them until the market had
stabilized. At that time, the futures contracts could be
liquidated and the Portfolio could then buy debt securities on
the cash market. To the extent a Portfolio enters into futures
contracts for this purpose, the assets in the segregated asset
account maintained to cover the Portfolio's obligations with
respect to such futures contracts will consist of cash, cash
equivalents or high quality liquid debt securities (or, in the
case of the AllianceBernstein Americas Government Income
Portfolio, AllianceBernstein Global Dollar Government Portfolio
and AllianceBernstein Utility Income Portfolio, high grade liquid
debt securities) from its portfolio in an amount equal to the
difference between the fluctuating market value of such futures
contracts and the aggregate value of the initial and variation
margin payments made by the Portfolio with respect to such
futures contracts.

          The ordinary spreads between prices in the cash and
futures markets, due to differences in the nature of those
markets, are subject to distortions. First, all participants in
the futures market are subject to initial deposit and variation
margin requirements. Rather than meeting additional variation
margin requirements, investors may close futures contracts
through offsetting transactions which could distort the normal
relationship between the cash and futures markets. Second, the
liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced, thus
producing distortion. Third, from the point of view of
speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the
securities market. Therefore, increased participation by
speculators in the futures market may cause temporary price
distortions. Due to the possibility of distortion, a correct
forecast of general interest rate trends by the Adviser may still
not result in a successful transaction.

          In addition, futures contracts entail risks. Although a
Portfolio may believe that use of such contracts will benefit the
Portfolio, if the Adviser's investment judgment about the general
direction of interest rates is incorrect, the Portfolio's overall
performance would be poorer than if it had not entered into any
such contract. For example, if a Portfolio has hedged against the
possibility of an increase in interest rates which would
adversely affect the price of debt securities held in its
portfolio and interest rates decrease instead, the Portfolio will
lose part or all of the benefit of the increased value of its
debt securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such
situations, if the Portfolio has insufficient cash, it may have
to sell debt securities from its portfolio to meet daily
variation margin requirements. Such sales of bonds may be, but
will not necessarily be, at increased prices which reflect the
rising market. The Portfolio may have to sell securities at a
time when it may be disadvantageous to do so.

STOCK INDEX FUTURES

          A Portfolio may purchase and sell stock index futures
as a hedge against movements in the equity markets. There are
several risks in connection with the use of stock index futures
by a Portfolio as a hedging device. One risk arises because of
the imperfect correlation between movements in the price of the
stock index futures and movements in the price of the securities
which are the subject of the hedge. The price of the stock index
futures may move more than or less than the price of the
securities being hedged. If the price of the stock index futures
moves less than the price of the securities which are the subject
of the hedge, the hedge will not be fully effective but, if the
price of the securities being hedged has moved in an unfavorable
direction, the Portfolio would be in a better position than if it
had not hedged at all. If the price of the securities being
hedged has moved in a favorable direction, this advantage will be
partially offset by the loss on the index future. If the price of
the future moves more than the price of the stock, the Portfolio
will experience either a loss or gain on the future which will
not be completely offset by movements in the price of the
securities which are subject to the hedge. To compensate for the
imperfect correlation of movements in the price of securities
being hedged and movements in the price of the stock index
futures, a Portfolio may buy or sell stock index futures
contracts in a greater dollar amount than the dollar amount of
securities being hedged if the volatility over a particular time
period of the prices of such securities has been greater than the
volatility over such time period of the index, or if otherwise
deemed to be appropriate by the Adviser. Conversely, a Portfolio
may buy or sell fewer stock index futures contracts if the
volatility over a particular time period of the prices of the
securities being hedged is less than the volatility over such
time period of the stock index, or it is otherwise deemed to be
appropriate by the Adviser. It is also possible that, where a
Portfolio has sold futures to hedge its portfolio against a
decline in the market, the market may advance and the value of
securities held in the Portfolio may decline. If this occurred,
the Portfolio would lose money on the futures and also experience
a decline in value in its portfolio securities. However, over
time the value of a diversified portfolio should tend to move in
the same direction as the market indices upon which the futures
are based, although there may be deviations arising from
differences between the composition of the Portfolio and the
stocks comprising the index.

          Where futures are purchased to hedge against a possible
increase in the price of stock before a Portfolio is able to
invest its cash (or cash equivalents) in stocks (or options) in
an orderly fashion, it is possible that the market may decline
instead. If a Portfolio then concludes not to invest in stock or
options at that time because of concern as to possible further
market decline or for other reasons, the Portfolio will realize a
loss on the futures contract that is not offset by a reduction in
the price of securities purchased.

          In addition the possibility that there may be an
imperfect correlation, or no correlation at all, between
movements in the stock index futures and the portion of the
portfolio being hedged, the price of stock index futures may not
correlate perfectly with movement in the stock index due to
certain market distortions. Rather than meeting additional margin
deposit requirements, investors may close futures contracts
through offsetting transactions which could distort the normal
relationship between the index and futures markets. Secondly,
from the point of view of speculators, the deposit requirements
in the futures market are less onerous than margin requirements
in the securities market. Therefore, increased participation by
speculators in the futures market may also cause temporary price
distortions. Due to the possibility of price distortion in the
futures market, and because of the imperfect correlation between
the movements in the stock index and movements in the price of
stock index futures, a correct forecast of general market trends
by the investment adviser may still not result in a successful
hedging transaction over a short time frame.

          Positions in stock index futures may be closed out only
on an exchange or board of trade which provides a secondary
market for such futures. Although the Portfolios intend to
purchase or sell futures only on exchanges or boards of trade
where there appear to be active secondary markets, there is no
assurance that a liquid secondary market on any exchange or board
of trade will exist for any particular contract or at any
particular time. In such event, it may not be possible to close a
futures investment position, and in the event of adverse price
movements, a Portfolio would continue to be required to make
daily cash payments of variation margin. However, in the event
futures contracts have been used to hedge portfolio securities,
such securities will not be sold until the futures contract can
be terminated. In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses
on the futures contract. However, as described above, there is no
guarantee that the price of the securities will in fact correlate
with the price movements in the futures contract and thus provide
an offset on a futures contract.

          The Adviser intends to purchase and sell futures
contracts on the stock index for which it can obtain the best
price with due consideration to liquidity.

OPTIONS ON FUTURES CONTRACTS

          Portfolios of the Fund intend to purchase and write
options on futures contracts for hedging purposes. None of the
Portfolios is a commodity pool and all transactions in futures
contracts engaged in by a Portfolio must constitute bona fide
hedging or other permissible transactions in accordance with the
rules and regulations promulgated by the CFTC. The purchase of a
call option on a futures contract is similar in some respects to
the purchase of a call option on an individual security.
Depending on the pricing of the option compared to either the
price of the futures contract upon which it is based or the price
of the underlying debt securities, it may or may not be less
risky than ownership of the futures contract or underlying debt
securities. As with the purchase of futures contracts, when a
Portfolio is not fully invested it may purchase a call option on
a futures contract to hedge against a market advance due to
declining interest rates.

          The writing of a call option on a futures contract
constitutes a partial hedge against declining prices of the
security or foreign currency which is deliverable upon exercise
of the futures contract or securities comprising an index. If the
futures price at expiration of the option is below the exercise
price, a Portfolio will retain the full amount of the option
premium which provides a partial hedge against any decline that
may have occurred in the Portfolio's portfolio holdings. The
writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the security or
foreign currency which is deliverable upon exercise of the
futures contract or securities comprising an index. If the
futures price at expiration of the option is higher than the
exercise price, a Portfolio will retain the full amount of the
option premium which provides a partial hedge against any
increase in the price of securities which the Portfolio intends
to purchase. If a put or call option a Portfolio has written is
exercised, a Portfolio 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 futures positions, the
Portfolio's losses from existing options on futures may to some
extent be reduced or increased by changes in the value of
portfolio securities.

          The purchase of a put option on a futures contract is
similar in some respects to the purchase of protective put
options on portfolio securities. For example, the Portfolio may
purchase a put option on a futures contract to hedge the
Portfolio's portfolio against the risk of rising interest rates.

          The amount of risk a Portfolio assumes when it
purchases an option on a futures contract is the premium paid for
the option plus related transaction costs. In addition to the
correlation risks discussed above, the purchase of an option also
entails the risk that changes in the value of the underlying
futures contract will not be fully reflected in the value of the
option purchased.

OPTIONS ON FOREIGN CURRENCIES

          Portfolios of the Fund may purchase and write options
on foreign currencies for hedging purposes in a manner similar to
that in which futures contracts on foreign currencies, or forward
contracts, will be utilized. For example, a decline in the dollar
value of a foreign currency in which portfolio 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 Portfolios may purchase put options on the
foreign currency. If the value of the currency does decline, the
Portfolios will have the right to sell such currency for a fixed
amount in dollars and will 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
Portfolios may purchase call options thereon. 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 a Portfolio deriving
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, a Portfolio could sustain losses on
transactions in foreign currency options which would require it
to forego a portion or all of the benefits of advantageous
changes in such rates.

          Portfolios of the Fund may write options on foreign
currencies for the same types of hedging purposes. For example,
where a Portfolio anticipates a decline in the dollar value of
foreign currency 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
will be offset by the amount of the premium received.

          Similarly, instead of purchasing a call option to hedge
against an anticipated increase in the U.S. Dollar cost of
securities to be acquired, a Portfolio could write a put option
on the relevant currency which, if rates move in the manner
projected, will expire unexercised and allow the Portfolio 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 Portfolio would 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, a Portfolio also may be required to forego all or a
portion of the benefits which might otherwise have been obtained
from favorable movements in exchange rates.

          Portfolios of the Fund intend to write covered call
options on foreign currencies. A call option written on a foreign
currency by a Portfolio is covered if the Portfolio owns the
underlying foreign currency covered by the call or has an
absolute and immediate right to acquire that foreign currency
without additional cash consideration (or for additional cash
consideration held in a segregated account by the Fund's
custodian) upon conversion or exchange of other foreign currency
held in its portfolio. A call option is also covered if the
Portfolio has a call on the same foreign currency and in the same
principal amount as the call written where the exercise price of
the call held (a) is equal to or less than the exercise price of
the call written or (b) is greater than the exercise price of the
call written if the difference is maintained by the Portfolio in
cash, U.S. Government Securities and other high grade liquid debt
securities in a segregated account with the Fund's custodian.

          Portfolios of the Fund also intend to write call
options on foreign currencies that are not covered for
cross-hedging purposes. A call option on a foreign currency is
for cross-hedging purposes if it is not covered, but is designed
to provide a hedge against a decline in the U.S. Dollar value of
a security which a Portfolio owns or has the right to acquire and
which is denominated in the currency underlying the option due to
an adverse change in the exchange rate. In such circumstances,
the Portfolio collateralizes the option by maintaining in a
segregated account with the Fund's custodian, cash or U.S.
Government Securities or other high quality liquid debt
securities (or, in the case of the AllianceBernstein Americas
Government Income Portfolio and the AllianceBernstein Utility
Income Portfolio, high grade liquid debt securities) in an amount
not less than the value of the underlying foreign currency in
U.S. Dollars marked to market daily.

ADDITIONAL RISKS OF OPTIONS ON FUTURES CONTRACTS,
FORWARD CONTRACTS AND OPTIONS ON FOREIGN CURRENCIES

          Unlike transactions entered into by a Portfolio in
futures contracts, options on foreign currencies and forward
contracts are not traded on contract markets regulated by the
CFTC or (with the exception of certain foreign currency options)
by the Commission. To the contrary, such instruments are 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 regulation by the
Commission. 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
Commission, 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 a
Portfolio to liquidate open positions at a profit prior to
exercise or expiration, or to limit losses in the event of
adverse market movements.

          The purchase and sale of exchange-traded foreign
currency options, however, 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 United States of data on which to make trading
decisions, (iii) delays in a Portfolio's ability to act upon
economic events occurring in foreign markets during nonbusiness
hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin
requirements than in the United States, and (v) lesser trading
volume.





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

                           APPENDIX C:

                             OPTIONS

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

          Portfolios of the Fund will only write covered put and
call options, unless such options are written for cross-hedging
purposes. The manner in which such options will be deemed covered
is described in the Prospectus under the heading "Other
Investment Policies and Techniques -- Options."

          The writer of an option may have no control over when
the underlying securities must be sold, in the case of a call
option, or purchased, in the case of a put option, since with
regard to certain options, the writer may be assigned an exercise
notice at any time prior to the termination of the obligation.
Whether or not an option expires unexercised, the writer retains
the amount of the premium. This amount, of course, may, in the
case of a covered call option, be offset by a decline in the
market value of the underlying security during the option period.
If a call option is exercised, the writer experiences a profit or
loss from the sale of the underlying security. If a put option is
exercised, the writer must fulfill the obligation to purchase the
underlying security at the exercise price, which will usually
exceed the then market value of the underlying security.

          The writer of a listed option that wishes to terminate
its obligation may effect a closing purchase transaction. This is
accomplished by buying an option of the same series as the option
previously written. The effect of the purchase is that the
writer's position will be cancelled by the clearing corporation.
However, a writer may not effect a closing purchase transaction
after being notified of the exercise of an option. Likewise, an
investor who is the holder of a listed option may liquidate its
position by effecting a closing sale transaction. This is
accomplished by selling an option of the same series as the
option previously purchased. There is no guarantee that either a
closing purchase or a closing sale transaction can be effected.

          Effecting a closing transaction in the case of a
written call option will permit the Portfolio to write another
call option on the underlying security with either a different
exercise price or expiration date or both, or in the case of a
written put option will permit the Portfolio to write another put
option to the extent that the exercise price thereof is secured
by deposited cash or short-term securities. Also, effecting a
closing transaction will permit the cash or proceeds from the
concurrent sale of any securities subject to the option to be
used for other Portfolio investments. If the Portfolio desires to
sell a particular security from its portfolio on which it has
written a call option, it will effect a closing transaction prior
to or concurrent with the sale of the security.

          A Portfolio will realize a profit from a closing
transaction if the price of the transaction is less than the
premium received from writing the option or is more than the
premium paid to purchase the option; the Portfolio will realize a
loss from a closing transaction if the price of the transaction
is more than the premium received from writing the option or is
less than the premium paid to purchase the option. Because
increases in the market price of a call option will generally
reflect increases in the market price of the underlying security,
any loss resulting from the repurchase of a call option is likely
to be offset in whole or in part by appreciation of the
underlying security owned by the Portfolio.

          An option position may be closed out only where there
exists a secondary market for an option of the same series. If a
secondary market does not exist, it might not be possible to
effect closing transactions in particular options with the result
that the Portfolio would have to exercise the options in order to
realize any profit. If the Portfolio is unable to effect a
closing purchase transaction in a secondary market, it will not
be able to sell the underlying security until the option expires
or it delivers the underlying security upon exercise. Reasons for
the absence of a liquid secondary market include the following:
(i) there may be insufficient trading interest in certain
options, (ii) restrictions may be imposed by a national
securities exchange (Exchange) on opening transactions or closing
transactions or both, (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or
series of options or underlying securities, (iv) unusual or
unforeseen circumstances may interrupt normal operations on an
Exchange, (v) the facilities of an Exchange or the Options
Clearing Corporation may not at all times be adequate to handle
current trading volume, or (vi) one or more Exchanges could, for
economic or other reasons, decide or be compelled at some future
date to discontinue the trading of options (or a particular class
or series of options), in which event the secondary market on
that Exchange (or in that class or series of options) would cease
to exist, although outstanding options on that Exchange that had
been issued by the Options Clearing Corporation as a result of
trades on that Exchange would continue to be exercisable in
accordance with their terms.

          A Portfolio may write options in connection with
buy-and-write transactions; that is, the Portfolio may purchase a
security and then write a call option against that security. The
exercise price of the call the Portfolio determines to write will
depend upon the expected price movement of the underlying
security. The exercise price of a call option may be below
(in-the-money), equal to (at-the-money) or above
(out-of-the-money) the current value of the underlying security
at the time the option is written. Buy-and-write transactions
using in-the- money call options may be used when it is expected
that the price of the underlying security will remain flat or
decline moderately during the option period. Buy-and-write
transactions using at-the-money call options may be used when it
is expected that the price of the underlying security will remain
fixed or advance moderately during the option period.
Buy-and-write transactions using out-of-the-money call options
may be used when it is expected that the premiums received from
writing the call option plus the appreciation in the market price
of the underlying security up to the exercise price will be
greater than the appreciation in the price of the underlying
security alone. If the call options are exercised in such
transactions, the Portfolio's maximum gain will be the premium
received by it for writing the option, adjusted upwards or
downwards by the difference between the Portfolio's purchase
price of the security and the exercise price. If the options are
not exercised and the price of the underlying security declines,
the amount of such decline will be offset in part, or entirely,
by the premium received.

          The writing of covered put options is similar in terms
of risk/return characteristics to buy-and-write transactions. If
the market price of the underlying security rises or otherwise is
above the exercise price, the put option will expire worthless
and the Portfolio's gain will be limited to the premium received.
If the market price of the underlying security declines or
otherwise is below the exercise price, the Portfolio may elect to
close the position or take delivery of the security at the
exercise price and the Portfolio's return will be the premium
received from the put option minus the amount by which the market
price of the security is below the exercise price.
Out-of-the-money, at-the-money, and in-the-money put options may
be used by the Portfolio in the same market environments that
call options are used in equivalent buy-and-write transactions.

          A Portfolio may purchase put options to hedge against a
decline in the value of its portfolio. By using put options in
this way, the Portfolio will reduce any profit it might otherwise
have realized in the underlying security by the amount of the
premium paid for the put option and by transaction costs.

          A Portfolio may purchase call options to hedge against
an increase in the price of securities that the Portfolio
anticipates purchasing in the future. The premium paid for the
call option plus any transaction costs will reduce the benefit,
if any, realized by the Portfolio upon exercise of the option,
and, unless the price of the underlying security rises
sufficiently, the option may expire worthless to the Portfolio.





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

                           APPENDIX D:

                   ADDITIONAL INFORMATION ABOUT
     THE UNITED KINGDOM, JAPAN, CANADA, MEXICO AND ARGENTINA

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

          The information in this section is based on material
obtained by the Fund from various United Kingdom, Japanese,
Canadian, Mexican and Argentine governmental and other sources
believed to be accurate but has not been independently verified
by the Fund or the Adviser. It is not intended to be a complete
description of the United Kingdom, Japan, Canada, Mexico or
Argentina, their economies or the consequences of investing in
United Kingdom or Japanese securities, or Canadian Government,
Mexican Government or Argentine Government Securities.

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

         ADDITIONAL INFORMATION ABOUT THE UNITED KINGDOM

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

          The United Kingdom of Great Britain and Northern
Ireland is located off the continent of Europe in the Atlantic
Ocean. Its population is approximately 60 million.

GOVERNMENT

          The United Kingdom is a constitutional monarchy. Queen
Elizabeth II has been the head of state since she acceded to the
throne in 1952. The monarchy was established in 1066. The
monarch's power has eroded over the centuries, but the monarch
retains the power to call and dissolve Parliament, to give assent
to bills passed by Parliament, to appoint the Prime Minister and
to sign treaties or declare war. In practice, most of these acts
are performed by government ministers, and supreme legislative
authority now resides in the Parliament. Parliament, the
bicameral legislature, consists of the House of Commons and the
House of Lords. Acts of Parliament passed in 1911 and 1949 limit
the powers of the House of Lords to prevent bills passed by the
House of Commons from becoming law. The main purpose of the House
of Lords is now to revise and amend laws passed by the House of
Commons. The future role and composition of the House of Lords is
the subject of a December 1999 report of the Royal Commission on
the Reform of the House of Lords, whose recommendations are under
consideration by a joint committee of the House of Commons and
the House of Lords. An initial step in the reform effort was
taken in November 1999, when hereditary peers lost their right to
sit and vote in the House of Lords. No further steps have been
taken in this regard. The national government is headed by the
Prime Minister who is appointed by the monarch on the basis of
ability to form a government with the support of the House of
Commons.

POLITICS

          Since World War II the national government has been
formed by either the Conservative Party or the Labour Party. The
Conservative Party under the leadership of Margaret Thatcher
achieved a parliamentary majority and formed a new government in
May 1979. In June 1983 and again in June 1987, the Conservative
Party under her leadership was reelected. The Party pursued
policies of reducing state intervention in the economy, reducing
taxes, de-regulating business and industry and privatizing state-
owned enterprises. It also displayed an antipathy toward the
European Union. In November 1990, Mrs. Thatcher faced a challenge
for the leadership of the party from Michael Heseltine, one of
her former cabinet ministers. The opposition proposed changes in
policy, including increased government intervention in the
economy and a less confrontational approach toward the European
Union. The two wings of the Conservative Party looked for someone
who could unite the Party and elected John Major as its leader
and, by virtue of the Conservative Party majority, to the post of
Prime Minister.

          Mr. Major led the Conservative Party to its fourth
successive general election victory in April 1992, after which
time, the popularity of both Mr. Major and the Conservative Party
declined. In April 1995, the Conservative Party won only 11% of
the vote in Scotland local elections, which resulted in
Conservative Party control of only 81 council seats out of 1,161.
It won only 25% of the vote in local council elections in England
and Wales in May 1995. In July 1995, Mr. Major won a vote of
confidence with his reelection as leader of the Conservative
Party. Despite Mr. Major's strengthened position within the
Conservative Party, the Party continued to suffer setbacks.
Within two weeks of Mr. Major's victory, the Conservative Party
lost its fifth by-election since the general election of 1992. By
1996, his overall majority was reduced to one. In the next
general election, on May 1, 1997, the Labour Party gained a
substantial majority in the House of Commons as Mr. Major and the
Conservative Party were defeated by the Labour Party led by Tony
Blair, who subsequently was appointed Prime Minister. The Labour
Party and Tony Blair achieved another victory in the next general
election, which occurred on June 7, 2001. The Labour Party now
holds 410 of the 659 seats in the House of Commons. The 2001
election results marked the first time in British political
history that the Labour Party secured re-election; it was also
the largest majority ever achieved by a governing party entering
its second term. The next general election is required by law to
occur no later than June 2006.

ECONOMY

          The United Kingdom's economy is tied with France for
the position of fourth largest economy in the Organization for
Economic Cooperation and Development, behind the United States,
Japan and Germany. Its economy maintained an average annual
growth rate of 3.6% in real growth domestic product ("GDP") terms
from 1982 through 1988; and from 1989 through 1993, the United
Kingdom's real GDP annual growth rate was 1.0%. The economy has
continued to experience the moderate growth that began in 1993,
after the 1990-1992 recession, the longest period of expansion
since records began. In recent years, real GDP has grown by 2.9%
(1998), 2.8% (1999), 3.8% (2000), 2.1% (2001), 1.7% (2002) and
1.9% (2003).

          Since the early 1990s, the United Kingdom's economy has
had moderate inflation, fluctuating within a narrow range. The
inflation rate during 2003 (as measured by the HIPC, the European
Union's ("EU") harmonized index of consumer prices) was an
estimated 1.4%.

          The sluggish growth in the United Kingdom's
manufacturing sector since the 1990-1992 recession continued the
trend toward the decreased importance of manufacturing in the
economy. Manufacturing accounted for just 18.1% of GDP in 2002
compared with 36.5% in 1960. As the United Kingdom's
manufacturing industry has declined in importance, the service
industry, including financial services, has increased in
importance. The service industries' share of GDP has increased to
almost two-thirds from 45% in 1960.

          Employment has been shifting from manufacturing to the
service industry, a trend expected to continue for the
foreseeable future. Overall, unemployment (as measured by the
Labour Force Survey) has continued to fall from a post-recession
high of 10.6% in January 1993 to an average of 5.0% in 2003.

          Foreign trade remains an important part of the United
Kingdom's economy. In 2002, exports of goods and services
represented 26.1% of GDP and imports represented 29.1% of GDP.
The United Kingdom has historically been an exporter of
manufactured products and an importer of food and raw materials,
but there is a growing trend toward manufactured goods forming a
larger proportion of imports. The decline of the United Kingdom's
manufacturing base has resulted in the emergence of a deficit on
trade in manufactures, previously in surplus, since the early
1980s. Currently the United Kingdom is a net importer of
foodstuffs and raw materials other than fuels, as well as of
clothing and footwear, electrical machinery and motor vehicles,
and a net exporter of petroleum and petroleum-related products,
chemical products, tobacco, beverages and mechanical machinery.
For every year since 1982, the United Kingdom has been a net
importer of goods. The relative importance of the United
Kingdom's trading partners has also shifted, with the EU having
become a more significant trading partner of the United Kingdom.
In 2002, the other members of the EU accounted for 58.7% of all
exports and 53.7% of its imports, as compared to 43.3% and 41.3%,
respectively, in 1980. In 2002, the United Kingdom's largest
trading partners with respect to exports and imports were the
United States and Germany, respectively.

          Historically, the United Kingdom's current account
consisted of relatively small trade deficits, sometimes
outweighed by surpluses on invisibles (services, interest,
dividends, profits and transfers). Since 1980, several important
changes have taken place with regard to the United Kingdom's
trading position. Those include the increased importance to the
economy of oil exports from the North Sea, the change from being
a net exporter to a net importer of goods and the diminishing
surpluses from invisibles. These developments led to a balance of
payments deficit, which has continued through 2003 with the
exception of 1997, when the balance of payments moved into
surplus.

          The United Kingdom's general government budget balance
was well below the permitted level for countries permitted to
participate in the Economic and Monetary Union ("EMU") beginning
in January 1999. Although the United Kingdom met the EMU's
eligibility criteria, the government chose not to participate in
the EMU when it was launched in January 1999. Further, the
government announced that it would not take any action before a
referendum was held after the next general election, which
occurred on June 7, 2001. Nonetheless, the government submitted a
report to the European Commission detailing the steps the
government is taking to prepare the United Kingdom for joining
the EMU at a later date in the event it decides to do so. The
issue of the United Kingdom's membership in the EMU has become
very contentious in the United Kingdom, however, and the
possibility of a referendum before the next general election has
become a remote one.

          While the United Kingdom's public finances are still
among the strongest in the EU, they have deteriorated over the
past several years as government borrowing has increased to meet
rising expenditures. The increased public expenditures could
jeopardize the government's adherence to two self-imposed rules -
that the government should borrow to invest, but not to fund
current spending, and that public sector net debt ("PSND") should
not be more than 40% of GDP. In 2001/2002 the PSND was 30% of
GDP, safely within the targeted limit and the lowest level in the
G-7 group or industrialized nations. It is anticipated that the
government will have to either raise taxes or reduce planned
expenditures in order to abide by the first rule.

MONETARY AND BANKING SYSTEM

          The central bank of the United Kingdom is the Bank of
England. Its main functions are to advise on the formulation and
execution of monetary policy, to supervise banking operations in
the United Kingdom, to manage the domestic currency, and, as
agent for the Government, the country's foreign exchange
reserves. Additionally, shortly after taking office in 1997,
Prime Minister Blair vested responsibility for setting interest
rates in a new Monetary Policy Committee headed by the Bank of
England, as opposed to the Treasury.

          The City of London is one of the world's major
financial centers. It has the greatest concentration of banks and
the largest insurance market in the world. It is estimated that
United Kingdom insurers handle approximately 23% of the general
insurance business placed in the international market. Financial
and business services currently form approximately 27.4% of the
country's GDP.

          The currency unit of the United Kingdom is the Pound
Sterling. As trade with the EU has grown, the main rate of
exchange in the past 20 years has been that against the Deutsche
Mark (and from 1999, the Euro), rather than the U.S. Dollar.
Between 1996 and 2000, the Pound appreciated strongly both
against the U.S. Dollar and the Deutsche Mark/Euro, stabilizing
slightly in 2001. Since the middle of 2000, the Pound has traded
in a narrower range against the Euro than the U.S. Dollar. At the
end of 2002 and 2003, the exchange rate between the U.S. Dollar
and the Pound was 1.50 and 1.79, respectively, and the exchange
rate between the Euro and the Pound was 1.53 and 1.42,
respectively.

          On January 1, 1999 eleven member countries of the EU
(Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, The Netherlands, Portugal and Spain) adopted the Euro
as their common currency. On January 1, 2001 Greece became the
twelfth country to adopt the Euro as its currency. In the
transition period of January 1, 1999 to January 1, 2002, the
national currencies of these participating countries (e.g., the
Deutsche Mark and the French Franc) were subdivisions of the
Euro. On January 1, 2002, Euro banknotes and coins were put into
general circulation in the twelve participating countries. As of
February 28, 2002, the old national currencies of all twelve
countries were withdrawn from circulation and the Euro became the
exclusive currency in those countries. The ECU, which was not a
true currency in its own right, but rather a unit of account
whose value was tied to its underlying constituent currencies,
ceased to exist as of January 1, 1999, at which time all ECU
obligations were converted into Euro obligations at a 1:1
conversion rate.

THE LONDON STOCK EXCHANGE

          The London Stock Exchange ("LSE") is both the national
stock exchange for the United Kingdom and the world's leading
marketplace for the trading of international equities. The LSE
provides a secondary market for trading in more than 10,000
securities. It offers markets for domestic securities (securities
issued by companies in the United Kingdom or Ireland), foreign
equities, United Kingdom gilts (securities issued by the national
government), bonds or fixed interest stocks (usually issued by
companies or local authorities) and options. As of December 31,
2003, foreign equities constituted approximately 59% and United
Kingdom equities constituted approximately 41% of the market
value of all LSE listed and quoted equity securities. At the end
of 2003, the LSE was the world's third largest stock exchange in
terms of market value, the New York Stock Exchange being the
largest and the Tokyo Stock Exchange being the second largest.

          The LSE comprises different markets. In addition to the
market for officially-listed securities, the LSE includes a
market created in 1995 for smaller and newer companies known as
AIM. As of December 31, 2003, 694 companies with an aggregate
market value of 18.4 billion Pounds were traded on AIM. As of
December 31, 2003, the market value of the securities traded on
AIM was less than 1% of the market value of the securities
officially listed on the LSE. Another new market, known as
techMARK, was launched by the LSE on November 4, 1999 for
innovative technology companies. As of December 31,2003, 178
companies with an aggregate market value of 296.9 billion Pounds
were traded on techMARK.

          The LSE runs markets for trading securities by
providing a market structure, regulating the operation of the
markets, supervising the conduct of member firms dealing in the
markets, publishing company news and providing trade confirmation
and settlement services. The domestic market is based on the
competing marketmaker system. The bid and offer prices are
distributed digitally via the Exchange's automated price
information system, SEAQ (Stock Exchange Automated Quotations),
which provides widespread dissemination of the securities prices
for the United Kingdom equity market. Throughout the trading day,
marketmakers display their bid (buying) and offer (selling)
prices and the maximum transaction size to which these prices
relate. These prices are firm to other LSE member firms, except
that the prices for larger transactions are negotiable.

          Marketmakers in the international equity market display
their quotes on SEAQ International. The system operates in a
manner similar to the domestic SEAQ, but is divided into 40
separate country sectors, of which 15 are developing markets
sectors.

          On October 20, 1997 the LSE launched the new Stock
Exchange Electronic Trading Service, an initiative that will
improve efficiency and lower share trading costs, and is expected
to attract more volume and thus increase liquidity.

          On July 7, 1998 the LSE and its German counterpart, the
Deutsche Borse, unexpectedly announced their intention to form a
strategic alliance under which members of one exchange will be
members of the other. While the first phase of the proposed
alliance began in January 1999, the LSE and the Deutsche Borse
still faced numerous issues, including agreement on common
regulations and promulgation by their respective governments of a
common tax regime for share trading. In September 2000, just
prior to a vote of shareholders and amid growing concerns about
regulatory matters and national and cultural differences,
opposition from retail traders and a hostile bid by a rival
exchange, the planned merger was called off. It is unclear
whether there will be efforts in the future to establish a
pan-European equity market.

          On November 23, 1999 the LSE, together with the Bank of
England and CREST (the paperless share settlement system through
which trades executed on the LSE's markets can be settled),
announced proposals for the United Kingdom's equity and corporate
debt markets to move from T+5 to T+3 settlement starting in
February 2001.

          Sector Analysis of the LSE. The LSE's domestic and
foreign securities include a broad cross-section of companies
involved in many different industries. In 2003, the five largest
industry sectors by turnover among domestic securities were banks
with 14.2%, telecommunications with 10.5%, oil and gas with 8.3%,
pharmaceuticals with 7.7% and media/entertainment with 6.6%. In
2003, the five largest country sectors by market value among
listed and SEAQ International quoted securities were the United
States with 20.9% of the aggregate market value of listed and
SEAQ International quoted securities, France with 12.1%, Germany
with 11.0%, Japan with 10.2% and The Netherlands with 8.1%.

          Market Growth of the LSE. LSE market value and the
trading volume have increased dramatically since the end of 1990.
In 2003, 820.3 billion domestic shares and 794.3 billion foreign
shares were traded as compared with 155.4 billion and 34.8
billion, respectively, in 1990. At the end of 2003, the market
value of listed domestic companies and foreign companies
increased to 1,877.0 billion Pounds and 1759.1 billion Pounds
from 450.5 billion Pounds and 1,124.1 billion Pounds,
respectively, at the end of 1990.

          Market Performance of the LSE. The FT-SE 100 is an
index that consists of the 100 largest United Kingdom companies.
The FT-SE 100 was introduced by the LSE in cooperation with The
Financial Times and the Institute and Faculty of Actuaries in
1984. As measured by the FT-SE 100, the performance of the 100
largest companies reached a record high of 6930.2 on December 30,
1999. On December 29, 2000, the FT-SE 100 closed at 6222.5; on
December 31, 2001, the FT-SE 100 closed at 5217.4; on December
31, 2002, the FT-SE 100 closed at 3940.4; and on December 31,
2003, the FT-SE 100 closed at 4476.9.

REGULATION OF THE UNITED KINGDOM FINANCIAL SERVICES INDUSTRY

          The principal securities law in the United Kingdom is
the Financial Services Act. The Financial Services Act, which
became law in November 1986, established a new regulatory system
for the conduct of investment businesses in the United Kingdom.
Most of the statutory powers under the Act were transferred to
the Securities and Investments Board ("SIB"), a designated agency
created for this purpose. The SIB was given wide-ranging
enforcement powers and was made accountable to Parliament through
the Treasury. A system of self regulating organizations ("SROs"),
which regulate their members, was made accountable to the SIB.
There are three SROs covering the financial market, including the
Securities and Futures Authority which is responsible for
overseeing activities on the Exchange. The other SROs are the
Investment Management Regulatory Organization and the Personal
Investment Authority. In 1988, it became illegal for any firm to
conduct business without authorization from the SRO responsible
for overseeing its activities. In addition, Recognized Investment
Exchanges ("RIEs"), which include the London Stock Exchange of
London, the London International Financial Futures and Options
Exchange, the London Commodities Exchange, the International
Petroleum Exchange of London, the London Metal Exchange and the
London Securities and Derivatives Exchange were made accountable
to the SIB. Recognition as an RIE exempts the exchange (but not
its members) from obtaining authorization for actions taken in
its capacity as an RIE. To become an RIE, an exchange must
satisfy the SIB that it meets various prerequisites set out in
the Act, including having effective arrangements for monitoring
and enforcing compliance with its rules. Recognized Professional
Bodies ("RPBs") supervise the conduct of lawyers, actuaries,
accountants and some insurance brokers. Together the SROs, RIEs
and RPBs provide the framework for protection for investors and
integrity of the markets.

          On May 20, 1997 the newly installed Labour government
announced a proposed major restructuring of the regulation and
supervision of the financial services industry in the United
Kingdom. The main feature of the restructuring plan was to
transfer regulatory authority over banks from the Bank of England
to an expanded SIB, which has been named the Financial Services
Authority (FSA). In addition, the plan called for the merger of
the three SROs into the FSA. The transfer of banking supervision
from the Bank of England to the FSA was formally implemented on
June 1, 1998. The Financial Services and Markets Act, legislation
implementing the proposed consolidation of the SROs into the FSA,
became fully implemented on December 1, 2001. The Labour
government has also taken measures to strengthen corporate
governance standards.

          The European Union's Investment Services Directive
("ISD") provides the framework for a single market in financial
services in Europe. The ISD allows authorized firms to provide
investment services in other EU member states on a cross-border
basis without the need for separate authorization in the host
state. Revisions to the ISD are currently under consideration.

          Basic restrictions on insider dealing in securities are
contained in the Company Securities Act of 1985. The Financial
Services Act provides guidelines for investigations into insider
dealing under the Criminal Justice Act of 1993 and penalties for
any person who fails to cooperate with such an investigation. In
addition, the Financial Services Act introduced new listing and
disclosure requirements for companies.

UNITED KINGDOM FOREIGN EXCHANGE AND INVESTMENT CONTROLS

          The United Kingdom has no exchange or investment
controls, and funds and capital may be moved freely in and out of
the country. Exchange controls were abolished in 1979. As a
member of the European Union, the United Kingdom applies the
European Union's common external tariff.





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

                ADDITIONAL INFORMATION ABOUT JAPAN

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

          Japan, located in eastern Asia, consists of four main
islands: Hokkaido, Honshu, Kyushu and Shikoku, and many small
islands. Its population is approximately 127.5 million.

GOVERNMENT

          The government of Japan is a representative democracy
whose principal executive is the Prime Minister. Japan's
legislature (known as the Diet) consists of two houses, the House
of Representatives (the lower house) and the House of Councillors
(the upper house).

POLITICS

          From 1955 to 1993, Japan's government was controlled by
the Liberal Democratic Party (the "LDP"), the major conservative
party. Since 1993, Japan's political scene has been very fluid,
with six different governments and ten prime ministers. Although
the LDP has been unable to gain the majority of either house of
the Diet and has therefore had to form coalitions with other
parties to maintain its position of governance, it remains by far
Japan's largest party and continues to dominate Japanese
politics. The current Prime Minister is Junichiro Koizumi, who
was elected by the LDP in April 2001 to replace Yoshiro Mori, who
had become one of Japan's most unpopular post-war prime
ministers. Prime Minister Koizumi swept the LDP to an
overwhelming victory in the July 2001 House of Councillors
election, winning 65 of the 121 seats at stake. The LDP currently
governs in a formal coalition with the New Komeito Party. The
coalition currently holds 276 of the 480 seats in the House of
Representatives and 139 of the 247 seats in the House of
Councillors. The opposition is dominated by the new Minshuto
Party (Democratic Party of Japan), which was established in 1998
by various opposition groups and parties. The next election
(House of Councillors) is required by law to occur no later than
June 2004.

ECONOMY

          Japan altered its calculation of GDP in November 2000
and restated historic data accordingly. As restated, Japan's real
GDP grew by 1.8% in 1997, contracted by 1.2% in 1998, grew by
0.2%, 2.1% and 0.6% in 1999, 2000 and 2001, respectively, and
contracted by 0.2% in 2002. During 2003, Japan's real GDP grew by
2.7%. Inflation, as measured by the consumer price index,
remained low during most of the 1990s, but during the last
several years Japan has experienced deflation of -0.3% in 1999,
- -0.7% in 2000 and 2001 and -0.9% in 2002. The consumer price
index averaged -0.3% in 2003. Consumer demand has been stagnant
and is expected to remain stagnant for the foreseeable future.
Unemployment is at its highest level since the end of World War
II, rising to 5.4% in 2002. Although high for Japan, unemployment
remains low by the standards of many other developed countries.

          Japan's post World War II reliance on heavy industries
has shifted to higher technology products assembly and, most
recently, to automobile, electrical and electronic production.
Japan's success in exporting its products has generated sizable
trade surpluses. While the U.S. remains Japan's most important
single trading partner, accounting for 24.6% of Japan's exports
and 15.4% of its imports in 2003, other Asian countries have
become important export markets as well, accounting for 32.5% of
all exports in 2003. Since the early 1980s, Japan's relations
with its trading partners have been difficult, partly due to the
concentration of Japanese exports in products such as
automobiles, machine tools and semiconductors and the large trade
surpluses resulting therefrom, and an overall trade imbalance as
indicated by Japan's balance of payments. Japan's overall trade
surplus for 1994 was at the time the largest in its history,
amounting to almost $120billion. By 1996, Japan's overall trade
surplus had decreased to $62 billion. Although the overall trade
surplus subsided for the next several years, it reached $123
billion in 1999. Japan recorded an overall trade surplus of $106
billion in 2003. Japan remains the largest creditor nation and a
significant donor of foreign aid.

          Japan's merchandise trade surpluses with the U.S. have
historically been high and have given rise to numerous incidents
of political conflict between the two countries. On October 1,
1994, the U.S. and Japan reached an agreement with respect to
trade in insurance, glass and medical and telecommunications
equipment. In June 1995, the two countries agreed in principal to
increase Japanese imports of American automobiles and automotive
parts. These and other agreements, however, have not been
successful in addressing Japan's trade surplus with the U.S. In
October 2001, the U.S. and Japan agreed to replace the 1995
automobile pact, a move that is viewed as a major step toward
improving U.S. - Japan auto trade. Other current sources of
tension between the two countries are disputes in connection with
trade in steel, semiconductors and photographic supplies,
deregulation of the Japanese insurance market, a dispute over
aviation rights and access to Japanese ports. It is expected that
the friction between the United States and Japan with respect to
trade issues will continue for the foreseeable future.

          In recent years, Japan's two-way trade with China has
grown rapidly. In 2003, China was Japan's second largest export
market, accounting for 12% of total merchandise export revenue,
compared to 5% in 1994. Since 2002, China has overtaken the
United States as the largest supplier of imported goods. In 2003,
China accounted for 19.7% of Japan's total import bill.

          After achieving one of the world's highest economic
growth rates between the 1960s and 1980s, by the early 1990s the
economy had slowed dramatically when the "bubble economy"
collapsed and stock and real estate prices plummeted. The
collapse of asset prices in 1990-97 left Japan with cumulative
losses of nearly $10 trillion, or roughly the equivalent of two
years of national output. The government produced ten fiscal
stimulus packages in the 1990s worth more than $1 trillion that
contained public works spending and tax cuts. None of these
stimulus packages have been successful in stimulating the
economy. Shortly after taking office in April 2001, Prime
Minister Koizumi announced the outlines of his reform agenda. In
a departure from previous economic packages, his plan made no
reference to stimulating growth through government spending.
Rather, his plan stressed the need to rid Japan's banks of bad
loans before real growth can return, setting a timetable of 2-3
years to solve the problem. The plan called for strengthening the
Resolution & Collection Corporation and adopting some programs
utilized by the U.S. in its resolution of the savings-and-loan
crisis in the early 1990s, such as securitizing bad loans.
Although Prime Minister Koizumi enjoys widespread popularity, he
has faced considerable political opposition and has had
difficulty achieving any significant progress in implementing his
reform agenda.

          One of the most serious consequences of the fall in
asset prices since the early 1990s has been the pressure placed
on Japan's financial institutions, many of which lent heavily to
real-estate developers and construction companies during the
1980s. The fall in land prices, together with the economic
slowdown, left Japanese banks saddled with a large amount of bad
loans. In June 1996, six bills designed to address the large
amount of bad debt in the banking system were passed by the Diet,
but the difficulties worsened. By the end of the 1997/98 fiscal
year, the government estimated that the banking system's bad
loans totaled 87.5 trillion Yen (approximately $600 billion), or
11% of outstanding bank loans.

          On December 17, 1997, in the wake of the collapse in
the previous month of one of Japan's 20 largest banks, the
government announced a proposal to strengthen the banks by means
of an infusion of public funds and other measures. In addition,
the imposition of stricter capital requirements and other
supervisory reforms scheduled to go into effect in April 1998
were postponed. Subsequent to the December 1997 proposals, the
government proposed a series of additional proposals,
culminating, after vigorous political debate, in a set of laws
that was approved by the Diet in October 1998. The new laws made
$508 billion in public funds available to increase the capital of
Japan's banks, to guarantee depositors' accounts and to
nationalize the weakest banks. On October 23, 1998, the Long-Term
Credit Bank of Japan, Ltd., one of Japan's 19 largest banks,
became the first Japanese bank to be nationalized pursuant to the
new laws. On December 11, 1998, the Nippon Credit Bank, Ltd.
became the second Japanese bank to be nationalized pursuant to
the new laws. Since then, four additional banks have been
nationalized. These laws did not achieve their intended effect.
In exchange for the infusion of public money, the banks were
encouraged to undertake certain structural reforms to make them
more profitable. These reforms were not undertaken by the banks,
nor was the government very aggressive in encouraging them. As a
result, the stock of bad debt continued to grow. As of March
2002, the government estimated the amount of bad debt to be 43.2
trillion Yen. Private estimates ranged from 100 to 250 trillion
Yen, or nearly 50% of GDP. As a result of additional reforms and
pressure from the government, as well as a recovering economy,
the situation has begun to improve. At the end of March 2003, the
amount of bad debt stood at 35.3 trillion Yen (US$304 billion),
as estimated by the government. In April 2003, the government
approved the launch of the Industrial Revitalization Corp., a
quasi governmental body charged with the responsibility of buying
up the bad loans and selling them to the public. Although
improved, the fragility of Japan's financial system is expected
to continue for the foreseeable future.

          In November 1996, then Prime Minister Hashimoto
announced a set of initiatives to deregulate the financial sector
by the year 2001. Known as "Tokyo's Big Bang," the reforms
include changes in tax laws to favor investors, the lowering of
barriers between banking, securities and insurance, abolition of
foreign exchange restrictions and other measures designed to
revive Tokyo's status in the international capital markets and to
stimulate the economy. The Big Bang was formally launched in
April 1998. Some of the measures that have already been
implemented include a liberalization of foreign exchange
restrictions, a repeal of the ban on holding companies, allowing
banks to sell mutual funds and to issue bonds, the elimination of
restrictions on the range of activities permitted for securities
subsidiaries and trust banking subsidiaries and the elimination
of fixed brokerage commissions on all stock trades. The remaining
reform measures, which include the entry of banks and trust banks
into the insurance business through subsidiaries, have not yet
been implemented. While in the long term the Big Bang is viewed
as a positive step for Japan, in the current economic climate it
is viewed as putting additional stress on weaker institutions.

          Between 1985 and 1995, the Japanese Yen generally
appreciated against the U.S. Dollar. Between 1990 and 1994 the
Yen's real effective exchange rate appreciated by approximately
36%. On April 19, 1995, the Japanese Yen reached an all time high
of 79.75 against the U.S. Dollar. After its peak of April 19,
1995, the Yen generally decreased in value against the U.S.
Dollar until mid-1998, when the Japanese Yen began to appreciate
again against the U.S. Dollar, reaching a 43-month high against
the U.S. Dollar in September 1999. This precipitated a series of
interventions in the currency market by the Bank of Japan that
slowed the appreciation of the Japanese Yen against the U.S.
Dollar. Although the Yen's appreciation continued to slow on
balance in 2001, the Japanese Yen began to gain ground against
the U.S. Dollar in mid-2001 amid growing concern about the U.S.
economy and Japan's own uncertain economic prospects. Prime
Minister Koizumi recently underscored his government's
determination to stop the Yen's appreciation, intervening in the
currency market several times in the wake of the September 11,
2001 terrorist attacks. The average Yen-Dollar exchange rates in
1998, 1999, 2000, 2001, 2002 and 2003 were 131.0, 113.7, 107.8,
121.6, 125.22 and 115.97, respectively.

          JAPANESE STOCK EXCHANGES. Currently, there are eight
stock exchanges in Japan. The Tokyo Stock Exchange (the "TSE"),
the Osaka Securities Exchange and the Nagoya Stock Exchange are
the largest, together accounting for approximately 99.9% of the
share trading volume and for about 99.9% of the overall trading
value of all shares traded on Japanese stock exchanges during
2002. The other stock exchanges are located in Kyoto, Hiroshima,
Fukuoka, Niigata and Sapporo. The chart below presents annual
share trading volume (in millions of shares) and annual trading
value (in billions of Yen) information with respect to each of
the three major Japanese stock exchanges for the years 1993
through 2002. Trading volume and the value of foreign stocks are
not included.

            All Exchanges         TOKYO              OSAKA            NAGOYA
         VOLUME    VALUE    VOLUME     VALUE    VOLUME    VALUE   VOLUME   VALUE
         ------    -----    ------     -----    ------    -----   ------   -----
2002    224,567   209,229   213,173   193,354   10,403   14,727     847   1,065
2001    217,893   225,239   204,037   202,262   12,377   20,779   1,402   6,113
2000    196,087   290,325   174,159   248,662   17,267   34,669   4,575   6,876
1999    175,445   210,236   155,163   185,541   14,972   22,105   4,934   2,371
1998    139,757   124,102   123,198    97,392   12,836   20,532   3,367   5,986
1997    130,657   151,445   107,566   108,500   15,407   27,024   6,098  12,758
1996    126,496   136,170   101,170   101,893   20,783   27,280   4,104   5,391
1995    120,149   115,840    92,034    83,564   21,094   24,719   5,060   5,462
1994    105,937   114,622    84,514    87,356   14,904   19,349   4,720   5,780
1993    101,173   106,123    86,935    86,889   10,440   14,635   2,780   3,459

Source: The Tokyo Stock Exchange Fact Books (1994-2003).
THE TOKYO STOCK EXCHANGE

          OVERVIEW OF THE TOKYO STOCK EXCHANGE. The TSE is the
largest of the Japanese stock exchanges and as such is widely
regarded as the principal securities exchange for all of Japan.
During 2002, the TSE accounted for 92.4% of the market value and
94.9% of the share trading volume on all Japanese stock
exchanges. A foreign stock section on the TSE, consisting of
shares of non-Japanese companies, listed 34 (out of 2,119 total
companies listed on the TSE) non-Japanese companies at the end of
2002. The market for stock of Japanese issuers on the TSE is
divided into a First Section and a Second Section. The First
Section is generally for larger, established companies (in
existence for five years or more) that meet listing criteria
relating to the size and business condition of the issuing
company, the liquidity of its securities and other factors
pertinent to investor protection. The TSE's Second Section is for
smaller companies and newly listed issuers.

          The TSE has recently undertaken several new
initiatives. In November 1999, for example, the TSE established
MOTHERS (Market for the High-Growth and Emerging Stocks), a new
market designed to foster the growth of emerging companies. In
addition, on October 17, 2000, the TSE announced plans to form an
alliance with the Chicago Mercantile Exchange, the TSE's most
concrete global alliance to date. Although the TSE has entered
into agreements with other exchanges, including the New York
Stock Exchange, they are for the most part limited to information
sharing arrangements. Additionally, the TSE is participating in
multilateral discussions to explore the possibility of a Global
Equity Market. Other participants include the New York Stock
Exchange, the Toronto Stock Exchange, the Bolsa Mexicana de
Valores and the Hong Kong Exchanges.

          MARKET GROWTH OF THE TSE. The First and Second Sections
of the TSE grew in terms of both average daily trading value and
aggregate year-end market value from 1982, when they were l28,320
million Yen and 98,090 billion Yen, respectively, through the end
of 1989, when they were 1,335,810 million Yen and 611,152 billion
Yen, respectively. Following the peak in 1989, both average daily
trading value and aggregate year-end market value declined
through 1992 when they were 243,362 million Yen and 289,483
billion Yen, respectively. In 1993 and 1994, both average daily
trading value and aggregate year-end market value increased and
were 353,208 and 353,666 million Yen, respectively, and 324,357
and 358,392 billion Yen, respectively. In 1995, average daily
trading value decreased to 335,598 million Yen and aggregate
year-end market value increased to 365,716 billion Yen. In 1996,
average daily trading value increased to 412,521 million Yen and
aggregate year-end market value decreased to 347,578 billion Yen.
In 1997, average daily trading value increased to 442,858 million
Yen and aggregate year-end market value decreased to 280,930
billion Yen. In 1998, average daily trading value decreased to
394.3 billion Yen and aggregate year-end market value decreased
to 275,181 billion Yen. In 1999, the average daily trading value
increased to 757.3 billion Yen and aggregate year-end market
value in 1999 increased to 456,840 billion Yen. In 2000, the
average daily trading value increased to 1,002.7 billion Yen and
aggregate year-end market value in 2000 decreased to 360,554
billion Yen. In 2001, the average daily trading value decreased
to 822.2 billion Yen and aggregate year-end market value in 2001
decreased to 296,789 billion Yen. In 2002, the average daily
trading value decreased to 785 billion Yen and aggregate year-end
market value decreased to 247,860 billion Yen.

          MARKET PERFORMANCE OF THE FIRST SECTION. As measured by
the TOPIX, a capitalization-weighted composite index of all
common stocks listed in the First Section, the performance of the
First Section reached a peak of 2,884.80 on December 18, 1989.
Thereafter, the TOPIX declined approximately 45% through December
29, 1995. On December 30, 1996 the TOPIX closed at 1,470.94, down
approximately 7% from the end of 1995. On December 30, 1997, the
TOPIX closed at 1,175.03, down approximately 20% from the end of
1996. On December 30, 1998 the TOPIX closed at 1086.99, down
approximately 7% from the end of 1997. On December 31, 1999 the
TOPIX closed at 1722.20, up approximately 58% from the end of
1998. On December 29, 2000 the TOPIX closed at 1283.67, down
approximately 25% from the end of 1999. On December 28, 2001, the
TOPIX closed at 1032.14, down approximately 20% from the
beginning of 2001. On December 31, 2002, the TOPIX closed at
843.29, down approximately 18% from the end of 2001 and down
approximately 70% from its all-time high in 1989. On December 31,
2003, the TOPIX closed at 1,043.69, up approximately 24% from the
end of 2002 and down approximately 64% from its all-time high in
1989.

JAPANESE FOREIGN EXCHANGE CONTROLS

          Under Japan's Foreign Exchange and Foreign Trade
Control Law and cabinet orders and ministerial ordinances
thereunder (the "Foreign Exchange Controls"), prior notification
to the Minister of Finance of Japan (the "Minister of Finance")
of the acquisition of shares in a Japanese company from a
resident of Japan (including a corporation) by a non-resident of
Japan (including a corporation) is required unless the
acquisition is made from or through a securities company
designated by the Minister of Finance or if the Yen equivalent of
the aggregate purchase price of shares is not more than 100
million Yen. Even in these situations, if a foreign investor
intends to acquire shares of a Japanese corporation listed on a
Japanese stock exchange or traded on a Japanese over-the-counter
market (regardless of the person from or through whom the foreign
investor acquires such shares) and as a result of the acquisition
the foreign investor would directly or indirectly hold 10% or
more of the total outstanding shares of that corporation, the
foreign investor must file a report within 15 days from the day
of such acquisition with the Minister of Finance and any other
minister with proper jurisdiction. In instances where the
acquisition concerns national security or meets certain other
conditions specified in the Foreign Exchange Controls, the
foreign investor must file a prior notification with respect to
the proposed acquisition with the Minister of Finance and any
other minister with proper jurisdiction. The ministers may make a
recommendation to modify or prohibit the proposed acquisition if
they consider that the acquisition would impair the safety and
maintenance of public order in Japan or harmfully influence the
smooth operation of the Japanese economy. If the foreign investor
does not accept the recommendation, the ministers may issue an
order modifying or prohibiting the acquisition. In certain
limited and exceptional circumstances, the Foreign Exchange
Controls give the Minister of Finance the power to require prior
approval for any acquisition of shares in a Japanese company by a
non-resident of Japan.

          In general, the acquisition of shares by non-resident
shareholders by way of stock splits, as well as the acquisition
of shares of a Japanese company listed on a Japanese stock
exchange by non-residents upon exercise of warrants or conversion
of convertible bonds, are not subject to any of the foregoing
notification or reporting requirements. Under the Foreign
Exchange Controls, dividends paid on shares, held by
non-residents of Japan and the proceeds of any sales of shares
within Japan may, in general, be converted into any foreign
currency and remitted abroad.

          Certain provisions of the Foreign Exchange Controls
were repealed or liberalized beginning in April 1998, pursuant to
the revised Foreign Exchange and Foreign Trade Law, which was
approved in May 1997 as part of the plan to implement the Big
Bang. Under the new law, Japanese citizens are permitted to open
bank accounts abroad and companies are now permitted to trade
foreign currencies without prior government approval.
Additionally, the foreign exchange bank system, which required
that all foreign exchange transactions be conducted through
specially designated institutions, has been eliminated.

REGULATION OF THE JAPANESE EQUITIES MARKETS

          The principal securities law in Japan is the Securities
and Exchange Law ("SEL") which provides overall regulation for
the issuance of securities in public offerings and private
placements and for secondary market trading. The SEL was amended
in 1988 in order to liberalize the securities market; to regulate
the securities futures, index, and option trade; to add
disclosure regulations; and to reinforce the prevention of
insider trading. Insider trading provisions are applicable to
debt and equity securities listed on a Japanese stock exchange
and to unlisted debt and equity securities issued by a Japanese
corporation that has securities listed on a Japanese stock
exchange or registered with the Securities Dealers Association
(the "SDA"). In addition, each of the six stock exchanges in
Japan has its own constitution, regulations governing the sale
and purchase of securities and standing rules for exchange
contracts for the purchase and sale of securities on the
exchange, as well as detailed rules and regulations covering a
variety of matters, including rules and standards for listing and
delisting of securities.

          The loss compensation incidents involving preferential
treatment of certain customers by certain Japanese securities
companies, which came to light in 1991, provided the impetus for
amendments to the SEL, which took effect in 1992, as well as two
reform bills passed by the Diet in 1992. The amended SEL now
prohibits securities companies from operating discretionary
accounts, compensating losses or providing artificial gains in
securities transactions, directly or indirectly, to their
customers and making offers or agreements with respect thereto.
Despite these amendments, there have been certain incidents
involving loss compensation. To ensure that securities are traded
at their fair value, the SDA and the TSE promulgated certain
rules, effective in 1992, which, among other things, explicitly
prohibit any transaction undertaken with the intent to provide
loss compensation of illegal gains regardless of whether the
transaction otherwise technically complies with the rules. The
reform bill passed by the Diet, which took effect in 1992 and
1993, provides for the establishment of a new Japanese securities
regulator and for a variety of reforms designed to revitalize the
Japanese financial and capital markets by permitting banks and
securities companies to compete in each other's field of
business, subject to various regulations and restrictions.

          Further reforms in the regulation of the securities
markets are anticipated over the next several years as the Big
Bang is implemented.





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

               ADDITIONAL INFORMATION ABOUT CANADA

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

Territory and Population
- ------------------------

          Canada is the second largest country in the world in
terms of land mass with an area of 9.09 million square kilometers
(3.51 million square miles). It is located north of the
continental United States of America and east of Alaska. Canada
comprises ten provinces (Alberta, British Columbia, Manitoba, New
Brunswick, Newfoundland, Nova Scotia, Ontario, Prince Edward
Island, Quebec and Saskatchewan) and three territories (the
Northwest Territories, the Nunavut Territory and the Yukon
Territory). Its population is approximately 31 million.

Government
- ----------

          Canada is a constitutional monarchy with Queen
Elizabeth II of the United Kingdom its nominal head of state. The
Queen is represented by the Canadian governor-general, appointed
on the recommendation of the Canadian prime minister. Canada's
government has a federal structure, with a federal government and
ten provincial governments. The legislative branch consists of a
House of Commons (parliament) and the Senate. Members of the
House of Commons are elected by Canadian citizens over 18 years
of age. Senators are appointed on a regional basis by the Prime
Minister. The federal government is headed by the Prime Minister
who is chosen from the party that has won the majority of seats
in the House of Commons. The provincial governments each have a
Legislative Assembly and a Premier. The prime minister has the
privilege of appointing all judges except those of the provincial
courts.

          Provinces have extensive power within specific areas of
jurisdiction. The federal government has defined areas of
jurisdiction and the power to act in areas declared by the House
of Commons to be for the general advantage of Canada. This
general power has been used to justify federal action in certain
areas of provincial jurisdiction. Concurrent federal and
provincial jurisdiction exists in certain matters, including
agriculture, immigration and pensions. The power-sharing issue
between the federal government and provincial governments has
been contentious and has proven to be a central issue in the
process of constitutional reform. Politics

          Since World War II, the federal government has been
formed by either the Liberal Party or the Progressive
Conservative Party. In October 1993, the Liberal Party, under the
leadership of Mr. Jean Chretien, won 178 of the 295 seats in the
Canadian House of Commons, ending nine years of rule by the
Progressive Conservative Party. The Liberal Party was re-elected
for a second term in the June 2, 1997 general election, but lost
20 seats in the House of Commons. A new political party, the
Canadian Reform Conservative Alliance (the "Canadian Alliance")
was formed in March 2000 to launch a more credible challenge to
the Liberal Party. In the general election held on November 27,
2000, however, the Liberal Party won a third-straight
parliamentary majority and gained 17 seats in the House of
Commons. Subsequent to the 2000 election, the Liberal Party
suffered several setbacks that damaged its credibility. These
included allegations of cronyism and corruption, surprising
by-election losses in May 2002 and internal challenges for party
leadership. In August 2002, Mr. Chretien announced that he would
not seek a fourth term as Prime Minister and would leave office
in February 2004. Although these events have to some extent
reinvigorated the opposition, the opposition remains fractured
and unable to capitalize on the situation. On November 14, 2003,
at the 2003 Leadership and Biennial Convention, the Liberal Party
chose Paul Martin, the former Finance Minister, to succeed Mr.
Chretien. The next general election is scheduled to occur in
November 2005, but may occur earlier now that there is new
leadership in place.

          Canada has had three major developments regarding unity
and constitutional reform in recent years. The first two major
developments were the rejection of the Meech Lake Agreement in
1990 and the Charlottetown Accord in 1992. Those reforms would
have given Quebec constitutional recognition as a distinct
society, transferred powers from the federal to the provincial
governments and reformed the Senate by providing for more equal
representation among the provinces.

          The third major development is the continuing
possibility of Quebec's independence. Upon gaining power in 1994,
the Quebec separatist party, Parti Quebecois ("PQ"), called for a
referendum supporting independence. On October 30, 1995, the
referendum was defeated in a close ballot, in which 50.6% voted
against secession and 49.4% voted for secession. If the
referendum had been approved, Quebec would have become a separate
country, but would have retained formal political and economic
links with Canada similar to those that join members of the
European Union. The PQ, under the leadership of Lucien Bouchard,
was re-elected in the provincial election held on November 30,
1998, winning 75 of the 125 seats. However, the party's share of
the popular vote dropped 2% from the 1994 election to 43%. The
Parti Liberal won 48 seats. Mr. Bouchard, acknowledging that he
had failed to rekindle the fervor for secession, resigned his
post in January 2001. It is unclear whether Mr. Bouchard's
successor, Bernard Landry, will hold a second referendum. The PQ
previously indicated it would do so if it were re-elected, but
only if the referendum would stand a strong chance of success.
Given current opinion polls, it is believed unlikely that a
referendum would have a strong chance of success. Recent polls
indicate that support for secession stands at about 40%.
Furthermore, the PQ fared poorly in the June 2002 provincial
elections. In August 1998, Canada's Supreme Court rendered a
unanimous opinion in a legal action initiated by the federal
government to determine the legality of Quebec's secession. While
the Court ruled that Quebec has no right to unilaterally leave
the Canadian federation, the court also indicated that the
federal government would have to negotiate a separation if a
clear majority of Quebec voters vote for it. Legislation to
establish the negotiating terms for Quebec's secession was
approved in March 2000. The so-called "clarity bill" requires the
support of a "clear majority" of Quebec's residents before such
negotiations could occur. Although it is expected that Quebec's
position within Canada will continue to be a matter of political
debate, the separatist movement is considered to be dormant at
this time.

Monetary and Banking System
- ---------------------------

          The central bank of Canada is the Bank of Canada. Its
main functions are conducting monetary policy, supervising
commercial banks, acting as a fiscal agent to the federal
government and managing the foreign exchange fund. The currency
unit of Canada is the Canadian Dollar. Canada does not impose
foreign exchange controls on capital receipts or payments by
residents or non-residents.

Trade
- -----

          Canada and the United States are each other's largest
trading partners and as a result there is a significant linkage
between the two economies. Bilateral trade between Canada and the
United States in 1997 was larger than between any other two
countries in the world. The North American Free Trade Agreement
("NAFTA") took effect on December 30, 1993. In July 1997 a
free-trade accord between Canada and Chile also took effect.
Similar trade liberalization accords were signed with Israel
(1997) and Costa Rica (2001). Talks with Brazil and Argentina are
also under way for similar bilateral trade agreements that are
expected eventually to fall under the umbrella of a new form of
NAFTA. When fully implemented, NAFTA is designed to create a free
trade area in North America, expand the flow of goods, services
and investment, and eventually eliminate tariff barriers, import
quotas and technical barriers among Canada, the United States,
Mexico and future parties to NAFTA. At the April 1998 Summit of
the Americas, a forum of democratically elected leaders of 34
nations across the Americas (including Canada) organized to
discuss economic, social and political matters of common
interest, an agreement was signed to begin trade negotiations
toward the creation of a free trade area across the Western
Hemisphere, known as the Free Trade Area of the Americas
("FTAA"). A subsequent Summit of the Americas took place in April
2001 and resulted in a commitment by the participating heads of
state to negotiate the establishment of the FTAA by 2005.
Ministerial negotiations have continued on a regular basis ever
since 2001.

          Given the relatively small size of Canada's domestic
market, the trade sector has always been an important factor in
the growth of the Canadian economy. Currently, more than 45% of
Canada's output is exported. The United States is by far Canada's
largest trading partner. Since the 1980s Canada has recorded
growing merchandise trade surpluses with the United States. A
significant contributor to Canada's export growth in recent years
has been the telecommunications and computer machinery sector.
Energy exports have surged as well. Canada's trade surplus in
2003 was US$40 billion. In view of the recent slowing of the U.S.
economy, the trade surplus has narrowed, as import growth has
outpaced export growth.

Economic Information Regarding Canada
- -------------------------------------

          Canada experienced rapid economic expansion during most
of the 1980s. In the early 1990s, however, the economy
experienced a deep recession. This resulted from, among other
things, high government debt and high interest rates. The
relatively low level of economic activity during this period
reduced the growth of tax receipts with the result that the
already high levels of government debt increased.

          The deterioration in the government's fiscal position,
which started during the recession in the early 1990s, was
aggravated by a reluctance to decrease expenditures or increase
taxes. In its 1995 budget, however, the Liberal Party introduced
new spending cuts, the largest in over thirty years, to reduce
Canada's budget deficit. For the fiscal years 1994-95, 1995-96
and 1996-97, the budget deficit was approximately 5%, 4.2% and
1.1%, respectively, of gross domestic product ("GDP"). On October
24, 1998, the government announced that there was a budget
surplus of C$3.5 billion for the 1997-98 fiscal year, the first
time in 28 years the government had recorded a budget surplus.
Six consecutive years of budget surpluses allowed the government
to repay over C$50 billion of its outstanding debt, reducing the
ratio of federal debt to GDP to an estimated 43.5% by March 2003,
compared to 70.9% in 1996. Although the recent slowdown in
economic growth and other factors have caused the government to
be less aggressive in its debt reduction policy in the last
couple of years, it is still a high priority and the government
plans to balance its budget for the next two fiscal years, making
it the only country in the Group of Seven industrialized
countries (Canada, France, Germany, Italy, Japan, the U.S. and
the U.K.) to do so. In light of Canada's healthy fiscal position,
Moody's announced in May 2002 that it was restoring Canada's
triple-A credit rating, which it had lost in 1994.

          In addition to the growth of the federal government
deficit, provincial government debt rose rapidly in the early
1990s. Several developments, including increased spending on
social services at the provincial level, were responsible for a
significant amount of the growth of public debt from 1990 through
1992. In response to the increase in provincial debt, a number of
rating agencies downgraded certain provincial debt ratings. All
provinces undertook plans to balance their respective budgets.
For fiscal year 2000-2001 all provinces, with the exception of
Newfoundland, Nova Scotia and Prince Edward Island, reported
budget surpluses. As with the federal government, provincial
revenues started to decline in the 2001-2002 fiscal year.

          Prior to 2001, Canada's real GDP growth was expressed
in constant 1992 prices. In 2001, Statistics Canada rebased the
measure to chained 1997 prices. Using the new measure, Canada's
real GDP growth rate was 4.1%, 5.5%, 5.3%, 1.9% and 3.3% in 1998,
1999, 2000, 2001 and 2002, respectively. Canada's real GDP growth
rate in 2003 is estimated to have been 1.7%. The recent growth of
the economy has been broadly based, unlike earlier periods of
recovery, when it was attributable almost entirely to a growth in
exports.

          During 1994, despite growing output and low inflation,
concern over the country's deficit and the uncertainty associated
with Quebec's status within Canada led to a weakening of its
currency and higher interest rates. On January 20, 1995, the
exchange rate for the Canadian Dollar fell to .702 against the
U.S. Dollar, which at that time represented a nine-year low and
was close to its then record low of .692. The Bank of Canada
responded by increasing rates on Treasury bills and selling U.S.
Dollars. Between January 20, 1995 and September 30, 1997, the
Canadian Dollar increased in value from .702 to .724 against the
U.S. Dollar. The renewed strength of the Canadian Dollar during
this period facilitated the easing of monetary policy.
Subsequently, however, the Canadian Dollar depreciated, reaching
a record low of .633 against the U.S. Dollar on August 27, 1998.
In 1998, 1999, 2000, 2001 and 2002, the average exchange rate
between the Canadian Dollar and the U.S. Dollar was .674, .673,
..673, .646 and .637, respectively. In June 1997, with a real GDP
growth rate of 4% annualized during the first two quarters of
1997 and signs of weakness in the Canadian Dollar, the Bank of
Canada decided to raise its Bank Rate (then the Bank of Canada's
official rate) for the first time since 1995, by 25 basis points
to 3.5%. The Bank Rate has been raised and lowered numerous times
since then in response to economic developments. In 2001,
concerns about the extent of the slowing U.S. economy and its
impact on North American equity markets resulted in the lowering
of the Bank Rate on several occasions, eventually to 2.00% on
January 15, 2002, the lowest level in 40 years. On March 2, 2004,
the Target for the Overnight Rate, which is the midpoint of the
Bank of Canada's operating band for overnight financing and
currently the Bank of Canada's official rate, stood at 2.25%.

          The following provides certain statistical and related
information regarding historical rates of exchange between the
U.S. Dollar and the Canadian Dollar, information concerning
inflation rates, historical information regarding the Canadian
GDP and information concerning yields on certain Canadian
Government Securities. Historical statistical information is not
necessarily indicative of future developments.

          CURRENCY EXCHANGE RATES. The exchange rate between the
U.S. Dollar and the Canadian Dollar is at any moment related to
the supply of and demand for the two currencies, and changes in
the rate result over time from the interaction of many factors
directly or indirectly affecting economic conditions in the
United States and Canada, including economic and political
developments in other countries and government policy and
intervention in the money markets.

          The range of fluctuation in the U.S. Dollar/Canadian
Dollar exchange rate has been narrower than the range of
fluctuation between the U.S. Dollar and most other major
currencies. However, the range that has occurred in the past is
not necessarily indicative of future fluctuations in that rate.
Future rates of exchange cannot be predicted, particularly over
extended periods of time.

          The following table sets forth, for each year
indicated, the annual average of the daily noon buying rates in
New York for cable transfers in New York City in U.S. Dollars for
one Canadian Dollar as certified for customs purposes by the
Federal Reserve Bank of New York:

                                                                  Buying
                                                                 Rate in
                                                               U.S. Dollars
                                                               ------------

      1993....................................................    0.78
      1994....................................................    0.73
      1995....................................................    0.73
      1996....................................................    0.73
      1997....................................................    0.72
      1998....................................................    0.67
      1999....................................................    0.67
      2000....................................................    0.67
      2001....................................................    0.65
      2002....................................................    0.64
      2003....................................................    0.71

Source:  Federal Reserve Statistical Releases.

          INFLATION RATE OF THE CANADIAN CONSUMER PRICE INDEX.
Since 1991, when the Canadian government adopted inflation
control targets, inflation in Canada has been maintained within
the targeted range of 1% to 3%. The following table sets forth
for each year indicated the average change in the Canadian
consumer price index for the twelve months ended December 31 for
the years 1993 through 2003.

                                                                National
                                                                Consumer
                                                               Price Index
                                                               -----------

      1991....................................................    5.6
      1992....................................................    1.5
      1993....................................................    1.8
      1994....................................................    0.2
      1995....................................................    2.2
      1996....................................................    1.6
      1997....................................................    1.6
      1998....................................................    0.9
      1999....................................................    1.7
      2000....................................................    2.7
      2001....................................................    2.6
      2002....................................................    2.3
      2003....................................................    2.2

Source: STATISTICS CANADA; BANK OF CANADA WEEKLY STATISTICS.

          CANADIAN GROSS DOMESTIC PRODUCT. The following table
sets forth Canada's GDP for the years 1996 through 2003, at
current and chained 1997 prices.

                                               Gross Domestic    Change from
                              Gross            Product at        Prior Year at
                              Domestic         Chained           Chained
                              Product          1997 Prices       1997 Prices
                              -------          -----------       -----------
                             (millions of Canadian Dollars)         (%)

1996                             833,100          848,667           1.7
1997                             877,900          885,022           4.2
1998                             915,000          918,900           4.1
1999                             982,400          969,800           5.5
2000                           1,075,600        1,020,800           5.3
2001                           1,107,500        1,040,400           1.9
2002                           1,154,900        1,074,500           3.3
2003 (estimated)               1,214,600        1,092,900           1.7

Source:  STATISTICS CANADA.

          YIELDS ON CANADIAN GOVERNMENT TREASURY BILLS AND BONDS.
The following table sets forth the yields on 3-month and 6-month
Government of Canada Treasury bills and 5-year and 10-year Canada
Benchmark Bonds from January 1999 through December 2003.


                               Treasury Bills             Benchmark Bonds
1999                       3 Months     6 Months      5 Years        10 Years
- ----                       --------     --------      -------        --------

January                      4.66         4.77          4.76          4.89
February                     4.84         4.93          5.22          5.26
March                        4.75         4.86          4.95          5.05
April                        4.60         4.67          4.98          5.14
May                          4.42         4.60          5.34          5.42
June                         4.62         4.88          5.35          5.46
July                         4.64         4.81          5.53          5.62
August                       4.83         5.08          5.51          5.55
September                    4.69         4.87          5.67          5.77
October                      4.85         5.20          6.20          6.26
November                     4.82         5.10          5.98          6.02
December                     4.93         5.29          6.11          6.18


                               Treasury Bills             Benchmark Bonds
2000                       3 Months     6 Months      5 Years        10 Years
- ----                       --------     --------      -------        --------

January                      5.08         5.39          6.38          6.44
February                     5.05         5.42          6.29          6.19
March                        5.28         5.56          6.13          6.03
April                        5.45         5.74          6.17          6.10
May                          5.75         6.01          6.17          6.00
June                         5.55         5.84          6.04          5.93
July                         5.63         5.82          6.00          5.86
August                       5.62         5.77          5.92          5.77
September                    5.56         5.72          5.76          5.75
October                      5.62         5.74          5.75          5.72
November                     5.74         5.88          5.59          5.54
December                     5.56         5.58          5.30          5.35

                               Treasury Bills             Benchmark Bonds
2001                       3 Months     6 Months      5 Years        10 Years
- ----                       --------     --------      -------        --------

January                      5.14         5.05          5.14          5.39
February                     4.80         4.74          5.09          5.36
March                        4.60         4.58          5.03          5.41
April                        4.41         4.36          5.23          5.66
May                          4.40         4.45          5.61          5.96
June                         4.24         4.29          5.39          5.73
July                         4.03         4.06          5.36          5.76
August                       3.81         3.84          4.93          5.36
September                    3.05         2.96          4.62          5.32
October                      2.34         2.26          4.08          4.86
November                     2.07         2.13          4.68          5.36
December                     1.95         1.95          4.69          5.44

                               Treasury Bills             Benchmark Bonds
2002                       3 Months     6 Months      5 Years        10 Years
- ----                       --------     --------      -------        --------

January                      1.96         2.11          4.71          5.42
February                     2.05         2.19          4.58          5.31
March                        2.30         2.68          5.28          5.79
April                        2.37         2.68          5.05          5.64
May                          2.60         2.87          4.90          5.49
June                         2.70         2.87          4.67          5.37
July                         2.81         2.90          4.30          5.23
August                       2.96         3.08          4.49          5.14
September                    2.83         2.93          4.20          4.92
October                      2.73         2.81          4.34          5.16
November                     2.70         2.78          4.28          5.09
December                     2.68         2.78          4.17          4.96

                               Treasury Bills             Benchmark Bonds
2003                       3 Months     6 Months      5 Years        10 Years
- ----                       --------     --------      -------        --------

January                      2.83         2.99          4.27          5.02
February                     2.88         3.06          4.18          4.93
March                        3.14         3.34          4.47          5.13
April                        3.19         3.32          4.18          4.90
May                          3.16         3.18          3.72          4.50
June                         3.07         2.99          3.55          4.37
July                         2.81         2.72          3.76          4.78
August                       2.71         2.76          3.97          4.96
September                    2.58         2.57          3.86          4.64
October                      2.64         2.63          4.07          4.85
November                     2.70         2.74          4.15          4.88
December                     2.64         2.64          4.00          4.73

Source:  BANK OF CANADA.

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

      ADDITIONAL INFORMATION ABOUT THE UNITED MEXICAN STATES

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

Territory and Population
- ------------------------

          The United Mexican States ("Mexico") occupies a
territory of approximately 1.97 million square kilometers (759
thousand square miles). To the north, Mexico shares a border with
the United States of America, and to the south it has borders
with Guatemala and Belize. Its coastline is along both the Gulf
of Mexico and the Pacific Ocean. Mexico comprises 31 states and a
Federal District (Mexico City). It is the second most populous
nation in Latin America, with an estimated population of 104.8
million, as reported by the Consejo Nacional de Poblacion
(Conapo).

          Mexico's three largest cities are Mexico City,
Guadalajara and Monterrey, which in 1997 together accounted for
25% of the country's population and 2% of the land. In the 1980s,
Government efforts concerning family planning and birth control,
together with declining birth rates among women under 35 and
those living in urban areas, have resulted in a reduction of the
annual population growth rate from 3% in the early 1970s to 1.5%
in the late 1990s. The growth rate in 2001 was 1.2%.

Government
- ----------

          The present form of government was established by the
Constitution, which took effect on May 1, 1917. The Constitution
establishes Mexico as a Federal Republic and provides for the
separation of the executive, legislative and judicial branches.
The President and the members of Congress are elected by popular
vote of Mexican citizens over 18 years of age.

          Executive authority is vested in the President, who is
elected for a single six-year term. The executive branch consists
of 17 ministries, the office of the Federal Attorney General, the
Federal District Department and the office of the Attorney
General of the Federal District.

          Federal Legislative authority is vested in the
Congress, which is composed of the Senate and the Chamber of
Deputies. Senators serve a six-year term. Deputies serve a
three-year term, and neither Senators nor Deputies may serve
consecutive terms in the same Chamber. The Senate has 128
members, four from each state and four from the Federal District.
The Chamber of Deputies has 500 members, of whom 300 are elected
by direct vote from the electoral districts and 200 are elected
by a system of proportional representation. The Constitution
provides that the President may veto bills and that Congress may
override such vetoes with a two-thirds majority of each Chamber.

          Federal judicial authority is vested in the Supreme
Court of Justice, the Circuit and District courts, and the
Federal Judicial Board. The Supreme Court has 11 members who are
selected by the Senate from a pool of candidates nominated by the
President. Its members serve for 15 year terms, except for the
current members of the Court, whose appointments range from eight
to 20 years.

          Mexico has diplomatic relations with approximately 175
countries. It is a charter member of the United Nations and a
founding member of the Organization of American States, the
International Monetary Fund (the "IMF"), the World Bank, the
International Finance Corporation, the Inter-American Development
Bank and the European Bank for Reconstruction and Development.
Mexico became a member of the Organization for Economic
Cooperation and Development (the "OECD") on April 14, 1994 and
the World Trade Organization ("WTO") on January 1, 1995 (the date
on which the WTO superseded the General Agreement on Trade and
Tariffs ("GATT")).

Politics
- --------

          Until the July 2, 2000 elections, the Partido
Revolucionario Institucional ("PRI") had long been the dominant
political party in Mexico, although its dominance had been
weakened in recent years. Between 1929 and 2000 the PRI won all
presidential elections and, until the 1997 Congressional
elections, held a majority in Congress. Until 1989 it had also
won all of the state governorships. The two other major parties
in Mexico are the Partido Accion Nacional ("PAN") and the Partido
de la Revolucion Democratica ("PRD").

          On July 2, 2000, elections were held to select a new
President of Mexico for a six-year term beginning on December 1,
2000. In addition, elections were held for three-quarters of the
Senate and the entire Chamber of Deputies. The candidate of the
PAN, Vicente Fox Quesada, won the Presidential election with
42.5% of the votes, the candidate of the PRI was second with
36.1% of the votes and the candidate of the Alianza por Mexico, a
five-party coalition headed by the PRD, was third with 16.6% of
the votes. With respect to the Congressional elections, no party
achieved a majority. The position of the PAN was further eroded
by the results of the July 2003 congressional elections, but,
again, no party achieved a simple majority of the 500 seats in
the Chamber of Deputies. The PAN lost 55 seats and now holds 151
seats; the PRI gained 11 seats and now holds 224 seats. The next
general elections are scheduled to occur in July 2006
(congressional).

          The July 2, 2000 elections represented not only the end
of the PRI's seven-decade domination of Mexico's politics. They
also marked the first elections in Mexico's history that have
been widely viewed both inside and outside Mexico to have been
conducted democratically, in accordance with electoral reforms
adopted in 1996, when certain constitutional amendments, which
had been agreed to by the President and the leaders of the four
major political parties represented in Congress, were approved.
The amendments, among other things, exclude the President from
the Federal Electoral Institute, an autonomous agency charged
with organizing elections; eliminate the Electoral Committee of
the Chamber of Deputies, which had been responsible for
determining the validity of presidential elections; impose limits
on expenditures on political campaigns and controls on the source
of and uses of funds contributed to a political party; grant
voting rights to Mexican citizens residing abroad; reduce from
315 to 300 the maximum number of congressional representatives
who may belong to a single party, and establish an electoral
procedure intended to result in a more proportional
representation in the Senate. The Mexican Supreme Court is
empowered to determine the constitutionality of electoral laws
and the Mexican Federal Electoral Court, which had been part of
the executive branch, is now part of the judicial branch.

          At the beginning of 1994, armed insurgents attacked
(and in some cases temporarily seized control of) several
villages in the southern state of Chiapas. While the government
responded by providing support to the local authorities and
publicly offering to negotiate a peaceful resolution that would
address the underlying concerns of the local population, the
conflict remained a source of debate and uncertainty for the
remainder of the year. For the next two years, there were
sporadic, unsuccessful negotiations with the insurgents, but
incidents of civil unrest continued and negotiations collapsed
altogether in September 1996, resulting in an uneasy standoff
between the insurgents and the government in Chiapas ever since.
Following the defeat of the PRI in both the July 2000
presidential elections and the August 2000 gubernatorial
elections in Chiapas, there was renewed hope that the
negotiations could be resumed. Among President Fox's first
actions after taking office on December 1, 2000 was sending a
bill to Congress that would have amended the constitution to
provide indigenous people more autonomy in their government.
Congress approved the bill in April 2001, but it was rejected by
the insurgents, who accused President Fox and Congress of
betraying them by watering down the reform. Communications with
government peace negotiators were subsequently abandoned.

          In addition to the civil unrest in Chiapas, other
developments have contributed to disillusionment among the
electorate with the institutions of government. These events
include the 1994 assassinations of Luis Donaldo Colosio and Jose
Francisco Ruiz Massieu, both high-ranking PRI officials. Links
between Mexico's drug cartels and high government and military
officials have also been discovered. These links could jeopardize
Mexico's status as an ally of the U.S. in the war against
narcotics smuggling. While Mexico is currently certified by the
President of the United States as an ally, there is no assurance
that the certification will be maintained. A loss of
certification could result in the termination of U.S. economic
assistance to Mexico.

          Shortly after his electoral victory on July 2, 2000,
President Fox announced the creation of the National Transparency
Commission to investigate unsolved major crimes and to examine
the misdeeds of previous governments. President Fox also
announced other initiatives to reform the government's law
enforcement and judicial functions. With no one party holding a
majority in the legislature, however, it has not been easy for
President Fox to advance his reform agenda.

Money and Banking
- -----------------

          Banco de Mexico, chartered in 1925, is the central bank
of Mexico. It is the federal government's primary authority for
the execution of monetary policy and the regulation of currency
and credit. It is authorized by law to regulate interest rates
payable on time deposits, to establish minimum reserve
requirements for credit institutions and to provide discount
facilities for certain types of bank loans. The currency unit of
Mexico is the Peso. Mexico repealed its exchange control rules in
1991 and now maintains only a market exchange rate.

          New laws relating to Banco de Mexico's activities and
role within the Mexican economy became effective on April 1,
1994. The purpose of the new laws was to reinforce the
independence of Banco de Mexico, so that it can act as a
counterbalance to the executive and legislative branches in
monetary policy matters. The new laws significantly strengthened
Banco de Mexico's authority with respect to monetary policy,
foreign exchange and related activities and the regulation of the
financial services industry.

          Since Mexico's commercial banks were privatized in the
early 1990s, the banking industry has experienced a significant
amount of non-performing loans. In February 1996, the ratio of
bad debts to the banking system's total loan portfolio reached a
high of 19.2% from 8.3% at the end of 1994. In 1995, the
government began a series of programs to address the problem and
to avoid a systemic banking collapse. These programs have
included subsidies to certain debtors and taking over bad debts.
At the end of 1999, the liabilities absorbed by the government
under Fobaproa, the program designed to take over the bad debts
of Mexico's banks, totalled $89 billion, equivalent to 18.3% of
Mexico's GDP. At the end of 2003 these liabilities were
equivalent to 12.1% of Mexico's GDP. Nonetheless, the government
has had to intervene and take control of a number of institutions
for eventual sale, most recently in November 1999, when the
government took control of BanCrecer, Mexico's fifth largest
bank, at an estimated cost of $10 billion. The overall cost of
the government's programs to aid the banking sector has been
estimated at $100 billion. The government has also instituted new
rules, which became effective, on a phased-in basis, in January
2000, to shore up the capital of Mexico's banks; these rules
became fully implemented in 2003. Additionally, deposit insurance
will gradually be reduced beginning in 2005. By the end of 2002,
only one of the 18 banks privatized in the early 1990s remained
in the hands of its original owners, and all of the banks that
had been taken over operated under the supervision of the
government had been sold or liquidated. By the end of 2002, the
past-due loans ratio had been reduced to 4.6%.

Trade
- -----

          Mexico became a member of the GATT in 1986 and has been
a member of the WTO since January 1, 1995, the date on which the
WTO superseded the GATT. Mexico has also entered into NAFTA with
the United States and Canada. In addition, Mexico signed an
agreement providing for a framework for a free trade agreement in
1992 with Costa Rica, El Salvador, Guatemala, Honduras and
Nicaragua as a step toward establishing a free-trade area. Mexico
entered into definitive free trade agreements with Costa Rica in
April 1994 and Nicaragua in December 1997. A free trade agreement
between Mexico and Chile went into effect on January 1, 1992. A
free trade agreement with Colombia and Venezuela was signed in
June 1994 and a similar agreement with Bolivia was signed in
September 1994; both agreements entered into force in January
1995. In addition, Mexico and the European Union signed an
agreement in March 2000 that will end all tariffs on their
bilateral trade in industrial goods by 2007. In May 2000, Mexico
signed an agreement with Guatemala, Honduras and El Salvador, and
in November 2000 an agreement with members of the European Free
Trade Area (Iceland, Lichtenstein, Norway and Sweden) was signed.
Mexico now has free trade agreements with over 30 nations. The
government estimated that at the end of 2001, 90% of Mexico's
exports had the benefit of some sort of preferential treatment.
Mexico is also in negotiations with Belize, Panama, Ecuador,
Trinidad, Tobago and Peru and is taking steps to increase trade
with Japan and other Pacific Rim countries. President Fox has
also expressed interest in reaching agreement with Mercosur (the
southern customs union comprising Argentina, Brazil, Paraguay and
Uruguay) but similar efforts have failed in the past due in part
to conflicts between Mexico and Brazil. Nonetheless, in November
2003, a free trade agreement between Mexico and Uruguay was
officially signed by President Fox and his Uruguayan counterpart.
The agreement, which requires congressional ratification by both
countries, establishes free trade on all manufactured goods
except footwear and some textiles, and provides for mutual
protection and promotion of investment.

          In connection with the implementation of NAFTA,
amendments to several laws relating to financial services
(including the Banking Law and the Securities Market Law) became
effective on January 1, 1994. These measures permit non-Mexican
financial groups and financial intermediaries, through Mexican
subsidiaries, to engage in various activities in the Mexican
financial system, including banking and securities activities. In
December 1998, Mexico lifted all remaining restrictions on
foreign ownership of its largest banks, which had been excluded
from the liberalization measures that became effective in 1994.
Since the purchase of Grupo Financiero Banamex - Accival SA by
Citigroup, Inc. in 2001, Mexico's three largest banks have been
under foreign ownership.

Economic Information Regarding Mexico
- -------------------------------------

          During the period from World War II through the
mid-1970s, Mexico experienced sustained economic growth. During
the mid 1970s, Mexico experienced high inflation and, as a
result, the government embarked on a high-growth strategy based
on oil exports and external borrowing. The steep decline in oil
prices in 1981 and 1982, together with high international
interest rates and the credit markets' unwillingness to refinance
maturing external Mexican credits, led in 1982 to record
inflation, successive devaluations of the peso by almost 500% in
total, a pubic sector deficit of 16.9% of GDP and, in August
1982, a liquidity crisis that precipitated subsequent
restructurings of a large portion of the country's external debt.
Through much of the 1980s, the Mexican economy continued to
experience high inflation and large foreign indebtedness. In
February 1990, Mexico became the first Latin American country to
reach an agreement with external creditor banks and
multi-national agencies under the U.S. Treasury's approach to
debt reduction known as the "Brady Plan."

          The value of the Mexican Peso has been central to the
performance of the Mexican economy. In 1989, the government
implemented a devaluation schedule, pursuant to which the
intended annual rate of devaluation was gradually lowered from
16.7% in 1989 to 11.4% in 1990, 4.5% in 1991 and 2.4% in 1992.
From October 1992 through December 20, 1994, the Mexican
Peso/U.S. Dollar exchange rate was allowed to fluctuate within a
band that widened daily. The ceiling of the band, which was the
maximum selling rate, depreciated at a daily rate of 0.0004 Pesos
(equal to approximately 4.5% per year), while the floor of the
band, i.e., the minimum buying rate, remained fixed. Banco de
Mexico agreed to intervene in the foreign exchange market to the
extent that the Mexican Peso/U.S. Dollar exchange rate reached
either the floor or the ceiling of the band.

          Beginning on January 1, 1994, volatility in the Mexican
Peso/U.S. Dollar exchange rate began to increase, with the value
of the Peso relative to the Dollar declining at one point to an
exchange rate of 3.375 Mexican Pesos to the U.S. Dollar, a
decline of approximately 8.69% from the high of 3.1050 pesos
reached in early February 1994. This increased volatility was
attributed to a number of political and economic factors,
including a growing current account deficit, the relative
overvaluation of the Peso, investor reactions to the increase in
U.S. interest rates, lower than expected economic growth in
Mexico in 1993, uncertainty concerning the Mexican presidential
elections in August 1994 and certain related developments.

          On December 20, 1994, increased pressure on the Mexican
Peso/U.S. Dollar exchange rate led Mexico to increase the ceiling
of the Banco de Mexico intervention band. That action proved
insufficient to address the concerns of foreign investors, and
the demand for foreign currency continued. On December 22, the
government adopted a free exchange rate policy, eliminating the
intervention band and allowing the Peso to float freely against
the Dollar. The value of the Mexican Peso continued to weaken
relative to the U.S. Dollar in the following days. There was
substantial volatility in the Mexican Peso/U.S. Dollar exchange
rate during the first quarter of 1995, with the exchange rate
falling to a low point of 7.588 Mexican Pesos to the U.S. Dollar
on March 13, 1995. By the end of April and through September
1995, the exchange rate began to stabilize; however, the exchange
rate began to show signs of renewed volatility in October and
November 1995. The Mexican Peso/U.S. Dollar exchange rate fell to
a low for the year of 8.14 Mexican Pesos to the U.S. Dollar on
November 13, 1995.

          In order to address the adverse economic situation that
developed at the end of 1994, the government announced in January
1995 a new economic program and a new accord among the government
and the business and labor sectors of the economy, which,
together with a subsequent program announced in March 1995 and
the international support package described below, formed the
basis of Mexico's 1995 economic plan (the "1995 Economic Plan").
The objectives of the 1995 Economic Plan were to stabilize the
financial markets, lay the foundation for a return to lower
inflation rates over the medium-term, preserve Mexico's
international competitiveness, maintain the solvency of the
banking system and attempt to reassure long-term investors of the
strong underlying fundamentals of the Mexican economy.

          In addition to the actions described above, in the
beginning of 1995, the government engaged in a series of
discussions with the IMF, the World Bank, the Inter-American
Development Bank and the U.S. and Canadian governments in order
to obtain the international financial support necessary to
relieve Mexico's liquidity crisis and aid in restoring financial
stability to Mexico's economy. The proceeds of the loans and
other financial support were used to refinance public sector
short-term debt, primarily Tesobonos, to restore the country's
international reserves and to support the banking sector. In a
series of repayments and prepayments beginning in October 1995
and ending in January 1997, Mexico repaid all of its borrowings
under the agreements.

          Using resources made available through the
international support package as well as operations by Banco de
Mexico, in 1995 Mexico altered its debt profile significantly.
The outstanding balance of Tesobonos was gradually reduced and by
February 1996 there were none outstanding. The PRONAFIDE,
together with other reforms implemented by the Mexico Government
since 1995, have enabled the Mexican economy to recover from the
economic crisis experienced by Mexico in late 1994 and 1995.

          On May 30, 2001, the government announced the National
Development Plan, whose objectives are to maintain sound public
finance policies designed to achieve Mexico's development goals;
design public policies with the objective of promoting dynamic
economic development; create political, economic and social
conditions that promote national development processes; better
integrate Mexico into the international markets; remove legal and
structural barriers to development in order to encourage creative
processes in the promotion of economic development; and encourage
innovation in all areas of national life, including scientific,
legal, economic, social, educational and administrative.

          On June 11, 2002, the government announced the
Development Financing Program 2002-2006 ("PRONAFIDE 2002-2006").
The goals of the PRONAFIDE 2002-2006 are to generate the
resources needed to finance social programs contemplated by the
National Development Plan; increase the rate of economic growth;
generate jobs consistent with population dynamics; and
consolidate a stable macroeconomic environment.

          Notwithstanding these initiatives, significant new
investment in infrastructure, industrial and agricultural
modernization, training and environmental protection will be
required for continued growth and development. The Mexican
economy is also likely to continue to be subject to the effects
of adverse domestic and external factors such as declines in
foreign direct and portfolio investment, high interest rates and
low oil prices, which may lead to volatility in the foreign
exchange and financial markets and may affect Mexico's ability to
service its foreign debt.

          The effects of the devaluation of the Mexican Peso, as
well as the government's response to that and related events,
were apparent in the performance of the Mexican economy during
1995 and 1996. Mexico's trade deficit decreased during 1995, the
value of imports decreasing by 8.7% between 1994 and 1995, to
$72.5 billion in 1995. Although the value of imports in 1996
increased approximately 23.4% from 1995, to $89.5 billion,
exports increased by almost the same amount. During 1995, Mexico
registered a $7.089 billion trade surplus, its first annual trade
surplus since 1989. Mexico continued to register a trade surplus
in 1996 and 1997 but the surplus decreased by approximately 7.9%
to $6.531 billion in 1996 and 90% to $624 million in 1997. Mexico
registered a $7.9 billion deficit in its trade balance in 1998, a
$5.6 billion deficit in 1999, an $8.1 billion deficit in 2000, a
$10 billion deficit in 2001, a $7.9 billion deficit in 2002 and a
$4.1 billion deficit in 2003. During 1996 and 1997, Mexico's
current account balance registered a deficit of $2.330 billion
and $7.448 billion, respectively, as compared with a deficit of
$1.576 billion in 1995. Mexico's current account balance
registered deficits of $16.1 billion, $14.01 billion, $18.2
billion, $18.0 billion and $14.0 billion in 1998, 1999, 2000,
2001 and 2002, respectively. During 2003, Mexico's current
account balance registered an estimated deficit of $12.1 billion.

          On December 31, 2003, Mexico's international reserves
amounted to $57.4 billion, compared to $48.0 billion at December
31, 2002, $44.7 billion at December 31, 2001, $33.6 billion at
December 31, 2000, $30.7 billion at December 31, 1999, $30.1
billion on December 31, 1998, $28 billion on December 31, 1997,
$17.5 billion at December 31, 1996, $15.7 billion at December 31,
1995 and $6.1 billion at December 31, 1994.

          During 1995 real GDP decreased by 6.2%, as compared
with an increase of 4.5% during 1994. This downward trend
continued into the first quarter of 1996, but turned around in
the second quarter of 1996. The real GDP continued to grow until
2001, resulting in an overall GDP growth rate of 5.1% for 1996,
6.8% for 1997, 4.9% for 1998, 3.7% for 1999 and 6.6% for 2000.
For 2001, Mexico's real GDP contracted by 0.3%. During 2002 and
2003, Mexico's real GDP grew by 0.9% and an estimated 1.0%,
respectively. The recent slowdown in Mexico's economy has been
attributed to the slowdown of the U.S. economy, rather than any
policy failures of the Mexican government.

          Although the Mexican economy has stabilized since 1994,
continuing recovery will require economic and fiscal discipline
as well as stable political and social conditions. There can be
no assurance that the government's initatives will be successful
or that President Fox and succeeding administrations will
continue those initiatives. Reflecting Mexico's strengthened
economy, S&P upgraded Mexico's sovereign debt rating on February
7, 2002 to investment grade. Fitch and Moody's took similar
actions on January 22, 2002 and March 7, 2000, respectively.

Statistical and Related Information Concerning Mexico
- -----------------------------------------------------

          The following provides certain statistical and related
information regarding historical rates of exchange between the
U.S. Dollar and the Mexican Peso, information concerning
inflation rates, historical information regarding the Mexican GDP
and information concerning interest rates on certain Mexican
Government Securities. Historical information is not necessarily
indicative of future fluctuations or exchange rates. In 1982,
Mexico imposed strict foreign exchange controls which shortly
thereafter were relaxed and were eliminated in 1991.

          CURRENCY EXCHANGE RATES. There is no assurance that
future regulatory actions in Mexico will not affect the Fund's
ability to obtain U.S. Dollars in exchange for Mexican Pesos.

          The following table sets forth the exchange rates of
the Mexican Peso to the U.S. Dollar announced by Banco de Mexico
for the payment of obligations denominated in dollars and payable
in Mexican Pesos within Mexico with respect to each year from
1993 to 2003.

                                                    End of
                                                    Period      Average
                                                    ------      -------

      1993                                           3.192        3.155
      1994                                           5.325        3.375
      1995                                           7.643        6.419
      1996                                           7.851        7.599
      1997                                           8.083        7.918
      1998                                           9.865        9.136
      1999                                           9.514        9.556
      2000                                           9.572        9.456
      2001                                           9.268        9.337
      2002                                          10.439        9.416
      2003                                          11.202       10.791

Source:  Banco de Mexico.

          INFLATION AND CONSUMER PRICES. Through much of the
1980s, the Mexican economy continued to be affected by high
inflation, low growth and high levels of domestic and foreign
indebtedness. The annual inflation rate, as measured by the
consumer price index, rose from 28.7% in December 1981 to 159.2%
in December 1987. In December 1987, the Mexican government agreed
with labor and business to curb the economy's inflationary
pressures by freezing wages and prices (the "1987 accord"). The
1987 accord included the implementation of restrictive fiscal and
monetary policies, the elimination of trade barriers and the
reduction of import tariffs. After substantive increases in
public sector prices and utility rates, price controls were
introduced.

          The 1987 accord was succeeded by a series of additional
accords, each of which continued to stress the moderation of
inflation, fiscal discipline and, in the case of accords entered
into prior to 1995, a gradual devaluation of the peso. There was
a gradual reduction in the number of goods and services whose
prices were covered by such accords. The two most recent of these
accords also incorporated a reduction in the income tax rate
applicable to corporations and certain self-employed individuals
from 35% to 34% and a reduction in the withholding tax applicable
to interest payments on publicly issued external debt and
external debt payable to certain financial institutions from 15%
to 4.9%. These policies lowered the consumer inflation rate from
159.2% at year-end 1987 to 7.1% at year-end 1994.

          The government has been committed to reversing the
decline in real wages that occurred in the 1980s through control
of inflation, a controlled gradual upward adjustment of wages and
a reduction in income taxes for the lower income brackets.
Nonetheless, the effect of the devaluation of the peso and the
government's response to that event and related developments
caused a significant increase in inflation, as well as a decline
in real wages for much of the population, during 1995, when the
inflation rate increased to 52.0%. Subsequent fiscal and monetary
policies succeeded in lowering inflation at year-end 1996 and
1997 (as measured by the increase in the National Consumer Price
Index), to 27.7% and 15.7%, respectively. At year-end 1998,
inflation rose to 18.6%, well over the government's target of
12%, but fell to 12.3% at year-end 1999, 9.0% at year-end 2000,
4.4% at year-end 2001 and 5.7% at year-end 2002. At year-end
2003, the inflation rate was 4.0%, above the government's
year-end target of 3.0%.

          CONSUMER PRICE INDEX. The following table sets forth
the changes in the Mexican consumer price index for the year
ended December 31 for the years 1993 through 2003.

                                                          Changes in National
                                                          Consumer Price
                                                          Index, Increase
                                                          Over Previous Period
                                                          --------------------

1993....................................................        8.0
1994....................................................        7.1
1995....................................................       52.0
1996....................................................       27.7
1997....................................................       15.7
1998....................................................       18.6
1999....................................................       12.3
2000....................................................        9.0
2001....................................................        4.4
2002....................................................        5.7
2003....................................................        4.0

Source: Banco de Mexico.

          MEXICAN GROSS DOMESTIC PRODUCT. The following table
sets forth certain information concerning Mexico's GDP for the
years 1993 through 2002, and the first two quarters of 2003, at
current and constant prices.

                           Gross Domestic     Gross Domestic    Change from
                           Product at         Product at        Prior Year
                           Current            Constant Prices   at Constant
                           Prices             1993 Prices(1)    Prices
                           ------             --------------    ------
                              (millions of Mexican Pesos)       (percent)

1993                          1,256,196           1,256,196         2.0
1994                          1,420,159           1,312,200         4.5
1995                          1,837,019           1,230,608        (6.2)
1996                          2,525,575           1,293,859         5.1
1997                          3,174,275           1,381,352         6.8
1998                          3,846,349           1,447,945         4.9
1999                          4,593,685           1,505,000         3.7
2000                          5,491,372           1,602,542         6.6
2001                          5,828,590           1,599,787        (0.3)
2002                                N/A           1,611,666         0.9
2003
      1st Quarter                   N/A           1,597,936        (0.5)
      2nd Quarter                   N/A           1,649,921         0.2

(1)  Constant Peso with purchasing power at December 31, 1993,
     expressed in Pesos.

Source: Mexico's National Statistics, Geography and Informatics
        Institute (INEGI).

          INTEREST RATES. The following table sets forth the
average interest rates per annum on 28-day and 91-day CETES,
which are peso-denominated Treasury bills, the average weighted
cost of term deposits for commercial banks ("CPP"), the average
interest rate ("TIIP") and the equilibrium interest rate ("TIIE")
for the periods listed below.

                 Average CETES and Interest Rates

                         28-Day      91-Day
                         CETES       CETES        CPP        TIIP        TIIE
1993:
           Jan.-June      16.4       17.3          20.9     20.4(1)      _____
           July-Dec.      13.5       13.6          16.2     16.1         _____
1994:
           Jan.-June      13.0       13.5          14.2     15.3         _____
           July-Dec.      15.2       15.7          16.8     20.4         _____
1995:
           Jan.-June      55.0       54.3          49.6     63.6         21.2(2)
           July-Dec.      41.9       42.2          40.7     44.5         44.5
1996:
           Jan.-June      35.4       37.2          34.5     37.3         37.2
           July-Dec.      27.4       28.6          26.9     30.2         30.1
1997:
           Jan.-June      20.8       22.2          20.8     23.2         23.2
           July-Dec.      18.8       20.3          17.4     20.5         20.6
1998:
           Jan.-June      18.8       19.9          17.2     20.6         20.7
           July-Dec.      30.7       32.5          24.9     32.9         33.1
1999:
           Jan.-June      24.3       24.7          22.3     27.2         27.3
           July-Dec.      18.5       19.9          17.2     20.8         20.8
2000:
           Jan.-June      14.7       15.8          13.8     16.8         16.8
           July-Dec.      15.8       16.5          13.6     17.2         17.2
2001:
           Jan.-June      14.5       15.2          13.0     16.0         16.0
           July-Dec.       8.1        9.3           7.3      9.8          9.8
2002:
           Jan.-June       7.0        7.2           5.4       (3)         8.1
           July-Dec.       7.2        7.6           5.3       (3)         7.0
2003:
           Jan.-June       7.5        7.6          11.2       (3)         8.2
           July-Dec.       5.0        6.5           6.4       (3)         5.4

(1)  February-June average.
(2)  Average for the last two weeks of March.
(3)  The Banco de Mexico ceased publication of the TIIP as of
     December 31, 2001.

Source: Banco de Mexico.





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

      ADDITIONAL INFORMATION ABOUT THE REPUBLIC OF ARGENTINA

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

Territory and Population
- ------------------------

          The Republic of Argentina ("Argentina") is the second
largest country in Latin America, occupying a territory of 2.8
million square kilometers (1.1 million square miles) (3.8 million
square kilometers (1.5 million square miles) if territorial
claims in the Antarctic and certain South Atlantic islands are
included). It is located at the extreme south of the South
American continent, bordered by Chile, Bolivia, Paraguay, Brazil,
Uruguay and the South Atlantic Ocean. Argentina consists of 23
provinces and the federal capital of Buenos Aires. In 1991, the
year of the last Census, it had a population of approximately
32.6 million. Official projections have estimated that
Argentina's population reached 37 million in 2000.

          The most densely inhabited areas and the traditional
agricultural wealth are on the wide temperate belt that stretches
across central Argentina. About one-third of the population lives
in the greater Buenos Aires area. Six other urban centers,
Cordoba, Rosario, Mendoza, San Miguel de Tucuman, Mar del Plata
and La Plata, have a population of over 500,000 each. Nearly 90%
of the country's population is concentrated in urban centers.

Government
- ----------

          The Argentine federal constitution (the
"Constitution"), first adopted in 1853, provides for a tripartite
system of government: an executive branch headed by a president;
a legislative branch made up of a bicameral congress; and a
judicial branch, of which the Supreme Court of Justice (the
"Supreme Court") is the highest body of authority. The President
is directly elected by the voters and may serve for a maximum of
two consecutive four-year terms. The President directs the
general administration of the country and has the power to veto
laws in whole or in part, although Congress may override a veto
by a two-thirds vote. Presidential elections were last held in
May 2003. The next presidential elections are due to occur in
2007.

          The Congress is made up of the Senate and the Chamber
of Deputies. The 72-member Senate consists of three Senators for
each province and the federal capital of Buenos Aires. Senators
are elected for six-year terms, and serve in staggered terms so
that one-third of the Senate's seats are subject to elections
every two years. The Chamber of Deputies consists of 257 seats,
which are allocated according to each province's population.
Deputies are elected for four-year staggered terms so that
one-half of the Chamber is subject to elections every two years.

          The judicial system comprises federal and provincial
trial courts, courts of appeal and supreme courts. The supreme
judicial power of the Republic is vested in the Supreme Court,
which has nine members who are appointed for life by the
President (subject to ratification by the Senate). Pursuant to
amendments to the Constitution adopted in 1994, the President
must select lower federal court judges from a list of nominees
selected by an independent body comprised of lawyers and
academics. In 1998 and 1999, steps were taken to implement this
system, which was designed to minimize political influence in the
selection and dismissal of judges.

          Each province has its own constitution, and elects its
own governor, legislators and judges, without the intervention of
the federal government.

Politics
- --------

          The three largest political parties in Argentina are
the Partido Justicialista or Peronist Party ("PJ"), which evolved
out of Juan Peron's efforts to expand the role of labor in the
political process in the 1940s, the Union Civica Radical or
Radical Civic Union ("UCR"), founded in 1890, and the Frente del
Pais Solidario or Front for a Country in Solidarity ("Frepaso"),
founded in 1994 by former members of the PJ and a small socialist
party. In 1997, members of the UCR and the Frepaso formed a
coalition called Alianza ("Alliance"), which has a platform
focused on remedying social problems. Traditionally, the UCR has
had more urban middle-class support and the PJ more labor
support. At present, support for the PJ, the UCR and the Alliance
is broadly based, with the Frepaso receiving most of its support
from the federal district of Buenos Aires. Smaller parties occupy
varied political positions on both sides of the political
spectrum and some are active only in certain provinces. The PJ
currently holds a majority in both the Senate and the Chamber of
Deputies, including a quorum in the Chamber of Deputies. In
addition, the PJ controls three-fourths of all provincial
governorships. This represents the largest accumulation of power
in a single political party since democracy was restored in 1983.
The next Congressional elections are required by law to be held
no later than October 2005.

          Since 1983, which was the last year of military rule,
Argentina has been governed by a succession of elected civilian
Presidents. Raul Alfonsin, elected in 1983, was the first
civilian president in six decades to stay in office until the
scheduled election of a successor. His UCR Government
re-established civilian rule, including a functioning Congress.
The next president, Carlos Menem, a member of the PJ, won two
successive elections in May 1989 and May 1995. In October 1999,
Fernando de la Rua, representing the Alliance, was elected
President. Amidst the country's worsening economic and fiscal
condition, and associated civil unrest that ensued, President de
la Rua was forced to resign on December 20, 2001. Thereafter,
Argentina had several interim Presidents, all members of the PJ.
On January 1, 2002 Eduardo Duhalde, a Senator who had lost the
1999 Presidential race to Mr. de la Rua, became the fourth
interim President of Argentina. Mr. Duhalde, a member of the PJ,
served as interim president until May 25, 2003, when Nestor
Kirchner, also a member of the PJ, took office.

          Former President Menem was first elected with the
backing of organized labor and business interests that
traditionally supported a closed economy and a large public
sector. Shortly after taking office, however, Mr. Menem adopted
market-oriented and reformist policies, including an aggressive
privatization program, a reduction in the size of the public
sector and an opening of the economy to international
competition. Mr. Menem won reelection in May 1995, but his
popularity declined as the government faced allegations of
corruption and criticism from both the ruling and opposition
parties concerning its economic policies. The Alliance did not
seek an alternative economic model. Rather, President de la Rua's
campaign emphasized the themes of maintaining stability,
improving social conditions and reducing the economy's
vulnerability to external shocks. President de la Rua had a
reputation for honesty and accountability, which contributed to
his electoral success in 1999. However, following allegations
that erupted in mid-2000 about officials in his administration
engaging in bribery with members of the legislature in connection
with his labor reform initiatives, there was growing concern
about President de la Rua's ability to successfully pursue the
measures necessary to maintain economic stability in Argentina.
President de la Rua failed to distance himself from his officials
involved in the scandal, resulting in the surprise resignation of
Argentina's vice-president in October 2000. The series of
high-level government corruption scandals, together with
Argentina's worsening economic difficulties, resulted in growing
public dissatisfaction, which was manifested in the October 14,
2001 elections and which led ultimately to his resignation on
December 20, 2001. The position of Mr. Duhalde, the last of the
interim Presidents who succeeded Mr. de la Rua, became tenuous
due chiefly to his lack of success in steering Argentina out of
its deep and lingering recession. Mr. Kirchner, the current
President, who lacks a power base (he received the lowest
percentage of the popular vote in the country's history) but
nevertheless reached a 77% approval rating by August 2003, has
started his term with a number of dynamic proposals focused
chiefly on an overhaul of the political system.

          Argentina has diplomatic relations with 139 countries.
It is a charter member of the United Nations and currently serves
as a member of its Security Council. Argentina is a founding
member of the Organization of American States and is also a
member of the International Monetary Fund ("IMF") and the World
Bank. Argentina became a member of the WTO on January 1, 1995
(the date on which the WTO superseded GATT). In October 1997, the
United States designated Argentina as a non-NATO ally.

Monetary and Banking System
- ---------------------------

          The central bank of Argentina is the Banco Central de
la Republica Argentina ("Central Bank of Argentina"). Its primary
functions include the administration of the financial sector,
note issue, credit control and regulation of foreign exchange
markets. The currency unit of Argentina is the Argentine Peso.
Beginning in January 1992, the rate of exchange between the
Argentine Peso and the U.S. Dollar remained approximately one to
one. The fixed exchange rate was terminated in February 2002 and
the Argentine Peso was allowed to float freely. After the
exchange rate reached almost PS4:US$1 in late March 2002, the
Central Bank intervened and stabilized the exchange rate at
around PS3:US$1 for several weeks. The exchange rates of the
Argentine Peso to the U.S. Dollar at the end of 2002 and 2003
were PS3.3900:US$1 and PS2.9257:US$1, respectively.

Economic Information Regarding Argentina
- ----------------------------------------

          The Argentina economy has many strengths including a
well balanced natural resource base and a high literacy rate.
Since World War II, however, it has had a record of erratic
growth, declining investment rates and rapid inflation. Following
implementation of President Menem's reform program in March 1991,
significant progress was made in reducing inflation and
increasing real GDP growth. Although the GDP declined by 2.8% in
1995, it increased during the following three years: 5.5% in
1996, 8.1% in 1997 and 3.9% in 1998. Subsequently, however,
Argentina's GDP contracted, declining by 3.4% in 1999, 0.8% in
2000, 4.4% in 2001 and 10.9% in 2002. In the first and second
quarters of 2003, Argentina's GDP is estimated to have grown by
5.2% and 6.0%, respectively, compared to the same periods in
2002. For 2003 as a whole, Argentina's GDP is estimated to have
grown by 7.8%. Argentina's protracted recession, which began in
mid-1998, has been attributed to external economic conditions,
including problems in Brazil, Argentina's main trading partner,
political uncertainties and an increasingly complicated fiscal
scenario that has kept country risk and interest rates at very
high levels.

          DEREGULATION OF THE ECONOMY AND PRIVATIZATIONS.
Deregulation of the domestic economy, liberalization of trade and
reforms of investment regulations are prominent features of
Argentina's structural adjustment program. In order to achieve
the free functioning of markets, the government has undertaken an
extensive program for the removal of economic restrictions and
regulations and the promotion of competition.

          In 1989 and 1990, steps were taken to remove various
regulations that restricted both international trade and domestic
commerce. Restrictions were removed in order to allow the private
sector to provide certain public services, such as telephone,
electricity and natural gas, subject to governmental regulation.

          On October 31, 1991, the Argentine government
promulgated its principal deregulation legislation which
deregulated the domestic market for goods, services and
transportation, abolished restrictions on imports and exports,
abolished or simplified a number of regulatory agencies and
allowed free wage bargaining in the private sector. In the
financial sector, this legislation abolished all stamp taxes
relating to publicly offered securities, all capital gains taxes
on stocks and bonds held by non-resident investors and fixed
commissions on the stock exchanges.

          In addition, Argentina has eliminated restrictions on
foreign direct investment and capital repatriation. In 1993,
legislation was adopted abolishing previous requirements of a
three-year waiting period for capital repatriation. Under the
legislation, foreign investors are permitted to remit profits at
any time and to organize their companies and make use of domestic
credit under the same rights and under the same conditions as
local firms. As a result, foreign banks have made significant
investments in Argentina's financial sector. As of March 1999,
eight of the ten largest private sector banks were either
foreign-owned or foreign-controlled. The process of deregulation
and liberalization is continuing through the privatization
process, the reform of the social security system, regional
integration and further labor law reforms.

          In 1989, the State Reform Law declared certain
enterprises eligible for privatization. In addition to increasing
the efficiency of services provided by public sector enterprises,
the privatizations have also served to reduce outstanding debt
(by applying cash proceeds and through the selective use of debt-
to-equity conversions), increase reserves and increase tax
revenues from the new owners of the enterprises. The
privatization program has also served as an important conduit for
direct foreign investment into Argentina, attracting interested
investors from Asia, Europe, North America and Latin America. The
government completed 32 major privatizations in 1993, 11 in 1994
and 3 in 1995. On March 13, 1995 the government announced a new
fiscal package, which included, among other measures, an
acceleration in the sale of assets and the privatization of
several additional companies. On August 1, 1997, the postal
service was privatized and on January 23, 1998, the government
officially unveiled a decree awarding the management of 33 of
Argentina's airports to a private consortium, bringing to more
than $30 billion the amount of assets sold since the
privatization program began.

          On January 20, 1999, the government sold most of its
residual interest (14.99%) in the Yacimientos Petroliferos
Fiscales, the largest oil and natural gas producer in Argentina,
in an auction in which major international oil firms were invited
to participate. The only bidder was the Spanish company Repsol,
which made an offer for the minimum price. The $2.01 billion in
proceeds from the sale were to be channeled to the Provincial
Development Trust Fund. The government sold an additional 5.3%
stake in YPF to Repsol on June 24, 1999 for $842 million. The
government will retain one "golden share" granting it veto power
over any strategic decisions.

          On February 2, 1999, the government sold the first
tranche of 25% in Banco Hipotecario National, the national
mortgage bank, which raised $307.5 million. The proceeds were to
be used to pay back the $220 million bridge loan obtained in 1998
from the banks in charge of organizing the sale; the balance will
be used to capitalize the Regional Infrastructure Fund. The sale
of the shares had been postponed on several occasions during 1998
because of the adverse conditions in the international financial
markets.

          The following provides certain statistical and related
information regarding historical rates of exchange between the
U.S. Dollar and the Argentine Peso, information concerning
inflation rates, historical information concerning the Argentine
GDP and information concerning interest rates on certain
Argentine Government Securities. Historical statistical
information is not necessarily indicative of future developments.

          CURRENCY EXCHANGE RATES. The Argentine foreign exchange
market was highly controlled until December 1989, when a free
exchange rate was established for all foreign transactions. With
the institution of the Convertibility Law on April 1, 1991, the
Argentine currency became tied to the U.S. Dollar. Under the
Convertibility Law, the Central Bank of Argentina was required to
maintain a reserve in foreign currencies, gold and certain public
bonds denominated in foreign currencies equal to the amount of
outstanding Argentine currency and was obliged to sell dollars to
any person who so required at a rate of one peso to one dollar.
From April 1, 1991 through the end of 1991, the exchange rate was
approximately 10,000 Australes (the predecessor to the Argentine
Peso) per U.S. Dollar. On January 1, 1992 the Argentine Peso
equal to 10,000 Australes was introduced. From January 1, 1992
until February 11, 2002, the rate of exchange from Argentine Peso
to U.S. Dollar was approximately one to one. While the fixed
exchange rate was instrumental in eradicating hyper-inflation and
stabilizing Argentina's economy in the early 1990s, in recent
years it has been viewed as an impediment to economic growth.
With the economy in a protracted recession, and facing a growing
fiscal crisis, the government terminated the decade-old
one-to-one peg to the U.S. Dollar in early January 2002, when it
devalued the Argentine Peso and established a dual exchange rate
system. Under this system, the government set the exchange rate
for export and import transactions, but otherwise let the
Argentine Peso float freely. On February 11, 2002 the Argentine
Peso was allowed to float freely for all purposes.

          The following table sets forth, for each year
indicated, the nominal exchange rates of Argentine Peso to U.S.
Dollar as of the last day of the period indicated.

            1993 . . . . . . . . . . . .               .9990
            1994 . . . . . . . . . . . .              1.0
            1995 . . . . . . . . . . . .              1.0
            1996 . . . . . . . . . . . .              1.0
            1997 . . . . . . . . . . . .              1.0
            1998 . . . . . . . . . . . .              1.0
            1999 . . . . . . . . . . . .              1.0
            2000 . . . . . . . . . . . .              1.0
            2001 . . . . . . . . . . . .              1.0
            2002 . . . . . . . . . . . .              3.3900
            2003 . . . . . . . . . . . .              2.9257

Source:  Banco Central de la Republica Argentina.

          WAGES AND PRICES. Prior to the adoption of the economic
plan announced by Economy Minister Domingo F. Cavallo in March
1991, the Argentine economy was characterized by low and erratic
growth, declining investment rates and rapid inflation.
Argentina's high inflation rates and balance of payments
imbalances during the period from 1975 to 1990 resulted mainly
from a lack of control over fiscal policy and the money supply.
Large subsidies to state-owned enterprises and an inefficient tax
collection system led to large persistent public-sector deficits
which were financed in large part through increases in the money
supply and external financings. High inflation combined with the
lag between the accrual and receipt of taxes reduced real tax
revenues and increased the size of the deficit, further fueling
the inflationary cycle. Inflation accelerated on several
occasions and turned into hyperinflation in 1989 and the end of
1990, with prices rising at an annual rate of 1,000% or more.

          During the 1980s and in 1990, the Argentine government
instituted several economic plans to stabilize the economy and
foster real growth, all of which failed after achieving initial
success mainly because the government was unable to sustain
reductions in the public deficit. The government's initial
stabilization efforts included a devaluation of the Austral, a
fixed exchange rate, wage and price controls and a sharp rise in
public utility rates.

          On March 20, 1991, Economy Minister Cavallo announced
the Convertibility Plan, which was subsequently approved by
Congress through passage of the Convertibility Law. The
Convertibility Plan sought to reduce inflation and restore
economic stability through reforms relating to the tax system,
privatizations and the opening of the economy that were intended
to address underlying structural problems that had distorted
fiscal and monetary policy.

          The Convertibility Plan was centered on the two
following fundamental principles:

          (1) Full international reserve backing for the monetary
base. The monetary base (consisting of currency in circulation
and peso deposits of financial entities with the Central Bank)
was not to exceed the Central Bank's gross international assets
as a fixed rate of one Argentine Peso per U.S. Dollar. This
effectively meant that the money supply could be increased only
when backed by increases in the level of international reserves,
and not whenever the public sector deficit or the financial
sector needed to be financed. Gross international assets included
the Central Bank's holdings of gold, foreign exchange (including
short-term investments), U.S. Dollar denominated Argentine
government bonds (in an amount not to exceed 30% of total assets)
and its net Asociacion Latinoamericana de Integraction ("ALADI")
claims (except overdue claims) all freely available and valued at
market prices. Under this arrangement, in which the Argentine
Peso was fully convertible into the U.S. Dollar, no increase in
the domestic monetary base could occur without an equivalent
increase in gross international assets at the one Argentine Peso
per U.S. Dollar rate; and

          (2) the prohibition of financing of fiscal deficits
through Central Bank lending and fiscal control to contain
expenditures and foster tax revenues.

          The IMF supported the implementation of the
Convertibility Plan and designed a financial program for the
Argentine public sector. In the event of any noncompliance with
the program, Argentina was required to consult in the first
instance with the IMF in order to obtain a waiver and, if
required, revise the program to remedy the situation. In the
second half of 1994, the Government decided to seek private
financing rather than utilize its EFF allotment for that period.
After the onset of the Mexican currency crisis, however, the
Government determined that it was necessary to seek further
funding through the EFF program, including drawing down on its
unused quota for the later part of 1994. Negotiations with the
IMF led to approval in April 1995 of economic performance waivers
for the last two quarters of 1994, an extension of the EFF credit
for a fourth year through March 30, 1996, and an increase in the
amount of the EFF credit by the equivalent of approximately $2.4
billion to a total of approximately $6.3 billion. On February 4,
1998, the IMF, citing Argentina's strong macroeconomic
performance in 1997, announced its approval of a new three-year
EFF credit for Argentina in the amount of approximately $2.8
billion to support the government's medium-term economic reform
program for 1998-2000. Among other targets, the agreement
required that Argentina not exceed a public fiscal deficit of
$3.85 billion for 1998.

          Three times during 1999, due to falling tax revenues
and political considerations that made spending cuts difficult,
Argentine authorities renegotiated their 1999 fiscal deficit
targets with the IMF. The fiscal deficit targets were raised to
$5.1 billion. Argentina also renewed its commitment to the
structural reform programs already a part of its agreement with
the IMF. These included the "fiscal convertibility" law to
legally establish a declining trend for the fiscal deficit,
reform of the revenue-sharing mechanism with the provinces,
reform of the Central Bank Charter and the legal framework of
Argentina's financial institutions, privatization of Argentina's
largest bank, which Congress explicitly prohibited in a law
passed in May 1999, and social security and labor reforms.
Nonetheless, Argentina's 1999 fiscal deficit was $7.1 billion,
excluding privatization proceeds.

          Upon taking office on December 10, 1999, President de
la Rua declared the fiscal deficit to be Argentina's worst enemy
and moved quickly to push a budget package through Congress to
reduce the deficit with spending cuts and tax increases. The
package called for a $5 billion spending reduction and a $4.5
billion budget deficit target. President de la Rua also submitted
several bills to Congress requesting labor reforms and the
granting of additional powers to the government in order to
facilitate fiscal deficit reduction. Although President de la Rua
faced political resistance in the PJ-controlled Senate, which
thwarted his efforts to adopt many of his proposed structural
reforms, his aggressive efforts showed a measure of success. The
IMF and Argentina reached agreement on a three-year US$7.4
billion standby credit facility. The extended credit facility set
a limit of US$4.7 billion on the 2000 deficit, down from US$7.1
billion in 1999. Although President de la Rua's efforts succeeded
in meeting fiscal targets at the beginning of 2000, Argentina's
fiscal performance in the second quarter of 2000 was
disappointing, resulting in a new fiscal adjustment package at
the end of May, focusing on public sector wage cuts. Other
initiatives included the reform of the social security and health
care systems. In January 2000 Argentina successfully completed
its first long-term global bond offering since 1997.

          Reducing the fiscal deficit has been made more
difficult by Argentina's recession, resulting in an extension of
the target date for achieving fiscal balance from 2003 to 2005.
In December 2000, amid growing concerns about the possibility of
a debt default in 2001, the IMF and several other international
lenders put together a $39.7 billion package of emergency credits
that were designed to cover the cost of most government debt
payments through 2003.

          In March 2001, following the resignation of two Economy
Ministers in a period of two weeks and amidst a worsening fiscal
crisis, President de la Rua named Domingo Cavallo, the architect
of the 1991 Convertibility Plan, to be Economy Minister. Mr.
Cavallo designed a package of proposals designed to stimulate
industry and boost Argentina's competitiveness. While committing
himself to meeting IMF fiscal targets, Mr. Cavallo increased the
policy emphasis on promoting growth by raising competitiveness
through targeted initiatives. This represented a change of
direction from Mr. Cavallo's two predecessors, who had given
priority to fiscal adjustment. In the first quarter of 2001
Argentina went $1 billion above the $2.1 billion deficit target
agreed to with the IMF. Amidst renewed concerns about the ability
of Argentina to stay current on its $130 billion government debt,
a new IMF aid package was negotiated in August 2001 that provided
another $8 billion in fresh loans. Underpinning the new IMF aid
package were significant budget cuts, which were approved in
principle by the Argentine Congress but never implemented.
Argentina also conducted some voluntary debt swaps, which allowed
the government to postpone some debt payments. By the end of
November 2001, however, the government acknowledged that by year
end the budget deficit would be about $7.8 billion, well over the
$6.5 billion target it set with the IMF in return for the $8
billion aid package. In early December 2001, the IMF announced
that it was withholding a $1.3 billion payment due under the aid
package. This left an approximately $2 billion hole in
Argentina's finances for the remaining weeks of 2001. As a
result, the government announced in late December 2001 a
suspension of payment on its foreign debt, estimated to be a
total of $136.71 billion, including debt to the IMF and other
multilateral lending bodies. Debt restructuring talksare ongoing.
Argentina's recent proposal to pay off its bondholders at a 75%
discount has not been well received.

          With revenues in a free-fall by the beginning of 2002,
Argentina entered into a 14-point agreement with the IMF in April
2002 that committed Argentina to meeting most of the IMF's
demands. These included abiding by Argentina's international
agreements, concluding bilateral agreements with the provincial
governments to enforce a fiscal pact reached in February 2002,
enforcing strict fiscal and monetary policies, guaranteeing
savers a credible restitution of their deposits through liquid
instruments and enforcing actions required to restore a solid and
reliable financial system. Given the deteriorating economy and
related social unrest, and given the lack of a strong political
consensus, it was very difficult for Argentina to meet the IMF's
demands.

          In September 2002, Argentina announced that it would no
longer use its diminishing reserves to pay back existing IMF
loans. In making this announcement, the government stated that
maintaining social programs and financing provincial economies
would take priority over its obligations to the IMF and other
multilateral lending bodies. Early in 2003, the IMF took certain
actions designed to provide transitional financial support
through August 31, 2003. These actions were taken in the context
of a short-term economic program that sought to preserve
macroeconomic stability through the transition to a new
government, which took office in May 2003. Subsequently, in
September 2003, the IMF approved a new three-year US$12.55
billion standby arrangement with Argentina. The accompanying
three-year economic program has three core elements. The first is
a fiscal framework to meet growth, employment and social equity
objectives while providing a sound basis for normalizing
relations with all of Argentina's creditors. The second is a
strategy to strengthen the banking system and facilitate bank
lending. The third is a set of institutional reforms to
facilitate corporate debt restructuring and improve the
investment climate. Argentina has also committed to remain
current on its financial obligations to the IMF.

          One of the most difficult problems facing Argentina has
been the banking crisis. Early in 2002 the government put a
freeze on bank deposits and announced a mandatory rescheduling of
term deposits in an effort to stem a run. Shortly thereafter, the
government devalued the Peso, which led to a resurgence of
inflation. Restoring liquidity to the banking system has been a
high priority; however, it has also been viewed as a threat to
the banking sector, which was already on the brink of insolvency.
Several plans to address this crisis were implemented, including
a program to exchange frozen deposits for long-term public sector
bonds. More stable conditions in the financial and foreign
exchange markets and high deposit rates have contributed to
improved liquidity; however, much of the banking sector suffers
from poor solvency indicators.

          The Convertibility Plan simplified fiscal and market
regulations and reallocated state activities to the private
sector, thereby reducing state expenditures, increasing the
amount of federal revenues and at the same time encouraging
domestic private sector initiative and foreign investment. Since
the Convertibility Plan was introduced in March 1991, inflation
as measured by the consumer price index declined from a 27.0%
monthly rate in February 1991 to a 0.3% monthly rate in December
1992 and resulted in a 24.8% annual rate for 1992. Inflation
decreased steadily thereafter, to an annual rate of 0.9% in 1998.
After 1998, a deflationary trend prevailed with the consumer
price index declining by 1.2%, 0.9% and 1.1% in 1999, 2000 and
2001, respectively. Following the devaluation of the Argentine
Peso in early 2002, the consumer price index grew rapidly,
resulting in an annual inflation rate of 25.9% for 2002. Rising
prices resulted in a sharp deterioration of social conditions in
Argentina. Growing numbers of the population fell below the
poverty line and there was threat of serious civil unrest. By
October 2002, 57.5% of Argentina's population was below the
poverty line. While conditions have improved slightly, over 50%
of the population remains below the poverty level.

          CONSUMER PRICE INDEX. The following table sets forth
for 1993-2003 the change in Argentine Consumer Prices for the
twelve months ended December 31.

                            INFLATION

                                                          Consumer
                                                          Prices,
                                                          Increase Over
                                                          Previous Period
                                                          ---------------

1993....................................................    10.6
1994....................................................     4.2
1995(1).................................................     3.4
1996(1).................................................     0.2
1997....................................................     0.5
1998....................................................     0.9
1999....................................................    (1.2)
2000....................................................    (0.9)
2001....................................................    (1.1)
2002....................................................    25.9
2003(2).................................................    13.4

          (1) In 1996, a new index was introduced called the
Indice Precios Internos al por Mayor (IPIM). The IPIM is broadly
similar to the index formerly used to determine wholesale price
inflation, but varies slightly as to the weighted average of the
goods measured in the index. The 1995 figures were also
recalculated using the new IPIM index.

          (2) Estimated.

Source: Banco Central de la Republica Argentina; Economist
        Intelligence Unit.

          ARGENTINE GROSS DOMESTIC PRODUCT. The following table
sets forth Argentina's GDP for the years 1994 through 2002,and
for the first and second quarters of 2003, at current and
constant prices.

                                     Gross Domestic Product   Change from Prior
                 Gross Domestic      at Constant              Year at Constant
                 Product             1993 Prices              Prices
                 -------             -----------              ------
                  (millions of Argentine Pesos)              (percent)

1994                257,440             250,308                 5.8
1995                258,032             243,186                (2.8)
1996                272,150             256,626                 5.5
1997                292,859             277,441                 8.1
1998                299,098             288,123                 3.9
1999                283,665             278,369                (3.4)
2000                284,346             276,173                (0.8)
2001                268,831             263,997                (4.4)
2002                312,580             235,236               (10.9)
2003
  1st Qtr.            N/A                  N/A                  5.2
  2nd Qtr.            N/A                  N/A                  6.0

Source: Ministerio de Economia, Obras y Servicios Publicos;
        National Bureau of National Accounts.





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

                           APPENDIX E:

               Statement of Policies and Procedures
                        for Voting Proxies

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

Introduction
- ------------

          As a registered investment adviser, Alliance Capital
Management L.P. ("Alliance Capital", "we" or "us") has a
fiduciary duty to act solely in the best interests of our
clients. As part of this duty, we recognize that we must vote
client securities in a timely manner and make voting decisions
that are in the best interests of our clients.

          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 is applicable to Alliance Capital's growth and value
investment groups investing on behalf of clients in both U.S. and
global securities.

Proxy Policies
- --------------

          This statement is designed to be responsive to the wide
range of 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. Alliance
Capital reserves the right to depart from these guidelines in
order to avoid voting decisions that we believe may be contrary
to our clients' best interests. In reviewing proxy issues, we
will apply the following general policies:

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. We
may withhold votes for directors that 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 and failure to act on
tender offers where a majority of shareholders have tendered
their shares. 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.
Finally, we may withhold votes for directors of non-U.S. issuers
where there is insufficient information about the nominees
disclosed in the proxy statement.

Appointment of Auditors: Alliance Capital believes that the
company remains in the best position to choose the auditors and
will generally support management's recommendation. However, we
recognize that there may be inherent conflicts when a company's
independent auditor performs substantial non-audit related
services for the company. Therefore, we may vote against the
appointment of auditors if the fees for non-audit related
services are disproportionate to the total audit fees paid by the
company or there are other reasons to question the independence
of the company's auditors.

Changes in 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, Alliance Capital will cast its votes in accordance with
the company's management 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 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 one hundred percent 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, or if the issuance of
new shares could excessively dilute the value of the outstanding
shares upon issuance.

Corporate Restructurings, Mergers and Acquisitions: Alliance
Capital 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 the research analysts that
cover the company and the investment professionals managing the
portfolios in which the stock is held.

Proposals Affecting Shareholder Rights: Alliance Capital 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.

Corporate Governance: Alliance Capital recognizes the importance
of good corporate governance in ensuring that management and the
board of directors fulfill their obligations to the shareholders.
We favor proposals promoting transparency and accountability
within a company. For example, we will vote for proposals
providing for equal access to proxies, a majority of independent
directors on key committees, and separating the positions of
chairman and chief executive officer.

Anti-Takeover Measures: Alliance Capital believes that measures
that impede 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. We will generally oppose proposals,
regardless of whether they are advanced by management or
shareholders, the purpose or effect of which is to entrench
management or dilute shareholder ownership. Conversely, we
support proposals that would restrict or otherwise eliminate
anti-takeover 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 blank check
preferred stock, classified boards and supermajority vote
requirements) that appear to be intended as management
entrenchment mechanisms.

Executive Compensation: Alliance Capital 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 benefit awards offered.
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. We will analyze
the proposed plans to ensure that shareholder equity will not be
excessively diluted, the option exercise price is not below
market price on the date of grant and an acceptable number of
employees are eligible to participate in such programs. We will
generally oppose plans that permit repricing 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. We will support proposals to submit
severance packages triggered by a change in control to a
shareholder vote and proposals that seek additional disclosure of
executive compensation. Finally, we will support shareholder
proposals requiring companies to expense stock options because we
view them as a large corporate expense.

Social and Corporate Responsibility: Alliance Capital will review
and analyze on a case-by-case basis proposals relating to social,
political and environmental issues to determine whether they will
have a financial impact on shareholder value. We will vote
against proposals that are unduly burdensome or result in
unnecessary and excessive costs to the company. We may abstain
from voting on social proposals that do not have a readily
determinable financial impact on shareholder value.

Proxy Voting Committees
- -----------------------

          Our growth and value investment groups have formed
separate proxy voting committees to establish general proxy
policies for Alliance Capital and consider specific proxy voting
matters as necessary. These committees periodically review new
types of corporate governance issues, evaluate proposals not
covered by these policies and recommend how we should generally
vote on such issues. In addition, the committees, in conjunction
with the analyst that covers the company, contact management and
interested shareholder groups as necessary to discuss proxy
issues. Members of the committees include senior investment
personnel and representatives of the Corporate Legal Department.
The committees may also evaluate proxies where we face a
potential conflict of interest (as discussed below). Finally, the
committees monitor adherence to guidelines, industry trends and
review the policies contained in this statement from time to
time.

Conflicts of Interest
- ---------------------

          Alliance Capital recognizes that there may be a
potential conflict of interest when we vote a proxy solicited by
an issuer whose retirement plan we manage, whose retirement plan
we administer, or with whom we have another business or personal
relationship that may affect how we vote on the issuer's proxy.
We believe that centralized management of proxy voting, oversight
by the proxy voting committees and adherence to these policies
ensures that proxies are voted with only our clients' best
interests in mind. That said, we have implemented additional
procedures to ensure that our votes are not the product of a
conflict of interests, including: (i) requiring anyone involved
in the decision making process to disclose to the chairman of the
appropriate proxy committee any potential conflict that they are
aware of and any contact that they have had with any interested
party regarding a proxy vote; (ii) 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 (iii) 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 a third party research
service to ensure that our voting decision is consistent with our
clients' best interests. For example, if our proposed vote is
consistent with our stated proxy voting policy, no further review
is necessary. If our proposed vote is contrary to our stated
proxy voting policy but is also contrary to management's
recommendation, no further review is necessary. If our proposed
vote is contrary to our stated proxy voting policy or is not
covered by our policy, is consistent with management's
recommendation, and is also consistent with the views of an
independent source, no further review is necessary. If our
proposed vote is contrary to our stated proxy voting policy or is
not covered by our policy, is consistent with management's
recommendation and is contrary to the views of an independent
source, the proposal is reviewed by the appropriate proxy
committee for final determination.

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
(usually one-week) 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. Alliance Capital may
determine that the value of exercising the vote does not outweigh
the detriment of not being able to transact in the shares during
this period. Accordingly, if share blocking is required we may
abstain from voting those shares. In such a situation we would
have determined that the cost of voting exceeds the expected
benefit to the client.

Proxy Voting Records
- --------------------

Clients may obtain information about how we voted proxies on
their behalf by contacting their Alliance Capital administrative
representative. Alternatively, clients may make a written request
for proxy voting information to: Mark R. Manley, Senior Vice
President & Acting General Counsel, Alliance Capital Management
L.P., 1345 Avenue of the Americas, New York, NY 10105.




00250.0292 #517428



[LOGO]
                                      ALLIANCEBERNSTEIN VARIABLE
                                      PRODUCTS SERIES FUND, INC.

- ----------------------------------------------------------------
c/o Alliance Global Investor Services, Inc.
P. O. Box 786003, San Antonio, Texas 78278-6003
Toll Free (800) 221-5672
- ----------------------------------------------------------------

               STATEMENT OF ADDITIONAL INFORMATION
                           May 3, 2004
                  (as amended October 12, 2004)
- ----------------------------------------------------------------

         This Statement of Additional Information ("SAI") is not
a prospectus but supplements and should be read in conjunction
with the Prospectus dated May 3, 2004 for AllianceBernstein
Variable Products Series Fund, Inc. (the "Fund") that offers
Class B shares. A separate Prospectus and SAI relates to the
Fund's Class A shares. Financial Statements for each Portfolio of
the Fund for the year ended December 31, 2003 are included in
each Portfolio's annual report to shareholders and are
incorporated into this SAI by reference. Copies of the
Prospectuses of the Fund and the annual reports for the
Portfolios of the Fund may be obtained by contacting Alliance
Global Investor Services, Inc. ("AGIS") at the address or
telephone number shown above.

                        TABLE OF CONTENTS

                                                                     PAGE

Introduction.............................................................
Investment Policies and Restrictions.....................................
     AllianceBernstein Money Market Portfolio............................
     AllianceBernstein Premier Growth Portfolio..........................
     AllianceBernstein Growth and Income Portfolio.......................
     AllianceBernstein U.S. Government/High Grade
        Securities Portfolio.............................................
     AllianceBernstein High Yield Portfolio..............................
     AllianceBernstein Total Return Portfolio............................
     AllianceBernstein International Portfolio...........................
     AllianceBernstein Global Bond Portfolio.............................
     AllianceBernstein Americas Government Income
        Portfolio
     AllianceBernstein Global Dollar Government Portfolio................
     AllianceBernstein Utility Income Portfolio..........................
     AllianceBernstein Growth Portfolio..................................
     AllianceBernstein Worldwide Privatization Portfolio.................
     AllianceBernstein Technology Portfolio..............................
     AllianceBernstein Small Cap Growth Portfolio........................
     AllianceBernstein Real Estate Investment Portfolio..................
     AllianceBernstein International Value Portfolio.....................
     AllianceBernstein Small Cap Value Portfolio.........................
     AllianceBernstein Value Portfolio...................................
     AllianceBernstein U.S. Large Cap Blended
        Style Portfolio..................................................
     AllianceBernstein Wealth Appreciation
        Strategy Portfolio...............................................
     AllianceBernstein Balanced Wealth
        Strategy Portfolio...............................................
Other Investment Policies................................................
Management of the Fund...................................................
Purchase and Redemption of Shares........................................
Net Asset Value..........................................................
Portfolio Transactions...................................................
Dividends, Distributions and Taxes.......................................
General Information   ...................................................
Financial Statements and Report of Independent
     Auditors............................................................
Appendix A - Description of Obligations Issued
     or Guaranteed by U.S. Government Agencies
     or Instrumentalities................................................A-1
Appendix B - Futures Contracts and Options on
     Futures Contracts and Foreign Currencies............................B-1
Appendix C - Options  ...................................................C-1
Appendix D - Additional Information About
     the United Kingdom, Japan, Canada, Mexico
     and Argentina ......................................................D-1
Appendix E - Statement of Policies and Procedures for
     Voting Proxies......................................................E-1
- --------------------------------------------------------------------

SM:  This is a service mark used under license from the owner.




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

                           INTRODUCTION
- -----------------------------------------------------------------

          The Fund is an open-end series investment company
designed to fund variable annuity contracts and variable life
insurance policies offered by the separate accounts of certain
life insurance companies. The Fund currently offers an
opportunity to choose among the separately managed pools of
assets (the "Portfolios") described in the Fund's Prospectus,
which have differing investment objectives and policies. The Fund
currently has twenty-two Portfolios, all of which are described
in this SAI. All of the Portfolios are diversified except for
AllianceBernstein Global Bond Portfolio, AllianceBernstein Global
Dollar Government Portfolio, AllianceBernstein Americas
Government Income Portfolio and AllianceBernstein Worldwide
Privatization Portfolio. The diversified Portfolios are
diversified as a matter of fundamental policy, and these policies
will not be changed without a shareholder vote.

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

               INVESTMENT POLICIES AND RESTRICTIONS

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

          The following investment policies and restrictions
supplement, and should be read in conjunction with, the
information regarding the investment objectives, policies and
restrictions of each Portfolio set forth in the Fund's
Prospectus. Except as noted below, the investment policies
described below are not fundamental and may be changed by the
Board of Directors of the Fund without the approval of the
shareholders of the affected Portfolio or Portfolios; however,
shareholders will be notified prior to a material change in such
policies.

          Whenever any investment policy or restriction states a
minimum or maximum percentage of a Portfolio's assets which may
be invested in any security or other asset, it is intended that
such minimum or maximum percentage limitation be determined
immediately after and as a result of such Portfolio's acquisition
of such security or other asset. Accordingly, any later increase
or decrease in percentage beyond the specified limitations
resulting from a change in value or net assets will not be
considered a violation.

ALLIANCEBERNSTEIN MONEY MARKET PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          The Portfolio may make the following investments
diversified by maturities and issuers:

          1. Marketable obligations of, or guaranteed by, the
United States Government, its agencies or instrumentalities.
These include issues of the U.S. Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of
agencies and instrumentalities established under the authority of
an act of Congress. The latter issues include, but are not
limited to, obligations of the Bank for Cooperatives, Federal
Financing Bank, Federal Home Loan Bank, Federal Intermediate
Credit Banks, Federal Land Banks, Federal National Mortgage
Association and Tennessee Valley Authority. Some of the
securities are supported by the full faith and credit of the U.S.
Treasury, others are supported by the right of the issuer to
borrow from the U.S. Treasury, and still others are supported
only by the credit of the agency or instrumentality.

          2. Certificates of deposit, bankers' acceptances and
interest-bearing savings deposits issued or guaranteed by banks
or savings and loan associations having total assets of more than
$1 billion and which are members of the Federal Deposit Insurance
Corporation. Certificates of deposit are receipts issued by a
depository institution in exchange for the deposit of funds. The
issuer agrees to pay the amount deposited plus interest to the
bearer of the receipt on the date specified on the certificate.
Such certificates may include, for example, those issued by
foreign subsidiaries of such banks which are guaranteed by them.
The certificate usually can be traded in the secondary market
prior to maturity. Bankers' acceptances typically arise from
short-term credit arrangements designed to enable businesses to
obtain funds to finance commercial transactions. Generally, an
acceptance is a time draft drawn on a bank by an exporter or an
importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then accepted by a bank that, in
effect, unconditionally guarantees to pay the face value of the
instrument on its maturity date. The acceptance may then be held
by the accepting bank as an earning asset or it may be sold in
the secondary market at the going rate of discount for a specific
maturity. Although maturities for acceptances can be as long as
270 days, most acceptances have maturities of six months or less.

          3. Commercial paper, including variable amount master
demand notes, of prime quality rated A-1+ or A-1 by Standard &
Poor's Corporation ("S&P"), Prime-1 by Moody's Investors Service,
Inc. ("Moody's") or F1 by Fitch Ratings ("Fitch") or, if not
rated, issued by domestic and foreign companies which have an
outstanding debt issue rated AAA or AA by S&P or Fitch, or Aaa or
Aa by Moody's. For a description of such ratings see Appendix A
to the Prospectus. Commercial paper consists of short-term
(usually from 1 to 270 days) unsecured promissory notes issued by
corporations in order to finance their current operations. A
variable amount master demand note represents a direct borrowing
arrangement involving periodically fluctuating rates of interest
under a letter agreement between a commercial paper issuer and an
institutional lender pursuant to which the lender may determine
to invest varying amounts.

          4. Repurchase agreements are collateralized fully as
that term is defined in Rule 2a-7 under the Investment Company
Act of 1940 ("1940 Act"). Repurchase agreements may be entered
into with member banks of the Federal Reserve System or primary
dealers (as designated by the Federal Reserve Bank of New York)
in U.S. Government securities or the Fund's custodian. It is the
Portfolio's current practice, which may be changed at any time
without shareholder approval, to enter into repurchase agreements
only with such primary dealers or the Fund's custodian. While the
maturities of the underlying collateral may exceed one year, the
term of the repurchase agreement is always less than one year.
Repurchase agreements not terminable within seven days will be
limited to no more than 10% of the Portfolio's total assets.

          For additional information regarding repurchase
agreements, see "Other Investment Policies -- Repurchase
Agreements," below.

          REVERSE REPURCHASE AGREEMENTS. While the Portfolio has
no current plans to do so, it may enter into reverse repurchase
agreements, which involve the sale of money market securities
held by the Portfolio with an agreement to repurchase the
securities at an agreed-upon price, date and interest payment.
The Fund's custodian will place cash not available for investment
or securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities ("U.S. Government Securities") or
other liquid high-quality debt securities in a separate account
of the Fund having a value equal to the aggregate amount of the
Portfolio's commitments in reverse repurchase agreements.

          LIQUID RESTRICTED SECURITIES. The Portfolio may
purchase restricted securities eligible for resale under Rule
144A of the Securities Act of 1933, as amended (the "Securities
Act") that are determined by Alliance Capital Management L.P.
(the "Adviser," or "Alliance") to be liquid in accordance with
procedures adopted by the Directors. Restricted securities are
securities subject to contractual or legal restrictions on
resale, such as those arising from an issuer's reliance upon
certain exemptions from registration under the Securities Act.

          In recent years, a large institutional market has
developed for certain types of restricted securities including,
among others, private placements, repurchase agreements,
commercial paper, foreign securities and corporate bonds and
notes. These instruments are often restricted securities because
they are sold in transactions not requiring registration. For
example, commercial paper issues in which the Portfolio may
invest include, among others, securities issued by major
corporations without registration under the Securities Act in
reliance on the exemption from registration afforded by Section
3(a)(3) of such Act and commercial paper issued in reliance on
the private placement exemption from registration which is
afforded by Section 4(2) of the Securities Act ("Section 4(2)
paper"). Section 4(2) paper is restricted as to disposition under
the Federal securities laws in that any resale must also be made
in an exempt transaction. Section 4(2) paper is normally resold
to other institutional investors through or with the assistance
of investment dealers who make a market in Section 4(2) paper,
thus providing liquidity. Institutional investors, rather than
selling these instruments to the general public, often depend on
an efficient institutional market in which such restricted
securities can be readily resold in transactions not involving a
public offering. In many instances, therefore, the existence of
contractual or legal restrictions on resale to the general public
does not, in practice, impair the liquidity of such investments
from the perspective of institutional holders.

          In 1990, in part to enhance the liquidity in the
institutional markets for restricted securities, the Securities
and Exchange Commission (the "Commission") adopted Rule 144A
under the Securities Act to establish a safe harbor from the
Securities Act's registration requirements for resale of certain
restricted securities to qualified institutional buyers. Section
4(2) paper that is issued by a company that files reports under
the Securities Exchange Act of 1934 ("Exchange Act") is generally
eligible to be resold in reliance on the safe harbor of Rule
144A. Pursuant to Rule 144A, the institutional restricted
securities markets may provide both readily ascertainable values
for restricted securities and the ability to liquidate an
investment in order to satisfy share redemption orders on a
timely basis. An insufficient number of qualified institutional
buyers interested in purchasing certain restricted securities
held by the Portfolio, however, could affect adversely the
marketability of such portfolio securities and the Portfolio
might be unable to dispose of such securities promptly or at
reasonable prices. Rule 144A has already produced enhanced
liquidity for many restricted securities, and market liquidity
for such securities may continue to expand as a result of Rule
144A and the consequent inception of the PORTAL System sponsored
by the National Association of Securities Dealers, Inc. ("NASD"),
an automated system for the trading, clearance and settlement of
unregistered securities. The Portfolio's investments in Rule 144A
eligible securities are not subject to the limitations described
above on securities issued under Section 4(2).

          The Fund's Directors have the ultimate responsibility
for determining whether specific securities are liquid or
illiquid. The Directors have delegated the function of making
day-to-day determinations of liquidity to the Adviser, pursuant
to guidelines approved by the Directors. The Adviser takes into
account a number of factors in determining whether a restricted
security being considered for purchase is liquid, including at
least the following:

          (i)      the frequency of trades and quotations
                   for the security;

          (ii)     the number of dealers making quotations
                   to purchase or sell the security;

          (iii)    the number of other potential purchasers
                   of the security;

          (iv)     the number of dealers undertaking to make
                   a market in the security;

          (v)      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 transfer); and

          (vi)     any applicable Commission interpretation
                   or position with respect to such types of
                   securities.

          Following the purchase of a restricted security by the
Portfolio, the Adviser monitors continuously the liquidity of
such security and reports to the Directors regarding purchases of
liquid restricted securities.

          MONEY MARKET REQUIREMENTS. While there are many kinds
of short-term securities used by money market investors, the
Portfolio, in keeping with its primary investment objective of
safety of principal, restricts its portfolio to the types of
investments listed above. Of note, the Portfolio does not invest
in issues of savings and loan associations, letters of credit, or
issues of foreign banks. The Portfolio may make investments in
certificates of deposit issued by, and time deposits maintained
at, foreign branches of domestic banks specified above, prime
quality dollar-denominated commercial paper issued by foreign
companies meeting the rating criteria specified above, and in
certificates of deposit and bankers' acceptances denominated in
U.S. dollars that are issued by U.S. branches of foreign banks
having total assets of at least $1 billion that are believed by
the Adviser to be of quality equivalent to that of other such
investments in which the Portfolio may invest. To the extent that
the Portfolio invests in such instruments, consideration is given
to their domestic marketability, the lower reserve requirements
generally mandated for overseas banking operations, the possible
impact of interruptions in the flow of international currency
transactions, potential political and social instability or
expropriation, imposition of foreign taxes, less government
supervision of issuers, difficulty in enforcing contractual
obligations and lack of uniform accounting standards. As even the
safest of securities involve some risk, there can be no
assurance, as is true with all investment companies, that the
Portfolio's objective will be achieved. The market value of the
Portfolio's investments tends to decrease during periods of
rising interest rates and to increase during intervals of falling
rates.

          The Portfolio intends to comply with Rule 2a-7 as
amended from time to time, including the diversification, quality
and maturity conditions imposed by the Rule. Accordingly, in any
case in which there is a variation between the conditions imposed
by the Rule and the Portfolio's investment policies and
restrictions, the Portfolio will be governed by the more
restrictive of the two requirements.

          Currently, pursuant to Rule 2a-7, the Portfolio may
invest only in U.S. denominated "Eligible Securities," (as that
term is defined in the Rule) that have been determined by the
Adviser to present minimal credit risks pursuant to procedures
approved by the Board of Directors. Generally, an eligible
security is a security that (i) has a remaining maturity of 397
days or less and (ii) is rated, or is issued by an issuer with
short-term debt outstanding that is rated, in one of the two
highest rating categories by two nationally recognized
statistical rating organizations ("NRSROs") or, if only one NRSRO
has issued a rating, by that NRSRO. A security that originally
had a maturity of greater than 397 days is an eligible security
if the issuer has outstanding short-term debt that would be an
eligible security. Unrated securities may also be eligible
securities if the Adviser determines that they are of comparable
quality to a rated eligible security pursuant to guidelines
approved by the Board of Directors. A description of the ratings
of some NRSROs appears in Appendix A to the Prospectus.

          Under Rule 2a-7, the Portfolio may not invest more than
5% of its assets in the first tier securities of any one issuer
other than the United States Government, its agencies and
instrumentalities. Generally, a first tier security is an
Eligible Security that has received a short-term rating from the
requisite NRSROs in the highest short-term rating category for
debt obligations, or is an unrated security deemed to be of
comparable quality. U.S. Government Securities are also
considered to be first tier securities. In addition, the
Portfolio may not invest in a security that has received, or is
deemed comparable in quality to a security that has received, the
second highest rating by the requisite number of NRSROs (a second
tier security) if immediately after the acquisition thereof that
Portfolio would have invested more than (A) the greater of 1% of
its total assets or one million dollars in securities issued by
that issuer which are second tier securities, or (B) 5% of its
total assets in second tier securities.

          INVESTMENT RESTRICTIONS. The following restrictions,
which are applicable to the Portfolio, supplement those set forth
above and may not be changed without Shareholder Approval, as
defined under the caption "General Information." below.

          The Portfolio may not:

          1. invest in securities of any one issuer (including
repurchase agreements with any one entity) other than U.S.
Government Securities, if immediately after such purchases more
than 5% of the value of its total assets would be invested in
such issuer, except that 25% of the value of the total assets of
a Portfolio may be invested without regard to such 5% limitation;

          2. acquire more than 10% of any class of the
outstanding securities of any issuer (for this purpose, all
preferred stock of an issuer shall be deemed a single class, and
all indebtedness of an issuer shall be deemed a single class);

          3. invest more than 25% of the value of its total
assets at the time an investment is made in the securities of
issuers conducting their principal business activities in any one
industry, except that there is no such limitation with respect to
U.S. Government Securities or certificates of deposit, bankers'
acceptances and interest-bearing deposits (for purposes of this
investment restriction, the electric, gas, telephone and water
business shall each be considered as a separate industry);

          4. borrow money, except that the Portfolio may borrow
money only for extraordinary or emergency purposes and then only
in amounts not exceeding 15% of its total assets at the time of
borrowing;

          5. mortgage, pledge or hypothecate any of its assets,
except as may be necessary in connection with permissible
borrowings described in paragraph 4 above (in an aggregate amount
not to exceed 15% of total assets of the Portfolio);

          6. invest in illiquid securities if immediately after
such investment more than 10% of the Portfolio's total assets
(taken at market value) would be invested in such securities;

          7. invest more than 10% of the value of its total
assets in repurchase agreements not terminable within seven days;

          8. purchase any security which has a maturity date more
than one year from the date of the Portfolio's purchase;

          9. make investments for the purpose of exercising
control;

          10. purchase securities of other investment companies,
except in connection with a merger, consolidation, acquisition or
reorganization;

          11. invest in real estate (other than money market
securities secured by real estate or interests therein or money
market securities issued by companies which invest in real estate
or interests therein), commodities or commodity contracts,
interests in oil, gas and other mineral exploration or other
development programs;

          12. make short sales of securities or maintain a short
position or write, purchase or sell puts, calls, straddles,
spreads or combinations thereof; or

          13. purchase or retain securities of any issuers if
those officers and directors of the Fund and officers and
directors of the Adviser who own individually more than 1/2% of
the outstanding securities of such issuer together own more than
5% of the securities of such issuer.

ALLIANCEBERNSTEIN PREMIER GROWTH PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          RESTRICTED SECURITIES. The Portfolio may invest in both
listed and unlisted domestic and foreign securities, and in
restricted securities, and in other assets having no ready
market, but not more than 10% of the Portfolio's total assets may
be invested in all such restricted or not readily marketable
assets at any one time. Restricted securities may be sold only in
privately negotiated transactions or in a public offering with
respect to which a registration statement is in effect under the
Securities Act, or pursuant to Rule 144 promulgated under such
Act. Where registration is required, the Portfolio may be
obligated to pay all or part of the registration expense, and a
considerable period may elapse between the time of the decision
to sell and the time the Portfolio may be permitted to sell a
security under an effective registration statement. If during
such a period adverse market conditions were to develop, the
Portfolio might obtain a less favorable price than that which
prevailed when it decided to sell. Restricted securities and
other not readily marketable assets will be valued in such a
manner as the Board of Directors of the Fund in good faith deems
appropriate to reflect their fair market value. See "Other
Investment Policies -- Illiquid Securities" below, for a more
detailed discussion of the Portfolio's investment policy on
restricted securities and securities with legal or contractual
restrictions on resale.

          SPECIAL SITUATIONS. The Portfolio will invest in
special situations from time to time. A special situation arises
when, in the opinion of the Adviser, the securities of a
particular company will, within a reasonably estimable period of
time, be accorded market recognition at an appreciated value
solely by reason of a development particularly or uniquely
applicable to that company, and regardless of general business
conditions or movements of the market as a whole. Developments
creating special situations might include, among others,
liquidations, reorganizations, recapitalizations or mergers,
material litigation, technological breakthroughs and new
management or management policies. Although large and well-known
companies may be involved, special situations often involve much
greater risk than is inherent in ordinary investment securities.

          SHORT SALES. The Portfolio may not sell securities
short, except that it may make short sales against the box. Such
sales may be used in some cases by the Portfolio to defer the
realization of gain or loss for federal income tax purposes on
securities then owned by the Portfolio. However, if the Portfolio
has unrealized gain with respect to a security and enters into a
short sale with respect to such security, the Portfolio generally
will be deemed to have sold the appreciated security and thus
will recognize gain for tax purposes.

          OPTIONS. The Portfolio may write call options and may
purchase and sell put and call options written by others,
combinations thereof, or similar options. The Portfolio may not
write put options. A put option gives the buyer of such option,
upon payment of a premium, the right to deliver a specified
number of shares of a stock to the writer of the option on or
before a fixed date at a predetermined price. A call option gives
the purchaser of the option, upon payment of a premium, the right
to call upon the writer to deliver a specified number of shares
of a specified stock on or before a fixed date, at a
predetermined price, usually the market price at the time the
contract is negotiated. A call option written by the Portfolio is
covered if the Portfolio owns the underlying security covered by
the call or has an absolute and immediate right to acquire that
security without additional cash consideration (or for additional
cash, U.S. Government Securities or other liquid high grade debt
obligation held in a segregated account by the Fund's custodian)
upon conversion or exchange of other securities held in its
portfolio. A call option is also covered if the Portfolio holds a
call on the same security and in the same principal amount as the
call written where the exercise price of the call held (a) is
equal to or less than the exercise price of the call written or
(b) is greater than the exercise price of the call written if the
difference is maintained by the Portfolio in cash in a segregated
account with the Fund's custodian. The premium paid by the
purchaser of an option will reflect, among other things, the
relationship of the exercise price to the market price and
volatility of the underlying security, the remaining term of the
option, supply and demand and interest rates.

          The writing of call options will, therefore, involve a
potential loss of opportunity to sell securities at high prices.
In exchange for the premium received by it, the writer of a fully
collateralized call option assumes the full downside risk of the
securities subject to such option. In addition, the writer of the
call gives up the gain possibility of the stock protecting the
call. Generally, the opportunity for profit from the writing of
options occurs when the stocks involved are lower priced or
volatile, or both. While an option that has been written is in
force, the maximum profit that may be derived from the optioned
stock is the premium less brokerage commissions and fees.

          It is the Portfolio's policy not to write a call option
if the premium to be received by the Portfolio in connection with
such options would not produce an annualized return of at least
15% of the then market value of the securities subject to the
option. Commissions, stock transfer taxes and other expenses of
the Portfolio must be deducted from such premium receipts. Option
premiums vary widely depending primarily on supply and demand.
Calls written by the Portfolio will ordinarily be sold either on
a national securities exchange or through put and call dealers,
most, if not all, of which are members of a national securities
exchange on which options are traded, and will in such case be
endorsed or guaranteed by a member of a national securities
exchange or qualified broker-dealer, which may be Sanford C.
Bernstein & Co. ("SCB & Co."), an affiliate of the Adviser. The
endorsing or guaranteeing firm requires that the option writer
(in this case the Portfolio) maintain a margin account containing
either corresponding stock or other equity as required by the
endorsing or guaranteeing firm.

          The Portfolio will not sell a call option written or
guaranteed by it if, as a result of such sale, the aggregate of
the Portfolio's securities subject to outstanding call options
(valued at the lower of the option price or market value of such
securities) would exceed 15% of the Portfolio's total assets. The
Portfolio will not sell any call option if such sale would result
in more than 10% of the Portfolio's assets being committed to
call options written by the Portfolio which, at the time of sale
by the Portfolio, have a remaining term of more than 100 days.

          INVESTMENT RESTRICTIONS. The following restrictions,
which are applicable to the Portfolio, supplement those set forth
above and may not be changed without Shareholder Approval, as
defined under the caption "General Information," below.

               The Portfolio may not:

          1. invest in securities of any one issuer (including
repurchase agreements with any one entity) other than U.S.
Government Securities, if immediately after such purchases more
than 5% of the value of its total assets would be invested in
such issuer, except that 25% of the value of the total assets of
a Portfolio may be invested without regard to such 5% limitation;

          2. acquire more than 10% of any class of the
outstanding securities of any issuer (for this purpose, all
preferred stock of an issuer shall be deemed a single class, and
all indebtedness of an issuer shall be deemed a single class);

          3. invest more than 25% of the value of its total
assets at the time an investment is made in the securities of
issuers conducting their principal business activities in any one
industry, except that there is no such limitation with respect to
U.S. Government Securities or certificates of deposit, bankers'
acceptances and interest-bearing deposits (for purposes of this
investment restriction, the electric, gas, telephone and water
business shall each be considered as a separate industry);

          4. borrow money, except that the Portfolio may borrow
money only for extraordinary or emergency purposes and then only
in amounts not exceeding 15% of its total assets at the time of
borrowing;

          5. mortgage, pledge or hypothecate any of its assets,
except as may be necessary in connection with permissible
borrowings described in paragraph 4 above (in an aggregate amount
not to exceed 15% of total assets of the Portfolio), or as
permitted in connection with short sales of securities "against
the box" by the Portfolio, as described above;

          6. invest in illiquid securities if immediately after
such investment more than 10% of the Portfolio's total assets
(taken at market value) would be invested in such securities;

          7. invest more than 10% of the value of its total
assets in repurchase agreements not terminable within seven days;

          8. write put options;

          9. make investments for the purpose of exercising
control;

          10. except as permitted in connection with short sales
of securities against the box described under the heading "Short
Sales" above, make short sales of securities;

          11. buy or hold securities of any issuer if any officer
or director of the Fund, the Adviser or any officer, director or
10% shareholder of the Adviser owns individually 1/2 of 1% of a
class of securities of such issuer, and such persons together own
beneficially more than 5% of such securities; or

          12. buy or sell any real estate or interests therein,
commodities or commodity contracts, including commodity futures
contracts.

ALLIANCEBERNSTEIN GROWTH AND INCOME PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

          The Portfolio may invest whenever the economic outlook
is unfavorable for common stock investments in other types of
securities, such as bonds, convertible bonds, preferred stocks
and convertible preferred stocks. The Portfolio engages primarily
in holding securities for investment and not for trading
purposes. Purchases and sales of portfolio securities are made at
such times and in such amounts as are deemed advisable in the
light of market, economic and other conditions, irrespective of
the volume of portfolio turnover.

          The Portfolio may invest in foreign securities.
Although not a fundamental policy, the Portfolio will not make
any such investments unless such securities are listed on a
national securities exchange.

          It is the Portfolio's policy not to concentrate its
investments in any one industry by investment of more than 25% of
the value of its total assets in such industry, underwrite
securities issued by other persons, purchase any securities as to
which it might be deemed a statutory underwriter under the
Securities Act, purchase or sell commodities or commodity
contracts or engage in the business of purchasing and selling
real estate.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

         The following investment policies and restrictions
supplement those set forth in the Prospectus.

          OPTIONS. The Portfolio may write covered call options,
provided that the option is listed on a domestic securities
exchange and that no option will be written if, as a result, more
than 25% of the Portfolio's assets are subject to call options.
For a discussion of options, see "AllianceBernstein Premier
Growth Portfolio - Options," above.

          The Portfolio will purchase call options only to close
out a position in an option written by it. In order to close out
a position, the Portfolio will make a closing purchase
transaction if such is available. In such a transaction, the
Portfolio will purchase a call option on the same security option
that it has previously written. When a security is sold from the
Portfolio against which a call option has been written, the
Portfolio will effect a closing purchase transaction so as to
close out any existing call option on that security. The
Portfolio will realize a profit or loss from a closing purchase
transaction if the amount paid to purchase a call option is less
or more than the amount received as a premium for the writing
thereof. A closing purchase transaction cannot be made if trading
in the option has been suspended.

          The premium received by the Portfolio upon writing a
call option will increase the Portfolio's assets, and a
corresponding liability will be recorded and subsequently
adjusted from day to day to the current value of the option
written. For example, if the current value of the option exceeds
the premium received, the excess would be an unrealized loss and,
conversely, if the premium exceeds the current value, such excess
would be an unrealized gain. The current value of the option will
be the last sales price on the principal exchange on which the
option is traded or, in the absence of any transactions, the mean
between the closing bid and asked price.

          INVESTMENT RESTRICTIONS. The following investment
restrictions, which are applicable to the Portfolio, supplement
those set forth above and may not be changed without Shareholder
Approval, as defined under the caption "General Information,"
below.

          The Portfolio may not:

          1. invest in securities of any one issuer (including
repurchase agreements with any one entity) other than U.S.
Government Securities, if immediately after such purchases more
than 5% of the value of its total assets would be invested in
such issuer, except that 25% of the value of the total assets of
a Portfolio may be invested without regard to such 5% limitation;

          2. acquire more than 10% of any class of the
outstanding securities of any issuer (for this purpose, all
preferred stock of an issuer shall be deemed a single class, and
all indebtedness of an issuer shall be deemed a single class);

          3. invest more than 25% of the value of its total
assets at the time an investment is made in the securities of
issuers conducting their principal business activities in any one
industry, except that there is no such limitation with respect to
U.S. Government Securities or certificates of deposit, bankers'
acceptances and interest-bearing deposits (for purposes of this
investment restriction, the electric, gas, telephone and water
business shall each be considered as a separate industry);

          4. borrow money, except that the Portfolio may borrow
money only for extraordinary or emergency purposes and then only
in amounts not exceeding 15% of its total assets at the time of
borrowing;

          5. mortgage, pledge or hypothecate any of its assets,
except as may be necessary in connection with permissible
borrowings described in paragraph 4 above (in an aggregate amount
not to exceed 15% of total assets of the Portfolio);

          6. invest in illiquid securities if immediately after
such investment more than 10% of the Portfolio's total assets
(taken at market value) would be invested in such securities;

          7. invest more than 10% of the value of its total
assets in repurchase agreements not terminable within seven days;
8. purchase the securities of any other investment company except
in a regular transaction on the open market;

          9. purchase the securities of any issuer if directors
or officers of the Fund or certain other interested persons own
more than 5% of such securities; or

          10. invest in the securities of any company for the
purpose of exercising control of management.

ALLIANCEBERNSTEIN U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          The Portfolio is subject to the diversification
requirements imposed by the Internal Revenue Code of 1986, as
amended (the "Code"), which, among other things, limits the
Portfolio to investing no more than 55% of its total assets in
any one investment. For purposes of this test, (i) all securities
of the same issuer are treated as a single investment, and (ii)
in the case of securities issued or guaranteed by the United
States or an agency or instrumentality of the United States, each
government agency or instrumentality is considered a separate
issuer. Consistent with this limitation, the Portfolio, as a
matter of fundamental policy, invests at least 45% of its total
assets in U.S. Government Securities. Nevertheless, the Portfolio
reserves the right to modify the percentage of its investments in
U.S. Government Securities in order to comply with all applicable
tax requirements.

          U.S. GOVERNMENT SECURITIES. U.S. Government Securities
include: (i) U.S. Treasury obligations, which differ only in
their interest rates, maturities and times of issuance, U.S.
Treasury bills (maturity of one year or less), U.S. Treasury
notes (maturities of one to 10 years), and U.S. Treasury bonds
(generally maturities of greater than 10 years), all of which are
backed by the full faith and credit of the United States; and
(ii) obligations issued or guaranteed by U.S. Government agencies
or instrumentalities, including government guaranteed
mortgage-related securities, some of which are backed by the full
faith and credit of the U.S. Treasury (e.g., direct pass-through
certificates of the Government National Mortgage Association),
some of which are supported by the right of the issuer to borrow
from the U.S. Government (e.g., obligations of Federal Home Loan
Banks), and some of which are backed only by the credit of the
issuer itself (e.g., obligations of the Student Loan Marketing
Association). See Appendix A for a description of obligations
issued or guaranteed by U.S. Government agencies or
instrumentalities.

          U.S. GOVERNMENT GUARANTEED MORTGAGE-RELATED SECURITIES
- -- GENERAL. Mortgages backing the U.S. Government guaranteed
mortgage-related securities purchased by the Portfolio include,
among others, conventional 30-year fixed rate mortgages,
graduated payment mortgages, 15-year mortgages and adjustable
rate mortgages. All of these mortgages can be used to create
pass-through securities. A pass-through security is formed when
mortgages are pooled together and undivided interests in the pool
or pools are sold. The cash flow from the mortgages is passed
through to the holders of the securities in the form of periodic
payments of interest, principal and prepayments (net of a service
fee). Prepayments occur when the holder of an individual mortgage
prepays the remaining principal before the mortgage's scheduled
maturity date. As a result of the pass-through of prepayments of
principal on the underlying securities, mortgage-backed
securities are often subject to more rapid prepayment of
principal than their stated maturity would indicate. Because the
prepayment characteristics of the underlying mortgages vary, it
is not possible to predict accurately the realized yield or
average life of a particular issue of pass-through certificates.
Prepayment rates are important because of their effect on the
yield and price of the securities. Accelerated prepayments
adversely impact yields for pass-throughs purchased at a premium
(i.e., a price in excess of principal amount) and may involve
additional risk of loss of principal because the premium may not
be fully amortized at the time the obligation is repaid. The
opposite is true for pass-throughs purchased at a discount. The
Portfolio may purchase mortgage-related securities at a premium
or at a discount. Principal and interest payments on the
mortgage-related securities are government guaranteed to the
extent described below. Such guarantees do not extend to the
value or yield of the mortgage-related securities themselves or
of the Portfolio's shares of common stock.

          GNMA CERTIFICATES. Certificates of the Government
National Mortgage Association ("GNMA Certificates") are mortgage-
related securities, which evidence an undivided interest in a
pool or pools of mortgages. GNMA Certificates that the Portfolio
may purchase are the modified pass-through type, which entitle
the holder to receive timely payment of all interest and
principal payments due on the mortgage pool, net of fees paid to
the issuer and GNMA, regardless of whether or not the mortgagors
actually make mortgage payments when due.

          The National Housing Act authorizes GNMA to guarantee
the timely payment of principal and interest on securities backed
by a pool or mortgages insured by the Federal Housing
Administration ("FHA") or guaranteed by the Veterans
Administration ("VA"). The GNMA guarantee is backed by the full
faith and credit of the United States Government. GNMA is also
empowered to borrow without limitation from the U.S. Treasury if
necessary to make any payments required under its guarantee.

          The average life of a GNMA Certificate is likely to be
substantially shorter than the original maturity of the mortgages
underlying the securities. Prepayments of principal by mortgagors
and mortgage foreclosures will usually result in the return of
the greater part of principal investment long before the maturity
of the mortgages in the pool. Foreclosures impose no risk to
principal investment because of the GNMA guarantee, except to the
extent that the Portfolio has purchased the certificates above
par in the secondary market.

          FHLMC SECURITIES. The Federal Home Loan Mortgage
Corporation ("FHLMC") was created in 1970 through enactment of
Title III of the Emergency Home Finance Act of 1970. Its purpose
is to promote development of a nationwide secondary market in
conventional residential mortgages.

          The FHLMC issues two types of mortgage-related
pass-through securities ("FHLMC Certificates"), mortgage
participation certificates ("PCs") and guaranteed mortgage
securities ("GMCs"). PCs resemble GNMA Certificates in that each
PC represents a pro rata share of all interest and principal
payments made and owed on the underlying pool. The FHLMC
guarantees timely monthly payment of interest on PCs and the
ultimate payment of principal.

          GMCs also represent a pro rata interest in a pool of
mortgages. However, these instruments pay interest semi-annually
and return principal once a year in guaranteed minimum payments.
The expected average life of these securities is approximately
ten years. The FHLMC guarantee is not backed by the full faith
and credit of the United States.

          FNMA SECURITIES. The Federal National Mortgage
Association ("FNMA") was established in 1938 to create a
secondary market in mortgages insured by the FHA. FNMA issues
guaranteed mortgage pass-through certificates ("FNMA
Certificates"). FNMA Certificates resemble GNMA Certificates in
that each FNMA Certificate represents a pro rata share of all
interest and principal payments made and owed on the underlying
pool. FNMA guarantees timely payment of interest and principal on
FNMA Certificates. The FNMA guarantee is not backed by the full
faith and credit of the United States.

          ZERO COUPON TREASURY SECURITIES. The Portfolio may
invest in zero coupon Treasury securities, which are U.S.
Treasury bills, notes and bonds which have been stripped of their
unmatured interest coupons and receipts or certificates
representing interests in such stripped debt obligations and
coupons. A zero coupon security is a debt obligation that does
not entitle the holder to any periodic payments prior to maturity
but, instead, is issued and traded at a discount from its face
amount. The discount varies depending on the time remaining until
maturity, prevailing interest rates, liquidity of the security
and perceived credit quality of the issuer. The market prices of
zero coupon securities are generally more volatile than those of
interest-bearing securities, and are likely to respond to changes
in interest rates to a greater degree than otherwise comparable
securities that do pay periodic interest. Current federal tax law
requires that a holder (such as the Portfolio) of a zero coupon
security accrue a portion of the discount at which the security
was purchased as income each year, even though the holder
receives no interest payment on the security during the year. As
a result, in order to make the distributions necessary for the
Portfolio not to be subject to federal income or excise taxes,
the Portfolio might be required to pay out as an income
distribution each year an amount, obtained by liquidation of
portfolio securities if necessary, greater than the total amount
of cash that the Portfolio has actually received as interest
during the year. The Adviser believes, however, that it is highly
unlikely that it would be necessary to liquidate any portfolio
securities for this purpose.

          Currently the only U.S. Treasury security issued
without coupons is the Treasury bill. Although the U.S. Treasury
does not itself issue treasury notes and bonds without coupons,
under the U.S. Treasury STRIPS program interest and principal on
certain long term treasury securities may be maintained
separately in the Federal Reserve book entry system and may be
separately traded and owned. However, in the last few years a
number of banks and brokerage firms have separated ("stripped")
the principal portions ("corpus") from the coupon portions of the
U.S. Treasury bonds and notes and sold them separately in the
form of receipts or certificates representing undivided interests
in these instruments (which instruments are generally held by a
bank in a custodial or trust account). The Staff of the
Commission has indicated that these receipts or certificates
representing stripped corpus interests in U.S. Treasury
securities sold by banks and brokerage firms should be considered
as securities issued by the bank or brokerage firm involved and,
therefore, should not be included in the Portfolio's
categorization of U.S. Government Securities for purposes of the
Portfolio's investing at least 45% of its assets in U.S.
Government Securities. The Fund disagrees with the Staff's
interpretation but has undertaken, until final resolution of the
issue, to include the Portfolio's purchases of such securities in
the non-U.S. Government Securities portion of the Portfolio's
investments which may be as much as 55% of its total assets.
However, if such securities are deemed to be U.S. Government
Securities, the Portfolio will include them as such for purposes
of determining the 55% limitation on U.S. Government Securities.

          REPURCHASE AGREEMENTS. The Portfolio 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. Currently the Portfolio plans to enter into
repurchase agreements only with the Fund's custodian and such
primary dealers. For a general discussion of repurchase
agreements, see "Other Investment Policies -- Repurchase
Agreements," below.

          GENERAL. U.S. Government Securities do not generally
involve the credit risks associated with other types of interest
bearing securities. As a result, the yields available from U.S.
Government Securities are generally lower than the yields
available from other interest-bearing securities. Like other
fixed-income securities, however, the values of U.S. Government
Securities change as interest rates fluctuate. When interest
rates decline, the values of U.S. Government Securities can be
expected to increase and when interest rates rise, the values of
U.S. Government Securities can be expected to decrease.

          HIGH GRADE DEBT SECURITIES. High grade debt securities
which, together with U.S. Government Securities, constitute at
least 65% of the Portfolio's assets include:

          1. debt securities which are rated AAA, AA, or A by S&P
or Fitch or Aaa, Aa or A by Moody's;

          2. obligations of, or guaranteed by, national or state
bank holding companies, which obligations, although not rated as
a matter of policy by either S&P or Moody's, are rated AAA, AA or
A by Fitch;

          3. commercial paper rated A-1+, A-1, A-2 or A-3 by S&P,
F1, F2 or F3 by Fitch or Prime-1, Prime-2 or Prime-3 by Moody's;
and

          4. bankers' acceptances or negotiable certificates of
deposit issued by banks rated AAA, AA or A by Fitch.

          INVESTMENT IN HIGH GRADE DEBT SECURITIES. With respect
to the Portfolio's investment in high grade debt securities, the
Portfolio does not acquire common stocks or equities exchangeable
for or convertible into common stock or rights or warrants to
subscribe for or purchase common stock, except that with respect
to convertible debt securities, the Portfolio may acquire common
stock through the exercise of conversion rights in situations
where it believes such exercise is in the best interest of the
Portfolio and its shareholders. In such event, the Portfolio will
sell the common stock resulting from such conversion as soon as
practical. The Portfolio may acquire debt securities and
nonconvertible preferred stock which may have voting rights, but
in no case will the Portfolio acquire more than 10% of the voting
securities of any one issuer. The relative size of the
Portfolio's investments in any grade or type of security will
vary from time to time. Critical factors that are considered in
the selection of securities relate to other investment
alternatives as well as trends in the determinants of interest
rates, corporate profits and management capabilities and
practices.

          SECURITIES RATINGS. The ratings of fixed-income
securities by S&P, Moody's and Fitch are a generally accepted
barometer 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.

          RESTRICTED SECURITIES. Consistent with its investment
restrictions, the Portfolio may acquire restricted securities.
Restricted securities may be sold only in privately negotiated
transactions or in a public offering with respect to which a
registration statement is in effect under the Securities Act or
pursuant to Rule 144 promulgated under such Act. Where
registration is required, the Portfolio may be obligated to pay
all or part of the registration expense, and a considerable
period may elapse between the time of the decision to sell and
the time the Portfolio may be permitted to sell a security under
an effective registration statement. If during such a period
adverse market conditions were to develop, the Portfolio might
obtain a less favorable price than prevailed when it decided to
sell. Restricted securities will be valued in such manner as the
Board of Directors of the Fund in good faith deem appropriate to
reflect their fair market value. If through the appreciation of
restricted securities or the depreciation of unrestricted
securities, the Portfolio should be in a position where more than
10% of the value of its total assets is invested in illiquid
assets, including restricted securities, the Portfolio will take
appropriate steps to protect liquidity. See "Other Investment
Policies -- Illiquid Securities" below, for a more detailed
discussion of the Portfolio's investment policy in securities
with legal or contractual restrictions on resale.

          OTHER SECURITIES. While the Portfolio's investment
strategy emphasizes U.S. Government Securities and high grade
debt securities, the Portfolio may, consistent with its
investment objectives, invest up to 20% of its net assets in
securities other than U.S. Government Securities and high grade
debt securities, including (i) investment grade corporate debt
securities of a type other than the high grade debt securities
described above (including collateralized mortgage obligations),
(ii) certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of
more than $1 billion and which are members of the Federal Deposit
Insurance Corporation and (iii) put and call options, futures
contracts and options thereon. Investment grade debt securities
are those rated Baa or higher by Moody's or BBB or higher by S&P
or Fitch or, if not so rated, of equivalent investment quality in
the opinion of the Adviser. Securities rated Baa by Moody's or
BBB by S&P or Fitch normally provide higher yields but are
considered to have speculative characteristics. Sustained periods
of deteriorating economic conditions or rising interest rates are
more likely to lead to a weakening in the issuers capacity to pay
interest and repay principal than in the case of higher-rated
securities. See Appendix A to the Prospectus for a description of
corporate debt ratings.

          COLLATERALIZED MORTGAGE OBLIGATIONS. Collateralized
mortgage obligations ("CMOs") are debt obligations issued
generally by finance subsidiaries or trusts that are secured by
mortgage-backed certificates, including, in many cases, GNMA
Certificates, FHLMC Certificates and FNMA Certificates, together
with certain funds and other collateral.

          Scheduled distributions on the mortgage-backed
certificates pledged to secure the CMOs, together with certain
funds and other collateral, will be sufficient to make timely
payments of interest on the CMOs and to retire the CMOs not later
than their stated maturity. Since the rate of payment of
principal of the CMOs depends on the rate of payment (including
prepayments) of the principal of the underlying mortgage-backed
certificates, the actual maturity of the CMOs could occur
significantly earlier than their stated maturity. The CMOs may be
subject to redemption under certain circumstances. CMOs bought at
a premium (i.e., a price in excess of principal amount) may
involve additional risk of loss of principal in the event of
unanticipated prepayments of the underlying mortgages because the
premium may not have been fully amortized at the time the
obligation is repaid.

          Although payment of the principal of and interest on
the mortgage-backed certificates pledged to secure the CMOs may
be guaranteed by GNMA, FHLMC, or FNMA, the CMOs represent
obligations solely of the issuer and are not insured or
guaranteed by GNMA, FHLMC, FNMA or any other governmental agency,
or by any other person or entity. The issuers of CMOs typically
have no significant assets other than those pledged as collateral
for the obligations.

          The Staff of the Commission currently takes the
position, in a reversal of its former view, that certain issuers
of CMOs are not investment companies for purposes of Section
12(d)(i) of the 1940 Act, which limits the ability of one
investment company to invest in another investment company. The
Staff of the Commission has determined that certain issuers of
CMOs are investment companies for purposes of the 1940 Act. In
reliance on a recent Staff interpretation, the Portfolio's
investments in certain qualifying CMOs, including CMOs that have
elected to be treated as real estate mortgage investment conduits
(REMICs), are not subject to the 1940 Act's limitation on
acquiring interests in other investment companies. In order to be
able to rely on the Staff's interpretation, the CMOs and REMICs
must be unmanaged, fixed-asset issuers, that (a) invest primarily
in mortgage-backed securities, (b) do not issue redeemable
securities, (c) operate under general exemptive orders exempting
them from all provisions of the 1940 Act, and (d) are not
registered or regulated under the 1940 Act as investment
companies. To the extent that the Portfolio selects CMOs or
REMICs that do not meet the above requirements, the Portfolio may
not invest more than 10% of its assets in all such entities and
may not acquire more than 3% of the voting securities of any
single such entity.

          OPTIONS ON U.S. GOVERNMENT SECURITIES. In an effort to
increase current income and to reduce fluctuations in net asset
value, the Portfolio intends to write covered put and call
options and purchase put and call options on U.S. Government
Securities that are traded on United States securities exchanges
and over the counter. The Portfolio may also write such call
options that are not covered for cross-hedging purposes. There
are no specific percentage limitations on the Portfolio's
investments in options.

          The Portfolio intends to write call options for
cross-hedging purposes. A call option is for cross-hedging
purposes if it is designed to provide a hedge against a decline
in value in another security which the Portfolio owns or has the
right to acquire. In such circumstances, the Portfolio
collateralizes the option by maintaining in a segregated account
with the custodian, cash or U.S. Government Securities in an
amount not less than the market value of the underlying security,
marked to market daily.

          In purchasing a call option, the Portfolio would be in
a position to realize a gain if, during the option period, the
price of the security increased by an amount in excess of the
premium paid. It would realize a loss if the price of the
security declined or remained the same or did not increase during
the period by more than the amount of the premium. In purchasing
a put option, the Portfolio would be in a position to realize a
gain if, during the option period, the price of the security
declined by an amount in excess of the premium paid. It would
realize a loss if the price of the security increased or remained
the same or did not decrease during that period by more than the
amount of the premium. If a put or call option purchased by the
Portfolio were permitted to expire without being sold or
exercised, its premium would be lost by the Portfolio.

          If a put option written by the Portfolio were
exercised, the Portfolio would be obligated to purchase the
underlying security at the exercise price. If a call option
written by the Portfolio were exercised, the Portfolio would be
obligated to sell the underlying security at the exercise price.
The risk involved in writing a put option is that there could be
a decrease in the market value of the underlying security caused
by rising interest rates or other factors. If this occurred, the
option could be exercised and the underlying security would then
be sold to the Portfolio at a higher price than its current
market value. The risk involved in writing a call option is that
there could be an increase in the market value of the underlying
security caused by declining interest rates or other factors. If
this occurred, the option could be exercised and the underlying
security would then be sold by the Portfolio at a lower price
than its current market value. The Portfolio retains the premium
received from writing a put or call option whether or not the
option is exercised.

          Over-the-counter options are purchased or written by
the Portfolio in privately negotiated transactions. Such options
are illiquid and it may not be possible for the Portfolio to
dispose of any option it has purchased or terminate its
obligations under an option it has written at a time when the
Adviser believes it would be advantageous to do so.

          For additional information on the use, risks and costs
of options, see Appendix C.

          FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The
Portfolio may enter into contracts for the purchase or sale for
future delivery of fixed-income securities or contracts based on
financial indices including any index of U.S. Government
Securities (futures contracts) and may purchase and write options
to buy or sell futures contracts (options on futures contracts).
Options on futures contracts to be written or purchased by the
Portfolio will be traded on U.S. exchanges or over the counter.
These investment techniques will be used only to hedge against
anticipated future changes in interest or exchange rates which
otherwise might either adversely affect the value of the
Portfolio's securities or adversely affect the prices of
securities which the Portfolio intends to purchase at a later
date. The successful use of such instruments draws upon the
Adviser's special skills and experience with respect to such
instrumentalities and usually depends on the Adviser's ability to
forecast interest rate movements correctly. Should interest rates
move in an unexpected manner, the Portfolio may not achieve the
anticipated benefits of futures contracts or options on futures
contracts or may realize losses and thus will be in a worse
position than if such strategies had not been used. In addition,
the correlation between movements in the price of futures
contracts or options on futures contracts and movements in the
price of securities hedged or used for cover will not be perfect.

          A sale of a futures contract means the acquisition of a
contractual obligation to deliver the securities called for by
the contract at a specified price on a specified date. A purchase
of a futures contract means the acquisition of a contractual
obligation to acquire the securities called for by the contract
at a specified price on a specified date. The purchaser of a
futures contract on an index agrees to take or make delivery of
an amount of cash equal to the difference between a specified
dollar multiple of the value of the index on the expiration date
of the contract and the price at which the contract was
originally struck.

          The Portfolio enters into futures contracts which are
based on U.S. Government Securities, such as long-term U.S.
Treasury bonds, Treasury notes, GNMA modified pass-through
mortgage-backed securities and three-month U.S. Treasury bills.
The Portfolio may also enter into futures contracts which are
based on non-U.S. Government bonds.

          The Portfolio's ability to engage in the options and
futures strategies described above depends on the availability of
liquid markets in such instruments. Markets in options and
futures with respect to U.S. Government Securities are relatively
new and still developing. It is impossible to predict the amount
of trading interest that may exist in various types of options or
futures. Therefore no assurance can be given that the Portfolio
will be able to utilize these instruments effectively for the
purposes set forth above. Furthermore, the Portfolio's ability to
engage in options and futures transactions may be limited by tax
considerations.

          The Portfolio has claimed an exclusion from the
definition of "commodity pool operator" under the Commodity
Exchange Act and therefore is not subject to registration or
regulation as a pool operator under that Act. In general, the
Portfolio adheres to two percentage restrictions on the use of
futures contracts. The first restriction is that the Portfolio
will not enter into any futures contracts and options on futures
contracts if immediately thereafter the amount of initial margin
deposits on all the futures contracts of the Portfolio and
premiums paid on options on futures contracts would exceed 5% of
the total assets of the Portfolio. The second restriction is that
the aggregate market value of the futures contracts held by the
Portfolio not exceed 50% of the total assets of the Portfolio.
Neither of these restrictions will be changed by the Portfolio
without considering the policies and concerns of the various
applicable federal and state regulatory agencies.

          For additional information on the use, risks and costs
of future contracts and options on future contracts, see Appendix
B.

          LENDING OF PORTFOLIO SECURITIES. In order to increase
income, the Portfolio may from time to time lend its securities
to brokers, dealers and financial institutions and receive
collateral in the form of cash or U.S. Government Securities.
Under the Portfolio's procedures, collateral for such loans must
be maintained at all times in an amount equal to at least 100% of
the current market value of the loaned securities (including
interest accrued on the loaned securities). The interest accruing
on the loaned securities will be paid to the Portfolio and the
Portfolio will have the right, on demand, to call back the loaned
securities. The Portfolio may pay fees to arrange the loans. The
Portfolio will not lend its securities in excess of 30% of the
value of its total assets, nor will the Portfolio lend its
securities to any officer, director, employee or affiliate of the
Fund or the Adviser.

          WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS. The
Portfolio may enter into forward commitments for the purchase or
sale of securities. Such transactions 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 such transactions are negotiated, the price, which
is generally expressed in yield terms, is fixed at the time the
commitment is made, but delivery and payment for the securities
take place at a later date. Normally, the settlement date occurs
within two months after the transaction, but delayed settlements
beyond two months may be negotiated. Securities purchased or sold
under a forward commitment are subject to market fluctuation, and
no interest (or dividend) accrues to the purchaser prior to the
settlement date. At the time the Portfolio enters 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 net asset value. Any
unrealized appreciation or depreciation reflected in such
valuation of a when, as and if issued security would be cancelled
in the event that the required condition did not occur and the
trade was cancelled.

          The use of when-issued transactions and forward
commitments enables the Portfolio to protect against anticipated
changes in interest rates and prices. For instance, in periods of
rising interest rates and falling bond prices, the Portfolio
might sell its securities on a forward commitment basis to limit
its exposure to falling prices. In periods of falling interest
rates and rising bond prices, the Portfolio might sell a security
and purchase the same or a similar security on a when-issued or
forward commitment basis, thereby obtaining the benefit of
currently higher cash yields. However, if the Adviser were to
forecast incorrectly the direction of interest rate movements,
the Portfolio might be required to complete such when-issued or
forward transactions at prices inferior to then current market
values. No when-issued transactions or forward commitments will
be made by the Portfolio if, as a result, the Portfolio's
aggregate commitments under such transactions would be more than
30% of the then current value of the Portfolio's total assets.

          When-issued and forward commitments may be sold prior
to the settlement date, but the Portfolio enters into forward
commitments only with the intention of actually receiving or
delivering the securities, as the case may be. To facilitate such
transactions, the custodian will maintain, in the separate
account, cash, U.S. Government Securities or other liquid, high-
grade debt obligations, having value equal to, or greater than,
any commitments to purchase securities on a when-issued or
forward commitment basis and, with respect to forward commitments
to sell the Portfolio's securities themselves. If the Adviser,
however, chooses to dispose of its right to acquire a when-issued
security prior to its acquisition or dispose of its right to
receive or deliver a security subject to a forward commitment
prior to the settlement date of the transaction, the Portfolio
can incur a gain or loss. At the time the Portfolio makes the
commitment to purchase or sell a security on a when-issued or
forward commitment basis, it records the transaction and reflects
the value of the security purchased or, if a sale, the proceeds
to be received, in determining its net asset value. In the event
the other party to a forward commitment transaction were to
default, the Portfolio might lose the opportunity to invest money
at favorable rates or to dispose of securities at favorable
prices.

          FUTURE DEVELOPMENTS. The Portfolio may, following
written notice thereof to its shareholders, take advantage of
opportunities in the area of options and futures contracts and
options on futures contracts which are not presently contemplated
for use by the Portfolio or which are not currently available but
which may be developed, to the extent such opportunities are both
consistent with the Portfolio's investment objective and legally
permissible for the Portfolio. Such opportunities, if they arise,
may involve risks which exceed those involved in the options and
futures activities described above.

          INTEREST RATE TRANSACTIONS (SWAPS, CAPS AND FLOORS).
The Portfolio may enter into interest rate swap, cap or floor
transactions for hedging purposes, 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 Portfolio anticipates purchasing at a later date.
The Adviser does not intend to use these transactions in a
speculative manner.

          Interest rate swaps involve the exchange by the
Portfolio with another party of their respective commitments to
pay or receive interest (e.g., an exchange of 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 Portfolio receiving or paying,
as the case may be, only the net amount of the two payments).
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. The
Portfolio may enter into interest rate swaps, caps and floors on
either an asset-based or liability-based basis, depending upon
whether it is hedging its assets or liabilities.

          The swap market has grown substantially in recent
years, with a large number of banks and investment banking firms
acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become well
established and relatively liquid. Caps and floors are less
liquid than swaps. These transactions do not involve the delivery
of securities or other underlying assets or principal.
Accordingly, unless there is a counterparty default, the risk of
loss to the Portfolio from interest rate transactions is limited
to the net amount of interest payments that the Portfolio is
contractually obligated to make. The Portfolio will enter into
interest rate swap, 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 Portfolio may be
either the buyer or the seller in the transaction. As a seller,
the Portfolio 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 Portfolio typically must pay the contingent payment
to the buyer, which is typically the "par value" (full notional
value) of the reference obligation. The contingent payment may be
a cash settlement or by physical delivery of the reference
obligation in return for payment of the face amount of the
obligation. If the Portfolio is a buyer and no credit event
occurs, the Portfolio may lose its investment and recover
nothing. 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 Portfolio had invested in the referenced obligation directly.
Credit default swaps are subject to general market risk,
liquidity risk and credit risk. As noted above, if the Portfolio
is a buyer and no credit event occurs, it will lose its
investment. In addition, if a credit event occurs, the value of
the reference obligation received by the Portfolio as a seller
coupled with the periodic payments previously received, may be
less than the full notional value it pays to the buyer, resulting
in a loss of value to the Portfolio.

          The Portfolio will not enter into a credit default swap
if the swap provides for settlement by physical delivery and such
delivery would result in the Portfolio investing (i) less than
80% of its net assets in U.S. Government or high-grade (AAA, AA
or A, or Aaa, Aa or A) securities, or (ii) more than 20% of its
net assets in investment grade corporate debt securities.

          INVESTMENT RESTRICTIONS. The following investment
restrictions, which are applicable to the Portfolio, supplement
those set forth above and may not be changed without Shareholder
Approval, as defined under the caption "General Information,"
below.

          The Portfolio may not:

          1. invest in securities of any one issuer (including
repurchase agreements with any one entity) other than U.S.
Government Securities, if immediately after such purchases more
than 5% of the value of its total assets would be invested in
such issuer, except that 25% of the value of the total assets of
the Portfolio may be invested without regard to such 5%
limitation;

          2. acquire more than 10% of any class of the
outstanding securities of any issuer (for this purpose, all
preferred stock of an issuer shall be deemed a single class, and
all indebtedness of an issuer shall be deemed a single class);

          3. invest more than 25% of the value of its total
assets at the time an investment is made in the securities of
issuers conducting their principal business activities in any one
industry, except that there is no such limitation with respect to
U.S. Government Securities or certificates of deposit, bankers'
acceptances and interest-bearing deposits (for purposes of this
investment restriction, the electric, gas, telephone and water
business shall each be considered as a separate industry);

          4. borrow money, except that the Portfolio may borrow
money only for extraordinary or emergency purposes and then only
in amounts not exceeding 15% of its total assets at the time of
borrowing;

          5. mortgage, pledge or hypothecate any of its assets,
except as may be necessary in connection with permissible
borrowings described in paragraph 4 above (in an aggregate amount
not to exceed 15% of total assets of the Portfolio);

          6. invest in illiquid securities if immediately after
such investment more than 10% of the Portfolio's total assets
(taken at market value) would be invested in such securities;

          7. invest more than 10% of the value of its total
assets in repurchase agreements not terminable within seven days;

          8. participate on a joint or joint and several basis in
any securities trading account;

          9. invest in companies for the purpose of exercising
control;

          10. issue senior securities, except in connection with
permitted borrowing for extraordinary emergency purposes or loans
of portfolio securities;

          11. sell securities short or maintain a short position,
unless at all times when a short position is open it owns an
equal amount of such securities or securities convertible into or
exchangeable for, without payment of any further consideration,
securities of the same issue as, and equal in amount to, the
securities sold short (short sales against the box), and unless
not more than 10% of the Portfolio's net assets (taken at market
value) is held as collateral for such sales at any one time (it
is the Portfolio's present intention to make such sales only for
the purpose of deferring realization of gain or loss for federal
income tax purposes);

          12. invest more than 5% of the value of its total
assets at the time an investment is made in the nonconvertible
preferred stock of issuers whose nonconvertible preferred stock
is not readily marketable;

          13. invest in the securities of any investment company,
except in connection with a merger, consolidation, acquisition of
assets or other reorganization approved by the Fund's
shareholders;

          14. invest more than 25% of the value of its total
assets at the time of investment in the aggregate of:

               (a) nonconvertible preferred stock of issuers
whose senior debt securities are rated Aaa, Aa, or A by Moody's
or AAA, AA or A by S&P, provided that in no event may such
nonconvertible preferred stocks exceed in the aggregate 20% of
the value of the Portfolio's total assets at the time of
investment;

               (b) debt securities of foreign issuers which are
rated Aaa, Aa or A by Moody's or AAA, AA or A by S&P; and

               (c) convertible debt securities which are rated
Aaa, Aa or A by Moody's, or AAA, AA or A by S&P, provided that in
no event may such securities exceed in the aggregate 10% of the
value of the Portfolio's total assets at the time of investment;

          15. purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in real
estate or interests therein;

          16. purchase or sell commodities or commodity contracts
(except currencies, currency futures, forward contracts or
contracts for the future acquisition or delivery of fixed-income
securities and related options) and other similar contracts; or

          17. purchase securities on margin, except for such
short-term credits as may be necessary for the clearance of
transactions.

ALLIANCEBERNSTEIN HIGH YIELD PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          The ratings of fixed-income securities by Moody's, S&P
and Fitch are a generally accepted barometer of credit risk. They
are, however, subject to certain limitations from an investor's
standpoint. Such limitations include the following: 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; and there may be varying degrees of
difference in credit risk of securities in each rating category.
The Adviser attempts to reduce the overall portfolio credit risk
through diversification and selection of portfolio securities
based on considerations mentioned below.

          While ratings provide a generally useful guide to
credit risks, they do not, nor do they purport to, offer any
criteria for evaluating interest rate risk. Changes in the
general level of interest rates cause fluctuations in the prices
of fixed-income securities already outstanding and will therefore
result in fluctuation in net asset value of the Portfolio's
shares. The extent of the fluctuation is determined by a complex
interaction of a number of factors. The Adviser evaluates those
factors it considers relevant and makes portfolio changes when it
deems it appropriate in seeking to reduce the risk of
depreciation in the value of the Portfolio. For a description of
credit ratings, see Appendix A to the Prospectus.

          PUBLIC UTILITIES. The Portfolio's investments in public
utilities, if any, may be subject to certain risks. Such
utilities may have difficulty meeting environmental standards and
obtaining satisfactory fuel supplies at reasonable costs. During
an inflationary period, public utilities also face increasing
fuel, construction and other costs and may have difficulty
realizing an adequate return on invested capital. There is no
assurance that regulatory authorities will grant sufficient rate
increases to cover expenses associated with the foregoing
difficulties as well as debt service requirements. In addition,
with respect to utilities engaged in nuclear power generation,
there is the possibility that federal, state or municipal
governmental authorities may from time to time impose additional
regulations or take other governmental action which might cause
delays in the licensing, construction, or operation of nuclear
power plants, or suspension of operation of such plants which
have been or are being financed by proceeds of the fixed-income
securities in the Portfolio.

          MORTGAGE-RELATED SECURITIES. The mortgage-related
securities in which the Portfolio may invest provide funds for
mortgage loans made to residential home buyers. These include
securities which represent interests on pools of mortgage loans
made by lenders such as savings and loan institutions, mortgage
bankers, commercial banks and others. Pools of mortgage loans are
assembled for sale to investors (such as the Portfolio) by
various governmental, government-related and private
organizations.

          Government-related (i.e., not backed by the full faith
and credit of the United States Government) guarantors include
FNMA and FHLMC. For a description of FNMA and FHLMC and the
securities they issue, see above, "AllianceBernstein U.S.
Government/High Grade Securities Portfolio -- U.S. Government
Securities, FHLMC Securities and FNMA Securities."

          Yields on mortgage-related 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 issued average life yield. Reinvestment of
prepayments may occur at higher or lower interest rates than the
original investment, thus affecting the yield of the Portfolio.
The compounding effect from reinvestment of monthly payments
received by the Portfolio will increase the yield to shareholders
compared to bonds that pay interest semi-annually.

          DIRECT INVESTMENT IN MORTGAGES. The Portfolio may
invest up to 5% of its total assets directly in residential
mortgages securing residential real estate (i.e., the Portfolio
becomes the mortgagee). Such investments are not mortgage-related
securities as described above. They are normally available from
lending institutions which group together a number of mortgages
for resale (usually from 10 to 50 mortgages) and which act as
serving agent for the purchaser with respect to, among other
things, the receipt of principal and interest payments. (Such
investments are also referred to as whole loans.) The vendor of
such mortgages receives a fee from the Portfolio for acting a
servicing agent. The vendor does not provide any insurance or
guarantees covering the repayment of principal or interest on the
mortgages. At present, such investments are considered to be
illiquid by the Adviser. The Portfolio will invest in such
mortgages only if the Adviser has determined through an
examination of the mortgage loans and their originators (which
may include an examination of such factors as percentage of
family income dedicated to loan service and relationship between
loan value and market value) that the purchase of the mortgages
should not present a significant risk of loss to the Portfolio.
The Portfolio has no present intention of making direct
investments in mortgages.

          WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS. The
Portfolio may purchase securities offered on a when-issued basis
and may purchase or sell securities on a forward commitment
basis. For a general description of when-issued securities and
forward commitments, see above, "AllianceBernstein U.S.
Government/High Grade Portfolio -- Investment Practices --
When-Issued Securities and Forward Commitments." No when-issued
or forward commitments will be made by the Portfolio if, as a
result, more than 20% of the value of the Portfolio's total
assets would be committed to such transactions.

          The Portfolio may purchase securities on a when, as and
if issued basis as described above in "AllianceBernstein U.S.
Government/High Grade Portfolio -- Investment Practices --
When-Issued Securities and Forward Commitments." The commitment
for the purchase of any such security will not be recognized in
the Portfolio until the Adviser determines that issuance of the
security is probable. At such time, the Portfolio will record the
transaction and, in determining its net asset value, will reflect
the value of the security daily. At such time, the Portfolio will
also establish a segregated account with its custodian bank in
which it will maintain U.S. Government Securities, cash or cash
equivalents or other high grade debt portfolio securities equal
in value to recognized commitments for such securities. The value
of the Portfolio's commitments to purchase the securities of any
one issuer, together with the value of all securities of such
issuer owned by the Portfolio, may not exceed 5% of the value of
the Portfolio's total assets at the time the initial commitment
to purchase such securities is made. Subject to the foregoing
restrictions, the Portfolio may purchase securities on such basis
without limit. An increase in the percentage of the Portfolio's
assets committed to the purchase of securities on a when, as and
if issued basis may increase the volatility of its net asset
value. The Adviser and the Directors of the Fund do not believe
that the net asset value of the Portfolio will be adversely
affected by its purchase of securities on such basis.

          FUTURES CONTRACTS AND OPTIONS ON FUTURES. The Portfolio
may invest in financial futures contracts (futures contracts) and
related options thereon. The Portfolio may sell a futures
contract or a call option thereon or purchase a put option on
such futures contract if the Adviser anticipates that interest
rates will rise, as a hedge against a decrease in the value of
the Portfolio's securities. If the Adviser anticipates that
interest rates will decline, the Portfolio may purchase a futures
contract or a call option thereon to protect against an increase
in the price of the securities the Portfolio intends to purchase.
These futures contracts and related options thereon will be used
only as a hedge against anticipated interest rate changes. For a
general discussion of futures contracts and options thereon,
including their risks, see "AllianceBernstein U.S.
Government/High Grade Securities Portfolio -- Investment
Practices -- Futures Contracts and Options on Futures Contracts,"
above and Appendix B.

          Currently, futures contracts can be purchased on debt
securities such as U.S. Treasury bills and bonds, U.S. Treasury
notes with maturities between 6 1/2 years and 10 years, GNMA
Certificates and bank certificates of deposit. The Portfolio may
invest in futures contracts covering these types of financial
instruments as well as in new types of such contracts that may
become available.

          Financial futures contracts are traded in an auction
environment on the floors of several exchanges principally the
Chicago Board of Trade, the Chicago Mercantile Exchange and the
New York Futures Exchange. Each exchange guarantees performance
under contract provisions through a clearing corporation, a
nonprofit organization managed by the exchange membership that is
also responsible for handling daily accounting of deposits or
withdrawals of margin.

          The Portfolio has claimed an exclusion from the
definition of "commodity pool operator" under the Commodity
Exchange Act and therefore is not subject to registration or
regulation as a pool operator under that Act. The Portfolio may
not enter into futures contracts or related options thereon if
immediately thereafter the amount committed to margin plus the
amount paid for option premiums exceeds 5% of the Portfolio's
total assets. In instances involving the purchase of futures
contracts by the Portfolio, an amount equal to the market value
of the futures contract will be deposited in a segregated account
of cash and cash equivalents to collateralize the position and
thereby insure that the use of such futures contract is
unleveraged.

          PUT AND CALL OPTIONS. The Portfolio may purchase put
and call options written by others and write put and call options
covering the types of securities in which the Portfolio may
invest. For a description of put and call options, including
their risks, see above, "AllianceBernstein U.S. Government/High
Grade Securities Portfolio -- Investment Practices -- Options on
U.S. and Foreign Government Securities." The Portfolio will not
purchase any option if, immediately thereafter, the aggregate
cost of all outstanding options purchased by the Portfolio would
exceed 2% of the value of its total assets; the Portfolio will
not write any option (other than options on futures contracts)
if, immediately thereafter, the aggregate value of its portfolio
securities subject to outstanding options would exceed 15% of its
total assets.

          FOREIGN SECURITIES. The Portfolio may purchase foreign
securities provided the value of issues denominated in foreign
currency shall not exceed 20% of the Portfolio's total assets and
the value of issues denominated in United States currency shall
not exceed 25% of the Portfolio's total assets. For the risks
associated with investments in foreign debt securities, see
above, "AllianceBernstein U.S. Government/High Grade Securities
Portfolio -- High Grade Debt Securities -- Foreign Securities."

          FOREIGN CURRENCY TRANSACTIONS. Since investments in
foreign companies usually involve currencies of foreign
countries, and since the Portfolio may temporarily hold funds in
bank deposits in foreign currencies during the completion of
investment programs, the value of the assets of the Portfolio as
measured in United States dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Portfolio may incur costs
in connection with conversions between various currencies. The
Portfolio conducts its foreign currency exchange transactions
either on a spot (i.e., cash) basis at the spot rate prevailing
in the foreign currency exchange market, or through entering into
forward contracts to purchase or sell foreign currencies. A
forward foreign currency exchange contract involves an obligation
to purchase or sell a specific currency at a future date, which
may be any fixed number of days (usually less than one year) from
the date of the contract agreed upon by the parties, at a price
set at the time of the contract. These contracts are traded in
the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward
contract generally has no deposit requirement, and no commissions
are charged at any stage for trades. Although foreign exchange
dealers do not charge a fee for conversion, they do realize a
profit based on the difference (the spread) between the price at
which they are buying and selling various currencies.

          The Portfolio may enter into forward foreign currency
exchange contracts only under two circumstances. First, when the
Portfolio enters into a contract for the purchase or sale of a
security denominated in a foreign currency, it may desire to
"lock in" the U.S. Dollar price of the security. By entering into
a forward contract for the purchase or sale, for a fixed amount
of dollars, of the amount of foreign currency involved in the
underlying security transactions, the Portfolio will be able to
protect itself against a possible loss resulting from an adverse
change in the relationship between the U.S. Dollar and the
subject foreign currency during the period between the date the
security is purchased or sold and the date on which payment is
made or received.

          Second, when the Adviser believes that the currency of
a particular foreign country may suffer a substantial decline
against the U.S. Dollar, the Portfolio may enter into a forward
contract to sell for a fixed amount of dollars the amount of
foreign currency approximating the value of some or all of the
Portfolio's investment portfolio securities denominated in such
foreign currency. The precise matching of the forward contract
amounts and the value of the securities involved will not
generally be possible since the future value of such securities
in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the
forward contract is entered into and the date it matures. The
projection of short-term currency market movement is extremely
difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. The Adviser does not intend to
enter into such forward contracts under this second set of
circumstances on a regular or continuous basis, and will not do
so if, as a result, the Portfolio will have more than 5% of the
value of its total assets committed to the consummation of such
contracts.

          The Portfolio will also not enter into such forward
contracts or maintain a net exposure to such contracts where the
consummation of the contracts would obligate the Portfolio to
deliver an amount of foreign currency in excess of the value of
the securities in the Portfolio or other assets denominated in
that currency. At the consummation of such a forward contract,
the Portfolio may either make delivery of the foreign currency or
terminate its contractual obligation to deliver the foreign
currency by purchasing an offsetting contract obligating it to
purchase, at the same maturity date, the same amount of such
foreign currency. If the Portfolio chooses to make delivery of
the foreign currency, it may be required to obtain such currency
through the sale of portfolio securities denominated in such
currency or through conversion of other assets of the Portfolio
into such currency. If the Portfolio engages in an offsetting
transaction, the Portfolio will incur a gain or a loss to the
extent that there has been a change in forward contract prices.

          Under normal circumstances, consideration of the
prospect for currency parities will be incorporated in a longer
term investment decision made with regard to overall
diversification strategies. However, the Adviser believes that it
is important to have the flexibility to enter into such forward
contract when it determines that the best interest of the
Portfolio will be served.

          The Fund's custodian bank places liquid assets in a
separate account of the Portfolio in an amount equal to the value
of the Portfolio's total assets committed to the consummation of
forward foreign currency exchange contracts entered into under
the second set of circumstances, as set forth above. If the value
of the securities placed in the separate account declines,
additional cash or securities will be placed in the account on a
daily basis so that the value of the account will equal the
amount of the Portfolio's commitments with respect to such
contracts.

          The Portfolio's dealing in forward foreign currency
exchange contracts is limited to the transactions described
above. Of course, the Portfolio is not required to enter into
such transactions with regard to its foreign currency-denominated
securities and will not do so unless deemed appropriate by the
Adviser. It also should be realized that this method of
protecting the value of the Portfolio's portfolio securities
against a decline in the value of a currency does not eliminate
fluctuations in the underlying prices of the securities. It
simply establishes a rate of exchange that can be achieved at
some future point in time. Additionally, although such contracts
tend to minimize the risk of loss due to a decline in the value
of the hedged currency, at the same time they tend to limit any
potential gain that might result should the value of such
currency increase.

          RESTRICTED SECURITIES. The Portfolio may acquire
restricted securities within the limits set forth in the
Prospectus. For a description of such securities including their
risks, see above, "AllianceBernstein U.S. Government/High Grade
Securities Portfolio Restricted Securities" and "Other Investment
Policies--Illiquid Securities," below. If through the
appreciation of restricted securities or the depreciation of
unrestricted securities the Portfolio should be in a position
where more than 10% of the value of its total assets is invested
in illiquid assets, including restricted securities, the
Portfolio will take appropriate steps to protect liquidity.

          REPURCHASE AGREEMENTS. The Portfolio may invest in
repurchase agreements terminable within seven days and pertaining
to issues of the United States Treasury with member banks of the
Federal Reserve System or primary dealers in U.S. Government
Securities, so long as such investments do not in the aggregate
exceed the Investment Restrictions as set forth in the
Prospectus. Such investments would be made in accordance with
procedures established by the Portfolio to require that the
securities serving as collateral for each repurchase agreement be
delivered either physically or in book entry form to the Fund's
custodian and to require that such collateral be marked to the
market with sufficient frequency to ensure that each such
agreement is fully collateralized at all times. The Portfolio
follows established procedures, which are periodically reviewed
by the Fund's Board of Directors, pursuant to which the Adviser
will monitor the creditworthiness of the dealers with which the
Portfolio enters into repurchase agreement transactions. For a
discussion of repurchase agreements, see "Other Investment
Policies -- Repurchase Agreements," below.

          LENDING OF PORTFOLIO SECURITIES. Consistent with
applicable regulatory requirements, the Portfolio may loan its
portfolio securities where such loans are continuously secured by
cash collateral equal to no less than the market value,
determined daily, of the securities loaned. In loaning its
portfolio securities, the Portfolio requires that interest or
dividends on securities loaned be paid to the Portfolio. Where
voting or consent rights with respect to loaned securities pass
to the borrower, the Portfolio follows the policy of calling the
loan, in whole or in part as may be appropriate, to permit it to
exercise such voting or consent rights if the exercise of such
rights involves issues having a material effect on the
Portfolio's investment in the securities loaned. Although the
Portfolio cannot at the present time determine the types of
borrowers to whom it may lend its portfolio securities, the
Portfolio anticipates that such loans will be made primarily to
bond dealers.

          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 Portfolio may be
either the buyer or the seller in the transaction. As a seller,
the Portfolio 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 Portfolio typically must pay the contingent payment
to the buyer, which is typically the "par value" (full notional
value) of the reference obligation. The contingent payment may be
a cash settlement or by physical delivery of the reference
obligation in return for payment of the face amount of the
obligation. If the Portfolio is a buyer and no credit event
occurs, the Portfolio may lose its investment and recover
nothing. 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 Portfolio had invested in the reference obligation directly.
Credit default swaps are subject to general market risk,
liquidity risk and credit risk. As noted above, if the Portfolio
is a buyer and no credit event occurs, it will lose its
investment. In addition, if a credit event occurs, the value of
the reference obligation received by the Portfolio as a seller
coupled with the periodic payments previously received, may be
less than the full notional value it pays to the buyer, resulting
in a loss of value to the Portfolio.

          The Portfolio will not enter into a credit default swap
if the swap provides for settlement by physical delivery and such
delivery would result in the Portfolio investing less than 80% of
its net assets in high yield fixed-income securities.

          INVESTMENT RESTRICTIONS. The following restrictions,
which are applicable to the Portfolio, supplement those set forth
above and may not be changed without Shareholder Approval, as
defined under the caption "General Information," below.

          The Portfolio may not:

          1. invest in securities of any one issuer (including
repurchase agreements with any one entity) other than U.S.
Government Securities, if immediately after such purchases more
than 5% of the value of its total assets would be invested in
such issuer, except that 25% of the value of the total assets of
a Portfolio may be invested without regard to such 5% limitation;

          2. acquire more than 10% of any class of the
outstanding securities of any issuer (for this purpose, all
preferred stock of an issuer shall be deemed a single class, and
all indebtedness of an issuer shall be deemed a single class);

          3. invest more than 25% of the value of its total
assets at the time an investment is made in the securities of
issuers conducting their principal business activities in any one
industry, except that there is no such limitation with respect to
U.S. Government Securities or certificates of deposit, bankers'
acceptances and interest-bearing deposits (for purposes of this
investment restriction, the electric, gas, telephone and water
business shall each be considered as a separate industry);

          4. borrow money, except that the Portfolio may borrow
money only for extraordinary or emergency purposes and then only
in amounts not exceeding 15% of its total assets at the time of
borrowing;

          5. mortgage, pledge or hypothecate any of its assets,
except as may be necessary in connection with permissible
borrowings described in paragraph 4 above (in an aggregate amount
not to exceed 15% of total assets of the Portfolio);

          6. invest in illiquid securities if immediately after
such investment more than 10% of the Portfolio's total assets
(taken at market value) would be invested in such securities
(illiquid securities purchased by the Portfolio may include: (a)
subordinated debentures or other debt securities issued in the
course of acquisition financing such as that associated with
leveraged buyout transactions, and (b) participation interests in
loans to domestic companies, or to foreign companies and
governments, originated by commercial banks and supported by
letters of credit or other credit facilities offered by such
banks or other financial institutions);

          7. invest more than 10% of the value of its total
assets in repurchase agreements not terminable within seven days;

          8. invest more than 5% of the value of its total assets
at the time an investment is made in the non-convertible
preferred stock of issuers whose non-convertible preferred stock
is not readily marketable;

          9. act as securities underwriter or invest in
commodities or commodity contracts, except that the Portfolio (i)
may acquire restricted or not readily marketable securities under
circumstances where, if such securities are sold, the Portfolio
might be deemed to be an underwriter for purposes of the
Securities Act, and (ii) may purchase financial futures as
described in the Prospectus and above;

          10. engage in the purchase or sale of real estate,
except that the Portfolio may invest in securities secured by
real estate or interests therein or issued by companies,
including real estate investment trusts, which deal in real
estate or interests therein;

          11. invest in companies for the purpose of exercising
control of management;

          12. issue any senior securities as defined in the 1940
Act (except to the extent that when-issued securities
transactions, forward commitments or stand-by commitments, or
loans of portfolio securities may be considered senior
securities);

          13. participate on a joint, or on a joint and several,
basis in any trading account in securities;

          14. effect a short sale of any security;

          15. purchase securities on margin, but it may obtain
such short-term credits as may be necessary for the clearance of
purchases and sales of securities; or

          16. invest in the securities of any other investment
company except in connection with a merger, consolidation,
acquisition of assets or other reorganization.

ALLIANCEBERNSTEIN TOTAL RETURN PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

          The Portfolio has adopted, as a fundamental policy,
that it be a "balanced fund." This fundamental policy cannot be
changed without Shareholder Approval, as defined under the
caption "General Information," below. The Portfolio engages
primarily in holding securities for investment and not for
trading purposes. Purchases and sales of portfolio securities are
made at such times and in such amounts as are deemed advisable in
the light of market, economic and other conditions, irrespective
of the volume of portfolio turnover.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          OPTIONS. Subject to market conditions, the Portfolio
may also try to realize income by writing covered call options
listed on a domestic securities exchange. In so doing, the
Portfolio foregoes the opportunity to profit from an increase in
the market price in the underlying security above the exercise
price of the option in return for the premium it received from
the purchaser of the option. The Adviser believes that such
premiums will increase the Portfolio's distributions without
subjecting it to substantial risks. No option will be written by
the Portfolio if, as a result, more than 25% of the Portfolio's
assets are subject to call options. For a discussion of covered
call options see "AllianceBernstein High Yield Portfolio -- Put
and Call Options," above. The Portfolio purchases call options
only to close out a position in an option written by it. In order
to close out a position, the Portfolio will make a closing
purchase transaction if such is available. Except as stated
above, the Portfolio may not purchase or sell puts or calls or
combinations thereof.

          FOREIGN SECURITIES. Although the Portfolio may invest
in foreign securities, it has no present intention to do so.

          INVESTMENT RESTRICTIONS. The following restrictions,
which are applicable to the Portfolio, supplement those set forth
above and may not be changed without Shareholder Approval, as
defined under the caption "General Information," below.

               The Portfolio may not:

          1. invest in securities of any one issuer (including
repurchase agreements with any one entity) other than U.S.
Government Securities, if immediately after such purchases more
than 5% of the value of its total assets would be invested in
such issuer, except that 25% of the value of the total assets of
a Portfolio may be invested without regard to such 5% limitation;

          2. acquire more than 10% of any class of the
outstanding securities of any issuer (for this purpose, all
preferred stock of an issuer shall be deemed a single class, and
all indebtedness of an issuer shall be deemed a single class);

          3. invest more than 25% of the value of its total
assets at the time an investment is made in the securities of
issuers conducting their principal business activities in any one
industry, except that there is no such limitation with respect to
U.S. Government Securities or certificates of deposit, bankers'
acceptances and interest-bearing deposits (for purposes of this
investment restriction, the electric, gas, telephone and water
business shall each be considered as a separate industry);

          4. borrow money, except that the Portfolio may borrow
money only for extraordinary or emergency purposes and then only
in amounts not exceeding 15% of its total assets at the time of
borrowing;

          5. mortgage, pledge or hypothecate any of its assets,
except as may be necessary in connection with permissible
borrowings described in paragraph 4 above (in an aggregate amount
not to exceed 15% of total assets of the Portfolio);

          6. invest in illiquid securities if immediately after
such investment more than 10% of the Portfolio's total assets
(taken at market value) would be invested in such securities;

          7. invest more than 10% of the value of its total
assets in repurchase agreements not terminable within seven days;

          8. purchase the securities of any other investment
company except in a regular transaction in the open market;

          9. retain investments in the securities of any issuer
if directors or officers of the Fund or certain other interested
persons own more than 5% of such securities;

          10. invest in other companies for the purchase of
exercising control of management;

          11. purchase securities on margin or sell securities
short; 12. underwrite securities issued by other persons;

          13. purchase any securities as to which it would be
deemed a statutory underwriter under the Securities Act;

          14. purchase or sell commodities or commodity
contracts; or

          15. issue any securities senior to the capital stock
offered hereby.

ALLIANCEBERNSTEIN INTERNATIONAL PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

          There is no limitation on the percent or amount of the
Portfolio's assets which may be invested for growth or income,
and therefore, at any point in time, the investment emphasis may
be placed solely or primarily on growth of capital or solely or
primarily on income. Ordinarily, the annual portfolio turnover
rate will not exceed 100%.

          In determining whether the Portfolio will be invested
for capital appreciation or for income or any combination of
both, the Adviser regularly analyzes a broad range of
international equity and fixed-income markets in order to assess
the degree of risk and level of return that can be expected from
each market. Based upon the current assessment of the Adviser,
the Portfolio expects that its objective will, over the long
term, be met principally through investing in the equity
securities of established international companies which, in the
opinion of the Adviser, have potential for growth of capital.
However, the Portfolio can be expected during certain periods to
place substantial emphasis on income through investment in
foreign debt securities when it appears that the total return
from such securities will equal or exceed the return on equity
securities.

          Investments may be made from time to time in companies
in, or governments of, developing countries as well as developed
countries. Although there is no universally accepted definition,
a developing country is generally considered to be a country
which is in the initial stages of its industrialization cycle
with a low per capita gross national product. Historical
experience indicates that the markets of developing countries
have been more volatile than the markets of the more mature
economies of developed countries; however, such markets often
have provided higher rates of return to investors. The Adviser at
present does not intend to invest more than 10% of the
Portfolio's total assets in companies in, or governments of,
developing countries.

          The Adviser, in determining the composition of the
Portfolio, will initially seek the appropriate distribution of
investments among various countries and geographic regions.
Accordingly, the Adviser considers the following factors in
making investment decisions on this basis: prospects for relative
economic growth between foreign countries; expected levels of
inflation; government policies influencing business conditions;
the outlook for currency relationships; and the range of
individual investment opportunities available to the
international portfolio investor. For a description of Japan and
the United Kingdom, see Appendix D.

          The Adviser, in analyzing individual companies for
investment, looks for one or more of the following
characteristics: an above average earnings growth per share; high
return on invested capital; healthy balance sheet; sound
financial and accounting policies and overall financial strength;
strong competitive advantages; effective research and product
development and marketing; efficient service; pricing
flexibility; strength of management; and general operating
characteristics which enables the companies to compete
successfully in their marketplace. While current dividend income
is not a prerequisite in the selection of portfolio companies,
the companies in which the Portfolio invests normally have
records of paying dividends for at least one year, and will
generally are expected to increase the amounts of such dividends
in future years as earnings increase.

          It is expected that the Portfolio's investments will
ordinarily be traded on exchanges located in the respective
countries in which the various issuers of such securities are
principally based and in some case on other exchanges. As much as
25% of the value of the Portfolio's total assets may be invested
in the securities of issuers having their principal business
activities in the same industry.

          Under exceptional economic or market conditions abroad,
the Portfolio may temporarily invest for defensive purposes all
or a major portion of its assets in U.S. government obligations
or debt obligations of companies incorporated in and having their
principal activities in the United States. As discussed below,
the Portfolio may also from time to time invest its temporary
cash balances in United States short-term money market
instruments.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          SECURITIES LENDING. The Portfolio may seek to increase
income by lending portfolio securities. The Portfolio has the
right to call a loan to obtain the securities loaned at any time
on five days notice or such shorter period as may be necessary to
vote the securities. During the existence of a loan, the
Portfolio will receive the income earned on investment of the
collateral. The Portfolio does not, however, have the right to
vote any securities having voting rights during the existence of
the loan, but the Portfolio will call the loan in anticipation of
an important vote to be taken among holders of the securities or
the giving or withholding of their consent on a material matter
affecting the investment. As with other extensions of credit
there are risks of delay in recovery or even loss of rights in
the collateral should the borrower of the securities fail
financially. However, the loans would be made only to firms
deemed by the Adviser to be in good standing, and when, in its
judgment, the amount which may be earned currently from
securities loans of this type justifies the attendant risk. The
value of the securities loaned will not exceed 30% of the value
of the Portfolio's total assets.

          WARRANTS. The Portfolio may invest in warrants which
entitle the holder to buy equity securities at a specific price
for a specific period of time. 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 the warrant does not necessarily change with the
value of the underlying securities and a warrant ceases to have
value if it is not exercised prior to the expiration date.

          SPECIAL RISK CONSIDERATIONS. 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.

          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
companies are also generally not subject to uniform accounting
and auditing and financial reporting standards, practices and
requirements comparable to those applicable to United States
companies.

          It is contemplated that foreign securities will be
purchased in over-the-counter markets or on stock exchanges
located in the countries in which the respective principal
offices of the issuers of the various securities are located, if
that is the best available market. 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 (the "Exchange"),
and securities of some foreign companies are less liquid and more
volatile than securities of comparable United States companies.
Similarly, volume and liquidity in most foreign bond markets is
less than in the United States and, at times, volatility of price
can be greater than in the United States. Fixed commissions on
foreign stock exchanges are generally higher than negotiated
commissions on United States exchanges, although the Portfolio
will endeavor to achieve the most favorable net results on its
portfolio transactions. There is generally less government
supervision and regulation of foreign stock exchanges, brokers
and listed companies than in the United States.

          With respect to certain foreign countries, there is the
possibility of adverse changes in investment or exchange control
regulations and interest rates, expropriation or confiscatory
taxation, limitations on the removal of funds or other assets of
the Portfolio, political or social instability, or diplomatic
developments which could affect United States investments in
those countries. Moreover, individual foreign economies may
differ favorably or unfavorably from the United States economy in
such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and
balance of payments position.

          The dividends and interest payable on certain of the
Portfolio's foreign securities may be subject to foreign
withholding taxes, thus reducing the net amount of income
available for distribution to the Portfolio's shareholders. 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 Portfolio.

          Although the Portfolio values its assets daily in terms
of U.S. Dollars, its does not intend to convert its holdings of
foreign currencies into U.S. Dollars on a daily basis. It 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, 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 Portfolio at one rate,
while offering a lesser rate of exchange should the Portfolio
desire to resell that currency to the dealer.

          Investors should understand that the expense ratio of
the Portfolio can be expected to be higher than investment
companies investing 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.

          Investors should further understand that all
investments have a risk factor. There can be no guarantee against
loss resulting from an investment in the Portfolio, and there can
be no assurance that the Portfolio's investment objective will be
attained. The Portfolio is designed for investors who wish to
diversify beyond the United States in an actively researched and
managed portfolio. The Portfolio may not be suitable for all
investors and is intended for long-term investors who can accept
the risks entailed in seeking long-term growth of capital through
investment in foreign securities as described above.

          FOREIGN CURRENCY TRANSACTIONS. Since investments in
foreign companies usually involve currencies of foreign
countries, and since the Portfolio may temporarily hold funds in
bank deposits in foreign currencies during the completion of
investment programs, the value of the assets of the Portfolio as
measured in United States dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Portfolio may incur costs
in connection with conversions between various currencies. The
Portfolio will conduct its foreign currency exchange transactions
either on a spot (i.e., cash) basis at the spot rate prevailing
in the foreign currency exchange market, or through entering into
forward contracts to purchase or sell foreign currencies. For a
discussion of forward foreign currency exchange contracts which
also apply to the Portfolio, see "AllianceBernstein High Yield
Portfolio -- Foreign Currency Transactions," above.

          INVESTMENT RESTRICTIONS. The following restrictions,
which are applicable to the Portfolio, supplement those set forth
above and may not be changed without Shareholder Approval, as
defined under the caption "General Information," below.

          The Portfolio may not:

          1. invest in securities of any one issuer (including
repurchase agreements with any one entity) other than U.S.
Government Securities, if immediately after such purchases more
than 5% of the value of its total assets would be invested in
such issuer, except that 25% of the value of the total assets of
a Portfolio may be invested without regard to such 5% limitation;

          2. acquire more than 10% of any class of the
outstanding securities of any issuer (for this purpose, all
preferred stock of an issuer shall be deemed a single class, and
all indebtedness of an issuer shall be deemed a single class);

          3. invest more than 25% of the value of its total
assets at the time an investment is made in the securities of
issuers conducting their principal business activities in any one
industry, except that there is no such limitation with respect to
U.S. Government Securities or certificates of deposit, bankers'
acceptances and interest-bearing deposits (for purposes of this
investment restriction, the electric, gas, telephone and water
business shall each be considered as a separate industry);

          4. borrow money, except that the Portfolio may borrow
money only for extraordinary or emergency purposes and then only
in amounts not exceeding 15% of its total assets at the time of
borrowing;

          5. mortgage, pledge or hypothecate any of its assets,
except as may be necessary in connection with permissible
borrowings described in paragraph 4 above (in an aggregate amount
not to exceed 15% of total assets of the Portfolio);

          6. invest in illiquid securities if immediately after
such investment more than 10% of the Portfolio's total assets
(taken at market value) would be invested in such securities;

          7. invest more than 10% of the value of its total
assets in repurchase agreements not terminable within seven days;

          8. purchase a security if, as a result, the Portfolio
would own any securities of an open-end investment company or
more than 3% of the total outstanding voting stock of any
closed-end investment company, or more than 5% of the value of
the Portfolio's total assets would be invested in securities of
any closed-end investment company or more than 10% of such value
in closed-end investment companies in general, unless the
security is acquired pursuant to a plan of reorganization or an
offer of exchange;

          9. purchase or sell real estate (although it may
purchase securities secured by real estate or interest therein,
or issued by companies or investment trusts which invest in real
estate or interest therein);

          10. purchase or sell commodity contracts, provided,
however, that this policy does not prevent the Portfolio from
entering into forward foreign currency exchange contracts;

          11. purchase securities on margin, except for use of
the short-term credit necessary for clearance of purchases of
portfolio securities;

          12. effect short sales of securities;

          13. act as an underwriter of securities, except insofar
as it might be deemed to be such for purposes of the Securities
Act with respect to the disposition of certain portfolio
securities acquired within the limitations of restriction 4
above;

          14. purchase or retain the securities of any issuer if,
to the knowledge of the Adviser, the officers and directors of
the Fund and of the Adviser, who each own beneficially more than
1/2 of 1% of the outstanding securities of such issuer, and
together own beneficially more than 5% of the securities of such
issuer;

          15. invest in companies for the purpose of exercising
management or control; or

          16. issue senior securities except as permitted by the
1940 Act.

ALLIANCEBERNSTEIN GLOBAL BOND PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          U.S. GOVERNMENT SECURITIES. See Appendix A for a
description of U.S. Government Securities.

          FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The
Portfolio may enter into futures contracts and options on futures
contracts. The successful use of such instruments draws upon the
Adviser's special skills and experience with respect to such
instruments and usually depends on the Adviser's ability to
forecast interest rate and currency exchange rate movements
correctly. Should interest or exchange rates move in an
unexpected manner, the Portfolio may not achieve the anticipated
benefits of futures contracts or options on futures contracts or
may realize losses and thus will be in a worse position than if
such strategies had not been used. In addition, the correlation
between movements in the price of futures contracts or options on
futures contracts and movements in the price of the securities
and currencies hedged or used for cover will not be perfect and
could produce unanticipated losses. The Fund's custodian will
place cash not available for investment in U.S. Government
Securities or other liquid high-quality debt securities in a
separate account of the Portfolio having a value equal to the
aggregate amount of the Portfolio's commitments in futures and
options on futures contracts.

          The Portfolio has claimed an exclusion from the
definition of "commodity pool operator" under the Commodity
Exchange Act and therefore is not subject to registration or
regulation as a pool operator under that Act. In general, the
Portfolio adheres to two percentage restrictions on the use of
futures contracts. The first restriction is that the Portfolio
will not enter into any futures contracts or options on futures
contracts if immediately thereafter the amount of margin deposits
on all the futures contracts of the Portfolio and premiums paid
on options on futures contracts would exceed 5% of the total
assets of the Portfolio. The second restriction is that the
aggregate market value of the outstanding futures contracts
purchased by the Portfolio not exceed 50% of the total assets of
the Portfolio. Neither of these restrictions will be changed by
the Board of Directors without considering the policies and
concerns of the various applicable federal and state regulatory
agencies.

          For additional information on the use, risks and costs
of futures contracts and options on futures contracts, see
Appendix B.

          OPTIONS ON FOREIGN CURRENCIES. For additional
information on the use, risks and costs of options on foreign
currencies, see Appendix B.

          FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The
Portfolio may purchase or sell forward foreign currency exchange
contracts ("forward contracts"). Forward contracts reduce the
potential gain from a positive change in the relationship between
the U.S. Dollar and foreign currencies. Unanticipated changes in
currency prices may result in poorer overall performance for the
Portfolio than if it had not entered into such contracts. The use
of foreign currency forward contracts will not eliminate
fluctuations in the underlying U.S. Dollar equivalent value of
the prices of or rates of return on the Portfolio's foreign
currency-denominated portfolio securities and the use of such
techniques will subject the Portfolio to certain risks.

          The matching of the increase in value of a forward
contract and the decline in the U.S. Dollar equivalent value of
the foreign currency-denominated asset that is the subject of the
hedge generally will not be precise. In addition, the Portfolio
may not always be able to enter into foreign currency forward
contracts at attractive prices and this will limit the
Portfolio's ability to use such contracts to hedge or cross-hedge
its assets. Also, with regard to the Portfolio's use of
cross-hedges, there can be no assurance that historical
correlations between the movement of certain foreign currencies
relative to the U.S. Dollar will continue. Thus, at any time poor
correlation may exist between movements in the exchange rates of
the foreign currencies underlying the Portfolio's cross-hedges
and the movements in the exchange rates of the foreign currencies
in which the Portfolio's assets that are the subject of such
cross-hedges are denominated.

          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 Portfolio may be
either the buyer or the seller in the transaction. As a seller,
the Portfolio 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 Portfolio typically must pay the contingent payment
to the buyer, which is typically the "par value" (full notional
value) of the reference obligation. The contingent payment may be
a cash settlement or by physical delivery of the reference
obligation in return for payment of the face amount of the
obligation. If the Portfolio is a buyer and no credit event
occurs, the Portfolio may lose its investment and recover
nothing. 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 Portfolio had invested in the referenced obligation directly.
Credit default swaps are subject to general market risk,
liquidity risk and credit risk. As noted above, if the Portfolio
is a buyer and no credit event occurs, it will lose its
investment. In addition, if a credit event occurs, the value of
the reference obligation received by the Portfolio as a coupled
with the periodic payments previously received, may be less than
the full notional value it pays to the buyer, resulting in a loss
of value to the Portfolio.

          The Portfolio will not enter into a credit default swap
if the swap provides for settlement by physical delivery and such
delivery would result in the Portfolio investing inconsistently
with its policy of investing in high-quality debt securities.

          INVESTMENT RESTRICTIONS. The following restrictions,
which are applicable to the Portfolio, supplement those set forth
above and may not be changed without Shareholder Approval, as
defined under the caption "General Information," below.

          The Portfolio may not:

          1. invest 25% or more of its total assets in securities
of companies engaged principally in any one industry except that
this restriction does not apply to U.S. Government Securities;

          2. borrow money except from banks for temporary or
emergency purposes, including the meeting of redemption requests
which might require the untimely disposition of securities;
borrowing in the aggregate may not exceed 15%, and borrowing for
purposes other than meeting redemptions may not exceed 5% of the
value of the Portfolio's total assets (including the amount
borrowed) less liabilities (not including the amount borrowed) at
the time the borrowing is made; securities will not be purchased
while borrowings in excess of 5% of the value of the Portfolio's
total assets are outstanding;

          3. pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings;

          4. invest in illiquid securities if immediately after
such investment more than 10% of the Portfolio's total assets
(taken at market value) would be invested in such securities;

          5. make loans except through (i) the purchase of debt
obligations in accordance with its investment objectives and
policies; (ii) the lending of portfolio securities; or (iii) the
use of repurchase agreements;

          6. participate on a joint or joint and several basis in
any securities trading account;

          7. invest in companies for the purpose of exercising
control;

          8. make short sales of securities or maintain a short
position, unless at all times when a short position is open it
owns an equal amount of such securities or securities convertible
into or exchangeable for, without payment of any further
consideration, securities of the same issue as, and equal in
amount to, the securities sold short (short sales against the
box), and unless not more than 10% of the Portfolio's net assets
(taken at market value) is held as collateral for such sales at
any one time (it is the Portfolio's present intention to make
such sales only for the purpose of deferring realization of gain
or loss for Federal income tax purposes);

          9. purchase a security if, as a result (unless the
security is acquired pursuant to a plan of reorganization or an
offer of exchange), the Portfolio would own any securities of an
open-end investment company or more than 3% of the total
outstanding voting stock of any closed-end investment company or
more than 5% of the value of the Portfolio's total assets would
be invested in securities of any one or more closed-end
investment companies; or

          10. (a) purchase or sell real estate, except that it
may purchase and sell securities of companies which deal in real
estate or purchase and sell securities of companies which deal in
real estate or interests therein; (b) purchase or sell
commodities or commodity contracts (except currencies, futures
contracts on currencies and related options, forward contracts or
contracts for the future acquisition or delivery of fixed-income
securities and related options, futures contracts and options on
futures contracts and other similar contracts); (c) invest in
interests in oil, gas, or other mineral exploration or
development programs; (d) purchase securities on margin, except
for such short-term credits as may be necessary for the clearance
of transactions; and (e) act as an underwriter of securities,
except that the Portfolio may acquire restricted securities under
circumstances in which, if such securities were sold, the
Portfolio might be deemed to be an underwriter for purposes of
the Securities Act.

          In addition to the restrictions set forth above, in
connection with the qualification of its shares for sale in
certain states, the Portfolio may not invest in warrants if, such
warrants valued at the lower cost or market, would exceed 5% of
the value of the Portfolio's net assets.

ALLIANCEBERNSTEIN AMERICAS GOVERNMENT INCOME PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          U.S. GOVERNMENT SECURITIES. For a general description
of U.S. Government Securities, see Appendix A.

          U.S. GOVERNMENT GUARANTEED MORTGAGE-RELATED SECURITIES
- -- GENERAL. For information regarding U.S. Government guaranteed
mortgage-related securities, see "AllianceBernstein U.S.
Government/High Grade Securities Portfolio -- U.S. Government
Guaranteed Mortgage- Related Securities -- General," above.

          GNMA CERTIFICATES. For information regarding GNMA
Certificates, see "AllianceBernstein U.S. Government/High Grade
Securities Portfolio -- GNMA Certificates," above.

          FHLMC SECURITIES. For information regarding FHLMC
Securities, see "AllianceBernstein U.S. Government/High Grade
Securities Portfolio -- FHLMC Securities," above.

          FNMA SECURITIES. For information regarding FNMA
Securities, see " AllianceBernstein U.S. Government/High Grade
Securities Portfolio -- FNMA Securities," above.

          ZERO COUPON TREASURY SECURITIES. The Portfolio may
invest in zero coupon Treasury securities. Currently the only
U.S. Treasury security issued without coupons is the Treasury
bill. Although the U.S. Treasury does not itself issue Treasury
notes and bonds without coupons, under the U.S. Treasury STRIPS
program interest and principal payments on certain long term
treasury securities may be maintained separately in the Federal
Reserve book entry system and may be separately traded and owned.
In addition, in the last few years a number of banks and
brokerage firms have stripped the corpus from the coupon portions
of the U.S. Treasury bonds and notes and sold them separately in
the form of receipts or certificates representing undivided
interests in these instruments (which instruments are generally
held by a bank in a custodial or trust account). The Staff of the
Commission has indicated that in its view, these receipts or
certificates should be considered as securities issued by the
bank or brokerage firm involved and, therefore, should not be
included in the Portfolio's categorization of U.S. Government
Securities. The Portfolio disagrees with the Staff's
interpretation, but will not treat such securities as U.S.
Government Securities until final resolution of the issue.

          Zero coupon Treasury securities do not entitle the
holder to any periodic payments of interest prior to maturity.
Accordingly, such securities usually trade at a deep discount
from their face or par value and will be subject to greater
fluctuations of market value in response to changing interest
rates than debt obligations of comparable maturities which make
current distributions of interest. Current federal tax law
requires that a holder (such as the Portfolio) of a zero coupon
security accrue a portion of the discount at which the security
was purchased as income each year even though the Portfolio
receives no interest payment in cash on the security during the
year.

          CANADIAN GOVERNMENT GUARANTEED MORTGAGE-RELATED
SECURITIES. Canadian mortgage-related securities may be issued in
several ways, the most common of which is a modified pass-
through vehicle issued pursuant to the program (the "NHA MBS
Program") established under the National Housing Act of Canada
("NHA"). Certificates issued pursuant to the NHA MBS Program
("NHA Mortgage-Related Securities") benefit from the guarantee of
the Canada Mortgage and Housing Corporation ("CMHC"), a federal
Crown corporation that is (except for certain limited purposes)
an agent of the Government of Canada whose guarantee (similar to
that of GNMA in the United States) is an unconditional obligation
of the Government of Canada except as described below. The NHA
currently provides that the aggregate principal amount of all
issues of NHA Mortgage-Related Securities in respect of which
CMHC may give a guarantee must not exceed $60 billion.

          NHA Mortgage-Related Securities are backed by a pool of
insured mortgages that satisfy the requirements established by
the NHA. Issuers that wish to issue NHA Mortgage-Related
Securities must meet the status and other requirements of CMHC
and submit the necessary documentation to become an approved
issuer. When an approved issuer wishes to issue NHA
Mortgage-Related Securities in respect of a particular pool of
mortgages, it must seek the approval of CMHC. Such mortgages
must, among other things, be first mortgages that are insured
under the NHA, not be in default and provide for equal monthly
payments throughout their respective terms.

          The mortgages in each NHA Mortgage-Related Securities
pool are assigned to CMHC which, in turn, issues a guarantee of
timely payment of principal and interest that is shown on the
face of the certificates representing the NHA Mortgage-Related
Securities (the "NHA MBS Certificates"). NHA Mortgage-Related
Securities do not constitute any liability of, nor evidence any
recourse against, the issuer of the NHA Mortgage-Related
Securities, but in the event of any failure, delay or default
under the terms of NHA MBS Certificates, the holder has recourse
to CMHC in respect of its guarantee set out on the NHA MBS
Certificates.

          In any legal action or proceeding or otherwise, CMHC
has agreed not to contest or defend against a demand for the
timely payment of the amount set forth and provided for in, and
unpaid on, any duly and validly issued NHA MBS Certificate,
provided that such payment is sought and claimed by or on behalf
of a bona fide purchaser of and investor in such security,
without actual notice at the time of the purchase of the basis or
grounds for contesting or defending against that demand for
timely payment.

          While most Canadian Mortgage-Related Securities are
subject to voluntary prepayments, some pools are not and function
more like a traditional bond. The typical maturity of Canadian
Mortgage-Related Securities is five years, as most Canadian
residential mortgages provide for a five-year maturity with equal
monthly blended payments of interest and principal based on a
twenty-five year amortization schedule. Pursuant to recent
changes adopted by CMHC, maturities of NHA Mortgaged-Related
Securities may be as short as six months or as long as eighteen
years.

          ILLIQUID SECURITIES. The Portfolio has adopted the
following investment policy which may be changed by the vote of
the Board of Directors.

          The Portfolio will not invest in illiquid securities if
immediately after such investment more than 15% of the
Portfolio's net assets (taken at market value) would be invested
in such securities. For this purpose, illiquid securities
include, among others, (a) securities that are illiquid by virtue
of the absence of a readily available market or legal or
contractual restriction on resale, (b) options purchased by the
Portfolio over-the-counter and the cover for options written by
the Portfolio over-the-counter and (c) repurchase agreements not
terminable within seven days.

          See "Other Investment Policies -- Illiquid Securities,"
below, for a more detailed discussion of the Portfolio's
investment policy on restricted securities and securities with
legal or contractual restrictions on resale.

          FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The
Portfolio may enter into futures contracts and options on futures
contracts. The successful use of such instruments draws upon the
Adviser's special skills and experience with respect to such
instruments and usually depends on the Adviser's ability to
forecast interest rate and currency exchange rate movements
correctly. Should interest or exchange rates move in an
unexpected manner, the Portfolio may not achieve the anticipated
benefits of futures contracts or options on futures contracts or
may realize losses and thus will be in a worse position than if
such strategies had not been used. In addition, the correlation
between movements in the price of futures contracts or options on
futures and movements in the price of the securities and
currencies hedged or used for cover will not be perfect and could
produce unanticipated losses.

          The Portfolio has claimed an exclusion from the
definition of "commodity pool operator" under the Commodity
Exchange Act and therefore is not subject to registration or
regulation as a pool operator under that Act. The Portfolio will
not enter into any futures contracts or options on futures
contracts if immediately thereafter the aggregate of the market
value of the outstanding futures contracts of the Portfolio and
the market value of the currencies and futures contracts subject
to outstanding options written by the Portfolio would exceed 50%
of the market value of the total assets of the Portfolio. These
restrictions will not be changed by the Fund's Board of Directors
without considering the policies and concerns of the various
applicable federal and state regulatory agencies.

          For additional information on the use, risks and costs
of futures contracts and options on futures contracts, see
Appendix B.

          OPTIONS ON FOREIGN CURRENCIES. For additional
information on the use, risks and costs of options on foreign
currencies, see Appendix B.

          FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The
Portfolio may purchase or sell forward foreign currency exchange
contracts. The Portfolio may enter into a forward contract, for
example, 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).
Additionally, for example, when the Portfolio 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 Portfolio's securities denominated in such foreign
currency, or, when the Portfolio 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 U.S. Dollar amount (position hedge). In this
situation the Portfolio may, in the alternative, enter into a
forward contract to sell a different foreign currency for a fixed
U.S. Dollar amount where the Portfolio believes that the U.S.
Dollar value of the currency to be sold pursuant to the forward
contract will fall whenever there is a decline in the U.S. Dollar
value of the currency in which portfolio securities of the
Portfolio are denominated (cross-hedge). The Fund's custodian
will place cash not available for investment or liquid high-grade
government securities in a segregated account of the Portfolio
having a value equal to the aggregate amount of the Portfolio's
commitments under forward contracts entered into with respect to
position hedges and cross-hedges. If the value of the securities
placed in the segregated account declines, additional cash or
liquid high-grade government securities will be placed in the
account on a daily basis so that the value of the account will
equal the amount of the Portfolio's commitments with respect to
such contracts. As an alternative to maintaining all or part of
the segregated account, the Portfolio may purchase a call option
permitting the Portfolio to purchase the amount of foreign
currency being hedged by a forward sale contract at a price no
higher than the forward contract price or the Portfolio may
purchase a put option permitting the Portfolio to sell the amount
of foreign currency subject to a forward purchase contract at a
price as high or higher than the forward contract price.

          Forward contracts will reduce the potential gain from a
positive change in the relationship between the U.S. Dollar and
foreign currencies. Unanticipated changes in currency prices may
result in poorer overall performance for the Portfolio than if it
had not entered into such contracts. The use of foreign currency
forward contracts will not eliminate fluctuations in the
underlying U.S. Dollar equivalent value of the proceeds of or
rates of return on the Portfolio's foreign currency denominated
portfolio securities and the use of such techniques will subject
the Portfolio to certain risks.

          The matching of the increase in value of a forward
contract and the decline in the U.S. Dollar equivalent value of
the foreign currency denominated asset that is the subject of the
hedge generally will not be precise. In addition, the Portfolio
may not always be able to enter into foreign currency forward
contracts at attractive prices and this will limit the
Portfolio's ability to use such contracts to hedge its assets.
Also, with regard to the Portfolio's use of cross-hedges, there
can be no assurance that historical correlations between the
movement of certain foreign currencies relative to the U.S.
Dollar will continue. Thus, at any time poor correlation may
exist between movements in the exchange rates of the foreign
currencies underlying the Portfolio's cross-hedges and the
movements in the exchange rates of the foreign currencies in
which the Portfolio's assets that are the subject of such
cross-hedges are denominated.

          OPTIONS ON U.S. GOVERNMENT SECURITIES AND FOREIGN
GOVERNMENT SECURITIES. For additional information on the use,
risks and costs of options in U.S. Government Securities and
foreign government securities, see Appendix A.

          REPURCHASE AGREEMENTS. The Portfolio may invest in
repurchase agreements pertaining to the types of securities in
which it invests. For additional information regarding repurchase
agreements, see "Other Investment Policies -- Repurchase
Agreements," below.

          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 Portfolio may be
either the buyer or the seller in the transaction. As a seller,
the Portfolio 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 Portfolio typically must pay the contingent payment
to the buyer, which is typically the "par value" (full notional
value) of the reference obligation. The contingent payment may be
a cash settlement or by physical delivery of the reference
obligation in return for payment of the face amount of the
obligation. If the Portfolio is a buyer and no credit event
occurs, the Portfolio may lose its investment and recover
nothing. 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 Portfolio had invested in the referenced obligation directly.
Credit default swaps are subject to general market risk,
liquidity risk and credit risk. As noted above, if the Portfolio
is a buyer and no credit event occurs, it will lose its
investment. In addition, if a credit event occurs, the value of
the reference obligation received by the Portfolio as a seller
coupled with the periodic payments previously received, may be
less than the full notional value it pays to the buyer, resulting
in a loss of value to the Portfolio.

          The Portfolio will not enter into a credit default swap
if the swap provides for settlement by physical delivery and such
delivery would result in the Portfolio investing (i) less than
80% of its net assets in investment grade securities, or (ii)
more than 20% of its net assets in non-investment grade
securities rated, at the time of investment, at least B- or B3.

INVESTMENT RESTRICTIONS

          The following restrictions, which are applicable to the
Portfolio, supplement those set forth above and may not be
changed without Shareholder Approval, as defined under the
caption "General Information," below.

          The Portfolio may not:

          1. invest 25% or more of its total assets in securities
of companies engaged principally in any one industry except that
this restriction does not apply to U.S. Government Securities;

          2. borrow money, except the Portfolio may, in
accordance with provisions of the 1940 Act, borrow money from
banks for temporary or emergency purposes, including the meeting
of redemption requests which might require the untimely
disposition of securities; borrowing in the aggregate may not
exceed 15%, and borrowing for purposes other than meeting
redemptions may not exceed 5% of the value of the Portfolio's
total assets (including the amount borrowed) at the time the
borrowing is made; outstanding borrowings in excess of 5% of the
value of the Portfolio's total assets will be repaid before any
subsequent investments are made;

          3. pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings;

          4. make loans except through (a) the purchase of debt
obligations in accordance with its investment objectives and
policies; (b) the lending of portfolio securities; or (c) the use
of repurchase agreements;

          5. participate on a joint or joint and several basis in
any securities trading account;

          6. invest in companies for the purpose of exercising
control;

          7. make short sales of securities or maintain a short
position, unless at all times when a short position is open it
owns an equal amount of such securities or securities convertible
into or exchangeable for, without payment of any further
consideration, securities of the same issue as, and equal in
amount to, the securities sold short (short sales against the
box), and unless not more than 10% of the Portfolio's net assets
(taken at market value) is held as collateral for such sales at
any one time (it is the Portfolio's present intention to make
such sales only for the purpose of deferring realization of gain
or loss for federal income tax purposes);

          8. purchase a security if, as a result (unless the
security is acquired pursuant to a plan of reorganization or an
offer of exchange), the Portfolio would own any securities of an
open-end investment company or more than 3% of the total
outstanding voting stock of any closed-end investment company or
more than 5% of the value of the Portfolio's total assets would
be invested in securities of any one or more closed-end
investment companies; or

          9. (a) purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in real
estate or purchase and sell securities of companies which deal in
real estate or interests therein; (b) purchase or sell
commodities or commodity contracts (except currencies, futures
contracts on currencies and related options, forward contracts or
contracts for the future acquisition or delivery of fixed-income
securities and related options, futures contracts and options on
futures contracts and other similar contracts); (c) invest in
interests in oil, gas, or other mineral exploration or
development programs; (d) purchase securities on margin, except
for such short-term credits as may be necessary for the clearance
of transactions; and (e) act as an underwriter of securities,
except that the Portfolio may acquire restricted securities under
circumstances in which, if such securities were sold, the
Portfolio might be deemed to be an underwriter for purposes of
the Securities Act.

          In addition to the restrictions set forth above, in
connection with the qualification of its shares for sale in
certain states, the Portfolio may not invest in warrants if such
warrants valued at the lower of cost or market would exceed 5% of
the value of the Portfolio's net assets. Included within such
amount, but not to exceed 2% of the Portfolio's net assets may be
warrants which are not listed on the Exchange or the American
Stock Exchange. Warrants acquired by the Portfolio in units or
attached to securities may be deemed to be without value. The
Portfolio will also not purchase puts, calls, straddles, spreads
and any combination thereof if by reason thereof the value of its
aggregate investment in such classes of securities will exceed 5%
of its total assets.

          For additional information about Canada, Mexico and
Argentina, see Appendix D.

ALLIANCEBERNSTEIN GLOBAL DOLLAR GOVERNMENT PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

          In selecting and allocating assets among countries, the
Adviser develops a long-term view of those countries and analyzes
sovereign risk by focusing on factors such as a country's public
finances, monetary policy, external accounts, financial markets,
stability of exchange rate policy and labor conditions. In
selecting and allocating assets among corporate issuers within a
given country, the Adviser considers the relative financial
strength of issuers and expects to emphasize investments in
securities of issuers that, in the Adviser's opinion, are
undervalued within each market sector. The Portfolio is not
required to invest any specified minimum amount of its total
assets in the securities or obligations of issuers located in any
particular country.

          Sovereign Debt Obligations held by the Portfolio take
the form of bonds, notes, bills, debentures, warrants, short-term
paper, loan participations, loan assignments and interests issued
by entities organized and operated for the purpose of
restructuring the investment characteristics of other Sovereign
Debt Obligations. Sovereign Debt Obligations held by the
Portfolio generally are not traded on a securities exchange. The
U.S. and non-U.S. corporate fixed-income securities held by the
Portfolio include debt securities, convertible securities and
preferred stocks of corporate issuers.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          BRADY BONDS. Brady Bonds are created through the
exchange of existing commercial bank loans to foreign entities
for new obligations in connection with debt restructurings under
a plan introduced by former U.S. Secretary of the Treasury,
Nicholas F. Brady (the "Brady Plan").

          They may be collateralized or uncollateralized and
issued in various currencies (although most are
dollar-denominated) and they are actively traded in the
over-the-counter secondary market.

          U.S. Dollar-denominated, Collateralized Brady Bonds,
which may be fixed rate par bonds or floating rate discount
bonds, are generally collateralized in full as to principal due
at maturity by U.S. Treasury zero coupon obligations that have
the same maturity as the Brady Bonds. Interest payments on these
Brady Bonds generally are collateralized by cash or securities in
an amount that, in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments based on the
applicable interest rate at that time, and is adjusted at regular
intervals thereafter. Certain Brady Bonds are entitled to value
recovery payments in certain circumstances, which in effect
constitute supplemental interest payments but generally are not
collateralized. Brady Bonds are often viewed as having up to four
valuation components: (i) collateralized repayment of principal
at final maturity; (ii) collateralized interest payments; (iii)
uncollateralized interest payments; and (iv) any uncollateralized
repayment of principal at maturity (these uncollateralized
amounts constitute the residual risk). In the event of a default
with respect to Collateralized Brady Bonds as a result of which
the payment obligations of the issuer are accelerated, the U.S.
Treasury zero coupon obligations held as collateral for the
payment of principal will not be distributed to investors, nor
will such obligations be sold and the proceeds distributed. The
collateral will be held by the collateral agent to the scheduled
maturity of the defaulted Brady Bonds, which will continue to be
outstanding, at which time the face amount of the collateral will
equal the principal payments that would have then been due on the
Brady Bonds in the normal course. In addition, in light of the
residual risk of Brady Bonds and, among other factors, the
history of defaults with respect to commercial bank loans by
public and private entities of countries issuing Brady Bonds,
investments in Brady Bonds are to be viewed as speculative.

          STRUCTURED SECURITIES. The Portfolio may invest up to
25% of its total assets in interests in entities organized and
operated solely for the purpose of restructuring the investment
characteristics of Sovereign 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 Brady Bonds) and the issuance by that
entity of one or more classes of securities ("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 on the underlying instruments. Because
Structured Securities of the type in which the Portfolio
anticipates it will invest typically involve no credit
enhancement, their credit risk generally will be equivalent to
that of the underlying instruments.

          The Portfolio is permitted to invest in a class of
Structured Securities that is either subordinated or
unsubordinated to the right of payment of another class.
Subordinated Structured Securities typically have higher yields
and present greater risks than unsubordinated Structured
Securities.

          Certain issuers of Structured Securities may be deemed
to be investment companies as defined in the 1940 Act. As a
result, the Portfolio's investment in these Structured Securities
may be limited by the restrictions contained in the 1940 Act
described in the Prospectus under "Investment in Other Investment
Companies."

          LOAN PARTICIPATIONS AND ASSIGNMENTS. The Portfolio may
invest in fixed and floating rate loans ("Loans") arranged
through private negotiations between an issuer of Sovereign Debt
Obligations and one or more financial institutions ("Lenders").
The Portfolio's investments in Loans are expected in most
instances to be in the form of participations in Loans
("Participations") and assignments of all or a portion of Loans
("Assignments") from third parties. The Portfolio may invest up
to 25% of its total assets in Participations and Assignments. The
government that is the borrower on the Loan will be considered by
the Portfolio to be the Issuer of a Participation or Assignment
for purposes of the Portfolio's fundamental investment policy
that it will not invest 25% or more of its total assets in
securities of issuers conducting their principal business
activities in the same industry (i.e., foreign government). The
Portfolio's investment in Participations typically will result in
the Portfolio having a contractual relationship only with the
Lender and not with the borrower. The Portfolio 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
Portfolio 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
Portfolio may not directly benefit from any collateral supporting
the Loan in which it has purchased the Participation. As a
result, the Portfolio 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 Portfolio 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 Portfolio will acquire Participations
only if the Lender is interpositioned between the Portfolio and
the borrower is a Lender having total assets of more than $25
billion and whose senior unsecured debt is rated investment grade
or higher (i.e. Baa or higher by Moody's or BBB or higher by S&P
or Fitch).

          When the Portfolio 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 Portfolio as the purchaser
of an assignment may differ from, and be more limited than, those
held by the assigning Lender. The assignability of certain
Sovereign Debt Obligations is restricted by the governing
documentation as to the nature of the assignee such that the only
way in which the Portfolio may acquire an interest in a Loan is
through a Participation and not an Assignment. The Portfolio 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 Portfolio 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 Portfolio's ability to
dispose of particular Assignments or Participations when
necessary to meet the Portfolio'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 more
difficult for the Portfolio to assign a value to these securities
for purposes of valuing the Portfolio's portfolio and calculating
its asset value.

          U.S. AND NON-U.S. CORPORATE FIXED INCOME SECURITIES.
U.S. and non-U.S. corporate fixed-income securities include debt
securities, convertible securities and preferred stocks of
corporate issuers. Differing yields on fixed-income securities of
the same maturity are a function of several factors, including
the relative financial strength of the issuers. Higher yields are
generally available from securities in the lower rating
categories. When the spread between the yields of lower rated
obligations and those of more highly rated issues is relatively
narrow, the Portfolio may invest in the latter since they may
provide attractive returns with somewhat less risk. The Portfolio
expects to invest in investment grade securities (i.e. securities
rated Baa or better by Moody's or BBB or better by S&P or Fitch),
in high yield, high risk lower rated securities (i.e., securities
rated lower than Baa by Moody's or BBB by S&P or Fitch) and in
unrated securities of comparable credit quality. Unrated
securities are considered for investment by the Portfolio when
the Adviser believes that the financial condition of the issuers
of such obligations and the protection afforded by the terms of
the obligations themselves limit the risk to the Portfolio to a
degree comparable to that of rated securities which are
consistent with the Portfolio's investment objectives and
policies. The ratings of fixed-income securities by S&P, Moody's
and Fitch are a generally accepted barometer 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. See "Certain Risk Considerations," below,
for a discussion of the risks associated with the Portfolio's
investments in U.S. and non-U.S. corporate fixed-income
securities.

          INTEREST RATE TRANSACTIONS. The Portfolio may enter
into interest rate swaps and may purchase or sell interest rate
caps and floors. The use of interest rate swaps is a highly
specialized activity which involves investment techniques and
risks different from those associated with ordinary portfolio
securities transactions. If the Adviser is incorrect in its
forecasts of market values, interest rates and other applicable
factors, the investment performance of the Portfolio would
diminish compared with what it would have been if these
investment techniques were not used. Moreover, even if the
Adviser is correct in its forecasts, there is a risk that the
swap position may correlate imperfectly with the price of the
asset or liability being hedged.

          There is no limit on the amount of interest rate swap
transactions that may be entered into by the Portfolio. These
transactions do not involve the delivery of securities or other
underlying assets of principal. Accordingly, the risk of loss
with respect to interest rate swaps is limited to the net amount
of interest payments that the Portfolio is contractually
obligated to make. If the other party to an interest rate swap
defaults, the Portfolio's risk of loss consists of the net amount
of interest payments that the Portfolio contractually is entitled
to receive. The Portfolio may purchase and sell (i.e., write)
caps and floors without limitation, subject to the segregated
account requirement described in the Prospectus under "-- Other
Investment Policies and Techniques -- Interest Rate
Transactions."

          FORWARD COMMITMENTS. The Portfolio may enter into
forward commitments for the purchase or sale of securities. Such
transactions 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).

          OPTIONS. The Portfolio may write covered put and call
options and purchase put and call options on securities of the
types in which it is permitted to invest that are traded on U.S.
and foreign securities exchanges. The Portfolio may also write
call options for cross-hedging purposes. There are no specific
limitations on the Portfolio's writing and purchasing of options.

          If a put option written by the Portfolio were
exercised, the Portfolio would be obligated to purchase the
underlying security at the exercise price. If a call option
written by the Portfolio were exercised, the Portfolio would be
obligated to sell the underlying security at the exercise price.
For additional information on the use, risks and costs of
options, see Appendix C.

          The Portfolio may purchase or write options on
securities of the types in which it is permitted to invest in
privately negotiated (i.e., over-the-counter) transactions. The
Portfolio 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 by the Portfolio in negotiated transactions
are illiquid and it may not be possible for the Portfolio to
effect a closing transaction at a time when the Adviser believes
it would be advantageous to do so. See "Description of the Fund
- -- Additional Investment Policies and Practices -- Illiquid
Securities" in the Fund's Prospectus.

          OPTIONS ON SECURITIES INDICES. The Portfolio may
purchase and sell exchange-traded index options on any securities
index composed of the types of securities in which it may invest.
An option on a securities index is similar to an option on a
security except that, rather than the right to take or make
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.
There are no specific limitations on the Portfolio's purchasing
and selling of options on securities indices.

          Through the purchase of listed index options, the
Portfolio could achieve many of the same objectives as through
the use of options on individual securities. Price movements in
the Portfolio's investment portfolio securities probably will not
correlate perfectly with movements in the level of the index and,
therefore, the Portfolio would bear a risk of loss on index
options purchased by it if favorable price movements of the
hedged portfolio securities do not equal or exceed losses on the
options or if adverse price movements of the hedged portfolio
securities are greater than gains realized from the options.

          WARRANTS. The Portfolio may invest in warrants, which
are option securities permitting their holder to subscribe for
other securities. The Portfolio may invest in warrants for debt
securities or warrants for equity securities that are acquired in
connection with debt instruments. Warrants do not carry with them
dividend or voting rights with respect to the securities that
they entitle their holder to purchase, and they do not represent
any rights in the assets of the issuer. As a result, an
investment in warrants may be considered more speculative than
certain other types of investments. In addition, the value of a
warrant does not necessarily change with the value of the
underlying securities, and a warrant ceases to have value if it
is not exercised prior to its expiration date. The Portfolio does
not intend to retain in its investment portfolio any common stock
received upon the exercise of a warrant and will sell the common
stock as promptly as practicable and in a manner that it believes
will reduce its risk of a loss in connection with the sale. The
Portfolio does not intend to retain in its investment portfolio
any warrant for equity securities acquired as a unit with a debt
instrument, if the warrant begins to trade separately from the
related debt instrument.

          REPURCHASE AGREEMENTS. For information regarding
repurchase agreements, see "Other Investment Policies --
Repurchase Agreements," below.

          ILLIQUID SECURITIES. The Fund has adopted the following
investment policy on behalf of the Portfolio which may be changed
by the vote of the Board of Directors. The Portfolio will not
invest in illiquid securities if immediately after such
investment more than 15% of the Portfolio's net assets (taken at
market value) would be invested in such securities. For this
purpose, illiquid securities include, among others, securities
that are illiquid by virtue of the absence of a readily available
market or legal or contractual restriction on resale.

          For additional information regarding illiquid
securities, see "Other Investment Policies -- Illiquid
Securities," below.

          INVESTMENT IN CLOSED-END INVESTMENT COMPANIES. The
Portfolio may invest in other investment companies whose
investment objectives and policies are consistent with those of
the Portfolio. In accordance with the 1940 Act, the Portfolio may
invest up to 10% of its assets in securities of other investment
companies. In addition, under the 1940 Act, the Portfolio may not
own more than 3% of the total outstanding voting stock of any
investment company and not more than 5% of the Portfolio's total
assets may be invested in the securities of any investment
company. If the Portfolio acquires shares in investment
companies, shareholders would bear both their proportionate share
of expenses in the Portfolio (including advisory fees) and,
indirectly, the expenses of such investment companies (including
management and advisory fees).

CERTAIN RISK CONSIDERATIONS

          RISKS OF FOREIGN INVESTMENTS. 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 Portfolio may invest require, for both tax and
accounting purposes, that certain assets and liabilities be
restated on the issuers 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.

          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 Portfolio invests and could adversely
affect the Portfolio's assets should these conditions or events
recur.

          Foreign investment in certain foreign securities is
restricted or controlled to varying degrees. These restrictions
or controls may at times limit or preclude foreign investment in
certain foreign securities and increase the costs and expenses of
the Portfolio. Certain countries in which the Portfolio invests
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 other than those on which the
Portfolio focuses its investments 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. The Portfolio could be adversely
affected by delays in, or a refusal to grant, any required
governmental approval for repatriation of capital, as well as by
the application to the Portfolio of any restrictions on
investments. Investing in local markets may require the Portfolio
to adopt special procedures, seek local governmental approvals or
take other actions, each of which may involve additional costs to
the Portfolio.

          Income from certain investments held by the Portfolio
could be reduced by foreign income taxes, including withholding
taxes. It is impossible to determine the effective rate of
foreign tax in advance. The Portfolio's net asset value may also
be affected by changes in the rates or methods of taxation
applicable to the Portfolio or to entities in which the Portfolio
has invested. The Adviser generally considers 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 Portfolio will not be subject to
change.

          SOVEREIGN DEBT OBLIGATIONS. Established secondary
markets may not exist for many of the Sovereign Debt Obligations
in which the Portfolio will invest. Reduced secondary market
liquidity may have an adverse effect on the market price and the
Portfolio'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 Portfolio to obtain accurate market
quotations for 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
Portfolio is 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, among
other things, in its inflation rate, the amount of its external
debt and its gross domestic product, also affects the governments
ability to honor its obligations.

          Many countries providing investment opportunities for
the Portfolio have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and
rapid fluctuations in inflation 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, wage 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 Portfolio will invest in most cases pertain to
countries that are among the worlds 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, reducing and rescheduling interest and
principal payments by negotiating new or amended credit
agreements or converting outstanding principal and unpaid
interest to Brady Bonds, and 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 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.
Increased 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 will 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 upon 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 in its
Sovereign Debt Obligations.

          The Portfolio 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 Portfolio's investment objectives. The
Portfolio 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 the 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.

          U.S. CORPORATE FIXED INCOME SECURITIES. The U.S.
corporate fixed-income securities in which the Portfolio invests
may include securities issued in connection with corporate
restructurings such as takeovers or leveraged buyouts, which may
pose particular risks. Securities issued to finance corporate
restructuring may have special credit risks due to the highly
leveraged conditions of the issuer. In addition, such issuers may
lose experienced management as a result of the restructuring.
Finally, the market price of such securities may be more volatile
to the extent that expected benefits from the restructuring do
not materialize. The Portfolio may also invest in U.S. corporate
fixed-income securities that are not current in the payment of
interest or principal or are in default, so long as the Adviser
believes such investment is consistent with the Portfolio's
investment objectives. The Portfolio's rights with respect to
defaults on such securities will be subject to applicable U.S.
bankruptcy, moratorium and other similar laws.

          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 Portfolio may be
either the buyer or the seller in the transaction. As a seller,
the Portfolio 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 Portfolio typically must pay the contingent payment
to the buyer, which is typically the "par value" (full notional
value) of the reference obligation. The contingent payment may be
a cash settlement or by physical delivery of the reference
obligation in return for payment of the face amount of the
obligation. If the Portfolio is a buyer and no credit event
occurs, the Portfolio may lose its investment and recover
nothing. 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 Portfolio had invested in the referenced obligation directly.
Credit default swaps are subject to general market risk,
liquidity risk and credit risk. As noted above, if the Portfolio
is a buyer and no credit event occurs, it will lose its
investment. In addition, if a credit event occurs, the value of
the reference obligation received by the Portfolio as a coupled
with the periodic payments previously received, may be less than
the full notional value it pays to the buyer, resulting in a loss
of value to the Portfolio.

          The Portfolio will not enter into a credit default swap
if the swap provides for settlement by physical delivery and such
delivery would result in the Portfolio investing less than 65% of
its total assets in sovereign debt obligations or in investments
inconsistent with its restrictions on investing in specific
countries.

          INVESTMENT RESTRICTIONS. The following restrictions,
which are applicable to the Portfolio, supplement those set forth
above and in the Prospectus, and may not be changed without
Shareholder Approval, as defined under the caption "General
Information," below.

          The Portfolio may not:

          1. invest 25% or more of its total assets in securities
of companies engaged principally in any one industry except that
this restriction does not apply to U.S. Government Securities;

          2. borrow money, except (a) the Portfolio may, in
accordance with provisions of the 1940 Act, borrow money from
banks for temporary or emergency purposes, including the meeting
of redemption requests which might require the untimely
disposition of securities; borrowing in the aggregate may not
exceed 15%, and borrowing for purposes other than meeting
redemptions may not exceed 5% of the value of the Portfolio's
total assets (including the amount borrowed) at the time the
borrowing is made; outstanding borrowings in excess of 5% of the
value of the Portfolio's total assets will be repaid before any
subsequent investments are made and (b) the Portfolio may enter
into reverse repurchase agreements and dollar rolls;

          3. pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings;

          4. make loans except through (a) the purchase of debt
obligations in accordance with its investment objectives and
policies; (b) the lending of portfolio securities; or (c) the use
of repurchase agreements;

          5. invest in companies for the purpose of exercising
control;

          6. make short sales of securities or maintain a short
position, unless at all times when a short position is open it
owns an equal amount of such securities or securities convertible
into or exchangeable for (without payment of any further
consideration) securities of the same issue as, and equal in
amount to, the securities sold short (short sales against the
box), and unless not more than 10% of the Portfolio's net assets
(taken at market value) is held as collateral for such sales at
any one time (it being the Portfolio's present intention to make
such sales only for the purpose of deferring realization of gain
or loss for federal income tax purposes); or

          7. (a) purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in real
estate or interests therein and securities that are secured by
real estate, provided such securities are securities of the type
in which the Portfolio may invest; (b) purchase or sell
commodities or commodity contracts, including futures contracts
(except forward commitment contracts or contracts for the future
acquisition or delivery of debt securities); (c) invest in
interests in oil, gas, or other mineral exploration or
development programs; (d) purchase securities on margin, except
for such short-term credits as may be necessary for the clearance
of transactions; and (e) act as an underwriter of securities,
except that the Portfolio may acquire restricted securities under
circumstances in which, if such securities were sold, the
Portfolio might be deemed to be an underwriter for purposes of
the Securities Act.

ALLIANCEBERNSTEIN UTILITY INCOME PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

          The utilities industry consists of companies engaged in
(i) the manufacture, production, generation, provision,
transmission, sale and distribution of gas and electric energy,
and communications equipment and services, including telephone,
telegraph, satellite, microwave and other companies providing
communication facilities for the public, or (ii) the provision of
other utility or utility related goods and services, including,
but not limited to, entities engaged in water provision,
cogeneration, waste disposal system provision, solid waste
electric generation, independent power producers and non-utility
generators. In evaluating particular issuers, the Adviser
considers a number of factors, including historical growth rates
and rates of return on capital, financial condition and
resources, management skills and such industry factors as
regulatory environment and energy sources. With respect to
investments in equity securities, the Adviser considers the
prospective growth in earnings and dividends in relation to
price/earnings ratios, yield and risk. The Adviser believes that
above-average dividend returns and below-average price/earnings
ratios are factors that not only provide current income but also
generally tend to moderate risk and to afford opportunity for
appreciation of securities owned by the Portfolio.

          The Portfolio invests in equity securities, such as
common stocks, securities convertible into common stocks and
rights and warrants to subscribe for the purchase of common
stocks and in fixed-income securities, such as bonds and
preferred stocks. The Portfolio may vary the percentage of assets
invested in any one type of security based upon the Adviser's
evaluation as to the appropriate portfolio structure for
achieving the Portfolio's investment objective under prevailing
market, economic and financial conditions. Certain securities
(such as fixed-income securities) will be selected on the basis
of their current yield, while other securities may be purchased
for their growth potential.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          CONVERTIBLE SECURITIES. Convertible securities include
bonds, debentures, corporate notes and preferred stocks that are
convertible at a stated exchange rate into 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. The price of
a convertible security will normally vary with changes in the
price of the underlying stock although the higher yield tends to
make the convertible security less volatile than the underlying
common stock. As with debt securities, the market value of
convertible securities tends to decrease as interest rates rise
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 offer investors the potential 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 are
consequently of higher quality and 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. The Portfolio may invest up to 30% of its net assets in
the convertible securities of companies whose common stocks are
eligible for purchase by the Portfolio under the investment
policies described above and in the Prospectus.

          RIGHTS OR WARRANTS. The Portfolio may invest up to 5%
of its net assets 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 Portfolio's investment portfolio. Rights and warrants entitle
the holder to buy equity securities at a specific price for a
specific period of time. Rights are similar to warrants except
that they have a substantially shorter duration. 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 underlying
securities nor do they represent any rights in the assets of the
issuing company. The value of a right or warrant does not
necessarily change with the value of the underlying security,
although the value of a right or warrant may decline because of a
decrease in the value of the underlying security, the passage of
time or a change in perception as to the potential of the
underlying security, or any combination thereof. If the market
price of the underlying security is below the exercise price set
forth in the warrant on the expiration date, the warrant will
expire worthless. Moreover, a right or warrant ceases to have
value if it is not exercised prior to the expiration date.

          U.S. GOVERNMENT SECURITIES. For a general description
of U.S. Government Securities, see Appendix A.

          OPTIONS. For additional information on the use, risks
and costs of options, see Appendix C.

          OPTIONS ON SECURITIES INDICES. The Portfolio may
purchase and sell exchange-traded index options on any securities
index composed of the types of securities in which it may invest.
An option on a securities index is similar to an option on a
security except that, rather than the right to take or make
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.
There are no specific limitations on the Portfolio's purchasing
and selling of options on securities indices.

          Through the purchase of listed index options, the
Portfolio could achieve many of the same objectives as through
the use of options on individual securities. Price movements in
the Portfolio's portfolio securities probably will not correlate
perfectly with movements in the level of the index and,
therefore, the Portfolio would bear a risk of loss on index
options purchased by it if favorable price movements of the
hedged portfolio securities do not equal or exceed losses on the
options or if adverse price movements of the hedged portfolio
securities are greater than gains realized from the options.

          FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. For
a discussion regarding futures contracts and options on futures
contracts, see "AllianceBernstein Americas Government Income
Portfolio -- Futures Contracts" and "Options on Futures
Contracts", above.

          For additional information on the use, risks and costs
of futures contracts and options on futures contracts, see
Appendix B.

          OPTIONS ON FOREIGN CURRENCIES. For additional
information on the use, risks and costs of options on foreign
currencies, see Appendix B.

          FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The
Portfolio may purchase or sell forward foreign currency exchange
contracts (forward contracts). For a discussion regarding forward
foreign currency exchange contracts, see "AllianceBernstein
Americas Government Income Portfolio" -- "Forward Foreign
Currency Exchange Contracts," above.

          REPURCHASE AGREEMENTS. The Portfolio may invest in
repurchase agreements pertaining to the types of securities in
which it invests. For additional information regarding repurchase
agreements, see "Other Investment Policies -- Repurchase
Agreements," below.

          ILLIQUID SECURITIES. The Fund has adopted the following
investment policy on behalf of the Portfolio which may be changed
by the vote of the Board of Directors. The Portfolio will not
invest in illiquid securities if immediately after such
investment more than 15% of the Portfolio's net assets (taken at
market value) would be invested in such securities. For this
purpose, illiquid securities include, among others, securities
that are illiquid by virtue of the absence of a readily available
market or legal or contractual restriction on resale. See "Other
Investment Policies -- Illiquid Securities," below, for a more
detailed discussion of the Portfolio's investment policy on
restricted securities and securities with legal or contractual
restrictions on resale.

          INVESTMENT IN CLOSED-END INVESTMENT COMPANIES. The
Portfolio may invest in closed-end companies whose investment
objectives and policies are consistent with those of the
Portfolio. The Portfolio may invest up to 5% of its net assets in
securities of closed-end investment companies. However, the
Portfolio may not own more than 3% of the total outstanding
voting stock of any closed-end investment company. If the
Portfolio acquires shares in closed-end investment companies,
shareholders would bear both their proportionate share of
expenses in the Portfolio (including advisory fees) and,
indirectly, the expenses of such investment companies (including
management and advisory fees).

CERTAIN RISK CONSIDERATIONS

          UTILITY COMPANY RISKS. Utility companies may be subject
to a variety of risks depending, in part, on such factors as the
type of utility involved and its geographic location. The
revenues of domestic and foreign utilities companies generally
reflect the economic growth and development in the geographic
areas in which they do business. The Adviser takes into account
anticipated economic growth rates and other economic developments
when selecting securities of utility companies. Some of the risks
involved in investing in the principal sectors of the utilities
industry are discussed below.

          Telecommunications regulation typically limits rates
charged, returns earned, providers of services, types of
services, ownership, areas served and terms for dealing with
competitors and customers. Telecommunications regulation
generally has tended to be less stringent for newer services,
such as mobile services, than for traditional telephone service,
although there can be no assurances that such newer services will
not be heavily regulated in the future. Regulation may limit
rates based on an authorized level of earnings, a price index, or
some other formula. Telephone rate regulation may include
government-mandated cross-subsidies that limit the flexibility of
existing service providers to respond to competition. Telephone
utilities are still experiencing the effect of the break-up of
American Telephone & Telegraph Company, including increased
competition and rapidly developing technologies with which
traditional telephone companies now compete. Regulation may also
limit the use of new technologies and hamper efficient
depreciation of existing assets. If regulation limits the use of
new technologies by established carriers or forces
cross-subsidies, large private networks may emerge.

          Declines in the price of alternative fuels have
adversely affected gas utilities. Many gas utilities generally
have been adversely affected by oversupply conditions, and by
increased competition from other providers of utility services.
In addition, some gas utilities entered into long-term contracts
with respect to the purchase or sale of gas at fixed prices,
which prices have since changed significantly in the open market.
In many cases, such price changes have been to the disadvantage
of the gas utility. Gas utilities are particularly susceptible to
supply and demand imbalances due to unpredictable climate
conditions and other factors and are subject to regulatory risks
as well.

          Although there can be no assurance that increased
competition and other structural changes will not adversely
affect the profitability of gas and telephone utilities, or that
other negative factors will not develop in the future, in
Alliance's opinion, increased competition and change may provide
better positioned utility companies with opportunities for
enhanced profitability.

          Electric utilities that utilize coal in connection with
the production of electric power are particularly susceptible to
environmental regulation, including the requirements of the
federal Clean Air Act and of similar state laws. Such regulation
may necessitate large capital expenditures in order for the
utility to achieve compliance. Due to the public, regulatory and
governmental concern with the cost and safety of nuclear power
facilities in general, certain electric utilities with
uncompleted nuclear power facilities may have problems completing
and licensing such facilities. Regulatory changes with respect to
nuclear and conventionally fueled generating facilities could
increase costs or impair the ability of such electric utilities
to operate such facilities, thus reducing their ability to
service dividend payments with respect to the securities they
issue. Furthermore, rates of return of utility companies
generally are subject to review and limitation by state public
utilities commissions and tend to fluctuate with marginal
financing costs. Electric utilities that utilize nuclear power
facilities must apply for recommissioning from the Nuclear
Regulatory Commission after 40 years. Failure to obtain
recommissioning could result in an interruption of service or the
need to purchase more expensive power from other entities and
could subject the utility to significant capital construction
costs in connection with building new nuclear or alternative-fuel
power facilities, upgrading existing facilities or converting
such facilities to alternative fuels.

          INVESTMENTS IN LOWER-RATED FIXED-INCOME SECURITIES.
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. The Adviser tries to reduce the risk
inherent in investment in lower-rated securities through credit
analysis, diversification and attention to current developments
and trends in interest rates and economic and political
conditions. However, there can be no assurance that losses will
not occur. Since the risk of default is higher for lower-rated
securities, the Adviser's research and credit analysis are a
correspondingly important aspect of its program for managing the
Portfolio's securities than would be the case if the Portfolio
did not invest in lower-rated securities. In considering
investments for the Portfolio, the Adviser attempts to identify
those high-risk, high-yield 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.

          Non-rated securities are also considered for investment
by the Portfolio 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 Portfolio to a degree comparable to that of rated
securities which are consistent with the Portfolio's objective
and policies.

          In seeking to achieve the Portfolio's objective, there
will be times, such as during periods of rising interest rates,
when depreciation and realization of capital losses on securities
in the 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 net asset value of the Portfolio.

          INVESTMENT RESTRICTIONS. The following restrictions,
which are applicable to the Portfolio, supplement those set forth
above and may not be changed without Shareholder Approval, as
defined under the caption "General Information," below.

          The Portfolio may not:

          1. invest more than 5% of its total assets in the
securities of any one issuer except the U.S. Government, although
with respect to 25% of its total assets it may invest in any
number of issuers;

          2. invest 25% or more of its total assets in the
securities of issuers conducting their principal business
activities in any one industry, other than the utilities
industry, except that this restriction does not apply to U.S.
Government Securities;

          3. purchase more than 10% of any class of the voting
securities of any one issuer;

          4. borrow money except from banks for temporary or
emergency purposes, including the meeting of redemption requests
which might require the untimely disposition of securities;
borrowing in the aggregate may not exceed 15%, and borrowing for
purposes other than meeting redemptions may not exceed 5% of the
value of the Portfolio's total assets (including the amount
borrowed) less liabilities (not including the amount borrowed) at
the time the borrowing is made; outstanding borrowings in excess
of 5% of the value of the Portfolio's total assets will be repaid
before any subsequent investments are made;

          5. purchase a security if, as a result (unless the
security is acquired pursuant to a plan of reorganization or an
offer of exchange), the Portfolio would own any securities of an
open-end investment company or more than 3% of the total
outstanding voting stock of any closed-end investment company or
more than 5% of the value of the Portfolio's net assets would be
invested in securities of any one or more closed-end investment
companies;

          6. make loans except through (a) the purchase of debt
obligations in accordance with its investment objectives and
policies; (b) the lending of portfolio securities; or (c) the use
of repurchase agreements;

          7. participate on a joint or joint and several basis in
any securities trading account;

          8. invest in companies for the purpose of exercising
control;

          9. issue any senior security within the meaning of the
Act except that the Portfolio may write put and call options or
make loans of portfolio securities;

          10. make short sales of securities or maintain a short
position, unless at all times when a short position is open it
owns an equal amount of such securities or securities convertible
into or exchangeable for (without payment of any further
consideration) securities of the same issue as, and equal in
amount to, the securities sold short (short sales against the
box), and unless not more than 10% of the Portfolio's net assets
(taken at market value) is held as collateral for such sales at
any one time (it is the Portfolio's present intention to make
such sales only for the purpose of deferring realization of gain
or loss for Federal income tax purposes); or

          11. (a) purchase or sell real estate, except that it
may purchase and sell securities of companies which deal in real
estate or interests therein; (b) purchase or sell commodities or
commodity contracts (except currencies, futures contracts on
currencies and related options, forward contracts or contracts
for the future acquisition or delivery of securities and related
options, futures contracts and options on futures contracts and
options on futures contracts and other similar contracts); (c)
invest in interests in oil, gas, or other mineral exploration or
development programs; (d) purchase securities on margin, except
for such short-term credits as may be necessary for the clearance
of transactions; and (e) act as an underwriter of securities,
except that the Portfolio may acquire restricted securities under
circumstances in which, if such securities were sold, the
Portfolio might be deemed to be an underwriter for purposes of
the Securities Act.

ALLIANCEBERNSTEIN GROWTH PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          REPURCHASE AGREEMENTS. Repurchase agreements are
agreements by which the Portfolio purchases a security and
obtains a simultaneous commitment from the seller to repurchase
the security at an agreed upon price and date. The resale price
is in excess of the purchase price and reflects an agreed upon
market rate unrelated to the coupon rate on the purchased
security. The purchased security serves as collateral for the
obligation of the seller to repurchase the security and the value
of the purchased security is initially greater than or equal to
the amount of the repurchase obligation. The seller is required
to furnish additional collateral on a daily basis in order to
maintain with the purchaser securities with a value greater than
or equal to the amount of the repurchase obligation. Such
transactions afford the Portfolio the opportunity to earn a
return on temporarily available cash. While at times the
underlying security may be a bill, certificate of indebtedness,
note, or bond issued by an agency, authority or instrumentality
of the U.S. Government, the obligation of the seller is not
guaranteed by the U.S. Government 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 Portfolio would attempt to exercise its rights with respect
to the underlying security, including possible disposition in the
market. However, the Portfolio may be subject to various delays
and risks of loss, including (a) possible declines in the value
of the underlying security, (b) possible reduced levels of income
and lack of access to income during this period and (c) possible
inability to enforce rights. The Portfolio has established
standards for the creditworthiness of parties with which it may
enter into repurchase agreements, and those standards, as
modified from time to time, will be implemented and monitored by
the Adviser.

          NON-PUBLICLY TRADED SECURITIES. The Portfolio may
invest in securities which are not publicly traded, including
securities sold pursuant to Rule 144A under the Securities Act
("Rule 144A Securities"). The sale of these securities is usually
restricted under federal securities laws, and market quotations
may not be readily available. As a result, the Portfolio may not
be able to sell these securities (other than Rule 144A
Securities) unless they are registered under applicable Federal
and state securities laws, or may have to sell such securities at
less than fair market value. Investment in these securities is
restricted to 5% of the Portfolio's total assets (excluding, to
the extent permitted by applicable law, Rule 144A Securities) and
is also subject to the restriction against investing more than
15% of total assets in illiquid securities. To the extent
permitted by applicable law, Rule 144A Securities will not be
treated as illiquid for purposes of the foregoing restriction so
long as such securities meet the liquidity guidelines established
by the Fund's Board of Directors. Pursuant to these guidelines,
the Adviser will monitor the liquidity of the Portfolio's
investment in Rule 144A Securities and, in reaching liquidity
decisions, will consider: (1) the frequency of trades and quotes
for the security; (2) the number of dealers wishing to purchase
or sell the security and the number of other potential
purchasers; (3) dealer undertakings to make a market in the
security; and (4) the nature of the security and the nature of
the marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers and the mechanics of
the transfer).

          FOREIGN SECURITIES. The Portfolio may invest without
limit in securities of foreign issuers which are not publicly
traded in the United States, although the Portfolio generally
will not invest more than 20% of its total assets in such
securities. Investment in foreign issuers or securities
principally outside the United States may involve certain special
risks due to foreign economic, political, diplomatic and legal
developments, including favorable or unfavorable changes in
currency exchange rates, exchange control regulations (including
currency blockage), expropriation of assets or nationalization,
confiscatory taxation, imposition of withholding taxes on
dividend or interest payments, and possible difficulty in
obtaining and enforcing judgments against foreign entities.
Furthermore, issuers of foreign securities are subject to
different, often less comprehensive, accounting, reporting and
disclosure requirements than domestic issuers. The securities of
some foreign companies and foreign securities markets are less
liquid and at times more volatile than securities of comparable
U.S. companies and U.S. securities markets. Foreign brokerage
commissions and other fees are also generally higher than in the
United States. There are also special tax considerations which
apply to securities of foreign issuers and securities principally
traded overseas.

DESCRIPTION OF CERTAIN MONEY MARKET SECURITIES IN WHICH THE PORTFOLIO
MAY INVEST

          CERTIFICATES OF DEPOSIT, BANKERS' ACCEPTANCES AND BANK
TIME DEPOSITS. Certificates of deposit are receipts issued by a
bank in exchange for the deposit of funds. The issuer agrees to
pay the amount deposited plus interest to the bearer of the
receipt on the date specified on the certificate. The certificate
usually can be traded in the secondary market prior to maturity.

          Bankers' acceptances typically arise from short-term
credit arrangements designed to enable businesses to obtain funds
to finance commercial transactions. Generally, an acceptance is a
time draft drawn on a bank by an exporter or an importer to
obtain a stated amount of funds to pay for specific merchandise.
The draft is then accepted by another bank that, in effect,
unconditionally guarantees to pay the face value of the
instrument on its maturity date. The acceptance may then be held
by the accepting bank as an earning asset or it may be sold in
the secondary market at the going rate of discount for a specific
maturity. Although maturities for acceptances can be as long as
270 days, most maturities are six months or less.

          Bank time deposits are funds kept on deposit with a
bank for a stated period of time in an interest bearing account.
At present, bank time deposits maturing in more than seven days
are not considered by the Adviser to be readily marketable.

          COMMERCIAL PAPER. Commercial paper consists of short-
term (usually from 1 to 270 days) unsecured promissory notes
issued by entities in order to finance their current operations.

          VARIABLE NOTES. Variable amount master demand notes and
variable amount floating rate notes are obligations that permit
the investment of fluctuating amounts by the Portfolio at varying
rates of interest pursuant to direct arrangements between the
Portfolio, as lender, and the borrower. Master demand notes
permit daily fluctuations in the interest rate while the interest
rate under variable amount floating rate notes fluctuate on a
weekly basis. These notes permit daily changes in the amounts
borrowed. The Portfolio has the right to increase the amount
under these notes at any time up to the full amount provided by
the note agreement, or to decrease the amount, and the borrower
may repay up to the full amount of the notes without penalty.
Because these types of notes are direct lending arrangements
between the lender and the borrower, it is not generally
contemplated that such instruments will be traded and there is no
secondary market for these notes. Master demand notes are
redeemable (and, thus, immediately repayable by the borrower) at
face value plus accrued interest at any time. Variable amount
floating rate notes are subject to next-day redemption for 14
days after the initial investment therein. With both types of
notes, therefore, the Portfolio's right to redeem depends on the
ability of the borrower to pay principal and interest on demand.
In connection with both types of note arrangements, the Portfolio
considers earning power, cash flow and other liquidity ratios of
the issuer. These notes, as such, are not typically rated by
credit rating agencies. Unless they are so rated, the Portfolio
may invest in them only if, at the time of an investment, the
issuer has an outstanding issue of unsecured debt rated Aa or
better by Moody's or AA or better by S&P or Fitch.

          The ratings of fixed-income securities by S&P, Moody's
and Fitch are a generally accepted barometer 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. A description of Moody's, S&Ps and Fitch
short-term note ratings is included as Appendix A to the
Prospectus.

          LENDING OF SECURITIES. The Portfolio may seek to
increase its income by lending portfolio securities. Under
present regulatory policies, including those of the Board of
Governors of the Federal Reserve System and the Commission, such
loans may be made only to member firms of the Exchange, and would
be required to be secured continuously by collateral in cash,
cash equivalents, or U.S. Treasury Bills maintained on a current
basis at an amount at least equal to the market value of the
securities loaned. The Portfolio would have the right to call a
loan and obtain the securities loaned at any time on five days
notice. During the existence of a loan, the Portfolio would
continue to receive the equivalent of the interest or dividends
paid by the issuer on the securities loaned and would also
receive compensation based on investment of the collateral. The
Portfolio would not, however, have the right to vote any
securities having voting rights during the existence of the loan,
but would call the loan in anticipation of an important vote to
be taken among holders of the securities or of the giving or
withholding of their consent on a material matter affecting the
investment. As with other extensions of credit, there are risks
of delay in recovery or even loss of rights in the collateral
should the borrower of the securities fail financially. However,
the loans would be made only to firms deemed by the Adviser to be
of good standing, and when, in the judgment of the Adviser, the
consideration which can be earned currently from securities loans
of this type justifies the attendant risk. If the Adviser
determines to make securities loans, it is not intended that the
value of the securities loaned would exceed 25% of the value of
the Portfolio's total assets.

          FORWARD COMMITMENTS AND WHEN-ISSUED AND DELAYED
DELIVERY SECURITIES. The Portfolio may enter into forward
commitments for the purchase of securities and may purchase
securities on a when-issued or delayed delivery basis. Agreements
for such purchases might be entered into, for example, when the
Portfolio anticipates a decline in interest rates and is able to
obtain a more advantageous yield by committing currently to
purchase securities to be issued later. When the Portfolio
purchases securities in this manner (i.e., on a forward
commitment, when-issued or delayed delivery basis), it does not
pay for the securities until they are received. The Portfolio is
required to create a segregated account with the Fund's custodian
and to maintain in that account cash, U.S. Government Securities
or other liquid high-grade debt obligations in an amount equal to
or greater than, on a daily basis, the amount of the Portfolio's
forward commitments and when-issued or-delayed delivery
commitments.

          The Portfolio enters into forward commitments and makes
commitments to purchase securities on a when-issued or delayed
delivery basis only with the intention of actually acquiring the
securities. However, the Portfolio may sell these securities
before the settlement date if it is deemed advisable as a matter
of investment strategy.

          Although the Portfolio does not intend to make such
purchases for speculative purposes and the Portfolio intends to
adhere to the provisions and policies of the Commission,
purchases of securities on such bases may involve more risk than
other types of purchases. For example, by committing to purchase
securities in the future, the Portfolio subjects itself to a risk
of loss on such commitments as well as on its portfolio
securities. Also, the Portfolio may have to sell assets which
have been set aside in order to meet redemptions. In addition, if
the Portfolio 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 Portfolio 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 and
would be treated for tax purposes as such. 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 Portfolio 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 Portfolio's payment obligation).

          OPTIONS. As noted in the Prospectus, the Portfolio may
write call and put options and may purchase call and put options
on securities. The Portfolio intends to write only covered
options. This means that so long as the Portfolio is obligated as
the writer of a call option, it will own the underlying
securities subject to the option or securities convertible into
such securities without additional consideration (or for
additional cash consideration held in a segregated account by the
custodian). In the case of call options on U.S. Treasury Bills,
the Portfolio might own U.S. Treasury Bills of a different series
from those underlying the call option, but with a principal
amount and value corresponding to the option contract amount and
a maturity date no later than that of the securities deliverable
under the call option. The Portfolio is considered covered with
respect to a put option it writes, if, so long as it is obligated
as the writer of a put option, it deposits and maintains in a
segregated account with the Fund's custodian, cash, U.S.
Government Securities or other liquid high-grade debt obligations
having a value equal to or greater than the exercise price of the
option.

          Effecting a closing transaction in the case of a
written call option will permit the Portfolio to write another
call option on the underlying security with either a different
exercise price or expiration date or both, or in the case of a
written put option will permit the Portfolio to write another put
option to the extent that the exercise price thereof is secured
by deposited cash or short-term securities. Such transactions
permit the Portfolio to generate additional premium income, which
may partially offset declines in the value of portfolio
securities or increases in the cost of securities to be acquired.
Also, effecting a closing transaction permits the cash or
proceeds from the concurrent sale of any securities subject to
the option to be used for other investments by the Portfolio,
provided that another option on such security is not written. If
the Portfolio desires to sell a particular security from its
portfolio on which it has written a call option, it will effect a
closing transaction in connection with the option prior to or
concurrent with the sale of the security.

          The Portfolio will realize a profit from a closing
transaction if the premium paid in connection with the closing of
an option written by the Portfolio is less than the premium
received from writing the option, or if the premium received in
connection with the closing of an option purchased by the
Portfolio is more than the premium paid for the original
purchase. Conversely, the Portfolio will suffer a loss if the
premium paid or received in connection with a closing transaction
is more or less, respectively, than the premium received or paid
in establishing the option position. Because increases in the
market price of a call option will generally reflect increases in
the market price of the underlying security, any loss resulting
from the repurchase of a call option previously written by the
Portfolio is likely to be offset in whole or in part by
appreciation of the underlying security owned by the Portfolio.

          The Portfolio may purchase a security and then write a
call option against that security, or it may purchase a security
and concurrently write an option on it. The exercise price of the
call the Portfolio determines to write will depend upon the
expected price movement of the underlying security. The exercise
price of a call option may be below (in-the-money), equal to
(at-the-money) or above (out-of-the-money) the current value of
the underlying security at the time the option is written.
In-the-money call options may be used when it is expected that
the price of the underlying security will decline moderately
during the option period. Out-of-the-money call options may be
written when it is expected that the premiums received from
writing the call option plus the appreciation in the market price
of the underlying security up to the exercise price will be
greater than the appreciation in the price of the underlying
security alone. If the call options are exercised in such
transactions, the Portfolio's maximum gain will be the premium
received by it for writing the option, adjusted upwards or
downwards by the difference between the Portfolio's purchase
price of the security and the exercise price. If the options are
not exercised and the price of the underlying security declines,
the amount of such decline will be offset in part, or entirely,
by the premium received.

          The writing of covered put options is similar in terms
of risk/return characteristics to buy-and-write transactions. If
the market price of the underlying security rises, or is
otherwise above the exercise price, the put option will expire
worthless and the Portfolio's gain will be limited to the premium
received. If the market price of the underlying security declines
or is otherwise below the exercise price, the Portfolio may elect
to close the position or retain the option until it is exercised,
at which time the Portfolio will be required to take delivery of
the security at the exercise price. The Portfolio's return will
be the premium received from the put option minus the amount by
which the market price of the security is below the exercise
price, which could result in a loss. Out-of-the-money put options
may be written when it is expected that the price of the
underlying security will decline moderately during the option
period. In-the-money put options may be used when it is expected
that the premiums received from writing the put option plus the
appreciation in the market price of the underlying security up to
the exercise price will be greater than the appreciation in the
price of the underlying security alone.

          The Portfolio may also 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
Portfolio 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 Portfolio will be required to sell the underlying security at
a 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 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 Portfolio 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 Portfolio 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 increases in the value of
securities to be acquired, up to the amount of the premium.

          The Portfolio 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 Portfolio 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 Portfolio will
reduce any profit it might otherwise have realized in the
underlying security by the amount of the premium paid for the put
option and by transaction costs.

          The Portfolio may purchase call options to hedge
against an increase in the price of securities that the Portfolio
anticipates purchasing in the future. If such increase occurs,
the call option will permit the Portfolio 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 Portfolio upon exercise of the option, and, unless the price
of the underlying security rises sufficiently, the option may
expire worthless to the Portfolio and the Portfolio will suffer a
loss on the transaction to the extent of the premium paid.

          OPTIONS ON SECURITIES INDEXES. The Portfolio may write
(sell) covered call and put options on securities indexes and
purchase call and put options on securities indexes. A call
option on a securities index is considered covered if, so long as
the Portfolio is obligated as the writer of the call, the
Portfolio holds in its portfolio securities the price changes of
which are, in the option of the Adviser, expected to replicate
substantially the movement of the index or indexes upon which the
options written by the Portfolio are based. A put on a securities
index written by the Portfolio will be considered covered if, so
long as it is obligated as the writer of the put, the Portfolio
segregates with the Fund's custodian cash, U.S. Government
Securities or other liquid high-grade debt obligations having a
value equal to or greater than the exercise price of the option.

          The Portfolio may also purchase put options on
securities indexes to hedge its investments against a decline in
value. By purchasing a put option on a securities index, the
Portfolio seeks to offset a decline in the value of securities it
owns through appreciation of the put option. If the value of the
Portfolio's investments does not decline as anticipated, or if
the value of the option does not increase, the Portfolio'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 Portfolio's security holdings.

          The purchase of call options on securities indexes may
be used by the Portfolio 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 Portfolio holds uninvested cash or
short-term debt securities awaiting investment. When purchasing
call options for this purpose, the Portfolio also bears 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
indexes when the Portfolio 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 calls on
securities the Portfolio owns.

          FUTURES AND RELATED OPTIONS. The Portfolio may enter
into stock futures contracts, and may enter into foreign currency
futures contracts. (Unless otherwise specified, stock index
futures contracts and foreign currency futures contracts are
collectively referred to as Futures Contracts.) Such investment
strategies will be used as a hedge and not for speculation.

          Purchases or sales of stock or bond index futures
contracts are used for hedging purposes to attempt to protect the
Portfolio's current or intended investments from broad
fluctuations in stock or bond prices. For example, the Portfolio
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 Portfolio's securities portfolio 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 Portfolio 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 part or
entirely, offset increases in the cost of securities that the
Portfolio intends to purchase. As such purchases are made, the
corresponding positions in stock or bond index futures contracts
will be closed out. The Portfolio generally intends to purchase
such securities upon termination of the futures position, but
under unusual market conditions a long futures position may be
terminated without a related purchase of securities.

          Interest rate futures contracts are purchased or sold
for hedging purposes to attempt to protect against the effects of
interest rate changes on the Portfolio's current or intended
investments in fixed-income securities. For example, if the
Portfolio owned long-term bonds and interest rates were expected
to increase, the Portfolio 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 Portfolio's portfolio.
However, since the futures market is more liquid than the cash
market, the use of interest rate futures contracts as a hedging
technique allows the Portfolio to hedge its interest rate risk
without having to sell its portfolio securities. If interest
rates did increase, the value of the debt securities in the
portfolio would decline, but the value of the Portfolio's
interest rate futures contracts would be expected to increase at
approximately the same rate, thereby keeping the net asset value
of the Portfolio 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 Portfolio 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 became
available or the market had stabilized. At that time, the
interest rate futures contracts could be liquidated and the
Portfolio's cash reserves could then be used to buy long-term
bonds on the cash market.

          The Portfolio may purchase and sell foreign currency
futures contracts for hedging purposes to attempt to protect its
current or intended investments from fluctuations in currency
exchange rates. Such fluctuations could reduce the dollar value
of portfolio securities denominated in foreign currencies, or
increase the cost of foreign-denominated securities to be
acquired, even if the value of such securities in the currencies
in which they are denominated remains constant. The Portfolio 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. In the event such decline occurs, the resulting
adverse effect on the value of foreign-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 Portfolio'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 value as a result of the change
in exchange rates.

          Conversely, the Portfolio could protect against a rise
in the dollar cost of foreign-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 Portfolio purchases
futures contracts under such circumstances, however, and the
price of securities to be acquired instead declines as a result
of appreciation of the dollar, the Portfolio sustains losses on
its futures position which could reduce or eliminate the benefits
of the reduced cost of portfolio securities to be acquired.

          The Portfolio may also engage in currency cross hedging
when, in the opinion of the Adviser, the historical relationship
among foreign currencies suggests that the Portfolio 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 risk as
those described above with respect to an unanticipated increase
or decline in the value of the subject currency relative to the
dollar.

          The Portfolio may purchase and write options on stock
index futures contracts and on foreign currency futures
contracts. (Unless otherwise specified, options on securities
index futures contracts and options on foreign currency futures
contracts are collectively referred to as "Options on Futures
Contracts.")

          The writing of a call option on a Futures Contract
constitutes a partial hedge against declining prices of the
securities in the Portfolio's portfolio. If the futures price at
expiration of the option is below the exercise price, the
Portfolio will retain the full amount of the option premium,
which provides a partial hedge against any decline that may have
occurred in the Portfolio'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 Portfolio will retain the full
amount of the option premium, providing a partial hedge against
any increase in the price of securities which the Portfolio
intends to purchase. If a put or call option the Portfolio has
written is exercised, the Portfolio 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 Portfolio's losses from exercised options
on futures may to some extent be reduced or increased by changes
in the value of portfolio securities.

          The Portfolio 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 Portfolio could, in lieu of selling Futures Contracts,
purchase put options thereon. In the event that such decrease
occurs, it may be offset, in whole or part, by a profit on the
option. If the market decline does not occur, the Portfolio 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
Portfolio will increase prior to acquisition due to a market
advance or changes in interest or exchange rates, the Portfolio
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 Portfolio will suffer a loss equal to the price of the call,
but the securities which the Portfolio intends to purchase may be
less expensive.

          FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The
Portfolio may enter into forward foreign currency exchange
contracts ("Forward Contracts") to attempt to minimize the risk
to the Portfolio from adverse changes in the relationship between
the U.S. Dollar and foreign currencies. The Portfolio intends to
enter into Forward Contracts for hedging purposes similar to
those described above in connection with its transactions in
foreign currency futures contracts. In particular, a Forward
Contract to sell a currency may be entered into in lieu of the
sale of a foreign currency futures contract where the Portfolio
seeks to protect against an anticipated increase in the exchange
rate for a specific currency that could reduce the dollar value
of portfolio securities denominated in such currency. Conversely,
the Portfolio may enter into a Forward Contract to purchase a
given currency to protect against a projected increase in the
dollar value of securities denominated in such currency which the
Portfolio intends to acquire. The Portfolio also may enter into a
Forward Contract in order to assure itself of a predetermined
exchange rate in connection with a fixed-income security
denominated in a foreign currency. The Portfolio may engage in
currency cross hedging when, in the opinion of the Adviser, the
historical relationship among foreign currencies suggests that
the Portfolio may achieve the same protection for a foreign
security at a reduced cost through the use of a Forward Contract
relating to a currency other than the U.S. Dollar or the foreign
currency in which the security is denominated.

          If a hedging transaction in Forward 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 Contract.
Nevertheless, by entering into such Forward Contracts, the
Portfolio may be required to forego all or a portion of the
benefits which otherwise could have been obtained from favorable
movements in exchange rates. The Portfolio does not presently
intend to hold Forward Contracts entered into until maturity, at
which time the Portfolio would be required to deliver or accept
delivery of the underlying currency, but will seek in most
instances to close out positions in such contracts by entering
into offsetting transactions. Such offsetting transactions will
serve to fix the Portfolio's profit or loss based upon the value
of the Contracts at the time the offsetting transaction is
executed.

          The Portfolio has established procedures consistent
with Commission policies concerning purchases of foreign currency
through Forward Contracts. Accordingly, the Portfolio will
segregate liquid assets in an amount least equal to the
Portfolio's obligations under any Forward Contract.

          OPTIONS ON FOREIGN CURRENCIES. The Portfolio 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 Portfolio may purchase put options on the foreign currency.
If the value of the currency does decline, the Portfolio 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 the 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
Portfolio may purchase call options thereon. 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 Portfolio deriving
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 Portfolio could sustain losses on
transactions in foreign currency options which would require it
to forego a portion or all of the benefits of advantageous
changes in such rates.

          The Portfolio may write options on foreign currencies
for the same types of hedging purposes or to increase return. For
example, where the Portfolio anticipates a decline in the dollar
value of foreign-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 Portfolio could write a put option on the
relevant currency. If rates move in the manner projected, the put
option will expire unexercised and allow the Portfolio 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 Portfolio will be required to purchase or sell the
underlying currency at a loss that may not be offset by the
amount of the premium. Through the writing of options on foreign
currencies, the Portfolio also may be required to forego all or a
portion of the benefits that might otherwise have been obtained
from favorable movements in exchange rates.

          RISK FACTORS IN OPTIONS FUTURES AND FORWARD
TRANSACTIONS. The Portfolio's abilities to effectively hedge all
or a portion of its portfolio through transactions in options,
Futures Contracts, Options on Futures Contracts, Forward
Contracts and options on foreign currencies, depend on the degree
to which price movements in the underlying index or instrument
correlate with price movements in the relevant portion of the
Portfolio's portfolio, or the securities the Portfolio intends to
purchase. In the case of futures and options based on an index,
the Portfolio will not duplicate the components of the index. In
the case of futures and options on fixed-income securities, the
securities which are being hedged may not be the same type of
obligation underlying such contract. As a result, the correlation
probably will not be exact. Consequently, the Portfolio bears the
risk that the price of the portfolio securities being hedged will
not move by the same amount, or in the same direction, as the
underlying index or obligation.

          For example, if the Portfolio purchases a put option on
an index, and the index decreases less than the value of the
hedged securities, the Portfolio will experience a loss that is
not completely offset by the put option. It is also possible that
there may be a negative correlation between the index or
obligation underlying an option or Futures Contract in which the
Portfolio has a position, and the portfolio securities that the
Portfolio is attempting to hedge, which could result in a loss on
both the Portfolio and the hedging instrument.

          It should be noted that stock index futures contracts
or options based upon a narrower index of securities, such as
those of a particular industry group, may present greater risk
than options or futures based on a broad market index. This is
because a narrower index is more susceptible to rapid and extreme
fluctuations as a result of changes in the value of a small
number of securities.

          The trading of futures and options entails the
additional risk of imperfect correlation between movements in the
futures or option price and the price of the underlying index or
obligation. The anticipated spread between the prices may be
distorted due to the differences in the nature of the markets,
such as differences in margin requirements, the liquidity of such
markets and the participation of speculators in the futures
market. In this regard, trading by speculators in futures and
options has occasionally resulted in market distortions, which
may be difficult or impossible to predict, particularly near the
expiration of such contracts.

          The trading of Options on Futures Contracts also
entails the risk that changes in the value of the underlying
Futures Contract will not be fully reflected in the value of the
option. The risk of imperfect correlation, however, generally
tends to diminish as the maturity date of the Futures Contract or
expiration date of the option approaches.

          Further, with respect to options on securities, options
on foreign currencies, options on stock indexes and Options on
Futures Contracts, the Portfolio is subject to the risk of market
movements between the time that the option is exercised and the
time of performance thereunder. This could increase the extent of
any loss suffered by the Portfolio in connection with such
transactions.

          If the Portfolio purchases futures or options in order
to hedge against a possible increase in the price of securities
before the Portfolio is able to invest its cash in such
securities, the Portfolio faces the risk that the market may
instead decline. If the Portfolio does not then invest in such
securities because of concern as to possible further market
declines or for other reasons, the Portfolio may realize a loss
on the futures or option contract that is not offset by a
reduction in the price of securities purchased.

          In writing a call option on a security, foreign
currency, index or futures contract, the Portfolio also incurs
the risk that changes in the value of the assets used to cover
the position will not correlate closely with changes in the value
of the option or underlying index or instrument. For example,
when the Portfolio writes a call option on a stock index, the
securities used as cover may not match the composition of the
index, and the Portfolio may not be fully covered. As a result,
the Portfolio could suffer a loss on the call which is not
entirely offset or offset at all by an increase in the value of
the Portfolio's securities.

          The writing of options on securities, options on stock
indexes or Options on Futures Contracts constitutes only a
partial hedge against fluctuations in the value of the
Portfolio's portfolio. When the Portfolio writes an option, it
will receive premium income in return for the holder's purchase
of the right to acquire or dispose of the underlying security or
future or, in the case of index options, cash. In the event that
the price of such obligation does not rise sufficiently above the
exercise price of the option (in the case of a call) or fall
below the exercise price (in the case of a put) the option will
not be exercised and the Portfolio will retain the amount of the
premium. This will constitute a partial hedge against any decline
that may have occurred in the Portfolio's holdings, or against
the increase in the cost of the instruments to be acquired.

          When the price of the underlying obligation moves
sufficiently in favor of the holder to warrant exercise of the
option and the option is exercised, the Portfolio will incur a
loss which may only be partially offset by the amount of the
premium it received. Moreover, by writing an option, the
Portfolio may be required to forego the benefits which might
otherwise have been obtained from an increase in the value of
portfolio securities or a decline in the value of securities to
be acquired.

          In the event of the occurrence of any of the foregoing
adverse market events, the Portfolio's overall return may be
lower than if it had not engaged in the transactions described
above.

          With respect to the writing of straddles on securities,
the Portfolio incurs the risk that the price of the underlying
security will not remain stable, that one of the options written
will be exercised and that the resulting loss will not be offset
by the amount of the premiums received. Such transactions, while
creating an opportunity for increased return by providing the
Portfolio with two simultaneous premiums on the same security,
nonetheless involve additional risk, because the Portfolio may
have an option exercised against it regardless of whether the
price of the security increases or decreases.

          Prior to exercise or expiration, a futures or option
position can be terminated only by entering into a closing
purchase or sale transaction. This requires a secondary market
for such instruments on the exchange on which the initial
transaction was entered into. While the Portfolio enters into
options or futures positions only if there appears to be a liquid
secondary market therefor, there can be no assurance that such a
market will exist for any particular contracts at any specific
time. In that event, it may not be possible to close out a
position held by the Portfolio, and the Portfolio could be
required to purchase or sell the instrument underlying an option,
make or receive a cash settlement or meet ongoing variation
margin requirements. Under such circumstances, if the Portfolio
has insufficient cash available to meet margin requirements, it
may be necessary to liquidate portfolio securities at a time when
it is disadvantageous to do so. The inability to close out
options and futures positions, could have an adverse impact on
the Portfolio's ability to effectively hedge its securities, and
could result in trading losses.

          The liquidity of a secondary market in a Futures
Contract or option thereon may be adversely affected by daily
price fluctuation limits, established by exchanges, which limit
the amount of fluctuation in the price of a contract during a
single trading day. Once the daily limit has been reached in the
contract, no trades may be entered into at a price beyond the
limit. This prevents the liquidation of open futures or option
positions and requires traders to make additional margin
deposits. Prices have in the past moved to the daily limit on a
number of consecutive trading days.

          The trading of Futures Contracts and options (including
Options on Futures Contracts) is also subject to the risk of
trading halts, suspensions, exchange or clearing house equipment
failures, government intervention, insolvency of a brokerage firm
or clearing house or other disruptions of normal trading
activity, that could at times make it difficult or impossible to
liquidate existing positions or to recover excess variation
margin payments.

          The Staff of the Commission had taken the position that
over-the-counter options and the assets used as cover for over-
the-counter options are illiquid securities, unless certain
arrangements are made with the other party to the option contract
permitting the prompt liquidation of the option position. The
Portfolio will enter into those special arrangements only with
primary U.S. Government Securities dealers recognized by the
Federal Reserve Bank of New York ("primary dealers"). In
connection with these special arrangements, the Portfolio will
establish standards for the creditworthiness of the primary
dealers with which it may enter into over-the-counter option
contracts and those standards, as modified from time to time,
will be implemented and monitored by the Adviser. Under these
special arrangements, the Portfolio will enter into contracts
with primary dealers which provide that the Portfolio has the
absolute right to repurchase an option it writes at any time at a
repurchase price which represents fair market value, as
determined in good faith through negotiation between the parties,
but which in no event will exceed a price determined pursuant to
a formula contained in the contract. Although the specific
details of the formula may vary between contracts with different
primary dealers, the formula will generally be based on a
multiple of the premium received by the Portfolio for writing the
option, plus the amount, if any, by which the option is in-the-
money. The formula will also include a factor to account for the
difference between the price of the security and the strike price
of the option if the option is written out-of-the-money. Under
such circumstances the Portfolio will treat as illiquid the
securities used as cover for over-the-counter options it has
written only to the extent described in the Prospectus. Although
each agreement will provide that the Portfolio's repurchase price
shall be determined in good faith (and that it shall not exceed
the maximum determined pursuant to the formula), the formula
price will not necessarily reflect the market value of the option
written; therefore, the Portfolio might pay more to repurchase
the option contract than the Portfolio would pay to close out a
similar exchange-traded option.

          Because of low initial margin deposits made upon the
opening of a futures position and the writing of an option, such
transactions involve substantial leverage. As a result,
relatively small movements in the price of the contract can
result in substantial unrealized gains or losses. To the extent
the Portfolio purchases or sells Futures Contracts and Options on
Futures Contracts, and purchases and writes options on securities
and securities indexes for hedging purposes, any losses incurred
in connection therewith should, if the hedging strategy is
successful, be offset, in whole or in part, by increases in the
value of securities held by the Portfolio or decreases in the
prices of securities the Portfolio intends to acquire. When the
Portfolio writes options on securities or options on stock
indexes for other than hedging purposes, the margin requirements
associated with such transactions could expose the Portfolio to
greater risk.

          The exchanges on which futures and options are traded
may impose limitations governing the maximum number of positions
on the same side of the market and involving the same underlying
instrument which may be held by a single investor, whether acting
alone or in concert with others (regardless of whether such
contracts are held on the same or different exchanges or held or
written in one or more accounts or through one or more brokers).
In addition, the CFTC and the various contract markets have
established limits referred to as speculative position limits on
the maximum net long or net short position which any person may
hold or control in a particular futures or option contract. An
exchange may order the liquidation of positions found to be in
violation of these limits and may impose other sanctions or
restrictions. The Adviser does not believe that these trading and
position limits will have any adverse impact on the strategies
for hedging the Portfolio.

          The amount of risk the Portfolio assumes when it
purchases an option on a Futures Contract is the premium paid for
the option, plus related transaction costs. In order to profit
from an option purchased, however, it may be necessary to
exercise the option and to liquidate the underlying Futures
Contract, subject to the risks of the availability of a liquid
offset market described herein. The writer of an option on a
Futures Contract is subject to the risks of commodity futures
trading, including the requirement of initial and variation
margin payments, as well as the additional risk that movements in
the price of the option may not correlate with movements in the
price of the underlying security, index, currency or Futures
Contract.

          Transactions in Forward Contracts, as well as futures
and options on foreign currencies, are subject to all of the
correlation, liquidity and other risks outlined above. In
addition, however, such transactions are subject to the risk of
governmental actions affecting trading in or the prices of
currencies underlying such contracts, which could restrict or
eliminate trading and could have a substantial adverse effect on
the value of positions held by the Portfolio. In addition, the
value of such positions could be adversely affected by a number
of other complex political and economic factors applicable to the
countries issuing the underlying currencies.

          Further, unlike trading in most other types of
instruments, there is no systematic reporting of last sale
information with respect to the foreign currencies underlying
contracts thereon. As a result, the available information on
which trading decisions will be based may not be as complete as
the comparable data on which the Portfolio makes investment and
trading decisions in connection with other transactions. Because
the foreign currency market is a global, twenty-four hour market,
events could occur on that market which will not be reflected in
the forward, futures or options markets until the following day,
thereby preventing the Portfolio from responding to such events
in a timely manner.

          Settlements of exercises of over-the-counter Forward
Contracts or foreign currency options generally must occur within
the country issuing the underlying currency. This, in turn,
requires traders to accept or make delivery of such currencies in
conformity with any United States or foreign restrictions and
regulations regarding the maintenance of foreign banking
relationships and fees, taxes or other charges.

          Unlike Futures Contracts and exchange-traded options
entered into by the Portfolio, options on foreign currencies,
Forward Contracts and over-the-counter options on securities are
not traded on contract markets regulated by the CFTC or (with the
exception of certain foreign currency options) the Commission.
Such instruments are instead 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 regulation by the Commission. 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 could lose amounts substantially in excess of the initial
investment, due to the margin and collateral requirements
associated with such positions.

          Over-the-counter transactions can be entered into only
with a financial institution willing to take the opposite side,
as principal, of the Portfolio's position, unless the institution
acts as broker and is able to find another counterparty willing
to enter into the transaction with the Portfolio. Where no such
counterparty is available, it will not be possible to enter into
a desired transaction. There also may be no liquid secondary
market in the trading of over-the-counter contracts, and the
Portfolio could be required to retain options purchased or
written, or Forward Contracts entered into, until exercise,
expiration or maturity. This could limit the Portfolio's ability
to profit from open positions or to reduce losses experienced,
and could result in greater losses.

          Over-the-counter transactions are not subject to the
guarantee of an exchange clearing house, and the Portfolio will
therefore be subject to the risk of default by, or the bankruptcy
of, the financial institution serving as its counterparty. One or
more such institutions also may decide to discontinue their role
as market-makers in a particular currency or security, thereby
restricting the Portfolio's ability to enter into desired hedging
transactions. The Portfolio will enter into an over-the-counter
transaction only with parties whose creditworthiness has been
reviewed and found satisfactory by the Adviser.

          Transactions in over-the-counter options on foreign
currencies are subject to a number of conditions regarding the
commercial purpose of the purchaser of such option. The Portfolio
is not able to determine at this time whether or to what extent
additional restrictions on the trading of over-the-counter
options on foreign currencies may be imposed at some point in the
future, or the effect that any such restrictions may have on the
hedging strategies to be implemented by them.

          The Portfolio has claimed an exclusion from the
definition of "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 foreign currencies traded on national
securities exchanges are within the jurisdiction of the
Commission, 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
Portfolio to liquidate open positions at a profit prior to
exercise or expiration, or to limit losses in the event of
adverse market movements.

          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, the 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, if the OCC
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, it may 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.

          RESTRICTIONS ON THE USE OF FUTURES AND OPTION
CONTRACTS. Under applicable regulations of the CFTC, when the
Portfolio enters into transactions in Futures Contracts and
Options on Futures Contracts other than for bona fide hedging
purposes, the Portfolio maintains with the Fund's custodian a
segregated liquid assets account which, together with any initial
margin deposits or other liquid assets, is equal to the aggregate
market value of the Futures Contracts and Options on Futures
Contracts that it purchases.

          The Portfolio has adopted the restriction that it will
not enter into a Futures Contract if, immediately thereafter, the
value of securities and other obligations underlying all such
Futures Contracts would exceed 50% of the Portfolio's total
assets. Moreover, the Portfolio will not purchase put and call
options if, as a result, more than 10% of its total assets would
be invested in such options.

          When the Portfolio purchases a Futures Contract, an
amount of cash and cash equivalents will be deposited in a
segregated account with the Fund's custodian so that the amount
so segregated will at all times equal the value of the Futures
Contract, thereby insuring that the use of such futures is
unleveraged.

          ECONOMIC EFFECTS AND LIMITATIONS. Income earned by the
Portfolio from its hedging activities is treated as capital gain
and, if not offset by net realized capital losses incurred by the
Portfolio, is distributed to shareholders in taxable
distributions. Although gain from futures and options
transactions may hedge against a decline in the value of the
Portfolio's securities, that gain, to the extent not offset by
losses, is distributed in light of certain tax considerations and
constitutes a distribution of that portion of the value preserved
against decline.

          The Portfolio will not over-hedge, or maintain open
short positions in futures or options contracts if, in the
aggregate, the market value of its open positions exceeds the
current market value of its securities portfolio plus or minus
the unrealized gain or loss on such open positions, adjusted for
the historical volatility relationship between the portfolio and
futures and options contracts.

          The Portfolio's ability to employ the options and
futures strategies described above depends on the availability of
liquid markets in such instruments. Markets in financial futures
and related options are still developing. It is impossible to
predict the amount of trading interest that may hereafter exist
in various types of options or futures. Therefore no assurance
can be given that the Portfolio will be able to use these
instruments effectively for the purposes set forth above. In
addition, the Portfolio's ability to engage in options and
futures transactions may be materially limited by tax
considerations.

          The Portfolio's ability to use options, futures and
forward contracts may be limited by tax considerations. In
particular, tax rules might affect the length of time for which
the Portfolio can hold such contracts and the character of the
income earned on such contracts. In addition, differences between
the Portfolio's book income (upon the basis of which
distributions are generally made) and taxable income arising from
its hedging activities may result in return of capital
distributions, and in some circumstances, distributions in excess
of the Portfolio's book income may be required in order to meet
tax requirements.

          FUTURE DEVELOPMENTS. The above discussion relates to
the Portfolio's proposed use of futures contracts, options and
options on futures contracts currently available. As noted above,
the relevant markets and related regulations are still in the
developing stage. In the event of future regulatory or market
developments, the Portfolio may also use additional types of
futures contracts or options and other investment techniques for
the purposes set forth above.

          The following restrictions, which are applicable to the
Portfolio, supplement those set forth above and may not be
changed without Shareholder Approval, as defined under the
caption "General Information," below.

          The Portfolio will not:

          1. invest more than 5% of its total assets in the
securities of any one issuer (other than U.S. Government
Securities and repurchase agreements relating thereto), although
up to 25% of the Portfolio's total assets may be invested without
regard to this restriction;

          2. invest 25% or more of its total assets in the
securities of any one industry. (Obligations of a foreign
government and its agencies or instrumentalities constitute a
separate "industry" from those of another foreign government);

          3. borrow money in excess of 15% of the value (taken at
the lower of cost or current value) of its total assets (not
including the amount borrowed) at the time the borrowing is made,
and then only from banks as a temporary measure to facilitate the
meeting of redemption requests (not for leverage) which might
otherwise require the untimely disposition of portfolio
investments or pending settlement of securities transactions or
for extraordinary or emergency purposes;

          4. underwrite securities issued by other persons except
to the extent that, in connection with the disposition of its
portfolio investments, it may be deemed to be an underwriter
under certain federal securities laws;

          5. purchase or retain real estate or interests in real
estate, although the Portfolio may purchase securities which are
secured by real estate and securities of companies which invest
in or deal in real estate;

          6. make loans to other persons except by the purchase
of obligations in which the Portfolio may invest consistent with
its investment policies and by entering into repurchase
agreements, or by lending its portfolio securities representing
not more than 25% of its total assets; or

          7. issue any senior security (as that term is defined
in the 1940 Act), if such issuance is specifically prohibited by
the 1940 Act or the rules and regulations promulgated thereunder.
For the purposes of this restriction, loans of portfolio
securities, collateral arrangements with respect to options,
Futures Contracts and Options on Futures Contracts and collateral
arrangements with respect to initial and variation margins are
not deemed to be the issuance of a senior security. (There is no
intention to issue senior securities except as set forth in
paragraph 3 above.)

          It is also a fundamental policy of the Portfolio that
it may purchase and sell futures contracts and related options.

          In addition, the following is a description of
operating policies which the Fund has adopted on behalf of the
Portfolio but which are not fundamental and are subject to change
without shareholder approval.

          The Portfolio will not:

          (a) pledge, mortgage, hypothecate or otherwise encumber
an amount of its assets taken at current value in excess of 15%
of its total assets (taken at the lower of cost or current value)
and then only to secure borrowings permitted by restriction (1)
above. For the purpose of this restriction, the deposit of
securities and other collateral arrangements with respect to
reverse repurchase agreements, options, Futures Contracts,
Forward Contracts and options on foreign currencies, and payments
of initial and variation margin in connection therewith are not
considered pledges or other encumbrances.

          (b) purchase securities on margin, except that the
Portfolio may obtain such short-term credits as may be necessary
for the clearance of purchases and sales of securities, and
except that the Portfolio may make margin payments in connection
with Futures Contracts, Options on Futures Contracts, options,
Forward Contracts or options on foreign currencies.

          (c) make short sales of securities or maintain a short
position for the account of the Portfolio unless at all times
when a short position is open it owns an equal amount of such
securities or unless by virtue of its ownership of other
securities it has at all such times a right to obtain securities
(without payment of further consideration) equivalent in kind and
amount to the securities sold, provided that if such right is
conditional the sale is made upon equivalent conditions and
further provided that the Portfolio will not make such short
sales with respect to securities having a value in excess of 5%
of its total assets.

          (d) write, purchase or sell any put or call option or
any combination thereof, provided that this shall not prevent the
Portfolio from writing, purchasing and selling puts, calls or
combinations thereof with respect to securities, indexes of
securities or foreign currencies, and with respect to Futures
Contracts.

          (e) purchase voting securities of any issuer if the
purchase, at the time thereof, would cause more than 10% of the
outstanding voting securities of such issuer to be held by the
Portfolio; or purchase securities of any issuer if such purchase
at the time thereof would cause more than 10% of any class of
securities of such issuer to be held by the Portfolio. For this
purpose all indebtedness of an issuer shall be deemed a single
class and all preferred stock of an issuer shall be deemed a
single class.

          (f) invest in securities of any issuer if, to the
knowledge of the Fund, officers and Directors of such Fund and
officers and directors of the Adviser who beneficially own more
than 0.5% of the shares of securities of that issuer together own
more than 5%.

          (g) purchase securities issued by any other registered
investment company or investment trust except (A) by purchase in
the open market where no commission or profit to a sponsor or
dealer results from such purchase other than the customary
brokers commission, or (B) where no commission or profit to a
sponsor or dealer results from such purchase, or (C) when such
purchase, though not made in the open market, is part of a plan
of merger or consolidation; provided, however, that the Portfolio
will not purchase such securities if such purchase at the time
thereof would cause more than 5% of its total assets (taken at
market value) to be invested in the securities of such issuers;
and, provided further, that the Portfolio's purchases of
securities issued by an open-end investment company will be
consistent with the provisions of the 1940 Act.

          (h) make investments for the purpose of exercising
control or management.

          (i) participate on a joint or joint and several basis
in any trading account in securities.

          (j) invest in interests in oil, gas, or other mineral
exploration or development programs, although the Portfolio may
purchase securities which are secured by such interests and may
purchase securities of issuers which invest in or deal in oil,
gas or other mineral exploration or development programs.

          (k) purchase warrants, if, as a result, the Portfolio
would have more than 5% of its total assets invested in warrants
or more than 2% of its total assets invested in warrants that are
not listed on the Exchange or the American Stock Exchange.

          (l) purchase commodities or commodity contracts,
provided that this shall not prevent the Portfolio from entering
into securities index futures contracts, foreign currency futures
contracts, forward foreign currency exchange contracts and
options (including options on any of the foregoing) to the extent
such action is consistent with the Portfolio's investment
objective and policies.

          (m) purchase additional securities in excess of 5% of
the value of its total assets until all of the Portfolio's
outstanding borrowings (as permitted and described in restriction
number 1 above) have been repaid.

          Whenever any investment restriction states a maximum
percentage of the Portfolio's assets which may be invested in any
security or other asset, it is intended that such maximum
percentage limitation be determined immediately after and as a
result of the Portfolio's acquisition of such securities or other
assets. Accordingly, any later increase or decrease beyond the
specified limitation resulting from a change in value or net
asset value will not be considered a violation of such percentage
limitation.

ALLIANCEBERNSTEIN WORLDWIDE PRIVATIZATION PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

          Equity securities in which the Portfolio invests
include common stock, preferred stock, rights or warrants to
subscribe for or purchase common or preferred stock, securities
(including debt securities) convertible into common or preferred
stock and securities that give the holder the right to acquire
common or preferred stock.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          DEBT SECURITIES AND CONVERTIBLE DEBT SECURITIES. The
Portfolio may invest up to 35% of its total assets in debt
securities and convertible debt securities of issuers whose
common stocks are eligible for purchase by the Portfolio under
the investment policies described above. Debt securities include
bonds, debentures, corporate notes and preferred stocks.
Convertible debt securities are such instruments that are
convertible at a stated exchange rate into 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. The market
value of debt securities and convertible debt securities tends to
decline as interest rates increase and, conversely, to increase
as interest rates decline. While convertible securities generally
offer lower interest 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 in an
issuer's capital structure. They are consequently of higher
quality and 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.

          The Portfolio may maintain not more than 5% of its net
assets in debt securities rated below Baa by Moody's and BBB by
S&P or Fitch, or, if not rated, determined by the Adviser to be
of equivalent quality. The Portfolio will not purchase a debt
security that, at the time of purchase, is rated below B by
Moody's, Fitch and S&P, or determined by the Adviser to be of
equivalent quality, but may retain a debt security the rating of
which drops below B. See "Special Risk Considerations," below.

          OPTIONS. The Portfolio may write covered put and call
options and purchase put and call options on securities of the
types in which it is permitted to invest that are traded on U.S.
and foreign securities exchanges and over-the-counter, including
options on market indices. The Portfolio will only write covered
put and call options, unless such options are written for
cross-hedging purposes. There are no specific limitations on the
Portfolio's writing and purchasing of options.

          If a put option written by the Portfolio were
exercised, the Portfolio would be obligated to purchase the
underlying security at the exercise price. If a call option
written by the Portfolio were exercised, the Portfolio would be
obligated to sell the underlying security at the exercise price.
For additional information on the use, risks and costs of
options, see Appendix C.

          The Portfolio may purchase or write options on
securities of the types in which it is permitted to invest in
privately negotiated (i.e., over-the-counter) transactions. The
Portfolio 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 by the Portfolio in negotiated transactions
are illiquid and it may not be possible for the Portfolio to
effect a closing transaction at a time when the Adviser believes
it would be advantageous to do so. See "Description of the
Portfolio -- Additional Investment Policies and Practices --
Illiquid Securities" in the Prospectus.

          FUTURES AND RELATED OPTIONS. For a discussion regarding
futures contracts and options on futures contracts, see
"AllianceBernstein Americas Government Income Portfolio --
Futures Contracts and Options on Futures Contracts," above.

          For additional information on the use, risks and costs
of futures contracts and options on futures contracts, see
Appendix B.

          OPTIONS ON FOREIGN CURRENCIES. For additional
information on the use, risks and costs of options on foreign
currencies, see Appendix B.

          FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. For a
discussion regarding forward foreign currency exchange contracts,
see "AllianceBernstein Americas Government Income Portfolio --
Forward Foreign Currency Exchange Contracts," above.

          FORWARD COMMITMENTS. No forward commitments will be
made by the Portfolio if, as a result, the Portfolio's aggregate
commitments under such transactions would be more than 30% of the
then current value of the Portfolio's total assets. For a
discussion regarding forward commitments, see "Other Investment
Policies -- Forward Commitments," below.

          SECURITIES NOT READILY MARKETABLE. The Portfolio may
invest up to 15% of its net assets in illiquid securities that
include, among others, securities for which there is no readily
available market. The Portfolio may therefore not be able to
readily sell such securities. Such securities are unlike
securities which are traded in the open market and which can be
expected to be sold immediately if the market is adequate. The
sale price of securities not readily marketable may be lower or
higher than the Adviser's most recent estimate of their fair
value. Generally, less public information is available with
respect to the issuers of such securities than with respect to
companies whose securities are traded on an exchange. Securities
not readily marketable are more likely to be issued by small
businesses and therefore subject to greater economic, business
and market risks than the listed securities of more
well-established companies. Adverse conditions in the public
securities markets may at certain times preclude a public
offering of an issuer's securities. To the extent that the
Portfolio makes any privately negotiated investments in state
enterprises, such investments are likely to be in securities that
are not readily marketable. It is the intention of the Portfolio
to make such investments when the Adviser believes there is a
reasonable expectation that the Portfolio would be able to
dispose of its investment within three years. There is no law in
a number of the countries in which the Portfolio may invest
similar to the Securities Act requiring an issuer to register the
public sale of securities with a governmental agency or imposing
legal restrictions on resales of securities, either as to length
of time the securities may be held or manner of resale. However,
there may be contractual restrictions on resale of securities. In
addition, many countries do not have informational disclosure
requirements similar in scope to those required under the
Exchange Act.

          REPURCHASE AGREEMENTS. The Portfolio may invest in
repurchase agreements pertaining to U.S. Government Securities.
For additional information regarding repurchase agreements, see
Policies -- Repurchase Agreements," below.

SPECIAL RISK CONSIDERATIONS

          Investment in the Portfolio involves the special risk
considerations described below.

RISKS OF FOREIGN INVESTMENT

          PARTICIPATION IN PRIVATIZATIONS. The governments of
certain foreign countries have, to varying degrees, embarked on
privatization programs contemplating the sale of all or part of
their interests in state enterprises. In certain jurisdictions,
the ability of foreign entities, such as the Portfolio, to
participate in privatizations may be limited by local law, or the
price or terms on which the Portfolio may be able to participate
may be less advantageous than for local investors. Moreover,
there can be no assurance that governments that have embarked on
privatization programs will continue to divest their ownership of
state enterprises, that proposed privatizations will be
successful or that governments will not re-nationalize
enterprises that have been privatized.

          RISK OF SALE OR CONTROL BY MAJOR STOCKHOLDERS. In the
case of the enterprises in which the Portfolio may invest, large
blocks of the stock of those enterprises may be held by a small
group of stockholders, even after the initial equity offerings by
those enterprises. The sale of some portion or all of those
blocks could have an adverse effect on the price of the stock of
any such enterprise.

          RECENT MANAGEMENT REORGANIZATION. Prior to making an
initial equity offering, most state enterprises or former state
enterprises go through an internal reorganization of management.
Such reorganizations are made in an attempt to better enable
these enterprises to compete in the private sector. However,
certain reorganizations could result in a management team that
does not function as well as the enterprise's prior management
and may have a negative effect on such enterprise. In addition,
the privatization of an enterprise by its government may occur
over a number of years, with the government continuing to hold a
controlling position in the enterprise even after the initial
equity offering for the enterprise.

          LOSS OF GOVERNMENT SUPPORT. Prior to privatization,
most of the state enterprises in which the Portfolio may invest
enjoy the protection of and receive preferential treatment from
the respective sovereigns that own or control them. After making
an initial equity offering, these enterprises may no longer have
such protection or receive such preferential treatment and may
become subject to market competition from which they were
previously protected. Some of these enterprises may not be able
to effectively operate in a competitive market and may suffer
losses or experience bankruptcy due to such competition.

          CURRENCY CONSIDERATIONS. Because substantially all of
the Portfolio's assets will be invested in securities denominated
in foreign currencies and a corresponding portion of the
Portfolio's revenues will be received in such currencies, the
dollar equivalent of the Portfolio'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 Portfolio's income. The Portfolio however, has
the ability to protect itself against adverse changes in the
values of foreign currencies by engaging in certain of the
investment practices listed above. If the value of the foreign
currencies in which the Portfolio receives its income falls
relative to the U.S. Dollar between receipt of the income and the
making of Portfolio distributions, the Portfolio may be required
to liquidate securities in order to make distributions if the
Portfolio has insufficient cash in U.S. Dollars to meet
distribution requirements. Similarly, if an exchange rate
declines between the time the Portfolio 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.

          MARKET CHARACTERISTICS. 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. Consequently, the Portfolio's investment portfolio
may experience greater price volatility and significantly lower
liquidity than a portfolio invested in equity securities of U.S.
companies. 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 settlements may in some
instances be subject to delays and related administrative
uncertainties.

          INVESTMENT AND REPATRIATION RESTRICTIONS. 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 Portfolio. As illustrations, certain countries
require governmental approval prior to investments by foreign
persons, or limit the amount of investment by foreign persons in
a particular company, or limit the investment by foreign persons
to only a specific class of securities of a company which may
have less advantageous terms than securities of the company
available for purchase by nationals or impose additional taxes on
foreign investors. The national policies of certain countries may
restrict investment opportunities in issuers deemed sensitive to
national interests. In addition, the repatriation of investment
income, capital or the proceeds of sales of securities from
certain of the countries is controlled under regulations,
including in some cases the need for certain advance government
notification or authority. In addition, if a deterioration occurs
in a country's balance of payments, the country could impose
temporary restrictions on foreign capital remittances. The
Portfolio 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. The liquidity of the Portfolio's investments in any
country in which any of these factors exist could be affected and
the Adviser will monitor the affect of any such factor or factors
on the Portfolio's investments. Investing in local markets may
require the Portfolio to adopt special procedures, seek local
governmental approvals or other actions, any of which may involve
additional costs to the Portfolio.

          CORPORATE DISCLOSURE STANDARDS. Issues 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 from U.S. standards in
important respects, and less information may be available to
investors in foreign securities than to investors in U.S.
securities.

          Foreign issuers are subject to accounting, auditing 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 statements 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 Portfolio will invest require, for both tax and
accounting purposes, that certain assets and liabilities be
restated on the issuers 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.

          TRANSACTION COSTS. 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.

          U.S. AND FOREIGN TAXES. Foreign taxes paid by the
Portfolio may be creditable or deductible by U.S. shareholders
for U.S. income tax purposes. No assurance can be given that
applicable tax laws and interpretations will not change in the
future. Moreover, non-U.S. investors may not be able to credit or
deduct such foreign taxes. Investors should review carefully the
information discussed under the heading "Dividends, Distributions
and Taxes," below, and should discuss with their tax advisers the
specific tax consequences of investing in the Portfolio.

          ECONOMIC POLITICAL AND LEGAL RISKS. 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 or diplomatic
developments could affect adversely the economy of a foreign
country or the Portfolio's investments in such country. In the
event of expropriation, nationalization or other confiscation,
the Portfolio could lose its entire investment 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 Portfolio than
that provided by U.S. laws. The Portfolio intends to spread its
portfolio investments among the capital markets of a number of
countries and, under normal market conditions, will invest in the
equity securities of issuers based in at least four, and normally
considerably more, countries. There is no restriction, however,
on the percentage of the Portfolio's assets that may be invested
in countries within any one region of the world. To the extent
that the Portfolio's assets are invested within any one region,
the Portfolio may be subject to any special risks that may be
associated with that region.

          NON-DIVERSIFIED STATUS. The Portfolio is a non-
diversified investment company, which means the Portfolio is not
limited in the proportion of its assets that may be invested in
the securities of a single issuer. However, the Portfolio intends
to conduct its operations so as to qualify to be taxed as a
regulated investment company for purposes of the Code, which will
relieve the Portfolio of any liability for federal income tax to
the extent its earnings are distributed to shareholders. See
"Dividends, Distribution and Taxes -- United States Federal
Income Taxes--General," below. To so qualify, among other
requirements, the Portfolio limits its investments so that, at
the close of each quarter of the taxable year, (i) not more than
25% of the market value of the Portfolio's total assets will be
invested in the securities of a single issuer, and (ii) with
respect to 50% of the market value of its total assets, not more
than 5% of the market value of its total assets will be invested
in the securities of a single issuer and the Portfolio will not
own more than 10% of the outstanding voting securities of a
single issuer. Investments in U.S. Government Securities are not
subject to these limitations. Because the Portfolio, as a
non-diversified investment company, may invest in a smaller
number of individual issuers than a diversified investment
company, an investment in the Portfolio may, under certain
circumstances, present greater risk to an investor than an
investment in a diversified investment company.

          Securities issued or guaranteed by foreign governments
are not treated like U.S. Government Securities for purposes of
the diversification tests described in the preceding paragraph,
but instead are subject to these tests in the same manner as the
securities of non-governmental issuers.

          INVESTMENTS IN LOWER-RATED DEBT SECURITIES. Debt
securities rated below investment grade, i.e., Ba and lower by
Moody's or BB and lower by S&P and Fitch (lower-rated
securities), or, if not rated, determined by the Adviser to be of
equivalent quality, are 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. They are also
generally 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.
Debt securities rated Ba by Moody's or BB by S&P and Fitch are
judged to have speculative characteristics or to be predominantly
speculative with respect to the issuer's ability to pay interest
and repay principal. Debt securities rated B by Moody's, S&P and
Fitch are judged to have highly speculative characteristics or to
be predominantly speculative. Such securities may have small
assurance of interest and principal payments. Debt securities
having the lowest ratings for non-subordinated debt instruments
assigned by Moody's, S&P or Fitch (i.e., rated C by Moody's or
CCC and lower by S&P or Fitch) 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.

          Ratings of fixed-income securities by Moody's, S&P or
Fitch are a generally accepted barometer of credit risk. They
are, however, subject to certain limitations from an investor's
standpoint. The rating of a security 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 the credit risk of securities
within each rating category. See Appendix A in the Prospectus for
a description of Moody's, S&P and Fitch bond and commercial paper
ratings.

          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. The Adviser tries to reduce the risk
inherent in investment in lower-rated securities through credit
analysis, diversification and attention to current developments
and trends in interest rates and economic and political
conditions. However, there can be no assurance that losses will
not occur. Since the risk of default is higher for lower-rated
securities, the Adviser's research and credit analysis are a
correspondingly important aspect of its program for managing the
Portfolio's securities than would be the case if the Portfolio
did not invest in lower-rated securities. In considering
investments for the Portfolio, the Adviser attempts to identify
those high-risk, high-yield 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.

          Non-rated securities will also be considered for
investment by the Portfolio 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 Portfolio to a degree comparable to that
of rated securities which are consistent with the Portfolio's
objective and policies.

INVESTMENT RESTRICTIONS

          The following restrictions, which are applicable to the
Portfolio, supplement those set forth above and may not be
changed without Shareholder Approval, as defined under the
caption "General Information," below.

          The Portfolio may not:

          1. invest 25% or more of its total assets in securities
of issuers conducting their principal business activities in the
same industry, except that this restriction does not apply to (a)
U.S. Government Securities; or (b) the purchase of securities of
issuers whose primary business activity is in the national
commercial banking industry, so long as the Fund's Board of
Directors determines, on the basis of factors such as liquidity,
availability of investments and anticipated returns, that the
Portfolio's ability to achieve its investment objective would be
adversely affected if the Portfolio were not permitted to invest
more than 25% of its total assets in those securities, and so
long as the Portfolio notifies its shareholders of any decision
by the Board of Directors to permit or cease to permit the
Portfolio to invest more than 25% of its total assets in those
securities, such notice to include a discussion of any increased
investment risks to which the Portfolio may be subjected as a
result of the Board's determination;

          2. borrow money, except the Portfolio may, in
accordance with provisions of the 1940 Act, borrow money from
banks for temporary or emergency purposes, including the meeting
of redemption requests which might require the untimely
disposition of securities; borrowing in the aggregate may not
exceed 15%, and borrowing for purposes other than meeting
redemptions may not exceed 5% of the value of the Portfolio's
total assets (including the amount borrowed) at the time the
borrowing is made; outstanding borrowings in excess of 5% of the
value of the Portfolio's total assets will be repaid before any
subsequent investments are made;

          3. pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings;

          4. make loans except through (a) the purchase of debt
obligations in accordance with its investment objectives and
policies; (b) the lending of portfolio securities; or (c) the use
of repurchase agreements;

          5. participate on a joint or joint and several basis in
any securities trading account;

          6. invest in companies for the purpose of exercising
control;

          7. issue any senior security within the meaning of the
Act except that the Portfolio may make loans of portfolio
securities and write put and call options;

          8. make short sales of securities or maintain a short
position, unless at all times when a short position is open the
Portfolio owns an equal amount of such securities or securities
convertible into or exchangeable for, without payment of any
further consideration, securities of the same issue as, and equal
in amount to, the securities sold short (short sales against the
box), and unless not more than 10% of the Portfolio's net assets
(taken at market value) is held as collateral for such sales at
any one time (it is the Portfolio's present intention to make
such sales only for the purpose of deferring realization of gain
or loss for Federal income tax purposes); or

          9. (a) purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in real
estate or interests therein; (b) purchase or sell commodities or
commodity contracts including futures contracts (except foreign
currencies, foreign currency options and futures, options and
futures on securities and securities indices and forward
contracts or contracts for the future acquisition or delivery of
securities and foreign currencies and related options on futures
contracts and similar contracts); (c) invest in interests in oil,
gas, or other mineral exploration or development programs; (d)
purchase securities on margin, except for such short-term credits
as may be necessary for the clearance of transactions; and (e)
act as an underwriter of securities, except that the Portfolio
may acquire restricted securities under circumstances in which,
if such securities were sold, the Portfolio might be deemed to be
an underwriter for purposes of the Securities Act.

ALLIANCEBERNSTEIN TECHNOLOGY PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

          Critical factors which are considered in the selection
of securities include the economic and political outlook, the
value of individual securities relative to other investment
alternatives, trends in the determinants of corporate profits,
and management capability and practices. Generally speaking,
disposal of a security will be based upon factors such as (i)
actual or potential deterioration of the issuer's earning power
which the Portfolio believes may adversely affect the price of
its securities, (ii) increases in the price level of the security
or of securities generally that the Portfolio believes are not
fully warranted by the issuers earning power, and (iii) changes
in the relative opportunities offered by various securities.

          Companies in which the Portfolio invests include those
whose processes, products or services are anticipated by the
Adviser, to significantly benefit the utilization or commercial
application of scientific discoveries or developments in such
fields as, for example, aerospace, aerodynamics, astrophysics,
biochemistry, chemistry, communications, computers, conservation,
electricity, electronics (including radio, television and other
media), energy (including development, production and service
activities), geology, health care, mechanical engineering,
medicine, metallurgy, nuclear physics, oceanography and plant
physiology.

          The Portfolio endeavors to invest in companies where
the expected benefits to be derived from the utilization of
technology significantly enhance the prospects of the company as
a whole (including, in the case of a conglomerate, affiliated
companies). The Portfolio's investment objective permits the
Portfolio to seek securities having potential for capital
appreciation in a variety of industries.

          Certain of the companies in which the Portfolio invests
may allocate greater than usual amounts to research and product
development. The securities of such companies may experience
above-average price movements associated with the perceived
prospects of success of the research and development programs. In
addition, companies in which the Portfolio invests could be
adversely affected by lack of commercial acceptance of a new
product or products or by technological change and obsolescence.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          OPTIONS. The Portfolio may write call options and may
purchase and sell put and call options written by others,
combinations thereof, or similar options. The Portfolio may not
write put options. A put option gives the buyer of such option,
upon payment of a premium, the right to deliver a specified
number of shares of a stock to the writer of the option, on or
before a fixed date, at a predetermined price. A call option
gives the purchaser of the option, upon payment of a premium, the
right to call upon the writer to deliver a specified number of
shares of a specified stock on or before a fixed date, at a
predetermined price, usually the market price at the time the
contract is negotiated. A call option written by the Portfolio is
covered if the Portfolio owns the underlying security covered by
the call or has an absolute and immediate right to acquire that
security without additional cash consideration (or for additional
cash, U.S. Government Securities or other liquid high grade debt
obligation held in a segregated account by the Fund's custodian)
upon conversion or exchange of other securities held in its
portfolio. A call option is also covered if the Portfolio holds a
call on the same security and in the same principal amount as the
call written where the exercise price of the call held (a) is
equal to or less than the exercise price of the call written or
(b) is greater than the exercise price of the call written if the
difference is maintained by the Portfolio in cash in a segregated
account with the Fund's custodian. The premium paid by the
purchaser of an option will reflect, among other things, the
relationship of the exercise price to the market price and
volatility of the underlying security, the remaining term of the
option, supply and demand and interest rates.

          The writing of call options, therefore, involves a
potential loss of opportunity to sell securities at high prices.
In exchange for the premium received by it, the writer of a fully
collateralized call option assumes the full downside risk of the
securities subject to such option. In addition, the writer of the
call gives up the gain possibility of the stock protecting the
call. Generally, the opportunity for profit from the writing of
options occurs when the stocks involved are lower priced or
volatile, or both. While an option that has been written is in
force, the maximum profit that may be derived from the optioned
stock is the premium, less brokerage commissions and fees.

          It is the Portfolio's policy not to write a call option
if the premium to be received by the Portfolio in connection with
such options would not produce an annualized return of at least
15% of the then market value of the securities subject to the
option. Commissions, stock transfer taxes and other expenses of
the Portfolio must be deducted from such premium receipts. Option
premiums vary widely depending primarily on supply and demand.
Calls written by the Portfolio are ordinarily sold either on a
national securities exchange or through put and call dealers,
most, if not all, of which are members of a national securities
exchange on which options are traded, and in such case are
endorsed or guaranteed by a member of a national securities
exchange or qualified broker-dealer, which may be SCB & Co. The
endorsing or guaranteeing firm requires that the option writer
(in this case the Portfolio) maintain a margin account containing
either corresponding stock or other equity as required by the
endorsing or guaranteeing firm.

          The Portfolio will not sell a call option written or
guaranteed by it if, as a result of such sale, the aggregate of
the Portfolio's securities subject to outstanding call options
(valued at the lower of the option price or market value of such
securities) would exceed 15% of the Portfolio's total assets. The
Portfolio will not sell any call option if such sale would result
in more than 10% of the Portfolio's assets being committed to
call options written by the Portfolio which, at the time of sale
by the Portfolio, have a remaining term of more than 100 days.

          OPTIONS ON MARKET INDICES. Options on securities
indices are similar to options on a security except that, rather
than the right to take or make 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.

          Through the purchase of listed index options, the
Portfolio could achieve many of the same objectives as through
the use of options on individual securities. Price movements in
the Portfolio's investment portfolio securities probably will not
correlate perfectly with movements in the level of the index and,
therefore, the Portfolio would bear a risk of loss on index
options purchased by it if favorable price movements of the
hedged portfolio securities do not equal or exceed losses on the
options or if adverse price movements of the hedged portfolio
securities are greater than gains realized from the options.

          RIGHTS AND WARRANTS. The Portfolio may invest up to 10%
of its total assets in rights and warrants which entitle the
holder to buy equity securities at a specific price for a
specific period of time. 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.

          FOREIGN INVESTMENTS. The Portfolio will not purchase a
foreign security if such purchase at the time thereof would cause
25% or more of the value of the Portfolio's total assets to be
invested in foreign securities. 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 Portfolio invests 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.

          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 Portfolio may invest and could
adversely affect the Portfolio's assets should these conditions
or events recur.

          Foreign investment in certain foreign securities is
restricted or controlled to varying degrees. These restrictions
or controls may at times limit or preclude foreign investment in
certain foreign securities and increase the costs and expenses of
the Portfolio. Certain countries in which the Portfolio 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.

          ILLIQUID SECURITIES. The Portfolio will not maintain
more than 15% of its total assets (taken at market value) in
illiquid securities. For this purpose, illiquid securities
include, among others, (a) securities that are illiquid by virtue
of the absence of a readily available market or legal or
contractual restriction or resale, (b) options purchased by the
Portfolio over-the-counter and the cover for options written by
the Portfolio over-the-counter and (c) repurchase agreements not
terminable within seven days.

          See "Other Investment Policies -- Illiquid Securities,"
below, for a more detailed discussion of the Portfolio's
investment policy on restricted securities and securities with
legal or contractual restrictions on resale.

          LENDING OF PORTFOLIO SECURITIES. In order to increase
income, the Portfolio may from time to time lend its securities
to brokers, dealers and financial institutions and receive
collateral in the form of cash or U.S. Government Securities.
Under the Portfolio's procedures, collateral for such loans must
be maintained at all times in an amount equal to at least 100% of
the current market value of the loaned securities (including
interest accrued on the loaned securities). The interest accruing
on the loaned securities will be paid to the Portfolio and the
Portfolio has the right, on demand, to call back the loaned
securities. The Portfolio may pay fees to arrange the loans. The
Portfolio will not lend its securities in excess of 30% of the
value of its total assets, nor will the Portfolio lend its
securities to any officer, director, employee or affiliate of the
Fund or the Adviser.

          Within this basic framework, the policy of the
Portfolio is to invest in any company and industry and in any
type of security which is believed to offer possibilities for
capital appreciation. Investments may be made in well-known and
established companies as well as in new and unseasoned companies.
Since securities fluctuate in value due to general economic
conditions, corporate earnings and many other factors, the shares
of the Portfolio will increase or decrease in value accordingly,
and there can be no assurance that the Portfolio will achieve its
investment goal or be successful.

          INVESTMENT RESTRICTIONS

          The following restrictions, which are applicable to the
Portfolio, supplement those set forth above and may not be
changed without Shareholder Approval, as defined under the
caption "General Information," below.

          To maintain portfolio diversification and reduce
investment risk, as a matter of fundamental policy, the Portfolio
may not:

          1. with respect to 75% of its total assets, have such
assets represented by other than: (a) cash and cash items, (b)
securities issued or guaranteed as to principal or interest by
the U.S. Government or its agencies or instrumentalities, or (c)
securities of any one issuer (other than the U.S. Government and
its agencies or instrumentalities) not greater in value than 5%
of the Portfolio's total assets, and not more than 10% of the
outstanding voting securities of such issuer;

          2. purchase the securities of any one issuer, other
than the U.S. Government and its agencies or instrumentalities,
if immediately after and as a result of such purchase (a) the
value of the holdings of the Portfolio in the securities of such
issuer exceeds 25% of the value of the Portfolio's total assets,
or (b) the Portfolio owns more than 25% of the outstanding
securities of any one class of securities of such issuer;

          3. concentrate its investments in any one industry, but
the Portfolio has reserved the right to invest up to 25% of its
total assets in a particular industry;

          4. invest in the securities of any issuer which has a
record of less than three years of continuous operation
(including the operation of any predecessor) if such purchase at
the time thereof would cause 10% or more of the value of the
total assets of the Portfolio to be invested in the securities of
such issuer or issuers;

          5. make short sales of securities or maintain a short
position or write put options;

          6. mortgage, pledge or hypothecate or otherwise
encumber its assets, except as may be necessary in connection
with permissible borrowings mentioned in investment restriction
(14) listed below;

          7. purchase the securities of any other investment
company or investment trust, except when such purchase is part of
a merger, consolidation or acquisition of assets;

          8. purchase or sell real property (including limited
partnership interests but excluding readily marketable interests
in real estate investment trusts or readily marketable securities
of companies which invest in real estate) commodities or
commodity contracts;

          9. purchase participations or other direct interests in
oil, gas, or other mineral exploration or development programs;

          10. participate on a joint or joint and several basis
in any securities trading account;

          11. invest in companies for the purpose of exercising
control;

          12. purchase securities on margin, but it may obtain
such short-term credits from banks as may be necessary for the
clearance of purchases and sales of securities;

          13. make loans of its assets to any other person, which
shall not be considered as including the purchase of portion of
an issue of publicly-distributed debt securities; except that the
Portfolio may purchase non-publicly distributed securities
subject to the limitations applicable to restricted or not
readily marketable securities and except for the lending of
portfolio securities as discussed under "Other Investment
Policies and Techniques -- Loans of Portfolio Securities" in the
Prospectus;

          14. borrow money except for the short-term credits from
banks referred to in paragraph (12) above and except for
temporary or emergency purposes and then only from banks and in
an aggregate amount not exceeding 5% of the value of its total
assets at the time any borrowing is made. Money borrowed by the
Portfolio will be repaid before the Portfolio makes any
additional investments;

          15. act as an underwriter of securities of other
issuers, except that the Portfolio may acquire restricted or not
readily marketable securities under circumstances where, if sold,
the Portfolio might be deemed to be an underwriter for purposes
of the Securities Act (the Portfolio will not invest more than
10% of its net assets in aggregate in restricted securities and
not readily marketable securities); or

          16. purchase or retain the securities of any issuer if,
to the knowledge of the Portfolio's management, those officers
and directors of the Portfolio, and those employees of the
Adviser, who each owns beneficially more than one-half of 1% of
the outstanding securities of such issuer together own more than
5% of the securities of such issuer.

ALLIANCEBERNSTEIN SMALL CAP GROWTH PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

          It is the policy of the Portfolio to invest principally
in equity securities (common stocks, securities convertible into
common stocks or rights or warrants to subscribe for or purchase
common stocks); however, it may also invest to a limited degree
in non-convertible bonds and preferred stocks when, in the
judgment of Alliance, such investments are warranted to achieve
the Portfolio's investment objective. When business or financial
conditions warrant, a more defensive position may be assumed and
the Portfolio may invest in short-term fixed-income securities,
in investment grade debt securities or preferred stocks, or it
may hold its assets in cash.

          The Portfolio may invest in both listed and unlisted
domestic and foreign securities, in restricted securities, and in
other assets having no ready market, but not more than 15% of the
Portfolio's total assets may be invested in all such restricted
or not readily marketable assets at any one time. Restricted
securities may be sold only in privately negotiated transactions
or in a public offering with respect to which a registration
statement is in effect under Rule 144 or 144A promulgated under
the Securities Act. Where registration is required, the Portfolio
may be obligated to pay all or part of the registration expense,
and a considerable period may elapse between the time of the
decision to sell and the time the Portfolio may be permitted to
sell a security under an effective registration statement. If,
during such a period adverse market conditions were to develop,
the Portfolio might obtain a less favorable price than that which
prevailed when it decided to sell. Restricted securities and
other not readily marketable assets will be valued in such manner
as the Board of Directors of the Fund in good faith deems
appropriate to reflect their fair market value.

          The Portfolio intends to invest in special situations
from time to time. A special situation arises when, in the
opinion of the Portfolio's management, the securities of a
particular company will, within a reasonably estimable period of
time, be accorded market recognition at an appreciated value
solely by reason of a development particularly or uniquely
applicable to that company and regardless of general business
conditions or movements of the market as a whole. Developments
creating special situations might include, among others, the
following: liquidations, reorganizations, recapitalizations or
mergers, material litigation, technological breakthroughs and new
management or management policies. Although large and well-known
companies may be involved, special situations often involve much
greater risk than is inherent in ordinary investment securities.
The Portfolio will not, however, purchase securities of any
company with a record of less than three years continuous
operation (including that of predecessors) if such purchase would
cause the Portfolio's investments in such companies, taken at
cost, to exceed 25% of the value of the Portfolio's total assets.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          GENERAL. In seeking to attain its investment objective
of growth of capital, the Portfolio supplements customary
investment practices by engaging in a broad range of investment
techniques including short sales against the box, writing call
options, purchases and sales of put and call options written by
others and investing in special situations. These techniques are
speculative, may entail greater risk, may be considered of a more
short-term nature, and to the extent used, may result in greater
turnover of the Portfolio's portfolio and a greater expense than
is customary for most investment companies. Consequently, the
Portfolio is not a complete investment program and is not a
suitable investment for those who cannot afford to take such
risks or whose objective is income or preservation of capital. No
assurance can be given that the Portfolio will achieve its
investment objective. However, by buying shares in the Portfolio
an investor may receive advantages he would not readily obtain as
an individual, including professional management and continuous
supervision of investments. The Portfolio is subject to the
overall limitation (in addition to the specific restrictions
referred to below) that the aggregate value of all restricted and
not readily marketable securities of the Portfolio, and of all
cash and securities covering outstanding call options written or
guaranteed by the Portfolio, shall at no time exceed 15% of the
value of the total assets of the Portfolio.

          There is also no assurance that the Portfolio will at
any particular time engage in all or any of the investment
activities in that it is authorized to engage. In the opinion of
the Portfolio's management, however, the power to engage in such
activities provides an opportunity which is deemed to be
desirable in order to achieve the Portfolio's investment
objective.

          SHORT SALES. The Portfolio may only make short sales of
securities against the box. A short sale is effected by selling a
security that the Portfolio does not own, or if the Portfolio
does own such security, it is not to be delivered upon
consummation of the sale. A short sale is against the box to the
extent that the Portfolio contemporaneously owns or has the right
to obtain securities identical to those sold short without
payment. Short sales may be used in some cases by the Portfolio
to defer the realization of gain or loss for Federal income tax
purposes on securities then owned by the Portfolio. However, if
the Portfolio has unrealized gain with respect to a security and
enters into a short sale with respect to such security, the
Portfolio generally will be deemed to have sold the appreciated
security and thus will recognize gain for tax purposes.

          PUTS AND CALLS. The Portfolio may write call options
and may purchase and sell put and call options written by others,
combinations thereof, or similar options. The Portfolio may not
write put options. A put option gives the buyer of such option,
upon payment of a premium, the right to deliver a specified
number of shares of a stock to the writer of the option on or
before a fixed date at a predetermined price. A call option gives
the purchaser of the option, upon payment of a premium, the right
to call upon the writer to deliver a specified number of shares
of a specified stock on or before a fixed date, at a
predetermined price, usually the market price at the time the
contract is negotiated. When calls written by the Portfolio are
exercised, the Portfolio will be obligated to sell stocks below
the current market price.

          The writing of call options will, therefore, involve a
potential loss of opportunity to sell securities at higher
prices. In exchange for the premium received, the writer of a
fully collateralized call option assumes the full downside risk
of the securities subject to such option. In addition, the writer
of the call gives up the gain possibility of the stock protecting
the call. Generally, the opportunity for profit from the writing
of options is higher, and consequently the risks are greater when
the stocks involved are lower priced or volatile, or both. While
an option that has been written is in force, the maximum profit
that may be derived from the optioned stock is the premium, less
brokerage commissions and fees. For a discussion regarding
certain tax consequences of the writing of call options by the
Portfolio, see "Dividends, Distributions and Taxes," below.

          Writing, purchasing and selling call options are highly
specialized activities and entail greater than ordinary
investment risks. It is the Portfolio's policy not to write a
call option if the premium to be received by the Portfolio in
connection with such option would not produce an annualized
return of at least 15% of the then market value of the securities
subject to option. Commissions, stock transfer taxes and other
expenses of the Portfolio must be deducted from such premium
receipts. Option premiums vary widely depending primarily on
supply and demand. Calls written by the Portfolio will ordinarily
be sold either on a national securities exchange or through put
and call dealers, most, if not all, of whom are members of a
national securities exchange on which options are traded, and
will in such cases be endorsed or guaranteed by a member of a
national securities exchange or qualified broker-dealer, which
may be SCB & Co. The endorsing or guaranteeing firm requires that
the option writer (in this case the Portfolio) maintain a margin
account containing either corresponding stock or other equity as
required by the endorsing or guaranteeing firm. A call written by
the Portfolio will not be sold unless the Portfolio at all times
during the option period owns either (a) the optioned securities,
or securities convertible into or carrying rights to acquire the
optioned securities or (b) an offsetting call option on the same
securities.

          The Portfolio will not sell a call option written or
guaranteed by it if, as a result of such sale, the aggregate of
the Portfolio's securities subject to outstanding call options
(valued at the lower of the option price or market value of such
securities) would exceed 15% of the Portfolio's total assets. The
Portfolio will not sell any call option if such sale would result
in more than 10% of the Portfolio's assets being committed to
call options written by the Portfolio, which, at the time of sale
by the Portfolio, have a remaining term of more than 100 days.
The aggregate cost of all outstanding options purchased and held
by the Portfolio shall at no time exceed 10% of the Portfolio's
total assets.

          In buying a call, the Portfolio would be in a position
to realize a gain if, during the option period, the price of the
shares increased by an amount in excess of the premium paid and
commissions payable on exercise. It would realize a loss if the
price of the security declined or remained the same or did not
increase during the period by more than the amount of the premium
and commissions payable on exercise. By buying a put, the
Portfolio would be in a position to realize a gain if, during the
option period, the price of the shares declined by an amount in
excess of the premium paid and commissions payable on exercise.
It would realize a loss if the price of the security increased or
remained the same or did not decrease during that period by more
than the amount of the premium and commissions payable on
exercise. In addition, the Portfolio could realize a gain or loss
on such options by selling them.

          As noted above, the Portfolio may purchase and sell put
and call options written by others, combinations thereof, or
similar options. There are markets for put and call options
written by others and the Portfolio may from time to time sell or
purchase such options in such markets. If an option is not sold
and is permitted to expire without being exercised, its premium
would be lost by the Portfolio.

          INVESTMENT RESTRICTIONS

          The following restrictions, which are applicable to the
Portfolio, supplement those set forth above and may not be
changed without Shareholder Approval, as defined under the
caption "General Information," below.

          As a matter of fundamental policy, the Portfolio may
not:

          1. purchase the securities of any one issuer, other
than the U.S. Government or any of its agencies or
instrumentalities, if immediately after such purchase more than
5% of the value of its total assets would be invested in such
issuer or the Portfolio would own more than 10% of the
outstanding voting securities of such issuer, except that up to
25% of the value of the Portfolio's total assets may be invested
without regard to such 5% and 10% limitations;

          2. invest more than 25% of the value of its total
assets in any particular industry;

          3. borrow money except for temporary or emergency
purposes in an amount not exceeding 5% of its total assets at the
time the borrowing is made;

          4. purchase or sell real estate;

          5. participate on a joint or joint and several basis in
any securities trading account;

          6. invest in companies for the purpose of exercising
control;

          7. except as permitted in connection with short sales
of securities against the box described under the heading "Short
Sales" above, make short sales of securities;

          8. make loans of its funds or assets to any other
person, which shall not be considered as including the purchase
of a portion of an issue of publicly distributed bonds, debt
securities, whether or not the purchase was made upon the
original issuance of the securities; except that the Portfolio
may purchase non-publicly distributed securities subject to the
limitations applicable to restricted securities and except for
the lending of portfolio securities;

          9. except as permitted in connection with short sales
of securities or writing of call options, described under the
headings "Short Sales," and "Puts and Calls," above, pledge,
mortgage or hypothecate any of its assets;

          10. except as permitted in connection with short sales
of securities against the box described under the heading
"Additional Investment Policies and Practices" above, make short
sales of securities; or

          11. purchase securities on margin, but it may obtain
such short-term credits as may be necessary for the clearance of
purchases and sales of securities.

          It is a non-fundamental policy of the Portfolio that:
(i) the Portfolio utilize futures and options thereon only for
hedging purposes, (ii) the Portfolio will not enter any futures
contracts or options on futures contracts if immediately
thereafter the market values of the outstanding futures contracts
of the Portfolio and the futures contracts subject to outstanding
options written by the Portfolio would exceed 50% of its total
assets, (iii) the Portfolio will not purchase or sell a stock
index future if immediately thereafter more than 30% of its total
assets would be hedged by stock index futures, and (iv) the
Portfolio will not purchase or sell a stock index future if,
immediately thereafter, the sum of the amount of margin deposit
on the Portfolio's existing futures positions would exceed 5% of
the market value of the Portfolio's total assets.

ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following investment policies and restrictions
supplement those set forth in the Prospectus.

          CONVERTIBLE SECURITIES. The Portfolio may invest up to
15% of its net assets in convertible securities of issuers whose
common stocks are eligible for purchase by the Portfolio under
the investment policies described above. Convertible securities
include bonds, debentures, corporate notes and preferred stocks.
Convertible securities are instruments that are convertible at a
stated exchange rate into common stock. Prior to their
conversion, convertible securities have the same general
characteristics as non-convertible securities that provide a
stable stream of income with generally higher yields than those
of equity securities of the same or similar issuers. The market
value of convertible securities tends to decrease as interest
rates rise and, conversely, to increase as interest rates
decline. While convertible securities generally offer lower
interest yields than non-convertible debt securities of similar
quality, they offer investors the potential from increases in the
market price of the underlying common stock. Convertible debt
securities that are rated Baa or lower by Moody's or BBB or lower
by S&P or Fitch and comparable unrated securities as determined
by the Adviser may share some or all of the risk of
non-convertible debt securities with those ratings.

          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 in an
issuer's capital structure. They are consequently of higher
quality and 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.

          FORWARD COMMITMENTS. No forward commitments will be
made by the Portfolio if, as a result, the Portfolio's aggregate
commitments under such transactions would be more than 30% of the
then current value of the Portfolio's total assets. For a general
discussion of forward commitments, see "Other Investment
Practices -- Forward Commitments," below.

          STANDBY COMMITMENT AGREEMENTS. The purchase of a
security subject to a standby commitment agreement and the
related commitment fee will be recorded on the date on which the
security can reasonably be expected to be issued, and the value
of the security will thereafter be reflected in the calculation
of the Portfolio's net asset value. The cost basis of the
security will be adjusted by the amount of the commitment fee. In
the event the security is not issued, the commitment fee will be
recorded as income on the expiration date of the standby
commitment. The Portfolio will at all times maintain a segregated
account with the Fund's custodian of cash and/or securities in an
aggregate amount equal to the purchase price of the securities
underlying the commitment.

          There can be no assurance that the securities subject
to a standby commitment will be issued, and 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
underlying the commitment is at the option of the issuer, the
Portfolio will bear the risk of capital loss in the event the
value of the security declines, and it 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 Portfolio.

          REPURCHASE AGREEMENTS. The Portfolio 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
Portfolio's ability to enter into repurchase agreements. For a
general discussion of repurchase agreements, see "Other
Investment Practices -- Repurchase Agreements," below.

          SHORT SALES. When engaging in a short sale, in addition
to depositing collateral with a broker-dealer, the Portfolio is
currently required under the 1940 Act to establish a segregated
account with the Fund's custodian and to maintain therein cash or
securities in an amount that, when added to cash or securities
deposited with the broker-dealer, will at all times equal at
least 100% of the current market value of the security sold
short.

          DEFENSIVE POSITION. For temporary defensive purposes,
the Portfolio may vary from its investment objectives during
periods in which conditions in securities markets or other
economic or political conditions warrant. During such periods,
the Portfolio may increase without limit its position in short-
term, liquid, high-grade debt securities, which may include U.S.
Government Securities, bank deposit, money market instruments,
short-term (for this purpose, securities with a remaining
maturity of one year or less) debt securities, including notes
and bonds, and short-term foreign currency denominated debt
securities rated A or higher by Moody's, S&P or Fitch or, if not
so rated, of equivalent investment quality as determined by the
Adviser.

          Subject to its policy of investing at least 80% of its
net assets in equity securities of real estate investment trusts
and other real estate industry companies, the Portfolio may also
at any time temporarily invest funds awaiting reinvestment or
held as reserves for dividends and other distributions to
shareholders in money market instruments referred to above.

RISK FACTORS ASSOCIATED WITH THE REAL ESTATE INDUSTRY

          REITS. 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. REITs are also 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.

          Investing in REITs involves risks similar to those
associated with investing in small capitalization 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
been more volatile in price than the larger capitalization stocks
included in the S&P 500.

          MORTGAGED-BACKED SECURITIES. Investing in
Mortgage-Backed Securities involves certain unique risks in
addition to those risks associated with investment in the real
estate industry in general. These risks include the failure of a
counterparty to meet its commitments, adverse interest rate
changes and the effects of prepayments on mortgage cash flows.
When interest rates decline, the value of an investment in fixed
rate obligations can be expected to rise. Conversely, when
interest rates rise, the value of an 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 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.

          Further, the yield characteristics of Mortgage-Backed
Securities, such as those in which the Portfolio may invest,
differ from those of traditional fixed-income securities. The
major differences typically include more frequent interest and
principal payments (usually monthly), the adjustability of
interest rates, and the possibility that prepayments of principal
may be made substantially earlier than their final distribution
dates.

          Prepayment rates are influenced by changes in current
interest rates and a variety of economic, geographic, social and
other factors, and cannot be predicted with certainty. Both
adjustable rate mortgage loans and fixed rate mortgage loans may
be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of
principal prepayments in an increasing interest rate environment.
Early payment associated with Mortgage-Backed Securities causes
these securities to experience significantly greater price and
yield volatility than that experienced by traditional
fixed-income securities. Under certain interest rate and
prepayment rate scenarios, the Portfolio may fail to recoup fully
its investment in Mortgage-Backed Securities notwithstanding any
direct or indirect governmental or agency guarantee. When the
Portfolio reinvests amounts representing payments and unscheduled
prepayments of principal, it may receive a rate of interest that
is lower than the rate on existing adjustable rate mortgage
pass-through securities. Thus, Mortgage-Backed Securities, and
adjustable rate mortgage pass-through securities in particular,
may be less effective than other types of U.S. Government
Securities as a means of "locking in" interest rates.

          A REMIC is a CMO that qualifies for special tax
treatment under the Code and invests in certain mortgages
primarily secured by interests in real property and other
permitted investments. Investors may purchase "regular" and
"residual" interest shares of beneficial interest in REMIC
trusts, although the Portfolio does not intend to invest in
residual interests.

          The Portfolio may invest in guaranteed mortgage
pass-through securities which represent participation interests
in pools of residential mortgage loans and are issued by U.S.
governmental or private lenders and guaranteed by the U.S.
Government or one of its agencies or instrumentalities, including
Ginnie Mae.

          GENERAL. Although the Portfolio does not invest
directly in real estate, it invests primarily in Real Estate
Equity Securities and has a policy of concentration of its
investments in the real state industry. Therefore, an investment
in the Portfolio is subject to certain risks associated with the
direct ownership of real estate and with the real estate industry
in general. These risks include, among others: possible declines
in the value of real estate; risks related to general and local
economic conditions; possible lack of availability of mortgage
funds; overbuilding; extended vacancies of properties; increases
in competition, property taxes and operating expenses; changes in
zoning laws; costs resulting from the clean-up of, and liability
to third parties for damages resulting from, environmental
problems; casualty or condemnation losses; uninsured damages from
floods, earthquakes or other natural disasters; limitations on
and variations in rents; and changes in interest rates. To the
extent that assets underlying the Portfolio's investments are
concentrated geographically, by property type or in certain other
respects, the Portfolio may be subject to certain of the
foregoing risks to a greater extent.

          In addition, if the Portfolio receives rental income or
income from the disposition of real property acquired as a result
of a default on securities the Portfolio owns, the receipt of
such income may adversely affect the Portfolio's ability to
retain its tax status as a regulated investment company.
Investments by the Portfolio in securities of companies providing
mortgage servicing will be subject to the risks associated with
refinancings and their impact on servicing rights.

          INVESTMENT RESTRICTIONS

          The following restrictions, which are applicable to the
Portfolio, supplement those set forth above and may not be
changed without Shareholder Approval, as defined under the
caption "General Information," below.

          As a matter of fundamental policy, the Portfolio may
not:

          1. with respect to 75% of its total assets, have such
assets represented by other than: (a) cash and cash items, (b)
U.S. Government Securities, or (c) securities of any one issuer
(other than the U.S. Government and its agencies or
instrumentalities) not greater in value than 5% of the
Portfolio's total assets, and not more than 10% of the
outstanding voting securities of such issuer;

          2. purchase the securities of any one issuer, other
than the U.S. Government and its agencies or instrumentalities,
if as a result (a) the value of the holdings of the Portfolio in
the securities of such issuer exceeds 25% of its total assets, or
(b) the Portfolio owns more than 25% of the outstanding
securities of any one class of securities of such issuer;

          3. invest 25% or more of its total assets in the
securities of issuers conducting their principal business
activities in any one industry, other than the real estate
industry, in which the Portfolio will invest at least 25% or more
of its total assets, except that this restriction does not apply
to U.S. Government Securities;

          4. purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in real
estate or interests therein, including Real Estate Equity
Securities;

          5. borrow money except for temporary or emergency
purposes or to meet redemption requests, in an amount not
exceeding 5% of the value of its total assets at the time the
borrowing is made.

          6. pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings;

          7. make loans except through (a) the purchase of debt
obligations in accordance with its investment objectives and
policies; (b) the lending of portfolio securities; or (c) the use
of repurchase agreements;

          8. participate on a joint or joint and several basis in
any securities trading account;

          9. invest in companies for the purpose of exercising
control;

          10. issue any senior security within the meaning of the
1940 Act except that the Portfolio may lend portfolio securities
in accordance with applicable law;

          11. make short sales of securities or maintain a short
position, unless at all times when a short position is open not
more than 25% of the Portfolio's net assets (taken at market
value) is held as collateral for such sales at any one time; or

          12. (a) purchase or sell commodities or commodity
contracts including futures contracts; (b) invest in interests in
oil, gas, or other mineral exploration or development programs;
(c) purchase securities on margin, except for such short-term
credits as may be necessary for the clearance of transactions;
and (d) act as an underwriter of securities, except that the
Portfolio may acquire restricted securities under circumstances
in which, if such securities were sold, the Portfolio might be
deemed to be an underwriter for purposes of the Securities Act.

ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO
ALLIANCEBERNSTEIN SMALL CAP VALUE PORTFOLIO
ALLIANCEBERNSTEIN VALUE PORTFOLIO

          For a general description of the Portfolio's investment
policies, see the Portfolio's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following information about each Portfolio's
investment policies and practices supplements the information set
forth in each Portfolio's Prospectus.

          CURRENCY SWAPS. The Portfolios may enter into currency
swaps for hedging purposes. Currency swaps involve the exchange
by a Portfolio with another party of a series of payments in
specified currencies. Since currency swaps are individually
negotiated, each Portfolio expects to achieve an acceptable
degree of correlation between its portfolio investments and its
currency swaps positions. A currency swap may involve the
delivery at the end of the exchange period of a substantial
amount of one designated currency in exchange for the other
designated currency. 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
net amount of the excess, if any, of a Portfolio's obligations
over its entitlements with respect to each currency swap will be
accrued on a daily basis, and an amount of liquid assets having
an aggregate net asset value at least equal to the accrued excess
will be maintained in a segregated account for the relevant
Portfolio by the Fund's custodian. No Portfolio will 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 rating organization at the time of entering
into the transaction. If there is a default by the other party to
such a transaction, a Portfolio entering into a currency swap
will have contractual remedies pursuant to the agreements related
to the transactions.

          FORWARD COMMITMENTS. The Portfolios may enter into
forward commitments for the purchase or sale of securities. Such
transactions 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, which is generally expressed in yield terms, is fixed
at the time the commitment is made, but delivery and payment for
the securities take place at a later date, normally within four
months after the transaction, although delayed settlements beyond
four months may be negotiated. Securities purchased or sold under
a forward commitment are subject to market fluctuation, and no
interest accrues to the purchaser prior to the settlement date.
At the time a Portfolio enters 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 net asset value. 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.

          The use of forward commitments enables the Portfolios
to protect against anticipated changes in interest rates and
prices. For instance, in periods of rising interest rates and
falling bond prices, a Portfolio might sell a security in its
portfolio on a forward commitment basis to limit its exposure to
falling bond prices. In periods of falling interest rates and
rising bond prices, a Portfolio might sell a security in its
portfolio and purchase the same or a similar security on a
when-issued or forward commitment basis, thereby obtaining the
benefit of currently higher cash yields. However, if the Adviser
to each of the Portfolios were to forecast incorrectly the
direction of interest rate movements, a Portfolio might be
required to complete such when-issued or forward transactions at
prices less favorable than current market values.

          A Portfolio's right to receive or deliver a security
under a forward commitment may be sold prior to the settlement
date, but a Portfolio will enter into forward commitments only
with the intention of actually receiving or delivering the
securities, as the case may be. To facilitate such transactions,
the Fund's custodian will maintain, in the separate account of
the relevant Portfolio, liquid assets having value equal to, or
greater than, any commitments to purchase securities on a forward
commitment basis. If a Portfolio, however, chooses to dispose of
the right to receive or deliver a security subject to a forward
commitment prior to the settlement date of the transaction, it
can incur a gain or loss. In the event the other party to a
forward commitment transaction were to default, a Portfolio might
lose the opportunity to invest money at favorable rates or to
dispose of securities at favorable prices.

          Although each Portfolio intends to make such purchases
for speculative purposes, purchases of securities on such bases
may involve more risk than other types of purchases. For example,
by committing to purchase securities in the future, a Portfolio
subjects itself to a risk of loss on such commitments as well as
on its portfolio securities. Also, a Portfolio may have to sell
assets that have been set aside in order to meet redemptions. In
addition, if a Portfolio determines it is advisable as a matter
of investment strategy to sell the forward commitment or
when-issued or delayed delivery securities before delivery, that
Portfolio 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 and would be treated for tax purposes as such. 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, that
Portfolio 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 Portfolio's payment
obligation).

          FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Each
Portfolio may purchase or sell forward foreign currency exchange
contracts ("forward contracts") to attempt to minimize the risk
to the Portfolio of adverse changes in the relationship between
the U.S. Dollar and foreign currencies. A forward contract is an
obligation to purchase or sell a specific currency for an agreed
price at a future date which is individually negotiated and
privately traded by currency traders and their customers.

          A Portfolio may enter into a forward contract, for
example, 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").
The Portfolios may not engage in transaction hedges with respect
to the currency of a particular country to an extent greater than
the aggregate amount of the Portfolio's transactions in that
currency. Additionally, for example, when a Portfolio 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 that Portfolio's securities denominated in such
foreign currency, or when a Portfolio 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"). No Portfolio will position hedge with respect to a
particular currency to an extent greater than the aggregate
market value (at the time of making such sale) of the securities
held in its portfolio denominated or quoted in that currency. In
this situation, a Portfolio may, in the alternative, enter into a
forward contract to sell a different foreign currency for a fixed
U.S. Dollar amount where the Portfolio believes that the U.S.
Dollar value of the currency to be sold pursuant to the forward
contract will fall whenever there is a decline in the U.S. Dollar
value of the currency in which portfolio securities of the
Portfolio are denominated ("cross-hedge").

          To the extent required by applicable law, the Fund's
custodian will place liquid assets in a separate account of the
relevant Portfolio having a value equal to the aggregate amount
of that Portfolio's commitments under forward contracts entered
into with respect to position hedges and cross-hedges. If the
value of the assets placed in a Portfolio's separate account
declines, additional liquid assets will be placed in the account
on a daily basis so that the value of the account will equal the
amount of that Portfolio's commitments with respect to such
contracts. As an alternative to maintaining all or part of the
separate account, a Portfolio may purchase a call option
permitting that Portfolio to purchase the amount of foreign
currency being hedged by a forward sale contract at a price no
higher than the forward contract price, or the Portfolio may
purchase a put option permitting that Portfolio to sell the
amount of foreign currency subject to a forward purchase contract
at a price as high or higher than the forward contract price. In
addition, each Portfolio may use such other methods of "cover" as
are permitted by applicable law.

          The Portfolios will not speculate in forward currency
contracts. The Portfolios will only enter forward foreign
currency exchange contracts with counterparties that, in the
opinion of the Adviser, do not present undue credit risk.
Generally, such forward contracts will be for a period of less
than three months.

          Hedging against a decline in the value of a currency
does not eliminate fluctuations in the prices of portfolio
securities or prevent losses if the prices of securities decline.
These transactions also preclude the opportunity for gain if the
value of the hedge currency should rise. Moreover, it may not be
possible for a Portfolio to hedge against a devaluation that is
so generally anticipated that the Portfolio is not able to
contract to sell the currency at a price above the anticipated
devaluation level. Unanticipated changes in currency prices may
result in poorer overall performance for a Portfolio than if it
had not entered into such contracts. The matching of the increase
in value of a forward contract and the decline in the U.S. Dollar
equivalent value of the foreign currency-denominated asset that
is the subject of the hedge generally will not be precise. In
addition, a Portfolio may not always be able to enter into
foreign currency forward contracts at attractive prices and this
will limit that Portfolio's ability to use such contract to hedge
or cross-hedge its assets. Also, with regard to a Portfolio's use
of cross-hedges, there can be no assurance that historical
correlations between the movement of certain foreign currencies
relative to the U.S. Dollar will continue. Thus, at any time poor
correlation may exist between movements in the exchange rates of
the foreign currencies underlying a Portfolio's cross-hedges and
the movements in the exchange rates of the foreign currencies in
which the Portfolio's assets that are the subject of such
cross-hedges are denominated.

          LENDING OF PORTFOLIO SECURITIES. Consistent with
applicable regulatory requirements, each Portfolio may lend its
portfolio securities provided the loan is continuously secured by
cash, marketable securities issued or guaranteed by the U.S.
Government or its agencies, or a standby letter of credit issued
by qualified banks equal to no less than the market value,
determined daily, of the securities loaned. In lending its
portfolio securities, a Portfolio will require that interest or
dividends on securities loaned be paid to the Portfolio. Where
voting or consent rights with respect to loaned securities pass
to the borrower, a Portfolio will follow the policy of calling
the loan, in whole or in part as may be appropriate, to permit it
to exercise such voting or consent rights if the exercise of such
rights involves issues having a material effect on the
Portfolio's investment in the securities loaned. Loans will be
made only to firms deemed by the Adviser to be of good standing
and will not be made unless, in the judgment of the Adviser, the
consideration to be earned from such loans would justify the
risk. The Portfolios may invest any cash collateral in portfolio
securities and earn additional income, or receive an agreed-upon
amount of income from a borrower who has delivered equivalent
collateral. The Portfolios will have the right to regain record
ownership of loaned securities to exercise beneficial rights such
as voting rights, subscription rights, and rights to dividends,
interest or distributions. The Portfolios may pay reasonable
finders', administrative, and custodial fees in connection with a
loan.

          OPTIONS. Each Portfolio may purchase put and call
options written by others and write covered put and call options
overlying the types of securities in which the Portfolio may
invest. A put option (sometimes called a "standby commitment")
gives the purchaser of the option, upon payment of a premium, the
right to deliver a specified amount of a security to the writer
of the option on or before a fixed date at a predetermined price.
A call option (sometimes called a "reverse standby commitment")
gives the purchaser of the option, upon payment of a premium, the
right to call upon the writer to deliver a specified amount of a
security on or before a fixed date at a predetermined price.

          The Portfolios may purchase put and call options to
provide protection against adverse price or yield effects from
anticipated changes in prevailing interest rates. For instance,
in periods of rising interest rates and falling bond prices, a
Portfolio might purchase a put option to limit its exposure to
falling prices. In periods of falling interest rates and rising
bond prices, a Portfolio might purchase a call option. In
purchasing a call option, a Portfolio would be in a position to
realize a gain if, during the option period, the price of the
security increased by an amount in excess of the premium paid. It
would realize a loss if the price of the security declined or
remained the same or did not increase during the period by more
than the amount of the premium. By purchasing a put option, a
Portfolio would be in a position to realize a gain if, during the
option period, the price of the security declined by an amount in
excess of the premium paid. It would realize a loss if the price
of the security increased or remained the same or did not
decrease during that period by more than the amount of the
premium. If a put or call option purchased by a Portfolio were
permitted to expire without being sold or exercised, its premium
would represent a loss to that Portfolio.

          When a Portfolio writes a put option, it must either
own at all times during the option period an offsetting put
option on the same security, or maintain in a segregated account
cash or liquid assets in an amount adequate to purchase the
underlying security should the put be exercised. When a Portfolio
writes a call option it must own at all times during the option
period either the underlying securities or an offsetting call
option on the same securities. If a put option written by a
Portfolio were exercised, the Portfolio would be obligated to
purchase the underlying security at the exercise price. If a call
option written by a Portfolio were exercised, that Portfolio
would be obligated to sell the underlying security at the
exercise price.

          The Portfolios may write put options either to earn
additional income in the form of option premiums (anticipating
that the price of the underlying security will remain stable or
rise during the option period and the option will therefore not
be exercised) or to acquire the underlying security at a net cost
below the current value (e.g., the option is exercised because of
a decline in the price of the underlying security, but the amount
paid by a Portfolio, offset by the option premium, is less than
the current price).

          Each Portfolio will write covered call options both to
reduce the risks associated with certain of its respective
investments and to increase total investment return through the
receipt of premiums. In return for the premium income, the
Portfolios will give up the opportunity to profit from an
increase in the market price of the underlying security above the
exercise price so long as its obligations under the contract
continue, except insofar as the premium represents a profit.
Moreover, in writing the call options, the Portfolios will retain
the risk of loss should the price of the security decline. The
premium is intended to offset that loss in whole or in part.
Unlike the situation in which a Portfolio owns securities not
subject to call options, a Portfolio, in writing call options,
must assume that the call may be exercised at any time prior to
the expiration of its obligation as a writer, and that in such
circumstances the net proceeds realized from the sale of the
underlying securities pursuant to the call may be substantially
below the prevailing market price.

          The risk involved in writing a put option is that there
could be a decrease in the market value of the underlying
security caused by rising interest rates or other factors. If
this occurred, the option could be exercised and the underlying
security would then be sold to a Portfolio at a higher price than
its current market value. The risk involved in writing a call
option is that there could be an increase in the market value of
the underlying security caused by declining interest rates or
other factors. If this occurred, the option could be exercised
and the underlying security would then be sold by the respective
Portfolio at a lower price than its current market value. These
risks could be reduced by entering into a closing transaction as
described below. A Portfolio retains the premium received from
writing a put or call option whether or not the option is
exercised.

          The Portfolios may also write covered call options for
cross-hedging purposes. A call option is for cross-hedging
purposes if it is designed to provide a hedge against a decline
in value in another security which a Portfolio owns or has the
right to acquire. In such circumstances, a Portfolio
collateralizes the option by maintaining, in a segregated account
with the custodian, liquid assets in an amount not less than the
market value of the underlying security, marked to market daily.

          Each Portfolio may dispose of an option which it has
purchased by entering into a "closing sale transaction" with the
writer of the option. A closing sale transaction terminates the
obligation of the writer of the option and does not result in the
ownership of an option. A Portfolio realizes a profit or loss
from a closing sale transaction if the premium received from the
transaction is more than or less than the cost of the option.

          Each Portfolio may terminate its obligation to the
holder of an option written by a Portfolio through a "closing
purchase transaction." A Portfolio may not, however, effect a
closing purchase transaction with respect to such an option after
it has been notified of the exercise of such option. A Portfolio
realizes a profit or loss from a closing purchase transaction if
the cost of the transaction is more than or less than the premium
received by that Portfolio from writing the option. A closing
purchase transaction for exchange-traded options may be made only
on a national securities exchange. There is no assurance that a
liquid secondary market on a national securities exchange will
exist for any particular option, or at any particular time, and
for some options, such as over-the-counter options, no secondary
market on a national securities exchange may exist. If a
Portfolio is unable to effect a closing purchase transaction,
that Portfolio will not sell the underlying security until the
option expires or the Portfolio delivers the underlying security
upon exercise.

          The Portfolios may purchase or write options in
negotiated transactions. The Portfolios may 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
also adopted procedures for monitoring the creditworthiness of
such entities. Options traded in the over-the-counter market may
not be as actively traded as those traded on an exchange.
Accordingly, it may be more difficult to value such options.
Options purchased or written by a Portfolio in negotiated
transactions may be considered illiquid and it may not be
possible for the Portfolio to effect a closing purchase
transaction at a time when the Adviser believes it would be
advantageous to do so.

          The Portfolios may enter into contracts (or amend
existing contracts) with primary dealer(s) with whom they write
over-the-counter options. The contracts will provide that the
relevant Portfolio has the absolute right to repurchase an option
it writes at any time at a repurchase price which represents the
fair market value, as determined in good faith through
negotiation between the parties, but which in no event will
exceed a price determined pursuant to a formula contained in the
contract. Although the specific details of the formula may vary
between contracts with different primary dealers, the formula
will generally be based on a multiple of the premium received by
a Portfolio for writing the option, plus the amount, if any, of
the option's intrinsic value (i.e., the amount the option is
"in-the-money"). The formula will also include a factor to
account for the difference between the price of the security and
the strike price of the option if the option is written
"out-of-the-money." Although each Portfolio has established
standards of creditworthiness for these primary dealers, a
Portfolio may still be subject to the risk that firms
participating in such transactions will fail to meet their
obligations. With respect to agreements concerning the
over-the-counter options a Portfolio has written, a Portfolio
will treat as illiquid only securities equal in amount to the
formula price described above less the amount by which the option
is "in-the-money," i.e., the amount by which the price of the
option exceeds the exercise price.

          OPTIONS ON SECURITIES INDICES. Each Portfolio may
purchase put and call options and write covered put and call
options on securities indexes for the purpose of hedging against
the risk of unfavorable price movements adversely affecting the
value of a Portfolio's securities or securities it intends to
purchase. An option on a securities index is similar to an option
on a security except that, rather than the right to take or make
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. A
call option on a securities index is considered covered, for
example, if, so long as a Portfolio is obligated as the writer of
the call, it holds securities the price changes of which are, in
the opinion of the Adviser, expected to replicate substantially
the movement of the index or indexes upon which the options
written by the Portfolio are based. A put on a securities index
written by a Portfolio will be considered covered if, so long as
it is obligated as the writer of the put, a Portfolio segregates
with the Fund's custodian liquid assets having a value equal to
or greater than the exercise price of the option.

          Through the purchase of listed index options, a
Portfolio could achieve many of the same objectives as through
the use of options on individual securities. Price movements in a
Portfolio's securities probably will not correlate perfectly with
movements in the level of the index and, therefore, a Portfolio
would bear a risk of loss on index options it purchased if
favorable price movements of the hedged portfolio securities do
not equal or exceed losses on the options or if adverse price
movements of the hedged portfolio securities are greater than
gains realized from the options.

          OPTIONS ON FOREIGN CURRENCIES. The Portfolios may
purchase and write put and call options on foreign currencies for
the purpose of protecting against declines in the U.S. Dollar
value of foreign currency-denominated portfolio securities and
against increases in the U.S. Dollar cost of such securities to
be acquired. As in the case of other kinds of options, however,
the writing of an option on a foreign currency constitutes only a
partial hedge, up to the amount of the premium received, and a
Portfolio could be required to purchase or sell foreign
currencies at disadvantageous exchange rates, thereby incurring
losses. The purchase of an option on a foreign currency may
constitute an effective hedge against fluctuations in exchange
rates although, in the event of rate movements adverse to a
Portfolio's position, it may forfeit the entire amount of the
premium plus related transaction costs. Options on foreign
currencies to be written or purchased by the Portfolios are
exchange-traded or traded over-the-counter. The Portfolios will
write options on foreign currencies only if they are "covered."

          The Portfolios will not speculate in foreign currency
options. Accordingly, the Portfolios will not hedge a currency
substantially in excess of the market value of the securities
denominated in that currency which it owns or the expected
acquisition price of securities which it anticipates purchasing.

          See Appendix B for further discussion of the use, risks
and costs of options on foreign currencies.

          FUTURES CONTRACTS AND OPTIONS THEREON. The Portfolios
may purchase and sell futures contracts and related options on
debt securities and on indexes of debt securities to hedge
against anticipated changes in interest rates that might
otherwise have an adverse effect on the value of its assets or
assets it intends to acquire. Each Portfolio may also enter into
futures contracts and related options on foreign currencies in
order to limit its exchange rate risk. A "sale" of a futures
contract means the acquisition of a contractual obligation to
deliver the securities called for by the contract at a specified
price on a specified date. A "purchase" of a futures contract
means the incurring of a contractual obligation to acquire the
securities called for by the contract at a specified price on a
specified date. The purchaser of a futures contract on an index
agrees to take or make delivery of an amount of cash equal to the
difference between a specified dollar multiple of the value of
the index on the expiration date of the contract and the price at
which the contract was originally struck. All futures contracts
and related options will be traded on exchanges that are licensed
and regulated by the CFTC. The Portfolios will only write options
on futures contracts which are "covered." These investment
techniques will be used only to hedge against anticipated future
changes in interest or exchange rates which otherwise might
either adversely affect the value of a Portfolio's securities or
adversely affect the prices of securities which the Portfolio
intends to purchase at a later date. These investment techniques
will not be used for speculation.

          The Portfolios have claimed an exclusion from the
definition of the term "commodity pool operator" under the
Commodity Exchange Act and therefore are not subject to
regulation as a pool operator under that Act. In general, each
Portfolio will limit its use of futures contracts and options on
futures contracts so that either (i) the contracts or options
thereon are for "bona fide hedging" purposes as defined under
regulations of the CFTC or (2) if for other purposes, no more
than 5% of the liquidation value of the respective Portfolio's
total assets will be used for initial margin of option premiums
required to establish non-hedging positions. These instruments
will be used for hedging purposes and not for speculation or to
leverage a Portfolio.

          In instances involving the purchase of futures
contracts or the writing of put options thereon by a Portfolio,
an amount of liquid assets equal to the cost of such futures
contracts or options written (less any related margin deposits)
will be deposited in a segregated account with the Fund's
custodian, thereby insuring that the use of such futures
contracts and options is unleveraged. In instances involving the
sale of futures contracts or the writing of call options thereon
by a Portfolio, the securities underlying such futures contracts
or options will at all times be maintained by the Portfolio or,
in the case of index futures and related options, the Portfolio
will own securities the price changes of which are, in the
opinion of the Adviser, expected to replicate substantially the
movement of the index upon which the futures contract or option
is based.

          Positions taken in the futures markets are not normally
held until delivery or cash settlement is required, but are
instead liquidated through offsetting transactions that may
result in a gain or a loss. While futures positions taken by the
Portfolios will usually be liquidated in this manner, each
Portfolio may instead make or take delivery of underlying
securities whenever it appears economically advantageous to do
so.

          Positions in futures contracts may be closed out only
on an exchange or a board of trade that provides the market for
such futures. Although each Portfolio intends to purchase or sell
futures only on exchanges or boards of trade where there appears
to be an active market, there is no guarantee that such will
exist for any particular contract or at any particular time. If
there is not a liquid market at a particular time, it may not be
possible to close a futures position at such time, and, in the
event of adverse price movements, a Portfolio would continue to
be required to make daily cash payments of maintenance margin.
However, in the event that futures positions are used to hedge
portfolio securities, the securities will not be sold until the
futures positions can be liquidated. In such circumstances, an
increase in the price of securities, if any, may partially or
completely offset losses on the futures contracts.

          See Appendix B for further discussion of the use, risks
and costs of futures contracts and options on futures contracts.

          REPURCHASE AGREEMENTS. The Portfolios 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
Portfolios' ability to enter into repurchase agreements.
Currently, each Portfolio intends to enter into repurchase
agreements only with the Fund's custodian and such primary
dealers. For a general discussion of repurchase agreements, see
"Other Investment Practices -- Repurchase Agreements," below.

          ILLIQUID SECURITIES. None of the Portfolios will invest
more than 15% of its net assets in illiquid securities. For this
purpose, illiquid securities are securities restricted as to
disposition under federal securities laws and 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),
and (b) repurchase agreements not terminable within seven days.
Securities that have legal or contractual restrictions on resale
but have a readily available market are not deemed illiquid for
purposes of this limitation. For a general discussion of illiquid
securities see "Other Investment Practices -- Illiquid
Securities," below.

          RIGHTS AND WARRANTS. The Portfolios may invest in
rights and 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 Portfolios'
investment portfolio. Rights and warrants may entitle the holder
to buy equity securities at a specific price for a specific
period of time. Rights are similar to warrants except that they
have a substantially shorter duration. 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 underlying securities nor do
they represent any rights in the assets of the issuing company.
The value of right or warrant does not necessarily change with
the value of the underlying security, although the value of a
right or warrant may decline because of a decrease in the value
of the underlying security, the passage of time or a change in
perception as to the potential of the underlying security, or any
combination thereof. If the market price of the underlying
security is below the exercise price set forth in the warrant on
the expiration date, the warrant will expire worthless. Moreover,
a right or warrant ceases to have value if it is not exercised
prior to the expiration date.

          PORTFOLIO TURNOVER. Because each Portfolio will
actively use trading to achieve its investment objective and
policies, a Portfolio may be subject to a greater degree of
turnover and, thus, a higher incidence of short-term capital
gains taxable as ordinary income than might be expected from
investment companies which invest substantially all of their
portfolios on a long-term basis, and correspondingly larger
mark-up charges can be expected to be borne by a Portfolio.
Management anticipates that the annual turnover in each Portfolio
may be in excess of 100%. An annual turnover rate of 100% occurs,
for example, when all of the securities in a Portfolio are
replaced one time in a period of one year.

          The value of a Portfolio's shares will be influenced by
the factors that generally affect securities, such as the
economic and political outlook, earnings, dividends and the
supply and demand for various classes of securities. There can
be, of course, no assurance that a Portfolio's investment
objective will be achieved.

CERTAIN RISK CONSIDERATIONS

          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-United States
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 United States 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 United
States, 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 auditing and financial
reporting standards, practices 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
Portfolios will 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.

          It is contemplated that foreign securities will be
purchased in over-the-counter markets or on stock exchanges
located in the countries in which the respective principal
offices of the issuers of the various securities are located, if
that is the best available market. 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 Exchange, and securities of some foreign
companies are less liquid and more volatile than securities of
comparable United States companies. Similarly, volume and
liquidity in most foreign bond markets is less than in the United
States and, at times, volatility of price can be greater than in
the United States. Fixed commissions on foreign stock exchanges
are generally higher than negotiated commissions on United States
exchanges, although the Portfolios 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 Portfolios will invest and could
adversely affect a Portfolio's assets should these conditions or
events recur.

          Foreign investment in certain foreign securities is
restricted or controlled to varying degrees. These restrictions
or controls may at times limit or preclude foreign investment in
certain foreign securities and increase the costs and expenses of
the Portfolios. Certain countries in which the Portfolios will
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 a Portfolio
could be reduced by foreign income taxes, including withholding
taxes. It is impossible to determine the effective rate of
foreign tax in advance. A Portfolio's net asset value may also be
affected by changes in the rates or methods of taxation
applicable to that Portfolio or to entities in which that
Portfolio 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 a Portfolio 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
Portfolio. See "Dividends, Distributions and Taxes," below.

          Although a Portfolio may value its assets in terms of
U.S. dollars, the Portfolios do not intend to convert their
holdings of foreign currencies into U.S. dollars on a daily
basis. The Portfolios 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 a Portfolio at one rate, while offering a
lesser rate of exchange should that Portfolio desire to resell
that currency to the dealer. Investors should understand that the
expense ratio of a Portfolio 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 American Depository Receipts ("ADRs") which
are traded in the United States on exchanges or over-the-counter,
are issued by domestic banks or trust companies and 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 Portfolios can avoid currency risks
which might occur during the settlement period for either
purchases or sales. The Portfolios may purchase foreign
securities directly, as well as through ADRs.

          SECURITIES RATINGS. The ratings of fixed-income
securities by Moody's and S&P are a generally accepted barometer
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.

          The Adviser will try to reduce the risk inherent in
each Portfolio'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 for each Portfolio, 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.

          Non-rated securities will also be considered for
investment by each Portfolio 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 a Portfolio to a degree comparable to that of
rated securities which are consistent with that Portfolio's
objectives and policies.

          1940 ACT RESTRICTIONS. Under the 1940 Act a Portfolio
is not permitted to borrow unless immediately after such
borrowing there is "asset coverage," as that term is defined and
used in the 1940 Act, of at least 300% for all borrowings of that
Portfolio. In addition, under the 1940 Act, in the event asset
coverage falls below 300%, a Portfolio must within three days
reduce the amount of its borrowing to such an extent that the
asset coverage of its borrowings is at least 300%. Assuming, for
example, outstanding borrowings representing not more than
one-third of a Portfolio's total assets less liabilities (other
than such borrowings), the asset coverage of that Portfolio's
portfolio would be 300%; while outstanding borrowings
representing 25% of the total assets less liabilities (other than
such borrowings), the asset coverage of the Portfolio's portfolio
would be 400%. Each Portfolio will maintain asset coverage of
outstanding borrowings of at least 300% and if necessary will, to
the extent possible, reduce the amounts borrowed by making
repayments from time to time in order to do so. Such repayments
could require a Portfolio to sell portfolio securities at times
considered disadvantageous by the Adviser and such sales could
cause a Portfolio to incur related transaction costs and to
realize taxable gains.

          Under the 1940 Act each Portfolio may invest not more
than 10% of its total assets in securities of other investment
companies. In addition, under the 1940 Act each Portfolio may not
own more than 3% of the total outstanding voting stock of any
investment company and not more than 5% of the value of each
Portfolio's total assets may be invested in the securities of any
investment company.

          The Portfolios may emphasize investments in particular
industries or sectors as a by-product of the stock selection
process rather than as the result of assigned targets or ranges.

CERTAIN FUNDAMENTAL INVESTMENT POLICIES

          Each Portfolio has adopted the following investment
restrictions, which may not be changed without Shareholder
Approval, as defined under the caption "General Information,"
below.

          Each Portfolio may not:

          1. make loans except through (a) the purchase of debt
obligations in accordance with its investment objective and
policies; (b) the lending of portfolio securities; or (c) the use
of repurchase agreements;

          2. borrow money or issue senior securities except to
the extent permitted by the 1940 Act;

          3. pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings;

          4. invest in companies for the purpose of exercising
control;

          5. (a) purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in real
estate or interests therein and securities that are secured by
real estate, provided such securities are securities of the type
in which a Portfolio may invest; (b) purchase or sell commodities
or commodity contracts, including futures contracts (except
foreign currencies, futures on securities, currencies and
securities indices and forward contracts or contracts for the
future acquisition or delivery of securities and foreign
currencies and other similar contracts and options on the
foregoing); and (c) act as an underwriter of securities, except
that a Portfolio may acquire restricted securities under
circumstances in which, if such securities were sold, that
Portfolio might be deemed to be an underwriter for purposes of
the Securities Act; or

          6. concentrate more than 25% of its assets in any
particular industry or group of industries.

ALLIANCEBERNSTEIN U.S. LARGE CAP BLENDED STYLE PORTFOLIO

          For a general description of the Portfolio's investment
policies and practices

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

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

          CONVERTIBLE SECURITIES. The Portfolio may invest up to
10% of its net assets in the convertible securities of companies
whose common stocks are eligible for purchase by the Portfolio
under the investment policies described above. For a discussion
regarding convertible securities, see "AllianceBernstein Utility
Income Portfolio -- Convertible Securities," above.

          Depositary Receipts. 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. ADRs
are depositary receipts typically issued by an U.S. bank or trust
company that evidence ownership of underlying securities issued
by a foreign corporation. GDRs and other types of depositary
receipts are typically issued by foreign banks or trust companies
and evidence ownership of underlying securities issued by either
a foreign or an U.S. company. 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 foreign securities markets. For purposes of determining
the country of issuance, investments in depositary receipts of
either type are deemed to be investments in the underlying
securities.

          Forward Commitments. The Portfolio may enter into
forward commitments for the purchase or sale of securities. Such
transactions 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, which is generally expressed in yield terms, is fixed
at the time the commitment is made, but delivery and payment for
the securities take place at a later date, normally within four
months after the transaction, although delayed settlements beyond
four months may be negotiated. Securities purchased or sold under
a forward commitment are subject to market fluctuation, and no
interest accrues to the purchaser prior to the settlement date.
At the time the Portfolio enters 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 net asset value. 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.

          The Portfolio's right to receive or deliver a security
under a forward commitment may be sold prior to the settlement
date, but the Portfolio will enter into forward commitments only
with the intention of actually receiving or delivering the
securities, as the case may be. To facilitate such transactions,
the Fund's custodian will maintain, in the separate account of
the Portfolio, liquid assets having value equal to, or greater
than, any commitments to purchase securities on a forward
commitment basis. If the Portfolio, however, chooses to dispose
of the right to receive or deliver a security subject to a
forward commitment prior to the settlement date of the
transaction, it can incur a gain or loss. In the event the other
party to a forward commitment transaction were to default, the
Portfolio might lose the opportunity to invest money at favorable
rates or to dispose of securities at favorable prices.

          Although the Portfolio intends to make such purchases
for speculative purposes, purchases of securities on such bases
may involve more risk than other types of purchases. For example,
by committing to purchase securities in the future, the Portfolio
subjects itself to a risk of loss on such commitments as well as
on its portfolio securities. Also, the Portfolio may have to sell
assets that have been set aside in order to meet redemptions. In
addition, if the Portfolio 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
Portfolio 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 and would be treated for tax purposes as such. 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
Portfolio 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 Portfolio's payment
obligation).

          Forward Foreign Currency Exchange Contracts. The
Portfolio may purchase or sell forward foreign currency exchange
contracts ("forward contracts") to attempt to minimize the risk
to the Portfolio of adverse changes in the relationship between
the U.S. Dollar and foreign currencies. A forward contract is an
obligation to purchase or sell a specific currency for an agreed
price at a future date which is individually negotiated and
privately traded by currency traders and their customers.

          The Portfolio may enter into a forward contract, for
example, 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").
The Portfolio may not engage in transaction hedges with respect
to the currency of a particular country to an extent greater than
the aggregate amount of the Portfolio's transactions in that
currency. Additionally, for example, when the Portfolio 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 Portfolio's securities denominated in such
foreign currency, or when the Portfolio 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"). The Portfolio will not position hedge with respect to a
particular currency to an extent greater than the aggregate
market value (at the time of making such sale) of the securities
held in its portfolio denominated or quoted in that currency. In
this situation the Portfolio may, in the alternative, enter into
a forward contract to sell a different foreign currency for a
fixed U.S. Dollar amount where the Portfolio believes that the
U.S. Dollar value of the currency to be sold pursuant to the
forward contract will fall whenever there is a decline in the
U.S. Dollar value of the currency in which portfolio securities
of the Portfolio are denominated ("cross-hedge").

          To the extent required by applicable law, the Fund's
custodian will place liquid assets in a separate account of the
Portfolio having a value equal to the aggregate amount of the
Portfolio's commitments under forward contracts entered into with
respect to position hedges and cross-hedges. If the value of the
assets placed in a separate account declines, additional liquid
assets will be placed in the account on a daily basis so that the
value of the account will equal the amount of the Portfolio's
commitments with respect to such contracts. As an alternative to
maintaining all or part of the separate account, the Portfolio
may purchase a call option permitting the Portfolio to purchase
the amount of foreign currency being hedged by a forward sale
contract at a price no higher than the forward contract price or
the Portfolio may purchase a put option permitting the Portfolio
to sell the amount of foreign currency subject to a forward
purchase contract at a price as high or higher than the forward
contract price. In addition, the Portfolio may use such other
methods of "cover" as are permitted by applicable law.

          The Portfolio will not speculate in forward currency
contracts. The Portfolio will only enter forward foreign currency
exchange contracts with counterparties that, in the opinion of
the Adviser, do not present undue credit risk.

          Hedging against a decline in the value of a currency
does not eliminate fluctuations in the prices of portfolio
securities or prevent losses if the prices of securities decline.
These transactions also preclude the opportunity for gain if the
value of the hedge currency should rise. Moreover, it may not be
possible for the Portfolio to hedge against a devaluation that is
so generally anticipated that the Portfolio is not able to
contract to sell the currency at a price above the anticipated
devaluation level. Unanticipated changes in currency prices may
result in poorer overall performance for the Portfolio than if it
had not entered into such contracts. The matching of the increase
in value of a forward contract and the decline in the U.S. Dollar
equivalent value of the foreign currency-denominated asset that
is the subject of the hedge generally will not be precise. In
addition, the Portfolio may not always be able to enter into
foreign currency forward contracts at attractive prices and this
will limit the Portfolio's ability to use such contract to hedge
or cross-hedge its assets. Also, with regard to the Portfolio's
use of cross-hedges, there can be no assurance that historical
correlations between the movement of certain foreign currencies
relative to the U.S. Dollar will continue. Thus, at any time poor
correlation may exist between movements in the exchange rates of
the foreign currencies underlying the Portfolio's cross-hedges
and the movements in the exchange rates of the foreign currencies
in which the Portfolio's assets that are the subject of such
cross-hedges are denominated.

          Futures Contracts and Options on Futures Contracts. The
Portfolio may enter into contracts for the purchase or sale for
future delivery of fixed-income securities or foreign currencies,
or contracts based on financial indices, including any index of
U.S. Government Securities, securities issued by foreign
government entities, or common stocks ("futures contracts") and
may purchase and write put and call options to buy or sell
futures contracts ("options on futures contracts"). For a
discussion regarding futures contracts and options on futures
contracts, see "AllianceBernstein U.S. Government/High Grade
Securities Portfolio -- Futures Contracts and Options on Futures
Contracts," above.

          The Fund's custodian will place liquid assets in a
segregated account of the Portfolio having a value equal to the
aggregate amount of the Portfolio's commitments under futures
contracts.

          For additional information on the use, risks and costs
of futures contracts and options on futures contracts, see
Appendix B.

          Illiquid Securities. The Portfolio will not invest more
than 15% of its net assets in illiquid securities. For this
purpose, illiquid securities are securities restricted as to
disposition under federal securities laws and 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) over-the-counter options and assets used to cover
over-the-counter options, and (c) repurchase agreements not
terminable within seven days. See "Other Investment Policies --
Illiquid Securities," below, for a more detailed discussion of
the Portfolio's investment policy on restricted securities and
securities with legal or contractual restrictions on resale.

          Loans of Portfolio Securities. The Portfolio may make
secured loans of its portfolio securities to brokers, dealers and
financial institutions provided that liquid assets, or bank
letters of credit equal to at least 100% of the market value of
the securities loaned are deposited and maintained by the
borrower with the Portfolio. A principal risk in lending
portfolio securities, as with other extensions of credit,
consists of possible loss of rights in the collateral should the
borrower fail financially. In addition, the Portfolio will be
exposed to the risk that the sale of any collateral realized upon
a borrower's default will not yield proceeds sufficient to
replace the loaned securities. In determining whether to lend
securities to a particular borrower, the Adviser (subject to
review by the Board of Directors) will consider all relevant
facts and circumstances, including the creditworthiness of the
borrower. While securities are on loan, the borrower will pay the
Portfolio any income earned thereon and the Portfolio may invest
any cash collateral in portfolio securities, thereby earning
additional income, or receive an agreed-upon amount of income
from a borrower who has delivered equivalent collateral. Any such
investment of cash collateral will be subject to the Portfolio's
investment risks. The Portfolio will have the right to regain
record ownership of loaned securities or equivalent securities in
order to exercise ownership rights such as voting rights,
subscription rights and rights to dividends, interest or other
distributions. The Portfolio may pay reasonable finders,
administrative and custodial fees in connection with a loan. The
Portfolio will not lend its portfolio securities to any officer,
director, employee or affiliate of the Portfolio or the Adviser.
The Board of Directors will monitor the Portfolio's lending of
portfolio securities.

          Options on Currencies. As in the case of other kinds of
options, the writing of an option on a currency constitutes only
a partial hedge, up to the amount of the premium received, and
the Portfolio could be required to purchase or sell foreign
currencies at disadvantageous exchange rates and incur losses.
The purchase of an option on a currency may constitute an
effective hedge against fluctuations in exchange rates although,
in the event of rate movements adverse to the Portfolio's
position, the Portfolio may forfeit the entire amount of the
premium plus related transaction costs.

          For additional information on the use, risks and costs
of Currency Options, see Appendix B.

          Options on Market Indices. The Portfolio may purchase
and sell exchange-traded index options. An option on a securities
index is similar to an option on a security except that, rather
than the right to take or make 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.

          Through the purchase of listed index options, the
Portfolio could achieve many of the same objectives as through
the use of options on individual securities. Price movements in
the Portfolio's portfolio securities probably will not correlate
perfectly with movements in the level of the index and,
therefore, the Portfolio would bear a risk of loss on index
options purchased by it if favorable price movements of the
hedged portfolio securities do not equal or exceed losses on the
options or if adverse price movements of the hedged portfolio
securities are greater than gains realized from the options.

          Puts and Calls. The Portfolio may write exchange-traded
call options on common stocks, for which it will receive a
purchase premium from the buyer, and may purchase and sell
exchange-traded call and put options on common stocks written by
others or combinations thereof. The Portfolio will not write put
options. Writing, purchasing and selling call options are highly
specialized activities and entail greater than ordinary
investment risks. A call option gives the purchaser of the
option, in exchange for paying the writer a premium, the right to
call upon the writer to deliver a specified number of shares of a
specified stock on or before a fixed date, at a predetermined
price. A put option gives the buyer of the option, in exchange
for paying the writer a premium, the right to deliver a specified
number of shares of a stock to the writer of the option on or
before a fixed date at a predetermined price.

          The writing of call options will, therefore, involve a
potential loss of opportunity to sell securities at higher
prices. In exchange for the premium received, the writer of a
fully collateralized call option assumes the full downside risk
of the securities subject to such option. In addition, the writer
of the call gives up the gain possibility of the stock protecting
the call. Generally, the opportunity for profit from the writing
of options is higher, and consequently the risks are greater when
the stocks involved are lower priced or volatile, or both. While
an option that has been written is in force, the maximum profit
that may be derived from the optioned stock is the premium less
brokerage commissions and fees. The Portfolio will not sell a
call written by it unless the Portfolio at all times during the
option period owns either (a) the optioned securities or has an
absolute and immediate right to acquire that security without
additional cash consideration (or for additional cash
consideration held in a segregated account by the Fund's
custodian) upon conversion or exchange of other securities held
in its portfolio or (b) a call option on the same security and in
the same principal amount as the call written where the exercise
price of the call held (i) is equal to or less than the exercise
price of the call written or (ii) is greater than the exercise
price of the call written if the difference is maintained by the
Portfolio in liquid assets in a segregated account with the
Fund's custodian.

          Premiums received by the Portfolio in connection with
writing call options will vary widely depending primarily on
supply and demand. Commissions, stock transfer taxes and other
expenses of the Portfolio must be deducted from such premium
receipts. Calls written by the Portfolio will ordinarily be sold
either on a national securities exchange or through put and call
dealers, most, if not all, of whom are members of a national
securities exchange on which options are traded, and will in such
cases be endorsed or guaranteed by a member of a national
securities exchange or qualified broker-dealer, which may be SCB
& Co., an affiliate of the Adviser. The endorsing or guaranteeing
firm requires that the option writer (in this case the Portfolio)
maintain a margin account containing either corresponding stock
or other equity as required by the endorsing or guaranteeing
firm.

          The Portfolio may purchase or write options on
securities of the types in which it is permitted to invest in
privately negotiated (i.e., over-the-counter) transactions. The
Portfolio 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.

          In buying a call, the Portfolio would be in a position
to realize a gain if, during the option period, the price of the
shares increased by an amount in excess of the premium paid and
commissions payable on exercise. It would realize a loss if the
price of the security declined or remained the same or did not
increase during the period by more than the amount of the premium
and commissions payable on exercise. By buying a put, the
Portfolio would be in a position to realize a gain if, during the
option period, the price of the shares declined by an amount in
excess of the premium paid and commissions payable on exercise.
It would realize a loss if the price of the security increased or
remained the same or did not decrease during that period by more
than the amount of the premium and commissions payable on
exercise. In addition, the Portfolio could realize a gain or loss
on such options by selling them.

          STOCK INDEX FUTURES. The Portfolio may purchase and
sell stock index futures contracts. A stock index assigns
relative values to the common stocks comprising the index. A
stock index futures contract is a bilateral agreement pursuant to
which two parties agree to take or make delivery of an amount of
liquid assets equal to a specified dollar amount multiplied by
the difference between the stock index value at the close of the
last trading day of the contract and the price at which the
futures contract is originally struck. No physical delivery of
the underlying stocks in the index is made. The Portfolio will
not purchase and sell options on stock index futures contacts.

          The Portfolio may not purchase or sell a stock index
future if, immediately thereafter, more than 30% of its total
assets would be hedged by stock index futures. In connection with
its purchase of stock index futures contracts the Portfolio will
deposit in a segregated account with the Fund's custodian an
amount of liquid assets equal to the market value of the futures
contracts less any amounts maintained in a margin account with
the Portfolio's broker. The Portfolio may not purchase or sell a
stock index future if, immediately thereafter, the sum of the
amount of margin deposits on the Portfolio's existing futures
positions would exceed 5% of the market value of the Portfolio's
total assets.

          For more detailed description of stock index futures
contracts, see Appendix B.

          REPURCHASE AGREEMENTS. The Portfolio may enter into
repurchase agreements. A repurchase agreement arises when a buyer
purchases a security and simultaneously agrees to resell it to
the vendor at an agreed-upon future date, normally a day or a few
days later. 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 Portfolio to keep all of its assets at work while retaining
overnight flexibility in pursuit of investments of a longer-term
nature. If a vendor defaults on its repurchase obligation, the
Portfolio would suffer a loss to the extent that the proceeds
from the sale of the collateral were less than the repurchase
price. If a vendor goes bankrupt, the Portfolio might be delayed
in or prevented from, selling the collateral for its benefit. The
Adviser monitors the creditworthiness of the vendors with which
the Portfolio enters into repurchase agreements.

          RIGHTS AND WARRANTS. The Portfolio may invest up to 5%
of its total assets 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 Portfolio'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.

          SHORT SALES. The Portfolio may make short sales of
securities or maintain a short position, provided that at all
times when a short position is open not more than 33% of the
Portfolio's net assets (taken at market value) is held as
collateral for such sales. Pursuant to the Taxpayer Relief Act of
1997, if the Portfolio has an unrealized gain with respect to a
security and enters into a short sale with respect to such
security, the Portfolio generally will be deemed to have sold the
appreciated security and thus will recognize a gain for tax
purposes. If the price of the security sold short increases
between the time of the short sale and the time the Portfolio
replaces the borrowed security, the Portfolio will incur a loss;
conversely, if the price declines, the Portfolio will realize a
capital gain. Certain special federal income tax considerations
may apply to short sales which are entered into by the Portfolio.

          GENERAL. The successful use of the foregoing investment
practices, which may be used as a hedge against changes in the
values of securities resulting from market conditions, draws upon
the Adviser's special skills and experience with respect to such
instruments and usually depends on the Adviser's ability to
forecast movements of specific securities or stock indices
correctly. Should these securities or indices move in an
unexpected manner, the Portfolio may not achieve the anticipated
benefits of options and stock index futures contracts or may
realize losses and, thus, be in a worse position than if such
strategies had not been used. In addition, the correlation
between movements in the prices of such instruments and movements
in the price of securities being hedged or used for cover will
not be perfect and could produce unanticipated losses. The
Portfolio's ability to dispose of its position in options and
stock index futures will depend on the availability of liquid
markets in these instruments. No assurance can be given that the
Portfolio will be able to close a particular option or stock
index futures position.

CERTAIN FUNDAMENTAL INVESTMENT POLICIES

          The Portfolio is also subject to the following
restrictions in implementing its investment policies which cannot
be changed without Shareholder Approval, as defined under the
caption "General Information," below.

          As a matter of fundamental policy, the Portfolio may
not:

          1. with respect to 75% of its assets (i) have more than
5% of its assets invested in any one issuer and (ii) own more
than 10% of the outstanding voting securities of any one issuer;

          2. invest 25% or more of the value of its total assets
in the same industry (except that this restriction does not apply
to securities issued or guaranteed by the U.S. Government, its
agencies and instrumentalities);

          3. mortgage, pledge or hypothecate or otherwise
encumber its assets, except as may be necessary in connection
with permissible borrowings;

          4. purchase securities on margin, but it may obtain
such short-term credits from banks as may be necessary for the
clearance of purchases and sales of securities;

          5. issue senior securities or borrow money, except as
permitted by the 1940 Act and the regulations and interpretations
thereunder;

          6. make loans to other persons, except that the
Portfolio may lend its portfolio securities in accordance with
applicable law. The acquisition of investment securities or other
investment instruments shall not be deemed the making of a loan;
7. purchase or sell real estate unless acquired as a result of
the ownership of securities or other instruments, provided that
this restriction shall not prohibit the Portfolio from investing
in securities or other instruments backed by real estate or in
securities of companies engaged in the real estate business;

          8. purchase or sell physical commodities unless
acquired as a result of the ownership of securities or
instruments; provided that this restriction shall not prohibit
the Portfolio from (i) engaging in permissible options and
futures transactions and forward foreign currency contracts in
accordance with the Portfolio's investment policies, or (ii)
investing in securities of any kind; or

          9. act as an underwriter of securities, except that the
Portfolio may acquire restricted securities or securities in
private placements under circumstances in which, if such
securities were sold, the Portfolio might be deemed to be an
underwriter within the meaning of the Securities Act.

          Whenever any investment restriction states a maximum
percentage of the Portfolio's assets which may be invested in any
security or other asset, it is intended that such maximum
percentage limitation be determined immediately after and as a
result of the Portfolio's acquisition of such securities or other
assets. Accordingly, any later increase or decrease in percentage
beyond the specified limitation resulting from a change in values
or net assets will not be considered a violation of any such
maximum.

ALLIANCEBERNSTEIN WEALTH APPRECIATION STRATEGY PORTFOLIO
ALLIANCEBERNSTEIN BALANCED WEALTH STRATEGY PORTFOLIO

          For a general description of the Portfolios' investment
policies, see the Fund's Prospectus.

ADDITIONAL INVESTMENT POLICIES AND PRACTICES

          The following additional investment policies supplement
those set forth in the Prospectus for the Portfolios.

          STRIPPED MORTGAGE-RELATED SECURITIES. Each Portfolio
may invest in stripped mortgage-related securities ("SMRS"). SMRS
are derivative multi-class mortgage-related securities. SMRS may
be issued by the U.S. Government, its agencies or
instrumentalities, or by private originators of, or investors in,
mortgage loans, including savings and loan associations, mortgage
banks, commercial banks, investment banks and special purpose
subsidiaries of the foregoing.

          SMRS are usually structured with two classes that
receive different proportions of the interest and principal
distributions on a pool of GNMA, FNMA or FHLMC certificates,
whole loans or private pass-through mortgage-related securities
("Mortgage Assets"). A common type of SMRS will have one class
receiving some of the interest and most of the principal from the
Mortgage Assets, while the other class will receive most of the
interest and the remainder of the principal. In the most extreme
case, one class will receive all of the interest (the
interest-only or "IO" class), while the other class will receive
all of the principal (the principal-only or "PO" class). The
yield to maturity on an IO class is extremely sensitive to the
rate of principal payments (including prepayments) on the related
underlying Mortgage Assets, and a rapid rate of principal
prepayments may have a material adverse effect on the yield to
maturity of the IO class. The rate of principal prepayment will
change as the general level of interest rates fluctuates. If the
underlying Mortgage Assets experience greater than anticipated
principal prepayments, the Portfolio may fail to fully recoup its
initial investment in these securities. Due to their structure
and underlying cash flows, SMRS may be more volatile than
mortgage-related securities that are not stripped.

          Although SMRS are purchased and sold by institutional
investors through several investment banking firms acting as
brokers or dealers, these securities were only recently
developed. As a result, established trading markets have not yet
developed for these securities and, accordingly, they may be
illiquid.

          FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Each Portfolio
may engage in foreign currency exchange transactions to protect
against uncertainty in the level of future currency exchange
rates. The Adviser expects to engage in foreign currency exchange
transactions in connection with the purchase and sale of
portfolio securities ("transaction hedging") and to protect
against changes in the value of specific portfolio positions
("position hedging").

          The Portfolios may engage in transaction hedging to
protect against a change in foreign currency exchange rates
between the date on which the Portfolio contracted to purchase or
sell a security and the settlement date, or to "lock in" the U.S.
dollar equivalent of a dividend or interest payment in a foreign
currency. The Portfolios may purchase or sell a foreign currency
on a spot (or cash) basis at the prevailing spot rate in
connection with the settlement of transactions in portfolio
securities denominated in that foreign currency.

          If conditions warrant, the Portfolios may also enter
into contracts to purchase or sell foreign currencies at a future
date ("forward contracts") and may purchase and sell foreign
currency futures contracts as hedges against changes in foreign
currency exchange rates between the trade and settlement dates on
particular transactions and not for speculation. A foreign
currency forward contract is a negotiated agreement to exchange
currency at a future time at a rate or rates that may be higher
or lower than the spot rate. Foreign currency futures contracts
are standardized exchange-traded contracts and have margin
requirements.

          For transaction hedging purposes, the Portfolios may
also purchase and sell call and put options on foreign currency
futures contracts and on foreign currencies.

          Each Portfolio may engage in position hedging to
protect against a decline in value relative to the U.S. dollar of
the currencies in which its portfolio securities are denominated
or quoted (or an increase in value of a currency in which
securities the Portfolio intends to buy are denominated, when the
Portfolio holds cash or short-term investments). For position
hedging purposes, each Portfolio may purchase or sell foreign
currency futures contracts, foreign currency forward contracts,
and options on foreign currency futures contracts and on foreign
currencies. In connection with position hedging, the Portfolios
may also purchase or sell foreign currency on a spot basis.

          A Portfolio's currency hedging transactions may call
for the delivery of one foreign currency in exchange for another
foreign currency and may at times not involve currencies in which
its portfolio securities are then denominated. The Adviser will
engage in such "cross hedging" activities when it believes that
such transactions provide significant hedging opportunities for a
Portfolio.

          REPURCHASE AGREEMENTS. The repurchase agreements
referred to in each Portfolio's Prospectus are agreements by
which a Portfolio purchases a security and obtains a simultaneous
commitment from the seller to repurchase the security at an
agreed upon price and date. The resale price is in excess of the
purchase price and reflects an agreed upon market rate unrelated
to the coupon rate on the purchased security. The purchased
security serves as collateral for the obligation of the seller to
repurchase the security and the value of the purchased security
is initially greater than or equal to the amount of the
repurchase obligation and the seller is required to furnish
additional collateral on a daily basis in order to maintain with
the purchaser securities with a value greater than or equal to
the amount of the repurchase obligation. Such transactions afford
the Portfolios the opportunity to earn a return on temporarily
available cash. While at times the underlying security may be a
bill, certificate of indebtedness, note, or bond issued by an
agency, authority or instrumentality of the U.S. Government, the
obligation of the seller is not guaranteed by the U.S. Government
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 Portfolios would attempt to
exercise their rights with respect to the underlying security,
including possible disposition in the market. However, the
Portfolios may incur various expenses in the attempted
enforcement and may be subject to various delays and risks of
loss, including (a) possible declines in the value of the
underlying security, (b) possible reductions in levels of income
and (c) lack of access to and possible inability to enforce
rights.

          Certificates of Deposit, Bankers' Acceptances and Bank
Time Deposits. Certificates of deposit are receipts issued by a
bank in exchange for the deposit of funds. The issuer agrees to
pay the amount deposited plus interest to the bearer of the
receipt on the date specified on the certificate. The certificate
usually can be traded in the secondary market prior to maturity.

          Bankers' acceptances typically arise from short-term
credit arrangements designed to enable businesses to obtain funds
to finance commercial transactions. Generally, an acceptance is a
time draft drawn on a bank by an exporter or an importer to
obtain a stated amount of funds to pay for specific merchandise.
The draft is then "accepted" by another bank that, in effect,
unconditionally guarantees to pay the face value of the
instrument on its maturity date. The acceptance may then be held
by the accepting bank as an earning asset or it may be sold in
the secondary market at the going rate of discount for a specific
maturity. Although maturities for acceptances can be as long as
270 days, most maturities are six months or less.

          Bank time deposits are funds kept on deposit with a
bank for a stated period of time in an interest bearing account.
At present, bank time deposits maturing in more than seven days
are not considered by the Adviser to be readily marketable.

          COMMERCIAL PAPER. Commercial paper consists of
short-term (usually from 1 to 270 days) unsecured promissory
notes issued by entities in order to finance their current
operations.

          VARIABLE NOTES. Variable amount master demand notes and
variable amount floating rate notes are obligations that permit
the investment of fluctuating amounts by a Portfolio at varying
rates of interest pursuant to direct arrangements between a
Portfolio, as lender, and the borrower. Master demand notes
permit daily fluctuations in the interest rate while the interest
rate under variable amount floating rate notes fluctuates on a
weekly basis. These notes permit daily changes in the amounts
borrowed. The Portfolios have the right to increase the amount
under these notes at any time up to the full amount provided by
the note agreement, or to decrease the amount, and the borrower
may repay up to the full amount of the note without penalty.
Because these types of notes are direct lending arrangements
between the lender and the borrower, it is not generally
contemplated that such instruments will be traded and there is no
secondary market for these notes. Master demand notes are
redeemable (and, thus, immediately repayable by the borrower) at
face value, plus accrued interest, at any time. Variable amount
floating rate notes are subject to next-day redemption 14 days
after the initial investment therein. With both types of notes,
therefore, the Portfolios' right to redeem depends on the ability
of the borrower to pay principal and interest on demand. In
connection with both types of note arrangements, the Portfolios
consider earning power, cash flow and other liquidity ratios of
the issuer. These notes, as such, are not typically rated by
credit rating agencies. Unless they are so rated, a Portfolio may
invest in them only if at the time of an investment the issuer
has an outstanding issue of unsecured debt rated Aa or better by
Moody's or AA or better by S&P or Fitch.

          ASSET-BACKED SECURITIES. The Portfolios may invest in
asset-backed securities (unrelated to first mortgage loans),
which represent fractional interests in pools of retail
installment loans, leases or revolving credit receivables, both
secured (such as Certificates for Automobile Receivables or
"CARS") and unsecured (such as Credit Card Receivable Securities
or "CARDS").

          The Staff of the Commission is of the view that certain
asset-backed securities may constitute investment companies under
the 1940 Act. The Portfolios intend to conduct their operations
in a manner consistent with this view; therefore, the Portfolios
generally may not invest more than 10% of their total assets in
such securities without obtaining appropriate regulatory relief.

          INVESTMENT IN OTHER INVESTMENT COMPANIES. Each of the
Portfolios currently invests directly in portfolio securities,
but may also, with the approval of the Portfolios' Directors and
upon obtaining such exemptive relief from the Commission as may
be necessary, invest in shares of one or more other investment
companies advised by Alliance that, in turn, invest directly in
portfolio securities. If the Portfolios' Directors approve
investments by the Portfolios in other investment companies
advised by Alliance, no shareholder approval would be required.
Investing in shares of other investment companies advised by
Alliance involves substantially the same risks as investing
directly in the underlying instruments, but may involve
additional expenses similar to those borne directly by the
Portfolios, including advisory fees and other operating expenses.
The Portfolios would invest in other investment companies advised
by Alliance only if Alliance were to determine that such
additional expenses would likely be outweighed by the benefits of
such investments relative to direct investments in portfolio
securities, such as increased diversification and reduced
transaction costs.

          LENDING OF PORTFOLIO SECURITIES. The Portfolios may
seek to increase income by lending portfolio securities. Under
present regulatory policies, including those of the Board of
Governors of the Federal Reserve System and the Commission, such
loans may be made only to member firms of the Exchange and would
be required to be secured continuously by collateral in cash,
cash equivalents, or U.S. Treasury Bills maintained on a current
basis at an amount at least equal to the market value of the
securities loaned. A Portfolio would have the right to call a
loan and obtain the securities loaned at any time on five days'
notice. During the existence of a loan, a Portfolio would
continue to receive the equivalent of the interest or dividends
paid by the issuer on the securities loaned and would also
receive compensation based on investment of the collateral. A
Portfolio would not, however, have the right to vote any
securities having voting rights during the existence of the loan
but would call the loan in anticipation of an important vote to
be taken among holders of the securities or of the giving or
withholding of their consent on a material matter affecting the
investment. As with other extensions of credit there are risks of
delay in recovery or even loss of rights in the collateral should
the borrower of the securities fail financially. However, the
loans would be made only to firms deemed by the Adviser to be of
good standing, 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. At the time any such
loan is made, the value of the securities loaned will not exceed
33 1/3% of a Portfolio's total assets.

          FORWARD COMMITMENTS AND WHEN-ISSUED AND DELAYED
DELIVERY SECURITIES. Each Portfolio may enter into forward
commitments for the purchase of securities and may purchase
securities on a "when-issued" or "delayed delivery" basis.
Agreements for such purchases might be entered into, for example,
when a Portfolio anticipates a decline in interest rates and is
able to obtain a more advantageous yield by committing currently
to purchase securities to be issued later. When a Portfolio
purchases securities in this manner (i.e., on a forward
commitment, "when-issued" or "delayed delivery" basis), it does
not pay for the securities until they are received, and the
Portfolio is required to create a segregated account with the
Fund's custodian and to maintain in that account liquid assets in
an amount equal to or greater than, on a daily basis, the amount
of the Portfolio's forward commitments and "when-issued" or
"delayed delivery" commitments. At the time a Portfolio 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 net asset value. 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.

          A Portfolio will enter into forward commitments and
make commitments to purchase securities on a "when-issued" or
"delayed delivery" basis only with the intention of actually
acquiring the securities. However, a Portfolio may sell these
securities before the settlement date if, in the opinion of the
Adviser, it is deemed advisable as a matter of investment
portfolio.

          Although neither of the Portfolios intends to make such
purchases for speculative purposes and each Portfolio intends to
adhere to the provisions of the Commission's policies, purchases
of securities on such bases may involve more risk than other
types of purchases. For example, by committing to purchase
securities in the future, a Portfolio subjects itself to a risk
of loss on such commitments as well as on its portfolio
securities. Also, a Portfolio may have to sell assets which have
been set aside in order to meet redemptions. In addition, if a
Portfolio determines it is advisable as a matter of investment
portfolio to sell the forward commitment or "when-issued" or
"delayed delivery" securities before delivery, that Portfolio 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, a Portfolio 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 a Portfolio's payment obligation).

          OPTIONS ON SECURITIES. Each Portfolio may write and
purchase call and put options on securities. Each Portfolio
intends to write only covered options. This means that so long as
a Portfolio is obligated as the writer of a call option, it will
own the underlying securities subject to the option or securities
convertible into such securities without additional consideration
(or for additional cash consideration held in a segregated
account by the custodian). In the case of call options on U.S.
Treasury Bills, a Portfolio might own U.S. Treasury Bills of a
different series from those underlying the call option, but with
a principal amount and value corresponding to the option contract
amount and a maturity date no later than that of the securities
deliverable under the call option. A Portfolio will be considered
"covered" with respect to a put option it writes, if, so long as
it is obligated as the writer of the put option, it deposits and
maintains with its custodian in a segregated account liquid
assets having a value equal to or greater than the exercise price
of the option.

          Each of the Portfolios may also 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, a Portfolio 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 Portfolio 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 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, a Portfolio 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, a Portfolio 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.

          Each of the Portfolios 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 Portfolio to
sell the securities at the exercise price or to close out the
options at a profit. By using put options in this way, a
Portfolio 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.

          A Portfolio may purchase call options to hedge against
an increase in the price of securities that the Portfolio
anticipates purchasing in the future. If such increase occurs,
the call option will permit the Portfolio 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 a
Portfolio upon exercise of the option, and, unless the price of
the underlying security rises sufficiently, the option may expire
worthless to the Portfolio and the Portfolio will suffer a loss
on the transaction to the extent of the premium paid.

          Each Portfolio may purchase or write options on
securities of the types in which it is permitted to invest in
privately negotiated (i.e., over-the-counter) transactions. Each
Portfolio 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.

          For additional information regarding options on
securities, see Appendix C.

          OPTIONS ON SECURITIES INDEXES. Each Portfolio may write
(sell) covered call and put options and purchase call and put
options on securities indexes. A call option on a securities
index is considered covered if, so long as a Portfolio is
obligated as the writer of the call option, the Portfolio holds
securities the price changes of which are expected by the Adviser
to replicate substantially the movement of the index or indexes
upon which the options written by the Portfolio are based. A put
option on a securities index written by a Portfolio will be
considered covered if, so long as it is obligated as the writer
of the put option, the Portfolio maintains with its custodian in
a segregated account liquid assets having a value equal to or
greater than the exercise price of the option.

          A Portfolio may also purchase put options on securities
indexes to hedge its investments against a decline in the value
of portfolio securities. By purchasing a put option on a
securities index, a Portfolio will seek to offset a decline in
the value of securities it owns through appreciation of the put
option. If the value of a Portfolio's investments does not
decline as anticipated, or if the value of the option does not
increase, the Portfolio's loss will be limited to the premium
paid for the option. The success of this portfolio will largely
depend on the accuracy of the correlation between the changes in
value of the index and the changes in value of a Portfolio's
security holdings.

          The purchase of call options on securities indexes may
be used by a Portfolio 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 Portfolio holds uninvested cash or
short-term debt securities awaiting investment. When purchasing
call options for this purpose, a Portfolio 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
indexes when a Portfolio 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 Portfolio owns.

          FUTURES CONTRACTS. Each Portfolio may enter into
interest rate futures contracts, index futures contracts and
foreign currency futures contracts. (Unless otherwise specified,
interest rate futures contracts, index futures contracts and
foreign currency futures contracts are collectively referred to
as "Futures Contracts.") Such investment portfolios will be used
as a hedge and not for speculation.

          Purchases or sales of stock or bond index futures
contracts are used for hedging purposes to attempt to protect a
Portfolio's current or intended investments from broad
fluctuations in stock or bond prices. For example, a Portfolio
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 Portfolio'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 a Portfolio 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
Portfolio intends to purchase. As such purchases are made, the
corresponding positions in stock or bond index futures contracts
will be closed out.

          Interest rate futures contracts are purchased or sold
for hedging purposes to attempt to protect against the effects of
interest rate changes on a Portfolio's current or intended
investments in fixed income securities. Each Portfolio 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 foreign-denominated securities to be
acquired, even if the value of such securities in the currencies
in which they are denominated remains constant. Each Portfolio
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 foreign-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 Portfolio'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 value as a result of the change
in exchange rates.

          Conversely, the Portfolios could protect against a rise
in the dollar cost of foreign-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 a Portfolio 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 Portfolio 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 Portfolios may also engage in currency "cross
hedging" when, in the opinion of the Adviser, the historical
relationship among foreign currencies suggests that a Portfolio
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.

          For additional information regarding futures contracts,
see Appendix B.

          OPTIONS ON FUTURES CONTRACTS. The Portfolios 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, a
Portfolio 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
Portfolio will suffer a loss equal to the price of the put. Where
it is projected that the value of securities to be acquired by a
Portfolio will increase prior to acquisition due to a market
advance or changes in interest or exchange rates, a Portfolio
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 Portfolio will suffer a loss equal to the price of the call,
but the securities which the Portfolio intends to purchase may be
less expensive.

          FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Each
Portfolio may enter into forward foreign currency exchange
contracts ("Forward Contracts") to attempt to minimize the risk
to the Portfolio from adverse changes in the relationship between
the U.S. dollar and foreign currencies. The Portfolios intend to
enter into Forward Contracts for hedging purposes similar to
those described above in connection with its transactions in
foreign currency futures contracts. In particular, a Forward
Contract to sell a currency may be entered into in lieu of the
sale of a foreign currency futures contract where a Portfolio
seeks to protect against an anticipated increase in the exchange
rate for a specific currency which could reduce the dollar value
of portfolio securities denominated in such currency. Conversely,
a Portfolio may enter into a Forward Contract to purchase a given
currency to protect against a projected increase in the dollar
value of securities denominated in such currency which the
Portfolio intends to acquire. A Portfolio also may enter into a
Forward Contract in order to assure itself of a predetermined
exchange rate in connection with a security denominated in a
foreign currency. The Portfolios may engage in currency "cross
hedging" when, in the opinion of the Adviser, the historical
relationship among foreign currencies suggests that a Portfolio
may achieve the same protection for a foreign security at a
reduced cost through the use of a Forward Contract relating to a
currency other than the U.S. dollar or the foreign currency in
which the security is denominated.

          If a hedging transaction in Forward 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 Contract.
Nevertheless, by entering into such Forward Contracts, a
Portfolio may be required to forego all or a portion of the
benefits which otherwise could have been obtained from favorable
movements in exchange rates.

          Each Portfolio has established procedures consistent
with the Commission's policies concerning purchases of foreign
currency through Forward Contracts. Accordingly, a Portfolio will
segregate and mark to market liquid assets in an amount at least
equal to the Portfolio's obligations under any Forward Contracts.

          OPTIONS ON FOREIGN CURRENCIES. Each Portfolio may
purchase and write options on foreign currencies for hedging
purposes or to increase return.

          For additional information on options on foreign
currencies, see Appendix B.

RISK FACTORS IN OPTIONS, FUTURES AND FORWARD TRANSACTIONS

          Risk of Imperfect Correlation of Hedging Instruments
With a Portfolio's PORTFOLIO. The Portfolios' abilities to hedge
all or a portion of their portfolios effectively through
transactions in options, Futures Contracts, options on Futures
Contracts, Forward Contracts and options on foreign currencies
depend on the degree to which price movements in the underlying
index or instrument correlate with price movements in the
securities that are the subject of the hedge. In the case of
futures and options based on an index, the portfolio will not
duplicate the components of the index, and in the case of futures
and options on fixed income securities, the portfolio securities
which are being hedged may not be the same type of obligation
underlying such contract. As a result, the correlation, to the
extent it exists, probably will not be exact.

          It should be noted that stock index futures contracts
or options based upon a narrower index of securities, such as
those of a particular industry group, may present greater risk
than options or futures based on a broad market index. This is
because a narrower index is more susceptible to rapid and extreme
fluctuations as a result of changes in the value of a small
number of securities.

          The trading of futures and options entails the
additional risk of imperfect correlation between movements in the
futures or option price and the price of the underlying index or
instrument. The anticipated spread between the prices may be
distorted due to the differences in the nature of the markets,
such as differences in margin requirements, the liquidity of such
markets and the participation of speculators in the futures
market. In this regard, trading by speculators in futures and
options has in the past occasionally resulted in market
distortions, which may be difficult or impossible to predict,
particularly near the expiration of such contracts.

          The trading of options on Futures Contracts also
entails the risk that changes in the value of the underlying
Futures Contract will not be fully reflected in the value of the
option.

          Further, with respect to options on securities, options
on foreign currencies, options on stock indexes and options on
Futures Contracts, the Portfolios are subject to the risk of
market movements between the time that the option is exercised
and the time of performance thereunder. This could increase the
extent of any loss suffered by a Portfolio in connection with
such transactions.

          If a Portfolio purchases futures or options in order to
hedge against a possible increase in the price of securities
before the Portfolio is able to invest its cash in such
securities, the Portfolio faces the risk that the market may
instead decline. If the Portfolio does not then invest in such
securities because of concern as to possible further market
declines or for other reasons, the Portfolio may realize a loss
on the futures or option contract that is not offset by a
reduction in the price of securities purchased.

          In writing a call option on a security, foreign
currency, index or Futures Contract, a Portfolio also incurs the
risk that changes in the value of the assets used to cover the
position will not correlate closely with changes in the value of
the option or underlying index or instrument. For example, when a
Portfolio writes a call option on a stock index, the securities
used as "cover" may not match the composition of the index, and
the Portfolio may not be fully covered. As a result, the
Portfolio could suffer a loss on the call which is not entirely
offset, or not offset at all, by an increase in the value of the
Portfolio's portfolio securities.

          The writing of options on securities, options on stock
indexes or options on Futures Contracts constitutes only a
partial hedge against fluctuations in the value of a Portfolio's
portfolio. When a Portfolio writes an option, it will receive
premium income in return for the holder's purchase of the right
to acquire or dispose of the underlying security or future or, in
the case of index options, cash. In the event that the price of
such an obligation does not rise sufficiently above the exercise
price of the option, in the case of a call, or fall below the
exercise price, in the case of a put, the option will not be
exercised and the Portfolio will retain the amount of the
premium, which will constitute a partial hedge against any
decline that may have occurred in the Portfolio's portfolio
holdings, or against the increase in the cost of the instruments
to be acquired.

          When the price of the underlying obligation moves
sufficiently in favor of the holder to warrant exercise of the
option, however, and the option is exercised, the Portfolio will
incur a loss which may only be partially offset by the amount of
the premium the Portfolio receives. Moreover, by writing an
option, a Portfolio may be required to forego the benefits which
might otherwise have been obtained from an increase in the value
of portfolio securities or a decline in the value of securities
to be acquired.

          In the event of the occurrence of any of the foregoing
adverse market events, a Portfolio's overall return may be lower
than if it had not engaged in the transactions described above.

          With respect to the writing of straddles on securities,
a Portfolio incurs the risk that the price of the underlying
security will not remain stable, that one of the options written
will be exercised and that the resulting loss will not be offset
by the amount of the premiums received. Such transactions,
therefore, while creating an opportunity for increased return by
providing a Portfolio with two simultaneous premiums on the same
security, nonetheless involve additional risk, because the
Portfolio may have an option exercised against it regardless of
whether the price of the security increases or decreases.

          If any of the foregoing adverse market events occurs, a
Portfolio's overall return may be lower than if it had not
engaged in the transactions described above.

          Potential Lack of a Liquid Secondary Market. Prior to
exercise or expiration, a futures or option position can be
terminated only by entering into a closing transaction. This
requires a liquid secondary market for such instruments on the
exchange, if any, on which the initial transaction was entered
into. There can be no assurance that a liquid secondary market
will exist for any particular contracts at any specific time. In
the absence of a liquid secondary market, it may not be possible
to close out a position held by a Portfolio, and the Portfolio
could be required to purchase or sell the instrument underlying
an option, make or receive a cash settlement or meet ongoing
variation margin requirements. Under such circumstances, if the
Portfolio has insufficient cash available to meet margin
requirements, it may be necessary to liquidate portfolio
securities at a time when, in the opinion of the Adviser, it is
otherwise disadvantageous to do so. The inability to close out
options and futures positions, therefore, could have an adverse
impact on the Portfolios' ability to hedge their portfolios
effectively, and could result in trading losses.

          The liquidity of a secondary market in a Futures
Contract or option thereon may be adversely affected by "daily
price fluctuation limits," established by exchanges, which limit
the amount of fluctuation in the price of a contract during a
single trading day. Once the daily limit has been reached in the
contract, no trades may be entered into at a price beyond the
limit, thus preventing the liquidation of open futures or option
positions and requiring traders to make additional margin
deposits. Prices of some Futures Contracts have in the past moved
to the daily limit on a number of consecutive trading days.

          The trading of Futures Contracts and options (including
options on Futures Contracts) is also subject to the risk of
trading halts, suspensions, exchange or clearing house equipment
failures, government intervention, insolvency of a brokerage firm
or clearing house and other disruptions of normal trading
activity, which could at times make it difficult or impossible to
liquidate existing positions or to recover excess variation
margin payments.

          The Staff of the Commission has taken the position that
over-the-counter options and the assets used as cover for
over-the-counter options are illiquid securities, unless certain
arrangements are made with the other party to the option contract
permitting the prompt liquidation of the option position. The
Portfolios will enter into those special arrangements only with
primary U.S. Government securities dealers recognized by the
Federal Reserve Bank of New York ("primary dealers"). Under these
special arrangements, the Fund will enter into contracts with
primary dealers which provide that each Portfolio has the
absolute right to repurchase an option it writes at any time at a
repurchase price which represents fair market value, as
determined in good faith through negotiation between the parties,
but which in no event will exceed a price determined pursuant to
a formula contained in the contract. Although the specific
details of the formula may vary between contracts with different
primary dealers, the formula will generally be based on a
multiple of the premium received by the Portfolio for writing the
option, plus the amount, if any, by which the option is
"in-the-money." The formula will also include a factor to account
for the difference between the price of the security and the
strike price of the option if the option is written
"out-of-the-money." Under such circumstances, the Portfolio only
needs to treat as illiquid that amount of the "cover" assets
equal to the amount by which (i) the formula price exceeds (ii)
any amount by which the market value of the security subject to
the option exceeds the exercise price of the option (the amount
by which the option is "in-the-money"). Although each agreement
will provide that the Portfolio's repurchase price shall be
determined in good faith (and that it shall not exceed the
maximum determined pursuant to the formula), the formula price
will not necessarily reflect the market value of the option
written; therefore, the Portfolio might pay more to repurchase
the option contract than the Portfolio would pay to close out a
similar exchange-traded option.

          MARGIN. Because of low initial margin deposits made
upon the opening of a futures position and the writing of an
option, such transactions involve substantial leverage. As a
result, relatively small movements in the price of the contract
can result in substantial unrealized gains or losses. However, to
the extent the Portfolios purchase or sell Futures Contracts and
options on Futures Contracts and purchase and write options on
securities and securities indexes for hedging purposes, any
losses incurred in connection therewith should, if the hedging
portfolio is successful, be offset, in whole or in part, by
increases in the value of securities held by the Portfolio or
decreases in the prices of securities the Portfolio intends to
acquire. When a Portfolio writes options on securities or options
on stock indexes for other than hedging purposes, the margin
requirements associated with such transactions could expose the
Portfolio to greater risk.

          TRADING AND POSITION LIMITS. The exchanges on which
futures and options are traded may impose limitations governing
the maximum number of positions on the same side of the market
and involving the same underlying instrument which may be held by
a single investor, whether acting alone or in concert with others
(regardless of whether such contracts are held on the same or
different exchanges or held or written in one or more accounts or
through one or more brokers). In addition, the CFTC and the
various contract markets have established limits referred to as
"speculative position limits" on the maximum net long or net
short position which any person may hold or control in a
particular futures or option contract. An exchange may order the
liquidation of positions found to be in violation of these limits
and may impose other sanctions or restrictions.

          RISKS OF OPTIONS ON FUTURES CONTRACTS. The amount of
risk a Portfolio assumes when it purchases an option on a Futures
Contract is the premium paid for the option, plus related
transaction costs. In order to profit from an option purchased,
however, it may be necessary to exercise the option and to
liquidate the underlying Futures Contract, subject to the risks
of the availability of a liquid offset market described herein.
The writer of an option on a Futures Contract is subject to the
risks of commodity futures trading, including the requirement of
initial and variation margin payments, as well as the additional
risk that movements in the price of the option may not correlate
with movements in the price of the underlying security, index,
currency or Futures Contract.

          RISKS OF FORWARD CONTRACTS, FOREIGN CURRENCY FUTURES
CONTRACTS AND OPTIONS THEREON, OPTIONS ON FOREIGN CURRENCIES AND
OVER-THE-COUNTER OPTIONS ON SECURITIES. Each Portfolio 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 such Act. Transactions in Forward Contracts, as well as
futures and options on foreign currencies, are subject to all of
the correlation, liquidity and other risks outlined above. In
addition, however, such transactions are subject to the risk of
governmental actions affecting trading in or the prices of
currencies underlying such contracts, which could restrict or
eliminate trading and could have a substantial adverse effect on
the value of positions held by a Portfolio. In addition, the
value of such positions could be adversely affected by a number
of other complex political and economic factors applicable to the
countries issuing the underlying currencies.

          Further, unlike trading in most other types of
instruments, there is no systematic reporting of last sale
information with respect to the foreign currencies underlying
contracts thereon. As a result, the available information on
which trading decisions will be based may not be as complete as
the comparable data on which a Portfolio makes investment and
trading decisions in connection with other transactions.
Moreover, because the foreign currency market is a global,
twenty-four hour market, events could occur on that market but
will not be reflected in the forward, futures or options markets
until the following day, thereby preventing the Portfolios from
responding to such events in a timely manner.

          Settlements of exercises of over-the-counter Forward
Contracts or foreign currency options generally must occur within
the country issuing the underlying currency, which in turn
requires traders to accept or make delivery of such currencies in
conformity with any U.S. or foreign restrictions and regulations
regarding the maintenance of foreign banking relationships and
fees, taxes or other charges.

          Unlike transactions entered into by the Portfolios in
Futures Contracts and exchange-traded options, options on foreign
currencies, Forward Contracts and over-the-counter options on
securities and securities indexes are not traded on contract
markets regulated by the CFTC or (with the exception of certain
foreign currency options) the Commission. Such instruments are
instead 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, that are subject to Commission regulation. 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 could lose amounts substantially in excess of the initial
investment due to the margin and collateral requirements
associated with such positions.

          In addition, over-the-counter transactions can be
entered into only with a financial institution willing to take
the opposite side, as principal, of a Portfolio's position unless
the institution acts as broker and is able to find another
counterparty willing to enter into the transaction with the
Portfolio. Where no such counterparty is available, it will not
be possible to enter into a desired transaction. There also may
be no liquid secondary market in the trading of over-the-counter
contracts, and a Portfolio could be required to retain options
purchased or written, or Forward Contracts entered into, until
exercise, expiration or maturity. This in turn could limit the
Portfolio's ability to profit from open positions or to reduce
losses experienced, and could result in greater losses.

          Further, over-the-counter transactions are not subject
to the guarantee of an exchange clearing house, and a Portfolio
will therefore be subject to the risk of default by, or the
bankruptcy of, the financial institution serving as its
counterparty. A Portfolio will enter into an over-the-counter
transaction only with parties whose creditworthiness has been
reviewed and found to be satisfactory by the Adviser.

          Transactions in over-the-counter options on foreign
currencies are subject to a number of conditions regarding the
commercial purpose of the purchaser of such option. The
Portfolios are not able to determine at this time whether or to
what extent additional restrictions on the trading of
over-the-counter options on foreign currencies may be imposed at
some point in the future, or the effect that any such
restrictions may have on the hedging strategies to be implemented
by them.

          For additional information regarding the risks of
forward contracts, foreign currency futures contracts and options
thereon, options on foreign currencies and over-the-counter
options on securities, see Appendix B.

          RESTRICTIONS ON THE USE OF FUTURES AND OPTION
CONTRACTS. Under applicable regulations, when a Portfolio enters
into transactions in Futures Contracts and options on Futures
Contracts, that Portfolio is required to segregate liquid assets
with its custodian which, together with any initial margin
deposits, are equal to the aggregate market value of the Futures
Contracts and options on Futures Contracts that it purchases.
Each Portfolio has adopted the additional restriction that it
will not enter into a Futures Contract if, immediately
thereafter, the value of securities and other obligations
underlying all such Futures Contracts would exceed 50% of a
Portfolio's total assets. Moreover, a Portfolio will not purchase
put and call options if as a result more than 10% of its total
assets would be invested in such options.

          For additional information regarding restrictions on
the use of futures and options contracts, see Appendix B.

          ECONOMIC EFFECTS AND LIMITATIONS. Income earned by a
Portfolio from its hedging activities will be treated as capital
gains and, if not offset by net realized capital losses incurred
by a Portfolio, will be distributed to shareholders in taxable
distributions. Although a gain from such transactions may hedge
against a decline in the value of a Portfolio's portfolio
securities, that gain, to the extent not offset by losses, will
be distributed in light of certain tax considerations and will
constitute a distribution of that portion of the value preserved
against decline.

          No Portfolio will "over-hedge," that is, a Portfolio
will not maintain open short positions in futures or options
contracts if, in the aggregate, the market value of its open
positions exceeds the current market value of its securities
portfolio plus or minus the unrealized gain or loss on such open
positions, adjusted for the historical volatility relationship
between the portfolio and futures and options contracts.

          Each Portfolio's ability to employ the options and
futures strategies described above will depend in part on the
availability of liquid markets in such instruments. Markets in
financial futures and related options are still developing. It is
impossible to predict the amount of trading interest that may
hereafter exist in various types of options or futures. Therefore
no assurance can be given that a Portfolio will be able to use
these instruments effectively for the purposes set forth above.

          The Portfolios' ability to use options, futures and
forward contracts may be limited by tax considerations. In
particular, tax rules might accelerate or adversely affect the
character of the income earned on such contracts. In addition,
differences between each Portfolio's book income (upon the basis
of which distributions are generally made) and taxable income
arising from its hedging activities may result in returns of
capital distributions, and in some circumstances, distributions
in excess of a Portfolio's book income may be required to be made
in order to meet tax requirements.

          FUTURE DEVELOPMENTS. The foregoing discussion relates
to each Portfolio's proposed use of Futures Contracts, Forward
Contracts, options, and options on Futures Contracts currently
available. As noted above, the relevant markets and related
regulations are evolving. In the event of future regulatory or
market developments, each Portfolio may also use additional types
of futures contracts or options and other investment techniques
for the purposes set forth above.

INVESTMENT RESTRICTIONS

          Except as described below and except as otherwise
specifically stated in the Prospectus or this SAI, the investment
policies of each Portfolio set forth in the Prospectus and in
this SAI are not fundamental and may be changed without
shareholder approval.

          Each Portfolio has adopted the following fundamental
investment restrictions, which may not be changed without
Shareholder Approval, as defined in the caption "General
Information," below.

          Neither the AllianceBernstein Wealth Appreciation
Strategy Portfolio nor the AllianceBernstein Balanced Wealth
Strategy Portfolio will:

          1. make loans except through (a) the purchase of debt
obligations in accordance with its investment objective and
policies; (b) the lending of portfolio securities; or (c) the use
of repurchase agreements;

          2. borrow money or issue senior securities except to
the extent permitted by the 1940 Act;

          3. pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings;

          4. invest in companies for the purpose of exercising
control;

          5. (a) purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in real
estate or interests therein and securities that are secured by
real estate, provided such securities are securities of the type
in which a Portfolio may invest; (b) purchase or sell commodities
or commodity contracts, including futures contracts (except
foreign currencies, futures on securities, currencies and
securities indices and forward contracts or contracts for the
future acquisition or delivery of securities and foreign
currencies and other similar contracts and options on the
foregoing); or (c) act as an underwriter of securities, except
that a Portfolio may acquire restricted securities under
circumstances in which, if such securities were sold, that
Portfolio might be deemed to be an underwriter for purposes of
the Securities Act; or

          6. (a) invest more than 5% of its total assets in the
securities of any one issuer (other than U.S. Government
securities, repurchase agreements relating thereto, and
securities of other investment companies), although up to 25% of
a Portfolio's total assets may be invested without regard to this
restriction; or (b) invest more than 25% or more of its total
assets in the securities of any one industry.

          Whenever any investment restriction states a maximum
percentage of a Portfolio's assets which may be invested in any
security or other asset, it is intended that such maximum
percentage limitation be determined immediately after and as a
result of such Portfolio's acquisition of such securities or
other assets. Accordingly, any later increase or decrease beyond
the specified limitation resulting from a change in value or net
asset value will not be considered a violation of such percentage
limitation.

OTHER INVESTMENT POLICIES

          REPURCHASE AGREEMENTS. Each Portfolio, except the
AllianceBernstein Total Return Portfolio and the
AllianceBernstein Technology Portfolio, may invest in repurchase
agreements pertaining to the types of securities in which it
invests. A repurchase agreement arises when a buyer purchases a
security and simultaneously agrees to resell it to the vender at
an agreed-upon future date, normally one day or a few days later.
The resale price is greater than the purchase price, reflecting
an agreed-upon market rate which is effective for the period of
time the buyer's money is invested in the security and which is
not related to the coupon rate on the purchased security. Such
agreements permit a Portfolio to keep all of its assets at work
while retaining overnight flexibility in pursuit of investments
of a longer-term nature. Each Portfolio requires continual
maintenance of collateral held by the Fund's custodian in an
amount equal to, or in excess of, the market value of the
securities that are the subject of the agreement. In the event
that a vendor defaulted on its repurchase obligation, a Portfolio
might suffer a loss to the extent that the proceeds from the sale
of the collateral were less than the repurchase price. If the
vendor became bankrupt, the Portfolio might be delayed in, or
prevented from, selling the collateral. Repurchase agreements may
be entered into with member banks of the Federal Reserve System
or primary dealers (as designated by the Federal Reserve Bank of
New York) in U.S. Government Securities. Repurchase agreements
often are for short periods such as one day or a week, but may be
longer.

          ILLIQUID SECURITIES. The following investment policy,
which is not fundamental and may be changed by the vote of the
Board of Directors, is applicable to each of the Fund's
Portfolios.

          A Portfolio will not invest in illiquid securities if
immediately after such investment more than 10% or, in the case
of the AllianceBernstein Americas Government Income Portfolio,
AllianceBernstein Global Dollar Government Portfolio,
AllianceBernstein Utility Income Portfolio, AllianceBernstein
Technology Portfolio, AllianceBernstein Small Cap Growth
Portfolio, AllianceBernstein Real Estate Investment Portfolio,
AllianceBernstein Wealth Appreciation Strategy Portfolio and
AllianceBernstein Balanced Wealth Strategy Portfolio, 15%, of the
Portfolio's total assets (taken at market value) would be
invested in such securities. For this purpose, illiquid
securities include, among others, (a) securities that are
illiquid by virtue of the absence of a readily available market
or legal or contractual restriction or resale, (b) options
purchased by the Portfolio over-the-counter and the cover for
options written by the Portfolio over-the-counter and (c)
repurchase agreements not terminable within seven days.

          Securities that have legal or contractual restrictions
on resale but have a readily available market are not deemed
illiquid for purposes of this limitation. The Adviser will
monitor the liquidity of such restricted securities under the
supervision of the Board of Directors.

          Historically, illiquid securities have included
securities subject to contractual or legal restrictions on resale
because they have not been registered under the Securities Act,
securities that are otherwise not readily marketable and
repurchase agreements having a maturity of longer than seven
days. Securities which have not been registered under the
Securities Act are referred to as private placements or
restricted securities and are purchased directly from the issuer
or in the secondary market. Mutual funds do not typically hold a
significant amount of these restricted 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 might also have to register such restricted
securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a
public offering of securities.

          In recent years, however, a large institutional market
has developed for certain securities that are not registered
under the Securities Act, including repurchase agreements,
commercial paper, foreign securities, municipal securities and
corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security
can be readily resold or on an issuer's ability to honor a demand
for repayment. The fact that there are contractual or legal
restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such
investments.

          During the coming year, each Portfolio may invest up to
5% of its total assets in restricted securities issued under
Section 4(2) of the Securities Act, which exempts from
registration transactions by an issuer not involving any public
offering. Section 4(2) instruments are restricted in the sense
that they can only be resold through the issuing dealer and only
to institutional investors; they cannot be resold to the general
public without registration.

          Rule 144A under 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 a Portfolio could, however, affect adversely
the marketability of such portfolio securities, and the Portfolio
might be unable to dispose of such securities promptly or at
reasonable prices. Rule 144A has already produced enhanced
liquidity for many restricted securities, and market liquidity
for such securities may continue to expand as a result of this
regulation and the consequent inception of the PORTAL System
sponsored by the NASD. A Portfolio's investments in Rule 144A
eligible securities are not subject to the limitations described
above under Section 4(2).

          The Adviser, acting under the supervision of the Board
of Directors, will monitor the liquidity of restricted securities
in each of the Fund's Portfolios that are eligible for resale
pursuant to Rule 144A. In reaching liquidity decisions, the
Adviser will consider, among others, the following factors: (i)
the frequency of trades and quotes for the security; (ii) the
number of dealers making quotations to purchase or sell the
security; (iii) the number of other potential purchasers of the
security; (iv) the number of dealers undertaking to make a market
in the security; (v) the nature of the security 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 (vi) any applicable Commission
interpretation or position with respect to such type of
securities.

          FORWARD COMMITMENTS. The use of forward commitments
enables the Fund's Portfolios to protect against anticipated
changes in interest rates and prices. For instance, in periods of
rising interest rates and falling bond prices, a Portfolio might
sell securities in its portfolio on a forward commitment basis to
limit its exposure to falling prices. In periods of falling
interest rates and rising bond prices, a Portfolio might sell a
security in its portfolio and purchase the same or a similar
security on a when-issued or forward commitment basis, thereby
obtaining the benefit of currently higher cash yields. However,
if the Adviser were to forecast incorrectly the direction of
interest rate movements, a Portfolio might be required to
complete such when-issued or forward transactions at prices
inferior to then current market values.

          A Portfolio's right to receive or deliver a security
under a forward commitment may be sold prior to the settlement
date, but the Portfolio will enter into forward commitments only
with the intention of actually receiving or delivering the
securities, as the case may be. To facilitate such transactions,
the Fund's custodian will maintain, in the separate account of
each Portfolio, cash or liquid high-grade Government Securities
having value equal to, or greater than, any commitments to
purchase securities on a forward commitment basis and, with
respect to forward commitments to sell portfolio securities of a
Portfolio, the portfolio securities themselves.

          UNRATED SECURITIES. Unrated securities will also be
considered by certain Portfolios when Alliance 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 Portfolio to a degree comparable to that
of rated securities which are consistent with the Portfolio's
objective and policies.

          GENERAL. Whenever any investment policy or restriction
states a minimum or maximum percentage of a Portfolio's assets
which may be invested in any security or other asset, it is
intended that such minimum or maximum percentage limitation be
determined immediately after and as a result of the Portfolio's
acquisition of such security or other asset. Accordingly, any
later increase or decrease in percentage beyond the specified
limitations resulting from a change in values or net assets will
not be considered a violation.

          The Fund has voluntarily agreed that each Portfolio
with the ability to invest in foreign issuers will adhere to the
foreign security diversification guidelines promulgated by
certain State Insurance Departments. Pursuant to these
guidelines, each such Portfolio will invest in issuers from a
minimum of five different foreign countries. This minimum will be
reduced to four different foreign countries when foreign
securities comprise less than 80% of the Portfolio's net asset
value, three different foreign countries when foreign securities
comprise less than 60% of the Portfolio's net asset value, two
different foreign countries when foreign securities comprise less
than 40% of the Portfolio's net asset value and one foreign
country when foreign securities comprise less than 20% of the
Portfolio's net asset value. The Fund has also voluntarily agreed
that each Portfolio that may invest in foreign securities will
limit its investment in the securities of issuers located in any
one country to 20% of the Portfolio's net asset value, except
that the Portfolio may have an additional 15% of its net asset
value invested in securities of issuers located in Australia,
Canada, France, Japan, the United Kingdom or Germany.

          In addition, the Fund has adopted an investment policy,
which is not designated a "fundamental policy" within the meaning
of the 1940 Act, of intending to have each Portfolio comply at
all times with the diversification requirements prescribed in
Section 817(h) of the Code or any successor thereto and the
applicable Treasury Regulations thereunder. This policy may be
changed upon notice to shareholders of the Fund, but without
their approval.

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

                      MANAGEMENT OF THE FUND

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

Board of Directors Information

          The business and affairs of the Fund are managed under
the direction of the Board of Directors. Certain information
concerning the Fund's Directors is set forth below.



                                                               PORTFOLIOS
                                                               IN FUND         OTHER
NAME, ADDRESS AND               PRINCIPAL                      COMPLEX         DIRECTORSHIPS
AGE OF DIRECTOR                 OCCUPATION(S)                  OVERSEEN        HELD
(YEARS OF SERVICE*)             DURING PAST 5 YEARS            BY DIRECTOR     BY DIRECTOR
- -------------------             -------------------            -----------     -----------

DISINTERESTED DIRECTORS
                                                                         
Chairman of the Board
William H. Foulk, Jr.,          Investment adviser and an         116             None
#+ 71,                          independent consultant.  He
2 Sound View Drive,             was formerly Senior Manager
Suite 100                       of Barrett Associates, Inc.,
Greenwich, CT 06830 (14)        a registered investment
                                adviser, with which he had
                                been associated since prior
                                to 1999.  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.

Ruth Block,#+ 73,               Formerly Executive Vice            96             None
500 S.E. Mizner Blvd.           President and Chief
Boca Raton, FL 33432 (12)       Insurance Officer of The
                                Equitable Life Assurance Society
                                of the United States; Chairman
                                and Chief Executive Officer of
                                Evlico; Director of Avon, BP (oil
                                and gas), Ecolab Incorporated
                                (specialty chemicals), Tandem
                                Financial Group, Donaldson,
                                Lufkin & Jenrette Securities
                                Corporation; former Governor at
                                Large, National Association of
                                Securities Dealers, Inc.

David H. Dievler,#+ 74,         Independent consultant.           100             None
P.O. Box 167,                   Until December 1994 he was
Spring Lake, NJ 07762 (14)      Senior Vice President of
                                Alliance Capital Management
                                Corporation ("ACMC") responsible
                                for mutual fund administration.
                                Prior to joining ACMC in 1984 he
                                was Chief Financial Officer of
                                Eberstadt Asset Management since
                                1968. Prior to that, he was a
                                Senior Manager at Price
                                Waterhouse & Co. Member of
                                American Institute of Certified
                                Public Accountants since 1953.

John H. Dobkin,#+ 62,           Consultant.  Formerly              98             None
P.O. Box 12,                    President of Save Venice,
Annandale, NY 12504 (12)        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
                                and during 1988-1992, Director
                                and Chairman of the Audit
                                Committee of ACMC.

Clifford L. Michel,#+ 64,       Senior Counsel of the law          97             Placer Dome,
15 St. Bernard's Road,          firm of Cahill Gordon &                           Inc.
Gladstone, NJ 07934 (12)        Reindel since February 2001
                                and a partner of that firm
                                for more than twenty-five
                                years prior thereto.  He is
                                President and Chief
                                Executive Officer of Wenonah
                                Development Company
                                (investments) and a Director
                                of the Placer Dome, Inc.
                                (mining).

Donald J. Robinson,#+ 69,       Senior Counsel to the law          96             None
98 Hell's Peak Road,            firm of Orrick, Herrington &
Weston, VT 05161 (8)            Sutcliffe LLP since prior to
                                1999. Formerly a senior
                                partner and a member of the
                                Executive Committee of that
                                firm. He was also a member and
                                Chairman of the Municipal
                                Securities Rulemaking Board and
                                Trustee of the Museum of the City
                                of New York.

- ----------------
*   There is no stated term of office for the Fund's Directors.
#   Member of the Audit Committee.
+   Member of the Nominating Committee.

          The Fund's Board of Directors has two standing
committees of the Board -- an Audit Committee and a Nominating
Committee. The members of the Audit and Nominating Committees are
identified above. The function of the Audit Committee is to
assist the Board of Directors in its oversight of Fund's
financial reporting process. The Audit Committee met four times
during the Fund's most recently completed fiscal year. The
function of the Nominating Committee is to nominate persons to
fill any vacancies or newly created positions on the Board of
Directors. The Nominating Committee did not meet during the
Fund's most recently completed fiscal year.

          The Nominating Committee has a charter and, pursuant to
the charter, the Nominating Committee will consider candidates
for nomination as a director submitted by a shareholder or group
of shareholders who have owned at least 5% of a Portfolio's
common stock for at least two years at 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 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 Fund will make a public
notice specifying the deadline for the submission. The Fund will
make the public notice at least 30 days prior to the deadline for
the submission, which is expected to be approximately 120 days
prior to the anticipated date of the proxy statement for the
annual meeting. The Fund may make the public notice in a
shareholder report or other mailing to shareholders or by other
means deemed by the Nominating Committee or the Board to be
reasonably calculated to inform shareholders.

          Shareholders submitting a candidate for consideration
by the Nominating Committee must provide the following
information to the 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 a Portfolio 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 a Portfolio 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 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 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 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 Nominating
Committee will not consider self-nominated candidates. The
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,
the candidate's ability to qualify as a disinterested Director
and such other criteria as the Nominating Committee determines to
be relevant in light of the existing composition of the Board and
any anticipated vacancies or other factors.

          In approving the most recent annual continuance of the
Fund's Advisory Agreement, the Directors considered all
information they deemed reasonably necessary to evaluate the
terms of the Advisory Agreement. The principal areas of review by
the Directors were the nature and quality of the services
provided by the Adviser and the reasonableness of the fees
charged for those services. These matters were considered by the
disinterested directors meeting separately from the full Board
with experienced counsel that is independent of the Adviser.

          The Directors' evaluation of the quality of the
Adviser's services took into account their knowledge and
experience gained through meetings with and reports of the
Adviser's senior management, portfolio managers and
administrative personnel over the course of the preceding year.
Both short-term and long-term investment performance of each
Portfolio, as well as senior management's attention to any
portfolio management issues, were considered. Each Portfolio's
current and longer-term performance were compared to its
performance benchmark and to that of competitive funds and other
funds with similar investment objectives. The Directors also
considered the expense limitation agreements for certain
Portfolios that set expense caps on overall Portfolio expenses
and provide for waiver of fees by the Adviser or reimbursement if
needed to meet such caps, the scope and quality of the in-house
research capability of the Adviser and other resources dedicated
to performing its services. The quality of administrative and
other services, including the Adviser's role in coordinating the
activities of the Fund's other service providers, were considered
in light of on-going reports by management as to compliance with
investment policies and applicable laws and regulations and of
related reports by management and the Fund's independent auditors
in periodic meetings with the Fund's Audit Committee.

          In reviewing the fees payable under the Advisory
Agreement, the Directors compared the fees and overall expense
levels of each Portfolio to those of competitive funds and other
funds with similar investment objectives. The information on
advisory fees and expense ratios, as well as performance data,
included both information compiled by the Adviser and information
compiled by an independent data service. The Directors also
considered the fees of each Portfolio as a percentage of assets
at different asset levels and possible economies of scale to the
Adviser. The Directors considered information provided by the
Adviser concerning the Adviser's profitability with respect to
each Portfolio, including the assumptions and methodology used in
preparing the profitability information, in light of applicable
case law relating to advisory fees. For these purposes, the
Directors took into account not only the fees paid by each
Portfolio, but also so-called fallout benefits to the Adviser,
such as the engagement of affiliates of the Adviser to provide
distribution, brokerage and transfer agency services to the Fund,
the benefits of research made available to the Adviser by reason
of brokerage commissions generated by the Fund's securities
transactions, and that the Advisory Agreement provides that the
Fund reimburses the Adviser for the cost of providing certain
administrative services. In evaluating each Portfolio's advisory
fees, the Directors also took into account the demands,
complexity and quality of the investment management of the
Portfolios.

          The Directors also considered the business reputation
of the Adviser and its financial resources. The Directors
evaluated the procedures and systems adopted by the Adviser that
are designed to fulfill the Adviser's fiduciary duty to each
Portfolio with respect to possible conflicts of interest,
including the Adviser's code of ethics (regulating the personal
trading of its officers and employees) and the allocation of
trades among its various investment advisory clients. The
Directors also considered information concerning policies and
procedures of the Adviser with respect to the execution of
portfolio transactions.

          No single factor was considered in isolation or to be
determinative to the decision of the Directors to approve
continuance of the Advisory Agreement. Rather, the Directors
concluded in light of a weighing and balancing of all factors
considered that it was in the best interests of each Portfolio to
continue its Advisory Agreement without modification to its
terms, including the fees charged for services thereunder.

          The dollar range of the Fund's securities owned by each
Director and the aggregate dollar range of securities of 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 RANGE
                                                    OF EQUITY SECURITIES IN
                          DOLLAR RANGE OF EQUITY    THE ALLIANCEBERNSTEIN
                          SECURITIES IN THE FUND    FUND COMPLEX AS OF
                          AS OF DECEMBER 31, 2003   DECEMBER 31, 2003
                          -----------------------   -----------------------

Ruth Block                   None                   Over $100,000
David H. Dievler             None                   Over $100,000
John H. Dobkin               None                   Over $100,000
William H. Foulk, Jr.        None                   Over $100,000
Clifford L. Michel           None                   Over $100,000
Donald J. Robinson           None                   Over $100,000
Officer Information

Certain information concerning the Fund's officers is set forth
below.



                            Position(s)                 Principal Occupation
Name, Address* and (Age)    Held with Fund              During Past 5 Years
- ------------------------    --------------              -------------------

                                                  
Marc O. Mayer, (41)         President                   Executive Vice President of
                                                        ACMC** since 2001; prior
                                                        thereto, he was Chief
                                                        Executive Officer of SCB & Co.
                                                        and its predecessor since
                                                        prior to 1999.

Kathleen A. Corbet, (44)    Senior Vice President       Executive Vice President of
                                                        ACMC,** with which she has
                                                        been associated since
                                                        prior to 1999.

Andrew M. Aran, (47)        Vice President              Senior Vice President
                                                        of ACMC,** with which he has
                                                        been associated since prior to
                                                        1999.

Bruce K. Aronow, (37)       Vice President              Vice President of ACMC,** with
                                                        which he has been associated
                                                        since 1999.  Prior thereto, he
                                                        was a Vice President at
                                                        INVESCO.

Edward D. Baker, III, (53)  Vice President              Senior Vice President and
                                                        Chief Investment Officer -
                                                        Emerging Markets of ACMC,**
                                                        with which he has been
                                                        associated since prior to 1999.

Michael R. Baldwin, (46)    Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Thomas J. Bardong, (59)     Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Stephen Beinhacker, (39)    Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Matthew D. W. Bloom, (47)   Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Russell I. Brody, (37)      Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Frank V. Caruso, (47)       Vice President              Senior Vice President of
                                                        Shields/ACMC,** with which he
                                                        has been associated since
                                                        prior to 1999.

John F. Chiodi, (38)        Vice President              Vice President of ACMC,** with
                                                        which he has been associated
                                                        since prior to 1999.

Michael P. Curcio, (38)     Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Henry S. D'Auria, (42)      Vice President              Senior Vice President of
                                                        ACMC** since October 2000 and
                                                        Chief Investment Officer of
                                                        Emerging Markets Value
                                                        Equities and Co-Chief
                                                        Investment Officer of
                                                        International Value Equities
                                                        since June 2003.  Prior
                                                        thereto, he was Director of
                                                        Research-Small Cap Value
                                                        Equities and Director of
                                                        Research-Emerging Markets
                                                        Value Equities of Sanford C.
                                                        Bernstein & Co., Inc. ("SCB")
                                                        since prior to 1999.

Paul J. DeNoon, (42)        Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Joseph C. Dona, (43)        Vice President              Vice President of ACMC,** with
                                                        which he has been associated
                                                        since prior to 1999.

Marilyn G. Fedak, (57)      Vice President              Senior Vice President and
                                                        Chief Investment Officer -
                                                        U.S. Value Equities and an
                                                        Executive Vice President at
                                                        ACMC** since October 2000.
                                                        Prior thereto, she was Chief
                                                        Investment Officer and
                                                        Chairman of the U.S. Equity
                                                        Investment Policy Group at SCB
                                                        & Co. since prior to 1999.

Norman M. Fidel, (57)       Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Eric J. Franco, (44)        Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Gina M. Griffin, (44)       Vice President              Senior Vice President of
                                                        ACMC,** with which she
                                                        has been associated
                                                        since prior to 1999.

Geoffrey Hauck, (39)        Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

William Johnston, (43)      Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Thomas Kamp, (42)           Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

James E. Kennedy, Jr., (43) Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

David A. Kruth, (40)        Vice President              Vice President of ACMC,** with
                                                        which he has been associated
                                                        since 1999.

Susanne M. Lent, (34)       Vice President              Vice President of ACMC,** with
                                                        which she has been associated
                                                        since 1999.

Alan E. Levi, (54)          Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Michael J. Levy, (34)       Vice President              Assistant Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Giulio A. Martini, (48)     Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Seth J. Masters, (44)       Vice President              Senior Vice President of
                                                        ACMC** and Chief Investment
                                                        Officer of Style Blend and
                                                        Core Equity Services and
                                                        headed U.S. and Global Style
                                                        Blend teams at ACMC** since
                                                        October 2000.  Prior thereto,
                                                        he was Chief Investment
                                                        Officer for Emerging Markets
                                                        Value at SCB since prior to
                                                        1999.

Melanie A. May, (34)        Vice President              Vice President of ACMC** since
                                                        2000; prior thereto, she was
                                                        as Assistant Vice President at
                                                        SCB since prior to 1999.

Michael Mon, (35)           Vice President              Vice President of ACMC,** with
                                                        which he has been associated
                                                        since June 1999.  Prior
                                                        thereto, he was a Portfolio
                                                        Manager at Brundage, Story and
                                                        Rose since 1999.

Ranji H. Nagaswami, (40)    Vice President              Senior Vice President of
                                                        ACMC** since 1999.  Prior
                                                        thereto, she was a managing
                                                        director and co-head of U.S.
                                                        Fixed Income at UBS Brinson
                                                        since prior to 1999.

Daniel Nordby, (60)         Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Jimmy K. Pang, (30)         Vice President              Vice President of ACMC,** with
                                                        which he has been associated
                                                        since prior to 1999.

Raymond J. Papera, (48)     Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Joseph G. Paul, (44)        Vice President              Senior Vice President of
                                                        ACMC** and Chief Investment
                                                        Officer - Small Cap Value
                                                        Equities since 2002.  He is
                                                        also Chief Investment Officer
                                                        of Advanced Value at ACMC**
                                                        since October 2000 and held
                                                        the same position at SCB since
                                                        prior to 1999.

Douglas J. Peebles, (38)    Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Jeffrey S. Phlegar, (37)    Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Daniel G. Pine, (52)        Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Michael J. Reilly, (39)     Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Paul C. Rissman, (47)       Vice President              Senior Vice President of
                                                        ACMC,** with which he
                                                        has been associated since
                                                        prior to 1999.

Thomas A. Schmitt, (46)     Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Jane Scheirov, (34)         Vice President              Senior Vice President of
                                                        ACMC,** with which she has
                                                        been associated since prior to
                                                        1999.

Karen Sesin, (45)           Vice President              Senior Vice President of
                                                        ACMC,** with which she has
                                                        been associated since 1999.
                                                        Prior thereto, she was a Chief
                                                        Investment Officer for
                                                        Waycrosse, Inc., an investment
                                                        company affiliated with
                                                        Cargill, Inc., since prior to
                                                        1999.

Lawrence J. Shaw, (53)      Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Kevin F. Simms, (38)        Vice President              Senior Vice President and
                                                        Director of Research for
                                                        International Value and Global
                                                        Value Equities at ACMC** since
                                                        October 2000.  Prior thereto,
                                                        he was Director of Research of
                                                        SCB & Co. since 1999.

Michael A. Snyder, (42)     Vice President              Senior Vice President of
                                                        ACMC** since May, 2001.  Prior
                                                        thereto, he was a Managing
                                                        Director in the high yield
                                                        asset management group at
                                                        Donaldson, Lufkin & Jenrette
                                                        Corporation since prior to
                                                        1999.

Annie C. Tsao, (51)         Vice President              Senior Vice President of
                                                        ACMC,** with which she
                                                        has been associated since
                                                        prior to 1999.

Francis X. Souzzo, (46)     Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Christopher M. Toub, (44)   Vice President              Senior Vice President of
                                                        ACMC,** with which he has been
                                                        associated since prior to 1999.

Jean Van De Walle, (45)     Vice President              Vice President of ACMC,** with
                                                        which he has been associated
                                                        since prior to 1999.

Richard A. Winge, (52)      Vice President              Senior Vice President and
                                                        Managing Director of
                                                        AllianceBernstein Investment
                                                        and Research Management, Inc.
                                                        ("ABIRM"),** with which he has
                                                        been associated since prior to
                                                        1999.

Aaron J. Hoffman, (31)      Assistant Vice President    Vice President of ACMC,** with
                                                        which he has been associated
                                                        since prior to 1999.

Patricia Post, (35)         Assistant Vice President    Assistant Vice President of
                                                        ACMC,** with which she has
                                                        been associated since prior to
                                                        1999.

Mark D. Gersten, (53)       Treasurer and               Senior Vice President of AGIS**
                            Chief Financial             and Vice President of ABIRM,**
                            Officer                     with which he has been
                                                        associated since prior to 1999.

Mark R. Manley, (41)        Secretary                   Senior Vice President and Acting
                                                        General Counsel of ACMC,** with
                                                        which he has been associated
                                                        since
                                                        prior to 1999.

Andrew L. Gangolf, (49)     Assistant Secretary         Senior Vice President and
                                                        Assistant General Counsel of
                                                        ABIRM,** with which he has
                                                        been associated since prior to
                                                        1999.

Thomas R. Manley, (52)      Controller                  Vice President of ACMC,** with
                                                        which he has been associated
                                                        since prior to 1999.


- -------------------
*    The address for each of the Fund's officers is 1345 Avenue
     of the Americas, New York, NY 10105.
**   ACMC, ABIRM and AGIS are affiliates of the Fund.

               The Fund does not pay any fees to, or reimburse
expenses of, its Directors who are considered "interested
persons" of the Fund. The aggregate compensation paid by the Fund
to each of the Directors during the Fund's fiscal year ended
December 31, 2003, the aggregate compensation paid to each of the
Directors during calendar year 2003 by the AllianceBernstein Fund
Complex, and the total number of registered investment companies
(and separate investment portfolios within those 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 registered investment
company in the AllianceBernstein Fund Complex provides
compensation in the form of pension or retirement benefits to any
of its directors or trustees.


                                       TOTAL NUMBER
                                                                OF REGISTERED
                                                                INVESTMENT        TOTAL NUMBER
                                                                COMPANIES         OF INVESTMENT
                                                                IN THE            PORTFOLIOS IN
                                               TOTAL            ALLIANCE-         THE ALLIANCE-
                                               COMPENSATION     BERNSTEIN         BERNSTEI
                                               FROM THE         FUND COMPLEX,     FUND COMPLEX,
                                               ALLIANCE-        INCLUDING         INCLUDING
                                               BERNSTEIN        THE FUND, AS      THE FUND, AS
                                               FUND             TO WHICH THE      TO WHICH THE
                             AGGREGATE         COMPLEX,         DIRECTOR IS       DIRECTOR IS
                             COMPENSATION      INCLUDING        A DIRECTOR        A DIRECTOR
NAME OF DIRECTOR             FROM THE FUND     THE FUND         OR TRUSTEE        OR TRUSTEE
- ----------------             -------------     ---------------- -----------       ----------

                                                                            
Ruth Block                   $3,947            $205,550               43                96
David H. Dievler             $3,937            $264,400               47               100
John H. Dobkin               $3,937            $234,550               45                98
William H. Foulk, Jr.        $3,942            $248,650               48               116
Clifford L. Michel           $3,933            $209,550               44                97
Donald J. Robinson           $3,938            $205,347               43                96


          As of April 5, 2004 the Directors and officers of the
Fund as a group owned less than 1% of the shares of the Fund.

ADVISER

          Alliance, 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 Fund's Board of Directors (see
"Management of the Fund" in the Prospectus).

          Alliance is a leading global investment management firm
supervising client accounts with assets as of December 31, 2003,
totaling approximately $475 billion. Alliance 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. Alliance is also one of the largest mutual
fund sponsors, with a diverse family of globally distributed
mutual fund portfolios. As one of the worlds leading global
investment management organizations, Alliance is able to compete
for virtually any portfolio assignment in any developed capital
market in the world.

          Alliance is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended. As of March 31,
2004, Alliance Capital Management Holding L.P. ("Holding"), a
Delaware limited partnership, owned approximately 31.5% of the
issued and outstanding units of limited partnership interest in
Alliance ("Alliance Units"). Units representing assignments of
beneficial ownership of limited partnership interests in holding
("Holding Units") trade publicly on the New York Stock Exchange
under the ticker symbol "AC". Alliance Units do not trade
publicly and are subject to significant restrictions on transfer.
ACMC is the general partner of both Alliance and Holding. ACMC
owns 100,000 general partnership units in Holding and a 1%
general partnership interest in Alliance. ACMC is an indirect
wholly-owned subsidiary of AXA Financial, Inc. ("AXA Financial"),
a Delaware corporation.

          As of March 31, 2004, AXA, AXA Financial, The Equitable
Life Assurance Society of the United States ("Equitable") and
certain subsidiaries of Equitable beneficially owned
approximately 57.3% of the issued and outstanding Alliance Units
and approximately 1.8% of the issued and outstanding Holding
Units which, including the general partnership interests in
Alliance and Holding, represent an economic interest of
approximately 58.4% in Alliance. As of March 31, 2004, SCB
Partners Inc., a wholly-owned subsidiary of SCB Inc.,
beneficially owned approximately 9.7% of the issued and
outstanding Alliance Units.

          AXA, a French company, is the holding company for an
international group of companies and 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 is a
wholly-owned subsidiary of AXA. Equitable is an indirect
wholly-owned subsidiary of AXA Financial.

          Based on information provided by AXA, as of February 1,
2004, approximately 16.89% of the issued ordinary shares
(representing 27.55% of the voting power) of AXA were owned
directly and indirectly by Finaxa, a French holding company. As
of February 1, 2004, 71.11% of the shares (representing 80.36% of
the voting power) of Finaxa were owned by three French mutual
insurance companies (the "Mutuelles AXA") and 21.32% of the
shares of Finaxa (representing 12.80% of the voting power) were
owned by BNP Paribas, a French bank. As of February 1, 2004, the
Mutuelles AXA owned directly or indirectly through intermediate
holding companies (including Finaxa) approximately 20.17% of the
issued ordinary shares (representing 32.94% of the voting power)
of AXA. The Advisory Agreement became effective on July 22, 1992.
The Advisory Agreement was approved by the unanimous vote, cast
in person, of the Fund's Directors including the Directors who
are not parties to the Advisory Agreement or interested persons
as defined in the Act, of any such party, at a meeting called for
the purpose and held on September 10, 1991. At a meeting held on
June 11, 1992, a majority of the outstanding voting securities of
the Fund approved the Advisory Agreement. The Advisory Agreement
was amended as of June 2, 1994 to provide for the addition of the
AllianceBernstein Americas Government Income Portfolio, the
AllianceBernstein Global Dollar Government Portfolio and the
AllianceBernstein Utility Income Portfolio. The amendment to the
Advisory Agreement was approved by the unanimous vote, cast in
person, of the disinterested Directors at a meeting called for
that purpose and held on December 7, 1993. The Advisory Agreement
was amended as of October 24, 1994 to provide for the addition of
the AllianceBernstein Growth Portfolio and the AllianceBernstein
Worldwide Privatization Portfolio. The amendment to the Advisory
Agreement was approved by the unanimous vote, cast in person of
the disinterested Directors at a meeting called for that purpose
and held on June 14, 1994. The Advisory Agreement was amended as
of February 1, 1996 to provide for the addition of the
AllianceBernstein Technology Portfolio. The amendment to the
Advisory Agreement was approved by the unanimous vote, cast in
person, of the disinterested Directors at a meeting called for
that purpose and held on November 28, 1995. The Advisory
Agreement was amended as of July 22, 1996 to provide for the
addition of the AllianceBernstein Small Cap Growth Portfolio. The
amendment to the Advisory Agreement was approved by the unanimous
vote, cast in person, of the disinterested Directors at a meeting
called for that purpose and held on June 4, 1996. The Advisory
Agreement was amended as of December 31, 1996 to provide for the
addition of the AllianceBernstein Real Estate Investment
Portfolio. The amendment to the Advisory Agreement was approved
by the unanimous vote, cast in person, of the disinterested
Directors at a meeting called for that purpose and held on
September 10, 1996. The Advisory Agreement was amended as of May
1, 1997 to provide for the addition of the AllianceBernstein High
Yield Portfolio. The amendment to the Advisory Agreement was
approved by the unanimous vote, cast in person, of the
disinterested Directors at a meeting called for that purpose and
held on April 12, 1997. The Advisory Agreement was amended as of
May 1, 2003 to provide for the addition of AllianceBernstein
Small Cap Value Portfolio, the AllianceBernstein Value Portfolio
and the AllianceBernstein International Value Portfolio. The
amendment to the Advisory Agreement was approved by the unanimous
vote, cast in person, of the disinterested Directors at a meeting
called for that purpose and held on January 31, 2001. The
Advisory Agreement was amended as of May 1, 2001 to provide for
the addition of the AllianceBernstein U.S. Large Cap Blended
Style Portfolio. The amendment to the Advisory Agreement was
approved by the unanimous vote, cast in person, of the
disinterested Directors at a meeting called for that purpose and
held on April 15-17, 2003. The Advisory Agreement was amended as
of May 1, 2004 to provide for the addition of the
AllianceBernstein Wealth Appreciation Strategy Portfolio and the
AllianceBernstein Balanced Wealth Strategy Portfolio. The
amendment to the Advisory Agreement was approved by unanimous
vote, cast in person, of the disinterested Directors at a meeting
called for that purpose held on March 16-18, 2004.

          The Adviser provides investment advisory services and
order placement facilities for each of the Fund's Portfolios and
pays all compensation of Directors and officers of the Fund who
are affiliated persons of the Adviser. The Adviser or its
affiliates also furnish the Fund, without charge, management
supervision and assistance and office facilities and provide
persons satisfactory to the Fund's Board of Directors to serve as
the Fund's officers.

          The Fund has, under the Advisory Agreement, assumed
obligation to pay for all 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, the Fund may also 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 Fund's Board of Directors. The
following table shows, for the Portfolios listed, the amounts the
Adviser received for such services during the fiscal year ended
December 31, 2003.

                                                                  Amount
                     Portfolio                                    Received
                     ---------                                    --------

AllianceBernstein Money Market Portfolio                          $75,000
AllianceBernstein Premier Growth Portfolio                        $75,000
AllianceBernstein Growth and Income Portfolio                     $75,000
AllianceBernstein U.S. Government/High Grade
   Securities Portfolio                                           $75,000
AllianceBernstein High Yield Portfolio                            $75,000
AllianceBernstein Total Return Portfolio                          $75,000
AllianceBernstein International Portfolio                         $75,000
AllianceBernstein Global Bond Portfolio                           $75,000
AllianceBersntein Americas Government Income
   Portfolio                                                      $75,000
AllianceBernstein Global Dollar Government
   Portfolio                                                      $75,000
AllianceBernstein Utility Income Portfolio                        $75,000
AllianceBernstein Growth Portfolio                                $75,000
AllianceBernstein Worldwide Privatization
   Portfolio                                                      $75,000
AllianceBernstein Technology Portfolio                            $75,000
AllianceBernstein Small Cap Growth Portfolio                      $75,000
AllianceBernstein Real Estate Investment Portfolio                $75,000
AllianceBernstein International Value Portfolio                   $0
AllianceBernstein Small Cap Value Portfolio                       $0
AllianceBernstein Value Portfolio                                 $75,000
AllianceBernstein U.S. Large Blended Style Portfolio              $0


          The following table sets forth the contractual annual
percentage rate of average daily net asset value that each of the
Portfolios pays the Adviser and, effective as of January 1, 2004,
the annual percentage rate of average daily net asset value under
the Advisor's waiver of a portion of its advisory fee, which is
expected to continue for a period of at least five years:

                                                                  Adviser's
                                                                  Fee After
                                               Contractual Fee    Waiver
                                               ---------------    ----------

      AllianceBernstein Money Market
         Portfolio                                  .500%           0.45%
      AllianceBernstein Premier
         Growth Portfolio                          1.000%           0.75%
      AllianceBernstein Growth and Income
         Portfolio                                  .625%           0.55%
      AllianceBernstein U.S. Government/High
         Grade Securities Portfolio                 .600%           0.45%
      AllianceBernstein High Yield
         Portfolio                                  .750%           0.50%
      AllianceBernstein Total Return
         Portfolio                                  .625%           0.55%
      AllianceBernstein International
         Portfolio                                 1.000%           0.75%
      AllianceBernstein Global Bond
         Portfolio                                  .650%           0.45%
      AllianceBernstein Americas Government
         Income Portfolio                           .650%           0.50%
      AllianceBernstein Global Dollar
         Government Portfolio                       .750%           0.50%
      AllianceBernstein Utility Income
         Portfolio                                  .750%           0.55%
      AllianceBernstein Growth Portfolio            .750%           0.75%
      AllianceBernstein Worldwide
         Privatization Portfolio                   1.000%           0.75%
      AllianceBernstein Technology
         Portfolio                                 1.000%           0.75%
      AllianceBernstein Small Cap   Growth
         Portfolio                                 1.000%           0.75%
      AllianceBernstein Real Estate
         Investment Portfolio                       .900%           0.55%
      AllianceBernstein International Value
         Portfolio                                 1.000%           0.75%
      AllianceBernstein Small Cap Value
         Portfolio                                 1.000%           0.75%
      AllianceBernstein Value Portfolio             .750%           0.55%
      AllianceBernstein U.S. Large Cap
         Blended Style Portfolio                    .950%           0.65%
      AllianceBernstein Wealth Appreciation
         Strategy Portfolio                         .650%           0.65%
      AllianceBernstein Balanced Wealth
         Strategy Portfolio                         .550%           0.55%

          The following table shows, for each Portfolio, the
amounts the Adviser received for such services for the last three
fiscal years (or since commencement of operations).

                                        FISCAL YEAR END
            PORTFOLIO                   DECEMBER 31        AMOUNT RECEIVED
            ---------                   -----------        ---------------


AllianceBernstein Money Market
   Portfolio                                 2001           $   840,656
                                             2002           $   821,456
                                             2003           $   653,243

AllianceBernstein Premier
   Growth Portfolio                          2001           $22,390,203
                                             2002           $16,947,980
                                             2003           $14,586,714

AllianceBernstein Growth and
   Income Portfolio                          2001           $ 6,879,681
                                             2002           $10,145,603
                                             2003           $11,253,144

AllianceBernstein U.S.
   Government/High Grade
   Securities Portfolio                      2001           $   487,416
                                             2002           $   868,142
                                             2003           $ 1,019,094

AllianceBernstein High Yield
   Portfolio                                 2001           $   120,638
                                             2002           $   226,146
                                             2003           $   348,733

AllianceBernstein Total Return
   Portfolio                                 2001           $   897,414
                                             2002           $ 1,131,591
                                             2003           $ 1,211,176

AllianceBernstein International
   Portfolio                                 2001           $   413,047
                                             2002           $   459,783
                                             2003           $   481,191

AllianceBernstein Global Bond
   Portfolio                                 2001           $   344,820
                                             2002           $   374,114
                                             2003           $   442,328

AllianceBernstein Americas
   Government Income Portfolio               2001           $   259,998
                                             2002           $   383,817
                                             2003           $   477,054

AllianceBernstein Global Dollar
   Government Portfolio                      2001           $       0
                                             2002           $    94,598
                                             2003           $   203,386

AllianceBernstein Utility
   Income Portfoli                           2001           $   481,671
                                             2002           $   369,511
                                             2003           $   307,994

AllianceBernstein Growth
   Portfolio                                 2001           $ 2,556,187
                                             2002           $ 1,867,303
                                             2003           $ 1,640,872


AllianceBernstein Worldwide
   Privatization Portfolio                   2001           $   208,119
                                             2002           $   265,507
                                             2003           $   327,976

AllianceBernstein Technology
   Portfolio                                 2001           $ 4,253,751
                                             2002           $ 2,856,689
                                             2003           $ 2,458,125

AllianceBernstein Small Cap
   Growth Portfolio                          2001           $ 1,683,682
                                             2002           $ 1,235,887
                                             2003           $   872,356

AllianceBernstein Real Estate
   Investment Portfolio                      2001           $   203,342
                                             2002           $   464,560
                                             2003           $   762,421

AllianceBernstein Small Cap
   Value Portfolio                           2001           $         0
                                             2002           $   485,292
                                             2003           $ 1,070,349

AllianceBernstein Value
   Portfolio                                 2001           $         0
                                             2002           $   333,082
                                             2003           $   657,864

AllianceBernstein International
   Value Portfolio                           2001           $         0
                                             2002           $    61,842
                                             2003           $   667,175

AllianceBernstein U.S. Large Cap
   Blended Style Portfolio                   2003           $         0


          The Adviser has contractually agreed to waive its fees
and bear certain expenses so that total Portfolio expenses do not
exceed on an annual basis 1.45% of average daily net assets for
Class A Shares of the AllianceBernstein U.S. Large Cap Blended
Style Portfolio, the AllianceBernstein Wealth Appreciation
Strategy Portfolio and the AllianceBernstein Balanced Wealth
Strategy Portfolio. This waiver extends through May 1, 2005 for
the AllianceBernstein U.S. Large Cap Blended Style Portfolio and
May 1, 2006 for the AllianceBernstein Wealth Appreciation
Strategy Portfolio and the AllianceBernstein Balanced Wealth
Strategy Portfolio and may be extended by Alliance for additional
one-year terms.

          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 the 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.
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 or dealer, such
transactions may be averaged as to price.

          The Advisory Agreement is terminable with respect to
any Portfolio without penalty on 60 days' written notice by a
vote of a majority of the outstanding voting securities of such
Portfolio or by a vote of a majority of the Fund's 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.

          The Advisory Agreement continues in effect until each
December 31, and thereafter for successive twelve month periods
computed from each January 1, provided that such continuance is
specifically approved at least annually by a vote of a majority
of the Fund's outstanding voting securities or by the Fund's
Board of Directors, including in either case approval by a
majority of the Directors who are not parties to the Advisory
Agreement or interested persons of such parties as defined by the
1940 Act. Most recently, continuance of the Agreement was
approved for an additional annual term by the Board of Directors,
including a majority of the Directors who are not parties to the
Advisory Agreement or interested persons of any such party, at a
Meeting held on November 17-18, 2003.

          The Adviser may act as an investment adviser to other
persons, firms or corporations, including investment companies,
and is investment adviser to the following registered investment
companies: AllianceBernstein All-Asia Investment Fund, Inc.,
AllianceBernstein Americas Government Income Trust, Inc.,
AllianceBernstein Balanced Shares, Inc., AllianceBernstein
Blended Style Series, Inc., AllianceBernstein Bond Fund, Inc.,
AllianceBernstein Capital Reserves, AllianceBernstein Disciplined
Growth Fund, Inc., AllianceBernstein Disciplined Value Fund,
Inc., AllianceBernstein Dynamic Growth Fund, Inc.,
AllianceBernstein Emerging Market Debt Fund, Inc.,
AllianceBernstein Exchange Reserves, AllianceBernstein Government
Reserves, AllianceBernstein Global Research Growth Fund, Inc.,
AllianceBernstein Global Small Cap Fund, Inc., AllianceBernstein
Global Strategic Income Trust, Inc., AllianceBernstein Greater
China '97 Fund, Inc., AllianceBernstein Growth and Income Fund,
Inc., AllianceBernstein Health Care Fund, Inc., AllianceBernstein
High Yield Fund, Inc., AllianceBernstein Institutional Funds,
Inc., AllianceBernstein Institutional Reserves, Inc.,
AllianceBernstein International Premier Growth Fund, Inc.,
AllianceBernstein Mid-Cap Growth Fund, Inc., AllianceBernstein
Multi-Market Strategy Trust, Inc., AllianceBernstein Municipal
Income Fund, Inc., AllianceBernstein Municipal Income Fund II,
AllianceBernstein Municipal Trust, AllianceBernstein New Europe
Fund, Inc., AllianceBernstein Premier Growth Fund, Inc.,
AllianceBernstein Real Estate Investment Fund, Inc.,
AllianceBernstein Select Investor Series, Inc., AllianceBernstein
Small Cap Growth Fund, Inc., AllianceBernstein Technology Fund,
Inc., AllianceBernstein Trust, AllianceBernstein Utility Income
Fund, Inc., The AllianceBernstein Portfolios, Sanford C.
Bernstein Fund, Inc. and Sanford C. Bernstein Fund II, Inc., all
registered open-end investment companies; and to ACM Government
Opportunity Fund, Inc., ACM Income Fund, Inc., ACM Managed Income
Fund, Inc., ACM Managed Dollar Income Fund, Inc., ACM Municipal
Securities Income Fund, Inc., Alliance All-Market Advantage Fund,
Inc., Alliance California Municipal Income Fund, Inc., Alliance
National Municipal Income Fund, Inc., Alliance New York Municipal
Income Fund, Inc., Alliance World Dollar Government Fund, Inc.,
Alliance World Dollar Government Fund II, Inc. and The Spain
Fund, Inc., all registered closed-end investment companies.

          In providing advisory services to the Fund and other
clients investing in real estate securities, Alliance has access
to the research services of CB Richard Ellis, Inc. ("CBRE"),
which acts as a consultant to Alliance with respect to the real
estate market. As a consultant, CBRE provides to Alliance, at
Alliance's expense, such in-depth information regarding the real
estate market, the factors influencing regional valuations and
analysis of recent transactions in office, retail, industrial and
multi-family properties as Alliance shall from time to time
request. CBRE will not furnish investment advice or make
recommendations regarding the purchase or sale of securities by
the Fund nor will it be responsible for making investment
decisions involving Fund assets.

          CBRE is a publicly held company and the largest real
estate services company in the United States. CBRE's business
includes real estate brokerage, property and facilities
management, and real estate finance and investment advisory
activities. The universe of property owning real estate industry
firms consists of approximately 153 companies of sufficient size
and quality to merit consideration for investment by the
Portfolio. As consultant to Alliance, CBRE provides access to its
proprietary model, REIT-Score, which analyzes the approximately
22,000 properties owned by these 153 companies. Using proprietary
databases and algorithms, CBRE analyzes local market rent,
expenses, occupancy trends, market specific transaction pricing,
demographic and economic trends, and leading indicators of real
estate supply such as building permits. Over 1,000 asset-type
specific geographic markets are analyzed and ranked on a relative
scale by CBRE in compiling its REIT-Score database. The relative
attractiveness of these real estate industry companies is
similarly ranked based on the composite rankings of the
properties they own.

          Once the universe of real estate industry companies has
been distilled through the market research process, CBRE's local
market presence provides the capability to perform site specific
inspections of key properties. This analysis examines specific
location, condition, and sub-market trends. CBRE's use of locally
based real estate professionals provides Alliance with a window
on the operations of the portfolio companies as information can
immediately be put in the context of local market events. Only
those companies whose specific property portfolios reflect the
promise of their general markets will be considered for
investment by the Portfolio.

DISTRIBUTION SERVICES AGREEMENT

          The Fund has entered into a Distribution Services
Agreement (the "Agreement") with ABIRM, the Fund's principal
underwriter (the "Principal Underwriter"), to permit the
Principal Underwriter 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 B shares in
accordance with a plan of distribution which has been duly
adopted and approved in accordance with Rule 12b-1 adopted by the
Commission under the 1940 Act (the "Rule 12b-1 Plan").

          Distribution services fees are accrued daily and paid
monthly and charged as expenses of the Fund as accrued. Under the
Agreement, the Treasurer of the Fund reports the amounts expended
under the Rule 12b-1 Plan and the purposes for which such
expenditures were made to the Directors of the Fund on a
quarterly basis. Also, the Agreement provides that the selection
and nomination of Directors who are not "interested persons" of
the Fund, as defined in the 1940 Act, are committed to the
discretion of such disinterested Directors then in office. The
Agreement was initially approved by the Directors of the Fund at
a meeting held on January 6, 1999. Most recently, continuance of
the Agreement was approved for an additional annual term by the
Board of Directors, including a majority of the Directors who are
not parties to the Agreement or interested persons of such party,
at a meeting held on November 17-18, 2003.

          The Agreement will continue in effect until each
December 31, and thereafter for successive twelve-month periods
computed from each January 1, provided that such continuance is
specifically approved at least annually by the Directors of the
Fund or by vote of the holders of a majority of the outstanding
Class B shares (as defined in the 1940 Act) and, in either case,
by a majority of the Directors of the Fund who are not parties to
the Agreement or interested persons, as defined in the 1940 Act,
of any such party (other than as directors of the Fund) and who
have no direct or indirect financial interest in the operation of
the Rule 12b-1 Plan or any agreement related thereto.

          The Adviser may from time to time and from its own
funds or such other resources as may be permitted by rules of the
Commission make payments for distribution services to the
Principal Underwriter; the latter may in turn pay part or all of
such compensation to brokers or other persons for their
distribution assistance. The Principal Underwriter will pay for
printing and distributing prospectuses or reports prepared for
its use in connection with the offering of the Class B shares to
the public and preparing, printing and mailing any other
literature or advertising in connection with the offering of the
Class B shares to the public. The Principal Underwriter will pay
all fees and expenses in connection with its qualification and
registration as a broker or dealer under federal and state laws
and of any activity which is primarily intended to result in the
sale of Class B shares issued by the Fund, unless the plan of
distribution in effect for Class B shares provides that the Fund
shall bear some or all of such expenses.

               In the event that the Agreement is terminated or
not continued with respect to the Class B shares of a Portfolio,
(i) no distribution services fees (other than current amounts
accrued but not yet paid) would be owed by the Fund to the
Principal Underwriter with respect to Class B shares of such
Portfolio and (ii) the Fund would not be obligated to pay the
Principal Underwriter for any amounts expended under the
Agreement not previously recovered by the Principal Underwriter
from distribution services fees in respect of shares of such
class or through deferred sales charges.

          During the fiscal year ended December 31, 2003, the
AllianceBernstein Global Bond Portfolio, AllianceBernstein
International Portfolio, AllianceBernstein Money Market
Portfolio, AllianceBernstein Premier Growth Portfolio,
AllianceBernstein Growth and Income Portfolio, AllianceBernstein
U.S. Government/High Grade Securities Portfolio,
AllianceBernstein Growth Portfolio, AllianceBernstein Worldwide
Privatization Portfolio, AllianceBernstein Technology Portfolio,
AllianceBernstein Small Cap Growth Portfolio, AllianceBernstein
Real Estate Investment Portfolio, AllianceBernstein Total Return
Portfolio, AllianceBernstein High Yield Portfolio,
AllianceBernstein Americas Government Income Portfolio,
AllianceBernstein Global Dollar Government Portfolio,
AllianceBernstein Utility Income Portfolio, AllianceBernstein
International Value Portfolio, AllianceBernstein Small Cap Value
Portfolio, AllianceBernstein Value Portfolio and
AllianceBernstein U.S. Large Cap Blended Style Portfolio paid
distribution services fees for expenditures under the Agreement,
with respect to Class B shares, in amounts aggregating $24,031,
$3,811, $138,782, $1,454,738, $3,232,624, $41,819, $224,579,
$12,515, $340,464, $22,868, $70,357, $29,548, $8,212, $8,041,
$3,628, $2,755, $146,670, $107,903, $219,288 and $4,290,
respectively, which constituted approximately .25% of each
Portfolio's aggregate average daily net assets attributable to
Class B shares during the period. The Adviser made payments from
its own resources as described above aggregating $86,133, $6,880,
$314,867, $1,728,799, $2,477,026, $39,046, $524,394, $229,580,
$523,984, $133,424, $229,192, $26,714, $34,514, $42,626, $15,824,
$17,649, $417,583, $310,627, $526,889 and $86,658 for the
AllianceBernstein Global Bond Portfolio, AllianceBernstein
International Portfolio, AllianceBernstein Money Market
Portfolio, AllianceBernstein Premier Growth Portfolio,
AllianceBernstein Growth and Income Portfolio, AllianceBernstein
U.S. Government/High Grade Securities Portfolio,
AllianceBernstein Growth Portfolio, AllianceBernstein Worldwide
Privatization Portfolio, AllianceBernstein Technology Portfolio,
AllianceBernstein Small Cap Growth Portfolio, AllianceBernstein
Real Estate Investment Portfolio, AllianceBernstein Total Return
Portfolio, AllianceBernstein High Yield Portfolio,
AllianceBernstein Americas Government Income Portfolio,
AllianceBernstein Global Dollar Government Portfolio and
AllianceBernstein Utility Income Portfolio, AllianceBernstein
International Value Portfolio, AllianceBernstein Small Cap Value
Portfolio, AllianceBernstein Value Portfolio and
AllianceBernstein U.S. Large Cap Blended Style Portfolio,
respectively.

               For the fiscal year ended December 31, 2003,
expenses incurred by each Portfolio and costs allocated to each
Portfolio in connection with activities primarily intended to
result in the sale of Class B shares were as follows:



                        Alliance-         Alliance-        Alliance-
                        Bernstein         Bernstein        Bernstein        Alliance-
Category of             Global Bond       International    Money Market     Bernstein Premier
Expense                 Portfolio         Portfolio        Portfolio        Growth Portfolio
- -------                 ---------         ---------        ---------        ----------------
                                                                
Advertising/
Marketing               $163              $39              $612             $2,972

Printing and Mailing
of Prospectuses and
Semi-Annual and
Annual Reports to
Other Than Current
Shareholders            $47               $10              $180             $857

Compensation to
Underwriters            $16,699           $0               $58,504          $339,067

Compensation to
Dealers                 $7,570            $643             $31,035          $167,056

Compensation to Sales
Personnel               $75,993           $8,900           $327,280         $2,481,323

Interest, Carrying or
Other Financing
Charges                 $0                $0               $0               $0

Other (includes
personnel costs
of those home
office employees
involved in the
distribution
effort and the
travel-related
expenses
incurred by the
marketing
personnel
conducting
seminars)               $9,692            $1,099           $36,038          $192,262

Totals                  $110,164          $10,691          $453,649         $3,183,537
                        ========          =======          ========         ==========




                                          Alliance-
                        Alliance-         Bernstein U.S.                    Alliance-
                        Bernstein         Gov't/High       Alliance-        Bernstein
                        Growth and        Grade            Bernstein        Worldwide
Category of             Income            Securities       Growth           Privatization
Expense                 Portfolio         Portfolio        Portfolio        Portfolio
- -------                 ---------         ---------        ---------        ---------
                                                                
Advertising/
Marketing               $4,722            $94              $883             $336

Printing and Mailing
of Prospectuses and
Semi-Annual and
Annual Reports to
Other than Current
Shareholders            $1,400            $29              $255             $92

Compensation to
Underwriters            $467,330          $6,537           $104,920         $46,904

Compensation to
Dealers                 $240,075          $3,838           $50,267          $21,906

Compensation to Sales
Personnel               $4,716,037        $65,775          $534,907         $147,820

Interest, Carrying or
Other Financing
Charges                 $0                $0               $0               $0

Other (includes
personnel costs
of those home
office employees
involved in the
distribution
effort and the
travel-related
expenses
incurred by the
marketing
personnel
conducting
seminars)               $280,086          $4,592           $57,741          $25,037

Totals                  $5,709,650        $80,865          $748,973         $242,095
                        ==========        =======          ========         ========




                                          Alliance-        Alliance-
                        Alliance-         Bernstein        Bernstein        Alliance-
                        Bernstein         Small Cap        Real Estate      Bernstein Total
Category of             Technology        Growth           Investment       Return
Expense                 Portfolio         Portfolio        Portfolio        Portfolio
- -------                 ---------         ---------        ---------        ---------
                                                                
Advertising/
Marketing               $955              $202             $402             $52

Printing and Mailing
of Prospectuses and
Semi-Annual and
Annual Reports to
Other than Current
Shareholders            $279              $53              $121             $16

Compensation to
Underwriters            $101,626          $27,134          $44,788          $5,114

Compensation to
Dealers                 $50,500           $12,729          $22,250          $2,532

Compensation to Sales
Personnel               $652,551          $101,663         $206,433         $45,608

Interest, Carrying or
Other Financing
Charges                 $0                $0               $0               $0

Other (includes
personnel costs
of those home
office employees
involved in the
distribution
effort and the
travel-related
expenses
incurred by the
marketing
personnel
conducting
seminars)               $58,537           $14,511          $25,555          $2,940

Totals                  $864,448          $156,292         $299,549         $56,262
                        ========          ========         ========         =======




                                          Alliance-        Alliance-
                        Alliance-         Bernstein        Bernstein
                        Bernstein         Americas         Global Dollar    Alliance-
Category of             High Yield        Gov't Income     Gov't            Bernstein Utility
Expense                 Portfolio         Portfolio        Portfolio        Income Portfolio
- -------                 ---------         ---------        ---------        ----------------
                                                                
Advertising/
Marketing               $56               $54              $19              $24

Printing and Mailing
of Prospectuses and
Semi-Annual and
Annual Reports to
Other than Current
Shareholders            $19               $12              $4               $6

Compensation to
Underwriters            $7,357            $9,963           $3,836           $3,958

Compensation to
Dealers                 $3,156            $3,757           $1,342           $1,554

Compensation to Sales
Personnel               $28,555           $32,705          $12,746          $13,111

Interest, Carrying or
Other Financing
Charges                 $0                $0               $0               $0

Other (includes
personnel costs
of those home
office employees
involved in the
distribution
effort and the
travel-related
expenses
incurred by the
marketing
personnel
conducting
seminars)               $3,583            $4,176           $1,505           $1,751

Totals                  $42,726           $50,667          $19,452          $20,404
                        =======           =======          =======          =======




                        Alliance-         Alliance-                         Alliance-
                        Bernstein         Bernstein        Alliance-        Bernstein U.S.
                        International     Small Cap        Bernstein        Large Cap
Category of             Value             Value            Value            Blended Style
Expense                 Portfolio         Portfolio        Portfolio        Portfolio
- -------                 ---------         ---------        ---------        ---------
                                                                
Advertising/
Marketing               $766              $529             $1,060           $114

Printing and Mailing
of Prospectuses and
Semi-Annual and
Annual Reports to
Other than Current
Shareholders            $228              $159             $312             $41

Compensation to
Underwriters            $81,350           $61,042          $97,265          $20,960

Compensation to
Dealers                 $40,219           $30,037          $51,398          $8,627

Compensation to Sales
Personnel               $395,170          $292,211         $535,732         $52,112

Interest, Carrying or
Other Financing
Charges                 $0                $0               $0               $0

Other (includes
personnel costs
of those home
office employees
involved in the
distribution
effort and the
travel-related
expenses
incurred by the
marketing
personnel
conducting
seminars)               $46,520           $34,552          $60,410          $9,094

Totals                  $564,253          $418,530         $746,177         $90,948
                        ========          ========         ========         =======


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

                PURCHASE AND REDEMPTION OF SHARES

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

          The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares."

          Shares of each Portfolio are offered at net asset value
on a continuous basis to the separate accounts of certain life
insurance companies (the "Insurers") without any sales or other
charge. The separate accounts of insurance companies place orders
to purchase shares based on, among other things, the amount of
premium payments to be invested and surrendered and transfer
requests to be effected pursuant to variable contracts funded by
shares of the Portfolio. The Fund reserves the right to suspend
the sale of its shares in response to conditions in the
securities markets or for other reasons. See the prospectus of
the separate account of the participating insurance company for
more information on the purchase of shares.

          The Insurers maintain omnibus account arrangements with
the Fund in respect of one or more Portfolios and place aggregate
purchase, redemption and exchange orders for shares of a
Portfolio corresponding to orders placed by the Insurer's
customers ("Contractholders") who have purchased contracts from
the Insurers, in each case, in accordance with the terms and
conditions of the relevant contract. Omnibus account arrangements
maintained by the Insurers are discussed below under "Limitations
on Ability to Detect and Curtail Excessive Trading Practices".

          Right to Restrict, Reject or Cancel Purchase and
Exchange Orders. The Fund reserves the right to restrict, reject
or cancel, without any prior notice, any purchase or exchange
order placed by an Insurer for any reason.

          Policy Regarding Excessive or Short Duration Trading.
Purchases and exchanges of shares of the Portfolios should be
made for long term investment purposes only. The Fund, as a
matter of policy, seeks to prevent excessive purchases and sales
or exchanges of shares of the Portfolios. Such practices are
commonly referred to as "market timing" or "short duration
trading." The Fund will seek to prevent such practices to the
extent they are detected by the procedures described below,
subject to the Fund's ability to monitor purchase, sale and
exchange activity, and subject to such limitations as may result
from the terms and conditions contained in certain of the
contracts as described below. The Fund, Alliance, ABIRM and AGIS
each 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, ABIRM and AGIS, maintains surveillance
          procedures with respect to purchase, sale and exchange
          activity in shares of the Portfolios. These
          surveillance procedures involve scrutinizing individual
          Insurers' omnibus transaction activity in shares of the
          Portfolios in order to seek to ascertain whether any
          such activity attributable to one or more
          Contractholders might constitute market timing or short
          duration trading. Insurers' omnibus transaction
          activity identified by these surveillance procedures,
          or as a result of any other information actually
          available at the time, will be evaluated to determine
          whether such activity might indicate excessive or short
          duration trading activity attributable to one or more
          Contractholders.

     o    Account Blocking Procedures. When a particular
          transaction or pattern of transactions identified by
          the surveillance procedures described above is
          determined by the Fund, ABIRM or AGIS, in its sole
          discretion, to be excessive or short duration trading
          in nature, the relevant Insurers' omnibus account(s) in
          respect of shares of the relevant Portfolio(s) will be
          promptly "blocked" with respect to any future purchase
          or exchange activity, except to the extent the Fund,
          ABIRM or AGIS has been informed in writing that the
          terms and conditions of a particular contract may limit
          the Fund's ability to apply its market timing policy to
          Contractholder activity as discussed below. As a
          result, any Contractholder seeking to engage through an
          Insurer in purchase or exchange activity in shares of
          one or more Portfolios under a particular contract will
          be prevented from doing so. However, sales of shares of
          a Portfolio back to the Fund will continue to be
          permitted in accordance with the terms of the
          Portfolio's prospectus. Insurers' omnibus accounts that
          are so blocked will generally remain blocked unless and
          until an Insurer provides evidence or assurance
          acceptable to the Fund, ABIRM or AGIS that one or more
          Contractholders did not or will not in the future
          engage in excessive or short duration trading.

          Limitations on Ability to Detect and Curtail Excessive
Trading Practices. Insurers utilizing omnibus account
arrangements may not identify to the Fund, ABIRM or AGIS
Contractholders' transaction activity relating to shares of a
particular Portfolio on an individual basis. Consequently, the
Fund, ABIRM and AGIS may not be able to detect excessive or short
duration trading in shares of a Portfolio attributable to a
particular Contractholder who effects purchase and redemption
and/or exchange activity in shares of the Portfolio through an
Insurer acting in an omnibus capacity. In seeking to prevent
excessive or short duration trading in shares of the Portfolios,
including the maintenance of any transaction surveillance or
account blocking procedures, the Fund, ABIRM and AGIS consider
the information actually available to them at the time.

          Contractholders should be aware that, even if the Fund,
ABIRM or AGIS, in its sole discretion, determines that a
particular Insurer's omnibus transaction activity in shares of a
Portfolio attributable to one or more other Contractholders may
constitute excessive or short duration trading, the terms and
conditions of the relevant contract may limit the ability of the
Fund, ABIRM or AGIS, or the Insurer to curtail the
Contractholder's activity. This means that even after the
detection of such possible Contractholder activity, the affected
Portfolio may continue to suffer the effects of excessive or
short duration trading.

          Risks Associated with Excessive or Short Duration
Trading Generally. While the Fund, ABIRM and AGIS will try to
prevent market timing by utilizing the procedures described
above, these procedures may not be successful in identifying or
stopping excessive or short duration trading attributable to
particular Contractholders in all circumstances. Excessive
purchases and sales or exchanges of shares of Portfolios may
adversely affect a Portfolio's performance and the interests of
those Contractholders pursuing a long-term investment strategy.
Volatility resulting from excessive purchases and sales or
exchanges of shares of a Portfolio, especially involving large
dollar amounts, may disrupt efficient portfolio management. In
particular, a Portfolio may have difficulty implementing
long-term investment strategies if it is unable to anticipate
what portion of its assets it should retain in cash to provide
liquidity to the Insurers in connection with Contractholders'
transaction activity under the contracts. Also, excessive
purchases and sales or exchanges of shares of a Portfolio may
force a particular Portfolio to maintain a disadvantageously
large cash position to accommodate short duration trading
activity. Further, excessive purchases and sales or exchanges of
a Portfolio's shares may force a particular Portfolio to sell
portfolio securities at inopportune times to raise cash to
accommodate short duration trading activity.

          In addition, a Portfolio may incur increased expenses
if one or more Contractholders engage in excessive purchase and
sale or exchange activity. For example, if a Portfolio is forced
to liquidate investments due to short duration trading activity
attributable to one or more Contractholders, it may incur
increased brokerage costs without attaining any investment
advantage. Similarly, a Portfolio may bear increased
administrative costs as a result of the asset level and
investment volatility that accompanies patterns of short duration
trading activity.

          Investments in foreign securities may be particularly
susceptible to short duration trading strategies. This is because
time zone differences among international stock markets can allow
a Contractholder engaging in a short duration strategy to exploit
a particular Portfolio's share prices that are based on closing
prices of foreign securities established some time before the
Fund, or its agents, calculates the share price of the relevant
Portfolio. In addition, a Contractholder engaging in a short
duration strategy may target a Portfolio that does not invest
primarily in foreign securities. For example, investments in
certain fixed-income securities such as high yield bonds or
certain asset-backed securities may also constitute an effective
vehicle for a Contractholder's short duration trading strategy.

          Risks Resulting from Imposition of Account Blocks in
Response to Excessive or Short Duration Trading Activity. If,
pursuant to the transaction surveillance and account blocking
procedures described above, the Fund or its agents, ABIRM or
AGIS, in its sole discretion, blocks a particular Insurer's
omnibus account with the Fund in respect of one or more
Portfolios, Contractholders seeking to engage in purchase or
exchange activity in shares of the affected Portfolio(s) will be
prevented from doing so. Further, as a result of any account
block, a Contractholder will be prevented from engaging in
purchase and exchange activity that otherwise may be permitted
pursuant to a particular contract regardless of whether the
Contractholder has actually engaged in the market timing or short
duration trading activity resulting in such account block. As
described above, sales of shares of a Portfolio back to the Fund
or redemptions will continue to be permitted in accordance with
the terms of the Fund's prospectus. However, it could be
disadvantageous for a Contractholder to redeem a Portfolio's
shares if the shares have declined in value. A Contractholder who
does not wish to redeem his or her shares effectively may be
"locked" into an investment in shares of one or more of the
Portfolios that the Contractholder did not intend to hold on a
long-term basis or that may not be appropriate for the
Contractholder's risk profile.

REDEMPTION OF SHARES

          An insurance company separate account may redeem all or
any portion of the shares in its account at any time at the net
asset value next determined after a redemption request in proper
form is furnished to the Fund. Any certificates representing
shares being redeemed must be submitted with the redemption
request. Shares do not earn dividends on the day they are
redeemed, regardless of whether the redemption request is
received before or after the time of computation of net asset
value that day. There is no redemption charge. The redemption
proceeds will normally be sent within seven days.

          The right of redemption may be suspended or the date or
payment may be postponed for any period during which the Exchange
is closed (other than customary weekend and holiday closings) or
during which the Commission determines that trading thereon is
restricted, or for any period during which an emergency (as
determined by the Commission) exists as a result of which
disposal by the Fund of securities owned by a Portfolio is not
reasonably practicable or as a result of which it is not
reasonably practicable for the Fund fairly to determine the value
of a Portfolio's net assets, or for such other periods as the
Commission may by order permit for the protection of security
holders of the Fund. For information regarding how to redeem
shares in the Fund please see your insurance company separate
account prospectus.

          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
Portfolio's securities at the time of such redemption or
repurchase. Payment either in cash or in portfolio securities
received by a shareholder upon redemption or repurchase of his
shares, assuming the shares constitute capital assets in his
hands, will result in long-term or short-term capital gains (or
loss) depending upon the shareholder's holding period and basis
in respect of the shares redeemed.

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

                         NET ASSET VALUE

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

          For all of the Portfolios, with the exception of
AllianceBernstein Money Market Portfolio, the per share net asset
value 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 a Portfolio on each Portfolio
business day on which such an order is received and on such other
days as the Board of Directors deems appropriate or necessary in
order to comply with Rule 22c-1 under the 1940 Act. Each
Portfolio's per share net asset value is calculated by dividing
the value of a Portfolio's total assets, less its liabilities, by
the total number of its shares then outstanding. A Portfolio
business day is any weekday on which the Exchange is open for
trading.

          In accordance with applicable rules under the 1940 Act
and the Portfolio's pricing policies and procedures adopted by
the Board of Directors (the "Pricing Policies") portfolio
securities are valued at current market value or at fair value.
The Board of Directors has delegated to the Adviser, subject to
the Board's continuing oversight, certain of its duties with
respect to the following Pricing Policies.

          With respect to securities for which market quotations
are readily available, the market value of a security will be
determined as follows:

          (a) securities listed on the Exchange or on a foreign
securities exchange are valued at the last sale price reflected
on the consolidated tape at the close of the Exchange or foreign
securities exchange on the business day as of which such value is
being determined. If there has been no sale on such day, the
securities are valued at the mean of the closing bid and asked
prices on such day. If no bid or asked prices are quoted on such
day, then the security is valued in good faith at fair value by,
or in accordance with procedures established by, the Board of
Directors;

          (b) securities not listed on the Exchange or on a
foreign securities exchange but listed on other national
securities exchanges are valued in accordance with paragraph (a)
above, and securities traded on The Nasdaq Stock Market, Inc.
("NASDAQ") are valued in accordance with the NASDAQ Official
Closing Price;

          (c) securities traded on the Exchange or on a foreign
securities exchange and on one or more other national or foreign
securities exchanges, and securities not traded on the Exchange
but traded on one or more other national or foreign securities
exchanges, are valued in accordance with paragraph (a) above by
reference to the principal exchange on which the securities are
traded;

          (d) listed put or call options purchased by a Portfolio
are valued at the last sale price. If there has been no sale on
that day, such securities will be valued at the closing bid
prices on that day;

          (e) open futures contracts and options thereon will be
valued using the closing settlement price or, in the absence of
such a price, the most recent quoted bid price. If there are no
quotations available for the day of valuations, the last
available closing settlement price will be used;

          (f) securities traded in the over-the-counter market,
including securities listed on a national securities exchange
whose primary market is believed to be over-the-counter (but
excluding securities traded on NASDAQ) are valued at the mean of
the current bid and asked prices as reported by the National
Quotation Bureau or other comparable sources;

          (g) U.S. Government securities and other debt
instruments having 60 days or less remaining until maturity are
valued at amortized cost if their original maturity was 60 days
or less, or by amortizing their fair value as of the 61st day
prior to maturity if their original term to maturity exceeded 60
days (unless in either case it is determined, in accordance with
procedures established by the Board of Directors, that this
method does not represent fair value);

          (h) fixed-income securities may be valued on the basis
of prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities. The
prices provided by a pricing service take into account many
factors, including institutional size, trading in similar groups
of securities and any developments related to specific
securities. For securities where the Adviser has determined that
an appropriate pricing service does not exist, such securities
may be valued on the basis of a quoted bid price or spread from a
major broker-dealer in such security;

          (i) mortgage-backed and asset-backed securities may be
valued at prices obtained from a bond pricing service or at a
price obtained from one or more of the major broker-dealers in
such securities when such prices are believed to reflect the fair
market value of such securities. In cases where broker-dealer
quotes are obtained, the Adviser may establish procedures whereby
changes in market yields or spreads are used to adjust, on a
daily basis, a recently obtained quoted bid price on a security;

          (j) OTC and other derivatives are valued on the basis
of a quoted bid price or spread from a major broker-dealer in
such security; and

          (k) all other securities will be valued in accordance
with readily available market quotations as determined in
accordance with procedures established by the Board of Directors.

          With respect to securities for which market quotations
are not readily available, the security will be valued at fair
value in accordance with policies and procedures adopted by the
Board of Directors.

          Trading in securities on Far Eastern and European
securities exchanges and over-the-counter markets is normally
completed well before the close of business of each Portfolio
business day. In addition, trading in foreign markets may not
take place on all Portfolio business days. Furthermore, trading
may take place in various foreign markets on days that are not
Portfolio business days. Each Portfolio's calculation of the net
asset value per share, therefore, does not always take place
contemporaneously with the most recent determination of the
prices of portfolio securities in these markets. Events affecting
the values of these portfolio securities that occur between the
time their prices are determined in accordance with the above
procedures and the close of the Exchange will not be reflected in
the Portfolio's calculation of net asset value unless it is
believed that these prices do not reflect current market value,
in which case the securities will be valued in good faith by, or
in accordance with procedures established by, the Board of
Directors at fair value.

          Each Portfolio may suspend the determination of its net
asset value (and the offering and sale of shares), subject to the
rules of the Commission 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 Portfolio 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 Commission by order permits a
suspension of the right of redemption or a postponement of the
date of payment on redemption.

          For purposes of determining a Portfolio's net asset
value 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 of Directors.

          The assets attributable to the Class A shares and Class
B shares will be invested together in a single portfolio. The net
asset value 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 each Portfolio in accordance with Rule 18f-3
under the 1940 Act (the "18f-3 Plan").

          The AllianceBernstein Money Market Portfolio utilizes
the amortized cost method of valuation of portfolio securities in
accordance with the provisions of Rule 2a-7 under the Act. The
amortized cost method involves valuing an instrument at its cost
and thereafter applying a constant amortization to maturity of
any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. The Fund
maintains procedures designed to stabilize, to the extent
reasonably possible, the price per share of the Portfolio as
computed for the purpose of sales and redemptions at $1.00. Such
procedures include review of the Portfolio's investment portfolio
holdings by the Directors at such intervals as they deem
appropriate to determine whether and to what extent the net asset
value of the Portfolio calculated by using available market
quotations or market equivalents deviates from net asset value
based on amortized cost. If such deviation as to the Portfolio
exceeds 1/2 of 1%, the Directors will promptly consider what
action, if any, should be initiated. In the event the Directors
determine that such a deviation may result in material dilution
or other unfair results to new investors or existing
shareholders, they will consider corrective action which might
include (1) selling instruments held by the Portfolio prior to
maturity to realize capital gains or losses or to shorten average
portfolio maturity; (2) withholding dividends of net income on
shares of the Portfolio; or (3) establishing a net asset value
per share of the Portfolio by using available market quotations
or equivalents. The net asset value of the shares of the
Portfolio is determined as of the close of business each Fund
business day (generally 4:00 p.m. Eastern time).

          The assets attributable to the Class A shares and Class
B shares of the Portfolio, will be invested together in a single
portfolio. The net asset value 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 the 18f-3 Plan.

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

                      PORTFOLIO TRANSACTIONS

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

          Neither the Fund nor the Adviser has entered into
agreements or understandings with any brokers or dealers
regarding the placement of securities transactions because of
research or statistical 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 impossible
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 Exchange Act and
is designed to augment the Adviser's own internal research and
investment strategy capabilities. Research and statistical
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 but not all such services may be utilized by
the Adviser in connection with the Fund.

          The Fund will deal in some instances in equity
securities which are not listed on a national stock exchange but
are traded in the over-the-counter market. In addition, most
transactions for the AllianceBernstein U.S. Government/High-Grade
Securities Portfolio and the AllianceBernstein Money Market
Portfolio are executed in the over-the-counter market. Where
transactions are executed in the over-the-counter 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.

          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 and the Fund's
distributor, for which SCB may receive a portion of the brokerage
commission. With respect to orders placed with SCB & Co. 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.

          The following table shows the brokerage commission paid
on investment transactions for the last three fiscal years:

                                 Fiscal        Aggregate         Brokerage
                               Year Ended      Brokerage         Commission Paid
Portfolio                      December 31     Commission Paid   to SCB & Co.
- ---------                      -----------     ---------------   ------------

AllianceBernstein
  Growth Portfolio                2001         $  905,366         $   35,136
                                  2002         $  464,895         $    2,815
                                  2003         $  300,559         $    1,240

AllianceBernstein
   Growth and Income
   Portfolio                      2001         $3,126,377         $   22,990
                                  2002         $5,089,476         $  318,196
                                  2003         $3,904,261         $  260,705

AllianceBernstein
   Global Bond
   Portfolio                      2001         $        0         $        0
                                  2002         $        0         $        0
                                  2003         $        0         $        0

AllianceBernstein
   Global Dollar
   Government Portfolio           2001         $        0         $        0
                                  2002         $        0         $        0
                                  2003         $        0         $        0

AllianceBernstein
   High Yield
   Portfolio                      2001         $        0         $        0
                                  2002         $        0         $        0
                                  2003         $        0         $        0

AllianceBernstein
   International
   Portfolio                      2001         $  145,026         $        0
                                  2002         $  168,020         $      233
                                  2003         $  164,709         $        0

AllianceBernstein
   Money Market
   Portfolio                      2001         $        0         $        0
                                  2002         $        0         $        0
                                  2003         $        0         $        0

AllianceBernstein
   Americas Government
   Income Portfolio               2001         $        0         $        0
                                  2002         $        0         $        0
                                  2003         $        0         $        0

AllianceBernstein
   Premier Growth
   Portfolio                      2001         $2,349,330         $  134,699
                                  2002         $6,596,311         $  311,635
                                  2003         $4,045,107         $  188,480

AllianceBernstein
   Small Cap Growth
   Portfolio                      2001         $  363,862         $        0
                                  2002         $  720,495         $    3,444
                                  2003         $  433,127         $        0

AllianceBernstein
   Real Estate
   Investment
   Portfolio                      2001         $   62,066         $        0
                                  2002         $  113,189         $    1,365
                                  2003         $  101,093         $        0

AllianceBernstein
   Technology
   Portfolio                      2001         $  333,394         $   14,540
                                  2002         $  963,875         $   32,458
                                  2003         $1,053,536         $   30,500

AllianceBernstein
   Total Return
   Portfolio                      2001         $  259,491         $        0
                                  2002         $  259,136         $        0
                                  2003         $  141,292         $        0

AllianceBernstein
   U.S. Government/
   High Grade Securities
   Portfolio                      2001         $        0         $        0
                                  2002         $        0         $        0
                                  2003         $        0         $        0

AllianceBernstein
   Utility Income
   Portfolio                      2001         $   94,324         $    6,212
                                  2002         $  178,592         $    2,780
                                  2003         $  148,510         $    6,140

AllianceBernstein
   Worldwide Privatization
   Portfolio                      2001         $   88,420         $        0
                                  2002         $   90,266         $        0
                                  2003         $   74,728         $        0

AllianceBernstein
   Small Cap Value
   Portfolio                      2001         $   36,583         $   17,701
                                  2002         $  229,834         $  115,881
                                  2003         $  201,066         $  114,816

AllianceBernstein
   Value
   Portfolio                      2001         $   34,797         $   15,649
                                  2002         $  123,901         $   73,126
                                  2003         $  139,185         $   87,947

AllianceBernstein
   International Value
   Portfolio                      2001         $    8,341         $      842
                                  2002         $   65,592         $    3,988
                                  2003         $  162,924         $   16,922

AllianceBernstein
   U.S. Large Cap
   Blended Style Portfolio        2003         $   11,112         $    5,579

          During the most recent fiscal year, the percentage of
the aggregate brokerage commission, stated above, paid by each
Portfolio to SCB & Co. and the percentage of each Portfolio's
aggregate dollar amount of transactions involving the payment of
commissions through SCB & Co. was as follows:

                                                          % of Aggregate
                                                          Dollar Amount
                                       % of Aggregate     of Transactions
                                       Brokerage          Involving the
                                       Commission         Payment of Commissions
Portfolio                              Paid to SCB & Co.  Through SCB & Co.
- ---------                              -----------------  -----------------

AllianceBernstein Growth Portfolio        0.40%               0.13%
AllianceBernstein Growth and Income
     Portfolio                            6.68%               0.18%
AllianceBernstein Global Bond Portfolio   0%                  0%
AllianceBernstein Global Dollar
     Government Portfolio                 0%                  0%
AllianceBernstein High Yield Portfolio    0%                  0%
AllianceBernstein International
     Portfolio                            0%                  0%
AllianceBernstein Money Market Portfolio  0%                  0%
AllianceBernstein Americas Government
     Income Portfolio                     0%                  0%
AllianceBernstein Premier Growth
     Portfolio                            4.66%               0.12%
AllianceBernstein Small Cap Growth
     Portfolio                            0%                  0%
AllianceBernstein Real Estate
     Investment Portfolio                 0%                  0%
AllianceBernstein Technology Portfolio    2.90%               0.25%
AllianceBernstein Total Return Portfolio  0%                  0%
AllianceBernstein U.S. Government/High
     Grade Securities Portfolio           0%                  0%
AllianceBernstein Utility Income
     Portfolio                            4.13%               0.40%
AllianceBernstein Worldwide
     Privatization Portfolio              0%                  0%
AllianceBernstein Small Cap Value
     Portfolio                            57.10%              0.26%
AllianceBernstein Value Portfolio         63.19%              0.19%
AllianceBernstein International Value
     Portfolio                            10.39%              0.31%
AllianceBernstein U.S. Large Cap
     Blended Style Portfolio              50.21%              0.14%

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

                DIVIDENDS, DISTRIBUTIONS AND TAXES

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

          Each Portfolio of the Fund qualified and intends to
continue to qualify to be taxed as a regulated investment company
under the Code. If so qualified, each Portfolio will not be
subject to federal income and excise taxes on its investment
company taxable income and net capital gain to the extent such
investment company taxable income and net capital gain are
distributed to the separate accounts of insurance companies which
hold its shares. Under current tax law, capital gains or
dividends from any Portfolio are not currently taxable to the
holder of a variable annuity or variable life insurance contract
when left to accumulate within such variable annuity or variable
life insurance contract. Distributions of net investment income
and net short-term capital gains will be treated as ordinary
income and distributions of net long-term capital gains will be
treated as long-term capital gain in the hands of the insurance
companies.

          Investment income received by a Portfolio from sources
within foreign countries may be subject to foreign income taxes
withheld at the source. If more than 50% of the value of a
Portfolio's total assets at the close of its taxable year
consists of stocks or securities of foreign corporations (which
for this purpose should include obligations issued by foreign
governments), such Portfolio will be eligible to file an election
with the Internal Revenue Service to pass through to its
shareholders the amount of foreign taxes paid by the Portfolio.
If eligible, each such Portfolio intends to file such an
election, although there can be no assurance that such Portfolio
will be able to do so.

          Section 817(h) of the Code requires that the
investments of a segregated asset account of an insurance company
be adequately diversified, in accordance with Treasury
Regulations promulgated thereunder, in order for the holders of
the variable annuity contracts or variable life insurance
policies underlying the account to receive the tax-deferred or
tax-free treatment generally afforded holders of annuities or
life insurance policies under the Code. The Department of the
Treasury has issued Regulations under section 817(h) that, among
other things, provide the manner in which a segregated asset
account will treat investments in a regulated investment company
for purposes of the applicable diversification requirements.
Under the Regulations, if a regulated investment company
satisfies certain conditions, a segregated asset account owning
shares of the regulated investment company will not be treated as
a single investment for these purposes, but rather the account
will be treated as owning its proportionate share of each of the
assets of the regulated investment company. Each Portfolio plans
to satisfy these conditions at all times so that the shares of
such Portfolio owned by a segregated asset account of a life
insurance company will be subject to this treatment under the
Code.

          For information concerning the federal income tax
consequences for the holders of variable annuity contracts and
variable life insurance policies, such holders should consult the
prospectus used in connection with the issuance of their
particular contracts or policies.

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

                       GENERAL INFORMATION

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

CAPITALIZATION

          The Fund was organized as a Maryland corporation in
1987 under the name "Alliance Variable Products Series Fund,
Inc." The name of the Fund became "AllianceBernstein Variable
Products Series Fund, Inc." on May 1, 2003. Each Portfolio's name
was changed on May 1, 2003. Prior thereto, the Portfolios were
known as: Alliance Money Market Portfolio, Alliance Premier
Growth Portfolio, Alliance Growth and Income Portfolio, Alliance
U.S. Government/High Grade Securities Portfolio, Alliance High
Yield Portfolio, Alliance Total Return Portfolio, Alliance
International Portfolio, Alliance Global Bond Portfolio, Alliance
Americas Government Income Portfolio, Alliance Global Dollar
Government Portfolio, Alliance Utility Income Portfolio, Alliance
Growth Portfolio, Alliance Worldwide Privatization Portfolio,
Alliance Technology Portfolio, Alliance Quasar Portfolio and
Alliance Real Estate Investment Portfolio. The AllianceBernstein
Quasar Portfolio's name was changed again on May 3, 2004 to
AllianceBernstein Small Cap Growth Portfolio.

          The Fund's shares have non-cumulative voting rights,
which means that the holders of more than 50% of the shares
voting for the election of Directors can elect 100% of the
Directors if they choose to do so, and in such election of
Directors will not be able to elect any person or persons to the
Board of Directors.

          All shares of the Fund when duly issued will be fully
paid and nonassessable. The Board of Directors is authorized to
reclassify any unissued shares into any number of additional
series and classes without shareholder approval. Accordingly, the
Board of Directors in the future, for reasons such as the desire
to establish one or more additional Portfolio's with different
investment objectives, policies or restrictions or to establish
additional channels of distribution, may create additional series
and classes of shares. Any issuance of shares of such additional
series and classes would be governed by the 1940 Act and the laws
of the State of Maryland.

          If shares of another series were issued in connection
with the creation of the new portfolio, each share of any of the
Fund's Portfolios would normally be entitled to one vote for all
purposes. Generally, shares of each Portfolio would vote as a
single series for the election of directors and on any other
matter that affected each Portfolio 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.
Moreover, the Class B shares of each Portfolio will vote
separately with respect to matters relating to the 12b-1 Plan(s)
adopted in accordance with Rule 12b-1 under the 1940 Act.
Meetings of shareholders may be called by 10% of the Fund's
outstanding shareholders.

          The outstanding voting shares of each Portfolio of the
Fund as of April 12, 2004 consisted of the following numbers of
Class B common stock: AllianceBernstein Money Market Portfolio,
43,010,060; AllianceBernstein Premier Growth Portfolio,
32,750,418; AllianceBernstein Growth and Income Portfolio,
80,128,689; AllianceBernstein U.S. Government/High Grade
Securities Portfolio, 1,878,973; AllianceBernstein International
Portfolio, 312,976; AllianceBernstein Total Return Portfolio,
1,901,934; AllianceBernstein Global Bond Portfolio, 915,400;
AllianceBernstein Americas Government Income Portfolio, 715,038;
AllianceBernstein Global Dollar Government Portfolio, 280,120;
AllianceBernstein Utility Income Portfolio, 232,843;
AllianceBernstein Growth Portfolio, 8,335,947; AllianceBernstein
Worldwide Privatization Portfolio, 511,318; AllianceBernstein
Technology Portfolio, 12,713,037; AllianceBernstein Small Cap
Growth Portfolio, 1,728,029; AllianceBernstein Real Estate
Investment Portfolio, 3,093,032; AllianceBernstein High Yield
Portfolio, 1,102,235; AllianceBernstein International Value
Portfolio, 10,251,769; AllianceBernstein Small Cap Value
Portfolio, 6,513,727; AllianceBernstein Value Portfolio,
11,160,521; and AllianceBernstein U.S. Large Cap Blended Style
Portfolio, 903,745. To the knowledge of the Fund, the following
persons owned of record or beneficially 5% or more of the
outstanding Class B shares of the Fund's Portfolios as of April
12, 2004:



                                                                 NUMBER OF        % OF
                                                                 CLASS B          CLASS B
PORTFOLIO                       NAME AND ADDRESS                 SHARES           SHARES
- ---------                       ----------------                 --------         ------
                                                                         
AllianceBernstein               American International
Money Market                    Life Insurance Co. of NY
                                ("American")
                                Attn: Ed Bacon
                                600 North King Street
                                Wilmington, DE  19801            3,573,049          8.30%

                                AIG Life Insurance
                                Company ("AIG")
                                Attn: Ed Bacon
                                Acct: AGVA7
                                600 N. King Street
                                Wilmington, DE  19801           31,348,036         72.80%

                                Anchor National Life
                                Insurance Co.
                                ("Anchor National")
                                P.O. Box 54299
                                Los Angeles, CA 90054            7,958,362         18.48%

AllianceBernstein Premier
Growth                          AIG                              3,747,997         11.45%

                                Allmerica Financial Life
                                Insurance and Annuity Company
                                ("Allmerica")
                                440 Lincoln Street Mailstop
                                S-310
                                Worcester, MA  01653             6,090,456         18.60%

                                Travelers Life and Annuity
                                Company
                                One Tower Square
                                Attn: Shareholder Accounting
                                #6MS
                                Hartford, CT  06183              2,431,064          7.42%

                                Allstate Life Insurance
                                Company ("Allstate")
                                300 N. Milwaukee Avenue Vernon
                                Hills, IL 60061                  1,980,210          6.05%

                                Metlife Investors Variable
                                Annuity
                                Account One
                                ("Met Life - Account 1") Attn:
                                Shar Nevehoven
                                4700 Westown Pky
                                Suite 200
                                West Des Moines, IA 50266        4,021,064         12.28%

AllianceBernstein Growth and    Lincoln Life Variable Annuity
Income                          ("Lincoln")
                                Acct. No.: 6 HO2 Fund
                                Accounting
                                1300 South Clinton St.Fort
                                Wayne, ID  46802                 5,954,043          7.42%

                                Allmerica                        9,619,169         12.00%

                                AIG                              8,906,978         11.11%

                                IDS Life Insurance Corporation
                                1438 AXP Financial Ctr.
                                Minneapolis, MN  55474          14,009,780         17.47%

                                GE Life and Annuity Assurance
                                Company
                                ("GE Life")
                                6610 W. Broad Street
                                Richmond, VA 23230               8,276,501         10.32%

                                Allstate                         9,723,197         12.12%

AllianceBernstein U.S.
Government/High Grade           AIG                              268,354           14.30%

                                Anchor National                  1,242,762         66.25%

                                American Enterprise Life
                                Insurance Co.
                                1438 - AXP
                                Minneapolis, MN  55474             330,073         17.59%

AllianceBernstein Total Return
                                Anchor National                  1,746,583         91.84%

AllianceBernstein               Keyport Life Insurance Company
International                   ("Keyport")
                                125 High Street
                                Boston, MA 02110                    33,713         10.82%

                                Anchor National                    277,150         88.96%

AllianceBernstein Global Bond
                                Keyport                            403,845         44.08%

                                Hartford Life Separate Account
                                200 Hopmeadow Street
                                PO Box 2999
                                Hartford, CT  06104                104,992         11.46%

                                Anchor National                    348,361         38.08%

AllianceBernstein Americas
Government Income               Anchor National                    714,635        100.00%

AllianceBernstein Global
Dollar Government               Anchor National                    280,106        100.00%

AllianceBernstein Utility
Income                          Anchor National                    232,844        100.00%

AllianceBernstein Growth        AIG                              3,342,653         39.96%

                                Lincoln                          1,117,709         13.36%

                                Allstate                         2,301,469         27.51%

                                Anchor National                    692,717          8.28%
AllianceBernstein Worldwide
Privatization                   Keyport                            121,074         23.61%

                                Sun Life Financial Futurity
                                Retirement Products & Services
                                ("SunLife") P.O. Box 9134
                                Wellesley Hills, MA 02481
                                                                   275,397         53.71%

                                Anchor National                    100,183         19.54%

AllianceBernstein Technology    AIG                              2,102,694         16.55%

                                Keyport                          1,181,735          9.30%

                                Lincoln                          5,293,636         41.67%

                                Allmerica                        1,104,295          8.69%

AllianceBernstein Small Cap
Growth                          GE Life                            849,666         49.29%

                                SunLife                            161,634          9.38%

                                Anchor National                    673,336         39.06%

AllianceBernstein Real Estate
Investment                      Metlife - Account 1              2,369,418         77.42%

                                 Metlife Investors Variable
                                Annuity - Account Five
                                Attn: Stacie Gannon
                                P.O. Box 295
                                West Des Moines, IA 50301          239,543          7.74%

                                Anchor National                    367,202         11.86%

AllianceBernstein High Yield    Anchor National                  1,101,953        100.00%

AllianceBernstein
International Value             Anchor National                    832,059          8.10%

                                IDS Life Insurance Corp
                                1438 AXP Financial CTR
                                Minneapolis, MN 55474-0014       8,498,572         82.71%

AllianceBernstein Small Cap
Value                           Lincoln Life                     1,199,223         18.41%

                                Allstate                         1,156,742         17.76%

                                Allmerica                        1,059,044         16.26%

                                Anchor National                  1,063,502         16.33%

                                Nationwide Insurance Co NWVA9
                                c/o IPO Portfolio Accounting
                                PO Box 182029
                                Columbia, OH 43218-2029            392,448          6.02%

                                Nationwide Insurance Co NWVA11
                                c/o IPO Portfolio Accounting
                                PO Box 182029
                                Columbia, OH 43218-2029            429,774          6.60%

                                Nationwide Insurance Co NWVA7
                                c/o IPO Portfolio Accounting
                                PO Box 192029
                                Columbia, OH 43218                 761,458         11.69%

AllianceBernstein Value         Anchor National                  1,776,072         15.92%

                                ING USA Annuity and Life
                                Insurance Company
                                1475 Dunwoody Drive
                                West Chester, PA 19380             603,118          5.41%

                                AIG                              6,061,520         54.33%

                                Allmerica                        1,019,578          9.14%

                                Anchor National                  1,776,072         15.92%

AllianceBernstein U.S. Large
Cap Blended Style               AIG                                139,459         15.35%

                                Anchor National                    765,471         84.27%


CODE OF ETHICS AND PROXY VOTING POLICIES AND PROCEDURES

          The Fund, the Adviser and the Principal Underwriter
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 each Portfolio.

          The Fund has adopted the Adviser's proxy voting
policies and procedures. The Adviser's proxy voting policies and
procedures are attached as Appendix E.

CUSTODIAN

          State Street Bank and Trust Company ("State Street"),
225 Franklin Street, Boston, Massachusetts 02110, acts as
custodian for the securities and cash of the Fund but plays no
part in deciding the purchase or sale of portfolio securities.
Subject to the supervision of the Fund's Directors, State Street
may enter into sub-custodial agreements for the holding of the
Fund's foreign securities.

PRINCIPAL UNDERWRITER

          ABIRM, 1345 Avenue of the Americas, New York, New York
10105, serves as the Fund's Principal Underwriter.

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 AUDITORS

          Ernst & Young LLP, 5 Times Square, New York, New York
10036, has been appointed as independent auditors for the Fund.

SHAREHOLDER APPROVAL

          The capitalized term "Shareholder Approval," as used in
this SAI means (1) the vote of 67% or more of the shares of that
Portfolio represented at a meeting at which more than 50% of the
outstanding shares are represented or (2) more than 50% of the
outstanding shares of that Portfolio, whichever is less.



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

     FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT AUDITORS

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

          The financial statements of AllianceBernstein Variable
Products Series Fund, Inc. for the fiscal year ended December 31,
2003 and the report of Ernst & Young LLP, the independent
auditors, are incorporated herein by reference to the Fund's
annual report. The annual report was filed with the Commission on
Form N-CSR on March 10, 2004. It is available without charge upon
request by calling AGIS at (800) 227-4618.




- ----------------------------------------------------------------
                           APPENDIX A:

         DESCRIPTION OF OBLIGATIONS ISSUED OR GUARANTEED
         BY U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES

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


          FEDERAL FARM CREDIT SYSTEM NOTES AND BONDS--are bonds
issued by a cooperatively owned nationwide system of banks and
associations supervised by the Farm Credit Administration, an
independent agency of the U.S. Government. These bonds are not
guaranteed by the U.S. Government.

          MARITIME ADMINISTRATION BONDS--are bonds issued and
provided by the Department of Transportation of the U.S.
Government and are guaranteed by the U.S. Government.

          FHA DEBENTURES--are debentures issued by the Federal
Housing Administration of the U.S. Government and are guaranteed
by the U.S. Government.

          GNMA CERTIFICATES--are mortgage-backed securities that
represent a partial ownership interest in a pool of mortgage
loans issued by lenders such as mortgage bankers, commercial
banks and savings and loan associations. Each mortgage loan
included in the pool is either insured by the Federal Housing
Administration or guaranteed by the Veterans Administration.

          FHLMC BONDS--are bonds issued and guaranteed by the
Federal Home Loan Mortgage Corporation.

          FNMA BONDS--are bonds issued and guaranteed by the
Federal National Mortgage Association.

          FEDERAL HOME LOAN BANK NOTES AND BONDS--are notes and
bonds issued by the Federal Home Loan Bank System and are not
guaranteed by the U.S. Government.

          STUDENT LOAN MARKETING ASSOCIATION (SALLIE MAE) NOTES
AND BONDS--are notes and bonds issued by the Student Loan
Marketing Association.

          Although this list includes a description of the
primary types of U.S. Government agency or instrumentality
obligations in which certain Portfolios of the Fund intend to
invest, Portfolios may invest in obligations of U.S. Government
agencies or instrumentalities other than those listed above.



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

                           APPENDIX B:

             FUTURES CONTRACTS AND OPTIONS ON FUTURES
                 CONTRACTS AND FOREIGN CURRENCIES

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

FUTURES CONTRACTS

          Portfolios of the Fund may enter into contracts for the
purchase or sale for future delivery of fixed-income securities
or foreign currencies, or contracts based on financial or stock
indices including any index of U.S. Government Securities,
Foreign Government Securities, corporate debt securities or
common stock. U.S. futures contracts have been designed by
exchanges which have been designated contracts markets by the
Commodity Futures Trading Commission ("CFTC"), and must be
executed through a futures commission merchant, or brokerage
firm, which is a member of the relevant contract market. Futures
contracts trade on a number of exchange markets, and, through
their clearing corporations, the exchanges guarantee performance
of the contracts as between the clearing members of the exchange.

          At the same time a futures contract is purchased or
sold, a Portfolio must allocate cash or securities as a deposit
payment (initial deposit). It is expected that the initial
deposit would be approximately 1 1/2%-5% of a contract's face
value. Daily thereafter, the futures contract is valued and the
payment of variation margin may be required, since each day the
Portfolio would provide or receive cash that reflects any decline
or increase in the contract's value.

          At the time of delivery of securities pursuant to such
a contract, adjustments are made to recognize differences in
value arising from the delivery of securities with a different
interest rate from that specified in the contract. In some (but
not many) cases, securities called for by a futures contract may
not have been issued when the contract was written.

          Although futures contracts by their terms call for the
actual delivery or acquisition of securities, in most cases the
contractual obligation is fulfilled before the date of the
contract without having to make or take delivery of the
securities. The off-setting of a contractual obligation is
accomplished by buying (or selling, as the case may be) on a
commodities exchange an identical futures contract calling for
delivery in the same month. Such a transaction, which is effected
through a member of an exchange, cancels the obligation to make
or take delivery of the securities. Since all transactions in the
futures market are made, offset or fulfilled through a
clearinghouse associated with the exchange on which the contracts
are traded, a Portfolio will incur brokerage fees when it
purchases or sells futures contracts.

INTEREST RATE FUTURES

          The purpose of the acquisition or sale of a futures
contract, in the case of a portfolio such as a Portfolio of the
Fund, which holds or intends to acquire fixed-income securities,
is to attempt to protect the Portfolio from fluctuations in
interest or foreign exchange rates without actually buying or
selling fixed-income securities or foreign currency. For example,
if interest rates were expected to increase, the Portfolio might
enter into futures contracts for the sale of debt securities.
Such a sale would have much the same effect as selling an
equivalent value of the debt securities owned by the Portfolio.
If interest rates did increase, the value of the debt securities
in the portfolio would decline, but the value of the futures
contracts to the Portfolio would increase at approximately the
same rate, thereby keeping the net asset value of the Portfolio
from declining as much as it otherwise would have. The Portfolio
could accomplish similar results by selling debt securities and
investing in bonds with short maturities when interest rates are
expected to increase. However, since the futures market is more
liquid than the cash market, the use of futures contracts as an
investment technique allows a Portfolio to maintain a defensive
position without having to sell its portfolio securities.

          Similarly, when it is expected that interest rates may
decline, futures contracts may be purchased to attempt to hedge
against anticipated purchases of debt securities at higher
prices. Since the fluctuations in the value of futures contracts
should be similar to those of debt securities, the Portfolio
could take advantage of the anticipated rise in the value of debt
securities without actually buying them until the market had
stabilized. At that time, the futures contracts could be
liquidated and the Portfolio could then buy debt securities on
the cash market. To the extent a Portfolio enters into futures
contracts for this purpose, the assets in the segregated asset
account maintained to cover the Portfolio's obligations with
respect to such futures contracts will consist of cash, cash
equivalents or high quality liquid debt securities (or, in the
case of the AllianceBernstein Americas Government Income
Portfolio, AllianceBernstein Global Dollar Government Portfolio
and AllianceBernstein Utility Income Portfolio, high grade liquid
debt securities) from its portfolio in an amount equal to the
difference between the fluctuating market value of such futures
contracts and the aggregate value of the initial and variation
margin payments made by the Portfolio with respect to such
futures contracts.

          The ordinary spreads between prices in the cash and
futures markets, due to differences in the nature of those
markets, are subject to distortions. First, all participants in
the futures market are subject to initial deposit and variation
margin requirements. Rather than meeting additional variation
margin requirements, investors may close futures contracts
through offsetting transactions which could distort the normal
relationship between the cash and futures markets. Second, the
liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced, thus
producing distortion. Third, from the point of view of
speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the
securities market. Therefore, increased participation by
speculators in the futures market may cause temporary price
distortions. Due to the possibility of distortion, a correct
forecast of general interest rate trends by the Adviser may still
not result in a successful transaction.

          In addition, futures contracts entail risks. Although a
Portfolio may believe that use of such contracts will benefit the
Portfolio, if the Adviser's investment judgment about the general
direction of interest rates is incorrect, the Portfolio's overall
performance would be poorer than if it had not entered into any
such contract. For example, if a Portfolio has hedged against the
possibility of an increase in interest rates which would
adversely affect the price of debt securities held in its
portfolio and interest rates decrease instead, the Portfolio will
lose part or all of the benefit of the increased value of its
debt securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such
situations, if the Portfolio has insufficient cash, it may have
to sell debt securities from its portfolio to meet daily
variation margin requirements. Such sales of bonds may be, but
will not necessarily be, at increased prices that reflect the
rising market. The Portfolio may have to sell securities at a
time when it may be disadvantageous to do so.

STOCK INDEX FUTURES

          A Portfolio may purchase and sell stock index futures
as a hedge against movements in the equity markets. There are
several risks in connection with the use of stock index futures
by a Portfolio as a hedging device. One risk arises because of
the imperfect correlation between movements in the price of the
stock index futures and movements in the price of the securities
which are the subject of the hedge. The price of the stock index
futures may move more than or less than the price of the
securities being hedged. If the price of the stock index futures
moves less than the price of the securities which are the subject
of the hedge, the hedge will not be fully effective but, if the
price of the securities being hedged has moved in an unfavorable
direction, the Portfolio would be in a better position than if it
had not hedged at all. If the price of the securities being
hedged has moved in a favorable direction, this advantage will be
partially offset by the loss on the index future. If the price of
the future moves more than the price of the stock, the Portfolio
will experience either a loss or gain on the future that will not
be completely offset by movements in the price of the securities
which are subject to the hedge. To compensate for the imperfect
correlation of movements in the price of securities being hedged
and movements in the price of the stock index futures, a
Portfolio may buy or sell stock index futures contracts in a
greater dollar amount than the dollar amount of securities being
hedged if the volatility over a particular time period of the
prices of such securities has been greater than the volatility
over such time period of the index, or if otherwise deemed to be
appropriate by the Adviser. Conversely, a Portfolio may buy or
sell fewer stock index futures contracts if the volatility over a
particular time period of the prices of the securities being
hedged is less than the volatility over such time period of the
stock index, or it is otherwise deemed to be appropriate by the
Adviser. It is also possible that, where a Portfolio has sold
futures to hedge its portfolio against a decline in the market,
the market may advance and the value of securities held in the
Portfolio may decline. If this occurred, the Portfolio would lose
money on the futures and also experience a decline in value in
its portfolio securities. However, over time the value of a
diversified portfolio should tend to move in the same direction
as the market indices upon which the futures are based, although
there may be deviations arising from differences between the
composition of the Portfolio and the stocks comprising the index.

          Where futures are purchased to hedge against a possible
increase in the price of stock before a Portfolio is able to
invest its cash (or cash equivalents) in stocks (or options) in
an orderly fashion, it is possible that the market may decline
instead. If a Portfolio then concludes not to invest in stock or
options at that time because of concern as to possible further
market decline or for other reasons, the Portfolio will realize a
loss on the futures contract that is not offset by a reduction in
the price of securities purchased.

          In addition the possibility that there may be an
imperfect correlation, or no correlation at all, between
movements in the stock index futures and the portion of the
portfolio being hedged, the price of stock index futures may not
correlate perfectly with movement in the stock index due to
certain market distortions. Rather than meeting additional margin
deposit requirements, investors may close futures contracts
through offsetting transactions that could distort the normal
relationship between the index and futures markets. Secondly,
from the point of view of speculators, the deposit requirements
in the futures market are less onerous than margin requirements
in the securities market. Therefore, increased participation by
speculators in the futures market may also cause temporary price
distortions. Due to the possibility of price distortion in the
futures market, and because of the imperfect correlation between
the movements in the stock index and movements in the price of
stock index futures, a correct forecast of general market trends
by the investment adviser may still not result in a successful
hedging transaction over a short time frame.

          Positions in stock index futures may be closed out only
on an exchange or board of trade that provides a secondary market
for such futures. Although the Portfolios intend to purchase or
sell futures only on exchanges or boards of trade where there
appear to be active secondary markets, there is no assurance that
a liquid secondary market on any exchange or board of trade will
exist for any particular contract or at any particular time. In
such event, it may not be possible to close a futures investment
position, and in the event of adverse price movements, a
Portfolio would continue to be required to make daily cash
payments of variation margin. However, in the event futures
contracts have been used to hedge portfolio securities, such
securities will not be sold until the futures contract can be
terminated. In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses
on the futures contract. However, as described above, there is no
guarantee that the price of the securities will in fact correlate
with the price movements in the futures contract and thus provide
an offset on a futures contract.

          The Adviser intends to purchase and sell futures
contracts on the stock index for which it can obtain the best
price with due consideration to liquidity.

OPTIONS ON FUTURES CONTRACTS

          Portfolios of the Fund intend to purchase and write
options on futures contracts for hedging purposes. None of the
Portfolios is a commodity pool and all transactions in futures
contracts engaged in by a Portfolio must constitute bona fide
hedging or other permissible transactions in accordance with the
rules and regulations promulgated by the CFTC. The purchase of a
call option on a futures contract is similar in some respects to
the purchase of a call option on an individual security.
Depending on the pricing of the option compared to either the
price of the futures contract upon which it is based or the price
of the underlying debt securities, it may or may not be less
risky than ownership of the futures contract or underlying debt
securities. As with the purchase of futures contracts, when a
Portfolio is not fully invested it may purchase a call option on
a futures contract to hedge against a market advance due to
declining interest rates.

          The writing of a call option on a futures contract
constitutes a partial hedge against declining prices of the
security or foreign currency that is deliverable upon exercise of
the futures contract or securities comprising an index. If the
futures price at expiration of the option is below the exercise
price, a Portfolio will retain the full amount of the option
premium that provides a partial hedge against any decline that
may have occurred in the Portfolio's portfolio holdings. The
writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the security or
foreign currency which is deliverable upon exercise of the
futures contract or securities comprising an index. If the
futures price at expiration of the option is higher than the
exercise price, a Portfolio will retain the full amount of the
option premium that provides a partial hedge against any increase
in the price of securities that the Portfolio intends to
purchase. If a put or call option a Portfolio has written is
exercised, the Portfolio will incur a loss that 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 futures positions, a
Portfolio's losses from existing options on futures may to some
extent be reduced or increased by changes in the value of
portfolio securities.

          The purchase of a put option on a futures contract is
similar in some respects to the purchase of protective put
options on portfolio securities. For example, a Portfolio may
purchase a put option on a futures contract to hedge the
Portfolio's portfolio against the risk of rising interest rates.

          The amount of risk a Portfolio assumes when it
purchases an option on a futures contract is the premium paid for
the option plus related transaction costs. In addition to the
correlation risks discussed above, the purchase of an option also
entails the risk that changes in the value of the underlying
futures contract will not be fully reflected in the value of the
option purchased.

OPTIONS ON FOREIGN CURRENCIES

          Portfolios of the Fund may purchase and write options
on foreign currencies for hedging purposes in a manner similar to
that in which futures contracts on foreign currencies, or forward
contracts, will be utilized. For example, a decline in the dollar
value of a foreign currency in which portfolio 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 Portfolios may purchase put options on the
foreign currency. If the value of the currency does decline, the
Portfolios will have the right to sell such currency for a fixed
amount in dollars and will 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
Portfolios may purchase call options thereon. 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 a Portfolio deriving
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, a Portfolio could sustain losses on
transactions in foreign currency options which would require it
to forego a portion or all of the benefits of advantageous
changes in such rates.

          Portfolios of the Fund may write options on foreign
currencies for the same types of hedging purposes. For example,
where a Portfolio anticipates a decline in the dollar value of
foreign currency 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
will be offset by the amount of the premium received.

          Similarly, instead of purchasing a call option to hedge
against an anticipated increase in the U.S. Dollar cost of
securities to be acquired, a Portfolio could write a put option
on the relevant currency which, if rates move in the manner
projected, will expire unexercised and allow the Portfolio 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 Portfolio would 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, a Portfolio also may be required to forego all or a
portion of the benefits which might otherwise have been obtained
from favorable movements in exchange rates.

          Portfolios of the Fund intend to write covered call
options on foreign currencies. A call option written on a foreign
currency by a Portfolio is covered if the Portfolio owns the
underlying foreign currency covered by the call or has an
absolute and immediate right to acquire that foreign currency
without additional cash consideration (or for additional cash
consideration held in a segregated account by the Fund's
custodian) upon conversion or exchange of other foreign currency
held in its portfolio. A call option is also covered if the
Portfolio has a call on the same foreign currency and in the same
principal amount as the call written where the exercise price of
the call held (a) is equal to or less than the exercise price of
the call written or (b) is greater than the exercise price of the
call written if the difference is maintained by the Portfolio in
cash, U.S. Government Securities and other high grade liquid debt
securities in a segregated account with the Fund's custodian.

          Portfolios of the Fund also intend to write call
options on foreign currencies that are not covered for
cross-hedging purposes. A call option on a foreign currency is
for cross-hedging purposes if it is not covered, but is designed
to provide a hedge against a decline in the U.S. Dollar value of
a security which a Portfolio owns or has the right to acquire and
which is denominated in the currency underlying the option due to
an adverse change in the exchange rate. In such circumstances,
the Portfolio collateralizes the option by maintaining in a
segregated account with the Fund's custodian, cash or U.S.
Government Securities or other high quality liquid debt
securities (or, in the case of the AllianceBernstein Americas
Government Income Portfolio and the AllianceBernstein Utility
Income Portfolio, high grade liquid debt securities) in an amount
not less than the value of the underlying foreign currency in
U.S. Dollars marked to market daily.

ADDITIONAL RISKS OF OPTIONS ON FUTURES CONTRACTS,
FORWARD CONTRACTS AND OPTIONS ON FOREIGN CURRENCIES

          Unlike transactions entered into by a Portfolio in
futures contracts, options on foreign currencies and forward
contracts are not traded on contract markets regulated by the
CFTC or (with the exception of certain foreign currency options)
by the Commission. To the contrary, such instruments are 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 regulation by the
Commission. 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
Commission, 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 a
Portfolio to liquidate open positions at a profit prior to
exercise or expiration, or to limit losses in the event of
adverse market movements.

          The purchase and sale of exchange-traded foreign
currency options, however, 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 United States of data on which to make trading
decisions, (iii) delays in a Portfolio's ability to act upon
economic events occurring in foreign markets during nonbusiness
hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin
requirements than in the United States, and (v) lesser trading
volume.


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

                           APPENDIX C:

                             OPTIONS

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

          Portfolios of the Fund will only write covered put and
call options, unless such options are written for cross-hedging
purposes. The manner in which such options will be deemed covered
is described in the Prospectus under the heading "Other
Investment Policies and Techniques -- Options."

          The writer of an option may have no control over when
the underlying securities must be sold, in the case of a call
option, or purchased, in the case of a put option, since with
regard to certain options, the writer may be assigned an exercise
notice at any time prior to the termination of the obligation.
Whether or not an option expires unexercised, the writer retains
the amount of the premium. This amount, of course, may, in the
case of a covered call option, be offset by a decline in the
market value of the underlying security during the option period.
If a call option is exercised, the writer experiences a profit or
loss from the sale of the underlying security. If a put option is
exercised, the writer must fulfill the obligation to purchase the
underlying security at the exercise price, which will usually
exceed the then market value of the underlying security.

          The writer of a listed option that wishes to terminate
its obligation may effect a closing purchase transaction. This is
accomplished by buying an option of the same series as the option
previously written. The effect of the purchase is that the
writer's position will be cancelled by the clearing corporation.
However, a writer may not effect a closing purchase transaction
after being notified of the exercise of an option. Likewise, an
investor who is the holder of a listed option may liquidate its
position by effecting a closing sale transaction. This is
accomplished by selling an option of the same series as the
option previously purchased. There is no guarantee that either a
closing purchase or a closing sale transaction can be effected.

          Effecting a closing transaction in the case of a
written call option will permit the Portfolio to write another
call option on the underlying security with either a different
exercise price or expiration date or both, or in the case of a
written put option will permit the Portfolio to write another put
option to the extent that the exercise price thereof is secured
by deposited cash or short-term securities. Also, effecting a
closing transaction will permit the cash or proceeds from the
concurrent sale of any securities subject to the option to be
used for other Portfolio investments. If the Portfolio desires to
sell a particular security from its portfolio on which it has
written a call option, it will effect a closing transaction prior
to or concurrent with the sale of the security.

          A Portfolio will realize a profit from a closing
transaction if the price of the transaction is less than the
premium received from writing the option or is more than the
premium paid to purchase the option; the Portfolio will realize a
loss from a closing transaction if the price of the transaction
is more than the premium received from writing the option or is
less than the premium paid to purchase the option. Because
increases in the market price of a call option will generally
reflect increases in the market price of the underlying security,
any loss resulting from the repurchase of a call option is likely
to be offset in whole or in part by appreciation of the
underlying security owned by the Portfolio.

          An option position may be closed out only where there
exists a secondary market for an option of the same series. If a
secondary market does not exist, it might not be possible to
effect closing transactions in particular options with the result
that the Portfolio would have to exercise the options in order to
realize any profit. If the Portfolio is unable to effect a
closing purchase transaction in a secondary market, it will not
be able to sell the underlying security until the option expires
or it delivers the underlying security upon exercise. Reasons for
the absence of a liquid secondary market include the following:
(i) there may be insufficient trading interest in certain
options, (ii) restrictions may be imposed by a national
securities exchange (Exchange) on opening transactions or closing
transactions or both, (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or
series of options or underlying securities, (iv) unusual or
unforeseen circumstances may interrupt normal operations on an
Exchange, (v) the facilities of an Exchange or the Options
Clearing Corporation may not at all times be adequate to handle
current trading volume, or (vi) one or more Exchanges could, for
economic or other reasons, decide or be compelled at some future
date to discontinue the trading of options (or a particular class
or series of options), in which event the secondary market on
that Exchange (or in that class or series of options) would cease
to exist, although outstanding options on that Exchange that had
been issued by the Options Clearing Corporation as a result of
trades on that Exchange would continue to be exercisable in
accordance with their terms.

          A Portfolio may write options in connection with buy-
and-write transactions; that is, the Portfolio may purchase a
security and then write a call option against that security. The
exercise price of the call the Portfolio determines to write will
depend upon the expected price movement of the underlying
security. The exercise price of a call option may be below
(in-the-money), equal to (at-the-money) or above
(out-of-the-money) the current value of the underlying security
at the time the option is written. Buy-and-write transactions
using in-the-money call options may be used when it is expected
that the price of the underlying security will remain flat or
decline moderately during the option period. Buy-and-write
transactions using at-the-money call options may be used when it
is expected that the price of the underlying security will remain
fixed or advance moderately during the option period.
Buy-and-write transactions using out-of-the-money call options
may be used when it is expected that the premiums received from
writing the call option plus the appreciation in the market price
of the underlying security up to the exercise price will be
greater than the appreciation in the price of the underlying
security alone. If the call options are exercised in such
transactions, the Portfolio's maximum gain will be the premium
received by it for writing the option, adjusted upwards or
downwards by the difference between the Portfolio's purchase
price of the security and the exercise price. If the options are
not exercised and the price of the underlying security declines,
the amount of such decline will be offset in part, or entirely,
by the premium received.

          The writing of covered put options is similar in terms
of risk/return characteristics to buy-and-write transactions. If
the market price of the underlying security rises or otherwise is
above the exercise price, the put option will expire worthless
and the Portfolio's gain will be limited to the premium received.
If the market price of the underlying security declines or
otherwise is below the exercise price, the Portfolio may elect to
close the position or take delivery of the security at the
exercise price and the Portfolio's return will be the premium
received from the put option minus the amount by which the market
price of the security is below the exercise price.
Out-of-the-money, at-the-money, and in-the-money put options may
be used by the Portfolio in the same market environments that
call options are used in equivalent buy-and-write transactions.

          A Portfolio may purchase put options to hedge against a
decline in the value of its portfolio. By using put options in
this way, the Portfolio will reduce any profit it might otherwise
have realized in the underlying security by the amount of the
premium paid for the put option and by transaction costs.

          A Portfolio may purchase call options to hedge against
an increase in the price of securities that the Portfolio
anticipates purchasing in the future. The premium paid for the
call option plus any transaction costs will reduce the benefit,
if any, realized by the Portfolio upon exercise of the option,
and, unless the price of the underlying security rises
sufficiently, the option may expire worthless to the Portfolio.



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

             APPENDIX D: ADDITIONAL INFORMATION ABOUT
     THE UNITED KINGDOM, JAPAN, CANADA, MEXICO AND ARGENTINA

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

          The information in this section is based on material
obtained by the Fund from various United Kingdom, Japanese,
Canadian, Mexican and Argentine governmental and other sources
believed to be accurate but has not been independently verified
by the Fund or the Adviser. It is not intended to be a complete
description of the United Kingdom, Japan, Canada, Mexico or
Argentina, their economies or the consequences of investing in
United Kingdom or Japanese securities, or Canadian Government,
Mexican Government or Argentine Government Securities.



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

         ADDITIONAL INFORMATION ABOUT THE UNITED KINGDOM

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

          The United Kingdom of Great Britain and Northern
Ireland is located off the continent of Europe in the Atlantic
Ocean. Its population is approximately 59 million.

GOVERNMENT

          The United Kingdom is a constitutional monarchy. Queen
Elizabeth II has been the head of state since she acceded to the
throne in 1952. The monarchy was established in 1066. The
monarch's power has eroded over the centuries, but the monarch
retains the power to call and dissolve Parliament, to give assent
to bills passed by Parliament, to appoint the Prime Minister and
to sign treaties or declare war. In practice, most of these acts
are performed by government ministers, and supreme legislative
authority now resides in the Parliament. Parliament, the
bicameral legislature, consists of the House of Commons and the
House of Lords. Acts of Parliament passed in 1911 and 1949 limit
the powers of the House of Lords to prevent bills passed by the
House of Commons from becoming law. The main purpose of the House
of Lords is now to revise and amend laws passed by the House of
Commons. The future role and composition of the House of Lords is
the subject of a December 1999 report of the Royal Commission on
the Reform of the House of Lords, whose recommendations are under
consideration by a joint committee of the House of Commons and
the House of Lords. An initial step in the reform effort was
taken in November 1999, when hereditary peers lost their right to
sit and vote in the House of Lords. No further steps have been
taken in this regard. The national government is headed by the
Prime Minister who is appointed by the monarch on the basis of
ability to form a government with the support of the House of
Commons.

POLITICS

          Since World War II the national government has been
formed by either the Conservative Party or the Labour Party. The
Conservative Party under the leadership of Margaret Thatcher
achieved a parliamentary majority and formed a new government in
May 1979. In June 1983 and again in June 1987, the Conservative
Party under her leadership was reelected. The Party pursued
policies of reducing state intervention in the economy, reducing
taxes, de-regulating business and industry and privatizing state-
owned enterprises. It also displayed an antipathy toward the
European Union. In November 1990, Mrs. Thatcher faced a challenge
for the leadership of the party from Michael Heseltine, one of
her former cabinet ministers. The opposition proposed changes in
policy, including increased government intervention in the
economy and a less confrontational approach toward the European
Union. The two wings of the Conservative Party looked for someone
who could unite the Party and elected John Major as its leader
and, by virtue of the Conservative Party majority, to the post of
Prime Minister.

          Mr. Major led the Conservative Party to its fourth
successive general election victory in April 1992, after which
time, the popularity of both Mr. Major and the Conservative Party
declined. In April 1995, the Conservative Party won only 11% of
the vote in Scotland local elections, which resulted in
Conservative Party control of only 81 council seats out of 1,161.
It won only 25% of the vote in local council elections in England
and Wales in May 1995. In July 1995, Mr. Major won a vote of
confidence with his reelection as leader of the Conservative
Party. Despite Mr. Major's strengthened position within the
Conservative Party, the Party continued to suffer setbacks.
Within two weeks of Mr. Major's victory, the Conservative Party
lost its fifth by-election since the general election of 1992. By
1996, his overall majority was reduced to one. In the next
general election, on May 1, 1997, the Labour Party gained a
substantial majority in the House of Commons as Mr. Major and the
Conservative Party were defeated by the Labour Party led by Tony
Blair, who subsequently was appointed Prime Minister. The Labour
Party and Tony Blair achieved another victory in the next general
election, which occurred on June 7, 2001. The Labour Party now
holds 410 of the 659 seats in the House of Commons. The 2001
election results marked the first time in British political
history that the Labour Party secured re-election; it was also
the largest majority ever achieved by a governing party entering
its second term. The next general election is required by law to
occur no later than June 2006.

ECONOMY

          The United Kingdom's economy is tied with France for
the position of fourth largest economy in the Organization for
Economic Cooperation and Development, behind the United States,
Japan and Germany. Its economy maintained an average annual
growth rate of 3.6% in real growth domestic product ("GDP") terms
from 1982 through 1988; and from 1989 through 1993, the United
Kingdom's real GDP annual growth rate was 1.0%. The economy has
continued to experience the moderate growth that began in 1993,
after the 1990-1992 recession, with real GDP having grown by 3.5%
in 1997, 2.9% in 1998, 2.4% in 1999, 3.1% in 2000, 2.0% in 2001,
and 1.6% in 2002.

          Since the early 1990s, the United Kingdom's economy has
had moderate inflation, averaging 2.8% (as measured by the RPIX,
which excludes mortgage interest payments). The inflation rate
during 2002 was an estimated 1.3%.

          The sluggish growth in the United Kingdom's
manufacturing sector since the 1990-1992 recession continued the
trend toward the decreased importance of manufacturing in the
economy. Manufacturing accounted for just 19.9% of GDP in 2001
compared with 36.5% in 1960. As the United Kingdom's
manufacturing industry has declined in importance, the service
industry, including financial services, has increased in
importance. The service industries' share of GDP has increased to
almost two-thirds from 45% in 1960.

          Employment has been shifting from manufacturing to the
service industry, a trend expected to continue for the
foreseeable future. Overall, unemployment has continued to fall
from a post-recession high of 10.6% in January 1993 to an average
of 3.1% in 2002.

          Foreign trade remains an important part of the United
Kingdom's economy. In 2001, exports of goods and services
represented 27.1% of GDP and imports represented 29.3% of GDP.
The United Kingdom has historically been an exporter of
manufactured products and an importer of food and raw materials,
but there is a growing trend toward manufactured goods forming a
larger proportion of imports. The decline of the United Kingdom's
manufacturing base has resulted in the emergence of a deficit on
trade in manufactures, previously in surplus, since the early
1980s. Currently the United Kingdom is a net importer of
foodstuffs and raw materials other than fuels, as well as of
clothing and footwear, electrical machinery and motor vehicles,
and a net exporter of petroleum and petroleum-related products,
chemical products, tobacco, beverages and mechanical machinery.
For every year since 1982, the United Kingdom has been a net
importer of goods. The relative importance of the United
Kingdom's trading partners has also shifted, with the European
Union ("EU") having become a more significant trading partner of
the United Kingdom. In 2001, the other members of the EU
accounted for 58.1% of all exports and 51.7% of its imports, as
compared to 43.3% and 41.3%, respectively, in 1980. In 2001, the
United Kingdom's largest trading partners with respect to exports
and imports were the United States and Germany, respectively.

          Historically, the United Kingdom's current account
consisted of relatively small trade deficits, sometimes
outweighed by surpluses on invisibles (services, interest,
dividends, profits and transfers). Since 1980, several important
changes have taken place with regard to the United Kingdom's
trading position. Those include the increased importance to the
economy of oil exports from the North Sea, the change from being
a net exporter to a net importer of goods and the diminishing
surpluses from invisibles. These developments led to a balance of
payments deficit, which has continued through 2002 with the
exception of 1997, when the balance of payments moved into
surplus.

          With regard to the public sector of the economy, the
national government publishes forecasts for the economy and the
public sector net cash requirement ("PSNCR"). The PSNCR is a
mandated measure of the amount of borrowing required to balance
the national government's budget. Figures for the fiscal year
ended March 31, 1998, showed a PSNCR equal to 0.2% of GDP (or a
general government financial deficit of 0.8%). As a result, the
general government budget balance for the 1997/1998 fiscal year
was well below the permitted level for countries permitted to
participate in the Economic and Monetary Union ("EMU") beginning
in January 1999. Although the United Kingdom has continued to
meet the EMU's eligibility criteria (and, with a general
government financial balance in surplus equivalent to 1% of GDP
in 2001, is currently in a stronger fiscal position than that of
most EMU members), the government chose not to participate in the
EMU when it was launched in January 1999. Further, the government
announced that it would not take any action before a referendum
was held after the next general election, which occurred on June
7, 2001. Nonetheless, the government submitted a report to the
European Commission detailing the steps the government is taking
to prepare the United Kingdom for joining the EMU at a later date
in the event it decides to do so. The issue of the United
Kingdom's membership in the EMU has become very contentious. It
is unclear whether a referendum will be held and, if so, what the
outcome might be.

MONETARY AND BANKING SYSTEM

          The central bank of the United Kingdom is the Bank of
England. Its main functions are to advise on the formulation and
execution of monetary policy, to supervise banking operations in
the United Kingdom, to manage the domestic currency, and, as
agent for the Government, the country's foreign exchange
reserves. Additionally, shortly after taking office in 1997,
Prime Minister Blair vested responsibility for setting interest
rates in a new Monetary Policy Committee headed by the Bank of
England, as opposed to the Treasury.

          The City of London is one of the world's major
financial centers. It has the greatest concentration of banks and
the largest insurance market in the world. It is estimated that
United Kingdom insurers handle approximately 23% of the general
insurance business placed in the international market. Financial
and business services currently form approximately 27.4% of the
country's GDP.

          The currency unit of the United Kingdom is the Pound
Sterling. As trade with the EU has grown, the main rate of
exchange in the past 20 years has been that against the Deutsche
Mark (and from 1999, the Euro), rather than the U.S. Dollar.
Between 1996 and 2000, the Pound appreciated strongly both
against the U.S. Dollar and the Deutsche Mark/Euro, stabilizing
slightly in 2001. Since the middle of 2000, the Pound has traded
in a narrower range against the Euro than the U.S. Dollar. At the
end of 2001 and 2002, the exchange rate between the U.S. Dollar
and the Pound was 1.46 and 1.60, respectively, and the exchange
rate between the Euro and the Pound was 1.63 and 1.53,
respectively.

          On January 1, 1999 eleven member countries of the EU
(Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, The Netherlands, Portugal and Spain) adopted the Euro
as their common currency. On January 1, 2001 Greece became the
twelfth country to adopt the Euro as its currency. In the
transition period of January 1, 1999 to January 1, 2002, the
national currencies of these participating countries (e.g., the
Deutsche Mark and the French Franc) were subdivisions of the
Euro. On January 1, 2002, Euro banknotes and coins were put into
general circulation in the twelve participating countries. As of
February 28, 2002, the old national currencies of all twelve
countries were withdrawn from circulation and the Euro became the
exclusive currency in those countries. The ECU, which was not a
true currency in its own right, but rather a unit of account
whose value was tied to its underlying constituent currencies,
ceased to exist as of January 1, 1999, at which time all ECU
obligations were converted into Euro obligations at a 1:1
conversion rate.

THE LONDON STOCK EXCHANGE

          The London Stock Exchange ("LSE") is both the national
stock exchange for the United Kingdom and the world's leading
marketplace for the trading of international equities. The LSE
provides a secondary market for trading in more than 10,000
securities. It offers markets for domestic securities (securities
issued by companies in the United Kingdom or Ireland), foreign
equities, United Kingdom gilts (securities issued by the national
government), bonds or fixed interest stocks (usually issued by
companies or local authorities) and options. As of December
31,2002, foreign equities constituted approximately 62% and
United Kingdom equities constituted approximately 38% of the
market value of all LSE listed and quoted equity securities. At
the end of 2002, the LSE was the world's third largest stock
exchange in terms of market value, the New York Stock Exchange
being the largest and the Tokyo Stock Exchange being the second
largest.

          The LSE comprises different markets. In addition to the
market for officially-listed securities, the LSE includes a
market created in 1995 for smaller and newer companies known as
AIM. As of December 31, 2002, 704 companies with an aggregate
market value of 10.3 billion Pounds were traded on AIM. As of
December 31, 2002, the market value of the securities traded on
AIM was less than 1% of the market value of the securities
officially listed on the LSE. Another new market, known as
techMARK, was launched by the LSE on November 4, 1999 for
innovative technology companies. As of December 31, 2002, 210
companies with an aggregate market value of 244.9 billion Pounds
were traded on techMARK.

          The LSE runs markets for trading securities by
providing a market structure, regulating the operation of the
markets, supervising the conduct of member firms dealing in the
markets, publishing company news and providing trade confirmation
and settlement services. The domestic market is based on the
competing marketmaker system. The bid and offer prices are
distributed digitally via the Exchange's automated price
information system, SEAQ (Stock Exchange Automated Quotations),
which provides widespread dissemination of the securities prices
for the United Kingdom equity market. Throughout the trading day,
marketmakers display their bid (buying) and offer (selling)
prices and the maximum transaction size to which these prices
relate. These prices are firm to other LSE member firms, except
that the prices for larger transactions are negotiable.

          Marketmakers in the international equity market display
their quotes on SEAQ International. The system operates in a
manner similar to the domestic SEAQ, but is divided into 40
separate country sectors, of which 15 are developing markets
sectors.

          On October 20, 1997 the LSE launched the new Stock
Exchange Electronic Trading Service, an initiative that will
improve efficiency and lower share trading costs, and is expected
to attract more volume and thus increase liquidity.

          On July 7, 1998 the LSE and its German counterpart, the
Deutsche Borse, unexpectedly announced their intention to form a
strategic alliance under which members of one exchange will be
members of the other. While the first phase of the proposed
alliance began in January 1999, the LSE and the Deutsche Borse
still faced numerous issues, including agreement on common
regulations and promulgation by their respective governments of a
common tax regime for share trading. In September 2000, just
prior to a vote of shareholders and amid growing concerns about
regulatory matters and national and cultural differences,
opposition from retail traders and a hostile bid by a rival
exchange, the planned merger was called off. It is unclear
whether there will be efforts in the future to establish a
pan-European equity market.

          On November 23, 1999 the LSE, together with the Bank of
England and CREST (the paperless share settlement system through
which trades executed on the LSE's markets can be settled),
announced proposals for the United Kingdom's equity and corporate
debt markets to move from T+5 to T+3 settlement starting in
February 2001.

          Sector Analysis of the LSE. The LSE's domestic and
foreign securities include a broad cross-section of companies
involved in many different industries. In 2002, the five largest
industry sectors by turnover among domestic securities were banks
with 16.4%, telecommunications with 10.5%, oil and gas with 9.4%,
pharmaceuticals with 7.8% and media/photography with 6.8%. In
2002, the five largest country sectors by market value among
listed and SEAQ International quoted securities were France with
16.2% of the aggregate market value of listed and SEAQ
International quoted securities, the United States with 14.1%,
Germany with 13.0%, The Netherlands with 10.3% and Japan with
8.3%.

          Market Growth of the LSE. LSE market value and the
trading volume have increased dramatically since the end of 1990.
In 2002, 706.4 billion domestic shares and 1057.2 billion foreign
shares were traded as compared with 155.4 billion and 34.8
billion, respectively, in 1990. At the end of 2002, the market
value of listed domestic companies and foreign companies
increased to 1,147.8 billion Pounds and 1901.7 billion Pounds
from 450.5 billion Pounds and 1,124.1 billion Pounds,
respectively, at the end of 1990.

          Market Performance of the LSE. The FT-SE 100 is an
index that consists of the 100 largest United Kingdom companies.
The FT-SE 100 was introduced by the LSE in cooperation with The
Financial Times and the Institute and Faculty of Actuaries in
1984. As measured by the FT-SE 100, the performance of the 100
largest companies reached a record high of 6930.2 on December 30,
1999. On December 29, 2000, the FT-SE 100 closed at 6222.5; on
December 31, 2001, the FT-SE 100 closed at 5217.4; and on
December 31, 2002, the FT-SE 100 closed at 3940.4.

REGULATION OF THE UNITED KINGDOM FINANCIAL SERVICES INDUSTRY

          The principal securities law in the United Kingdom is
the Financial Services Act. The Financial Services Act, which
became law in November 1986, established a new regulatory system
for the conduct of investment businesses in the United Kingdom.
Most of the statutory powers under the Act were transferred to
the Securities and Investments Board ("SIB"), a designated agency
created for this purpose. The SIB was given wide-ranging
enforcement powers and was made accountable to Parliament through
the Treasury. A system of self regulating organizations ("SROs"),
which regulate their members, was made accountable to the SIB.
There are three SROs covering the financial market, including the
Securities and Futures Authority that is responsible for
overseeing activities on the Exchange. The other SROs are the
Investment Management Regulatory Organization and the Personal
Investment Authority. In 1988, it became illegal for any firm to
conduct business without authorization from the SRO responsible
for overseeing its activities. In addition, Recognized Investment
Exchanges ("RIEs"), which include the London Stock Exchange of
London, the London International Financial Futures and Options
Exchange, the London Commodities Exchange, the International
Petroleum Exchange of London, the London Metal Exchange and the
London Securities and Derivatives Exchange were made accountable
to the SIB. Recognition as an RIE exempts the exchange (but not
its members) from obtaining authorization for actions taken in
its capacity as an RIE. To become an RIE, an exchange must
satisfy the SIB that it meets various prerequisites set out in
the Act, including having effective arrangements for monitoring
and enforcing compliance with its rules. Recognized Professional
Bodies ("RPBs") supervise the conduct of lawyers, actuaries,
accountants and some insurance brokers. Together the SROs, RIEs
and RPBs provide the framework for protection for investors and
integrity of the markets.

          On May 20, 1997 the newly installed Labour government
announced a proposed major restructuring of the regulation and
supervision of the financial services industry in the United
Kingdom. The main feature of the restructuring plan was to
transfer regulatory authority over banks from the Bank of England
to an expanded SIB, which has been named the Financial Services
Authority (FSA). In addition, the plan called for the merger of
the three SROs into the FSA. The transfer of banking supervision
from the Bank of England to the FSA was formally implemented on
June 1, 1998. The Financial Services and Markets Act, legislation
implementing the proposed consolidation of the SROs into the FSA,
which was more complex and more controversial, was enacted on
June 14, 2000 and became fully implemented on December 1, 2001.

          The European Union's Investment Services Directive
("ISD") provides the framework for a single market in financial
services in Europe. The ISD allows authorized firms to provide
investment services in other EU member states on a cross-border
basis without the need for separate authorization in the host
state. Revisions to the ISD are currently under consideration.

          Basic restrictions on insider dealing in securities are
contained in the Company Securities Act of 1985. The Financial
Services Act provides guidelines for investigations into insider
dealing under the Criminal Justice Act of 1993 and penalties for
any person who fails to cooperate with such an investigation. In
addition, the Financial Services Act introduced new listing and
disclosure requirements for companies.

UNITED KINGDOM FOREIGN EXCHANGE AND INVESTMENT CONTROLS

          The United Kingdom has no exchange or investment
controls, and funds and capital may be moved freely in and out of
the country. Exchange controls were abolished in 1979. As a
member of the European Union, the United Kingdom applies the
European Union's common external tariff.



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

                ADDITIONAL INFORMATION ABOUT JAPAN

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

          Japan, located in eastern Asia, consists of four main
islands: Hokkaido, Honshu, Kyushu and Shikoku, and many small
islands. Its population is approximately 126 million.

GOVERNMENT

          The government of Japan is a representative democracy
whose principal executive is the Prime Minister. Japan's
legislature (known as the Diet) consists of two houses, the House
of Representatives (the lower house) and the House of Councillors
(the upper house).

POLITICS

          From 1955 to 1993, Japan's government was controlled by
the Liberal Democratic Party (the "LDP"), the major conservative
party. Since 1993, Japan's political scene has been very fluid,
with six different governments and seven prime ministers.
Although the LDP has been unable to gain the majority of either
house of the Diet and has therefore had to form coalitions with
other parties to maintain its position of governance, it remains
by far Japan's largest party and continues to dominate Japanese
politics. The current Prime Minister is Junichiro Koizumi, who
was elected by the LDP in April 2001 to replace Yoshiro Mori, who
had become one of Japan's most unpopular post-war prime
ministers. Prime Minister Koizumi swept the LDP to an
overwhelming victory in the July 2001 House of Councillors
election, winning 65 of the 121 seats at stake. The LDP currently
governs in a formal coalition with the New Komeito Party and the
New Conservative Party. The coalition currently holds 283 of the
480 seats in the House of Representatives and 139 of the 247
seats in the House of Councillors. The opposition is dominated by
the new Minshuto Party (Democratic Party of Japan), which was
established in 1998 by various opposition groups and parties. The
next election (House of Representatives) is required by law to
occur no later than June 2004.

ECONOMY

          Japan altered its calculation of GDP in November 2000
and restated historic data accordingly. As restated, Japan's real
GDP grew by 3.3% and 1.8% in 1996 and 1997, respectively,
contracted by 1.2% in 1998, grew by 0.2% and 2.1% in 1999 and
2000, respectively, and contracted by 0.8% and 0.5% in 2001 and
2002, respectively. Inflation remained low during most of the
1990s, but during the last several years Japan has experienced
deflation of -0.3% in 1999, -0.7% in 2000 and 2001 and -0.9% in
2002. Consumer demand has been stagnant and is expected to remain
stagnant for the foreseeable future. Unemployment is at its
highest level since the end of World War II, rising to 5.4% in
2002, and is not expected to fall appreciably in the foreseeable
future.

          Japan's post World War II reliance on heavy industries
has shifted to higher technology products assembly and, most
recently, to automobile, electrical and electronic production.
Japan's success in exporting its products has generated sizable
trade surpluses. While the U.S. remains Japan's most important
single trading partner, accounting for 28.5% of Japan's exports
and 18.3% of its imports in 2002, other Asian countries have
become important export markets as well, accounting for 28.9% of
all exports in 2002. Since the early 1980's, Japan's relations
with its trading partners have been difficult, partly due to the
concentration of Japanese exports in products such as
automobiles, machine tools and semiconductors and the large trade
surpluses resulting therefrom, and an overall trade imbalance as
indicated by Japan's balance of payments. Japan's overall trade
surplus for 1994 was the largest in its history, amounting to
almost $145 billion. Exports totaled $386 billion, up 9.3% from
1993, and imports were $242 billion, up 13.6% from 1993. The
current account surplus in 1994 was $130 billion, down 1.5% from
a record high in 1993. By 1996, Japan's overall trade surplus had
decreased to $83 billion. Exports had increased to a total of
$400 billion, up 3.6% from 1994, and imports had increased to a
total of $317 billion, up 31.0% from 1994. During 1997, the
overall trade surplus increased approximately 22% from 1996.
Exports increased to a total of $409 billion, up 2% from 1996,
and imports decreased to $308 billion, down 3% from 1996. During
1998, the overall trade surplus increased approximately 20% from
1997. Exports decreased to a total of $374.0 billion, down 8.6%
from 1997, and imports decreased to $251.7 billion, down 18.2%
from 1997. During 1999, the overall trade surplus was almost
unchanged from 1998, with exports showing an increase of 7.9% and
imports showing an increase of 11.1%. During 2000, the overall
trade surplus decreased by approximately 5.0%, with exports
increasing by approximately 14.0% and imports increasing by
approximately 22.0%. During 2001, the overall trade surplus
decreased by approximately 39.8%, the largest such decline in 31
years, with exports and imports decreasing by approximately 16.6%
and 0.9%, respectively. The sharp decline in the trade surplus
during 2001 was attributed to the economic slowdown in its
largest export market, the U.S., as well as a rapid increase in
imports from China. During 2002, the overall trade surplus
increased for the first time since 1998, by approximately 33%,
with exports increasing by approximately 3% and imports
decreasing by approximately 4%. Japan remains the largest
creditor nation and a significant donor of foreign aid.

          Japan's merchandise trade surpluses with the U.S. have
historically been high and have give rise to numerous incidents
of political conflict between the two countries. On October 1,
1994, the U.S. and Japan reached an agreement with respect to
trade in insurance, glass and medical and telecommunications
equipment. In June 1995, the two countries agreed in principal to
increase Japanese imports of American automobiles and automotive
parts. These and other agreements, however, have not been
successful in addressing Japan's trade surplus with the U.S. In
October 2001, the U.S. and Japan agreed to replace the 1995
automobile pact, a move that is viewed as a major step toward
improving U.S. - Japan auto trade. Other current sources of
tension between the two countries are disputes in connection with
trade in steel, semiconductors and photographic supplies,
deregulation of the Japanese insurance market, a dispute over
aviation rights and access to Japanese ports. It is expected that
the friction between the United States and Japan with respect to
trade issues will continue for the foreseeable future.

          In recent years, Japan's two-way trade with China has
grown rapidly. In 2002, China was Japan's second largest export
market, accounting for 9.6% of total merchandise export revenue,
and its largest supplier of imported goods, overtaking the U.S.
for the first time, accounting for 18.3% of the total bill. This
compares to export and import shares of 5.2% and 12.4%,
respectively, in 1997.

          After achieving one of the world's highest economic
growth rates between the 1960s and 1980s, by the early 1990s the
economy had slowed dramatically when the "bubble economy"
collapsed and stock and real estate prices plummeted. The
collapse of asset prices in 1990-97 left Japan with cumulative
losses of nearly $10 trillion, or roughly the equivalent of two
years of national output. The government produced ten fiscal
stimulus packages in the 1990s worth more than $1 trillion that
contained public works spending and tax cuts. None of these
stimulus packages have been successful in stimulating the
economy.

          Shortly after taking office in April 2001, Prime
Minister Koizumi announced the outlines of his reform agenda. In
a departure from previous economic packages, his plan made no
reference to stimulating growth through government spending.
Rather, his plan stressed the need to rid Japan's banks of bad
loans before real growth can return, setting a timetable of 2-3
years to solve the problem. The plan called for strengthening the
Resolution & Collection Corporation and adopting some programs
utilized by the U.S. in its resolution of the savings-and-loan
crisis in the early 1990s, such as securitizing bad loans.
Although Prime Minister Koizumi enjoys widespread popularity, he
has faced considerable political opposition and has been unable
to achieve any significant progress in implementing his reform
agenda.

          One of the most serious consequences of the fall in
asset prices since the early 1990s has been the pressure placed
on Japan's financial institutions, many of which lent heavily to
real-estate developers and construction companies during the
1980s. The fall in land prices, together with the economic
slowdown, left Japanese banks saddled with a large amount of bad
loans. In June 1996, six bills designed to address the large
amount of bad debt in the banking system were passed by the Diet,
but the difficulties worsened. By the end of the 1997/98 fiscal
year, the government estimated that the banking system's bad
loans totaled 87.5 trillion Yen (approximately $600 billion), or
11% of outstanding bank loans.

          On December 17, 1997, in the wake of the collapse in
the previous month of one of Japan's 20 largest banks, the
government announced a proposal to strengthen the banks by means
of an infusion of public funds and other measures. In addition,
the imposition of stricter capital requirements and other
supervisory reforms scheduled to go into effect in April 1998
were postponed. Subsequent to the December 1997 proposals, the
government proposed a series of additional proposals,
culminating, after vigorous political debate, in a set of laws
that was approved by the Diet in October 1998. The new laws made
$508 billion in public funds available to increase the capital of
Japan's banks, to guarantee depositors' accounts and to
nationalize the weakest banks. On October 23, 1998, the Long-Term
Credit Bank of Japan, Ltd., one of Japan's 19 largest banks,
became the first Japanese bank to be nationalized pursuant to the
new laws. On December 11, 1998, the Nippon Credit Bank, Ltd.
became the second Japanese bank to be nationalized pursuant to
the new laws. Since then, four additional banks have been
nationalized. These laws have not achieved their intended effect.
In exchange for the infusion of public money, the banks were
encouraged to undertake certain structural reforms to make them
more profitable. These reforms have not been undertaken by the
banks, nor has the government been very aggressive in encouraging
them, and, as a result, the stock of bad debt has continued to
grow and the financial system remains in a very fragile state. As
of March 2002, the government estimated the amount of bad debt to
be 43.2 trillion Yen. Private estimates range from 100 to 250
trillion Yen. In April 2003, the government approved the launch
of the Industrial Revitalization Corp., a quasi governmental body
charged with the responsibility of buying up the bad loans and
selling them to the public.

          In 1996, the government, facing the prospect of a
number of bank insolvencies, suspended Japan's normal deposit
insurance cap of 10 million Yen (about $86,000) for five years.
The suspension was extended one year from April 2001 to April
2002 to allow more time for smaller institutions to get back on
their feet before removing the protection of deposit insurance.
In April 2002, the 10 million Yen cap was reinstated, but only
for time deposits. Although there was a significant movement from
time deposits to demand deposits, the change proceeded without
any sudden shocks to the financial system as feared. In addition
to bad domestic loans, Japanese banks also had significant
exposure to the financial turmoil in other Asian markets during
the late 1990s. Furthermore, the Japanese banking system
continues to be buffeted by factors beyond its control, including
a new wave of bankruptcies and falling stock prices. Falling
stock prices became an even greater factor in September 2001,
when new mark-to-market accounting regulations went into effect.
In October 2001, amid growing concerns, both internally and
externally, about Japan's financial health, Japan's Financial
Services Agency ("FSA") undertook a special inspection of Japan's
major banks. Following the inspection, which concluded in April
2002, the FSA issued a report and recommendations for reform,
which have been viewed as insufficient to address the problems.
Citing, among other things, persistent flaws in Japan's banking
sector, on April 15, 2002, S&P downgraded Japan's long-term local
and foreign currency sovereign credit ratings to AA-. The
fragility of Japan's financial system is expected to continue for
the foreseeable future.

          In November 1996, then Prime Minister Hashimoto
announced a set of initiatives to deregulate the financial sector
by the year 2001. Known as "Tokyo's Big Bang," the reforms
include changes in tax laws to favor investors, the lowering of
barriers between banking, securities and insurance, abolition of
foreign exchange restrictions and other measures designed to
revive Tokyo's status in the international capital markets and to
stimulate the economy. The Big Bang was formally launched in
April 1998. Some of the measures that have already been
implemented include a liberalization of foreign exchange
restrictions, a repeal of the ban on holding companies, allowing
banks to sell mutual funds and to issue bonds, the elimination of
restrictions on the range of activities permitted for securities
subsidiaries and trust banking subsidiaries and the elimination
of fixed brokerage commissions on all stock trades. The remaining
reform measures, which include the entry of banks and trust banks
into the insurance business through subsidiaries, have not yet
been implemented. While in the long term the Big Bang is viewed
as a positive step for Japan, in the current economic climate it
is viewed as putting additional stress on weaker institutions.

          Between 1985 and 1995, the Japanese Yen generally
appreciated against the U.S. Dollar. Between 1990 and 1994 the
Yen's real effective exchange rate appreciated by approximately
36%. On April 19, 1995, the Japanese Yen reached an all time high
of 79.75 against the U.S. Dollar. After its peak of April 19,
1995, the Yen generally decreased in value against the U.S.
Dollar until mid-1998, when the Japanese Yen began to appreciate
again against the U.S. Dollar, reaching a 43-month high against
the U.S. Dollar in September 1999. This precipitated a series of
interventions in the currency market by the Bank of Japan that
slowed the appreciation of the Japanese Yen against the U.S.
Dollar. Although the Yen's appreciation continued to slow on
balance in 2001, the Japanese Yen began to gain ground against
the U.S. Dollar in mid-2001 amid growing concern about the U.S.
economy and Japan's own uncertain economic prospects. Prime
Minister Koizumi recently underscored his government's
determination to stop the Yen's appreciation, intervening in the
currency market several times in the wake of the September 11,
2001 terrorist attacks. The average Yen-Dollar exchange rates in
1998, 1999, 2000, 2001 and 2002 were 131.0, 113.7, 107.8, 121.6
and 125.22, respectively.

          JAPANESE STOCK EXCHANGES. Currently, there are eight
stock exchanges in Japan. The Tokyo Stock Exchange (the "TSE"),
the Osaka Securities Exchange and the Nagoya Stock Exchange are
the largest, together accounting for approximately 99.9% of the
share trading volume and for about 99.9% of the overall trading
value of all shares traded on Japanese stock exchanges during
2001. The other stock exchanges are located in Kyoto, Hiroshima,
Fukuoka, Niigata and Sapporo. The chart below presents annual
share trading volume (in millions of shares) and annual trading
value (in billions of Yen) information with respect to each of
the three major Japanese stock exchanges for the years 1991
through 2001. Trading volume and the value of foreign stocks are
not included.



            All Exchanges            TOKYO                 OSAKA                NAGOYA
          VOLUME    VALUE      VOLUME     VALUE       VOLUME    VALUE       VOLUME     VALUE
          ------    -----      ------     -----       ------    -----       ------     -----
                                                                
2001      217,893   225,239    204,037    202,262     12,377     20,779      1,402      6,113
2000      196,087   290,325    174,159    248,662     17,267     34,669      4,575      6,876
1999      175,445   210,236    155,163    185,541     14,972     22,105      4,934      2,371
1998      139,757   124,102    123,198     97,392     12,836     20,532      3,367      5,986
1997      130,657   151,445    107,566    108,500     15,407     27,024      6,098     12,758
1996      126,496   136,170    101,170    101,893     20,783     27,280      4,104      5,391
1995      120,149   115,840     92,034     83,564     21,094     24,719      5,060      5,462
1994      105,937   114,622     84,514     87,356     14,904     19,349      4,720      5,780
1993      101,173   106,123     86,935     86,889     10,440     14,635      2,780      3,459
1992       82,563    80,456     66,408     60,110     12,069     15,575      3,300      3,876
1991      107,844   134,160     93,606    110,897     10,998     18,723      2,479      3,586

Source:  The Tokyo Stock Exchange Fact Books (1994-2000); monthly data sheets (2001).


THE TOKYO STOCK EXCHANGE

          OVERVIEW OF THE TOKYO STOCK EXCHANGE. The TSE is the
largest of the Japanese stock exchanges and as such is widely
regarded as the principal securities exchange for all of Japan.
During 2001, the TSE accounted for 98.7% of the market value and
93.6% of the share trading volume on all Japanese stock
exchanges. A foreign stock section on the TSE, consisting of
shares of non-Japanese companies, listed 38 (out of 2,103 total
companies listed on the TSE) non-Japanese companies at the end of
2001. The market for stock of Japanese issuers on the TSE is
divided into a First Section and a Second Section. The First
Section is generally for larger, established companies (in
existence for five years or more) that meet listing criteria
relating to the size and business condition of the issuing
company, the liquidity of its securities and other factors
pertinent to investor protection. The TSE's Second Section is for
smaller companies and newly listed issuers.

          The TSE has recently undertaken several new
initiatives. In November 1999, for example, the TSE established
MOTHERS (Market for the High-Growth and Emerging Stocks), a new
market designed to foster the growth of emerging companies. In
addition, on October 17, 2000, the TSE announced plans to form an
alliance with the Chicago Mercantile Exchange, the TSE's most
concrete global alliance to date. Although the TSE has entered
into agreements with other exchanges, they are for the most part
limited to information sharing arrangements. Additionally, the
TSE is participating in multilateral discussions to explore the
possibility of a Global Equity Market. Other participants include
the New York Stock Exchange, the Toronto Stock Exchange, the
Bolsa Mexicana de Valores and the Hong Kong Exchanges.

          SECTOR ANALYSIS OF THE FIRST SECTION. The TSE's
domestic stocks include a broad cross-section of companies
involved in many different areas of the Japanese economy. At the
end of 2001, the three largest industry sectors, based on market
value, listed on the first section of the TSE were electric
appliances, with 211 companies representing 16.6% of all domestic
stocks so listed; transportation equipment, with 85 companies
representing 9.2% of all domestic stocks so listed; and banks
with 88 companies representing 7.8% of all domestic stocks so
listed.

          MARKET GROWTH OF THE TSE. The First and Second Sections
of the TSE grew in terms of both average daily trading value and
aggregate year-end market value from 1982, when they were l28,320
million Yen and 98,090 billion Yen, respectively, through the end
of 1989, when they were 1,335,810 million Yen and 611,152 billion
Yen, respectively. Following the peak in 1989, both average daily
trading value and aggregate year-end market value declined
through 1992 when they were 243,362 million Yen and 289,483
billion Yen, respectively. In 1993 and 1994, both average daily
trading value and aggregate year-end market value increased and
were 353,208 and 353,666 million Yen, respectively, and 324,357
and 358,392 billion Yen, respectively. In 1995, average daily
trading value decreased to 335,598 million Yen and aggregate
year-end market value increased to 365,716 billion Yen. In 1996,
average daily trading value increased to 412,521 million Yen and
aggregate year-end market value decreased to 347,578 billion Yen.
In 1997, average daily trading value increased to 442,858 million
Yen and aggregate year-end market value decreased to 280,930
billion Yen. In 1998, average daily trading value decreased to
394.3 billion Yen and aggregate year-end market value decreased
to 275,181 billion Yen. In 1999, the average daily trading value
increased to 757.3 billion Yen and aggregate year-end market
value in 1999 increased to 456,840 billion Yen. In 2000, the
average daily trading value increased to 1,002.7 billion Yen and
aggregate year-end market value in 2000 decreased to 360,554
billion Yen. In 2001, the average daily trading value decreased
to 822.2 billion Yen and aggregate year-end market value in 2001
decreased to 296,789 billion Yen.

          MARKET PERFORMANCE OF THE FIRST SECTION. As measured by
the TOPIX, a capitalization-weighted composite index of all
common stocks listed in the First Section, the performance of the
First Section reached a peak of 2,884.80 on December 18, 1989.
Thereafter, the TOPIX declined approximately 45% through December
29, 1995. On December 30, 1996 the TOPIX closed at 1,470.94, down
approximately 7% from the end of 1995. On December 30, 1997, the
TOPIX closed at 1,175.03, down approximately 20% from the end of
1996. On December 30, 1998 the TOPIX closed at 1086.99, down
approximately 7% from the end of 1997. On December 31, 1999 the
TOPIX closed at 1722.20, up approximately 58% from the end of
1998. On December 29, 2000 the TOPIX closed at 1283.67, down
approximately 25% from the end of 1999. On December 28, 2001, the
TOPIX closed at 1032.14, down approximately 20% from the
beginning of 2001.

JAPANESE FOREIGN EXCHANGE CONTROLS

          Under Japan's Foreign Exchange and Foreign Trade
Control Law and cabinet orders and ministerial ordinances
thereunder (the "Foreign Exchange Controls"), prior notification
to the Minister of Finance of Japan (the "Minister of Finance")
of the acquisition of shares in a Japanese company from a
resident of Japan (including a corporation) by a non-resident of
Japan (including a corporation) is required unless the
acquisition is made from or through a securities company
designated by the Minister of Finance or if the Yen equivalent of
the aggregate purchase price of shares is not more than 100
million Yen. Even in these situations, if a foreign investor
intends to acquire shares of a Japanese corporation listed on a
Japanese stock exchange or traded on a Japanese over-the-counter
market (regardless of the person from or through whom the foreign
investor acquires such shares) and as a result of the acquisition
the foreign investor would directly or indirectly hold 10% or
more of the total outstanding shares of that corporation, the
foreign investor must file a report within 15 days from the day
of such acquisition with the Minister of Finance and any other
minister with proper jurisdiction. In instances where the
acquisition concerns national security or meets certain other
conditions specified in the Foreign Exchange Controls, the
foreign investor must file a prior notification with respect to
the proposed acquisition with the Minister of Finance and any
other minister with proper jurisdiction. The ministers may make a
recommendation to modify or prohibit the proposed acquisition if
they consider that the acquisition would impair the safety and
maintenance of public order in Japan or harmfully influence the
smooth operation of the Japanese economy. If the foreign investor
does not accept the recommendation, the ministers may issue an
order modifying or prohibiting the acquisition. In certain
limited and exceptional circumstances, the Foreign Exchange
Controls give the Minister of Finance the power to require prior
approval for any acquisition of shares in a Japanese company by a
non-resident of Japan.

          In general, the acquisition of shares by non-resident
shareholders by way of stock splits, as well as the acquisition
of shares of a Japanese company listed on a Japanese stock
exchange by non-residents upon exercise of warrants or conversion
of convertible bonds, are not subject to any of the foregoing
notification or reporting requirements. Under the Foreign
Exchange Controls, dividends paid on shares, held by
non-residents of Japan and the proceeds of any sales of shares
within Japan may, in general, be converted into any foreign
currency and remitted abroad.

          Certain provisions of the Foreign Exchange Controls
were repealed or liberalized beginning in April 1998, pursuant to
the revised Foreign Exchange and Foreign Trade Law, which was
approved in May 1997 as part of the plan to implement the Big
Bang. Under the new law, Japanese citizens are permitted to open
bank accounts abroad and companies are now permitted to trade
foreign currencies without prior government approval.
Additionally, the foreign exchange bank system, which required
that all foreign exchange transactions be conducted through
specially designated institutions, has been eliminated.

REGULATION OF THE JAPANESE EQUITIES MARKETS

          The principal securities law in Japan is the Securities
and Exchange Law ("SEL") which provides overall regulation for
the issuance of securities in public offerings and private
placements and for secondary market trading. The SEL was amended
in 1988 in order to liberalize the securities market; to regulate
the securities futures, index, and option trade; to add
disclosure regulations; and to reinforce the prevention of
insider trading. Insider trading provisions are applicable to
debt and equity securities listed on a Japanese stock exchange
and to unlisted debt and equity securities issued by a Japanese
corporation that has securities listed on a Japanese stock
exchange or registered with the Securities Dealers Association
(the "SDA"). In addition, each of the six stock exchanges in
Japan has its own constitution, regulations governing the sale
and purchase of securities and standing rules for exchange
contracts for the purchase and sale of securities on the
exchange, as well as detailed rules and regulations covering a
variety of matters, including rules and standards for listing and
delisting of securities.

          The loss compensation incidents involving preferential
treatment of certain customers by certain Japanese securities
companies, which came to light in 1991, provided the impetus for
amendments to the SEL, which took effect in 1992, as well as two
reform bills passed by the Diet in 1992. The amended SEL now
prohibits securities companies from operating discretionary
accounts, compensating losses or providing artificial gains in
securities transactions, directly or indirectly, to their
customers and making offers or agreements with respect thereto.
Despite these amendments, there have been certain incidents
involving loss compensation. To ensure that securities are traded
at their fair value, the SDA and the TSE promulgated certain
rules, effective in 1992, which, among other things, explicitly
prohibit any transaction undertaken with the intent to provide
loss compensation of illegal gains regardless of whether the
transaction otherwise technically complies with the rules. The
reform bill passed by the Diet, which took effect in 1992 and
1993, provides for the establishment of a new Japanese securities
regulator and for a variety of reforms designed to revitalize the
Japanese financial and capital markets by permitting banks and
securities companies to compete in each other's field of
business, subject to various regulations and restrictions.

          Further reforms in the regulation of the securities
markets are anticipated over the next several years as the Big
Bang is implemented.



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

               ADDITIONAL INFORMATION ABOUT CANADA

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

Territory and Population

          Canada is the second largest country in the world in
terms of land mass with an area of 9.22 million square kilometers
(3.85 million square miles). It is located north of the
continental United States of America and east of Alaska. Canada
comprises ten provinces (Alberta, British Columbia, Manitoba, New
Brunswick, Newfoundland, Nova Scotia, Ontario, Prince Edward
Island, Quebec and Saskatchewan) and three territories (the
Northwest Territories, the Nunavut Territory and the Yukon
Territory). Its population is approximately 30 million.

Government

          Canada is a constitutional monarchy with Queen
Elizabeth II of the United Kingdom its nominal head of state. The
Queen is represented by the Canadian governor-general, appointed
on the recommendation of the Canadian prime minister. Canada's
government has a federal structure, with a federal government and
ten provincial governments. The legislative branch consists of a
House of Commons (parliament) and the Senate. Members of the
House of Commons are elected by Canadian citizens over 18 years
of age. Senators are appointed on a regional basis by the Prime
Minister. The federal government is headed by the Prime Minister
who is chosen from the party that has won the majority of seats
in the House of Commons. The provincial governments each have a
Legislative Assembly and a Premier. The prime minister has the
privilege of appointing all judges except those of the provincial
courts.

          Provinces have extensive power within specific areas of
jurisdiction. The federal government has defined areas of
jurisdiction and the power to act in areas declared by the House
of Commons to be for the general advantage of Canada. This
general power has been used to justify federal action in certain
areas of provincial jurisdiction. Concurrent federal and
provincial jurisdiction exists in certain matters, including
agriculture, immigration and pensions. The power-sharing issue
between the federal government and provincial governments has
been contentious and has proven to be a central issue in the
process of constitutional reform.

Politics

          Since World War II, the federal government has been
formed by either the Liberal Party or the Progressive
Conservative Party. In October 1993, the Liberal Party, under the
leadership of Mr. Jean Chretien, won 178 of the 295 seats in the
Canadian House of Commons, ending nine years of rule by the
Progressive Conservative Party. The Liberal Party was re-elected
for a second term in the June 2, 1997 general election, but lost
20 seats in the House of Commons. A new political party, the
Canadian Reform Conservative Alliance (the "Canadian Alliance")
was formed in March 2000 to launch a more credible challenge to
the Liberal Party. In the general election held on November 27,
2000, however, the Liberal Party won a third-straight
parliamentary majority and gained 17 seats in the House of
Commons. Since the 2000 election, the Liberal Party has suffered
several setbacks that have damaged its credibility and have
served to reinvigorate the opposition. These include allegations
of cronyism and corruption, surprising by-election losses in May
2002 and internal challenges for party leadership. In August
2002, Mr. Chretien announced that he would not seek a fourth term
as Prime Minister and would leave office in February 2004. The
next general election is scheduled to occur in November 2005.

          Canada has had three major developments regarding unity
and constitutional reform in recent years. The first two major
developments were the rejection of the Meech Lake Agreement in
1990 and the Charlottetown Accord in 1992. Those reforms would
have given Quebec constitutional recognition as a distinct
society, transferred powers from the federal to the provincial
governments and reformed the Senate by providing for more equal
representation among the provinces.

          The third major development is the continuing
possibility of Quebec's independence. Upon gaining power in 1994,
the Quebec separatist party, Parti Quebecois ("PQ"), called for a
referendum supporting independence. On October 30, 1995, the
referendum was defeated in a close ballot, in which 50.6% voted
against secession and 49.4% voted for secession. If the
referendum had been approved, Quebec would have become a separate
country, but would have retained formal political and economic
links with Canada similar to those that join members of the
European Union. The PQ, under the leadership of Lucien Bouchard,
was re-elected in the provincial election held on November 30,
1998, winning 75 of the 125 seats. However, the party's share of
the popular vote dropped 2% from the 1994 election to 43%. The
Parti Liberal won 48 seats. Mr. Bouchard, acknowledging that he
had failed to rekindle the fervor for secession, resigned his
post in January 2001. It is unclear whether Mr. Bouchard's
successor, Bernard Landry, will hold a second referendum. The PQ
previously indicated it would do so if it were re-elected, but
only if the referendum would stand a strong chance of success.
Given current opinion polls, it is believed unlikely that a
referendum would have a strong chance of success. Recent polls
indicate that support for secession stands at about 40%.
Furthermore, the PQ fared poorly in the June 2002 provincial
elections. In August 1998, Canada's Supreme Court rendered a
unanimous opinion in a legal action initiated by the federal
government to determine the legality of Quebec's secession.

          While the Court ruled that Quebec has no right to
unilaterally leave the Canadian federation, the court also
indicated that the federal government would have to negotiate a
separation if a clear majority of Quebec voters vote for it.
Legislation to establish the negotiating terms for Quebec's
secession was approved in March 2000. The so-called "clarity
bill" requires the support of a "clear majority" of Quebec's
residents before such negotiations could occur. Although it is
expected that Quebec's position within Canada will continue to be
a matter of political debate, the separatist movement is
considered to be dormant at this time.

Monetary and Banking System

          The central bank of Canada is the Bank of Canada. Its
main functions are conducting monetary policy, supervising
commercial banks, acting as a fiscal agent to the federal
government and managing the foreign exchange fund. The currency
unit of Canada is the Canadian Dollar. Canada does not impose
foreign exchange controls on capital receipts or payments by
residents or non-residents.

Trade

          Canada and the United States are each other's largest
trading partners and as a result there is a significant linkage
between the two economies. Bilateral trade between Canada and the
United States in 1997 was larger than between any other two
countries in the world. The North American Free Trade Agreement
("NAFTA") took effect on December 30, 1993. In July 1997 a
free-trade accord between Canada and Chile also took effect.
Similar trade liberalization accords were signed with Israel
(1997) and Costa Rica (2001). Talks with Brazil and Argentina are
also under way for similar bilateral trade agreements that are
expected eventually to fall under the umbrella of a new form of
NAFTA. When fully implemented, NAFTA is designed to create a free
trade area in North America, expand the flow of goods, services
and investment, and eventually eliminate tariff barriers, import
quotas and technical barriers among Canada, the United States,
Mexico and future parties to NAFTA. At the April 1998 Summit of
the Americas, a forum of democratically elected leaders of 34
nations across the Americas (including Canada) organized to
discuss economic, social and political matters of common
interest, an agreement was signed to begin trade negotiations
toward the creation of a free trade area across the Western
Hemisphere, known as the Free Trade Area of the Americas
("FTAA"). A second Summit of the Americas took place in April
2001 and resulted in a commitment by the participating heads of
state to negotiate the establishment of the FTAA by 2005.

          Given the relatively small size of Canada's domestic
market, the trade sector has always been an important factor in
the growth of the Canadian economy. Currently, more than 45% of
Canada's output is exported. The United States is by far Canada's
largest trading partner. Since the 1980s Canada has recorded
growing merchandise trade surpluses with the United States. A
significant contributor to Canada's export growth in recent years
has been the telecommunications and computer machinery sector.
Energy exports have surged as well. Canada's trade surplus in
2001 was US$40 billion. In view of the slowing of the U.S.
economy in 2001-2002, the trade surplus has narrowed, as import
growth has outpaced export growth.

Economic Information Regarding Canada

          Canada experienced rapid economic expansion during most
of the 1980s. In the early 1990s, however, the economy
experienced a deep recession. This resulted from, among other
things, high government debt and high interest rates. The
relatively low level of economic activity during this period
reduced the growth of tax receipts with the result that the
already high levels of government debt increased.

          The deterioration in the government's fiscal position,
which started during the recession in the early 1990s, was
aggravated by a reluctance to decrease expenditures or increase
taxes. In its 1995 budget, however, the Liberal Party introduced
new spending cuts, the largest in over thirty years, to reduce
Canada's budget deficit. For the fiscal years 1994-95, 1995-96
and 1996-97, the budget deficit was approximately 5%, 4.2% and
1.1%, respectively, of gross domestic product ("GDP"). On October
24, 1998, the government announced that there was a budget
surplus of C$3.5 billion for the 1997-98 fiscal year, the first
time in 28 years the government had recorded a budget surplus.
Budget surpluses of C$2.9 billion, C$12.3 billion, C$20 billion
and C$9.8 billion were recorded for the 1998-1999, 1999-2000,
2000-2001 and 2001-2002 fiscal years, respectively. The last time
the budget was in surplus for five consecutive years was in the
period up to 1951-1952. In 1999, the government forecast a
cumulative budget surplus of C$95.5 billion over the subsequent
five years, including a cumulative C$30 billion in the
contingency reserve. The recent slowdown in economic growth,
however, has altered that forecast, as federal revenue started to
decline in the 2001-2002 fiscal year. Contributing to the decline
in federal revenue are the tax cuts and spending measures
implemented in the past several years in the wake of the budget
surpluses. Nonetheless, Canada is expected to maintain a balanced
budget for the next two years, making it the only country in the
Group of Seven industrialized countries (Canada, France, Germany,
Italy, Japan, the U.S. and the U.K.) to do so. In light of
Canada's healthy fiscal position, Moody's announced in May 2002
that it was restoring Canada's triple-A credit rating, which it
had lost in 1994.

          In addition to the growth of the federal government
deficit, provincial government debt rose rapidly in the early
1990s. Several developments, including increased spending on
social services at the provincial level, were responsible for a
significant amount of the growth of public debt from 1990 through
1992. In response to the increase in provincial debt, a number of
rating agencies downgraded certain provincial debt ratings. All
provinces undertook plans to balance their respective budgets.
For fiscal year 2000-2001 all provinces, with the exception of
Newfoundland, Nova Scotia and Prince Edward Island, reported
budget surpluses. As with the federal government, provincial
revenues started to decline in the 2001-2002 fiscal year. Those
provinces that are required to have balanced budgets may be
forced to reduce public spending.

          Prior to 2001, Canada's real GDP growth was expressed
in constant 1992 prices. In 2001, Statistics Canada rebased the
measure to chained 1997 prices. Using the new measure, Canada's
real GDP growth rate was 4.1%, 5.4%, 4.5%, 1.5% and 3.3% in 1998,
1999, 2000, 2001 and 2002, respectively. The recent growth of the
economy has been broadly based, unlike earlier periods of
recovery, when it was attributable almost entirely to a growth in
exports.

          During 1994, despite growing output and low inflation,
concern over the country's deficit and the uncertainty associated
with Quebec's status within Canada led to a weakening of its
currency and higher interest rates. On January 20, 1995, the
exchange rate for the Canadian Dollar fell to .702 against the
U.S. Dollar, which at that time represented a nine-year low and
was close to its then record low of .692. The Bank of Canada
responded by increasing rates on Treasury bills and selling U.S.
Dollars. Between January 20, 1995 and September 30, 1997, the
Canadian Dollar increased in value from .702 to .724 against the
U.S. Dollar. The renewed strength of the Canadian Dollar during
this period facilitated the easing of monetary policy.
Subsequently, however, the Canadian Dollar depreciated, reaching
a record low of .633 against the U.S. Dollar on August 27, 1998.
In 1998, 1999, 2000, 2001 and 2002, the average exchange rate
between the Canadian Dollar and the U.S. Dollar was .674, .673,
..673, .646 and .637, respectively. In June 1997, with a real GDP
growth rate of 4% annualized during the first two quarters of
1997 and signs of weakness in the Canadian Dollar, the Bank of
Canada decided to raise its Bank Rate for the first time since
1995, by 25 basis points to 3.5%. The Bank Rate has been raised
and lowered numerous times since then in response to economic
developments. In 2001, concerns about the extent of the slowing
U.S. economy and its impact on North American equity markets
resulted in the lowering of the Bank Rate on several occasions,
most recently on January 15, 2002, when it was lowered to 2.00%,
the lowest level in 40 years. Subsequently, the Bank Rate was
raised several times, most recently on March 3, 2003, when it was
raised to 3.0%.

          The following provides certain statistical and related
information regarding historical rates of exchange between the
U.S. Dollar and the Canadian Dollar, information concerning
inflation rates, historical information regarding the Canadian
GDP and information concerning yields on certain Canadian
Government Securities. Historical statistical information is not
necessarily indicative of future developments.

          CURRENCY EXCHANGE RATES. The exchange rate between the
U.S. Dollar and the Canadian Dollar is at any moment related to
the supply of and demand for the two currencies, and changes in
the rate result over time from the interaction of many factors
directly or indirectly affecting economic conditions in the
United States and Canada, including economic and political
developments in other countries and government policy and
intervention in the money markets.

          The range of fluctuation in the U.S. Dollar/Canadian
Dollar exchange rate has been narrower than the range of
fluctuation between the U.S. Dollar and most other major
currencies. However, the range that has occurred in the past is
not necessarily indicative of future fluctuations in that rate.
Future rates of exchange cannot be predicted, particularly over
extended periods of time.

          The following table sets forth, for each year
indicated, the annual average of the daily noon buying rates in
New York for cable transfers in New York City in U.S. Dollars for
one Canadian Dollar as certified for customs purposes by the
Federal Reserve Bank of New York:

                                                          Buying Rate in
                                                          U.S. Dollars


          1993................................................0.78
          1994................................................0.73
          1995................................................0.73
          1996................................................0.73
          1997................................................0.72
          1998................................................0.67
          1999................................................0.67
          2000................................................0.67
          2001................................................0.65
          2002................................................0.64

Source:  Federal Reserve Statistical Releases.

          INFLATION RATE OF THE CANADIAN CONSUMER PRICE INDEX.
Since 1991, when the Canadian government adopted inflation
control targets, inflation in Canada has been maintained within
the targeted range of 1% to 3%. Although the inflation rate
during the last quarter of 2002 exceeded the target level, for
the year 2002 as a whole, the rate was within the targeted range.
The inflationary pressures that existed in the second half of
2002 persisted into 2003 but are expected to ease in the second
half of 2003. The following table sets forth for each year
indicated the average change in the Canadian consumer price index
for the twelve months ended December 31 for the years 1993
through 2002, and for each of the first two months of 2003.

                                                      National Consumer
                                                         Price Index

          1991................................................5.6
          1992................................................1.5
          1993................................................1.8
          1994................................................0.2
          1995................................................2.2
          1996................................................1.6
          1997................................................1.6
          1998................................................0.9
          1999................................................1.7
          2000................................................2.7
          2001................................................2.6
          2002................................................2.3
          2003................................................
             January..........................................4.5
             February.........................................4.6

Source: STATISTICS CANADA; BANK OF CANADA WEEKLY STATISTICS.

          CANADIAN GROSS DOMESTIC PRODUCT. The following table
sets forth Canada's GDP for the years 1996 through 2002, at
current and chained 1997 prices.

                                    Gross Domestic   Change from Prior
                                    Product at       Prior Year at
            Gross Domestic          Chained 1997     Chained 1997
            Product                 Prices           Prices
            -------                 ------           ------

            (millions of Canadian Dollars)               (%)

1996              833,100                 848,667        1.7
1997              877,900                 885,022        4.2
1998              901,800                 919,770        4.1
1999              957,900                 966,362        5.4
2000           1,038,800                1,009,182        4.5
2001           1,092,246                1,027,523        1.5
2002           1,142,123                      NA         3.3

Source:  STATISTICS CANADA; BANK OF.

          YIELDS ON CANADIAN GOVERNMENT TREASURY BILLS AND BONDS.
The following table sets forth the yields on 3-month and 6-month
Government of Canada Treasury bills and 5-year and 10-year Canada
Benchmark Bonds from January 1998 through December 2002.


                          Treasury Bills               Benchmark Bonds
1998                3 Months          6 Months        5 Years       10 Years
- ----                --------------------------        ----------------------

January                4.10              4.42           5.09             5.41
February               4.57              4.84           5.26             5.47
March                  4.59              4.70           5.11             5.34
April                  4.85              4.97           5.32             5.49
May                    4.75              4.97           5.21             5.34
June                   4.87              5.04           5.28             5.35
July                   4.94              5.13           5.42             5.47
August                 4.91              5.25           5.62             5.67
September              4.91              5.03           4.78             4.95
October                4.74              4.79           4.69             5.00
November               4.82              4.93           5.03             5.18
December               4.70              4.76           4.76             4.89

                          Treasury Bills               Benchmark Bonds
1999                3 Months          6 Months        5 Years       10 Years
- ----                --------------------------        ----------------------

January                4.66              4.77           4.76             4.89
February               4.84              4.93           5.22             5.26
March                  4.75              4.86           4.95             5.05
April                  4.60              4.67           4.98             5.14
May                    4.42              4.60           5.34             5.42
June                   4.62              4.88           5.35             5.46
July                   4.64              4.81           5.53             5.62
August                 4.83              5.08           5.51             5.55
September              4.69              4.87           5.67             5.77
October                4.85              5.20           6.20             6.26
November               4.82              5.10           5.98             6.02
December               4.93              5.29           6.11             6.18

                          Treasury Bills               Benchmark Bonds
2000                3 Months          6 Months        5 Years       10 Years
- ----                --------------------------        ----------------------

January                5.08              5.39           6.38             6.44
February               5.05              5.42           6.29             6.19
March                  5.28              5.56           6.13             6.03
April                  5.45              5.74           6.17             6.10
May                    5.75              6.01           6.17             6.00
June                   5.55              5.84           6.04             5.93
July                   5.63              5.82           6.00             5.86
August                 5.62              5.77           5.92             5.77
September              5.56              5.72           5.76             5.75
October                5.62              5.74           5.75             5.72
November               5.74              5.88           5.59             5.54
December               5.56              5.58           5.30             5.35

                          Treasury Bills               Benchmark Bonds
2001                3 Months          6 Months        5 Years       10 Years
- ----                --------------------------        ----------------------

January                5.14              5.05           5.14             5.39
February               4.80              4.74           5.09             5.36
March                  4.60              4.58           5.03             5.41
April                  4.41              4.36           5.23             5.66
May                    4.40              4.45           5.61             5.96
June                   4.24              4.29           5.39             5.73
July                   4.03              4.06           5.36             5.76
August                 3.81              3.84           4.93             5.36
September              3.05              2.96           4.62             5.32
October                2.34              2.26           4.08             4.86
November               2.07              2.13           4.68             5.36
December               1.95              1.95           4.69             5.44

                          Treasury Bills               Benchmark Bonds
2002                3 Months          6 Months        5 Years       10 Years
- ----                --------------------------        ----------------------

January                1.96              2.11           4.71             5.42
February               2.05              2.19           4.58             5.31
March                  2.30              2.68           5.28             5.79
April                  2.37              2.68           5.05             5.64
May                    2.60              2.87           4.90             5.49
June                   2.70              2.87           4.67             5.37
July                   2.81              2.90           4.30             5.23
August                 2.96              3.08           4.49             5.14
September              2.83              2.93           4.20             4.92
October                2.73              2.81           4.34             5.16
November               2.70              2.78           4.28             5.09
December               2.68              2.78           4.17             4.96

Source:  BANK OF CANADA.

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

      ADDITIONAL INFORMATION ABOUT THE UNITED MEXICAN STATES

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

Territory and Population

          The United Mexican States ("Mexico") occupies a
territory of approximately 1.97 million square kilometers (759
thousand square miles). To the north, Mexico shares a border with
the United States of America, and to the south it has borders
with Guatemala and Belize. Its coastline is along both the Gulf
of Mexico and the Pacific Ocean. Mexico comprises 31 states and a
Federal District (Mexico City). It is the second most populous
nation in Latin America, with an estimated population of 99.6
million in mid-2000, as reported by the Consejo Nacional de
Poblacion (Conapo).

          Mexico's three largest cities are Mexico City,
Guadalajara and Monterrey, which in 1997 together accounted for
25% of the country's population and 2% of the land. In the 1980s,
Government efforts concerning family planning and birth control,
together with declining birth rates among women under 35 and
those living in urban areas, have resulted in a reduction of the
annual population growth rate from 3% in the early 1970s to 1.5%
in the late 1990s. The growth rate in 2001 was 1.2%.

Government

          The present form of government was established by the
Constitution, which took effect on May 1, 1917. The Constitution
establishes Mexico as a Federal Republic and provides for the
separation of the executive, legislative and judicial branches.
The President and the members of Congress are elected by popular
vote of Mexican citizens over 18 years of age.

          Executive authority is vested in the President, who is
elected for a single six-year term. The executive branch consists
of 17 ministries, the office of the Federal Attorney General, the
Federal District Department and the office of the Attorney
General of the Federal District.

          Federal Legislative authority is vested in the
Congress, which is composed of the Senate and the Chamber of
Deputies. Senators serve a six-year term. Deputies serve a
three-year term, and neither Senators nor Deputies may serve
consecutive terms in the same Chamber. The Senate has 128
members, four from each state and four from the Federal District.
The Chamber of Deputies has 500 members, of whom 300 are elected
by direct vote from the electoral districts and 200 are elected
by a system of proportional representation. The Constitution
provides that the President may veto bills and that Congress may
override such vetoes with a two-thirds majority of each Chamber.

          Federal judicial authority is vested in the Supreme
Court of Justice, the Circuit and District courts, and the
Federal Judicial Board. The Supreme Court has 11 members who are
selected by the Senate from a pool of candidates nominated by the
President. Its members serve for 15 year terms, except for the
current members of the Court, whose appointments range from eight
to 20 years.

          Mexico has diplomatic relations with approximately 175
countries. It is a charter member of the United Nations and a
founding member of the Organization of American States, the
International Monetary Fund (the "IMF"), the World Bank, the
International Finance Corporation, the Inter-American Development
Bank and the European Bank for Reconstruction and Development.
Mexico became a member of the Organization for Economic
Cooperation and Development (the "OECD") on April 14, 1994 and
the World Trade Organization ("WTO") on January 1, 1995 (the date
on which the WTO superseded the General Agreement on Trade and
Tariffs ("GATT")).

Politics

          Until the July 2, 2000 elections, the Partido
Revolucionario Institucional ("PRI") had long been the dominant
political party in Mexico, although its dominance had been
weakened in recent years. Between 1929 and 2000 the PRI won all
presidential elections and, until the 1997 Congressional
elections, held a majority in Congress. Until 1989 it had also
won all of the state governorships. The two other major parties
in Mexico are the Partido Accion Nacional ("PAN") and the Partido
de la Revolucion Democratica ("PRD").

          On July 2, 2000, elections were held to select a new
President of Mexico for a six-year term beginning on December 1,
2000. In addition, elections were held for three-quarters of the
Senate and the entire Chamber of Deputies. The candidate of the
PAN, Vicente Fox Quesada, won the Presidential election with
42.5% of the votes, the candidate of the PRI was second with
36.1% of the votes and the candidate of the Alianza por Mexico, a
five-party coalition headed by the PRD, was third with 16.6% of
the votes. With respect to the Congressional elections, no party
achieved a majority. The Alianza por el Cambio, which comprises
the PAN and a smaller party, now has 223 seats in the 500-member
Chamber of Deputies and 51 seats in the 128-member Senate; the
PRI now has 210 seats in the Chamber of Deputies and 60 seats in
the Senate; and the Alianza por Mexico now has 67 seats in the
Chamber of Deputies and 17 seats in the Senate. The next general
elections are scheduled to occur in July 2003 (congressional).

          The July 2, 2000 elections represented not only the end
of the PRI's seven-decade domination of Mexico's politics. They
also marked the first elections in Mexico's history that have
been widely viewed both inside and outside Mexico to have been
conducted democratically, in accordance with electoral reforms
adopted in 1996, when certain constitutional amendments, which
had been agreed to by the President and the leaders of the four
major political parties represented in Congress, were approved.
The amendments, among other things, exclude the President from
the Federal Electoral Institute, an autonomous agency charged
with organizing elections; eliminate the Electoral Committee of
the Chamber of Deputies, which had been responsible for
determining the validity of presidential elections; impose limits
on expenditures on political campaigns and controls on the source
of and uses of funds contributed to a political party; grant
voting rights to Mexican citizens residing abroad; reduce from
315 to 300 the maximum number of congressional representatives
who may belong to a single party, and establish an electoral
procedure intended to result in a more proportional
representation in the Senate. The Mexican Supreme Court is
empowered to determine the constitutionality of electoral laws
and the Mexican Federal Electoral Court, which had been part of
the executive branch, is now part of the judicial branch.

          At the beginning of 1994, armed insurgents attacked
(and in some cases temporarily seized control of) several
villages in the southern state of Chiapas. While the government
responded by providing support to the local authorities and
publicly offering to negotiate a peaceful resolution that would
address the underlying concerns of the local population, the
conflict remained a source of debate and uncertainty for the
remainder of the year. For the next two years, there were
sporadic, unsuccessful negotiations with the insurgents, but
incidents of civil unrest continued and negotiations collapsed
altogether in September 1996, resulting in an uneasy standoff
between the insurgents and the government in Chiapas ever since.
Following the defeat of the PRI in both the July 2000
presidential elections and the August 2000 gubernatorial
elections in Chiapas, there was renewed hope that the
negotiations could be resumed. Among President Fox's first
actions after taking office on December 1, 2000 was sending a
bill to Congress that would have amended the constitution to
provide indigenous people more autonomy in their government.
Congress approved the bill in April 2001, but it was rejected by
the insurgents, who accused President Fox and Congress of
betraying them by watering down the reform. Communications with
government peace negotiators were subsequently abandoned.

          In addition to the civil unrest in Chiapas, other
developments have contributed to disillusionment among the
electorate with the institutions of government. These events
include the 1994 assassinations of Luis Donaldo Colosio and Jose
Francisco Ruiz Massieu, both high-ranking PRI officials. Links
between Mexico's drug cartels and high government and military
officials have also been discovered. These links could jeopardize
Mexico's status as an ally of the U.S. in the war against
narcotics smuggling. While Mexico is currently certified by the
President of the United States as an ally, there is no assurance
that the certification will be maintained. A loss of
certification could result in the termination of U.S. economic
assistance to Mexico.

          Shortly after President Fox's electoral victory on July
2, 2000, he announced the creation of the National Transparency
Commission to investigate unsolved major crimes and to examine
the misdeeds of previous governments. President Fox is planning
other initiatives to reform the government's law enforcement and
judicial functions. With no one party holding a majority in the
legislature, however, it has not been easy for President Fox to
advance his reform agenda.

Money and Banking

          Banco de Mexico, chartered in 1925, is the central bank
of Mexico. It is the federal government's primary authority for
the execution of monetary policy and the regulation of currency
and credit. It is authorized by law to regulate interest rates
payable on time deposits, to establish minimum reserve
requirements for credit institutions and to provide discount
facilities for certain types of bank loans. The currency unit of
Mexico is the Peso. Mexico repealed its exchange control rules in
1991 and now maintains only a market exchange rate.

          New laws relating to Banco de Mexico's activities and
role within the Mexican economy became effective on April 1,
1994. The purpose of the new laws was to reinforce the
independence of Banco de Mexico, so that it can act as a
counterbalance to the executive and legislative branches in
monetary policy matters. The new laws significantly strengthened
Banco de Mexico's authority with respect to monetary policy,
foreign exchange and related activities and the regulation of the
financial services industry.

          Since Mexico's commercial banks were privatized in the
early 1990s, the banking industry has experienced a significant
amount of non-performing loans. In February 1996, the ratio of
bad debts to the banking system's total loan portfolio reached a
high of 19.2% from 8.3% at the end of 1994. In 1995, the
government began a series of programs to address the problem and
to avoid a systemic banking collapse. These programs have
included subsidies to certain debtors and taking over bad debts.
At the end of 1999, the liabilities absorbed by the government
under Fobaproa, the program designed to take over the bad debts
of Mexico's banks, totalled $89 billion, equivalent to 18.3% of
Mexico's GDP. At the end of September 2002 these liabilities were
equivalent to 12.6% of Mexico's GDP. Nonetheless, the government
has had to intervene and take control of a number of institutions
for eventual sale, most recently in November 1999, when the
government took control of BanCrecer, Mexico's fifth largest
bank, at an estimated cost of $10 billion. The overall cost of
the government's programs to aid the banking sector has been
estimated at $100 billion. The government has also instituted new
rules, which became effective, on a phased-in basis, in January
2000, to shore up the capital of Mexico's banks; these rules are
scheduled to be fully implemented in 2003. Additionally, deposit
insurance will gradually be reduced beginning in 2005. By the end
of 2002, only one of the 18 banks privatized in the early 1990s
remained in the hands of its original owners, and all of the
banks that had been taken over operated under the supervision of
the government had been sold or liquidated.

Trade

          Mexico became a member of the GATT in 1986 and has been
a member of the WTO since January 1, 1995, the date on which the
WTO superseded the GATT. Mexico has also entered into NAFTA with
the United States and Canada. In addition, Mexico signed an
agreement providing for a framework for a free trade agreement in
1992 with Costa Rica, El Salvador, Guatemala, Honduras and
Nicaragua as a step toward establishing a free-trade area. Mexico
entered into definitive free trade agreements with Costa Rica in
April 1994 and Nicaragua in December 1997. Negotiations to reach
free-trade agreements with the group formed by Guatemala,
Honduras and El Salvador are continuing. A free trade agreement
between Mexico and Chile went into effect on January 1, 1992. A
free trade agreement with Colombia and Venezuela was signed in
June 1994 and a similar agreement with Bolivia was signed in
September 1994; both agreements entered into force in January
1995. In addition, Mexico and the European Union signed an
agreement in March 2000 that will end all tariffs on their
bilateral trade in industrial goods by 2007. In May 2000, Mexico
signed an agreement with Guatemala, Honduras and El Salvador, and
in November 2000 an agreement with members of the European Free
Trade Area (Iceland, Lichtenstein, Norway and Sweden) was signed.
Mexico now has free trade agreements with 31 nations. The
government estimated that at the end of 2001, 90% of Mexico's
exports had the benefit of some sort of preferential treatment.
Mexico is also in negotiations with Belize, Panama, Ecuador,
Trinidad, Tobago and Peru and is taking steps to increase trade
with Japan and other Pacific Rim countries. President Fox has
also expressed interest in reaching agreement with Mercosur (the
southern customs union comprising Argentina, Brazil, Paraguay and
Uruguay) but similar efforts have failed in the past due in part
to conflicts between Mexico and Brazil.

          In connection with the implementation of NAFTA,
amendments to several laws relating to financial services
(including the Banking Law and the Securities Market Law) became
effective on January 1, 1994. These measures permit non-Mexican
financial groups and financial intermediaries, through Mexican
subsidiaries, to engage in various activities in the Mexican
financial system, including banking and securities activities. In
December 1998, Mexico lifted all remaining restrictions on
foreign ownership of its largest banks, which had been excluded
from the liberalization measures that became effective in 1994.
Since the purchase of Grupo Financiero Banamex - Accival SA by
Citigroup, Inc. in 2001, Mexico's three largest banks have been
under foreign ownership.

Economic Information Regarding Mexico

          During the period from World War II through the
mid-1970s, Mexico experienced sustained economic growth. During
the mid 1970s, Mexico experienced high inflation and, as a
result, the government embarked on a high-growth strategy based
on oil exports and external borrowing. The steep decline in oil
prices in 1981 and 1982, together with high international
interest rates and the credit markets' unwillingness to refinance
maturing external Mexican credits, led in 1982 to record
inflation, successive devaluations of the peso by almost 500% in
total, a pubic sector deficit of 16.9% of GDP and, in August
1982, a liquidity crisis that precipitated subsequent
restructurings of a large portion of the country's external debt.
Through much of the 1980s, the Mexican economy continued to
experience high inflation and large foreign indebtedness. In
February 1990, Mexico became the first Latin American country to
reach an agreement with external creditor banks and
multi-national agencies under the U.S. Treasury's approach to
debt reduction known as the "Brady Plan."

          The value of the Mexican Peso has been central to the
performance of the Mexican economy. In 1989, the government
implemented a devaluation schedule, pursuant to which the
intended annual rate of devaluation was gradually lowered from
16.7% in 1989 to 11.4% in 1990, 4.5% in 1991 and 2.4% in 1992.
From October 1992 through December 20, 1994, the Mexican
Peso/U.S. Dollar exchange rate was allowed to fluctuate within a
band that widened daily. The ceiling of the band, which was the
maximum selling rate, depreciated at a daily rate of 0.0004 Pesos
(equal to approximately 4.5% per year), while the floor of the
band, i.e., the minimum buying rate, remained fixed. Banco de
Mexico agreed to intervene in the foreign exchange market to the
extent that the Mexican Peso/U.S. Dollar exchange rate reached
either the floor or the ceiling of the band.

          Beginning on January 1, 1994, volatility in the Mexican
Peso/U.S. Dollar exchange rate began to increase, with the value
of the Peso relative to the Dollar declining at one point to an
exchange rate of 3.375 Mexican Pesos to the U.S. Dollar, a
decline of approximately 8.69% from the high of 3.1050 pesos
reached in early February 1994. This increased volatility was
attributed to a number of political and economic factors,
including a growing current account deficit, the relative
overvaluation of the Peso, investor reactions to the increase in
U.S. interest rates, lower than expected economic growth in
Mexico in 1993, uncertainty concerning the Mexican presidential
elections in August 1994 and certain related developments.

          On December 20, 1994, increased pressure on the Mexican
Peso/U.S. Dollar exchange rate led Mexico to increase the ceiling
of the Banco de Mexico intervention band. That action proved
insufficient to address the concerns of foreign investors, and
the demand for foreign currency continued. On December 22, the
government adopted a free exchange rate policy, eliminating the
intervention band and allowing the Peso to float freely against
the Dollar. The value of the Mexican Peso continued to weaken
relative to the U.S. Dollar in the following days. There was
substantial volatility in the Mexican Peso/U.S. Dollar exchange
rate during the first quarter of 1995, with the exchange rate
falling to a low point of 7.588 Mexican Pesos to the U.S. Dollar
on March 13, 1995. By the end of April and through September
1995, the exchange rate began to stabilize; however, the exchange
rate began to show signs of renewed volatility in October and
November 1995. The Mexican Peso/U.S. Dollar exchange rate fell to
a low for the year of 8.14 Mexican Pesos to the U.S. Dollar on
November 13, 1995.

          In order to address the adverse economic situation that
developed at the end of 1994, the government announced in January
1995 a new economic program and a new accord among the government
and the business and labor sectors of the economy, which,
together with a subsequent program announced in March 1995 and
the international support package described below, formed the
basis of Mexico's 1995 economic plan (the "1995 Economic Plan").
The objectives of the 1995 Economic Plan were to stabilize the
financial markets, lay the foundation for a return to lower
inflation rates over the medium-term, preserve Mexico's
international competitiveness, maintain the solvency of the
banking system and attempt to reassure long-term investors of the
strong underlying fundamentals of the Mexican economy.

          The central elements of the 1995 Economic Plan were
fiscal reform, aimed at increasing public revenues through price
and tax adjustments and reducing public sector expenditures;
restrictive monetary policy, characterized by limited credit
expansion; stabilization of the exchange rate while maintaining
the current floating exchange rate policy; reduction of the
current account deficit; introduction of certain financial
mechanisms to enhance the stability of the banking sector; and
maintenance and enhancement of certain social programs, to ease
the transition for the poorest segments of society.

          In addition to the actions described above, in the
beginning of 1995, the government engaged in a series of
discussions with the IMF, the World Bank, the Inter-American
Development Bank and the U.S. and Canadian governments in order
to obtain the international financial support necessary to
relieve Mexico's liquidity crisis and aid in restoring financial
stability to Mexico's economy. The proceeds of the loans and
other financial support were used to refinance public sector
short-term debt, primarily Tesobonos, to restore the country's
international reserves and to support the banking sector. The
largest component of the international support package was up to
$20 billion in support from the United States pursuant to four
related agreements entered into on February 21, 1995. During
1995, the U.S. government and the Canadian government disbursed
$13.7 billion of proceeds to Mexico under these agreements and
the North American Framework Agreement ("NAFA"), the proceeds of
which were used by Mexico to refinance maturing short-term debt,
including Tesobonos and $1 billion of short-term swaps under the
NAFA. In a series of repayments and prepayments beginning in
October 1995 and ending in January 1997, Mexico repaid all of its
borrowings under the agreements.

          Using resources made available through the
international support package as well as operations by Banco de
Mexico, in 1995 Mexico altered its debt profile significantly.
The outstanding balance of Tesobonos (which are dollar
denominated) was reduced from $29.2 billion at December 31, 1994
to $16.2 billion at the end of the first quarter of 1995, $10.0
billion at the end of the second quarter, $2.5 billion at the end
of the third quarter and $246 million at the end of the fourth
quarter. By February 16, 1996, Mexico had no Tesobonos
outstanding, and has not issued Tesobonos since that date. As of
December 31, 1996, 100% of Mexico's net internal debt was
denominated and payable in Mexican Pesos, as compared with only
44.3% of such debt at the end of 1994.

          The government established a series of economic reform
programs following the 1995 Economic Plan. On June 3, 1997, the
government announced the Programa Nacional de Financiamiento del
Desarrollo 1997-2000 (National Development Financing Program
1997-2000, or "PRONAFIDE"). The PRONAFIDE's goals are to: (i)
achieve, on average, real GDP growth of 5% per year, (ii)
generate more than one million jobs per year, (iii) increase real
wages and salaries, (iv) strengthen the capacity of the
government to respond to social needs, (v) avoid economic crises
of the types suffered by Mexico during the past 20 years, (vi)
continue to decrease gradually the rate of inflation and (vii)
achieve a public sector balance that is close to equilibrium by
the year 2000. In order to achieve a sustainable real GDP growth
of 5%, the Government believes an investment rate of 25% of GDP
is required. Thus, the PRONAFIDE seeks to stimulate investment by
(i) promoting private-sector savings through the new pension
system and through a fiscal policy aimed at stimulating internal
savings of individuals, families and businesses, (ii)
consolidating public savings through the rationalization of
public expenditures and keeping such expenditures within the
level of tax revenues, although investment and social programs
will continue to be a priority, (iii) using external savings only
as a complement to internal savings and (iv) strengthening and
modernizing the financial system through adequate supervision and
controls, as well as stimulating and reorienting development
banks by increasing their level of investment efficiency.

          The PRONAFIDE, together with other reforms implemented
by the Mexico Government since 1995, have enabled the Mexican
economy to recover from the economic crisis experienced by Mexico
in late 1994 and 1995. Nonetheless, significant new investment in
infrastructure, industrial and agricultural modernization,
training and environmental protection will be required for
continued growth and development. The Mexican economy is also
likely to continue to be subject to the effects of adverse
domestic and external factors such as declines in foreign direct
and portfolio investment, high interest rates and low oil prices,
which may lead to volatility in the foreign exchange and
financial markets and may affect Mexico's ability to service its
foreign debt.

          The effects of the devaluation of the Mexican Peso, as
well as the government's response to that and related events,
were apparent in the performance of the Mexican economy during
1995 and 1996. Mexico's trade deficit decreased during 1995, the
value of imports decreasing by 8.7% between 1994 and 1995, to
$72.5 billion in 1995. Although the value of imports in 1996
increased approximately 23.4% from 1995, to $89.5 billion,
exports increased by almost the same amount. During 1995, Mexico
registered a $7.089 billion trade surplus, its first annual trade
surplus since 1989. Mexico continued to register a trade surplus
in 1996 and 1997 but the surplus decreased by approximately 7.9%
to $6.531 billion in 1996 and 90% to $624 million in 1997. Mexico
registered a $7.9 billion deficit in its trade balance in 1998, a
$5.6 billion deficit in 1999, an $8.1 billion deficit in 2000 and
a $10 billion deficit in 2001. During 1996 and 1997, Mexico's
current account balance registered a deficit of $2.330 billion
and $7.448 billion, respectively, as compared with a deficit of
$1.576 billion in 1995. Mexico's current account balance
registered deficits of $16.1 billion, $14.01 billion, $18.2
billion and $18.0 billion in 1998, 1999, 2000 and 2001,
respectively. During the first nine months of 2002, Mexico's
current account balance registered a deficit of $9.5 billion,
compared with a $14.7 billion dollar deficit during the same
period in 2001.

          On September 30, 2002, Mexico's international reserves
amounted to $48.0 billion, compared to $44.7 billion at December
31, 2001, $33.6 billion at December 31, 2000, $30.7 billion at
December 31, 1999, $30.1 billion on December 31, 1998, $28
billion on December 31, 1997, $17.5 billion at December 31, 1996,
$15.7 billion at December 31, 1995 and $6.1 billion at December
31, 1994.

          During 1995 real GDP decreased by 6.2%, as compared
with an increase of 4.5% during 1994. This downward trend
continued into the first quarter of 1996, but turned around in
the second quarter of 1996. The real GDP continued to grow until
2001, resulting in an overall GDP growth rate of 5.1% for 1996,
6.8% for 1997, 4.9% for 1998, 3.8% for 1999 and 6.9% for 2000.
For 2001, Mexico's real GDP contracted by 0.3%. During the third
quarter of 2002, Mexico's real GDP grew by 1.8%, year-on-year.
The recent slowdown in Mexico's economy has been attributed to
the slowdown of the U.S. economy, rather than any policy failures
of the Mexican government.

          Although the Mexican economy has stabilized since 1994,
continuing recovery will require economic and fiscal discipline
as well as stable political and social conditions. There can be
no assurance that the government's initatives will be successful
or that President Fox and succeeding administrations will
continue those initiatives. Reflecting Mexico's strengthened
economy, S&P upgraded Mexico's sovereign debt rating on February
7, 2002 to investment grade. Fitch and Moody's took similar
actions on January 22, 2002 and March 7, 2000, respectively.

Statistical and Related
Information Concerning Mexico

          The following provides certain statistical and related
information regarding historical rates of exchange between the
U.S. Dollar and the Mexican Peso, information concerning
inflation rates, historical information regarding the Mexican GDP
and information concerning interest rates on certain Mexican
Government Securities. Historical information is not necessarily
indicative of future fluctuations or exchange rates. In 1982,
Mexico imposed strict foreign exchange controls which shortly
thereafter were relaxed and were eliminated in 1991.

          CURRENCY EXCHANGE RATES. There is no assurance that
future regulatory actions in Mexico will not affect the Fund's
ability to obtain U.S. Dollars in exchange for Mexican Pesos.

          The following table sets forth the exchange rates of
the Mexican Peso to the U.S. Dollar announced by Banco de Mexico
for the payment of obligations denominated in dollars and payable
in Mexican Pesos within Mexico with respect to each year from
1992 to 2002.

                               End of
                               Period        Average

1992........................... 3.119        3.094
1993........................... 3.192        3.155
1994........................... 5.325        3.375
1995........................... 7.643        6.419
1996........................... 7.851        7.599
1997........................... 8.083        7.918
1998........................... 9.865        9.136
1999........................... 9.514        9.556
2000........................... 9.572        9.456
2001........................... 9.268        9.337
2002...........................10.439        9.416

Source:  Banco de Mexico.

          INFLATION AND CONSUMER PRICES. Through much of the
1980s, the Mexican economy continued to be affected by high
inflation, low growth and high levels of domestic and foreign
indebtedness. The annual inflation rate, as measured by the
consumer price index, rose from 28.7% in December 1981 to 159.2%
in December 1987. In December 1987, the Mexican government agreed
with labor and business to curb the economy's inflationary
pressures by freezing wages and prices (the "1987 accord"). The
1987 accord included the implementation of restrictive fiscal and
monetary policies, the elimination of trade barriers and the
reduction of import tariffs. After substantive increases in
public sector prices and utility rates, price controls were
introduced.

          The 1987 accord was succeeded by a series of additional
accords, each of which continued to stress the moderation of
inflation, fiscal discipline and, in the case of accords entered
into prior to 1995, a gradual devaluation of the peso. There was
a gradual reduction in the number of goods and services whose
prices were covered by such accords. The two most recent of these
accords also incorporated a reduction in the income tax rate
applicable to corporations and certain self-employed individuals
from 35% to 34% and a reduction in the withholding tax applicable
to interest payments on publicly issued external debt and
external debt payable to certain financial institutions from 15%
to 4.9%. These policies lowered the consumer inflation rate from
159.2% at year-end 1987 to 7.1% at year-end 1994.

          The government has been committed to reversing the
decline in real wages that occurred in the 1980s through control
of inflation, a controlled gradual upward adjustment of wages and
a reduction in income taxes for the lower income brackets.
Nonetheless, the effect of the devaluation of the peso and the
government's response to that event and related developments
caused a significant increase in inflation, as well as a decline
in real wages for much of the population, during 1995, when the
inflation rate increased to 52.0%. Subsequent fiscal and monetary
policies succeeded in lowering inflation at year-end 1996 and
1997 (as measured by the increase in the National Consumer Price
Index), to 27.7% and 15.7%, respectively. At year-end 1998,
inflation rose to 18.6%, well over the government's target of
12%, but fell to 12.3% at year-end 1999, 9.0% at year-end 2000
and 4.4% at year-end 2001. At year-end 2002, the inflation rate
was 5.7%, above the government's year-end target of 4.5%.

          CONSUMER PRICE INDEX. The following table sets forth
the changes in the Mexican consumer price index for the year
ended December 31 for the years 1992 through 2002.

                                                   Changes in
                                                   National Consumer
                                                   Price Index,
                                                   Increase Over
                                                   Previous Period
                                                   ---------------

          1992.............................             11.9
          1993.............................              8.0
          1994.............................              7.1
          1995.............................             52.0
          1996.............................             27.7
          1997.............................             15.7
          1998.............................             18.6
          1999.............................             12.3
          2000.............................              9.0
          2001.............................              4.4
          2002.............................              5.7

Source: Banco de Mexico.

          MEXICAN GROSS DOMESTIC PRODUCT. The following table
sets forth certain information concerning Mexico's GDP for the
years 1992 through 2001, and the first three quarters of 2002, at
current and constant prices.

                              Gross            Gross              Change
                              Domestic         Domestic           from Prior
                              Product          Product at         Year at
                              at Current       Constant           Constant
                              Prices           1993 Prices(1)     Prices
                              ------           --------------     ------

                              (millions of Mexican Pesos)         (percent)

          1992................1,125,334          1,232,162          3.6
          1993................1,256,196          1,256,196          2.0
          1994................1,423,364          1,312,200          4.5
          1995................1,840,431          1,230,608         (6.2)
          1996................2,508,147          1,293,859          5.1
          1997................3,178,953          1,381,352          6.8
          1998................3,791,191          1,447,945          4.9
          1999................4,622,789          1,505,000          3.7
          2000................5,491,018          1,603,262          6.6
          2001................5,771,857            1,598,832       (0.3)
          2002
              1st Quarter     N/A                  N/A             (2.0)
              2nd  Quarter    N/A                  N/A              2.1
              3rd Quarter     N/A                  N/A              1.8

(1) Constant Peso with purchasing power at December 31, 1993,
expressed in Pesos.

Source: Mexico's National Statistics, Geography and Informatics
Institute (INEGI).

          INTEREST RATES. The following table sets forth the
average interest rates per annum on 28-day and 91-day CETES,
which are peso-denominated Treasury bills, the average weighted
cost of term deposits for commercial banks ("CPP"), the average
interest rate ("TIIP") and the equilibrium interest rate ("TIIE")
for the periods listed below.


                              Average CETES and Interest Rates
                               ---------------------------------


                                  28-Day     91-Day
                                  CETES      CETES     CPP         TIIP            TIIE
                                  -----      -----     -----       -----           -----
                                                                
1992:
               Jan.-June          13.8       13.8      16.9        _____           _____
               July-Dec.          17.4       18.0      20.7        _____           _____
1993:
               Jan.-June          16.4       17.3      20.9        20.4(1)         _____
               July-Dec.          13.5       13.6      16.2        16.1            _____
1994:
               Jan.-June          13.0       13.5      14.2        15.3            _____
               July-Dec.          15.2       15.7      16.8        20.4            _____
1995:
               Jan.-June          55.0       54.3      49.6        63.6            71.2(2)
               July-Dec.          41.9       42.2      40.7        44.5            44.5
1996:
               Jan.-June          35.4       37.2      34.5        37.3            37.2
               July-Dec.          27.4       28.6      26.9        30.2            30.1
1997:
               Jan.-June          20.8       22.2      20.8        23.2            23.2
               July-Dec.          18.8       20.3      17.4        20.5            20.6
1998:
               Jan.-June          18.8       19.9      17.2        20.6            20.7
               July-Dec.          30.7       32.5      24.9        32.9            33.1
1999:
               Jan.-June          24.3       24.7      22.3        27.2            27.3
               July-Dec.          18.5       19.9      17.2        20.8            20.8
2000:
               Jan.-June          14.7       15.8      13.8        16.8            16.8
               July-Dec.          15.8       16.5      13.6        17.2            17.2
2001:
               Jan.-June          14.5       15.2      13.0        16.0            16.0
               July-Dec.           8.1        9.3       7.3         9.8             9.8
2002:
               Jan.-June           7.0        7.2       5.4          (3)            8.1
               July-Dec.           7.2        7.6       5.3          (3)            7.0



(1)  February-June average.
(2)  Average for the last two weeks of March.
(3)  The Banco de Mexico ceased publication of the TIIP as of
     December 31, 2001.

Source: Banco de Mexico.



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

      ADDITIONAL INFORMATION ABOUT THE REPUBLIC OF ARGENTINA

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

Territory and Population

          The Republic of Argentina ("Argentina") is the second
largest country in Latin America, occupying a territory of 2.8
million square kilometers (1.1 million square miles) (3.8 million
square kilometers (1.5 million square miles) if territorial
claims in the Antarctic and certain South Atlantic islands are
included). It is located at the extreme south of the South
American continent, bordered by Chile, Bolivia, Paraguay, Brazil,
Uruguay and the South Atlantic Ocean. Argentina consists of 23
provinces and the federal capital of Buenos Aires. In 1991, the
year of the last Census, it had a population of approximately
32.6 million. Official projections have estimated that
Argentina's population reached 37 million in 2000.

          The most densely inhabited areas and the traditional
agricultural wealth are on the wide temperate belt that stretches
across central Argentina. About one-third of the population lives
in the greater Buenos Aires area. Six other urban centers,
Cordoba, Rosario, Mendoza, San Miguel de Tucuman, Mar del Plata
and La Plata, have a population of over 500,000 each.
Approximately 79% of the country's population is urban.

Government

          The Argentine federal constitution (the
"Constitution"), first adopted in 1853, provides for a tripartite
system of government: an executive branch headed by a president;
a legislative branch made up of a bicameral congress; and a
judicial branch, of which the Supreme Court of Justice (the
"Supreme Court") is the highest body of authority. The President
is directly elected by the voters and may serve for a maximum of
two consecutive four-year terms. The President directs the
general administration of the country and has the power to veto
laws in whole or in part, although Congress may override a veto
by a two-thirds vote. Presidential elections were last held on
October 24, 1999.

          The Congress is made up of the Senate and the Chamber
of Deputies. The 72-member Senate consists of three Senators for
each province and the federal capital of Buenos Aires. Senators
are elected for six-year terms, and serve in staggered terms so
that one-third of the Senate's seats are subject to elections
every two years. The Chamber of Deputies consists of 257 seats,
which are allocated according to each province's population.
Deputies are elected for four-year staggered terms so that
one-half of the Chamber is subject to elections every two years.

          The judicial system comprises federal and provincial
trial courts, courts of appeal and supreme courts. The supreme
judicial power of the Republic is vested in the Supreme Court,
which has nine members who are appointed for life by the
President (subject to ratification by the Senate). Pursuant to
amendments to the Constitution adopted in 1994, the President
must select lower federal court judges from a list of nominees
selected by an independent body comprised of lawyers and
academics. In 1998 and 1999, steps were taken to implement this
system, which was designed to minimize political influence in the
selection and dismissal of judges.

          Each province has its own constitution, and elects its
own governor, legislators and judges, without the intervention of
the federal government.

Politics

          The three largest political parties in Argentina are
the Partido Justicialista or Peronist Party ("PJ"), which evolved
out of Juan Peron's efforts to expand the role of labor in the
political process in the 1940s, the Union Civica Radical or
Radical Civic Union ("UCR"), founded in 1890, and the Frente del
Pais Solidario or Front for a Country in Solidarity ("Frepaso"),
founded in 1994 by former members of the PJ and a small socialist
party. In 1997, members of the UCR and the Frepaso formed a
coalition called Alianza ("Alliance"), which has a platform
focused on remedying social problems. Traditionally, the UCR has
had more urban middle-class support and the PJ more labor
support. At present, support for the PJ, the UCR and the Alliance
is broadly based, with the Frepaso receiving most of its support
from the federal district of Buenos Aires. Smaller parties occupy
varied political positions on both sides of the political
spectrum and some are active only in certain provinces. Following
the October 24, 1999 Congressional elections, the Alliance held
125 seats in the Chamber of Deputies and the PJ held 101 seats.
Following the October 14, 2001 Congressional elections, the PJ
held the largest bloc in the Chamber of Deputies, as well as the
Senate, which it already controlled. The next elections
(Congressional and Presidential) are required by law to be held
no later than October 2003. However, in August 2002, President
Duhalde, recognizing the fragility of his political position,
moved the elections up. They are currently scheduled for April
27, 2003. The next president is scheduled to take office on May
25, 2003.

          Since 1983, which was the last year of military rule,
Argentina has been governed by a succession of elected civilian
Presidents. Raul Alfonsin, elected in 1983, was the first
civilian president in six decades to stay in office until the
scheduled election of a successor. His UCR Government
re-established civilian rule, including a functioning Congress.
The next president, Carlos Menem, a member of the PJ, won two
successive elections in May 1989 and May 1995. In October 1999,
Fernando de la Rua, representing the Alliance, was elected
President. Amidst the country's worsening economic and fiscal
condition, and associated civil unrest that ensued, President de
la Rua was forced to resign on December 20, 2001. Thereafter,
Argentina had several interim Presidents, all members of the PJ.
On January 1, 2002 Eduardo Duhalde, a Senator who had lost the
1999 Presidential race to Mr. de la Rua, became the fourth
interim President of Argentina. Mr. Duhalde is also a member of
the PJ.

          Former President Menem was first elected with the
backing of organized labor and business interests that
traditionally supported a closed economy and a large public
sector. Shortly after taking office, however, Mr. Menem adopted
market-oriented and reformist policies, including an aggressive
privatization program, a reduction in the size of the public
sector and an opening of the economy to international
competition. Mr. Menem won reelection in May 1995, but his
popularity declined as the government faced allegations of
corruption and criticism from both the ruling and opposition
parties concerning its economic policies. The Alliance did not
seek an alternative economic model. Rather, President de la Rua's
campaign emphasized the themes of maintaining stability,
improving social conditions and reducing the economy's
vulnerability to external shocks. President de la Rua had a
reputation for honesty and accountability, which contributed to
his electoral success in 1999. However, following allegations
that erupted in mid-2000 about officials in his administration
engaging in bribery with members of the legislature in connection
with his labor reform initiatives, there was growing concern
about President de la Rua's ability to successfully pursue the
measures necessary to maintain economic stability in Argentina.
President de la Rua failed to distance himself from his officials
involved in the scandal, resulting in the surprise resignation of
Argentina's vice-president in October 2000. The series of
high-level government corruption scandals, together with
Argentina's worsening economic difficulties, resulted in growing
public dissatisfaction, which was manifested in the October 14,
2001 elections and which led ultimately to his resignation on
December 20, 2001.

          Argentina has diplomatic relations with 139 countries.
It is a charter member of the United Nations and currently serves
as a member of its Security Council. Argentina is a founding
member of the Organization of American States and is also a
member of the International Monetary Fund ("IMF") and the World
Bank. Argentina became a member of the WTO on January 1, 1995
(the date on which the WTO superseded GATT). In October 1997, the
United States designated Argentina as a non-NATO ally.

Monetary and Banking System

          The central bank of Argentina is the Banco Central de
la Republica Argentina ("Central Bank of Argentina"). Its primary
functions include the administration of the financial sector,
note issue, credit control and regulation of foreign exchange
markets. The currency unit of Argentina is the Argentine Peso.
Beginning in January 1992, the rate of exchange between the
Argentine Peso and the U.S. Dollar remained approximately one to
one. The fixed exchange rate was terminated in February 2002 and
the Argentine Peso was allowed to float freely. After the
exchange rate reached almost PS4:US$1 in late March 2002, the
Central Bank intervened and stabilized the exchange rate at
around PS3:US$1 for several weeks. On April 1, 2003, the exchange
rate was PS2.96: US $1.

Economic Information Regarding Argentina

          The Argentina economy has many strengths including a
well balanced natural resource base and a high literacy rate.
Since World War II, however, it has had a record of erratic
growth, declining investment rates and rapid inflation. Following
implementation of President Menem's reform program in March 1991,
significant progress was made in reducing inflation and
increasing real GDP growth. Although the GDP declined by 2.8% in
1995, it increased during the following three years: 5.5% in
1996, 8.1% in 1997 and 3.9% in 1998. Since 1998, however,
Argentina's GDP has contracted, declining by 3.4% in 1999, 0.8%
in 2000, 4.4% in 2001 and 10.9% in 2002. The recession, which
began in mid-1998, has been attributed to external economic
conditions, including problems in Brazil, Argentina's main
trading partner, political uncertainties and an increasingly
complicated fiscal scenario that has kept country risk and
interest rates at very high levels.

          DEREGULATION OF THE ECONOMY AND PRIVATIZATIONS.
Deregulation of the domestic economy, liberalization of trade and
reforms of investment regulations are prominent features of
Argentina's structural adjustment program. In order to achieve
the free functioning of markets, the government has undertaken an
extensive program for the removal of economic restrictions and
regulations and the promotion of competition.

          In 1989 and 1990, steps were taken to remove various
regulations that restricted both international trade and domestic
commerce. Restrictions were removed in order to allow the private
sector to provide certain public services, such as telephone,
electricity and natural gas, subject to governmental regulation.

          On October 31, 1991, the Argentine government
promulgated its principal deregulation legislation which
deregulated the domestic market for goods, services and
transportation, abolished restrictions on imports and exports,
abolished or simplified a number of regulatory agencies and
allowed free wage bargaining in the private sector. In the
financial sector, this legislation abolished all stamp taxes
relating to publicly offered securities, all capital gains taxes
on stocks and bonds held by non-resident investors and fixed
commissions on the stock exchanges.

          In addition, Argentina has eliminated restrictions on
foreign direct investment and capital repatriation. In 1993,
legislation was adopted abolishing previous requirements of a
three-year waiting period for capital repatriation. Under the
legislation, foreign investors are permitted to remit profits at
any time and to organize their companies and make use of domestic
credit under the same rights and under the same conditions as
local firms. As a result, foreign banks have made significant
investments in Argentina's financial sector. As of March 1999,
eight of the ten largest private sector banks were either
foreign-owned or foreign-controlled. The process of deregulation
and liberalization is continuing through the privatization
process, the reform of the social security system, regional
integration and further labor law reforms.

          In 1989, the State Reform Law declared certain
enterprises eligible for privatization. In addition to increasing
the efficiency of services provided by public sector enterprises,
the privatizations have also served to reduce outstanding debt
(by applying cash proceeds and through the selective use of debt-
to-equity conversions), increase reserves and increase tax
revenues from the new owners of the enterprises. The
privatization program has also served as an important conduit for
direct foreign investment into Argentina, attracting interested
investors from Asia, Europe, North America and Latin America. The
government completed 32 major privatizations in 1993, 11 in 1994
and 3 in 1995. On March 13, 1995 the government announced a new
fiscal package, which included, among other measures, an
acceleration in the sale of assets and the privatization of
several additional companies. On August 1, 1997, the postal
service was privatized and on January 23, 1998, the government
officially unveiled a decree awarding the management of 33 of
Argentina's airports to a private consortium, bringing to more
than $30 billion the amount of assets sold since the
privatization program began.

          On January 20, 1999, the government sold most of its
residual interest (14.99%) in the Yacimientos Petroliferos
Fiscales, the largest oil and natural gas producer in Argentina,
in an auction in which major international oil firms were invited
to participate. The only bidder was the Spanish company Repsol,
which made an offer for the minimum price. The $2.01 billion in
proceeds from the sale were to be channeled to the Provincial
Development Trust Fund. The government sold an additional 5.3%
stake in YPF to Repsol on June 24, 1999 for $842 million. The
government will retain one "golden share" granting it veto power
over any strategic decisions.

          On February 2, 1999, the government sold the first
tranche of 25% in Banco Hipotecario National, the national
mortgage bank, which raised $307.5 million. The proceeds were to
be used to pay back the $220 million bridge loan obtained in 1998
from the banks in charge of organizing the sale; the balance will
be used to capitalize the Regional Infrastructure Fund. The sale
of the shares had been postponed on several occasions during 1998
because of the adverse conditions in the international financial
markets.

          The following provides certain statistical and related
information regarding historical rates of exchange between the
U.S. Dollar and the Argentine Peso, information concerning
inflation rates, historical information concerning the Argentine
GDP and information concerning interest rates on certain
Argentine Government Securities. Historical statistical
information is not necessarily indicative of future developments.

          CURRENCY EXCHANGE RATES. The Argentine foreign exchange
market was highly controlled until December 1989, when a free
exchange rate was established for all foreign transactions. With
the institution of the Convertibility Law on April 1, 1991, the
Argentine currency became tied to the U.S. Dollar. Under the
Convertibility Law, the Central Bank of Argentina was required to
maintain a reserve in foreign currencies, gold and certain public
bonds denominated in foreign currencies equal to the amount of
outstanding Argentine currency and was obliged to sell dollars to
any person who so required at a rate of one peso to one dollar.
From April 1, 1991 through the end of 1991, the exchange rate was
approximately 10,000 Australes (the predecessor to the Argentine
Peso) per U.S. Dollar. On January 1, 1992 the Argentine Peso
equal to 10,000 Australes was introduced. From January 1, 1992
until February 11, 2002, the rate of exchange from Argentine Peso
to U.S. Dollar was approximately one to one. While the fixed
exchange rate was instrumental in eradicating hyper-inflation and
stabilizing Argentina's economy in the early 1990s, in recent
years it has been viewed as an impediment to economic growth.
With the economy in a protracted recession, and facing a growing
fiscal crisis, the government terminated the decade-old
one-to-one peg to the U.S. Dollar in early January 2002, when it
devalued the Argentine Peso and established a dual exchange rate
system. Under this system, the government set the exchange rate
for export and import transactions, but otherwise let the
Argentine Peso float freely. On February 11, 2002 the Argentine
Peso was allowed to float freely for all purposes. On April 1,
2003 the Argentine Peso-U.S. Dollar exchange rate was 2.96.

          The following table sets forth, for each year
indicated, the nominal exchange rates of Argentine Peso to U.S.
Dollar as of the last day of the period indicated.

          1992 . . . . . . . . . . . .                       .9990
          1993 . . . . . . . . . . . .                       .9990
          1994 . . . . . . . . . . . .                      1.0
          1995 . . . . . . . . . . . .                      1.0
          1996 . . . . . . . . . . . .                      1.0
          1997 . . . . . . . . . . . .                      1.0
          1998 . . . . . . . . . . . .                      1.0
          1999 . . . . . . . . . . . .                      1.0
          2000 . . . . . . . . . . . .                      1.0
          2001 . . . . . . . . . . . .                      1.0
          2002 . . . . . . . . . . . .                      3.3900

Source:  Banco Central de la Republica Argentina.

          WAGES AND PRICES. Prior to the adoption of the economic
plan announced by Economy Minister Domingo F. Cavallo in March
1991, the Argentine economy was characterized by low and erratic
growth, declining investment rates and rapid inflation.
Argentina's high inflation rates and balance of payments
imbalances during the period from 1975 to 1990 resulted mainly
from a lack of control over fiscal policy and the money supply.
Large subsidies to state-owned enterprises and an inefficient tax
collection system led to large persistent public-sector deficits
which were financed in large part through increases in the money
supply and external financings. High inflation combined with the
lag between the accrual and receipt of taxes reduced real tax
revenues and increased the size of the deficit, further fueling
the inflationary cycle. Inflation accelerated on several
occasions and turned into hyperinflation in 1989 and the end of
1990, with prices rising at an annual rate of 1,000% or more.

          During the 1980s and in 1990, the Argentine government
instituted several economic plans to stabilize the economy and
foster real growth, all of which failed after achieving initial
success mainly because the government was unable to sustain
reductions in the public deficit. The government's initial
stabilization efforts included a devaluation of the Austral, a
fixed exchange rate, wage and price controls and a sharp rise in
public utility rates.

          On March 20, 1991, Economy Minister Cavallo announced
the Convertibility Plan, which was subsequently approved by
Congress through passage of the Convertibility Law. The
Convertibility Plan sought to reduce inflation and restore
economic stability through reforms relating to the tax system,
privatizations and the opening of the economy that were intended
to address underlying structural problems that had distorted
fiscal and monetary policy.

          The Convertibility Plan was centered on the two
following fundamental principles:

          (1) Full international reserve backing for the monetary
base. The monetary base (consisting of currency in circulation
and peso deposits of financial entities with the Central Bank)
was not to exceed the Central Bank's gross international assets
as a fixed rate of one Argentine Peso per U.S. Dollar. This
effectively meant that the money supply could be increased only
when backed by increases in the level of international reserves,
and not whenever the public sector deficit or the financial
sector needed to be financed. Gross international assets included
the Central Bank's holdings of gold, foreign exchange (including
short-term investments), U.S. Dollar denominated Argentine
government bonds (in an amount not to exceed 30% of total assets)
and its net Asociacion Latinoamericana de Integraction ("ALADI")
claims (except overdue claims) all freely available and valued at
market prices. Under this arrangement, in which the Argentine
Peso was fully convertible into the U.S. Dollar, no increase in
the domestic monetary base could occur without an equivalent
increase in gross international assets at the one Argentine Peso
per U.S. Dollar rate; and

          (2) the prohibition of financing of fiscal deficits
through Central Bank lending and fiscal control to contain
expenditures and foster tax revenues.

          The IMF supported the implementation of the
Convertibility Plan and designed a financial program for the
Argentine public sector. In the event of any noncompliance with
the program, Argentina was required to consult in the first
instance with the IMF in order to obtain a waiver and, if
required, revise the program to remedy the situation. In the
second half of 1994, the Government decided to seek private
financing rather than utilize its EFF allotment for that period.
After the onset of the Mexican currency crisis, however, the
Government determined that it was necessary to seek further
funding through the EFF program, including drawing down on its
unused quota for the later part of 1994. Negotiations with the
IMF led to approval in April 1995 of economic performance waivers
for the last two quarters of 1994, an extension of the EFF credit
for a fourth year through March 30, 1996, and an increase in the
amount of the EFF credit by the equivalent of approximately $2.4
billion to a total of approximately $6.3 billion. On February 4,
1998, the IMF, citing Argentina's strong macroeconomic
performance in 1997, announced its approval of a new three-year
EFF credit for Argentina in the amount of approximately $2.8
billion to support the government's medium-term economic reform
program for 1998-2000. Among other targets, the agreement
required that Argentina not exceed a public fiscal deficit of
$3.85 billion for 1998.

          Three times during 1999, due to falling tax revenues
and political considerations that made spending cuts difficult,
Argentine authorities renegotiated their 1999 fiscal deficit
targets with the IMF. The fiscal deficit targets were raised to
$5.1 billion. Argentina also renewed its commitment to the
structural reform programs already a part of its agreement with
the IMF. These included the "fiscal convertibility" law to
legally establish a declining trend for the fiscal deficit,
reform of the revenue-sharing mechanism with the provinces,
reform of the Central Bank Charter and the legal framework of
Argentina's financial institutions, privatization of Argentina's
largest bank, which Congress explicitly prohibited in a law
passed in May 1999, and social security and labor reforms.
Nonetheless, Argentina's 1999 fiscal deficit was $7.1 billion,
excluding privatization proceeds.

          In October 1999 Argentina became the first country to
take part in a new World Bank program designed to relieve
financial pressure in countries that meet economic and social
reform targets. Under the program, Argentina was able to sell
$1.5 billion in bonds backed by a "policy-based guarantee" of the
World Bank. The bonds were rated investment grade by Standard &
Poor's, which cited the World Bank's backing and Argentina's
"unblemished record" in servicing multilateral debt.

          Upon taking office on December 10, 1999, President de
la Rua declared the fiscal deficit to be Argentina's worst enemy
and moved quickly to push a budget package through Congress to
reduce the deficit with spending cuts and tax increases. The
package called for a $5 billion spending reduction and a $4.5
billion budget deficit target. President de la Rua also submitted
several bills to Congress requesting labor reforms and the
granting of additional powers to the government in order to
facilitate fiscal deficit reduction. Although President de la Rua
faced political resistance in the PJ-controlled Senate, which
thwarted his efforts to adopt many of his proposed structural
reforms, his aggressive efforts showed a measure of success. The
IMF and Argentina reached agreement on a three-year US$7.4
billion standby credit facility. The extended credit facility set
a limit of US$4.7 billion on the 2000 deficit, down from US$7.1
billion in 1999. Although President de la Rua's efforts succeeded
in meeting fiscal targets at the beginning of 2000, Argentina's
fiscal performance in the second quarter of 2000 was
disappointing, resulting in a new fiscal adjustment package at
the end of May, focusing on public sector wage cuts. Other
initiatives included the reform of the social security and health
care systems. In January 2000 Argentina successfully completed
its first long-term global bond offering since 1997.

          Reducing the fiscal deficit has been made more
difficult by Argentina's recession, resulting in an extension of
the target date for achieving fiscal balance from 2003 to 2005.
In December 2000, amid growing concerns about the possibility of
a debt default in 2001, the IMF and several other international
lenders put together a $39.7 billion package of emergency credits
that were designed to cover the cost of most government debt
payments through 2003.

          In March 2001, following the resignation of two Economy
Ministers in a period of two weeks and amidst a worsening fiscal
crisis, President de la Rua named Domingo Cavallo, the architect
of the 1991 Convertibility Plan, to be Economy Minister. Mr.
Cavallo designed a package of proposals designed to stimulate
industry and boost Argentina's competitiveness. While committing
himself to meeting IMF fiscal targets, Mr. Cavallo increased the
policy emphasis on promoting growth by raising competitiveness
through targeted initiatives. This represented a change of
direction from Mr. Cavallo's two predecessors, who had given
priority to fiscal adjustment. In the first quarter of 2001
Argentina went $1 billion above the $2.1 billion deficit target
agreed to with the IMF. Amidst renewed concerns about the ability
of Argentina to stay current on its $130 billion government debt,
a new IMF aid package was negotiated in August 2001 that provided
another $8 billion in fresh loans. Underpinning the new IMF aid
package were significant budget cuts, which were approved in
principle by the Argentine Congress but never implemented.
Argentina also conducted some voluntary debt swaps, which allowed
the government to postpone some debt payments. By the end of
November 2001, however, the government acknowledged that by year
end the budget deficit would be about $7.8 billion, well over the
$6.5 billion target it set with the IMF in return for the $8
billion aid package. In early December 2001, the IMF announced
that it was withholding a $1.3 billion payment due under the aid
package. This left an approximately $2 billion hole in
Argentina's finances for the remaining weeks of 2001. As a
result, the government announced in late December 2001 a
suspension of payment on its foreign debt, estimated to be a
total of $132.14 billion. Debt restructuring talks have not yet
occurred and progress with IMF negotiations has been slow.

          With revenues in a free-fall by the beginning of 2002,
Argentina entered into a 14-point agreement with the IMF in April
2002 that committed Argentina to meeting most of the IMF's
demands. These included abiding by Argentina's international
agreements, concluding bilateral agreements with the provincial
governments to enforce a fiscal pact reached in February 2002,
enforcing strict fiscal and monetary policies, guaranteeing
savers a credible restitution of their deposits through liquid
instruments and enforcing actions required to restore a solid and
reliable financial system. Given the deteriorating economy and
related social unrest, and given the lack of a strong political
consensus, it was very difficult for Argentina to meet the IMF's
demands.

          In September 2002, Argentina announced that it would no
longer use its diminishing reserves to pay back existing IMF
loans. In making this announcement, the government stated that
maintaining social programs and financing provincial economies
would take priority over its obligations to the IMF and other
multilateral lending bodies which amounted to approximately $2.25
billion as of September 2002. Early in 2003, the IMF took certain
actions designed to provide transitional financial support
through August 31, 2003. These actions were taken in the context
of a short-term economic program that seeks to preserve
macroeconomic stability through the transition to a new
government expected to take office in May 2003. In addition to
maintaining core monetary and fiscal policies, Argentina has
committed to a number of structural measures. Argentina has also
committed to remain current on its financial obligations to the
IMF.

          One of the most difficult problems facing Argentina is
the banking crisis. Early in 2002 the government put a freeze on
bank deposits and announced a mandatory rescheduling of term
deposits in an effort to stem a run. Shortly thereafter, the
government devalued the Peso, which has led to a resurgence of
inflation. Restoring liquidity to the banking system is a high
priority; however, it is also viewed as a threat to the banking
sector, which is already on the brink of insolvency. In late
March 2003 the government approved a plan to end the freeze
within a four-month timeframe. Plans to compensate the banks for
their losses are under discussion.

          The Convertibility Plan simplified fiscal and market
regulations and reallocated state activities to the private
sector, thereby reducing state expenditures, increasing the
amount of federal revenues and at the same time encouraging
domestic private sector initiative and foreign investment. Since
the Convertibility Plan was introduced in March 1991, inflation
as measured by the consumer price index declined from a 27.0%
monthly rate in February 1991 to a 0.3% monthly rate in December
1992 and resulted in a 24.8% annual rate for 1992. Inflation
decreased steadily thereafter, to an annual rate of 0.9% in 1998.
After 1998, a deflationary trend prevailed with the consumer
price index declining by 1.2%, 0.9% and 1.1% in 1999, 2000 and
2001, respectively. Following the devaluation of the Argentine
Peso in early 2002, the consumer price index grew rapidly,
resulting in an annual inflation rate of 25.9% for 2002. Rising
prices have resulted in a sharp deterioration of social
conditions in Argentina. Growing numbers of the population are
now below the poverty line and the threat of serious civil unrest
remains.

          CONSUMER PRICE INDEX. The following table sets forth
for 1993-2002 the change in Argentine Consumer Prices for the
twelve months ended December 31.

                                INFLATION
                                ---------

                                                  Consumer Prices,
                                                  Increase Over
                                                  Previous Period
                                                  ---------------

               1993.....................................10.6
               1994..................................... 4.2
               1995(1).................................. 3.4
               1996(1).................................. 0.2
               1997..................................... 0.5
               1998..................................... 0.9
               1999.....................................(1.2)
               2000.....................................(0.9)
               2001.....................................(1.1)
               2002.....................................25.9

          (1) In 1996, a new index was introduced called the
Indice Precios Internos al por Mayor (IPIM). The IPIM is broadly
similar to the index formerly used to determine wholesale price
inflation, but varies slightly as to the weighted average of the
goods measured in the index. The 1995 figures were also
recalculated using the new IPIM index.

- -------------------
Source: Banco Central de la Republica Argentina; Economist
Intelligence Unit.

          ARGENTINE GROSS DOMESTIC PRODUCT. The following table
sets forth Argentina's GDP for the years 1993 through 2002, at
current and constant prices.

                                      Gross Domestic          Change from
               Gross Domestic         Product at Constant     Prior Year at
               Product                1993 Prices             Constant Prices
               -------                -----------             ---------------

                 (millions of Argentine Pesos)                  (percent)

1993              236,500                 208,300                   N/A
1994              257,440                 250,308                   5.8
1995              258,032                 243,186                (2.8)
1996              272,150                 256,626                   5.5
1997              292,859                 277,441                   8.1
1998              298,948                 288,123                   3.9
1999              283,133                 278,320                (3.4)
2000              285,000                 276,868                (0.8)
2001              272,600                    N/A                 (4.4)
2002                 N/A                     N/A                (10.9)
- ---------------
Source: Ministerio de Economia, Obras y Servicios Publicos;
National Bureau of National Accounts.



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

                           APPENDIX E:
               STATEMENT OF POLICIES AND PROCEDURES
                        FOR VOTING PROXIES

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

Introduction

          As a registered investment adviser, Alliance Capital
Management L.P. ("Alliance Capital", "we" or "us") has a
fiduciary duty to act solely in the best interests of our
clients. As part of this duty, we recognize that we must vote
client securities in a timely manner and make voting decisions
that are in the best interests of our clients.

          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 is applicable to Alliance Capital's growth and value
investment groups investing on behalf of clients in both U.S. and
global securities.

Proxy Policies

          This statement is designed to be responsive to the wide
range of 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. Alliance
Capital reserves the right to depart from these guidelines in
order to avoid voting decisions that we believe may be contrary
to our clients' best interests. In reviewing proxy issues, we
will apply the following general policies:

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. We
may withhold votes for directors that 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 and failure to act on
tender offers where a majority of shareholders have tendered
their shares. 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.
Finally, we may withhold votes for directors of non-U.S. issuers
where there is insufficient information about the nominees
disclosed in the proxy statement. Appointment of Auditors:
Alliance Capital believes that the company remains in the best
position to choose the auditors and will generally support
management's recommendation. However, we recognize that there may
be inherent conflicts when a company's independent auditor
performs substantial non-audit related services for the company.
Therefore, we may vote against the appointment of auditors if the
fees for non-audit related services are disproportionate to the
total audit fees paid by the company or there are other reasons
to question the independence of the company's auditors.

Changes in 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, Alliance Capital will cast its votes in accordance with
the company's management 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 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 one hundred percent 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, or if the issuance of
new shares could excessively dilute the value of the outstanding
shares upon issuance.

Corporate Restructurings, Mergers and Acquisitions: Alliance
Capital 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 the research analysts that
cover the company and the investment professionals managing the
portfolios in which the stock is held.

Proposals Affecting Shareholder Rights: Alliance Capital 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.

Corporate Governance: Alliance Capital recognizes the importance
of good corporate governance in ensuring that management and the
board of directors fulfill their obligations to the shareholders.
We favor proposals promoting transparency and accountability
within a company. For example, we will vote for proposals
providing for equal access to proxies, a majority of independent
directors on key committees, and separating the positions of
chairman and chief executive officer.

Anti-Takeover Measures: Alliance Capital believes that measures
that impede 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. We will generally oppose proposals,
regardless of whether they are advanced by management or
shareholders, the purpose or effect of which is to entrench
management or dilute shareholder ownership. Conversely, we
support proposals that would restrict or otherwise eliminate
anti-takeover 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 blank check
preferred stock, classified boards and supermajority vote
requirements) that appear to be intended as management
entrenchment mechanisms.

Executive Compensation: Alliance Capital 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 benefit awards offered.
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. We will analyze
the proposed plans to ensure that shareholder equity will not be
excessively diluted, the option exercise price is not below
market price on the date of grant and an acceptable number of
employees are eligible to participate in such programs. We will
generally oppose plans that permit repricing 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. We will support proposals to submit
severance packages triggered by a change in control to a
shareholder vote and proposals that seek additional disclosure of
executive compensation. Finally, we will support shareholder
proposals requiring companies to expense stock options because we
view them as a large corporate expense.

Social and Corporate Responsibility: Alliance Capital will review
and analyze on a case-by-case basis proposals relating to social,
political and environmental issues to determine whether they will
have a financial impact on shareholder value. We will vote
against proposals that are unduly burdensome or result in
unnecessary and excessive costs to the company. We may abstain
from voting on social proposals that do not have a readily
determinable financial impact on shareholder value.

Proxy Voting Committees

          Our growth and value investment groups have formed
separate proxy voting committees to establish general proxy
policies for Alliance Capital and consider specific proxy voting
matters as necessary. These committees periodically review new
types of corporate governance issues, evaluate proposals not
covered by these policies and recommend how we should generally
vote on such issues. In addition, the committees, in conjunction
with the analyst that covers the company, contact management and
interested shareholder groups as necessary to discuss proxy
issues. Members of the committees include senior investment
personnel and representatives of the Corporate Legal Department.
The committees may also evaluate proxies where we face a
potential conflict of interest (as discussed below). Finally, the
committees monitor adherence to guidelines, industry trends and
review the policies contained in this statement from time to
time.

Conflicts of Interest

          Alliance Capital recognizes that there may be a
potential conflict of interest when we vote a proxy solicited by
an issuer whose retirement plan we manage, whose retirement plan
we administer, or with whom we have another business or personal
relationship that may affect how we vote on the issuer's proxy.
We believe that centralized management of proxy voting, oversight
by the proxy voting committees and adherence to these policies
ensures that proxies are voted with only our clients' best
interests in mind. That said, we have implemented additional
procedures to ensure that our votes are not the product of a
conflict of interests, including: (i) requiring anyone involved
in the decision making process to disclose to the chairman of the
appropriate proxy committee any potential conflict that they are
aware of and any contact that they have had with any interested
party regarding a proxy vote; (ii) 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 (iii) 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 a third party research
service to ensure that our voting decision is consistent with our
clients' best interests. For example, if our proposed vote is
consistent with our stated proxy voting policy, no further review
is necessary. If our proposed vote is contrary to our stated
proxy voting policy but is also contrary to management's
recommendation, no further review is necessary. If our proposed
vote is contrary to our stated proxy voting policy or is not
covered by our policy, is consistent with management's
recommendation, and is also consistent with the views of an
independent source, no further review is necessary. If our
proposed vote is contrary to our stated proxy voting policy or is
not covered by our policy, is consistent with management's
recommendation and is contrary to the views of an independent
source, the proposal is reviewed by the appropriate proxy
committee for final determination.

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
(usually one-week) 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. Alliance Capital may
determine that the value of exercising the vote does not outweigh
the detriment of not being able to transact in the shares during
this period. Accordingly, if share blocking is required we may
abstain from voting those shares. In such a situation we would
have determined that the cost of voting exceeds the expected
benefit to the client.

Proxy Voting Records

          Clients may obtain information about how we voted
proxies on their behalf by contacting their Alliance Capital
administrative representative. Alternatively, clients may make a
written request for proxy voting information to: Mark R. Manley,
Senior Vice President & Acting General Counsel, Alliance Capital
Management L.P., 1345 Avenue of the Americas, New York, NY 10105.


00250.0292 #517461