N-14 1 d883816_n-14.txt As filed with the Securities and Exchange Commission on June 26, 2008 Registration No : Investment Company Act Registration No. 811-5398 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-14 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. Post-Effective Amendment No. -------------------------------------------- ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. (Exact Name of Registrant as Specified in Charter) 1345 Avenue of the Americas, New York, New York 10105 (Address of Principal Executive Office) (Zip Code) Registrant's Telephone Number, including Area Code: (800) 221-5672 --------------------------------------------------------------- EMILIE D. WRAPP AllianceBernstein L.P. 1345 Avenue of the Americas New York, New York l0105 (Name and address of agent for service) Copies of communications to: Kathleen K. Clarke Seward & Kissel LLP 1200 G Street, Nw Suite 350 Washington, DC 20005 Approximate Date of Proposed Public Offering: As soon as practicable after this Registration Statement becomes effective. It is proposed that this filing will become effective on July 28, 2008 pursuant to Rule 488 under the Securities Act of 1933. No filing fee is required because an indefinite number of shares has previously been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended. ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. CONTENTS OF FORM N-14 REGISTRATION STATEMENT This Registration Statement contains the following papers and documents: o Cover Sheet o Contents of Registration Statement o Form N-14 Cross Reference Sheet o Letter to Shareholders o Notice of Special Meetings of Shareholders o Part A - Proxy Statement/Prospectus o Part B - Statement of Additional Information o Part C - Other Information o Signatures o Exhibits CROSS REFERENCE SHEET ITEM NO. PROXY/PROSPECTUS Part A 1. Beginning of Registration Statement and Outside Front Cover Page of Prospectus Cover Page/Questions & Answers 2. Beginning of Outside Back Cover Page of Prospectus Questions & Answers 3. Fee Table, Synopsis Information and Risk Factors Summary, Appendix A 4. Information about the Transaction Letter to Stockholders, Questions and Answers, Summary, Information About the Proposed Transaction 5. Information about the Registrant Letters to Stockholders, Questions and Answers, Summary, Information About the Funds 6. Information about the Company Being Letters to Stockholders, Questions Acquired and Answers, Summary, Information About the Funds 7. Voting Information Voting Information 8. Interest of Certain Persons and Experts Experts 9. Additional Information Required for Reoffering by Persons Deemed to be Not Applicable Underwriters Part B 10. Cover Page Cover Page 11. Table of Contents Table of Contents 12. Additional Information About the SAI Registrant 13. Additional Information about the SAI Company being Acquired 14. Financial Statements Incorporated by Reference to the SAI 15-17. Information required to be included in Part C is set forth under the appropriate item, so numbered, in Part C of this Registration Statement. AB AllianceBernstein investments ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. -- ALLIANCEBERNSTEIN BALANCED SHARES PORTFOLIO 1345 Avenue of the Americas New York, New York 10105 June 26, 2008 INFORMATION ABOUT THE ACQUISITION Dear Variable Annuity Contractholder: We are sending this information to you because you hold an interest in a separate account offered by an insurance company that funds a variable insurance product. Certain of the purchase payments made under your contract by you as a contractholder have been allocated to AllianceBernstein Balanced Shares Portfolio ("Balanced Shares"), a series of AllianceBernstein Variable Products Series Fund, Inc. ("AVP"). The Board of Directors (the "Directors") of AVP is pleased to announce the acquisition of the assets and liabilities of Balanced Shares by AllianceBernstein Balanced Wealth Strategy Portfolio ("Balanced Wealth"), another series of AVP. We sometimes refer to each of Balanced Wealth and Balanced Shares as a "Portfolio" and together, the "Portfolios". The acquisition, which is expected to become effective late in the third quarter of this year, is described in more detail in the attached Prospectus. You should review the Prospectus carefully and retain it for future reference. Balanced Shares and Balanced Wealth have virtually identical investment objectives, follow similar investment strategies and their investment portfolios overlap to a significant extent. We anticipate that the acquisition will result in benefits to the shareholders of Balanced Shares as discussed more fully in the Prospectus. As a general matter, we believe that the acquisition will provide a very similar investment opportunity with a lower expense ratio for Balanced Shares shareholders. In approving the acquisition, the Directors have considered, among other things, the investment objectives and investment policies of the Portfolios, the changes in the marketplace for variable annuity contracts since Balanced Shares commenced operations and its prospects for future sales, expense ratio reductions expected to result from the acquisition, continuity of portfolio management, the comparison of fees for the Portfolios and the pro forma combined Portfolio, the overlap of the securities held by the Portfolios, the costs of the acquisition and the allocation thereof, and the tax-free nature of the acquisition and have concluded that the acquisition is in the best interests of the Portfolios. Upon the acquisition of Balanced Shares by Balanced Wealth, insurance company shareholders of Balanced Shares will receive shares of Balanced Wealth of the same class of shares as the shares they currently own, which have an aggregate net asset value ("NAV") equal to the aggregate NAV of the shareholder's shares in Balanced Shares. Balanced Shares would then terminate. The contractholders of Balanced Shares will not be assessed any sales charges or other shareholder fees in connection with the acquisition. Sincerely, Marc O. Mayer President PROSPECTUS Acquisition of the Assets and Assumption of the Liabilities of ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. -- ALLIANCEBERNSTEIN BALANCED SHARES PORTFOLIO By, and in Exchange for Shares of, ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. -- ALLIANCEBERNSTEIN BALANCED WEALTH STRATEGY PORTFOLIO July 28, 2008 TABLE OF CONTENTS Questions and Answers 6 Summary 9 Comparison of Fees 9 Comparison of Investment Advisory Fees 11 Comparison of Investment Objectives and Policies 11 Principal Risks 12 Federal Income Tax Consequences 13 Comparison of Distribution and Purchase Procedures 13 Service Providers 14 Comparison of Business Structures 14 Information about the Transaction 15 Description of the Plan 15 Reasons for the Acquisition 15 Description of Securities to be Issued 17 Dividends and Other Distributions 17 Federal Income Tax Consequences 18 Capitalization Information 19 Information about the Portfolios 20 Management of the Portfolios 20 Advisory Agreement and Fees 20 Distributor 21 Other Service Providers 21 Legal Matters 21 Experts 21 Financial Highlights 22 Appendix A -- Comparison of Investment Objectives and Policies 23 Appendix B -- Portfolio Performance 29 Appendix C -- Description of Principal Risks of the Portfolios 32 Appendix D -- Certain Information Applicable to Class A and Class B Shares of Balanced Wealth 34 Appendix E -- Other Information 39 Appendix F -- Form of Plan of Acquisition and Liquidation 41 Appendix G -- Capitalization 48 Appendix H -- Legal Proceedings 49 Appendix I -- Share Ownership Information 50 Appendix J -- Financial Highlights 53 QUESTIONS AND ANSWERS The following questions and answers provide an overview of key features of the acquisition and of the information contained in this Prospectus. 1. What is this document and why did we send this document to you? This is a Prospectus that provides you with information about the acquisition (the "Acquisition") of the assets and liabilities of AllianceBernstein Balanced Shares Portfolio ("Balanced Shares"), a series of AllianceBernstein Variable Products Series Fund, Inc. ("AVP"), by AllianceBernstein Balanced Wealth Strategy Portfolio ("Balanced Wealth"), another series of AVP. (Balanced Wealth and Balanced Shares are each a "Portfolio" and, collectively, the "Portfolios.") On June 11, 2008, the Board of Directors (the "Directors") of AVP approved and declared advisable the Acquisition of Balanced Shares by Balanced Wealth. The Acquisition does not require approval by Balanced Shares shareholders. Shares of the Portfolios are not sold directly to individuals. The Portfolios only offer their shares through the separate accounts of life insurance companies ("Insurers"). As a contractholder, you hold a contract with an Insurer that offers the Portfolios as an investment option. The Insurers are the shareholders of record but the contractholders have a beneficial interest in the Portfolios. References to "you" or "shareholders" in this prospectus include the Insurers, as the shareholders of record, and contractholders. Shareholders may contact a Portfolio at 1-800-221-5672 or write to a Portfolio at 1345 Avenue of the Americas, New York, NY 10105. 2. How will the Acquisition work? The Plan of Acquisition and Liquidation dated as of June 11, 2008 (the "Plan") provides for (i) the transfer of all the assets of Balanced Shares to Balanced Wealth, (ii) the assumption by Balanced Wealth of all the liabilities of Balanced Shares, (iii) the issuance to Balanced Shares shareholders of the equivalent class of shares of Balanced Wealth, equal in aggregate net asset value ("NAV") to the NAV of their former Balanced Shares shares in redemption of their Balanced Shares shares, and (iv) the termination of Balanced Shares. The shareholders of Balanced Shares are insurance company separate accounts ("Separate Accounts") used to fund variable life and annuity products ("Variable Products"). As a Variable Product owner, you have a beneficial interest in the insurance company's shares of Balanced Shares. The insurance companies will receive shares of a class of Balanced Wealth corresponding to the class of shares of Balanced Shares they now own. The Balanced Wealth shares that shareholders of Balanced Shares receive will have the same aggregate NAV as the shares of Balanced Shares held before the Acquisition. Shareholders of Balanced Shares will not be assessed any sales charges or other shareholder fees in connection with the Acquisition. Class B shares of both Balanced Shares and Balanced Wealth are subject to distribution fees. 3. Why is the Acquisition taking place? After considering the recommendation of AllianceBernstein L.P. (the "Adviser"), the Directors concluded that participation by Balanced Shares in the Acquisition is in the best interests of Balanced Shares. The Directors also concluded that the Acquisition would benefit Balanced Shares shareholders by resulting in, among other things, a reduction in expenses, and would not dilute shareholders' interests. In reaching this conclusion, the Directors considered, among other things, the investment objectives and investment policies of the Portfolios, the changes in the marketplace for Variable Products since Balanced Shares commenced operations and its prospects for future sales, the expense ratio reductions expected to result from the Acquisition, continuity of portfolio management, the comparison of fees for the Portfolios and the pro forma combined Portfolio, the overlap of securities held by the Portfolios, the costs of the Acquisition and the allocation thereof, and the tax-free nature of the Acquisition. 4. When will the Acquisition take place? The Acquisition is expected to take place late in the third quarter of this year. 5. Who will bear the expenses of the Acquisition? The expenses of the Acquisition will be borne by the Portfolios, which will be apportioned on the basis of each Portfolio's projected expense ratio reductions relative to the other's, in the amounts of approximately $109,500 and $89,500 for Balanced Shares and Balanced Wealth, respectively. 6. Where may I find additional information regarding the Portfolios? Additional information about the Portfolios is available in the Statement of Additional Information ("SAI") dated May 1, 2008 that has been filed with the Securities and Exchange Commission ("SEC") in connection with this Prospectus. The SAI and each Portfolio's Annual Report to Shareholders, which contains audited financial statements for the Portfolios' fiscal year, are incorporated by reference into this Prospectus. In addition, the Prospectus and SAI for each Portfolio dated May 1, 2008 (the "Prospectuses") and each Portfolio's Annual Report dated December 31, 2007 are also incorporated by reference into this Prospectus. Additional copies of the Annual and Semi-Annual Reports and the Prospectus for each Portfolio are available at www.AllianceBernstein.com and are also available, along with this Prospectus and SAI, upon request, without charge, by writing to the address or calling the telephone number listed below. By mail: AllianceBernstein Investor Services, Inc. P.O. Box 786003 San Antonio, TX 78278-6003 By phone: For Information: 1-800-221-5672 For Literature: 1-800-227-4618 All of this additional information is also available in documents filed with the SEC. You may view or obtain these documents from the SEC: In person: at the SEC's Public Reference Room in Washington, DC By phone: 1-202-551-8090 (for information on the operations of the Public Reference Room only) By mail: Public Reference Section, Securities and Exchange Commission, Washington, DC 20549-0102 (duplicating fee required) By electronic mail: publicinfo@sec.gov (duplicating fee required) On the Internet: www.sec.gov Other Important Things to Note: o You may lose money by investing in the Portfolios. o The SEC has not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense. SUMMARY The following summary highlights differences between Balanced Wealth and Balanced Shares. This summary is not complete; for more complete information, please read this entire document. Note that certain information is presented as of March 31, 2008. At the June 11, 2008 Special Board Meeting (the "Board Meeting"), the Portfolios' Adviser, AllianceBernstein L.P., represented to the Directors that, if the information were updated, it would not differ in any material respect. Balanced Shares is a diversified open-end fund, with assets, as of March 31, 2008, of approximately $145 million, that is an actively-managed balanced fund, targeting a mix of 60% equity and 40% fixed-income securities. Balanced Wealth is a diversified open-end fund, with assets, as of March 31, 2008, of approximately $220 million, that is also a balanced fund, which targets a weighting of 60% equity securities and 40% debt securities with a goal of providing moderate upside potential without excessive volatility. While Balanced Shares has a longer performance history, Balanced Wealth has outperformed Balanced Shares over comparable periods since Balanced Wealth's inception in 2004. The average annual total returns for Class A shares of Balanced Wealth, as of December 31, 2007, was 5.55% for one year, 7.59% for three years and 9.62% since inception, and for Balanced Shares' Class A shares 3.05% for one year, 2.84% for three years, 9.22% for five years, and 7.14% for ten years. These performance numbers do not reflect charges associated with the Variable Products or contractholders' accounts. Comparison of Fees The expense ratios of the Balanced Wealth Class A and Class B shares, before waiver, are the same as the expense ratios of the Balanced Shares Class A and Class B shares and slightly lower after waiver. The Acquisition would result in a significant reduction in expense ratios for shareholders of Balanced Shares as well as for Balanced Wealth shareholders. The following table shows the Portfolios' expense ratios and pro forma expense ratio of the combined Portfolio for Class A and Class B shares as of March 31, 2008. Class A Class B Total Annual Total Annual Expense Ratio Expense Ratio ------------------------------ Balanced Shares 0.77% 1.02% Balanced Wealth (before waiver) 0.77% 1.02% Balanced Wealth (after waiver)* 0.75% 1.00% Combined Fund (pro forma) 0.69% 0.94% ---------- * Reflects the Adviser's contractual waiver of a portion of its advisory fee and/or reimbursement of a portion of the Portfolio's operating expenses so that expenses do not exceed 0.75% for Class A shares and 1.00% for Class B shares. The waiver continues through the end of the Portfolio's current fiscal year and may be extended by the Adviser for additional one-year terms. As the table indicates, the expense per share would be reduced for Balanced Shares' Class A and Class B shares by 0.08% after the Acquisition. The Acquisition would also result in a reduction in the expense ratios, after waiver, for Balanced Wealth Class A and B shares of 0.06%. This expense information does not include any fees and expenses that may be applied at the separate account level or contract level for any charges that may be incurred under a contract. Inclusion of these charges would increase the expenses reflected above. The purpose of the table below is to assist an investor in understanding the various costs and expenses that a shareholder bears directly and indirectly from an investment in the Portfolios. The table allows you to compare the expenses of each Portfolio and estimates for the pro forma combined Portfolio in its first year following the Acquisition. Fee Table --------- Shareholder Fees (fees paid directly from your investment) N/A Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets) The operating expenses information below is designed to assist contractholders of variable products that invest in the Portfolios in understanding the fees and expenses that they may pay as an investor. Because the information does not reflect deductions at the separate account level or contract level for any charges that may be incurred under a contract, contractholders that invest in a Portfolio should refer to the variable contract prospectus for a description of fees and expenses that apply to contractholders. Inclusion of these charges would increase the fees and expenses provided below. Balanced Balanced Balanced Wealth Shares Wealth (pro forma) Class A Class A Class A --------------------------------- Management Fees .55% .55% .55% Other Expenses .22% .22% .14% ------ ------ ------ Total Portfolio Operating Expenses .77% .77% .69% ====== ====== ====== Waiver and/or Expense Reimbursement None .02)%(a) None Net Expenses .77% .75% .69% ====== ====== ====== Balanced Balanced Balanced Wealth Shares Wealth (pro forma) Class B Class B Class B --------------------------------- Management Fees .55% .55% .55% Distribution and/or Service (12b-1) Fees .25% .25% .25% Other Expenses .22% .22% .14% ------ ------ ------ Total Portfolio Operating Expenses 1.02% 1.02% .94% ====== ====== ====== Waiver and/or Expense Reimbursement None (.02)%(a) None Net Expenses 1.02% 1.00% .94% ====== ====== ====== ---------- (a) Reflects the Adviser's contractual waiver of a portion of its advisory fee and/or reimbursement of a portion of the Fund's operating expenses. This waiver extends through the Fund's current fiscal year and may be extended by the Adviser for additional one-year terms. Examples The Examples are to help you compare the cost of investing in each Portfolio with the cost of investing in the combined Portfolio on a pro forma combined basis. The Examples do not give effect to any separate account or contract level fees that might be paid by a contractholder. They assume that you invest $10,000 in a Portfolio for the time periods indicated and then redeem all of your shares at the end of those periods. They also assume that your investment has a 5% return each year, that a Portfolio's operating expenses stay the same and that all dividends and distributions are reinvested. Balanced Wealth Balanced Shares Balanced Wealth (pro forma) Class A Class A Class A -------------------------------------------------- After 1 Year $79 $77 $70 After 3 Years $246 $244 $221 After 5 Years $428 $426 $384 After 10 Years $954 $952 $859 Balanced Wealth Balanced Shares Balanced Wealth (pro forma) Class B Class B Class B -------------------------------------------------- After 1 Year $104 $102 $96 After 3 Years $325 $323 $300 After 5 Years $563 $561 $520 After 10 Years $1,248 $1,246 $1,155 The projected post-Acquisition pro forma Annual Portfolio Operating Expenses and Examples presented above are based upon numerous material assumptions. Although these projections represent good faith estimates, there can be no assurance that any particular level of expenses or expense reductions will be achieved, because expenses depend on a variety of factors, including the future level of fund assets, many of which are beyond the control of Balanced Wealth and the Adviser. Comparison of Investment Advisory Fees Balanced Shares and Balanced Wealth pay advisory fees to the Adviser at the same annual rate of .55% of each Portfolio's average daily net assets. Comparison of Investment Objectives and Policies The investment objectives of the Portfolios are virtually identical and their investment strategies are similar as shown in the following table. Balanced Shares Balanced Wealth ------------------------------------------------------------- Investment Balanced Shares' investment Balanced Wealth's investment Objective objective is total return objective is to maximize total consistent with reasonable return consistent with the risk, through a combination Adviser's determination of of income and long-term reasonable risk. growth of capital. Principal The Portfolio invests in a The Portfolio targets a Investment diversified portfolio of weighting of 60% equity Strategies equity and fixed-income securities and 40% debt securities. The percentage securities with a goal of of the Portfolio's assets providing moderate upside invested in each type of potential without excessive security will vary. volatility. Normally, the Portfolio's investments will consist of The Portfolio's equity about 60% in stocks, but component is diversified stocks may comprise up to between growth and value 75% of its investments. equity investment styles, and between U.S. and non-U.S. markets. The Portfolio will not purchase a security if as a result less than 25% of its net assets will be in fixed-income securities. The Portfolio's portfolio normally will include approximately 60 to 90 companies. As the table above shows, each Portfolio pursues virtually identical investment objectives and similar investment strategies, targeting the same 60/40 equity/fixed-income blend. However, their investment strategies and approaches differ. Balanced Shares takes a more opportunistic approach to multiple class investing, varying the percentages of its assets committed to different asset classes from time to time in response to changing market conditions. In contrast, Balanced Wealth attempts a more level approach by maintaining a disciplined blend of assets classes with low correlation to each other. Each asset class--domestic growth equities, domestic value equities, international growth equities, international value equities, global real estate investment trusts and core intermediate bonds--is allocated a portion of the Portfolio's assets. In addition, Balanced Shares is a more concentrated fund than Balanced Wealth, currently holding approximately 285 securities compared to Balanced Wealth's approximately 750. The equity component of Balances Shares, with approximately 75 issuers, is significantly more concentrated than the equity component of Balanced Wealth, which includes approximately 425 issuers. A more detailed comparison of the investment strategies and policies of the Portfolios is provided in Appendix A and the historical performance of the Portfolios is provided in Appendix B. As a result of their different investment strategies and approaches, there is currently approximately a 51% overlap of securities between the two Portfolios. The Adviser expects that Balanced Wealth will retain all of Balanced Shares' fixed-income securities and some of its domestic equity securities. The combined Fund will therefore acquire approximately $71 million of securities free of transaction costs, which are estimated to be approximately $80,000. The Adviser anticipates that the remainder of Balanced Shares' equity positions will be repositioned shortly after the Acquisition. The transaction costs associated with selling these securities are expected to total approximately $43,000 or approximately 1.16 basis points ("bps") of the combined Fund's pro forma net assets. The combined Fund will then invest the cash in equity securities, incurring transaction costs estimated to be no greater than $120,000 or 3.3 bps of the combined Fund's pro forma net assets. The Adviser believes that it is appropriate for the combined Fund to bear the repositioning costs because both Portfolios will benefit from the Acquisition, and the cost savings of receiving the majority of Balanced Shares' positions in kind will outweigh the costs of liquidating Balanced Shares' unwanted equity positions. Principal Risks Each Portfolio is subject to principal risks of market risk, interest rate risk, credit risk, allocation risk, non-U.S. (foreign) risk, currency risk and liquidity risk. A description of each of these and other risks is provided in Appendix C. Federal Income Tax Consequences As long as the contracts funded through the separate accounts of the insurance company shareholders qualify as annuity contracts under section 72 of the Internal Revenue Code of 1986, as amended (the "Code"), the Acquisition will not create any tax liability for contractholders. No gain or loss will be recognized by Balanced Shares or its shareholders as a result of the Acquisition. The aggregate tax basis of the shares of Balanced Wealth received by a shareholder of Balanced Shares (including any fractional shares to which the shareholder may be entitled) will be the same as the aggregate tax basis of the shareholder's shares of Balanced Shares. The holding period of the shares of Balanced Wealth received by a shareholder of Balanced Shares (including any fractional share to which the shareholder may be entitled) will include the holding period of the shares of Balanced Shares held by the shareholder, provided that such shares are held as capital assets by the shareholder of Balanced Shares at the time of the Acquisition. The holding period and tax basis of each asset of Balanced Shares in the hands of Balanced Wealth as a result of the Acquisition will be the same as the holding period and tax basis of each such asset in the hands of Balanced Shares prior to the Acquisition. Provided that Balanced Shares shares surrendered constitute capital assets in the hands of the shareholder, such gain or loss realized by the shareholder will be capital gain or loss upon disposition of the shares. This tax information is based on the advice of Seward & Kissel LLP, counsel to each of the Portfolios. It is a condition to the closing of the Acquisition that such advice be confirmed in a written opinion of counsel. An opinion of counsel is not binding on the Internal Revenue Service ("IRS"). Neither Portfolio has any capital loss carryforward positions. No distribution of capital gains to Balanced Shares shareholders prior to the closing of the Acquisition is anticipated. Prior to the closing of the Acquisition, AVP, if necessary, will declare a distribution to the Balanced Shares shareholders which, together with all previous distributions, will have the effect of distributing to the Balanced Shares shareholders all of Balanced Shares' investment company taxable income (computed without regard to the deduction for dividends paid) and net realized capital gains, if any, through the closing. A portion of the assets of Balanced Shares may be sold in connection with the Acquisition. The actual tax impact of such sales will depend on the difference between the price at which such portfolio assets are sold and Balanced Shares' basis in such assets. Any capital gains recognized in these sales will be distributed to Balanced Shares' shareholders (but not contractholders) as capital gain dividends (to the extent of the excess of net realized long-term capital gains over net realized short-term capital losses) and ordinary dividends (to the extent of net realized short-term capital gains) during or with respect to the year of sale, and such distributions will be taxable to shareholders (but not to the contractholders). Additional tax considerations are discussed under the section on "Federal Income Tax Consequences" in "Information about the Transaction". Comparison of Distribution and Purchase Procedures The purchase procedures for the Portfolios are the same. The Portfolios offer their shares through the separate accounts of life insurance companies (the "Insurers"). You may only purchase and sell shares through these separate accounts. See the prospectus of the separate account of the participating insurance company for information on the purchase and sale of the Portfolios' shares. AllianceBernstein Investments, Inc. ("ABI") may from time to time receive payments from Insurers in connection with the sale of the Portfolios' shares through the Insurer's separate accounts. More information on distribution and purchase procedures of Balanced Wealth is provided in Appendix D. Service Providers The Portfolios have the same service providers, which will continue in their capacity after the Acquisition. Comparison of Business Structures Each Portfolio is a series of AVP, which is organized as a Maryland corporation and is governed by its Charter, Bylaws and Maryland law. For more information on the organizational structure and governance of the Portfolios, see Appendix E. INFORMATION ABOUT THE TRANSACTION Description of the Plan As provided in the Plan, Balanced Wealth will acquire all the assets and assume all the liabilities, expenses and obligations of Balanced Shares at the effective time of the Acquisition (the "Effective Time"). In return, Balanced Wealth will issue, and Balanced Shares will distribute to its shareholders, a number of full and fractional shares of Balanced Wealth, determined by dividing the net value of all the assets of Balanced Shares by the NAV of one share of Balanced Wealth. For this purpose, the Plan provides the times for and methods of determining the net value of the assets of each Portfolio. The Plan provides that shareholders of Balanced Shares will be credited with shares of Balanced Wealth corresponding to the aggregate NAV of Balanced Shares shares that the shareholder holds of record at the Effective Time. Following the distribution of Balanced Wealth shares in full liquidation of Balanced Shares, Balanced Shares will wind up its affairs and terminate as soon as is reasonably possible after the Acquisition. The projected expenses of the Acquisition, largely those for legal, accounting, printing and proxy solicitation expenses, are estimated to total approximately $199,000. The projected expenses will be shared by the Portfolios on the basis of the benefit that they will receive relative to their respective total expense ratios ("TERs"). Based on March 31, 2008 expense numbers, Balanced Shares would have an 0.08% reduction in expenses, representing a 10% TER reduction and Balanced Wealth would have a 0.06% reduction in expenses, representing an 8% TER reduction. Based on these relative benefits, the projected Acquisition expenses would be apportioned 55% to Balanced Shares or $109,500, which represents 7.4 bps of Balanced Shares' net assets as of March 31, 2008, and 45% to Balanced Wealth, or $89,500, which represents 3.5 bps of Balanced Wealth's net assets at March 31, 2008. The Acquisition is expected to occur in the third quarter of this year. Under applicable legal and regulatory requirements, none of Balanced Shares' shareholders will be entitled to exercise objecting shareholders' appraisal rights, i.e., to demand the fair value of their shares in connection with the Acquisition. Therefore, shareholders will be bound by the terms of the Acquisition under the Plan. However, any shareholder of Balanced Shares may redeem shares of common stock prior to the Acquisition. Completion of the Acquisition is subject to certain conditions set forth in the Plan. The Directors may terminate the Plan under certain circumstances. Among other circumstances, the Directors may terminate the Plan upon a determination that proceeding with the Plan is not in the best interests of a Portfolio or of its shareholders. A copy of a form of the Plan for the Acquisition is attached as Appendix F. Reasons for the Acquisition At the Board Meeting, the Adviser recommended that the Directors approve the proposed Plan and Acquisition. The Directors considered the factors discussed below from the point of view of the interests of Balanced Shares and its shareholders. After careful consideration, the Directors (including all Directors who are not "interested persons" of the Portfolio, the Adviser or its affiliates) determined that the Acquisition would be in the best interests of Balanced Shares and that the interests of existing shareholders of the Portfolios would not be diluted as a result of the Acquisition. The Directors have unanimously approved the Plan and Acquisition. The Adviser presented the following reasons in favor of the Acquisition: o The Adviser discussed with the Directors that there has been a shift away from a multiple series fund, such as AVP as the preferred funding vehicle for Variable Products, to a customized "private-label" platform of investment options subadvised by a number of different investment advisers. While AVP's key style-pure and blended equity Portfolios remain desirable for some insurance companies, the Adviser believes that combining its Portfolios, where possible, into larger offerings will satisfy the existing insurance company shareholders' needs and may attract new issuers of Variable Products. The Adviser believes that a single, less expensive balanced portfolio will be more attractive to insurance companies and to the underlying contractholders since the combination will allow them to benefit from a lower expense ratio. o The Adviser also discussed with the Directors that it believes that the Acquisition would benefit Balanced Shares and its shareholders by resulting in lower expenses. At the Board Meeting, the Directors (with the advice and assistance of independent counsel) also considered, among other things: o potential shareholder benefits, including the fact that, based on March 31, 2008 expense numbers, the pro forma total expenses of each class of shares of the combined Portfolio are expected to be lower than the current expenses of the corresponding classes of shares of Balanced Shares, even without taking account of the expense cap in place for Balanced Wealth; o the Adviser's plans with respect to the portfolio securities of Balanced Shares and Balanced Wealth, including that (i) there is currently a 51% overlap between the portfolio holdings of the two Portfolios, (ii) the Adviser expects that the combined Fund will retain approximately 50% of Balanced Shares' portfolio, primarily fixed-income securities, and (iii) that the balance of Balanced Shares' portfolio will be repositioned shortly after the Acquisition; o the current asset level of Balanced Shares and the combined pro forma asset level of the combined Portfolio; o the historical performance of the Portfolios; o the investment objectives and principal investments of the Portfolios, which are similar in that both are balanced funds, which target 60% equity and 40% fixed-income securities, although the Portfolios have different investment strategies and approaches; and o that the portfolio manager teams and the individuals on the teams with the most direct day-to-day management responsibilities are different and that the portfolio management team and the individuals with the most direct day-to-day management responsibilities for Balanced Wealth will continue to have responsibility for management of the combined Fund. The Directors also considered, among other things: o the fact that, because the Separate Accounts are not subject to federal income tax on a current basis, there is no need to consider the impact of the Acquisition on any capital loss carryforwards; o the form of the Plan and the terms and conditions of the Acquisition; o the fact that the Portfolios have the same advisory contract terms and pay the same advisory fee rates; o whether the Acquisition would result in the dilution of shareholders' interests; o the fact that no changes in service providers would result from the Acquisition; o the benefits of the Acquisition to the Adviser, which will benefit from the elimination of separate monitoring and administration of Balanced Shares; o the fact that Balanced Wealth will assume all the liabilities, expenses and obligations of Balanced Shares; o the expected federal income tax consequences of the Acquisition; o the expenses of the Acquisition, and the fact that these would be borne by both Portfolios and apportioned on the basis of the projected relative expense ratio reductions for each Portfolio as a result of the Acquisition; and o the fact that the Adviser has agreed to indemnify Balanced Wealth for a three-year period against any undisclosed or other liabilities not disclosed or not reflected in the NAV of Balanced Shares at the time of the Acquisition, to reimburse Balanced Wealth for any costs in connection with investigating any such liability, and to continue certain insurance coverage for a six-year period. Also at the Board Meeting, the Directors approved the Plan on behalf of Balanced Wealth. Description of Securities to be Issued Under the Plan, Balanced Wealth will issue additional shares of its Class A and Class B common stock for distribution to corresponding classes of shares of Balanced Shares. Under AVP's Charter, Balanced Wealth may issue up to 500,000,000 shares of common stock, par value $.001 per share, for each of these Classes. When the acquisition of Balanced Shares by Balanced Wealth is consummated, Class A and Class B shareholders of Balanced Shares will receive shares of a corresponding class of Balanced Wealth having an aggregate NAV equal to the aggregate NAV of the shareholder's shares in Balanced Shares. Each share of Balanced Wealth represents an equal proportionate interest with other shares of Balanced Wealth. Each share has equal earnings, assets, and voting privileges, and is entitled to dividends and other distributions out of the income earned and gain realized on the assets belonging to Balanced Wealth as authorized by the Directors. Shares of Balanced Wealth entitle their holders to one vote per full share and fractional votes for fractional shares held. Shares of Balanced Wealth received by Balanced Shares in the Acquisition will be issued at NAV, without a sales charge, and will be fully paid and non-assessable. Dividends and Other Distributions On or before the Closing Date, as defined in the Plan, Balanced Shares will, if necessary, declare and pay as a distribution substantially all its undistributed net investment income, net short-term capital gain, net long-term capital gain and net gains from foreign currency transactions as applicable to maintain its treatment as a regulated investment company. Federal Income Tax Consequences As long as the variable contracts funded through the separate accounts of the insurance company shareholders qualify as annuity contracts under section 72 of the Code, the Acquisition will not create any tax liability for contractholders. Subject to certain stated assumptions contained therein, Balanced Shares will receive an opinion of Seward & Kissel LLP, its counsel, substantially to the following effect: (i) the Acquisition will constitute a "reorganization" within the meaning of Section 368(a) of the Code and that Balanced Shares and Balanced Wealth will each be "a party to a reorganization" within the meaning of Section 368(b) of the Code; (ii) a shareholder of Balanced Shares will recognize no gain or loss on the exchange of the shareholder's shares of Balanced Shares solely for shares of Balanced Wealth; (iii) neither Balanced Shares nor Balanced Wealth will recognize any gain or loss upon the transfer of all of the assets of Balanced Shares to Balanced Wealth in exchange for shares of Balanced Wealth and the assumption by Balanced Wealth of the liabilities of Balanced Shares pursuant to the Plan or upon the distribution of shares of Balanced Wealth to shareholders of Balanced Shares in exchange for their respective shares of Balanced Shares; (iv) the holding period and tax basis of the assets of Balanced Shares acquired by Balanced Wealth will be the same as the holding period and tax basis that Balanced Shares had in such assets immediately prior to the Acquisition; (v) the aggregate tax basis of shares of Balanced Wealth received in connection with the Acquisition by each shareholder of Balanced Shares (including any fractional share to which the shareholder may be entitled) will be the same as the aggregate tax basis of the shares of Balanced Shares surrendered in exchange therefor; (vi) the holding period of shares of Balanced Wealth received in connection with the Acquisition by each shareholder of Balanced Shares (including any fractional share to which the shareholder may be entitled) will include the holding period of the shares of Balanced Shares surrendered in exchange therefore, provided that such Balanced Shares shares constitute capital assets in the hands of the shareholder as of the Closing Date; and (vii) Balanced Wealth will succeed to the capital loss carryovers of Balanced Shares but the use of Balanced Wealth's existing capital loss carryovers (as well as the carryovers of Balanced Shares) may be subject to limitation under Section 383 of the Code after the Acquisition. This opinion of counsel will not be binding on the IRS or a court and there is no assurance that the IRS or a court will not take a view contrary to those expressed in the opinion. A portion of the assets of Balanced Shares may be sold in connection with the Acquisition. The actual tax impact of such sales will depend on the difference between the price at which such portfolio assets are sold and Balanced Shares' basis in such assets. Any capital gains recognized in these sales will be distributed to Balanced Shares' shareholders (but not to the contractholders) as capital gain dividends (to the extent of the excess of net realized long-term capital gains over net realized short-term capital losses) and ordinary dividends (to the extent of net realized short-term capital gains) during or with respect to the year of sale, and such distributions will be taxable to shareholders (but not to the contractholders). Neither Portfolio has any capital loss carryforwards. No distribution of capital gains to Balanced Shares's shareholders prior to the closing of the Acquisition is anticipated. Prior to the closing of the Acquisition, AVP, if necessary, will declare a distribution to the Balanced Shares shareholders which, together with all previous distributions, will have the effect of distributing to the Balanced Shares shareholders all of Balanced Shares' investment company taxable income (computed without regard to the deduction for dividends paid) and net realized capital gains, if any, through the closing. Shareholders of Balanced Shares are encouraged to consult their tax advisers regarding the effect, if any, of the Acquisition in light of their individual circumstances. Because the foregoing discussion only relates to the federal income tax consequences of the Acquisition, those shareholders also should consult their tax advisers as to state and local tax consequences, if any, of the Acquisition. Capitalization Information For information on the existing capitalization of the Portfolios and the pro forma capitalization of Balanced Wealth, see Appendix G. INFORMATION ABOUT THE PORTFOLIOS Balanced Shares and Balanced Wealth are each a series of AVP, an open-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act") and organized as a Maryland corporation in 1987 under the name Alliance Variable Products Series Fund, Inc. The company's name became AllianceBernstein Variable Products Series Fund, Inc. on April 30, 2003. Management of the Portfolios The Directors of AVP direct the management of the business and affairs of the Portfolios. The Directors approve all significant agreements between the respective Portfolio and persons or companies furnishing services to it, including a Portfolio's agreements with the Adviser and the Portfolio's custodian, transfer and dividend disbursing agent. The day-to-day operations of a Portfolio are delegated to its officers and the Portfolio's Adviser, subject to the Portfolio's investment objective and policies and to general supervision by the Directors. The management and investment decisions of Balanced Shares are made by the Adviser's Balanced Shares Investment Team, made up of members of the Relative Value Investment Team on the equity side and the U.S. Core Investment Grade Fixed-Income Team on the fixed-income side. The Portfolio's management team relies heavily on the Adviser's large internal research staff. The individuals on the team with the most direct day-to-day management responsibilities are Frank Caruso and Aryeh Glatter on the equity side and Alison M. Martier, Greg J. Wilensky, Shawn E. Keegan, Joran Laird, Jeffrey S. Phlegar and Douglas J. Peebles on the fixed-income side. Messrs. Caruso and Glatter are Senior Vice Presidents of the Adviser. They have both been members of the Relative Value Investment Team since prior to 2003 and have collaborated with other members of the Relative Value Investment Team on the Portfolio's investments since prior to 2003. Messrs. Keegan and Laird are Vice Presidents of the Adviser, with which they have been associated in a substantially similar capacity to their current positions since prior to 2003. Ms. Martier and Mr. Wilensky are Senior Vice Presidents of the Adviser, with which they have been associated in a substantially similar capacity to their current positions since prior to 2003. Ms. Martier is also Director of the Fixed-Income Senior Portfolio Management Team. Messrs. Phlegar and Peebles are Executive Vice Presidents of the Adviser, with which they have been associated in a substantially similar capacity to their current positions since prior to 2003, and are Chief Investment Officers and Co-Heads of Fixed-Income. Daniel T. Grasman, Mark A. Hamilton, Joshua Lisser, Seth J. Masters and Christopher H. Nikolich, members of the Adviser's Blend Investment Policy Team, are the individuals primarily responsible for the day-to-day management of Balanced Wealth. Mr. Grasman has been a Vice President of the Adviser since 2004. Prior thereto, he was co-founder and CCO of Xelector since prior to 2003. Messrs. Hamilton, Lisser, and Nikolich are Senior Vice Presidents of the Adviser, with which they have been associated in a substantially similar capacity to their current positions since prior to 2003. Mr. Lisser is also Chief Investment Officer of Structured Equities, and a member of the Blend Strategies team. Mr. Masters is an Executive Vice President of the Adviser, with which he has been associated in a substantially similar capacity to his current position since prior to 2003, and Chief Investment Officer of Blend Strategies. Effective July 1, 1008, Messrs. Hamilton and Nikolich will no longer be members of the Team. Marc O. Mayer and Dokyoung Lee will join Messrs. Masters, Grasman and Lisser as the team members with the most significant responsibility for the day-to-day management of Balanced Wealth. Mr. Mayer is an Executive Vice President and has been associated with the Adviser in a substantially similar capacity to his current position since prior to 2003. In May 2008, Mr. Mayer because Chief Investment Officer of Blend Solutions for the Adviser, taking over this role from Mr. Masters, who became Chief Investment Officer of Defined Contribution. Mr. Lee is a Senior Vice President and Director of Research - Blend Solutions of the Adviser and has been associated with the Adviser in a substantially similar capacity to his current position since prior to 2003. Advisory Agreement and Fees Each Portfolio's investment adviser is AllianceBernstein L.P., 1345 Avenue of the Americas, New York, New York 10105. The Adviser is a leading international investment adviser managing client accounts with assets as of March 31, 2008 totaling over $735 billion (of which approximately $98 billion represented the assets of investment companies). As of March 31, 2008, the Adviser managed retirement assets for many of the largest public and private employee benefit plans (including 53 of the nation's FORTUNE 100 companies), for public employee retirement funds in 37 states, for investment companies, and for foundations, endowments, banks and insurance companies worldwide. Currently, there are 38 registered investment companies managed by the Adviser, comprising 116 separate investment portfolios, with approximately 4.1 million retail accounts. The Adviser also serves as administrator for each Portfolio. Under AVP's advisory agreement with the Adviser with respect to the Portfolios (the "Advisory Agreement"), the Adviser provides investment advisory services and order placement facilities for the Portfolios and pays all compensation of directors and officers of the Portfolios who are affiliated persons of the Adviser. Under the Advisory Agreement, each Portfolio pays the Adviser an advisory fee at an annual rate of .55% of its average daily net assets. The Advisory Agreement, by its terms, continues in effect from year to year if such continuance is specifically approved, at least annually, by a majority vote of the Directors of AVP who neither are interested persons of the Portfolio nor have any direct or indirect financial interest in the Advisory Agreement, cast in person at a meeting called for the purpose of voting on such approval. A discussion regarding the basis for the Directors' approval of the Advisory Agreement is available in the Annual Report to Shareholders for the fiscal year ended December 31, 2007 (in the case of Balanced Wealth) and in the semi-annual report for the period ended June 30, 2007 (in the case of Balanced Shares). The Adviser is the subject of certain legal proceedings and a discussion of those proceedings is presented in Appendix H. Distributor AllianceBernstein Investments, Inc. ("ABI" or the "Distributor"), a wholly-owned subsidiary of the Adviser, serves as the distributor of Balanced Shares' and Balanced Wealth's shares. Under a Distribution Services Agreement, adopted under each Portfolio's Rule 12b-1 plan, Balanced Shares and Balanced Wealth pay distribution and service fees to the Distributor at an annual rate of up to .25% of each Portfolio's average daily net assets attributable to their Class B shares. The Distribution Agreement provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. Other Service Providers The Portfolios will have the same service providers after the Acquisition. AllianceBernstein Investor Services, Inc. ("ABIS"), an affiliate of the Adviser, provides shareholder services for the Portfolios. The Portfolios compensate ABIS for these services. The Bank of New York, 1 Wall Street, New York, New York 10286, serves as custodian for the Portfolios. ABIS, P.O. Box 786003, San Antonio, TX 78278-6003, serves as transfer agent for the Portfolios. After the Acquisition, The Bank of New York and ABIS will serve, respectively, as custodian and transfer agent for the combined Portfolio. Ernst & Young LLP serves as the independent registered public accounting firm for the Portfolios and will continue to serve in that capacity for the combined Portfolio after the Acquisition. LEGAL MATTERS The validity of the shares of Balanced Wealth offered hereby will be passed upon for Balanced Shares by Seward & Kissel LLP. EXPERTS The audited financial statements and financial highlights in the Prospectus and the SAI have been included in reliance on the report of Ernst & Young LLP, 5 Times Square, New York, New York, 10036, the independent registered public accounting firm for each of the Portfolios, given on its authority as experts in auditing and accounting. FINANCIAL HIGHLIGHTS Financial highlights information for the Portfolios is available at Appendix J. APPENDIX A COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
Balanced Shares Balanced Wealth Differences --------------------------------------------------------------------------------- Investment The Portfolio's The Portfolio's These objectives are Objective investment objective is investment objective is virtually identical. total return consistent to maximize total return with reasonable risk, consistent with the through a combination of Adviser's determination income and long-term of reasonable risk. growth of capital. Investment Policies(1) --------------------------------------------------------------------------------- Status The Portfolio is Same. These policies are diversified. (F) identical. Principal The Portfolio invests in The Portfolio targets a While both Portfolios Strategies a diversified portfolio weighting of 60% equity target a 60/40 of equity and securities and 40% debt equity/fixed-income fixed-income securities. securities with a goal of allocation, Balanced The percentage of the providing moderate upside Shares will not go above Portfolio's assets potential without a 75/25 invested in each type of excessive volatility. equity/fixed-income security will vary. allocation. Normally, the Portfolio's The Portfolio's equity investments will consist component is diversified of about 60% in stocks, between growth and value but stocks may comprise equity investment styles, up to 75% of its and between U.S. and investments. non-U.S. markets. The Portfolio will not purchase a security if as a result less than 25% of its net assets will be in fixed-income securities. The Portfolio's portfolio normally will include approximately 60 to 90 companies. Credit Quality The Portfolio invests in The Portfolio's debt Balanced Wealth's short- and long-term debt securities will primarily securities will be securities in such be investment grade debt primarily investment proportions and of such securities (including grade, but may include type as the Adviser deems cash and money market preferred stock and best adapted to the instruments), but may lower-rated securities. current economic and also include preferred market outlooks. stock and, when the Adviser believes that The Portfolio may invest conditions favoring them up to 20% of its assets are compelling, in high yield securities lower-rated securities. (securities rated below BBB- by S&P, Moody's or The Portfolio will not Fitch). As an operating invest more than 5% of policy, the Portfolio its net assets in will invest no more than securities rated at the 25% of its investments in time of purchase below high yield debt investment grade. securities rated CCC- or below.
---------- (1) Policies with the Notation "F" are fundamental policies.
Balanced Shares Balanced Wealth Differences --------------------------------------------------------------------------------- Foreign The Portfolio may invest The Portfolio may invest These policies are Securities in equity and in non-U.S. companies. identical. fixed-income securities of non-U.S. issuers located in emerging or developed countries. Real Estate None. The Portfolio may invest Balanced Wealth may Investment Trusts in REITs. invest in REITs. (REITs) Asset-Backed The Portfolio may invest Same. These policies are Securities in mortgage-related and identical. other asset-backed securities. Derivatives The Portfolio may, but is Same. These policies are not required to, use identical. derivatives for risk management purposes or as part of its investment strategies. The Portfolio may use forward contracts, forward currency exchange contracts, futures contracts and options on futures contracts, options, options on foreign currencies, options on securities, options on securities indices, swap transactions, currency swaps and synthetic foreign equity securities. Credit Default The Portfolio will not Same. These policies are Swaps enter into a credit identical. default swap if the swap provides for settlement by physical delivery and such delivery would result in the Portfolio investing in securities rated below BBB- or Baa3 or not maintaining an average aggregate credit rating of at least A-. Inflation- The Portfolio may invest Same. These policies are Protected in inflation-protected identical. Securities securities. Loan The Portfolio may invest Not specifically Balanced Shares may Participations in loan participations. identified, but the specifically invest in Portfolio has the loan participations. flexibility to invest in a broad range of fixed-income securities. Structured The Portfolio may invest Not specifically Balanced Shares may Securities in structured securities. identified, but the specifically invest in Portfolio has the structured securities. flexibility to invest in a broad range of fixed-income securities. Variable and The Portfolio may invest Not specifically Balanced Shares may Floating Rate in variable, floating, identified, but the specifically invest in Securities and inverse floating rate Portfolio has the variable, floating, and instruments. flexibility to invest in inverse floating rate a broad range of instruments. fixed-income securities. Preferred Stock The Portfolio may invest Same. These policies are in preferred stocks. identical. Convertible The Portfolio may invest Same. These policies are Securities in convertible securities. identical. Depositary The Portfolio may invest Same. These policies are Receipts in American Depositary identical. Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs") or other securities representing securities of companies based in countries other than the United States. Repurchase The Portfolio may enter The Portfolio may enter Balanced Wealth is not Agreements into repurchase into repurchase subject to the agreements pertaining to agreements in which the limitations of Balanced the type of securities in Portfolio purchases a Shares' policy. which it invests with security from a bank or member banks of the broker-dealer. Federal Reserve System. Currently, the Fund intends to enter into repurchase agreements only with its custodian and such primary dealers. Forward The Portfolio may invest Same. These policies are Commitments in forward commitments. identical. Rights and The Portfolio may invest Same. These policies are Warrants in rights or warrants. identical. Short Sales None. The Portfolio may make Balanced Wealth may make short sales of short sales of securities. securities or maintain a short position, but only if at all times when a short position is open not more than 33% of its net assets is held as collateral for such short sales. Illiquid The Portfolio will limit Same. These policies are Securities its investment in illiquid identical. securities to no more than 15% of net assets or such other amount permitted by guidance regarding the 1940 Act. Other Investment The Portfolio may invest Same. These policies are Companies in other investment identical. companies, as permitted by the 1940 Act or the rules or regulations thereunder. Securities Lending The Portfolio may lend Same. These policies are portfolio securities to identical. the extent permitted under the 1940 Act or the rules or regulations thereunder (as such statute, rules or regulations may be amended from time to time) or by guidance regarding, interpretations of, or exemptive orders under, the 1940 Act. Margin The Portfolio may not Same. These policies are purchase securities on identical. margin, except (i) as otherwise provided under rules adopted by the SEC under the 1940 Act or by guidance regarding the 1940 Act, or interpretations thereof, and (ii) that the Portfolio may obtain such short-term credits as are necessary for the clearance of portfolio transactions, and the Portfolio may make margin payments in connection with futures contracts, options, forward contracts, swaps, caps, floors, collars and other financial instruments. Industry The Portfolio may not Same. These policies are Concentration concentrate investments in identical. an industry, as concentration may be defined under the 1940 Act or the rules or regulations thereunder (as such statute, rules or regulations may be amended from time to time) or by guidance regarding, interpretations of, or exemptive orders under, the 1940 Act or the rules or regulations thereunder published by appropriate regulatory authorities. (F) Borrowing The Portfolio may not Same. These policies are issue any senior security identical. (as that term is defined in the 1940 Act) or borrow money, except to the extent permitted by the 1940 Act or the rules or regulations thereunder (as such statute, rules or regulations may be amended from time to time) or by guidance regarding, or interpretations of, or exemptive orders under, the 1940 Act or the rules or regulations thereunder published by appropriate regulatory authorities. For the purposes of this restriction, margin and collateral arrangements, including, for example, with respect to permitted borrowings, options, futures contracts, options on futures contracts and other derivatives such as swaps are not deemed to involve the issuance of a senior security. (F) Lending The Portfolio may not make Same. These policies are loans except through (i) identical. the purchase of debt obligations in accordance with its investment objective and policies; (ii) the lending of portfolio securities; (iii) the use of repurchase agreements; or (iv) the making of loans to affiliated funds as permitted under the 1940 Act, the rules or regulations thereunder (as such statutes, rule or regulations may be amended from time to time), or by guidance regarding, and interpretations of, or exemptive orders under, the 1940 Act. (F) Real Estate The Portfolio may not Same. These policies are purchase or sell real identical. estate except that it may dispose of real estate acquired as a result of the ownership of securities or other instruments. This restriction does not prohibit the Portfolio from investing in securities or other instruments backed by real estate or in securities of companies engaged in the real estate business. (F) Commodities The Portfolio may not Same. These policies are purchase or sell identical. commodities regulated by the Commodity Futures Trading Commission under the Commodity Exchange Act or commodities contracts except for futures contracts and options on futures contracts. (F) Underwriting The Portfolio may not act Same. These policies are as an underwriter of identical. 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 of 1933, as amended. (F)
---------- (1) Policies with the notation "F" are fundamental policies. APPENDIX B PORTFOLIO PERFORMANCE The charts below show the percentage gain or loss in each calendar year for the ten-year period ended December 31, 2007, for Class A shares of Balanced Shares and the three-year period ended December 31, 2007 for Class A shares of Balanced Wealth. They should give you a general idea of how each Portfolio's return has varied from year to year. The charts include the effects of Portfolio expenses but do not reflect charges associated with the Variable Products or contractholders' accounts. The calculations of annual total return assume the reinvestment of all dividends and capital gain distributions on the reinvestment date. Performance results included the effect of expense reduction arrangements, if any. If these arrangements had not been in place, the performance results would have been lower. As with all mutual funds, past performance is not an indication of future results. No assurance can be given that Balanced Wealth will achieve any particular level of performance after the Acquisition. Additional discussion of the manner of calculation of total return is contained in the Prospectuses of each Portfolio. Calendar Year Total Returns Balanced Shares The annual returns in the bar chart are for the Portfolio's Class A shares. [The following table was depicted as a bar chart in the printed material.] 17.0 6.5 12.5 2.3 -10.6 19.1 9.1 3.9 11.79 3.05 -------------------------------------------------------------------------- 98 99 00 01 02 03 04 05 06 07 Calendar Year End You should consider an investment in the Portfolio as a long-term investment. The Portfolio's returns will fluctuate over long and short periods. For example, during the period shown in the bar chart, the Portfolio's: Best quarter was up 14.38% in the 4th quarter, 1998; and worst quarter was down -8.50% in the 2nd quarter, 2002. Balanced Wealth The annual returns in the bar chart are for the Portfolio's Class A shares. [The following table was depicted as a bar chart in the printed material.] N/A N/A N/A N/A N/A N/A N/A 7.3 13.9 5.55 -------------------------------------------------------------------------- 98 99 00 01 02 03 04 05 06 07 Calendar Year End You should consider an investment in the Portfolio as a long-term investment. The Portfolio's returns will fluctuate over long and short periods. For example, during the period shown in the bar chart, the Portfolio's: Best quarter was up 6.19% in the 4th quarter, 2006; and worst quarter was down -2.90% in the 1st quarter, 2005. The following tables list average annual total returns for the one-year, five-years, and ten-years, for Balanced Shares and one-year and since inception for Balanced Wealth, in each case for periods ended December 31, 2007. These tables are intended to provide you with some indication of the risks of investing in the Portfolios. At the bottom of each table, you can compare the Portfolios' performance with the performance of several broad-based market indices. Average Annual Total Returns Balanced Shares (Class A) PERFORMANCE TABLE Average Annual Total Returns (For the periods ended December 31, 2007) Class A 1 Year 5 Years 10 Years -------------------------------------------------------------------------------- Portfolio 3.05% 9.22% 7.14% -------------------------------------------------------------------------------- Russell 1000 Value Index (0.17)% 14.63% 7.68% -------------------------------------------------------------------------------- Lehman Brothers Aggregate Index 6.97% 4.42% 5.97% -------------------------------------------------------------------------------- 60% Russell 1000 Value Index/40% LB Aggregate Index 2.79% 10.57% 7.00% -------------------------------------------------------------------------------- Balanced Shares (Class B) PERFORMANCE TABLE Average Annual Total Returns (For the periods ended December 31, 2007) Class B 1 Year 5 Years Since Inception* -------------------------------------------------------------------------------- Portfolio 2.75% 8.95% 5.30% -------------------------------------------------------------------------------- Russell 1000 Value Index (0.17)% 14.63% 9.43% -------------------------------------------------------------------------------- Lehman Brothers Aggregate Index 6.97% 4.42% 5.03% -------------------------------------------------------------------------------- 60% Russell 1000 Value Index/40% LB Aggregate Index 2.79% 10.57% 7.29% -------------------------------------------------------------------------------- * Since Inception return information is from October 26, 2001. Balanced Wealth (Class A) ------------------------- PERFORMANCE TABLE Average Annual Total Returns (For the periods ended December 31, 2007) Class A 1 Year Since Inception* -------------------------------------------------------------------------------- Portfolio 5.55% 9.62% -------------------------------------------------------------------------------- S&P 500 Stock Index 5.49% 11.33% -------------------------------------------------------------------------------- Lehman Brothers U.S. Aggregate Index 6.97% 4.98% -------------------------------------------------------------------------------- 60% S&P 500 Stock Index/40% Lehman Brothers U.S. Aggregate Index 6.08% 8.79% -------------------------------------------------------------------------------- * Since Inception return information is from July 1, 2004. Balanced Wealth (Class B) ------------------------- PERFORMANCE TABLE Average Annual Total Returns (For the periods ended December 31, 2007) Class B Since 1 Year Inception* -------------------------------------------------------------------------------- Portfolio 5.26% 9.34% -------------------------------------------------------------------------------- S&P 500 Stock Index 5.49% 9.80% -------------------------------------------------------------------------------- Lehman Brothers U.S. Aggregate Index 6.97% 5.03% -------------------------------------------------------------------------------- 60% S&P 500 Stock Index/40% Lehman Brothers U.S. Aggregate Index 6.08% 8.08% -------------------------------------------------------------------------------- * Since Inception return information is from July 1, 2004. APPENDIX C DESCRIPTION OF PRINCIPAL RISKS OF THE PORTFOLIOS Among the principal risks of investing in a Portfolio are market risk, interest rate risk, credit risk, allocation risk, non-U.S. (foreign) risk, emerging market risk, currency risk, liquidity risk, capitalization risk, and management risk. Each of these risks is more fully described below. Each Portfolio could become subject to additional risks because the types of investments made by each Portfolio can change over time. Market Risk This is the risk that the value of a Portfolio's investments will fluctuate as the stock or bond markets fluctuate and that prices overall will decline over shorter- or longer-term periods. Interest Changes in interest rates will affect the yield and value of a Rate Risk Portfolio's investments in fixed-income securities. When interest rates rise, the value of a Portfolio's investments tends to fall and this decrease in value may not be offset by higher interest income from new investments. Interest rate risk is generally greater for Portfolios that invest in fixed-income securities with longer maturities or durations. Credit Risk This is the risk that the issuer or the guarantor of a fixed-income security, or the counterparty to a derivatives or other contract, will be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. The issuer or guarantor may default causing a loss of the full principal amount of a security and any accrued interest. The degree of risk for a particular security may be reflected in its credit rating. There is the possibility that the credit rating of a fixed-income security or its guarantor may be downgraded after purchase of the security, which may affect the value of the security. Investments in fixed-income securities with lower ratings tend to have a higher probability that an issuer will default or fail to meet its payment obligations. Allocation If a Portfolio pursues the objective of a portfolio balanced Risk between equity and debt securities, it has the risk that the allocation of these investments may have a more significant effect on the Portfolio's NAV when one of these asset classes is performing more poorly than the other. Non-U.S. A Portfolio's investments in non-U.S. (foreign) securities may (Foreign) experience more rapid and extreme changes in value than Risk investments in securities of U.S. companies. The securities markets of many non-U.S. countries are relatively small, with a limited number of companies representing a small number of securities. Non-U.S. companies usually are not subject to the same degree of regulation as U.S. issuers. Reporting, accounting, and auditing standards of non-U.S. countries differ, in some cases significantly, from U.S. standards. Nationalization, expropriation or confiscatory taxation, currency blockage, political changes, or diplomatic development could adversely affect a Portfolio's investments in a non-U.S. country. These risks are heightened for emerging market countries because there may be more economic, political and social instability, and investments in companies in emerging markets may have more risk because these securities may be more volatile and less liquid. To the extent a Portfolio invests in a particular country or geographic region, the Portfolio may have more significant risk due to market changes or other factors affecting that country or region, including political instability and unpredictable economic conditions. Emerging Non-U.S. investment risk may be particularly high to the extent Market Risk a Portfolio invests in emerging market securities of issuers based in countries with developing economies. These securities may present market, credit, currency, liquidity, legal, political and other risks different from, or greater than, the risk of investing in developed non-U.S. (foreign) countries. Currency This is the risk that fluctuations in the exchange rates between Risk the U.S. Dollar and non-U.S. (foreign) currencies may negatively affect the value of a Portfolio's investments or reduce the returns of a Portfolio. Liquidity Liquidity risk exists when particular investments are difficult to Risk purchase or sell, possibly preventing a Portfolio from selling out of these illiquid securities at an advantageous time or price. Derivatives and securities involving substantial market and credit risk tend to involve greater liquidity risk. Management Each Portfolio is subject to management risk because it is an Risk actively managed investment portfolio. The Adviser will apply its investment techniques and risk analyses in making investment decisions for each Portfolio, but there can be no guarantee that its decisions will produce the desired results. APPENDIX D CERTAIN INFORMATION APPLICABLE TO CLASS A AND CLASS B SHARES OF BALANCED WEALTH How to Buy and Sell Shares The Portfolio offers its shares through the separate accounts of life insurance companies (the "Insurers"). You may only purchase and sell shares through these separate accounts. See the prospectus of the separate account of the participating insurance company for information on the purchase and sale of the Portfolio's shares. AllianceBernstein Investments, Inc. ("ABI") may from time to time receive payments from Insurers in connection with the sale of the Portfolio's shares through the Insurer's separate accounts. The Insurers maintain omnibus account arrangements with the Portfolio in respect of the Portfolio and place aggregate purchase, redemption and exchange orders for shares of the Portfolio corresponding to orders placed by the 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." ABI may refuse any order to purchase shares. The Portfolio reserves the right to suspend the sale of its shares to the public in response to conditions in the securities markets or for other reasons. Payments to Financial Intermediaries Financial intermediaries, such as the Insurers, market and sell shares of the Portfolio and typically receive compensation for selling shares of the Portfolio. This compensation is paid from various sources. Insurers or your financial intermediary receive compensation from ABI and/or the Adviser in several ways from various sources, which include some or all of the following: o defrayal of costs for educational seminars and training; o additional distribution support; and o payments related to providing contractholder recordkeeping and/or administrative services. ABI and/or the Adviser may pay Insurers or other financial intermediaries to perform record-keeping and administrative services in connection with the Portfolio. Such payments will generally not exceed 0.35% of the average daily net assets of the Portfolio attributable to the Insurer. Other Payments for Distribution Services and Educational Support In addition to the fees described above, ABI, at its expense, currently provides additional payments to the Insurers that sell shares of the Portfolio. These sums include payments to reimburse directly or indirectly the costs incurred by the Insurers and their employees in connection with educational seminars and training efforts about the Portfolio for the Insurers' employees and/or their clients and potential clients. The costs and expenses associated with these efforts may include travel, lodging, entertainment and meals. For 2008, ABI's additional payments to these firms for educational support and distribution assistance related to the AVP Portfolios is expected to be approximately $1.5 million. In 2007, ABI paid additional payments of approximately $1.2 million for the AVP Portfolios. If one mutual fund sponsor that offers shares to separate accounts of an Insurer makes greater distribution assistance payments than another, the Insurer may have an incentive to recommend or offer the shares of funds of one fund sponsor over another. Please speak with your financial intermediary to learn more about the total amounts paid to your financial intermediary by the Adviser, ABI and by other mutual fund sponsors that offer shares to Insurers that may be recommended to you. You should also consult disclosures made by your financial intermediary at the time of purchase. ABI anticipates that the Insurers or their affiliates that will receive additional payments for educational support include: AIG SunAmerica Ameriprise Financial Genworth Financial Grant West Life Annuity Co. Hartford Life Insurance ING Reliastar Life ING USA Annuity and Life Insurance Co. Lincoln Financial Distributors Merrill Lynch Prudential Financial ReliaStar Life Insurance Co. RiverSource Distributors, Inc. Transamerica Capital, Inc. Although the Portfolio may use brokers and dealers who sell shares of the Portfolio to effect Portfolio transactions, the Portfolio does not consider the sale of AllianceBernstein Mutual Fund shares as a factor when selecting brokers or dealers to effect Portfolio transactions. Frequent Purchases and Redemptions of Portfolio Shares The Portfolio's Board of Directors has adopted policies and procedures designed to detect and deter frequent purchases and redemptions of Portfolio shares or excessive or short-term trading that may disadvantage long-term contractholders. These policies are described below. The Portfolio reserves the right to restrict, reject or cancel, without any prior notice, any purchase or exchange order for any reason, including any purchase or exchange order accepted by any Insurer or a contractholder's financial intermediary. Risks Associated With Excessive Or Short-Term Trading Generally --------------------------------------------------------------- While the Portfolio will try to prevent market timing by utilizing the procedures described below, these procedures may not be successful in identifying or stopping excessive or short-term trading in all circumstances. By realizing profits through short-term trading, contractholders that engage in rapid purchases and sales or exchanges of the Portfolio's shares dilute the value of shares held by long-term contractholders. Volatility resulting from excessive purchases and sales or exchanges of Portfolio shares, especially involving large dollar amounts, may disrupt efficient portfolio management. In particular, the Portfolio may have difficulty implementing its long-term investment strategies if it is forced to maintain a higher level of its assets in cash to accommodate significant short-term trading activity. Excessive purchases and sales or exchanges of the Portfolio's shares may force the Portfolio to sell portfolio securities at inopportune times to raise cash to accommodate short-term trading activity. In addition, the Portfolio may incur increased expenses if one or more contractholders engage in excessive or short-term trading. For example, a Portfolio may be forced to liquidate investments as a result of short-term trading and incur increased brokerage costs and realization of taxable capital gains without attaining any investment advantage. Similarly, the Portfolio may bear increased administrative costs due to asset level and investment volatility that accompanies patterns of short-term trading activity. All of these factors may adversely affect Portfolio performance. Investments in foreign securities may be particularly susceptible to short-term trading strategies. This is because foreign securities are typically traded on markets that close well before the time a Portfolio calculates its NAV at 4:00 p.m., Eastern Time, which gives rise to the possibility that developments may have occurred in the interim that would affect the value of these securities. The time zone differences among international stock markets can allow a contractholder engaging in a short-term trading strategy to exploit differences in Portfolio share prices that are based on closing prices of foreign securities established some time before the Portfolio calculates its own share price (referred to as "time zone arbitrage"). The Portfolio has procedures, referred to as fair value pricing, designed to adjust closing market prices of foreign securities to reflect what is believed to be the fair value of those securities at the time the Portfolio calculates its NAV. While there is no assurance, the Portfolio expects that the use of fair value pricing, in addition to the short-term trading policies discussed below, will significantly reduce a contractholder's ability to engage in time zone arbitrage to the detriment of other contractholders. Contractholders engaging in a short-term trading strategy may also target a Portfolio that does not invest primarily in foreign securities. If the Portfolio invests in securities that are, among other things, thinly traded, traded infrequently, or relatively illiquid, it has the risk that the current market price for the securities may not accurately reflect current market values. Contractholders may seek to engage in short-term trading to take advantage of these pricing differences (referred to as "price arbitrage"). The Portfolio may be adversely affected by price arbitrage, in particular, to the extent that it significantly invests in small-cap securities or specific industry sector securities. Policy Regarding Short-Term Trading ----------------------------------- Purchases and exchanges of shares of the Portfolio should be made for investment purposes only. The Portfolio seeks to prevent patterns of excessive purchases and sales or exchanges of Portfolio shares. The Portfolio will seek to prevent such practices to the extent they are detected by the procedures described below. The Portfolio reserves the right to modify this policy, including any surveillance or account blocking procedures established from time to time to effectuate this policy, at any time without notice. Transaction Surveillance Procedures. The Portfolio, through its agents, ABI and ABIS, maintains surveillance procedures to detect excessive or short-term trading in Portfolio shares. This surveillance process involves several factors, which include scrutinizing individual Insurers' omnibus transaction activity in Portfolio shares in order to ascertain whether any such activity attributable to one or more contractholders might constitute excessive or short-term 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-term trading activity attributable to one or more contractholders. These surveillance procedures may be modified from time to time, as necessary or appropriate to improve the detection of excessive or short-term trading or to address specific circumstances. Account Blocking Procedures. If the Portfolio determines, in its sole discretion, that a particular transaction or pattern of transactions identified by the transaction surveillance procedures described above is excessive or short-term trading in nature, the relevant Insurer's omnibus account(s) will be immediately "blocked" and no future purchase or exchange activity will be permitted, except to the extent the Portfolio, ABI or ABIS has been informed in writing that the terms and conditions of a particular contract may limit the Portfolio's ability to apply its short-term trading 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 the Portfolio under a particular contract will be prevented from doing so. However, sales of Portfolio shares back to the Portfolio or redemptions will continue to be permitted in accordance with the terms of the Portfolio's current Prospectus. In the event an account is blocked, certain account-related privileges, such as the ability to place purchase, sale and exchange orders over the internet or by phone, may also be suspended. An Insurer's omnibus account that is blocked will generally remain blocked unless and until the Insurer provides evidence or assurance acceptable to the Portfolio one or more contractholders did not or will not in the future engage in excessive or short-term trading. Applications of Surveillance Procedures and Restrictions to Omnibus Accounts. The Portfolio applies its surveillance procedures to Insurers. As required by SEC rules, the Portfolio has entered into agreements with all of its financial intermediaries, including Insurers, that require the financial intermediaries to provide the Portfolio, upon the request of the Portfolio or its agents, with individual account level information about their transactions. If the Portfolio detects excessive trading through its monitoring of omnibus accounts, including trading at the individual account level, an Insurer will also execute instructions from the Portfolio to take actions to curtail the activity, which may include applying blocks to accounts to prohibit future purchases and exchanges of Portfolio shares. Risks to Contractholders Resulting From Imposition of Account Blocks in Response to Excessive Short-Term Trading Activity -------------------------------------------------------------------------------- A contractholder identified as having engaged in excessive or short-term trading activity whose account is "blocked" and who may not otherwise wish to redeem his or her shares effectively may be "locked" into an investment in shares of the Portfolio 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. To rectify this situation, a contractholder with a "blocked" account may be forced to redeem Portfolio shares, which could be costly if, for example, these shares have declined in value. To avoid this risk, a contractholder should carefully monitor the purchases, sales, and exchanges of Portfolio shares and avoid frequent trading in Portfolio shares. Limitations on Ability to Detect and Curtail Excessive Trading Practices ------------------------------------------------------------------------ Insurers utilizing omnibus account arrangements may not identify to the Portfolio, ABI or ABIS contractholders' transaction activity relating to shares of the Portfolio on an individual basis. Consequently, the Portfolio, ABI and ABIS may not be able to detect excessive or short-term trading in shares of the 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-term trading in shares of the Portfolio, including the maintenance of any transaction surveillance or account blocking procedures, the Portfolio, ABI and ABIS consider the information actually available to them at the time. How the Portfolio Values Its Shares The Portfolio's NAV is calculated at the close of regular trading on the Exchange (ordinarily, 4:00 p.m., Eastern Time), only on days when the Exchange is open for business. To calculate NAV, the Portfolio's assets are valued and totaled, liabilities are subtracted, and the balance, called net assets, is divided by the number of shares outstanding. If the Portfolio invests in securities that are primarily traded on foreign exchanges that trade on weekends or other days when the Portfolio does not price its shares, the NAV of the Portfolio's shares may change on days when contractholders will not be able to purchase or redeem their shares in the Portfolio. The Portfolio values its securities at their current market value determined on the basis of market quotations or, if market quotations are not readily available or are unreliable, at "fair value" as determined in accordance with procedures established by and under the general supervision of the Directors. When the Portfolio uses fair value pricing, it may take into account any factors it deems appropriate. The Portfolio may determine fair value based upon developments related to a specific security, current valuations of non-U.S. (foreign) stock indices (as reflected in U.S. futures markets) and/or U.S. sector or broader stock market indices. The prices of securities used by the Portfolio to calculate its NAV may differ from quoted or published prices for the same securities. Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security is materially different than the value that could be realized upon the sale of that security. The Portfolio expects to use fair value pricing for securities primarily traded on U.S. exchanges only under very limited circumstances, such as the early closing of the exchange on which a security is traded or suspension of trading in the security. The Portfolio may use fair value pricing more frequently for securities primarily traded in non-U.S. (foreign) markets because, among other things, most non-U.S. (foreign) markets close well before the Portfolio values its securities at 4:00 p.m., Eastern Time. The earlier close of these non-U.S. (foreign) markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim. For example, the Portfolio believes that non-U.S. (foreign) security values may be affected by events that occur after the close of non-U.S. (foreign) securities markets. To account for this, the Portfolio may frequently value many of its non-U.S. (foreign) equity securities using fair value prices based on third party vendor modeling tools to the extent available. Subject to the Directors' oversight, the Directors has delegated responsibility for valuing the Portfolio's assets to the Adviser. The Adviser has established a Valuation Committee, which operates under the policies and procedures approved by the Directors, to value the Portfolio's assets on behalf of the Portfolio. The Valuation Committee values Portfolio assets as described above. Your order for purchase, sale, or exchange of shares is priced at the next-determined NAV after your order is received in proper form by the Portfolio. APPENDIX E OTHER INFORMATION The following information provides only a summary of the key features of the organizational structure and governing documents of the Portfolios. Each Portfolio is organized as a series of the same Maryland corporation. The Charter and Bylaw provisions that govern AVP apply to Balanced Wealth and Balanced Shares. Accordingly, there are no differences between Balanced Shares and Balanced Wealth in terms of their corporate organizational structures. General Each Portfolio has procedures available to its respective shareholders for calling shareholders' meetings and for the removal of directors. Under Maryland law, unless the charter provides otherwise (which AVP's does not), a director may be removed, either with or without cause, at a meeting duly called and at which a quorum is present by the affirmative vote of the holders of a majority of the votes entitled to be cast for the election of directors. Under the Bylaws, shareholder-requested special meetings of shareholders for any other purpose shall be called by AVP's Secretary only upon the written request of shareholders entitled to cast not less than a majority of all the votes entitled to be cast at the meeting. For each Portfolio, the presence in person or by proxy of the holders of one-third of the shares entitled to be cast constitutes a quorum at any meeting of shareholders of the Portfolio. When a quorum is present at any meeting, the affirmative vote of a majority of the votes (or with respect to the election of directors, a plurality of votes) cast shall decide any question brought before such meeting, except as otherwise required by law. Shares of Common Stock of the Portfolios The Portfolios' shares have no preemptive rights. Each share has equal voting, dividend, distribution and liquidation rights. Shareholders are entitled to one vote per share. All voting rights for the election of directors are non-cumulative, which means that the holders of more than 50% of the shares of common stock of AVP can elect 100% of the directors then nominated for election if they choose to do so and, in such event, the holders of the remaining shares of common stock will not be able to elect any directors. The Portfolios are organized as series of the same Maryland corporation and thus their shareholders have the same rights due to them under state law. The Portfolios are not required to, and do not, hold annual meetings of shareholders and have no current intention to hold such meetings, except as required by the 1940 Act. Under the 1940 Act, Balanced Shares and Balanced Wealth are required to hold a shareholder meeting if, among other reasons, the number of Directors elected by shareholders is less than a majority of the total number of Directors, or if a Portfolio seeks to change its fundamental investment policies. Dividends and Distributions Balanced Shares and Balanced Wealth have the same dividends and distributions policies. Both Balanced Shares and Balanced Wealth declare dividends on their shares at least annually. The income and capital gains distribution is made in shares of each Portfolio. Indemnification and Liability of Directors and Officers The charter of AVP generally provides for the indemnification of officers and directors, as applicable, to the full extent permitted by Maryland law. This indemnification does not protect any such person against any liability to a Portfolio or any shareholder thereof to which such person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the satisfaction of such person's office. Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its shareholders for money damages except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment as being material to the cause of action. AVP's charter contains such a provision that eliminates directors' and officers' liability to the maximum extent permitted by Maryland law. This exculpation does not protect any such person against any liability to a Portfolio or any shareholder thereof to which such person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the satisfaction of such person's office. APPENDIX F FORM OF PLAN OF ACQUISITION AND LIQUIDATION ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. WITH RESPECT TO ITS SERIES ALLIANCEBERNSTEIN BALANCED SHARES PORTFOLIO AND ALLIANCEBERNSTEIN BALANCED WEALTH STRATEGY PORTFOLIO As of June 11, 2008 This Plan of Acquisition and Liquidation (the "Plan") has been adopted by the Board of Directors of AllianceBernstein Variable Products Series Fund, Inc., a Maryland corporation (the "Corporation"), as of this 11th day of June, 2008, to provide for the reorganization of AllianceBernstein Balanced Shares Portfolio (the "Acquired Portfolio") into AllianceBernstein Balanced Wealth Strategy Portfolio (the "Acquiring Portfolio"). The Acquired Portfolio and the Acquiring Portfolio (together, the "Portfolios") are each separate series of the Corporation, an open-end management investment company registered with the Securities and Exchange Commission (the "SEC") under the Investment Company Act of 1940, as amended (the "1940 Act"). The Board of Directors (the "Board") has determined that it is in the best interest of the stockholders of the Acquiring Portfolio and the Acquired Portfolio that the Acquired Portfolio transfer all of the assets attributable to its Class A shares held by its stockholders ("Stockholders") in exchange for Class A shares of equal net asset value of the Acquiring Portfolio ("Class A Acquisition Shares"), transfer all of the assets attributable to its Class B shares held by its Stockholders in exchange for Class B shares of equal net asset value of the Acquiring Portfolio ("Class B Acquisition Shares" and together with Class A Acquisition Shares, the "Acquisition Shares") and distribute Class A Acquisition Shares and Class B Acquisition Shares, respectively, of the Acquired Portfolio and that the Corporation redeem the outstanding shares (the "Acquired Portfolio Shares") of the Acquired Portfolio, all as provided for below (the "Acquisition"). In this Plan of Acquisition, any references to a Portfolio taking action shall mean and include all necessary actions of the Corporation on behalf of a Portfolio, unless the context of this Plan of Acquisition or the 1940 Act requires otherwise. The Corporation intends that the Acquisition qualify as a "reorganization" within the meaning of Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the "Code"), and any successor provisions, and that with respect to the Acquisition, the Acquiring Portfolio and the Acquired Portfolio will each be a "party to a reorganization" within the meaning of Section 368(b) of the Code. 1. Definitions In addition to the terms elsewhere defined herein, each of the following terms shall have the meaning indicated for that term as follows: 1933 Act Securities Act of 1933, as amended. Assets All assets of any kind and all interests, rights, privileges and powers of or attributable to the Acquired Portfolio or its shares, as appropriate, whether or not determinable at the Effective Time (as defined herein) and wherever located, including, without limitation, all cash, cash equivalents, securities, claims (whether absolute or contingent, known or unknown, accrued or unaccrued or conditional or unmatured), contract rights and receivables (including dividend and interest receivables) owned by the Acquired Portfolio or attributable to its shares and any deferred or prepaid expense, other than unamortized organizational expenses, shown as an asset on the Acquired Portfolio's books. Closing Date Such date as the officers of the Corporation shall designate. Effective Time 5:00 p.m., Eastern Time, on the Closing Date, or such other time as the officers of the Corporation shall designate. Financial The audited financial statements of the relevant Portfolio for Statements its most recently completed fiscal year and, if applicable, the unaudited financial statements of that Portfolio for its most recently completed semi-annual period. Liabilities All liabilities, expenses and obligations of any kind whatsoever of the Acquired Portfolio, whether known or unknown, accrued or unaccrued, absolute or contingent or conditional or unmatured. N-14 The Registration Statement of the Acquiring Portfolio on Form Registration N-14 under the 1940 Act that will register the Acquisition Statement Shares to be issued in the Acquisition. Valuation Time The close of regular session trading on the New York Stock Exchange ("NYSE") on the Closing Date, when for purposes of the Plan, the Corporation determines the net asset value per Acquisition Share of the Acquiring Portfolio and the net value of the assets of the Acquired Portfolio. NAV A Portfolio's net asset value is calculated by valuing and totaling assets and then subtracting liabilities and then dividing the balance by the number of shares that are outstanding. 2. Regulatory Filings The Acquiring Portfolio shall promptly prepare and file the N-14 Registration Statement with the SEC, and the Acquiring Portfolio and the Acquired Portfolio also shall make any other required or appropriate filings with respect to the actions contemplated hereby. 3. Transfer of the Acquired Portfolio's Assets The Acquiring Portfolio and the Acquired Portfolio shall take the following steps with respect to the Acquisition, as applicable: (a) On or prior to the Closing Date, the Acquired Portfolio shall pay or provide for the payment of all of the Liabilities, expenses, costs and charges of or attributable to the Acquired Portfolio that are known to the Acquired Portfolio and that are due and payable prior to or as of the Closing Date. (b) Prior to the Effective Time, except to the extent prohibited by Rule 19b-1 under the 1940 Act, the Acquired Portfolio will declare to Acquired Portfolio Stockholders of record a dividend or dividends which, together with all previous such dividends, shall have the effect of distributing (a) all the excess of (i) the Acquired Portfolio's investment income excludable from gross income under Section 103(a) of the Code over (ii) the Acquired Portfolio's deductions disallowed under Sections 265 and 171(a)(2) of the Code, (b) all of the Acquired Portfolio's investment company taxable income (as defined in Code Section 852), (computed in each case without regard to any deduction for dividends paid), and (c) all of the Acquired Portfolio's net realized capital gain (as defined in Code Section 1222), if any (after reduction for any capital loss carryover), for the taxable year ending on December 31, 2007 and for the short taxable year beginning on January 1, 2008, and ending on the Closing Date. Such dividends will be declared and paid to ensure continued qualification of the Acquired Portfolio as a "regulated investment company" for tax purposes and to eliminate fund-level tax. (c) At the Effective Time, the Acquired Portfolio shall assign, transfer, deliver and convey the Assets to the Acquiring Portfolio, subject to the Liabilities, and the Acquiring Portfolio shall then accept the Assets and assume the Liabilities such that at and after the Effective Time (i) the Assets at and after the Effective Time shall become and be assets of the Acquiring Portfolio, and (ii) the Liabilities at the Effective Time shall attach to the Acquiring Portfolio, and shall be enforceable against the Acquiring Portfolio to the same extent as if initially incurred by the Acquiring Portfolio. The Corporation shall redeem the outstanding shares of the Acquired Portfolio by issuance of shares of Acquiring Portfolio as described more fully below. (d) Within a reasonable time prior to the Closing Date, the Acquired Portfolio shall provide, if requested, a list of the Assets to the Acquiring Portfolio. The Acquired Portfolio may sell any asset on such list prior to the Effective Time. After the Acquired Portfolio provides such list, the Acquired Portfolio will not acquire any additional securities or permit to exist any encumbrances, rights, restrictions or claims not reflected on such list, without the approval of the Acquiring Portfolio. Within a reasonable time after receipt of the list and prior to the Closing Date, the Acquiring Portfolio will advise the Acquired Portfolio in writing of any investments shown on the list that the Acquiring Portfolio has determined to be inconsistent with its investment objective, policies and restrictions. The Acquired Portfolio will dispose of any such securities prior to the Closing Date to the extent practicable and consistent with applicable legal requirements, including the Acquired Portfolio's investment objectives, policies and restrictions. In addition, if the Acquiring Portfolio determines that, as a result of the Acquisition, the Acquiring Portfolio would own an aggregate amount of an investment that would exceed a percentage limitation applicable to the Acquiring Portfolio, the Acquiring Portfolio will advise the Acquired Portfolio in writing of any such limitation and the Acquired Portfolio shall dispose of a sufficient amount of such investment as may be necessary to avoid the limitation as of the Effective Time, to the extent practicable and consistent with applicable legal requirements, including the Acquired Portfolio's investment objectives, policies and restrictions. (e) The Acquired Portfolio shall assign, transfer, deliver and convey the Assets to the Acquiring Portfolio at the Effective Time on the following basis: (1) The value of the Assets less the Liabilities of the Acquired Portfolio attributable to shares of Class A held by Stockholders and shares of Class B held by Stockholders, determined as of the Valuation Time, shall be divided by the then NAV of one Class A and Class B Acquisition Share, as applicable, and, in exchange for the transfer of the Assets, the Acquiring Portfolio shall simultaneously issue and deliver to the Acquired Portfolio the number of Class A and Class B Acquisition Shares (including fractional shares) so determined, rounded to the second decimal place or such other decimal place as the officers of the Corporation shall designate; (2) The NAV of Class A and Class B Acquisition Shares to be delivered to the Acquired Portfolio shall be determined as of the Valuation Time in accordance with the Acquiring Portfolio's then applicable valuation procedures, and the net value of the Assets to be conveyed to the Acquiring Portfolio shall be determined as of the Valuation Time in accordance with the then applicable valuation procedures of the Acquired Portfolio; and (3) The portfolio securities of the Acquired Portfolio shall be made available by the Acquired Portfolio to The Bank of New York, as custodian for the Acquiring Portfolio (the "Custodian"), for examination no later than five business days preceding the Valuation Time. On the Closing Date, such portfolio securities and all the Acquired Portfolio's cash shall be delivered by the Acquired Portfolio to the Custodian for the account of the Acquiring Portfolio, such portfolio securities to be duly endorsed in proper form for transfer in such manner and condition as to constitute good delivery thereof in accordance with the custom of brokers or, in the case of portfolio securities held in the U.S. Treasury Department's book-entry system or by The Depository Trust Company, Participants Trust Company or other third party depositories, by transfer to the account of the Custodian in accordance with Rule 17f-4, Rule 17f-5 or Rule 17f-7, as the case may be, under the 1940 Act and accompanied by all necessary federal and state stock transfer stamps or a check for the appropriate purchase price thereof. The cash delivered shall be in the form of currency or certified or official bank checks, payable to the order of the Custodian, or shall be wired to an account pursuant to instructions provided by the Acquiring Portfolio. (f) Promptly after the Closing Date, the Acquired Portfolio will deliver to the Acquiring Portfolio a Statement of Assets and Liabilities of the Acquired Portfolio as of the Closing Date. 4. Termination of the Acquired Portfolio, Registration of Acquisition Shares and Access to Records The Acquired Portfolio and the Acquiring Portfolio also shall take the following steps, as applicable: (a) At or as soon as reasonably practical after the Effective Time, the Acquired Portfolio shall terminate by transferring pro rata to its Class A Stockholders of record Class A Acquisition Shares received by the Acquired Portfolio pursuant to Section 3(e)(1) of this Plan and to its Class B Stockholders of record Class B Acquisition Shares received by the Acquired Portfolio pursuant to Section 3(e)(1) of this Plan. The Acquiring Portfolio shall establish accounts on its share records and note on such accounts the names of the former Acquired Portfolio Stockholders and the types and amounts of the Acquisition Shares that former Acquired Portfolio Stockholders are due based on their respective holdings of the Acquired Portfolio Shares as of the close of business on the Closing Date. Fractional Acquisition Shares shall be carried to the second decimal place. The Acquiring Portfolio shall not issue certificates representing the Acquisition Shares in connection with such exchange. All issued and outstanding Acquired Portfolio Shares will be simultaneously redeemed and cancelled on the books of the Acquired Portfolio. Ownership of the Acquisition Shares will be shown on the books of the Acquiring Portfolio's transfer agent. Following distribution by the Acquired Portfolio to its Stockholders of all Acquisition Shares delivered to the Acquired Portfolio, the Acquired Portfolio shall wind up its affairs and shall take all steps as are necessary and proper to terminate as soon as is reasonably possible after the Effective Time. (b) At and after the Closing Date, the Acquired Portfolio shall provide the Acquiring Portfolio and its transfer agent with immediate access to: (i) all records containing the names, addresses and taxpayer identification numbers of all of the Acquired Portfolio's Stockholders and the number and percentage ownership of the outstanding shares of the Acquired Portfolio owned by Stockholders as of the Effective Time, and (ii) all original documentation (including all applicable Internal Revenue Service forms, certificates, certifications and correspondence) relating to the Acquired Portfolio Stockholders' taxpayer identification numbers and their liability for or exemption from back-up withholding. The Acquired Portfolio shall preserve and maintain, or shall direct its service providers to preserve and maintain, records with respect to the Acquired Portfolio as required by Section 31 of, and Rules 31a-1 and 31a-2 under, the 1940 Act. 5. Conditions to Consummation of the Acquisition The consummation of the Acquisition shall be subject to the following conditions precedent: (a) There shall have been no material adverse change in the financial condition, results of operations, business, properties or assets of the Acquiring Portfolio or the Acquired Portfolio since the date of the most recent Financial Statements. Negative investment performance shall not be considered a material adverse change. (b) The Corporation shall have received an opinion of Seward & Kissel LLP, substantially to the effect that for federal income tax purposes: (1) The Acquisition will constitute a "reorganization" within the meaning of Section 368(a) of the Code and that the Acquiring Portfolio and the Acquired Portfolio will each be "a party to a reorganization" within the meaning of Section 368(b) of the Code; (2) A Stockholder of the Acquired Portfolio will recognize no gain or loss on the exchange of the Stockholder's shares of the Acquired Portfolio solely for Acquisition Shares; (3) Neither the Acquired Portfolio nor the Acquiring Portfolio will recognize any gain or loss upon the transfer of all of the Assets to the Acquiring Portfolio in exchange for Acquisition Shares and the assumption by the Acquiring Portfolio of the Liabilities pursuant to this Plan or upon the distribution of Acquisition Shares to Stockholders of the Acquired Portfolio in exchange for their respective shares of the Acquired Portfolio; (4) The holding period and tax basis of the Assets acquired by the Acquiring Portfolio will be the same as the holding period and tax basis that the Acquired Portfolio had in such Assets immediately prior to the Acquisition; (5) The aggregate tax basis of Acquisition Shares received in connection with the Acquisition by each Stockholder of the Acquired Portfolio (including any fractional share to which the Stockholder may be entitled) will be the same as the aggregate tax basis of the shares of the Acquired Portfolio surrendered in exchange therefor, and increased by any gain recognized on the exchange; (6) The holding period of Acquisition Shares received in connection with the Acquisition by each Stockholder of the Acquired Portfolio (including any fractional share to which the stockholder may be entitled) will include the holding period of the shares of the Acquired Portfolio surrendered in exchange therefor, provided that such Acquired Portfolio shares constitute capital assets in the hands of the Stockholder as of the Closing Date; and (7) The Acquiring Portfolio will succeed to the capital loss carryovers of the Acquired Portfolio but the use of the Acquiring Portfolio's existing capital loss carryovers (as well as the carryovers of the Acquired Portfolio) may be subject to limitation under Section 383 of the Code after the Acquisition. The opinion will be based on certain factual certifications made by officers of the Portfolios and will also be based on customary assumptions and subject to certain qualifications. The opinion is not a guarantee that the tax consequences of the Acquisition will be as described above. Notwithstanding this subparagraph (b), Seward & Kissel LLP will express no view with respect to the effect of the Acquisition on any transferred asset as to which any unrealized gain or loss is required to be recognized at the end of a taxable year (or on the termination or transfer thereof) under federal income tax principles. Each Portfolio shall provide additional factual representations to Seward & Kissel LLP with respect to the Portfolios that are reasonably necessary to enable Seward & Kissel LLP to deliver the tax opinion. Notwithstanding anything in this Plan to the contrary, neither Portfolio may waive in any material respect the conditions set forth under this subparagraph (b). (c) The N-14 Registration Statement shall have become effective under the 1933 Act as to the Acquisition Shares, and the SEC shall not have instituted and, to the knowledge of the Acquiring Portfolio, is not contemplating instituting any stop order suspending the effectiveness of the N-14 Registration Statement. (d) No action, suit or other proceeding shall be threatened or pending before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with the Acquisition. (e) The SEC shall not have issued any unfavorable advisory report under Section 25(b) of the 1940 Act nor instituted any proceeding seeking to enjoin consummation of the Acquisition under Section 25(c) of the 1940 Act. (f) The Acquired Portfolio shall have received a letter from AllianceBernstein L.P. (the "Adviser") with respect to insurance matters in form and substance satisfactory to the Acquired Portfolio. (g) The Acquiring Portfolio shall have received a letter from the Adviser agreeing to indemnify the Acquiring Portfolio in respect of certain liabilities of the Acquired Portfolio in form and substance satisfactory to the Acquiring Portfolio. 6. Closing (a) The Closing shall be held at the offices of the Corporation, 1345 Avenue of the Americas, New York, New York 10105, or at such other place as the officers of the Corporation may designate. (b) In the event that at the Valuation Time (i) the NYSE shall be closed to trading or trading thereon shall be restricted, or (ii) trading or the reporting of trading on said Exchange or elsewhere shall be disrupted so that accurate appraisal of the value of the net assets of the Acquired Portfolio or the Acquiring Portfolio is impracticable, the Closing Date shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored; provided that if trading shall not be fully resumed and reporting restored within three business days of the Valuation Time, this Plan may be terminated by the Board. (c) The Acquiring Portfolio will provide to the Acquired Portfolio evidence satisfactory to the Acquired Portfolio that Acquisition Shares issuable pursuant to the Acquisition have been credited to the Acquired Portfolio's account on the books of the Acquiring Portfolio. After the Closing Date, the Acquiring Portfolio will provide to the Acquired Portfolio evidence satisfactory to the Acquired Portfolio that such Shares have been credited pro rata to open accounts in the names of the Acquired Portfolio Stockholders. (d) At the Closing, each party shall deliver to the other such bills of sale, instruments of assumption of liabilities, checks, assignments, stock certificates, receipts or other documents as such other party or its counsel may reasonably request in connection with the transfer of assets, assumption of liabilities and liquidation contemplated by this Plan. 7. Termination of Plan A majority of the Corporation's Board may terminate this Plan before the applicable Effective Time if: (i) any of the conditions precedent set forth herein are not satisfied; or (ii) the Board determines that the consummation of the Acquisition is not in the best interests of either Portfolio or its Stockholders. 8. Termination of the Acquired Portfolio If the Acquisition is consummated, the Acquired Portfolio shall terminate its registration under the 1940 Act and the 1933 Act and will terminate. 9. Expenses The Acquisition expenses shall be borne by both Portfolios and apportioned on the basis of each Portfolio's relative expense ratio reductions. APPENDIX G CAPITALIZATION The following table shows on an unaudited basis the capitalization of each of Balanced Shares and Balanced Wealth as of March 31, 2008 and on a pro forma combined basis, giving effect to the acquisition of the assets and liabilities of Balanced Shares by Balanced Wealth at net asset value as of March 31, 2008.
Balanced Wealth Balanced Shares Balanced Wealth Pro Forma Class A Class A Class A Adjustments (pro forma)(a) ------------ ------------ -------------- -------------- Net Asset Value $111,525,704 $9,356 (68,609)(b) $111,466,451 Shares outstanding 6,196,226 765 2,923,322 9,120,313 Net asset value per share $18.00 $12.23 $12.22 Balanced Wealth Balanced Shares Balanced Wealth Pro Forma Class B Class B Class B Adjustments (pro forma)(a) ------------ ------------ -------------- -------------- Net Asset Value $33,866,833 $220,045,214 (130,391)(b) $253,781,656 Shares outstanding 1,895,712 18,124,741 893,202 20,913,655 Net asset value per share $17.86 $12.14 $12.13
---------- (a) Assumes the Acquisition was consummated on March 31, 2008 and is for information purposes only. No assurance can be given as to how many shares of Balanced Wealth will be received by the shareholders of Balanced Shares on the date the Acquisition takes place, and the foregoing should not be relied upon to reflect the number of shares of Balanced Wealth that actually will be received on or after such date. (b) Includes adjustments for estimated proxy costs. APPENDIX H LEGAL PROCEEDINGS On October 2, 2003, a purported class action complaint entitled Hindo, et al. v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint") was filed against the Adviser, AllianceBernstein Holding L.P. ("Holding"), AllianceBernstein Corporation, AXA Financial, Inc., the AllianceBernstein Funds, certain officers of the Adviser ("AllianceBernstein defendants"), and certain other unaffiliated defendants, as well as unnamed Doe defendants. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo Complaint alleges that certain of the AllianceBernstein defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in "late trading" and "market timing" of AllianceBernstein Mutual Fund securities, violating Sections 11 and 15 of the Securities Act of 1933, as amended, Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934, as amended, and Sections 206 and 215 of the Investment Advisers Act of 1940, as amended. Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts. Following October 2, 2003, additional lawsuits making factual allegations generally similar to those in the Hindo Complaint were filed in various federal and state courts against the Adviser and certain other defendants. All state court actions against the Adviser either were voluntarily dismissed or removed to federal court. On February 20, 2004, the Judicial Panel on Multidistrict Litigation transferred all federal actions to the United States District Court for the District of Maryland (the "Mutual Fund MDL"). On September 29, 2004, plaintiffs filed consolidated amended complaints with respect to four claim types: mutual fund shareholder claims; mutual fund derivative claims; derivative claims brought on behalf of Holding; and claims brought under ERISA by participants in the Profit Sharing Plan for Employees of the Adviser. All four complaints include substantially identical factual allegations, which appear to be based in large part on the Order of the SEC dated December 18, 2003 as amended and restated January 15, 2004 (the "SEC Order") and the New York State Attorney General Assurance of Discontinuance dated September 1, 2004 (the "NYAG Order"). On April 21, 2006, the Adviser and attorneys for the plaintiffs in the mutual fund shareholder claims, mutual fund derivative claims, and ERISA claims entered into a confidential memorandum of understanding ("MOU") containing their agreement to settle these claims. The agreement will be documented by a stipulation of settlement and will be submitted for court approval at a later date. The settlement amount ($30 million), which we previously accrued and disclosed, has been disbursed. The derivative claims brought on behalf of Holding, in which plaintiffs seek an unspecified amount of damages, remain pending. It is possible that these matters and/or other developments resulting from these matters could result in increased redemptions of the affected fund's shares or other adverse consequences to those funds. This may require those funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the Portfolio. However, the Adviser believes that these matters are not likely to have a material adverse effect on its ability to perform advisory services relating to those funds or the portfolio. APPENDIX I SHARE OWNERSHIP INFORMATION Shares Outstanding As of June 16, 2008, each Portfolio had the following number of shares of common stock outstanding. Number of Outstanding Shares of Portfolio Class Common Stock ----------------------------------------- ----- --------------------------- Balanced Shares A 6,780,749 B 2,111,377 Balanced Wealth A 765 B 21,707,110 Ownership of Shares As of June 16, 2008, the Directors and officers of each Portfolio as a group beneficially owned less than 1% of the outstanding shares of common stock of that Portfolio. To the knowledge of each Portfolio, the following table shows the persons owning, as of June 16, 2008, either of record or beneficially, 5% or more of the outstanding shares of the Portfolio and the percentage of the combined Portfolio's shares to be owned by the persons if the Acquisition had been consummated as of that date.
Percentage of Outstanding Shares Number of Percentage of of Combined Name and Address of Outstanding Shares Outstanding Shares Portfolio Class Portfolio and Class Shareholder of Class Owned of Class Owned Owned ------------------- ---------------------- ------------------ ------------------- ------------------- Balanced Shares Class A American International Life 356,043 5.26% 3.90% Insurance Company of New York Attn: Ed Bacon 2727 A Allen Parkway Mail Stop 4D-1 Houston, TX 77019-2116 AIG Life Insurance Company 6,102,762 90.13% 66.91% Attn: Ed Bacon 2727 A Allen Parkway Mail Stop 4D-1 Houston, TX 77019-2107 Class B Anchor National Life Insurance Company 1,914,576 90.68% 9.15% Attn: Variable Annuity Accounting 21650 Oxnard Street Woodland Hills, CA 91367-4901 American Enterprise Life 137,072 6.49% 0.66% Insurance Company 1497 AXP Financial Center Minneapolis, MN 55474-0001 Balanced Wealth Alliance Capital Management L.P. 765 100% 0.01% Class A Attn: Raymond Cardosi - Seed Account 1 N. Lexington Avenue White Plains, NY 10601-1712 Class B Hartford Life and Annuity 10,722,413 49.11% 51.27% Separate Account 200 Hopwood Meadow Street P.O. Box 2999 Hartford, CT 06104-2999 Hartford Life Separate Account 1A 4,361,900 19.98% 20.86% 200 Hopwood Meadow Street P.O. Box 2999 Hartford, CT 06104-2999 GE Life and Annuity Insurance Company 1,444,477 6.62% 6.91% 6610 Broad Street Building 3, 5th Floor Attn: Variable Accounting Richmond, VA 23230-1702 Anchor National Life Insurance Company 3,424,733 15.68% 16.38% Attn: Variable Annuity Accounting 21650 Oxnard Street Woodland Hills, CA 91367-4901
[THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX J FINANCIAL HIGHLIGHTS The financial highlights table is intended to help you understand each Portfolio's financial performance for the past 5 years (or, if shorter, the period of the Portfolio's operations). Certain information reflects financial results for a single share of each Portfolio. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Portfolio (assuming reinvestment of all dividends and distributions). Except as otherwise indicated, this information has been audited by Ernst & Young LLP, the independent registered public accounting firm for both Balanced Wealth and Balanced Shares as of the end of the Portfolios' last fiscal year, whose reports, along with each Portfolio's financial statements, are included in the Portfolios' annual report and available upon request. Balanced Shares ---------------
Less: Dividends and Income from Investment Operations Distributions -------------------------------------------- -------------------------- Net Realized and Unrealized Net Increase Dividends Distributions Net Asset Net Gain (Loss) (Decrease) in from from Net Value, Investment on Net Asset Net Realized Gain Beginning Income Investment Contribution Value from Investment on Investment Fiscal Year or Period of Period (Loss)(a) Transactions from Adviser Operations Income Transactions --------------------- --------- ---------- ------------ ------------ ------------- ---------- ------------- Balanced Shares Class A Year Ended 12/31/07 $20.31 $.51 $ .08 $.04 $ .63 $(.55) $(.46) Year Ended 12/31/06 19.18 .49 1.66 0.00 2.15 (.49) (.53) Year Ended 12/31/05 18.94 .43 .30 0.00 .73 (.49) 0.00 Year Ended 12/31/04 17.76 .46(e) 1.12 0.00 1.58 (.40) 0.00 Year Ended 12/31/03 15.30 .42 2.47 0.00 2.89 (.43) 0.00 Class B Year Ended 12/31/07 $20.18 $.46 $ .07 $.04 $ .57 $(.50) $(.46) Year Ended 12/31/06 19.05 .44 1.66 0.00 2.10 (.44) (.53) Year Ended 12/31/05 18.83 .38 .29 0.00 .67 (.45) 0.00 Year Ended 12/31/04 17.69 .43(e) 1.10 0.00 1.53 (.39) 0.00 Year Ended 12/31/03 15.27 .36 2.48 0.00 2.84 (.42) 0.00
---------- See footnotes on page 56.
Less: Dividends and Distributions Total Return Ratios/Supplemental Data ------------------------ ------------ ------------------------------------------------------------------ Ratio to Ratio to Average Ratio to Average Net Assets Average Net Total Net Assets, of Net Assets Assets Total Net Asset Investment End of Expenses, Net of Expenses, of Net Dividends Value Return Based Period of Before Investment Portfolio and End of on Net Asset (000's Waivers and Waivers and Income Turnover Fiscal Year or Period Distributions Period Value(b) Omitted) Reimbursements Reimbursements (Loss) Rate --------------------- ------------- --------- ------------ ----------- -------------- -------------- ---------- --------- Balanced Shares Class A Year Ended 12/31/07 $(1.01) $19.93 3.05%(c) $131,663 .73% .73% 2.51% 67% Year Ended 12/31/06 (1.02) 20.31 11.79 163,608 .73(d) .73(d) 2.53(d) 40 Year Ended 12/31/05 (.49) 19.18 3.91 175,005 .71 .71 2.29 52 Year Ended 12/31/04 (.40) 18.94 9.07 193,600 .71 .76 2.57(e) 60 Year Ended 12/31/03 (.43) 17.76 19.05 197,334 .79 .79 2.60 81 Class B Year Ended 12/31/07 $(.96) $19.79 2.75%(c) $38,804 .98% .98% 2.26% 67% Year Ended 12/31/06 (.97) 20.18 11.56 44,609 .98(d) .98(d) 2.28(d) 40 Year Ended 12/31/05 (.45) 19.05 3.61 45,493 .96 .96 2.04 52 Year Ended 12/31/04 (.39) 18.83 8.79 45,047 .96 1.01 2.35(e) 60 Year Ended 12/31/03 (.42) 17.69 18.78 23,417 1.05 1.05 2.29 81
---------- See footnotes on page 56. Balanced Wealth ---------------
Less: Dividends and Income from Investment Operations Distributions --------------------------------- ----------------------- Net Realized and Distributions Unrealized Net Increase Dividends from Net Realized Net Asset Net Gain (Loss) (Decrease) in from Gain on Investment Value, Investment on Net Asset Net and Foreign Beginning Income Investment Value from Investment Currency Fiscal Year or Period of Period (Loss)(a) Transactions Operations Income Transactions --------------------- --------- ---------- ------------ ------------- ---------- ------------------ Balanced Wealth Class A Year Ended 12/31/07 $12.87 $.31(e) $ .41 $ .72 $(.32) $(.22) Year Ended 12/31/06 11.39 .25(e) 1.32 1.57 (.09) 0.00 Year Ended 12/31/05 10.69 .18(e) .60 .78 (.05) (.03) 6/01/04(f) to 12/31/04 10.00 .07(e) .62 .69 0.00 0.00 Class B Year Ended 12/31/07 $12.81 $.27(e) $ .41 $ .68 $(.30) $(.22) Year Ended 12/31/06 11.34 .22(e) 1.33 1.55 (.08) 0.00 Year Ended 12/31/05 10.67 .15(e) .60 .75 (.05) (.03) 6/01/04(f) to 12/31/04 10.00 .06(e) .61 .67 0.00 0.00
---------- See footnotes on page 56.
Less: Dividends and Distributions Total Return Ratios/Supplemental Data ------------------------ ------------ ------------------------------------------------------------------ Ratio to Ratio to Average Ratio to Average Net Assets Average Net Total Net Assets, of Net Assets Assets Total Net Asset Investment End of Expenses, Net of Expenses, of Net Dividends Value, Return Based Period of Before Investment Portfolio and End of on Net Asset (000's Waivers and Waivers and Income Turnover Fiscal Year or Period Distributions Period Value(b) Omitted) Reimbursements Reimbursements (Loss) Rate --------------------- ------------- --------- ------------ ----------- -------------- -------------- ---------- --------- Balanced Wealth Class A Year Ended 12/31/07 $(.54) $13.05 5.55% $ 10 .76% .85% 2.33% 77% Year Ended 12/31/06 (.09) 12.87 13.92 11,111 .99(d) 1.07(d) 2.08(d) 203 Year Ended 12/31/05 (.08) 11.39 7.30 9,746 1.20 1.54 1.64 139 6/01/04(f) to 12/31/04 0.00 10.69 6.90 9,089 1.20(g) 2.87(g) 1.36(g) 44 Class B Year Ended 12/31/07 $(.52) $12.97 5.26% $211,440 1.01% 1.07% 2.11% 77% Year Ended 12/31/06 (.08) 12.81 13.75 124,992 1.23(d) 1.31(d) 1.84(d) 203 Year Ended 12/31/05 (.08) 11.34 7.01 64,325 1.45 1.77 1.31 139 6/01/04(f) to 12/31/04 0.00 10.67 6.70 17,866 1.45(g) 3.34(g) 1.49(g) 44
---------- (a) Based on average shares outstanding. (b) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at the net asset value during the period, and a redemption on the last day of the period. Initial sales charge or contingent deferred sales charge, if applicable, is not reflected in the calculation of total investment return. Total investment return does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Total investment returns calculated for periods of less than one year are not annualized. (c) Includes the impact of proceeds received and credited to the Portfolio resulting from class action settlements, which enhanced the performance of Class A shares and Class B shares of AllianceBernstein Shares Portfolio for the year ended December 31, 2007 by 0.16% for each Class of shares. (d) The ratio includes expenses attributable to costs of proxy solicitation. (e) Net of expenses reimbursed or waived by the Adviser. (f) Commencement of operations. (g) Annualized. ALLIANCEBERNSTEIN VARIABLE PRODUCT SERIES FUND, INC. - ALLIANCEBERNSTEIN BALANCED WEALTH STRATEGY PORTFOLIO 1345 Avenue of the Americas New York, New York Toll Free (800) 221-5672 STATEMENT OF ADDITIONAL INFORMATION July 28, 2008 This Statement of Additional Information (the "SAI") relates to the acquisition (the "Acquisition") of all of the assets and liabilities of AllianceBernstein Balanced Shares Portfolio ("Balanced Shares"), a series of AllianceBernstein Variable Product Series Fund, Inc., by AllianceBernstein Balanced Wealth Strategy Portfolio ("Balanced Wealth"). This SAI contains information which may be of interest to shareholders but which is not included in the Prospectus dated July 28, 2008 (the "Prospectus") of Balanced Wealth which relates to the Acquisition. As described in the Prospectus, the Acquisition would involve the transfer of all the assets of Balanced Shares in exchange for shares of Balanced Wealth and the assumption by Balanced Wealth of all the liabilities of Balanced Shares. Balanced Shares would distribute the Balanced Wealth shares it receives to its shareholders in complete liquidation of Balanced Shares. Balanced Wealth will be the survivor for accounting purposes. This SAI is not a prospectus and should be read in conjunction with the Prospectus. The Prospectus has been filed with the Securities and Exchange Commission and is available upon request and without charge by writing to Balanced Shares at 1345 Avenue of the Americas, New York, New York 10105, or by calling 1-800-221-5672. -------------------------------------------------------------------------------- TABLE OF CONTENTS Page ADDITIONAL INFORMATION ABOUT BALANCED WEALTH AND BALANCED SHARES 2 FINANCIAL STATEMENTS 3 Additional Information About Balanced Wealth and Balanced Shares Further information about Balanced Wealth and Balanced Shares is contained in their Statements of Additional Information each dated May 1, 2008, which are available upon request and without charge by writing to Balanced Shares at 1345 Avenue of the Americas, New York, New York 10105, or by calling 1-800-221-5672. Financial Statements The financial statements and Report of Independent Registered Public Accounting Firm contained in the Annual Report for the twelve months ended December 31, 2007, of Balanced Wealth, which report contains historical financial information regarding Balanced Wealth, has been filed with the Securities and Exchange Commission and is incorporated herein by reference. The financial statements and Report of Independent Registered Public Accounting Firm contained in the Annual Report for the twelve months ended December 31, 2007, of Balanced Shares, which report contains historical financial information regarding Balanced Shares, has been filed with the Securities and Exchange Commission and is incorporated herein by reference. Pro Forma Financial Information: The following represents the pro forma financial information: PRO FORMA ALLIANCEBERNSTEIN VARIABLE PRODUCT SERIES FUND, FINANCIAL STATEMENTS ALLIANCEBERNSTEIN BALANCED SHARES PORTFOLIO ALLIANCEBERNSTEIN BALANCED WEALTH STRATEGY PORTFOLIO July 28, 2008 PORTFOLIO OF INVESTMENTS PRO FORMA ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND BALANCED WEALTH PORTFOLIO AllianceBernstein Variable Products Series Fund Balanced Wealth Portfolio December 31, 2007 (unaudited) AllianceBernstein Variable Products Series Fund Balanced Shares Portfolio ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS - 63.0% FINANCIALS - 18.5% BANKING - 3.9% Bank of America Corp. $ 29,400 $ 1,213,044 45,800 $ 1,889,708 $ -0- 75,200 $ 3,102,752 Citigroup, Inc. 28,400 836,096 64,700 1,904,768 -0- 93,100 2,740,864 Comerica, Inc. 3,800 165,414 -0- -0- -0- 3,800 165,414 Federal Home Loan Mortgage Corp. 4,600 156,722 -0- -0- -0- 4,600 156,722 Federal National Mortgage Association 6,800 271,864 -0- -0- -0- 6,800 271,864 Fifth Third Bancorp 5,400 135,702 -0- -0- -0- 5,400 135,702 JPMorgan Chase & Co. 23,100 1,008,315 117,600 5,133,240 -0- 140,700 6,141,555 Keycorp 4,100 96,145 -0- -0- -0- 4,100 96,145 National City Corp. 2,200 36,212 -0- -0- -0- 2,200 36,212 SunTrust Banks, Inc. 2,150 134,354 -0- -0- -0- 2,150 134,354 U.S. Bancorp 8,200 260,268 -0- -0- -0- 8,200 260,268 Wachovia Corp. 4,500 171,135 -0- -0- -0- 4,500 171,135 Washington Mutual, Inc. 6,600 89,826 -0- -0- -0- 6,600 89,826 Wells Fargo & Co. 9,200 277,748 39,200 1,183,448 -0- 48,400 1,461,196 ------------------ ------------- ------- ------------- 4,852,845 10,111,164 -0- 14,964,009 ------------------ ------------- ------- ------------- CAPITAL MARKETS - 2.6% 3i Group PLC 10,223 202,409 -0- -0- -0- 10,223 202,409 Bank of New York Mellon Corp. -0- -0- 16,320 795,763 -0- 16,320 795,763 The Blackstone Group LP 19,400 429,322 -0- -0- -0- 19,400 429,322 Credit Suisse Group 8,550 514,672 -0- -0- -0- 8,550 514,672 Deutsche Bank AG 2,500 326,730 -0- -0- -0- 2,500 326,730 Franklin Resources, Inc. 9,375 1,072,781 11,700 1,338,831 -0- 21,075 2,411,612 The Goldman Sachs Group, Inc. 2,065 444,078 1,600 344,080 -0- 3,665 788,158 Julius Baer Holding AG 5,574 457,376 -0- -0- -0- 5,574 457,376 Lehman Brothers Holdings, Inc. 3,800 248,672 9,900 647,856 -0- 13,700 896,528 Macquarie Group Ltd. 4,716 315,535 -0- -0- -0- 4,716 315,535 Man Group PLC 42,277 479,918 -0- -0- -0- 42,277 479,918 Northern Trust Corp. -0- -0- 29,300 2,243,794 -0- 29,300 2,243,794 ------------------ ------------- ------- ------------- 4,491,493 5,370,324 -0- 9,861,817 ------------------ ------------- ------- ------------- COMMERCIAL BANKS - 1.0% Banco Santander Central Hispano SA 2,247 48,531 -0- -0- -0- 2,247 48,531 Bank Leumi Le-Israel (a) 14,400 69,842 -0- -0- -0- 14,400 69,842 Barclays PLC 33,800 341,357 -0- -0- -0- 33,800 341,357 BNP Paribas SA 3,100 336,350 -0- -0- -0- 3,100 336,350 China Construction Bank Corp.-Class H 157,000 131,477 -0- -0- -0- 157,000 131,477 Credit Agricole SA 9,821 331,324 -0- -0- -0- 9,821 331,324 Hana Financial Group, Inc. (a) 1,100 59,060 -0- -0- -0- 1,100 59,060 HBOS PLC 29,920 435,068 -0- -0- -0- 29,920 435,068 Kookmin Bank (a) 1,200 88,457 -0- -0- -0- 1,200 88,457 Mitsubishi UFJ Financial Group, Inc. 42,800 403,601 -0- -0- -0- 42,800 403,601 Royal Bank of Scotland Group PLC 47,331 417,908 -0- -0- -0- 47,331 417,908 Societe Generale 2,460 355,788 -0- -0- -0- 2,460 355,788 Standard Chartered PLC 9,114 332,631 -0- -0- -0- 9,114 332,631 Sumitomo Mitsui Financial Group, Inc. 50 370,014 -0- -0- -0- 50 370,014 ------------------ ------------- ------- ------------- 3,721,408 -0- -0- 3,721,408 ------------------ ------------- ------- ------------- CONSUMER FINANCE - 0.1% American Express Co. 3,000 156,060 -0- -0- -0- 3,000 156,060 Discover Financial Services 5,400 81,432 -0- -0- -0- 5,400 81,432 ORIX Corp. 1,480 248,917 -0- -0- -0- 1,480 248,917 ------------------ ------------- ------- ------------- 486,409 -0- -0- 486,409 ------------------ ------------- ------- ------------- DIVERSIFIED FINANCIAL SERVICES - 0.7% CME Group, Inc.-Class A 1,675 1,149,050 -0- -0- -0- 1,675 1,149,050 Deutsche Boerse AG 2,970 582,934 -0- -0- -0- 2,970 582,934 Fortis (Euronext Brussels) 9,666 253,044 -0- -0- -0- 9,666 253,044 ING Groep NV 9,300 362,378 -0- -0- -0- 9,300 362,378 Moody's Corp. 2,400 85,680 -0- -0- -0- 2,400 85,680 NYSE Euronext 3,700 324,749 -0- -0- -0- 3,700 324,749 ------------------ ------------- ------- ------------- 2,757,835 -0- -0- 2,757,835 ------------------ ------------- ------- ------------- FINANCIAL SERVICES - 0.6% Ameriprise Financial, Inc. 2,800 154,308 -0- -0- -0- 2,800 154,308 CIT Group, Inc. 5,700 136,971 -0- -0- -0- 5,700 136,971 Janus Capital Group, Inc. 1,300 42,705 -0- -0- -0- 1,300 42,705 MBIA, Inc. 2,400 44,712 -0- -0- -0- 2,400 44,712 Merrill Lynch & Co., Inc. 5,000 268,400 22,400 1,202,432 -0- 27,400 1,470,832 Morgan Stanley 8,900 472,679 -0- -0- -0- 8,900 472,679 ------------------ ------------- ------- ------------- 1,119,775 1,202,432 -0- 2,322,207 ------------------ ------------- ------- ------------- INSURANCE - 4.3% ACE Ltd. 4,600 284,188 55,900 3,453,502 -0- 60,500 3,737,690 Allianz SE 1,900 409,695 -0- -0- -0- 1,900 409,695 Allstate Corp. 6,600 344,718 -0- -0- -0- 6,600 344,718 AMBAC Financial Group, Inc. 2,700 69,579 -0- -0- -0- 2,700 69,579 American International Group, Inc. 14,900 868,670 67,500 3,935,250 -0- 82,400 4,803,920 AON Corp. 2,900 138,301 -0- -0- -0- 2,900 138,301 Assicurazioni Generali SpA 2,765 125,161 -0- -0- -0- 2,765 125,161 Aviva PLC 15,154 201,964 -0- -0- -0- 15,154 201,964 Axis Capital Holdings Ltd. -0- -0- 52,700 2,053,719 -0- 52,700 2,053,719 Chubb Corp. 5,900 322,022 -0- -0- -0- 5,900 322,022 Everest Re Group Ltd. 1,900 190,760 -0- -0- -0- 1,900 190,760
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ Fidelity National Financial, Inc.- Class A $ 6,200 $ 90,582 -0- $ -0- $ -0- 6,200 $ 90,582 Fondiaria-Sai SpA (ordinary shares) 2,300 94,349 -0- -0- -0- 2,300 94,349 Fondiaria-Sai SpA (saving shares) 700 19,679 -0- -0- -0- 700 19,679 Genworth Financial, Inc.- Class A 10,600 269,770 -0- -0- -0- 10,600 269,770 Hartford Financial Services Group, Inc. 2,600 226,694 6,200 540,578 -0- 8,800 767,272 Marsh & McLennan Cos., Inc. 9,400 248,818 -0- -0- -0- 9,400 248,818 MetLife, Inc. 5,700 351,234 -0- -0- -0- 5,700 351,234 Muenchener Rueckversicherungs AG 1,700 329,931 -0- -0- -0- 1,700 329,931 Old Republic International Corp. 7,900 121,739 -0- -0- -0- 7,900 121,739 PartnerRe Ltd. 2,200 181,566 -0- -0- -0- 2,200 181,566 QBE Insurance Group Ltd. 12,595 365,668 -0- -0- -0- 12,595 365,668 Safeco Corp. 2,400 133,632 -0- -0- -0- 2,400 133,632 Torchmark Corp. 1,875 113,494 -0- -0- -0- 1,875 113,494 The Travelers Cos., Inc. 7,200 387,360 -0- -0- -0- 7,200 387,360 Unum Group 9,900 235,521 -0- -0- -0- 9,900 235,521 Willis Group Holdings Ltd. -0- -0- 5,900 224,023 -0- 5,900 224,023 ------------------ ------------- ------- ------------- 6,125,095 10,207,072 -0- 16,332,167 ------------------ ------------- ------- ------------- PROPERTY - CASUALTY INSURANCE - 0.1% The Progressive Corp. 14,500 277,820 -0- -0- -0- 14,500 277,820 ------------------ ------------- ------- ------------- REAL ESTATE INVESTMENT TRUSTS (REITs) - 3.5% Alexandria Real Estate Equities, Inc. 1,825 185,548 -0- -0- -0- 1,825 185,548 Allied Properties Real Estate Investment Trust 9,740 204,669 -0- -0- -0- 9,740 204,669 AMB Property Corp. 2,300 132,388 -0- -0- -0- 2,300 132,388 Apartment Investment & Management Co.-Class A 4,600 159,758 -0- -0- -0- 4,600 159,758 Ascendas Real Estate Investment Trust 84,000 142,205 -0- -0- -0- 84,000 142,205 Ashford Hospitality Trust, Inc. 9,300 66,867 -0- -0- -0- 9,300 66,867 AvalonBay Communities, Inc. 900 84,726 -0- -0- -0- 900 84,726 Boardwalk Real Estate Investment Trust (a) 5,888 265,773 -0- -0- -0- 5,888 265,773 Boston Properties, Inc. 1,800 165,258 -0- -0- -0- 1,800 165,258 British Land Co. PLC 10,644 199,603 -0- -0- -0- 10,644 199,603 Canadian Real Estate Investment Trust 8,434 247,723 -0- -0- -0- 8,434 247,723 CapitaMall Trust 146,600 347,602 -0- -0- -0- 146,600 347,602 Cominar Real Estate Investment Trust (a) 6,582 136,049 -0- -0- -0- 6,582 136,049 DB RREEF Trust 267,963 467,771 -0- -0- -0- 267,963 467,771 Derwent Valley Holdings PLC 7,450 207,144 -0- -0- -0- 7,450 207,144 DiamondRock Hospitality Co. 5,500 82,390 -0- -0- -0- 5,500 82,390 Digital Realty Trust, Inc. 8,300 318,471 -0- -0- -0- 8,300 318,471 Dundee Real Estate Investment Trust (a) 3,601 123,030 -0- -0- -0- 3,601 123,030 Entertainment Properties Trust 3,100 145,700 -0- -0- -0- 3,100 145,700 Equity Residential 5,500 200,585 -0- -0- -0- 5,500 200,585 Essex Property Trust, Inc. 425 41,433 -0- -0- -0- 425 41,433 FelCor Lodging Trust, Inc. 3,100 48,329 -0- -0- -0- 3,100 48,329 First Industrial Realty Trust, Inc. 2,900 100,340 -0- -0- -0- 2,900 100,340 Fonciere des Murs 2,800 93,092 -0- -0- -0- 2,800 93,092 Fonciere Des Regions 475 60,227 -0- -0- -0- 475 60,227 General Growth Properties, Inc. 9,700 399,446 -0- -0- -0- 9,700 399,446 General Property Group 34,988 123,145 -0- -0- -0- 34,988 123,145 Great Portland Estates PLC 15,400 143,491 -0- -0- -0- 15,400 143,491 H&R Real Estate Investment 1 17 -0- -0- -0- 1 17 Hammerson PLC 8,750 178,325 -0- -0- -0- 8,750 178,325 HCP, Inc. 3,600 125,208 -0- -0- -0- 3,600 125,208 Health Care REIT, Inc. 3,900 174,291 -0- -0- -0- 3,900 174,291 Highwoods Properties, Inc. 4,400 129,272 -0- -0- -0- 4,400 129,272 Home Properties, Inc. 3,100 139,035 -0- -0- -0- 3,100 139,035 Host Hotels & Resorts, Inc. 11,829 201,566 -0- -0- -0- 11,829 201,566 ING Office Fund 131,600 185,886 -0- -0- -0- 131,600 185,886 Japan Real Estate Investment Corp.-Class A 16 198,575 -0- -0- -0- 16 198,575 Kimco Realty Corp. 4,250 154,700 -0- -0- -0- 4,250 154,700 Klepierre 8,595 439,306 -0- -0- -0- 8,595 439,306 Land Securities Group PLC 5,842 175,070 -0- -0- -0- 5,842 175,070 LaSalle Hotel Properties 2,300 73,370 -0- -0- -0- 2,300 73,370 Liberty International PLC 10,400 222,203 -0- -0- -0- 10,400 222,203 Macerich Co. 2,300 163,438 -0- -0- -0- 2,300 163,438 Mid-America Apartment Communities, Inc. 2,250 96,187 -0- -0- -0- 2,250 96,187 Mirvac Group 80,182 419,038 -0- -0- -0- 80,182 419,038 National Retail Properties 3,700 86,506 -0- -0- -0- 3,700 86,506 Nationwide Health Properties, Inc. 6,700 210,179 -0- -0- -0- 6,700 210,179 Nippon Building Fund, Inc.- Class A 21 293,261 -0- -0- -0- 21 293,261 Nomura Real Estate Office Fund, Inc.-Class A 19 178,797 -0- -0- -0- 19 178,797 Omega Healthcare Investors, Inc. 5,500 88,275 -0- -0- -0- 5,500 88,275 Primaris Retail Real Estate Investment Trust (a) 7,149 132,559 -0- -0- -0- 7,149 132,559 Prologis 6,775 429,399 -0- -0- -0- 6,775 429,399 Public Storage 2,050 150,490 -0- -0- -0- 2,050 150,490 Rayonier, Inc. 5,300 250,372 -0- -0- -0- 5,300 250,372 RioCan Real Estate Investment Trust (a) 7,491 165,609 -0- -0- -0- 7,491 165,609 RioCan Real Estate Investment Trust (a) 1,400 30,952 -0- -0- -0- 1,400 30,952 Segro PLC 8,769 81,581 -0- -0- -0- 8,769 81,581 Simon Property Group, Inc. 7,350 638,421 -0- -0- -0- 7,350 638,421 SL Green Realty Corp. 550 51,403 -0- -0- -0- 550 51,403 Stockland 19,479 142,973 -0- -0- -0- 19,479 142,973 Stockland-New 422 3,027 -0- -0- -0- 422 3,027 Strategic Hotels & Resorts, Inc. 4,400 73,612 -0- -0- -0- 4,400 73,612 Sunstone Hotel Investors, Inc. 3,600 65,844 -0- -0- -0- 3,600 65,844 Tanger Factory Outlet Centers 5,050 190,435 -0- -0- -0- 5,050 190,435
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ Taubman Centers, Inc. $ 4,900 $ 241,031 -0- $ -0- $ -0- 4,900 $ 241,031 UDR, Inc. 4,050 80,392 -0- -0- -0- 4,050 80,392 Unibail 2,525 553,306 -0- -0- -0- 2,525 553,306 Ventas, Inc. 6,950 314,487 -0- -0- -0- 6,950 314,487 Vornado Realty Trust 4,000 351,800 -0- -0- -0- 4,000 351,800 Westfield Group 33,589 614,092 -0- -0- -0- 33,589 614,092 ------------------ ------------- ------- ------------- 13,387,053 -0- -0- 13,387,053 ------------------ ------------- ------- ------------- REAL ESTATE MANAGEMENT & DEVELOPMENT -1.7% Beni Stabili SpA 76,800 83,325 -0- -0- -0- 76,800 83,325 Brookfield Properties Corp. 2,225 42,831 -0- -0- -0- 2,225 42,831 Citycon Oyj 33,942 181,072 -0- -0- -0- 33,942 181,072 Forest City Enterprises, Inc.-Class A 1,650 73,326 -0- -0- -0- 1,650 73,326 Hang Lung Properties Ltd. 141,000 629,996 -0- -0- -0- 141,000 629,996 Henderson Land Development Co., Ltd. 18,000 167,168 -0- -0- -0- 18,000 167,168 IVG Immobilien AG 3,900 128,728 -0- -0- -0- 3,900 128,728 Keppel Land Ltd. 44,000 220,151 -0- -0- -0- 44,000 220,151 Kerry Properties Ltd. 86,131 684,864 -0- -0- -0- 86,131 684,864 Lend Lease Corp. Ltd. 32,000 483,197 -0- -0- -0- 32,000 483,197 Mitsubishi Estate Co., Ltd. 15,000 357,374 -0- -0- -0- 15,000 357,374 Mitsui Fudosan Co., Ltd. 13,100 282,521 -0- -0- -0- 13,100 282,521 New World Development Co., Ltd. 125,997 441,117 -0- -0- -0- 125,997 441,117 Norwegian Property ASA 20,500 249,072 -0- -0- -0- 20,500 249,072 NTT Urban Development Corp. (a) 390 624,363 -0- -0- -0- 390 624,363 Sino Land Co. 79,950 279,968 -0- -0- -0- 79,950 279,968 Sponda OYJ 10,300 122,463 -0- -0- -0- 10,300 122,463 Sumitomo Realty & Development 8,000 195,649 -0- -0- -0- 8,000 195,649 Sun Hung Kai Properties Ltd. 46,700 980,866 -0- -0- -0- 46,700 980,866 Tokyu Land Corp. 31,000 265,246 -0- -0- -0- 31,000 265,246 ------------------ ------------- ------- ------------- 6,493,297 -0- -0- 6,493,297 ------------------ ------------- ------- ------------- 43,713,030 26,890,992 -0- 70,604,022 ------------------ ------------- ------- ------------- INFORMATION TECHNOLOGY - 7.7% COMMUNICATIONS EQUIPMENT - 1.4% Cisco Systems, Inc. (b) 60,450 1,636,381 51,000 1,380,570 -0- 111,450 3,016,951 Nokia OYJ (ADR) 19,700 756,283 -0- -0- -0- 19,700 756,283 Nokia OYJ 17,244 662,469 -0- -0- -0- 17,244 662,469 Research In Motion Ltd. (b) 9,075 1,029,105 -0- -0- -0- 9,075 1,029,105 ------------------ ------------- ------- ------------- 4,084,238 1,380,570 -0- 5,464,808 ------------------ ------------- ------- ------------- COMPUTERS & PERIPHERALS - 2.0% Apple, Inc. (b) 12,430 2,462,134 -0- -0- -0- 12,430 2,462,134 Asustek Computer, Inc. (a) 43,000 127,951 -0- -0- -0- 43,000 127,951 Compal Electronics, Inc. (a) 56,280 61,282 -0- -0- -0- 56,280 61,282 EMC Corp. (b) 15,500 287,215 -0- -0- -0- 15,500 287,215 Fujitsu Ltd. 38,000 254,200 -0- -0- -0- 38,000 254,200 Hewlett-Packard Co. 27,700 1,398,296 8,400 424,032 -0- 36,100 1,822,328 Sun Microsystems, Inc. (b) -0- -0- 141,325 2,562,223 -0- 141,325 2,562,223 Toshiba Corp. 26,000 191,879 -0- -0- -0- 26,000 191,879 ------------------ ------------- ------- ------------- 4,782,957 2,986,255 -0- 7,769,212 ------------------ ------------- ------- ------------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.1% AU Optronics Corp. (a) 86,692 167,186 -0- -0- -0- 86,692 167,186 HON HAI Precision Industry Co. Ltd. (a) 8,200 50,541 -0- -0- -0- 8,200 50,541 Tyco Electronics Ltd. 1,250 46,412 -0- -0- -0- 1,250 46,412 ------------------ ------------- ------- ------------- 264,139 -0- -0- 264,139 ------------------ ------------- ------- ------------- INTERNET SOFTWARE & SERVICES - 0.7% Google, Inc.-Class A (b) 3,900 2,696,772 -0- -0- -0- 3,900 2,696,772 ------------------ ------------- ------- ------------- IT SERVICES - 0.6% Accenture Ltd.-Class A -0- -0- 63,200 2,277,096 -0- 63,200 2,277,096 ------------------ ------------- ------- ------------- OFFICE ELECTRONICS - 0.0% Konica Minolta Holdings, Inc. 5,500 96,421 -0- -0- -0- 5,500 96,421 ------------------ ------------- ------- ------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.7% Applied Materials, Inc. -0- -0- 35,700 634,032 -0- 35,700 634,032 Broadcom Corp.-Class A (b) 25,000 653,500 2,400 62,736 -0- 27,400 716,236 Hynix Semiconductor, Inc. (a)(b) 5,900 161,598 -0- -0- -0- 5,900 161,598 Integrated Device Technology, Inc. (b) -0- -0- 42,900 485,199 -0- 42,900 485,199 Intel Corp. 18,850 502,541 54,100 1,442,306 -0- 72,950 1,944,847 Nvidia Corp. (b) 24,425 830,938 35,700 1,214,514 -0- 60,125 2,045,452 Samsung Electronics Co. Ltd. (a) 140 82,390 -0- -0- -0- 140 82,390 United Microelectronics Corp. (a) 398,207 247,387 -0- -0- -0- 398,207 247,387 ------------------ ------------- ------- ------------- 2,478,354 3,838,787 -0- 6,317,141 ------------------ ------------- ------- ------------- SOFTWARE - 1.2% Adobe Systems, Inc. (b) 14,700 628,131 9,200 393,116 -0- 23,900 1,021,247 Microsoft Corp. 20,400 726,240 70,200 2,499,120 -0- 90,600 3,225,360 Nintendo Co. Ltd. 400 234,861 -0- -0- -0- 400 234,861 Oracle Corp. (b) 5,700 128,706 -0- -0- -0- 5,700 128,706 ------------------ ------------- ------- ------------- 1,717,938 2,892,236 -0- 4,610,174 ------------------ ------------- ------- ------------- 16,120,819 13,374,944 -0- 29,495,763 ------------------ ------------- ------- ------------- ENERGY- 7.4% ENERGY EQUIPMENT & SERVICES - 1.3% Baker Hughes, Inc. 13,950 1,131,345 11,310 917,241 -0- 25,260 2,048,586 Cameron International Corp. (b) 6,300 303,219 6,200 298,406 -0- 12,500 601,625 Nabors Industries Ltd. (b) -0- -0- 30,100 824,439 -0- 30,100 824,439 Schlumberger Ltd. 14,700 1,446,039 -0- -0- -0- 14,700 1,446,039
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ Technip SA $ 2,010 $ 159,878 -0- $ -0- $ -0- 2,010 $ 159,878 ------------------ ------------- ------- ------------- 3,040,481 2,040,086 -0- 5,080,567 ------------------ ------------- ------- ------------- ENERGY SOURCES - 3.8% Chevron Corp. 14,400 1,343,952 32,000 2,986,560 -0- 46,400 4,330,512 ConocoPhillips 11,300 997,790 9,100 803,530 -0- 20,400 1,801,320 Exxon Mobil Corp. 22,700 2,126,763 52,300 4,899,987 -0- 75,000 7,026,750 Marathon Oil Corp. 5,600 340,816 15,700 955,502 -0- 21,300 1,296,318 Occidental Petroleum Corp. 1,900 146,281 -0- -0- -0- 1,900 146,281 ------------------ -------------- ------- ------------- 4,955,602 9,645,579 -0- 14,601,181 ------------------ -------------- ------- ------------- OIL, GAS & CONSUMABLE FUELS - 2.3% China Petroleum & Chemical Corp.-Class H 108,000 160,105 -0- -0- -0- 108,000 160,105 China Shenhua Energy Co. Ltd.-Class H 42,000 247,413 -0- -0- -0- 42,000 247,413 ENI SpA 9,800 357,665 -0- -0- -0- 9,800 357,665 EOG Resources, Inc. 7,150 638,137 -0- -0- -0- 7,150 638,137 Gazprom OAO (Sponsored) (ADR) 4,476 253,789 -0- -0- -0- 4,476 253,789 LUKOIL (Sponsored) (ADR) 2,000 169,000 -0- -0- -0- 2,000 169,000 Noble Energy, Inc. -0- -0- 15,900 1,264,368 -0- 15,900 1,264,368 Petro-Canada (a) 1,200 64,745 -0- -0- -0- 1,200 64,745 Petroleo Brasileiro SA (ADR) 2,800 322,672 -0- -0- -0- 2,800 322,672 Petroleo Brasileiro SA (Sponsored) (ADR) 1,900 182,818 -0- -0- -0- 1,900 182,818 Royal Dutch Shell PLC 12,600 531,172 -0- -0- -0- 12,600 531,172 Royal Dutch Shell PLC (Euronext Amsterdam)-Class A 9,657 407,670 -0- -0- -0- 9,657 407,670 StatoilHydro ASA 8,900 274,572 -0- -0- -0- 8,900 274,572 Total SA 7,166 593,348 -0- -0- -0- 7,166 593,348 Total SA (ADR) -0- -0- 37,900 3,130,540 -0- 37,900 3,130,540 ------------------ ------------- ------- ------------ 4,203,106 4,394,908 -0- 8,598,014 ------------------ ------------- ------- ------------ 12,199,189 16,080,573 -0- 28,279,762 ------------------ ------------- ------- ------------ INDUSTRIALS- 4.9% AEROSPACE & DEFENSE - 1.6% BAE Systems PLC 44,621 442,814 -0- - -0- 44,621 442,814 Boeing Co. 2,350 205,531 -0- - -0- 2,350 205,531 Honeywell International, Inc. 19,200 1,182,144 12,100 744,997 -0- 31,300 1,927,141 Spirit Aerosystems Holdings, Inc.-Class A (b) 14,300 493,350 -0- - -0- 14,300 493,350 United Technologies Corp. 2,500 191,350 37,700 2,885,558 -0- 40,200 3,076,908 ------------------ ------------- ------- ------------- 2,515,189 3,630,555 -0- 6,145,744 ------------------ ------------- ------- ------------- AIRLINES - 0.1% Air France-KLM 3,200 111,835 -0- -0- -0- 3,200 111,835 Deutsche Lufthansa AG 4,600 122,418 -0- -0- -0- 4,600 122,418 ------------------ ------------- ------- ------------- 234,253 -0- -0- 234,253 ------------------ ------------- ------- ------------- COMMERCIAL SERVICES & SUPPLIES - 0.2% Allied Waste Industries, Inc. (b) 16,100 177,422 -0- -0- -0- 16,100 177,422 Capita Group PLC 5,713 79,202 -0- -0- -0- 5,713 79,202 Dun & Bradstreet Corp. -0- -0- 6,300 558,369 -0- 6,300 558,369 Pitney Bowes, Inc. 3,800 144,552 -0- -0- -0- 3,800 144,552 ------------------ ------------- ------- ------------- 401,176 558,369 -0- 959,545 ------------------ ------------- ------- ------------- CONSTRUCTION & ENGINEERING - 0.2% Fluor Corp. 5,000 728,600 -0- -0- -0- 5,000 728,600 ------------------ ------------- ------- ------------- ELECTRICAL EQUIPMENT - 1.6% ABB Ltd. 19,079 550,082 -0- -0- -0- 19,079 550,082 ABB Ltd. (Sponsored) (ADR) 19,200 552,960 -0- -0- -0- 19,200 552,960 Emerson Electric Co. 7,350 416,451 77,400 4,385,484 -0- 84,750 4,801,935 Renewable Energy Corp. (b) 1,917 96,154 -0- -0- -0- 1,917 96,154 ------------------ ------------- ------- ------------- 1,615,647 4,385,484 -0- 6,001,131 ------------------ ------------- ------- ------------- INDUSTRIAL CONGLOMERATES - 0.3% 3M Co. 1,800 151,776 -0- -0- -0- 1,800 151,776 Mcdermott Intl Inc. (b) 2,200 129,866 -0- -0- -0- 2,200 129,866 Siemens AG 3,108 492,182 -0- -0- -0- 3,108 492,182 Textron, Inc. 7,250 516,925 -0- -0- -0- 7,250 516,925 Tyco International Ltd. 1,250 49,563 -0- -0- -0- 1,250 49,563 ------------------ ------------- ------- ------------- 1,340,312 -0- -0- 1,340,312 ------------------ ------------- ------- ------------- MACHINERY - 0.6% Caterpillar, Inc. 2,900 210,424 -0- -0- -0- 2,900 210,424 Deere & Co. 10,950 1,019,664 -0- -0- -0- 10,950 1,019,664 Ingersoll-Rand Co. Ltd.-Class A 6,000 278,820 -0- -0- -0- 6,000 278,820 Komatsu Ltd. 5,700 152,869 -0- -0- -0- 5,700 152,869 NGK Insulators Ltd. 9,000 241,302 -0- -0- -0- 9,000 241,302 PACCAR, Inc. 3,600 196,128 -0- -0- -0- 3,600 196,128 Sumitomo Heavy Industries Ltd. 800 7,294 -0- -0- -0- 800 7,294 Terex Corp. (b) 2,100 137,697 -0- -0- -0- 2,100 137,697 ------------------ ------------- ------- ------------- 2,244,198 -0- -0- 2,244,198 ------------------ ------------- ------- ------------- MARINE - 0.1% Mitsui OSK Lines Ltd. 10,000 126,423 -0- -0- -0- 10,000 126,423 Nippon Yusen KK (a) 16,000 126,048 -0- -0- -0- 16,000 126,048 ------------------ ------------- ------- ------------- 252,471 -0- -0- 252,471 ------------------ ------------- ------- ------------- ROAD & RAIL - 0.0% Avis Budget Group, Inc. (b) 3,600 46,800 -0- -0- -0- 3,600 46,800 ------------------ ------------- ------- ------------- TRADING COMPANIES & DISTRIBUTORS - 0.2% Mitsubishi Corp. 4,100 110,965 -0- -0- -0- 4,100 110,965 ------------- -------------
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ Mitsui & Co. Ltd. $ 26,000 $ 542,949 -0- $ -0- $ -0- 26,000 $ 542,949 ------------------ ------------- ------- ------------- 653,914 -0- -0- 653,914 ------------------ ------------- ------- ------------- 10,032,560 8,574,408 -0- 18,606,968 ------------------ ------------- ------- ------------- HEALTH CARE - 6.1% BIOTECHNOLOGY - 0.6% Celgene Corp. (b) 12,450 575,314 -0- -0- -0- 12,450 575,314 CSL Ltd./Australia 3,038 96,243 -0- -0- -0- 3,038 96,243 Genentech, Inc. (b) 7,650 513,086 -0- -0- -0- 7,650 513,086 Gilead Sciences, Inc. (b) 26,850 1,235,369 -0- -0- -0- 26,850 1,235,369 ------------------ ------------- ------- ------------- 2,420,012 -0- -0- 2,420,012 ------------------ ------------- ------- ------------- HEALTH CARE EQUIPMENT & SUPPLIES - 0.8% Alcon, Inc. 7,375 1,054,920 -0- -0- -0- 7,375 1,054,920 Becton Dickinson & Co. -0- -0- 13,100 1,094,898 -0- 13,100 1,094,898 Covidien Ltd. 1,250 55,363 -0- -0- -0- 1,250 55,363 Essilor International SA 3,934 250,941 -0- -0- -0- 3,934 250,941 Hologic, Inc. (b) 7,300 501,072 -0- -0- -0- 7,300 501,072 ------------------ ------------- ------- ------------- 1,862,296 1,094,898 -0- 2,957,194 ------------------ ------------- ------- ------------- HEALTH CARE PROVIDERS & SERVICES - 2.9% Aetna, Inc. -0- -0- 27,400 1,581,802 -0- 27,400 1,581,802 Medco Health Solutions, Inc. (b) 6,750 684,450 -0- -0- -0- 6,750 684,450 UnitedHealth Group, Inc. -0- -0- 60,200 3,503,640 -0- 60,200 3,503,640 WellPoint, Inc. (b) 11,300 991,349 46,600 4,088,218 -0- 57,900 5,079,567 ------------------ ------------- ------- ------------- 1,675,799 9,173,660 -0- 10,849,459 ------------------ ------------- ------- ------------- PHARMACEUTICALS - 1.8% Abbott Laboratories 21,100 1,184,765 -0- -0- -0- 21,100 1,184,765 AstraZeneca PLC 1,900 81,782 -0- -0- -0- 1,900 81,782 Forest Laboratories, Inc. (b) -0- -0- 17,800 648,810 -0- 17,800 648,810 GlaxoSmithKline PLC 6,400 162,538 -0- -0- -0- 6,400 162,538 Merck & Co., Inc. 7,800 453,258 28,100 1,632,891 -0- 35,900 2,086,149 Roche Holding AG 1,152 199,141 -0- -0- -0- 1,152 199,141 Sanofi-Aventis SA 3,200 292,929 -0- -0- -0- 3,200 292,929 Schering-Plough Corp. -0- -0- 21,400 570,096 -0- 21,400 570,096 Teva Pharmaceutical Industries Ltd. (Sponsored) (ADR) 16,050 746,004 -0- -0- -0- 16,050 746,004 Wyeth -0- -0- 23,500 1,038,465 -0- 23,500 1,038,465 ------------------ ------------- ------- ------------- 3,120,417 3,890,262 -0- 7,010,679 ------------------ ------------- ------- ------------- 9,078,524 14,158,820 -0- 23,237,344 ------------------ ------------- ------- ------------- MATERIALS - 2.2% CHEMICALS - 1.1% Air Products & Chemicals, Inc. 7,300 719,999 7,200 710,136 -0- 14,500 1,430,135 Ashland, Inc. 2,600 123,318 -0- -0- -0- 2,600 123,318 BASF SE 3,600 533,063 -0- -0- -0- 3,600 533,063 Bayer AG 5,987 546,114 -0- -0- -0- 5,987 546,114 Mitsubishi Chemical Holdings Corp. 30,500 232,705 -0- -0- -0- 30,500 232,705 Mitsui Chemicals, Inc. (a) 12,400 80,499 -0- -0- -0- 12,400 80,499 Monsanto Co. 10,450 1,167,160 -0- -0- -0- 10,450 1,167,160 ------------------ ------------- ------- ------------- 3,402,858 710,136 -0- 4,112,994 ------------------ ------------- ------- ------------- CONSTRUCTION MATERIALS - 0.0% Buzzi Unicem SpA 3,000 82,909 -0- -0- -0- 3,000 82,909 ------------------ ------------- ------- ------------- CONTAINERS & PACKAGING- 0.1% Ball Corp. 4,000 180,000 -0- -0- -0- 4,000 180,000 Crown Holdings, Inc. (b) 4,600 117,990 -0- -0- -0- 4,600 117,990 ------------------ ------------- ------- ------------- 297,990 -0- -0- 297,990 ------------------ ------------- ------- ------------- METALS & MINING - 1.0% Alcoa, Inc. 10,600 387,430 -0- -0- -0- 10,600 387,430 Anglo American PLC 2,514 152,603 -0- -0- -0- 2,514 152,603 Antofagasta PLC 11,100 157,366 -0- -0- -0- 11,100 157,366 ArcelorMittal 4,068 327,120 -0- -0- -0- 4,068 327,120 BHP Billiton PLC 6,854 209,002 -0- -0- -0- 6,854 209,002 Cia Vale do Rio Doce (ADR) 9,000 294,030 -0- -0- -0- 9,000 294,030 Cia Vale do Rio Doce (Sponsored) (ADR) 6,100 170,678 -0- -0- -0- 6,100 170,678 JFE Holdings, Inc. 8,900 446,283 -0- -0- -0- 8,900 446,283 Kazakhmys PLC 2,800 75,756 -0- -0- -0- 2,800 75,756 Nippon Steel Corp. 41,000 250,958 -0- -0- -0- 41,000 250,958 POSCO (a) 200 120,836 -0- -0- -0- 200 120,836 Rio Tinto PLC 5,848 615,458 -0- -0- -0- 5,848 615,458 Xstrata PLC 9,837 690,272 -0- -0- -0- 9,837 690,272 ------------------ ------------- ------- ------------- 3,897,792 -0- -0- 3,897,792 ------------------ ------------- ------- ------------- PAPER & FOREST PRODUCTS - 0.0% Stora Enso Oyj-Class R 11,300 168,685 -0- -0- -0- 11,300 168,685 ------------------ ------------- ------- ------------- 7,850,234 710,136 -0- 8,560,370 ------------------ ------------- ------- ------------- CONSUMER STAPLES - 4.8% BEVERAGES - 0.4% The Coca-Cola Co. 3,300 202,521 -0- -0- -0- 3,300 202,521 PepsiCo, Inc. 8,500 645,150 8,100 614,790 -0- 16,600 1,259,940 ------------------ ------------- ------- ------------- 847,671 614,790 -0- 1,462,461 ------------------ ------------- ------- ------------- BEVERAGES & TOBACCO - 1.6% Altria Group, Inc. 7,700 581,966 64,400 4,867,352 -0- 72,100 5,449,318 Coca-Cola Enterprises, Inc. 8,300 216,049 -0- -0- -0- 8,300 216,049 Kraft Foods, Inc.-Class A 2,300 75,049 -0- -0- -0- 2,300 75,049 Molson Coors Brewing Co.-Class B 3,800 196,156 -0- -0- -0- 3,800 196,156 ------------------ ------------- ------- ------------- 1,069,220 4,867,352 -0- 5,936,572 ------------------ ------------- ------- ------------- FOOD & HOUSEHOLD PRODUCTS - 0.2% ConAgra Foods, Inc. 4,100 97,539 -0- -0- -0- 4,100 97,539 General Mills, Inc. 2,425 138,225 -0- -0- -0- 2,425 138,225 Kellogg Co. 3,100 162,533 -0- -0- -0- 3,100 162,533 Sara Lee Corp. 12,700 203,962 -0- -0- -0- 12,700 203,962
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ Supervalu, Inc. 7,000 $ 262,640 -0- $ -0- $ -0- 7,000 $ 262,640 ------------------ ------------- ------- ------------- 864,899 -0- -0- 864,899 ------------------ ------------- ------- ------------- FOOD & STAPLES RETAILING - 0.1% Koninklijke Ahold NV 17,860 247,340 -0- -0- -0- 17,860 247,340 Tesco PLC 20,213 192,277 -0- -0- -0- 20,213 192,277 ------------------ ------------- ------- ------------- 439,617 -0- -0- 439,617 ------------------ ------------- ------- ------------- FOOD PRODUCTS- 0.8% Associated British Foods PLC 9,400 167,680 -0- -0- -0- 9,400 167,680 HJ Heinz Co. -0- -0- 31,300 1,461,084 -0- 31,300 1,461,084 Nestle SA 1,291 592,815 -0- -0- -0- 1,291 592,815 Unilever PLC 9,595 359,859 -0- -0- -0- 9,595 359,859 WM Wrigley Jr Co. 9,800 573,790 -0- -0- -0- 9,800 573,790 ------------------ ------------- ------- ------------- 1,694,144 1,461,084 -0- 3,155,228 ------------------ ------------- ------- ------------- HOUSEHOLD PRODUCTS - 1.1% Colgate-Palmolive Co. 6,650 518,434 -0- -0- -0- 6,650 518,434 Procter & Gamble Co. 20,200 1,483,084 24,200 1,776,764 -0- 44,400 3,259,848 Reckitt Benckiser PLC 5,205 302,463 -0- -0- -0- 5,205 302,463 ------------------ ------------- ------- ------------- 2,303,981 1,776,764 -0- 4,080,745 ------------------ ------------- ------- ------------- PERSONAL PRODUCTS - 0.1% L'Oreal SA 1,645 235,560 -0- -0- -0- 1,645 235,560 ------------------ ------------- ------- ------------- TOBACCO- 0.5% British American Tobacco PLC 5,495 214,817 -0- -0- -0- 5,495 214,817 Loews Corp. - Carolina Group -0- -0- 20,600 1,757,180 -0- 20,600 1,757,180 ------------------ ------------- ------- ------------- 214,817 1,757,180 -0- 1,971,997 ------------------ ------------- ------- ------------- 7,669,909 10,477,170 -0- 18,147,079 ------------------ ------------- ------- ------------- CONSUMER DISCRETIONARY - 2.2% AUTO COMPONENTS - 0.1% Compagnie Generale des Etablissements Michelin-Class B 1,700 194,359 -0- -0- -0- 1,700 194,359 Denso Corp. 4,100 166,846 -0- -0- -0- 4,100 166,846 Hyundai Mobis (a) 1,710 158,008 -0- -0- -0- 1,710 158,008 ------------------ ------------- ------- ------------- 519,213 -0- -0- 519,213 ------------------ ------------- ------- ------------- AUTOMOBILES - 0.4% Fiat SpA 8,775 225,825 -0- -0- -0- 8,775 225,825 General Motors Corp. 9,800 243,922 -0- -0- -0- 9,800 243,922 Nissan Motor Co. Ltd. 39,200 427,848 -0- -0- -0- 39,200 427,848 Renault SA 3,000 425,468 -0- -0- -0- 3,000 425,468 ------------------ ------------- ------- ------------- 1,323,063 -0- -0- 1,323,063 ------------------ ------------- ------- ------------- HOTELS, RESTAURANTS & LEISURE - 0.3% Las Vegas Sands Corp. (b) 1,400 144,270 -0- -0- -0- 1,400 144,270 Marriott International, Inc.-Class A 3,800 129,884 -0- -0- -0- 3,800 129,884 McDonald's Corp. 9,400 553,754 -0- -0- -0- 9,400 553,754 Starwood Hotels & Resorts Worldwide, Inc. 625 27,519 -0- -0- -0- 625 27,519 Yum! Brands, Inc. 7,750 296,592 -0- -0- -0- 7,750 296,592 ------------------ ------------- ------- ------------- 1,152,019 -0- -0- 1,152,019 ------------------ ------------- ------- ------------- HOUSEHOLD DURABLES - 0.1% Centex Corp. 2,900 73,254 -0- -0- -0- 2,900 73,254 KB Home 2,800 60,480 -0- -0- -0- 2,800 60,480 Sharp Corp. 15,000 267,572 -0- -0- -0- 15,000 267,572 ------------------ ------------- ------- ------------- 401,306 -0- -0- 401,306 ------------------ ------------- ------- ------------- LEISURE EQUIPMENT & PRODUCTS - 0.0% Brunswick Corp. 3,200 54,560 -0- -0- -0- 3,200 54,560 ------------------ ------------- ------- ------------- MEDIA - 0.5% Comcast Corp.-Class A (b) -0- -0- 14,070 256,918 -0- 14,070 256,918 Comcast Corp.-Special- Class A (b) 7,950 144,054 -0- - -0- 7,950 144,054 Lagardere SCA 2,200 164,759 -0- - -0- 2,200 164,759 News Corp.-Class A -0- -0- 73,000 1,495,770 -0- 73,000 1,495,770 ------------------ ------------- ------- ------------- 308,813 1,752,688 -0- 2,061,501 ------------------ ------------- ------- ------------- MULTILINE RETAIL - 0.6% Dollar Tree Stores, Inc. (b) 900 23,328 -0- -0- -0- 900 23,328 Family Dollar Stores, Inc. 4,800 92,304 -0- -0- -0- 4,800 92,304 Kohl's Corp. (b) 7,125 326,325 28,000 1,282,400 -0- 35,125 1,608,725 Macy's, Inc. 7,500 194,025 -0- -0- -0- 7,500 194,025 New World Department Store China Ltd. (b) 872 1,222 -0- -0- -0- 872 1,222 Target Corp. 6,200 310,000 -0- -0- -0- 6,200 310,000 ------------------ ------------- ------- ------------- 947,204 1,282,400 -0- 2,229,604 ------------------ ------------- ------- ------------- SPECIALTY RETAIL - 0.2% Esprit Holdings Ltd. 16,700 245,912 -0- -0- -0- 16,700 245,912 Home Depot, Inc. 10,100 272,094 -0- -0- -0- 10,100 272,094 Inditex SA 3,901 236,050 -0- -0- -0- 3,901 236,050 ------------------ ------------- ------- ------------- 754,056 -0- -0- 754,056 ------------------ ------------- ------- ------------- 5,460,234 3,035,088 -0- 8,495,322 ------------------ ------------- ------- ------------- CAPITAL EQUIPMENT - 1.4% AEROSPACE & DEFENSE - 0.3% Lockheed Martin Corp. 1,000 105,260 8,200 863,132 -0- 9,200 968,392 Northrop Grumman Corp. 3,900 306,696 -0- -0- -0- 3,900 306,696 ------------------ ------------- ------- ------------- 411,956 863,132 -0- 1,275,088 ------------------ ------------- ------- ------------- AUTOMOBILES - 0.1% Autoliv, Inc. 2,300 121,233 -0- -0- -0- 2,300 121,233 BorgWarner, Inc. 2,750 133,128 -0- -0- -0- 2,750 133,128 Johnson Controls, Inc. 3,300 118,932 -0- -0- -0- 3,300 118,932 Lear Corp. (b) 3,100 85,746 -0- -0- -0- 3,100 85,746 ------------------ ------------- ------- ------------- 459,039 -0- -0- 459,039 ------------------ ------------- ------- -------------
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRIAL COMPONENTS - 0.1% Eaton Corp. 2,900 $ 281,155 -0- $ -0- $ -0- 2,900 $ 281,155 ------------------ -------------- ------ ------------- MACHINERY & ENGINEERING - 0.0% Cummins, Inc. 1,400 178,318 -0- -0- -0- 1,400 178,318 ------------------ -------------- ------ ------------- MULTI-INDUSTRY - 0.9% General Electric Co. 49,500 1,834,965 35,640 1,321,175 -0- 85,140 3,156,140 SPX Corp. 1,425 146,561 -0- -0- -0- 1,425 146,561 ------------------ -------------- ------ ------------- 1,981,526 1,321,175 -0- 3,302,701 ------------------ -------------- ------ ------------- 3,311,994 2,184,307 -0- 5,496,301 ------------------ -------------- ------ ------------- TELECOMMUNICATIONS - 1.6% TELECOMMUNICATIONS - 1.6% AT&T, Inc. 39,800 1,654,088 48,000 1,994,880 -0- 87,800 3,648,968 Sprint Nextel Corp. 30,700 403,091 -0- -0- -0- 30,700 403,091 Verizon Communications, Inc. 20,300 886,907 29,700 1,297,593 -0- 50,000 2,184,500 ------------------ -------------- ------ ------------- 2,944,086 3,292,473 -0- 6,236,559 ------------------ -------------- ------ ------------- UTILITIES - 0.8% ELECTRIC UTILITIES - 0.2% E.ON AG 1,600 340,196 -0- -0- -0- 1,600 340,196 The Tokyo Electric Power Co. 9,900 256,274 -0- -0- -0- 9,900 256,274 ------------------ -------------- ------ ------------- 596,470 -0- -0- 596,470 ------------------ -------------- ------ ------------- INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.1% Iberdrola Renovables (b) 12,874 106,347 -0- -0- -0- 12,874 106,347 International Power PLC 20,376 183,675 -0- -0- -0- 20,376 183,675 ------------------ -------------- ------ ------------- 290,022 -0- -0- 290,022 ------------------ -------------- ------ ------------- MULTI-UTILITIES - 0.3% Ameren Corp. 4,100 222,261 -0- -0- -0- 4,100 222,261 CMS Energy Corp. 3,000 52,140 -0- -0- -0- 3,000 52,140 RWE AG 1,380 194,398 -0- -0- -0- 1,380 194,398 Suez SA 4,017 273,421 -0- -0- -0- 4,017 273,421 Veolia Environnement 2,851 259,694 -0- -0- -0- 2,851 259,694 ------------------ -------------- ------ ------------- 1,001,914 -0- -0- 1,001,914 ------------------ -------------- ------ ------------- UTILITY (ELECTRIC & GAS) - 0.2% Allegheny Energy, Inc. 1,800 114,498 -0- -0- -0- 1,800 114,498 American Electric Power Co., Inc. 5,300 246,768 -0- -0- -0- 5,300 246,768 Constellation Energy Group, Inc. 2,200 225,566 -0- -0- -0- 2,200 225,566 Entergy Corp. 900 107,568 -0- -0- -0- 900 107,568 Pinnacle West Capital Corp. 3,600 152,676 -0- -0- -0- 3,600 152,676 Wisconsin Energy Corp. 2,350 114,468 -0- -0- -0- 2,350 114,468 ------------------ -------------- ------ ------------- 961,544 -0- -0- 961,544 ------------------ -------------- ------ ------------- 2,849,950 -0- -0- 2,849,950 ------------------ -------------- ------ ------------- CONSUMER CYCLICAL - 1.9% APPLIANCES & HOUSEHOLD DURABLES - 0.0% Black & Decker Corp. 1,400 97,510 -0- -0- -0- 1,400 97,510 Newell Rubbermaid, Inc. 1,900 49,172 -0- -0- -0- 1,900 49,172 ------------------ -------------- ------ ------------- 146,682 -0- -0- 146,682 ------------------ -------------- ------ ------------- BROADCASTING & PUBLISHING - 1.0% CBS Corp.-Class B 7,800 212,550 -0- -0- -0- 7,800 212,550 Gannett Co., Inc. 6,500 253,500 -0- -0- -0- 6,500 253,500 Idearc, Inc. 5,800 101,848 -0- -0- -0- 5,800 101,848 Time Warner, Inc. 13,600 224,536 79,700 1,315,847 -0- 93,300 1,540,383 Viacom, Inc.-Class B (b) 4,700 206,424 23,800 1,045,296 -0- 28,500 1,251,720 The Walt Disney Co. 11,400 367,992 -0- -0- -0- 11,400 367,992 ------------------ -------------- ------ ------------- 1,366,850 2,361,143 -0- 3,727,993 ------------------ -------------- ------ ------------- BUSINESS & PUBLIC SERVICES - 0.0% Interpublic Group of Cos., Inc. (b) 5,500 44,605 -0- -0- -0- 5,500 44,605 ------------------ -------------- ------ ------------- MERCHANDISING - 0.8% The Gap, Inc. 8,400 178,752 -0- -0- -0- 8,400 178,752 The Kroger Co. 5,200 138,892 -0- -0- -0- 5,200 138,892 Lowe's Cos., Inc. 5,800 131,196 -0- -0- -0- 5,800 131,196 Office Depot, Inc. (b) 3,300 45,903 -0- -0- -0- 3,300 45,903 Safeway, Inc. 5,600 191,576 65,300 2,233,913 -0- 70,900 2,425,489 Wal-Mart Stores, Inc. 1,400 66,542 -0- -0- -0- 1,400 66,542 ------------------ -------------- ------ ------------- 752,861 2,233,913 -0- 2,986,774 ------------------ -------------- ------ ------------- RECREATION & OTHER CONSUMER - 0.0% Mattel, Inc. 7,700 146,608 -0- -0- -0- 7,700 146,608 ------------------ -------------- ------ ------------- TEXTILES & APPAREL - 0.1% Jones Apparel Group, Inc. 9,600 153,504 -0- -0- -0- 9,600 153,504 ------------------ -------------- ------ ------------- 2,611,110 4,595,056 -0- 7,206,166 ------------------ -------------- ------ ------------- TELECOMMUNICATION SERVICES - 0.8% DIVERSIFIED TELECOMMUNICATION SERVICES - 0.4% CenturyTel, Inc. -0- -0- 17,400 721,404 -0- 17,400 721,404 China Netcom Group Corp. Ltd. 59,000 175,783 -0- -0- -0- 59,000 175,783 Nippon Telegraph & Telephone Corp. (a) 31 154,099 -0- -0- -0- 31 154,099 Telefonica SA 15,993 518,435 -0- -0- -0- 15,993 518,435 TeliaSonera AB (a) 17,574 164,186 -0- -0- -0- 17,574 164,186 ------------------ -------------- ------ ------------- 1,012,503 721,404 -0- 1,733,907 ------------------ -------------- ------ ------------- WIRELESS TELECOMMUNICATION SERVICES - 0.4% America Movil SAB de CV Series L (ADR) 6,800 417,452 -0- -0- -0- 6,800 417,452 Vodafone Group PLC 251,545 944,280 -0- -0- -0- 251,545 944,280 ------------------ -------------- ------ ------------- 1,361,732 -0- -0- 1,361,732 ------------------ -------------- ------- ------------- 2,374,235 721,404 -0- 3,095,639 ------------------ -------------- ------- ------------- Pro Forma
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ MEDICAL - 1.4% HEALTH & PERSONAL CARE - 1.4% AmerisourceBergen Corp.-Class A 5,000 $ 224,350 -0- $ -0- $ -0- 5,000 $ 224,350 Cardinal Health, Inc. 3,300 190,575 -0- -0- -0- 3,300 190,575 Eli Lilly & Co. 5,900 315,001 38,100 2,034,159 -0- 44,000 2,349,160 International Flavors & Fragrances, Inc. 1,550 74,601 -0- -0- -0- 1,550 74,601 McKesson Corp. 3,200 209,632 -0- -0- -0- 3,200 209,632 Pfizer, Inc. 48,100 1,093,313 59,600 1,354,708 -0- 107,700 2,448,021 ------------------ -------------- ------- ------------- 2,107,472 3,388,867 -0- 5,496,339 ------------------ -------------- ------- ------------- INDUSTRIAL COMMODITIES - 0.4% CHEMICALS - 0.3% Dow Chemical Co. 9,300 366,606 8,300 327,186 -0- 17,600 693,792 E.I. Du Pont de Nemours & Co. 8,700 383,583 -0- -0- -0- 8,700 383,583 Lubrizol Corp. 1,525 82,594 -0- -0- -0- 1,525 82,594 ------------------ -------------- ------- ------------- 832,783 327,186 -0- 1,159,969 ------------------ -------------- ------- ------------- CONTAINERS & PACKAGING - 0.0% Sonoco Products Co. 3,500 114,380 -0- -0- -0- 3,500 114,380 ------------------ -------------- ------- ------------- FOREST & PAPER - 0.0% Smurfit-Stone Container Corp. (b) 7,000 73,920 -0- -0- -0- 7,000 73,920 ------------------ -------------- ------- ------------- MISCELLANEOUS MATERIALS - 0.1% Bemis, Inc. 2,700 73,926 -0- -0- -0- 2,700 73,926 Owens-Illinois, Inc. (b) 3,300 163,350 -0- -0- -0- 3,300 163,350 ------------------ -------------- ------- ------------- 237,276 -0- -0- 237,276 ------------------ -------------- ------- ------------- 1,258,359 327,186 -0- 1,585,545 ------------------ -------------- ------- ------------- TECHNOLOGY/ELECTRONICS - 0.8% DATA PROCESSING - 0.6% Dell, Inc. (b) 6,600 161,766 -0- -0- -0- 6,600 161,766 Electronic Data Systems Corp. 3,200 66,336 -0- -0- -0- 3,200 66,336 International Business Machines Corp. 3,000 324,300 15,200 1,643,120 -0- 18,200 1,967,420 Sanmina-SCI Corp. (ADR) (b) 9,400 17,108 -0- -0- -0- 9,400 17,108 ------------------ -------------- ------- ------------- 569,510 1,643,120 -0- 2,212,630 ------------------ -------------- ------- ------------- ELECTRICAL & ELECTRONICS - 0.1% Lexmark International, Inc.- Class A (b) 4,100 142,926 -0- -0- -0- 4,100 142,926 Tech Data Corp. (b) 1,400 52,808 -0- -0- -0- 1,400 52,808 ------------------ -------------- ------- ------------- 195,734 -0- -0- 195,734 ------------------ -------------- ------- ------------- ELECTRONIC COMPONENTS & INSTRUMENTS - 0.1% Arrow Electronics, Inc. (b) 4,400 172,832 -0- -0- -0- 4,400 172,832 Avnet, Inc. (b) 6,100 213,317 -0- -0- -0- 6,100 213,317 Flextronics International Ltd. (b) 1,300 15,678 -0- -0- -0- 1,300 15,678 ------------------ -------------- ------- ------------- 401,827 -0- -0- 401,827 ------------------ -------------- ------- ------------- 1,167,071 1,643,120 -0- 2,810,191 ------------------ -------------- ------- ------------- CONSUMER GROWTH - 0.1% HOSPITAL SUPPLIES - 0.1% Johnson & Johnson 5,200 346,840 -0- -0- -0- 5,200 346,840 ------------------ -------------- ------- ------------- CONSUMER MANUFACTURING - 0.0% AUTO & RELATED - 0.0% AutoNation, Inc. (b) 7,500 117,450 -0- -0- -0- 7,500 117,450 ------------------ -------------- ------- ------------- NON-FINANCIAL - 0.0% HOME BUILDING - 0.0% Pulte Homes, Inc. 7,200 75,888 -0- -0- -0- 7,200 75,888 ------------------ -------------- ------- ------------- CONSTRUCTION & HOUSING - 0.0% REAL ESTATE - 0.0% Canadian Apartment Properties 1 16 -0- -0- -0- 1 16 ------------------ -------------- ------- ------------- Total Common Stocks (cost $119,710,792 and $90,864,744 131,288,970 109,454,544 -0- 240,743,514 ------------------ -------------- ------- ------------- MORTGAGE PASS-THRU'S - 4.9% FIXED RATE 30-YEAR - 3.5% Federal Gold Loan Mortgage Corp. Series 2005 4.50%, 8/01/35 239 225,592 $ -0- -0- $ -0- $ 239 225,592 Series 2006 7.00%, 8/01/36 -0- -0- 928 964,232 -0- 928 964,232 Series 2007 7.00%, 2/01/37 663 688,707 -0- -0- -0- 663 688,707 Federal Home Loan Mortgage Corp. Series 2007 5.50%, 7/01/35 252 252,418 -0- -0- -0- 252 252,418 Federal National Mortgage Association Series 2003 5.00%, 11/01/33 687 671,437 -0- -0- -0- 687 671,437 Series 2004 5.50%, 11/01/34 498 497,878 -0- -0- -0- 498 497,878 6.00%, 9/01/34 582 591,609 -0- -0- -0- 582 591,609
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ Series 2005 4.50%, 8/01/35 $ 725 $ 686,249 $ -0- $ -0- $ -0- $ 725 $ 686,249 Series 2006 5.00%, 2/01/36 925 903,100 -0- -0- -0- 925 903,100 6.50%, 9/01/36 2,449 2,517,625 525 539,491 -0- 2,974 3,057,116 Series 2007 4.50%, 9/01/35 - 8/01/37 1,741 1,649,530 -0- -0- -0- 1,741 1,649,530 5.00%, 7/01/36 279 272,857 -0- -0- -0- 279 272,857 5.50%, 8/01/37 2,850 2,863,828 -0- -0- -0- 2,850 2,863,828 ------------------ ------------- ------- ------------- 11,820,830 1,503,723 -0- 13,324,553 ------------------ ------------- ------- ------------- AGENCY ARMS - 1.1% Federal Home Loan Mortgage Corp. Series 2006 5.829%, 12/01/36 (c) 1,202 1,221,655 -0- -0- -0- 1,202 1,221,655 6.029%, 9/01/36 (c) -0- -0- 514 522,667 -0- 514 522,667 Series 2007 6.05%, 4/01/37 (c) -0- -0- 332 337,144 -0- 332 337,144 6.037%, 10/01/37 (c) 312 317,213 -0- -0- -0- 312 317,213 Federal National Mortgage Association Series 2005 5.322%, 9/01/35 (c) 87 87,406 -0- -0- -0- 87 87,406 Series 2006 5.463%, 5/01/36 (c) 63 63,894 -0- -0- -0- 63 63,894 5.799%, 3/01/36 (c) 147 149,549 -0- -0- -0- 147 149,549 5.851%, 11/01/36 (c) 115 117,133 -0- -0- -0- 115 117,133 5.916%, 6/01/36 (c) 107 109,612 -0- -0- -0- 107 109,612 Series 2007 5.769%, 1/01/37 (c) 161 163,491 -0- -0- -0- 161 163,491 5.925%, 2/01/37 (c) -0- -0- 527 536,241 -0- 527 536,241 6.025%, 11/01/36 (c) 110 112,123 -0- -0- -0- 110 112,123 6.027%, 2/01/37 (c) -0- -0- 326 332,401 -0- 326 332,401 6.081%, 3/01/37 (c) 305 311,244 -0- -0- -0- 305 311,244 ------------------ ------------- ------- ------------- 2,653,320 1,728,453 -0- 4,381,773 ------------------ ------------- ------- ------------- NON-AGENCY ARMS - 0.3% Bear Stearns Alt-A Trust Series 2006-1, Class 22A1 5.40%, 2/25/36 (d) 208 201,643 -0- -0- -0- 208 201,643 Series 2006-3, Class 22A1 6.218%, 5/25/36 (d) 64 62,260 230 224,826 -0- 294 287,086 Series 2007-1, Class 21A1 5.728%, 1/25/47 (d) 67 64,567 -0- -0- -0- 67 64,567 Citigroup Mortgage Loan Trust, Inc. Series 2005-2, Class 1A4 5.11%, 5/25/35 (d) 131 128,047 -0- -0- -0- 131 128,047 Series 2006-AR1, Class 3A1 5.50%, 3/25/36 (c) 143 142,861 -0- -0- -0- 143 142,861 Indymac Index Mortgage Loan Trust Series 2006-AR7, Class 4A1 6.228%, 5/25/36 (d) 88 87,521 -0- -0- -0- 88 87,521 Residential Funding Mortgage Securities, Inc. Series 2005-SA3, Class 3A 5.235%, 8/25/35 (d) 139 136,783 -0- -0- -0- 139 136,783 ------------------ ------------- ------- ------------- 823,682 224,826 -0- 1,048,508 ------------------ ------------- ------- ------------- Total Mortgage Pass-Thru's 15,297,832 3,457,002 -0- 18,754,834 (cost $15,105,886 and $3,442,539) ------------------ ------------- ------- ------------- U.S. TREASURIES - 6.0% U.S. Treasury Bonds 4.50%, 2/15/36 3,920 3,939,906 3,385 3,402,189 -0- 7,305 7,342,095 8.75%, 5/15/17 3 4,081 2,623 3,568,510 -0- 2,626 3,572,591 U.S. Treasury Notes 4.25%, 11/15/17 3,555 3,616,935 1,935 1,968,711 -0- 5,490 5,585,646 4.875%, 5/31/11 5,940 6,260,202 15 15,809 -0- 5,955 6,276,011 ------------------ ------------- ------- ------------- Total U.S. Treasuries 13,821,124 8,955,219 -0- 22,776,343 (cost $13,369,047 and $8,723,761) ------------------ ------------- ------- ------------- CORPORATES - INVESTMENT GRADES - 9.7% FINANCIAL INSTITUTIONS - 4.2% BANKING- 2.1% Bank of America Corp. 3.375%, 2/17/09 70 69,094 -0- -0- -0- 70 69,094 4.50%, 8/01/10 100 100,049 -0- -0- -0- 100 100,049 Bank of Tokyo-Mitsubishi UFJ L 7.40%, 6/15/11 -0- -0- 200 216,309 -0- 200 216,309 Barclays Bank PLC 8.55%, 6/15/11 (d)(e) -0- -0- 50 52,665 -0- 50 52,665 BB&T Capital Trust IV 6.82%, 6/12/57 (d) -0- -0- 175 164,635 -0- 175 164,635 Chase Manhattan Corp. 6.00%, 2/15/09 170 171,487 155 156,355 -0- 325 327,842 The Chuo Mitsui Trust & Banking Co., Ltd. 5.506%, 4/15/15 (d)(e) -0- -0- 300 275,847 -0- 300 275,847 Citicorp Series MTNF 6.375%, 11/15/08 31 31,421 30 30,407 -0- 61 61,828
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ Citigroup, Inc. 3.625%, 2/09/09 $ 135 $ 133,190 $ 160 $ 157,855 $ -0- $ 295 $ 291,045 4.625%, 8/03/10 75 74,591 -0- -0- -0- 75 74,591 5.286%, 6/09/09 (c) 20 19,846 -0- -0- -0- 20 19,846 Dresdner Funding Trust I 8.151%, 6/30/31 (e) -0- -0- 295 300,879 -0- 295 300,879 Fuji JGB Investment 9.87%, 6/30/08 (d)(e) -0- -0- 240 242,192 -0- 240 242,192 HBOS PLC 5.375%, 11/01/13 (d)(e) -0- -0- 250 227,905 -0- 250 227,905 6.413%, 10/01/35 (d)(e) -0- -0- 400 325,462 -0- 400 325,462 HSBC Bank USA 5.875%, 11/01/34 -0- -0- 310 284,479 -0- 310 284,479 JPMorgan Chase & Co. 6.75%, 2/01/11 80 83,999 -0- -0- -0- 80 83,999 JPMorgan Chase Capital XXV 6.80%, 10/01/37 51 49,035 -0- -0- -0- 51 49,035 Morgan J P & Co., Inc. 6.25%, 1/15/09 157 158,896 139 140,678 -0- 296 299,574 MUFG Capital Finance 1 Ltd. 6.346%, 7/25/16 (d) -0- -0- 170 161,013 -0- 170 161,013 National City Bk Of Ohio 6.25%, 3/15/11 250 257,080 -0- -0- -0- 250 257,080 Popular North America, Inc. 4.25%, 4/01/08 -0- -0- 470 468,995 -0- 470 468,995 Rabobank Capital Funding II 5.26%, 12/31/13 (d)(e) -0- -0- 230 214,286 -0- 230 214,286 RBS Capital Trust III 5.512%, 9/30/14 (d) -0- -0- 495 455,053 -0- 495 455,053 Regions Financing Trust II 6.625%, 5/15/47 (d) -0- -0- 170 140,485 -0- 170 140,485 Resona Preferred Global Securities 7.191%, 7/30/15 (d)(e) -0- -0- 413 409,794 -0- 413 409,794 Royal Bank Of Scotland Group PLC 6.40%, 4/01/09 108 109,969 -0- -0- -0- 108 109,969 7.648%, 9/30/31 (d) -0- -0- 250 257,934 -0- 250 257,934 SouthTrust Corp. 5.80%, 6/15/14 175 180,713 -0- -0- -0- 175 180,713 Sumitomo Mitsui Banking Corp. 5.625%, 10/15/15 (d)(e) -0- -0- 135 126,055 -0- 135 126,055 UBS Preferred Funding Trust I 8.622%, 10/01/10 (d) 40 43,129 -0- -0- -0- 40 43,129 UBS Preferred Funding Trust II 7.247%, 6/26/11 (d) -0- -0- 250 262,454 -0- 250 262,454 UBS Preferred Funding Trust V Series 1 6.243%, 5/15/16 (d) -0- -0- 465 447,729 -0- 465 447,729 UFJ Finance Aruba AEC 6.75%, 7/15/13 -0- -0- 335 363,934 -0- 335 363,934 Unicredito Italiano Capital Trust II 9.20%, 10/05/10 (d)(e) -0- -0- 330 359,623 -0- 330 359,623 Union Bank Of California 5.95%, 5/11/16 250 239,977 -0- -0- -0- 250 239,977 Wachovia Capital Trust III 5.80%, 3/15/11 (d) -0- -0- 85 75,952 -0- 85 75,952 Wachovia Corp. 5.625%, 12/15/08 46 45,911 -0- -0- -0- 46 45,911 Washington Mutual, Inc. 4.20%, 1/15/10 14 12,507 13 11,614 -0- 27 24,121 Wells Fargo & Co. 4.20%, 1/15/10 35 34,779 -0- -0- -0- 35 34,779 Zions Bancorporation 5.50%, 11/16/15 35 32,823 -0- -0- -0- 35 32,823 ------------------ ------------- ------- ------------- 1,848,496 6,330,589 -0- 8,179,085 ------------------ ------------- ------- ------------- BROKERAGE - 0.6% The Bear Stearns Co., Inc. 5.55%, 1/22/17 165 147,875 -0- -0- -0- 165 147,875 5.70%, 11/15/14 145 137,503 -0- -0- -0- 145 137,503 7.625%, 12/07/09 98 100,742 -0- -0- -0- 98 100,742 The Goldman Sachs Group, Inc. 3.875%, 1/15/09 134 132,628 126 124,710 -0- 260 257,338 4.75%, 7/15/13 35 34,282 325 334,367 -0- 360 368,649 5.70%, 9/01/12 -0- -0- 34 35,536 -0- 34 35,536 7.35%, 10/01/09 36 37,626 -0- -0- -0- 36 37,626 Lehman Brothers Holdings, Inc. 5.00%, 1/14/11 60 59,118 -0- -0- -0- 60 59,118 6.20%, 9/26/14 33 33,610 -0- -0- -0- 33 33,610 6.50%, 7/19/17 54 54,640 -0- -0- -0- 54 54,640 7.875%, 11/01/09 75 78,169 -0- -0- -0- 75 78,169 7.875%, 8/15/10 -0- -0- 150 158,984 -0- 150 158,984 Series MTNG 4.80%, 3/13/14 42 39,089 -0- -0- -0- 42 39,089 Merrill Lynch & Co., Inc. 4.79%, 8/04/10 105 104,042 -0- -0- -0- 105 104,042
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ 6.00%, 2/17/09 $ 47 $ 47,384 $ -0- $ -0- $ -0- $ 47 $ 47,384 6.05%, 5/16/16 145 142,473 -0- -0- -0- 145 142,473 Series MTNC 4.125%, 1/15/09 52 51,322 47 46,387 -0- 99 97,709 4.125%, 9/10/09 -0- -0- 160 157,434 -0- 160 157,434 ------------------ ------------- ------- ------------- 1,200,503 857,418 -0- 2,057,921 ------------------ ------------- ------- ------------- FINANCE - 0.8% Capital One Bank 4.25%, 12/01/08 160 156,569 -0- -0- -0- 160 156,569 6.50%, 6/13/13 -0- -0- 200 196,179 -0- 200 196,179 Capital One Financial Corp. 5.50%, 6/01/15 20 18,447 23 21,214 -0- 43 39,661 6.75%, 9/15/17 43 41,242 -0- -0- -0- 43 41,242 CIT Group, Inc. 3.375%, 4/01/09 -0- -0- 150 144,539 -0- 150 144,539 5.00%, 2/01/15 75 65,195 -0- -0- -0- 75 65,195 5.125%, 9/30/14 40 35,235 -0- -0- -0- 40 35,235 5.85%, 9/15/16 150 132,432 -0- -0- -0- 150 132,432 7.625%, 11/30/12 135 136,837 -0- -0- -0- 135 136,837 Countrywide Financial Corp. 6.25%, 5/15/16 58 33,383 297 170,944 -0- 355 204,327 Series MTN 5.80%, 6/07/12 75 54,787 86 62,823 -0- 161 117,610 Countrywide Home Loans, Inc. Series MTNL 4.00%, 3/22/11 69 49,822 10 7,221 -0- 79 57,043 General Electric Capital Corp. 4.375%, 11/21/11 25 24,803 -0- -0- -0- 25 24,803 5.875%, 2/15/12 -0- -0- 285 296,943 -0- 285 296,943 6.75%, 3/15/32 135 153,277 -0- -0- -0- 135 153,277 Household Finance Corp. 4.125%, 12/15/08 90 89,176 -0- -0- -0- 90 89,176 HSBC Finance Corp. 6.50%, 11/15/08 80 80,878 -0- -0- -0- 80 80,878 7.00%, 5/15/12 85 89,060 -0- -0- -0- 85 89,060 International Lease Finance Corp. 6.375%, 3/15/09 -0- -0- 150 151,696 -0- 150 151,696 iStar Financial, Inc. 5.15%, 3/01/12 50 43,211 30 25,926 -0- 80 69,137 5.65%, 9/15/11 95 84,894 -0- -0- -0- 95 84,894 6.00%, 12/15/10 -0- -0- 200 182,064 -0- 200 182,064 Series B 5.95%, 10/15/13 -0- -0- 65 56,640 -0- 65 56,640 SLM Corp. 4.50%, 7/26/10 55 50,446 -0- -0- -0- 55 50,446 5.375%, 1/15/13 - 5/15/14 375 334,306 190 169,964 -0- 565 504,270 ------------------ ------------- ------- ------------- 1,674,000 1,486,153 -0- 3,160,153 ------------------ ------------- ------- ------------- INSURANCE - 0.7% The Allstate Corp. 6.125%, 5/15/37 (d) -0- -0- 160 154,371 -0- 160 154,371 American RE Corp. Series B 7.45%, 12/15/26 -0- -0- 140 144,875 -0- 140 144,875 Assurant, Inc. 5.625%, 2/15/14 35 34,250 -0- -0- -0- 35 34,250 Berkshire Hathaway Finance Corp. 4.20%, 12/15/10 50 50,259 -0- -0- -0- 50 50,259 CNA Financial Corp. 5.85%, 12/15/14 -0- -0- 85 85,140 -0- 85 85,140 Hartford Financial Services Group, Inc. 6.375%, 11/01/08 -0- -0- 125 126,364 -0- 125 126,364 ING Groep NV 5.775%, 12/08/15 (d) -0- -0- 470 433,523 -0- 470 433,523 Liberty Mutual Group, Inc. 5.75%, 3/15/14 (e) 35 35,644 200 203,683 -0- 235 239,327 Lincoln National Corp. 7.00%, 5/17/66 (d) -0- -0- 345 346,388 -0- 345 346,388 North Front Pass Through Trust 5.81%, 12/15/24 (d)(e) -0- -0- 500 478,409 -0- 500 478,409 UnitedHealth Group, Inc. 4.125%, 8/15/09 67 66,603 -0- -0- -0- 67 66,603 5.25%, 3/15/11 165 166,846 110 111,231 -0- 275 278,077 WellPoint, Inc. 4.25%, 12/15/09 80 79,071 -0- -0- -0- 80 79,071 5.25%, 1/15/16 -0- -0- 75 72,613 -0- 75 72,613 ------------------ ------------- ------- ------------- 432,673 2,156,597 -0- 2,589,270 ------------------ ------------- ------- ------------- 5,155,672 10,830,757 -0- 15,986,429 ------------------ ------------- ------- ------------- INDUSTRIAL - 4.7% BASIC - 0.4% The Dow Chemical Co. 7.375%, 11/01/29 10 10,999 15 16,499 -0- 25 27,498
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ Eastman Chemical Co. 7.25%, 1/15/24 $ -0- $ -0- $ 100 $ 108,861 $ -0- $ 100 $ 108,861 Inco Ltd. 7.75%, 5/15/12 -0- -0- 325 354,574 -0- 325 354,574 International Paper Co. 5.30%, 4/01/15 55 53,681 -0- -0- -0- 55 53,681 International Steel Group, Inc. 6.50%, 4/15/14 60 61,609 -0- -0- -0- 60 61,609 Lubrizol Corp. 4.625%, 10/01/09 20 20,085 -0- -0- -0- 20 20,085 5.50%, 10/01/14 -0- -0- 180 178,707 -0- 180 178,707 Noranda, Inc. 6.00%, 10/15/15 -0- -0- 205 207,850 -0- 205 207,850 Southern Copper Corp. 7.50%, 7/27/35 -0- -0- 195 206,526 -0- 195 206,526 Westvaco Corp. 8.20%, 1/15/30 15 16,038 -0- -0- -0- 15 16,038 Weyerhaeuser Co. 5.95%, 11/01/08 35 35,284 -0- -0- -0- 35 35,284 7.375%, 3/15/32 -0- -0- 170 170,603 -0- 170 170,603 ------------------ ------------- ------- ------------- 197,696 1,243,620 -0- 1,441,316 ------------------ ------------- ------- ------------- CAPITAL GOODS - 0.3% Boeing Capital Corp. 4.75%, 8/25/08 35 35,119 -0- -0- -0- 35 35,119 CRH America, Inc. 6.00%, 9/30/16 -0- -0- 90 88,019 -0- 90 88,019 Caterpillar Financial Services 4.50%, 6/15/09 46 46,017 -0- -0- -0- 46 46,017 Hanson Australia Funding Ltd. 5.25%, 3/15/13 -0- -0- 120 119,726 -0- 120 119,726 Hutchison Whampoa International Ltd. 7.45%, 11/24/33 (e) -0- -0- 100 114,047 -0- 100 114,047 Masco Corp. 7.75%, 8/01/29 -0- -0- 165 178,625 -0- 165 178,625 Textron Financial Corp. 4.125%, 3/03/08 80 79,922 -0- -0- -0- 80 79,922 Tyco International Group SA 6.00%, 11/15/13 85 87,366 115 118,202 -0- 200 205,568 Waste Management, Inc. 6.375%, 11/15/12 -0- -0- 175 185,031 -0- 175 185,031 6.875%, 5/15/09 40 41,067 -0- -0- -0- 40 41,067 ------------------ ------------- ------- ------------- 289,491 803,650 -0- 1,093,141 ------------------ ------------- ------- ------------- COMMUNICATIONS - MEDIA - 0.6% BSKYB Finance UK PLC 5.625%, 10/15/15 (e) -0- -0- 85 83,633 -0- 85 83,633 British Sky Broadcasting PLC 8.20%, 7/15/09 20 20,924 -0- -0- -0- 20 20,924 Comcast Cable Communications Holdings, Inc. 9.455%, 11/15/22 55 69,940 -0- -0- -0- 55 69,940 Comcast Cable Communications, Inc. 6.20%, 11/15/08 66 66,537 -0- -0- -0- 66 66,537 6.875%, 6/15/09 50 51,429 -0- -0- -0- 50 51,429 Comcast Corp. 5.30%, 1/15/14 40 39,224 -0- -0- -0- 40 39,224 5.50%, 3/15/11 50 50,478 -0- -0- -0- 50 50,478 Cox Enterprises, Inc. 4.375%, 5/01/08 (e) 40 39,872 -0- -0- -0- 40 39,872 News America Holdings, Inc. 8.25%, 10/17/96 -0- -0- 60 69,688 -0- 60 69,688 9.25%, 2/01/13 -0- -0- 65 75,978 -0- 65 75,978 News America, Inc. 5.30%, 12/15/14 -0- -0- 190 189,022 -0- 190 189,022 6.55%, 3/15/33 45 44,950 -0- -0- -0- 45 44,950 RR Donnelley & Sons Co. 4.95%, 4/01/14 25 23,570 -0- -0- -0- 25 23,570 5.50%, 5/15/15 -0- -0- 185 178,004 -0- 185 178,004 The Thomson Corp. 5.75%, 2/01/08 -0- -0- 460 459,876 -0- 460 459,876 Time Warner Cos., Inc. 7.57%, 2/01/24 -0- -0- 70 75,918 -0- 70 75,918 Time Warner Entertainment Co. 8.375%, 3/15/23 130 153,126 250 294,474 -0- 380 447,600 Viacom, Inc. 7.875%, 7/30/30 -0- -0- 60 65,117 -0- 60 65,117 WPP Finance Corp. 5.875%, 6/15/14 25 26,606 125 133,030 -0- 150 159,636 ------------------ ------------- ------- ------------- 586,656 1,624,740 -0- 2,211,396 ------------------ ------------- ------- -------------
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ COMMUNICATIONS - TELECOMMUNICATIONS - 1.2% AT&T Corp. 7.30%, 11/15/11 $ 40 $ 43,340 $ 250 $ 270,877 $ -0- $ 290 $ 314,217 8.00%, 11/15/31 15 18,421 -0- -0- -0- 15 18,421 Bellsouth Capital Funding Corp. 7.12%, 7/15/97 -0- -0- 360 376,225 -0- 360 376,225 BellSouth Corp. 5.20%, 9/15/14 -0- -0- 270 269,465 -0- 270 269,465 British Telecommunications PLC 8.625%, 12/15/10 100 109,735 -0- -0- -0- 100 109,735 Embarq Corp. 6.738%, 6/01/13 5 5,172 250 258,594 -0- 255 263,766 7.082%, 6/01/16 240 247,291 280 288,507 -0- 520 535,798 GTE Corp. 8.75%, 11/01/21 -0- -0- 270 330,870 -0- 270 330,870 New Cingular Wireless Services, Inc. 7.875%, 3/01/11 95 102,882 -0- -0- -0- 95 102,882 8.75%, 3/01/31 50 64,799 155 200,877 -0- 205 265,676 Nextel Communications, Inc. Series E 6.875%, 10/31/13 45 44,332 -0- -0- -0- 45 44,332 Series F 5.95%, 3/15/14 -0- -0- 165 155,095 -0- 165 155,095 Qwest Corp. 5.625%, 11/15/08 110 109,450 -0- -0- -0- 110 109,450 7.50%, 10/01/14 -0- -0- 165 167,475 -0- 165 167,475 7.875%, 9/01/11 150 156,000 115 119,600 -0- 265 275,600 8.875%, 3/15/12 110 117,700 -0- -0- -0- 110 117,700 Sprint Capital Corp. 8.375%, 3/15/12 120 129,963 -0- -0- -0- 120 129,963 Telecom Italia Capital SA 4.00%, 1/15/10 120 117,532 -0- -0- -0- 120 117,532 6.00%, 9/30/34 65 63,206 -0- -0- -0- 65 63,206 Telefonos de Mexico SAB de CV 4.50%, 11/19/08 157 156,231 139 138,319 -0- 296 294,550 Telus Corp. 8.00%, 6/01/11 -0- -0- 100 108,347 -0- 100 108,347 Verizon Communications, Inc. 4.90%, 9/15/15 35 34,049 -0- -0- -0- 35 34,049 Verizon New Jersey, Inc. Series A 5.875%, 1/17/12 45 46,341 -0- -0- -0- 45 46,341 Verizon Virginia, Inc. Series A 4.625%, 3/15/13 -0- -0- 365 352,558 -0- 365 352,558 Vodafone Group PLC 5.50%, 6/15/11 60 60,637 -0- -0- -0- 60 60,637 7.875%, 2/15/30 -0- -0- 155 182,617 -0- 155 182,617 ------------------ ------------- ------- ------------- 1,627,081 3,219,426 -0- 4,846,507 ------------------ ------------- ------- ------------- CONSUMER CYCLICAL - AUTOMOTIVE - 0.0% DaimlerChrysler North America 4.875%, 6/15/10 25 24,889 70 69,689 -0- 95 94,578 ------------------ ------------- ------- ------------- CONSUMER CYCLICAL - OTHER - 0.2% Centex Corp. 5.45%, 8/15/12 164 144,247 -0- -0- -0- 164 144,247 Starwood Hotels & Resorts Worldwide, Inc. 7.375%, 11/15/15 81 83,622 141 145,564 -0- 222 229,186 7.875%, 5/01/12 84 89,259 98 104,135 -0- 182 193,394 Toll Brothers Finance Corp. 5.15%, 5/15/15 20 18,149 30 27,224 -0- 50 45,373 6.875%, 11/15/12 40 39,071 -0- -0- -0- 40 39,071 ------------------ ------------- ------- ------------- 374,348 276,923 -0- 651,271 ------------------ ------------- ------- ------------- CONSUMER CYCLICAL - RETAILERS - 0.1% CVS Corp. 6.125%, 8/15/16 -0- -0- 150 153,973 -0- 150 153,973 Ltd. Brands, Inc. 6.90%, 7/15/17 25 24,155 -0- -0- -0- 25 24,155 ------------------ ------------- ------- ------------- 24,155 153,973 -0- 178,128 ------------------ ------------- ------- ------------- CONSUMER NON-CYCLICAL - 1.0% Altria Group, Inc. 7.75%, 1/15/27 85 109,513 145 186,817 -0- 230 296,330 Anheuser-Busch Cos., Inc. 6.50%, 2/01/43 -0- -0- 100 107,125 -0- 100 107,125 Bristol-Myers Squibb Co. 6.875%, 8/01/97 -0- -0- 425 448,722 -0- 425 448,722 Bunge Ltd Finance Corp. 5.10%, 7/15/15 69 65,352 -0- -0- -0- 69 65,352 Cadbury Schweppes US Finance LLC 5.125%, 10/01/13 (e) 135 134,921 190 189,889 -0- 325 324,810 ConAgra Foods, Inc. 7.875%, 9/15/10 19 20,394 -0- -0- -0- 19 20,394 Fisher Scientific International, Inc. 6.125%, 7/01/15 19 18,873 410 407,267 -0- 429 426,140 6.75%, 8/15/14 29 29,724 -0- -0- -0- 29 29,724 Pro Forma
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ Kraft Foods, Inc. 4.125%, 11/12/09 $ 115 $ 114,008 $ -0- $ -0- $ -0- $ 115 $ 114,008 5.25%, 10/01/13 -0- -0- 150 147,473 -0- 150 147,473 Reynolds American, Inc. 7.25%, 6/01/12 -0- -0- 160 168,906 -0- 160 168,906 7.25%, 6/01/13 150 158,660 -0- -0- -0- 150 158,660 7.625%, 6/01/16 145 154,134 160 170,079 -0- 305 324,213 Safeway, Inc. 4.125%, 11/01/08 18 17,806 -0- -0- -0- 18 17,806 4.95%, 8/16/10 -0- -0- 400 402,100 -0- 400 402,100 5.80%, 8/15/12 -0- -0- 155 160,374 -0- 155 160,374 6.50%, 3/01/11 15 15,693 -0- -0- -0- 15 15,693 Tyson Foods, Inc. 6.85%, 4/01/16 150 153,923 -0- -0- -0- 150 153,923 Wyeth 5.50%, 2/01/14 40 40,627 -0- -0- -0- 40 40,627 6.50%, 2/01/34 -0- -0- 285 302,477 -0- 285 302,477 ------------------ ------------- ------- ------------- 1,033,628 2,691,229 -0- 3,724,857 ------------------ ------------- ------- ------------- ENERGY - 0.4% Amerada Hess Corp. 7.30%, 8/15/31 -0- -0- 140 157,258 -0- 140 157,258 7.875%, 10/01/29 55 65,099 -0- -0- -0- 55 65,099 Gazprom 6.212%, 11/22/16 (e) 315 305,613 350 339,570 -0- 665 645,183 Norsk Hydro 6.36%, 1/15/09 -0- -0- 45 45,712 -0- 45 45,712 Transocean, Inc. 7.50%, 4/15/31 -0- -0- 155 170,273 -0- 155 170,273 Valero Energy Corp. 4.75%, 6/15/13 -0- -0- 125 121,198 -0- 125 121,198 6.875%, 4/15/12 45 48,017 -0- -0- -0- 45 48,017 XTO Energy, Inc. 7.50%, 4/15/12 -0- -0- 100 109,315 -0- 100 109,315 ------------------ ------------- ------- ------------- 418,729 943,326 -0- 1,362,055 ------------------ ------------- ------- ------------- SERVICES - 0.1% The Western Union Co. 5.93%, 10/01/16 -0- -0- 315 314,329 -0- 315 314,329 ------------------ ------------- ------- ------------- TECHNOLOGY - 0.4% Electronic Data Systems Corp. Series B 6.50%, 8/01/13 145 146,617 310 313,458 -0- 455 460,075 Hewlett-Packard Co. 3.625%, 3/15/08 -0- -0- 475 473,895 -0- 475 473,895 International Business Machines Corp. 4.375%, 6/01/09 20 20,183 -0- -0- -0- 20 20,183 Motorola, Inc. 6.50%, 9/01/25 70 67,977 105 101,966 -0- 175 169,943 7.50%, 5/15/25 15 15,961 20 21,281 -0- 35 37,242 7.625%, 11/15/10 5 5,356 64 68,552 -0- 69 73,908 Xerox Corp. 7.625%, 6/15/13 30 31,306 35 36,524 -0- 65 67,830 9.75%, 1/15/09 111 116,041 104 108,723 -0- 215 224,764 ------------------ ------------- ------- ------------- 403,441 1,124,399 -0- 1,527,840 ------------------ ------------- ------- ------------- TRANSPORTATION - AIRLINES - 0.1% Southwest Airlines Co. 5.25%, 10/01/14 -0- -0- 415 404,449 -0- 415 404,449 Transportation - Railroads - 0.1% CSX Corp. 5.50%, 8/01/13 -0- -0- 50 49,835 -0- 50 49,835 Norfolk Southern Corp. 7.90%, 5/15/97 -0- -0- 45 52,103 -0- 45 52,103 ------------------ ------------- ------- ------------- -0- 506,387 -0- 506,387 ------------------ ------------- ------- ------------- 4,980,114 12,971,691 -0- 17,951,805 ------------------ ------------- ------- ------------- REITS - 0.1% Regency Centers LP 5.25%, 8/01/15 -0- -0- 225 213,260 -0- 225 213,260 ------------------ ------------- ------- ------------- UTILITY - 0.7% ELECTRIC - 0.4% Carolina Power & Light Co. 6.50%, 7/15/12 65 69,181 -0- -0- -0- 65 69,181 Consumers Energy Co. Series C 4.25%, 4/15/08 25 24,916 -0- -0- -0- 25 24,916 Series D 5.375%, 4/15/13 -0- -0- 215 214,405 -0- 215 214,405 Dominion Resources, Inc./VA 7.50%, 6/30/66 (d) -0- -0- 305 301,543 -0- 305 301,543 Exelon Corp. 6.75%, 5/01/11 25 26,148 -0- -0- -0- 25 26,148 FPL Group Capital, Inc. 6.35%, 10/01/66 (d) -0- -0- 55 52,018 -0- 55 52,018 6.65%, 6/15/67 (d) -0- -0- 170 163,729 -0- 170 163,729
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ FirstEnergy Corp. Series B 6.45%, 11/15/11 $ 65 $ 67,120 $ -0- $ -0- $ -0- $ 65 $ 67,120 Series C 7.375%, 11/15/31 85 93,265 -0- -0- -0- 85 93,265 MidAmerican Energy Holdings Co. 5.875%, 10/01/12 30 31,094 -0- -0- -0- 30 31,094 Nisource Finance Corp. 7.875%, 11/15/10 40 42,433 -0- -0- -0- 40 42,433 Pacific Gas & Electric Co. 4.80%, 3/01/14 65 63,194 -0- -0- -0- 65 63,194 Progress Energy, Inc. 7.10%, 3/01/11 19 20,220 -0- -0- -0- 19 20,220 Public Service Company of Colorado 7.875%, 10/01/12 30 33,666 -0- -0- -0- 30 33,666 SPI Electricity & Gas Australia Holdings Pty Ltd. 6.15%, 11/15/13 (e) 238 242,852 250 255,096 -0- 488 497,948 ------------------ ------------- ------- ------------- 714,089 986,791 -0- 1,700,880 ------------------ ------------- ------- ------------- NATURAL GAS - 0.3% CenterPoint Energy Resources Corp. Series B 7.875%, 4/01/13 -0- -0- 285 312,926 -0- 285 312,926 Duke Energy Field Services Corp. 7.875%, 8/16/10 15 16,091 -0- -0- -0- 15 16,091 Enterprise Products Operating LP Series B 5.60%, 10/15/14 25 24,950 150 149,699 -0- 175 174,649 Texas Eastern Transmission Corp. 7.30%, 12/01/10 -0- -0- 350 375,188 -0- 350 375,188 TransCanada Pipelines Ltd. 6.35%, 5/15/67 (d) -0- -0- 180 168,710 -0- 180 168,710 Williams Cos., Inc. 7.875%, 9/01/21 40 44,350 -0- -0- -0- 40 44,350 ------------------ ------------- ------- ------------- 85,391 1,006,523 -0- 1,091,914 ------------------ ------------- ------- ------------- 799,480 1,993,314 -0- 2,792,794 ------------------ ------------- ------- ------------- NON CORPORATE SECTORS - 0.0% AGENCIES - NOT GOVERNMENT GUARANTEED - 0.0% Petronas Capital, Ltd. 7.00%, 5/22/12 (e) -0- -0- 150 163,316 -0- 150 163,316 ------------------ ------------- ------- ------------- Total Corporates - Investment Grades (cost $11,025,886 and $26,585,983) 10,935,266 26,172,338 -0- 37,107,604 ------------------ ------------- ------- ------------- COMMERCIAL MORTGAGE-BACKED SECURITIES - 3.2% NON-AGENCY FIXED RATE CMBS - 3.2% Banc of America Commercial Mortgage, Inc. Series 2001-PB1, Class A2 5.787%, 5/11/35 164 167,898 1,526 1,563,852 -0- 1,690 1,731,750 Series 2004-4, Class A3 4.128%, 7/10/42 200 197,530 -0- -0- -0- 200 197,530 Series 2004-6, Class A2 4.161%, 12/10/42 140 137,776 -0- -0- -0- 140 137,776 Series 2005-6, Class A4 5.181%, 9/10/47 315 310,604 -0- -0- -0- 315 310,604 Series 2006-5, Class A4 5.414%, 9/10/47 355 355,201 -0- -0- -0- 355 355,201 Bear Stearns Commercial Mortgage Securities, Inc. 5.70%, 6/11/50 365 376,041 -0- -0- -0- 365 376,041 Series 2006-PW12, Class A4 5.711%, 9/11/38 100 102,615 -0- -0- -0- 100 102,615 Citigroup Commercial Mortgage Trust Series 2004-C1, Class A4 5.529%, 4/15/40 (d) 110 111,331 -0- -0- -0- 110 111,331 Credit Suisse First Boston Mortgage Securities Corp. Series 2003-CK2, Class A2 3.861%, 3/15/36 32 32,065 -0- -0- -0- 32 32,065 Series 2004-C1, Class A4 4.75%, 1/15/37 (d) 70 68,342 -0- -0- -0- 70 68,342 Credit Suisse Mortgage Capital Certificates Series 2006-C3, Class A3 5.827%, 6/15/38 (d) 90 92,952 -0- -0- -0- 90 92,952 Series 2006-C4, Class A3 5.467%, 9/15/39 235 235,629 -0- -0- -0- 235 235,629 GE Capital Commercial Mortgage Corp. Series 2005-C3, Class A3FX 4.863%, 7/10/45 360 358,003 -0- -0- -0- 360 358,003 Greenwich Capital Commercial Funding Corp. Series 2007-GG9, Class A4 5.444%, 3/10/39 215 216,269 -0- -0- -0- 215 216,269 GS Mortgage Securities Corp. II Series 2001-ROCK, Class C 6.878%, 5/03/18 (e) 605 639,962 -0- -0- -0- 605 639,962
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ Series 2004-GG2, Class A6 5.396%, 8/10/38 $ 80 $ 80,544 $ 600 $ 604,080 $ -0- $ 680 $ 684,624 Series 2007-GG10, Class A2 5.778%, 8/10/45 490 499,415 -0- -0- -0- 490 499,415 JPMorgan Chase Commercial Mortgage Securities Corp. Series 2004-C1, Class A2 4.302%, 1/15/38 60 58,895 -0- -0- -0- 60 58,895 Series 2005-CB11, Class A4 5.335%, 8/12/37 170 170,349 -0- -0- -0- 170 170,349 Series 2005-LDP3, Class A2 4.851%, 8/15/42 100 99,324 -0- -0- -0- 100 99,324 Series 2005-LDP4, Class A2 4.79%, 10/15/42 210 208,337 -0- -0- -0- 210 208,337 Series 2005-LDP5, Class A2 5.198%, 12/15/44 60 60,043 -0- -0- -0- 60 60,043 Series 2006-CB14, Class A4 5.481%, 12/12/44 (d) 50 50,178 -0- -0- -0- 50 50,178 Series 2006-CB15, Class A4 5.814%, 6/12/43 (d) 110 112,971 -0- -0- -0- 110 112,971 Series 2006-CB16, Class A4 5.552%, 5/12/45 200 201,766 -0- -0- -0- 200 201,766 Series 2006-CB17, Class A4 5.429%, 12/12/43 350 351,943 -0- -0- -0- 350 351,943 LB-UBS Commercial Mortgage Trust Series 2003-C3, Class A4 4.166%, 5/15/32 150 143,440 -0- -0- -0- 150 143,440 Series 2004-C4, Class A4 5.296%, 6/15/29 40 40,520 -0- -0- -0- 40 40,520 Series 2004-C8, Class A2 4.201%, 12/15/29 125 123,152 -0- -0- -0- 125 123,152 Series 2005-C1, Class A4 4.742%, 2/15/30 120 116,572 -0- -0- -0- 120 116,572 Series 2005-C7, Class A4 5.197%, 11/15/30 50 48,932 -0- -0- -0- 50 48,932 Series 2006-C3, Class A4 5.661%, 3/15/39 (d) 285 290,049 -0- -0- -0- 285 290,049 Series 2006-C4, Class A4 5.883%, 6/15/38 (d) 275 285,381 -0- -0- -0- 275 285,381 Series 2006-C6, Class A4 5.372%, 9/15/39 330 329,097 235 234,357 -0- 565 563,454 Series 2007-C6, Class A4 5.858%, 7/15/40 210 217,192 -0- -0- -0- 210 217,192 Series 2007-C7, Class A3 5.866%, 9/15/45 -0- -0- 620 641,337 -0- 620 641,337 Merrill Lynch Mortgage Trust Series 2005-CKI1, Class A6 5.244%, 11/12/37 (d) 40 39,871 -0- -0- -0- 40 39,871 Series 2005-MKB2, Class A2 4.806%, 9/12/42 320 318,394 -0- -0- -0- 320 318,394 Merrill Lynch/Countrywide Commercial Mortgage Trust Series 2006-2, Class A4 6.105%, 6/12/46 (d) 110 114,209 -0- -0- -0- 110 114,209 Series 2006-3, Class A4 5.414%, 7/12/46 (d) 280 279,856 -0- -0- -0- 280 279,856 Morgan Stanley Capital I Series 2004-HQ4, Class A5 4.59%, 4/14/40 190 187,626 -0- -0- -0- 190 187,626 Series 2005-HQ5, Class A4 5.168%, 1/14/42 -0- -0- 1,035 1,029,128 -0- 1,035 1,029,128 Series 2007-T27, Class A4 5.651%, 6/13/42 210 215,469 -0- -0- -0- 210 215,469 ------------------ ------------- ------- ------------- 8,045,743 4,072,754 -0- 12,118,497 ------------------ ------------- ------- ------------- NON-AGENCY ADJUSTABLE RATE CMBS - 0.0% GS Mortgage Securities Corp. II Series 2007-EOP, Class E 5.692%, 3/06/20 (c)(e) 75 72,281 -0- -0- -0- 75 72,281 ------------------ ------------- ------- ------------- Total Commercial Mortgage- Backed Securities (cost $8,007,866 and $4,046,251) 8,118,024 4,072,754 -0- 12,190,778 ------------------ ------------- ------- ------------- GOVERNMENT-RELATED - U.S. AGENCIES - 2.0% AGENCY DEBENTURES - 2.0% Federal Home Loan Bank 4.625%, 10/10/12 470 483,739 -0- -0- -0- 470 483,739 5.00%, 11/17/17 3,120 3,234,931 655 679,128 -0- 3,775 3,914,059 Federal Home Loan Mortgage Corp. 5.125%, 11/17/17 2,670 2,785,988 245 255,643 -0- 2,915 3,041,631 Federal National Mortgage Association Series 2005 3.875%, 2/15/10 200 201,339 -0- -0- -0- 200 201,339 ------------------ ------------- ------- ------------- Total Government-Related - U.S. Agencies (cost $6,639,440 and $919,607) 6,705,997 934,771 -0- 7,640,768 ------------------ ------------- ------- -------------
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ GOVERNMENT-RELATED - U.S. OTHER ISSUERS - 0.1% TEXAS - 0.1% Dallas-Fort Worth Int'l Arpt Fac Impr Corp. MBIA FSA 7.07%, 11/01/24 $ -0- $ -0- $ 400 $ 413,528 $ -0- $ 400 $ 413,528 (cost $409,203) ------------------ ------------- ------- ------------- -0- 413,528 -0- 413,528 ------------------ ------------- ------- ------------- GOVERNMENT-RELATED - FOREIGN AGENCIES - 0.9% Development Bank of Japan 1.75%, 6/21/10 JPY 200,000 1,830,694 JPY -0- -0- -0- JPY 200,000 1,830,694 Kreditanstalt fuer Wiederaufbau 1.75%, 3/23/10 (a) 114,000 1,041,107 -0- -0- -0- 114,000 1,041,107 Series INTL 1.85%, 9/20/10 (a) 64,000 587,937 -0- -0- -0- 64,000 587,937 ------------------ ------------- ------- ------------- Total Government-Related - Foreign Agencies (cost $3,315,964) 3,459,738 -0- -0- 3,459,738 ------------------ ------------- ------- ------------- EMERGING MARKETS - NON-INVESTMENT GRADES - 1.1% NON CORPORATE SECTORS - 1.1% SOVEREIGN - 1.1% Republic of Brazil 8.25%, 1/20/34 (a) $ 725 $ 917,125 $ 855 $ 1,081,575 $ -0- $ 1,580 $ 1,998,700 Republic of Panama 9.375%, 4/01/29 (a) 200 273,000 270 368,550 -0- 470 641,550 Republic of Peru 7.35%, 7/21/25 (a) 215 245,100 -0- -0- -0- 215 245,100 8.75%, 11/21/33 185 245,125 395 523,375 -0- 580 768,500 Republic of Philippines 8.25%, 1/15/14 261 292,320 231 258,720 -0- 492 551,040 8.875%, 3/17/15 46 54,119 44 51,766 -0- 90 105,885 ------------------ ------------- ------- ------------- Total Emerging Markets - Non-Investment Grades (cost $1,913,602 and $2,286,763) 2,026,789 2,283,986 -0- 4,310,775 ------------------ ------------- ------- ------------- GOVERNMENT-RELATED - SOVEREIGNS - 0.5% Government of Poland Series 1110 6.00%, 11/24/10 (a) PLN 1,745 706,841 PLN -0- -0- PLN -0- PLN 1,745 706,841 Mexican Bonos Series MI10 8.00%, 12/19/13 MXN 14,185 1,296,569 MXN -0- -0- MXN -0- MXN 14,185 1,296,569 ------------------ ------------- ------- ------------- Total Government-Related - Sovereigns (cost $2,013,711) 2,003,410 -0- -0- 2,003,410 ------------------ ------------- ------- ------------- ASSET-BACKED SECURITIES - 0.9% HOME EQUITY LOANS - FLOATING RATE - 0.6% Bear Stearns Asset Backed Securities, Inc. Series 2005-SD1, Class 1A1 5.015%, 4/25/22 (c) $ 2 $ 2,214 $ -0- $ -0- $ -0- $ 2 $ 2,214 Series 2007-HE3, Class M1 5.315%, 4/25/37 (c) 100 64,310 -0- -0- -0- 100 64,310 Credit-Based Asset Servicing & Securities, Inc. Series 2005-CB7, Class AF2 5.147%, 11/25/35 (f) 88 87,025 83 81,906 -0- 171 168,931 Home Equity Asset Trust Series 2007-3, Class M1 5.215%, 8/25/37 (c) 275 189,522 -0- -0- -0- 275 189,522 Home Equity Mortgage Trust Series 2006-1, Class A2 5.367%, 5/25/36 (f) 30 15,019 -0- -0- -0- 30 15,019 Household Home Equity Loan trust Series 2007-1, Class M1 5.329%, 3/20/36 (c) -0- -0- 365 255,500 -0- 365 255,500 HSI Asset Securitization Corp. Trust Series 2006-OPT2, Class 2A1 4.945%, 1/25/36 (c) 15 14,774 -0- -0- -0- 15 14,774 Indymac Residential Asset Backed Trust Series 2006-D, Class 2A2 4.975%, 11/25/36 (c) 295 277,991 -0- -0- -0- 295 277,991 IXIS Real Estate Capital Trust Series 2006-HE3, Class A2 4.965%, 1/25/37 (c) 195 183,940 -0- -0- -0- 195 183,940 Lehman XS Trust Series 2007-4N, Class M1 5.315%, 3/25/47 (c) 265 193,001 -0- -0- -0- 265 193,001 Newcastle Mortgage Securities Trust Series 2007-1, Class 2A1 4.919%, 4/25/37 (c) -0- -0- 301 287,611 -0- 301 287,611 Option One Mortgage Loan Trust Series 2007-2, Class M1 5.225%, 3/25/37 (c) -0- -0- 125 77,575 -0- 125 77,575
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ RAAC Series Series 2006-SP3, Class A1 4.945%, 8/25/36 (c) $ 128 $ 124,149 $ 61 $ 59,118 $ -0- $ 189 $ 183,267 Residential Asset Securities Corp. Series 2003-KS3, Class A2 5.465%, 5/25/33 (c) 2 2,214 -0- -0- -0- 2 2,214 Soundview Home Equity Loan Trust Series 2007-OPT2, Class 2A2 4.919%, 7/25/37 (c) -0- -0- 300 287,766 -0- 300 287,766 Specialty Underwriting & Residential Finance Series 2006-BC1, Class A2A 4.945%, 12/25/36 (c) 11 10,965 -0- -0- -0- 11 10,965 Structured Asset Investment Loan Trust Series 2006-1, Class A1 4.945%, 1/25/36 (c) 20 20,378 -0- -0- -0- 20 20,378 ------------------ ------------- ------- ------------- 1,185,502 1,049,476 -0- 2,234,978 ------------------ ------------- ------- ------------- HOME EQUITY LOANS - FIXED RATE - 0.2% Countrywide Asset-Backed Certificates Series 2007-S1, Class A3 5.81%, 11/25/36 275 228,013 375 310,926 -0- 650 538,939 Credit-Based Asset Servicing & Securities, Inc. Series 2003-CB1, Class AF 3.45%, 1/25/33 (f) 35 35,034 184 181,502 -0- 219 216,536 Home Equity Mortgage Trust Series 2005-4, Class A3 4.742%, 1/25/36 (f) 35 28,187 69 54,890 -0- 104 83,077 Residential Funding Mortgage Securities II, Inc. Series 2005-HI2, Class A3 4.46%, 5/25/35 71 70,101 -0- -0- -0- 71 70,101 ------------------ ------------- ------- ------------- 361,335 547,318 -0- 908,653 ------------------ ------------- ------- ------------- CREDIT CARDS - FIXED RATE - 0.0% MBNA Credit Card Master Note Trust Series 2003-A6, Class A6 2.75%, 10/15/10 85 84,388 -0- -0- -0- 85 84,388 ------------------ ------------- ------- ------------- AUTOS - FIXED RATE - 0.0% Capital One Prime Auto Receivables Trust Series 2005-1, Class A3 4.32%, 8/15/09 26 25,701 89 88,710 -0- 115 114,411 ------------------ ------------- ------- ------------- OTHER - FLOATING RATE - 0.0% Libertas Preferred Funding Ltd. Series 2007-3A, Class 2 5.893%, 4/09/47 (c)(e)(g) -0- -0- 260 26,000 -0- 260 26,000 ------------------ ------------- ------- ------------- Total Asset-Backed Securities (cost $1,943,188 and $2,157,277) 1,656,926 1,711,504 -0- 3,368,430 ------------------ ------------- ------- ------------- GOVERNMENT-RELATED - NON-U.S. ISSUERS - 0.8% SOVEREIGNS - 0.7% Russian Federation 7.50%, 3/31/30 (a)(e)(f) 812 923,423 955 1,086,711 -0- 1,767 2,010,134 United Mexican States 5.625%, 1/15/17 -0- -0- 680 689,180 -0- 680 689,180 ------------------ ------------- ------- ------------- 923,423 1,775,891 -0- 2,699,314 ------------------ ------------- ------- ------------- SUPRANATIONALS - 0.0% European Investment Bank 5.125%, 5/30/17 175 182,568 -0- -0- -0- 175 182,568 ------------------ ------------- ------- ------------- AGENCIES - 0.1% Korea Development Bank 5.75%, 9/10/13 -0- -0- 200 206,662 -0- 200 206,662 ------------------ ------------- ------- ------------- Total Government-Related - Non-U.S. Issuers (cost $1,077,608 and $1,973,671) 1,105,991 1,982,553 -0- 3,088,544 ------------------ ------------- ------- ------------- CORPORATES - NON-INVESTMENT GRADES - 0.8% INDUSTRIAL - 0.6% BASIC - 0.1% Freeport-McMoRan Copper & Gold, Inc. 8.25%, 4/01/15 -0- -0- 60 63,600 -0- 60 63,600 8.375%, 4/01/17 -0- -0- 60 64,350 -0- 60 64,350 Ineos Group Holdings PLC 8.50%, 2/15/16 (e) 75 66,750 -0- -0- -0- 75 66,750 Packaging Corp. of America 4.375%, 8/01/08 -0- -0- 200 198,162 -0- 200 198,162 5.75%, 8/01/13 30 30,660 -0- -0- -0- 30 30,660 ------------------ ------------- ------- ------------- 97,410 326,112 -0- 423,522 ------------------ ------------- ------- ------------- CAPITAL GOODS - 0.0% Bombardier, Inc. 6.75%, 5/01/12 (e) -0- -0- 100 101,250 -0- 100 101,250 ------------------ ------------- ------- -------------
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ COMMUNICATIONS - MEDIA - 0.2% Cablevision Systems Corp. Series B 8.00%, 4/15/12 $ 45 $ 43,650 $ -0- $ -0- $ -0- $ 45 $ 43,650 Clear Channel Communications, Inc. 5.50%, 9/15/14 85 64,790 150 114,335 -0- 235 179,125 DirecTV Holdings LLC 6.375%, 6/15/15 40 38,400 -0- -0- -0- 40 38,400 Echostar DBS Corp. 6.625%, 10/01/14 17 16,915 18 17,910 -0- 35 34,825 7.125%, 2/01/16 48 48,960 47 47,940 -0- 95 96,900 RH Donnelley Corp. Series A-3 8.875%, 1/15/16 -0- -0- 140 130,900 -0- 140 130,900 ------------------ ------------- ------- ------------- 212,715 311,085 -0- 523,800 ------------------ ------------- ------- ------------- COMMUNICATIONS - TELECOMMUNICATIONS - 0.1% Mobile Telesystems Finance 9.75%, 1/30/08 (e) -0- -0- 230 230,000 -0- 230 230,000 Qwest Communications International, Inc. 7.50%, 2/15/14 25 24,937 -0- -0- -0- 25 24,937 Series B 7.50%, 2/15/14 15 14,963 -0- -0- -0- 15 14,963 Windstream Corp. 8.125%, 8/01/13 -0- -0- 149 154,215 -0- 149 154,215 ------------------ ------------- ------- ------------- 39,900 384,215 -0- 424,115 ------------------ ------------- ------- ------------- CONSUMER CYCLICAL - AUTOMOTIVE - 0.1% Ford Motor Credit Co. 4.95%, 1/15/08 -0- -0- 135 134,910 -0- 135 134,910 7.375%, 10/28/09 160 150,599 -0- -0- -0- 160 150,599 General Motors Corp. 8.25%, 7/15/23 70 55,650 -0- -0- -0- 70 55,650 ------------------ ------------- ------- ------------- 206,249 134,910 -0- 341,159 ------------------ ------------- ------- ------------- CONSUMER CYCLICAL - OTHER - 0.1% DR Horton, Inc. 6.50%, 4/15/16 -0- -0- 80 69,410 -0- 80 69,410 Harrah's Operating Co., Inc 5.625%, 6/01/15 30 21,900 116 84,680 -0- 146 106,580 5.75%, 10/01/17 11 7,453 10 6,775 -0- 21 14,228 6.50%, 6/01/16 39 29,055 39 29,055 -0- 78 58,110 MGM Mirage 6.75%, 9/01/12 60 58,425 -0- 60 58,425 8.375%, 2/01/11 40 40,900 -0- -0- -0- 40 40,900 Wynn Las Vegas LLC/Corp. 6.625%, 12/01/14 -0- -0- 45 44,212 -0- 45 44,212 ------------------ ------------- ------- ------------- 99,308 292,557 -0- 391,865 ------------------ ------------- ------- ------------- TRANSPORTATION - SERVICES - 0.0% Hertz Corp. 8.875%, 1/01/14 35 35,481 -0- -0- -0- 35 35,481 ------------------ ------------- ------- ------------- 691,063 1,550,129 -0- 2,241,192 ------------------ ------------- ------- ------------- UTILITY - 0.1% ELECTRIC - 0.1% Dynegy Holdings, Inc. 8.375%, 5/01/16 70 68,425 70 68,425 -0- 140 136,850 Edison Mission Energy 7.00%, 5/15/17 60 58,950 55 54,037 -0- 115 112,987 NRG Energy, Inc. 7.25%, 2/01/14 65 63,375 65 63,375 -0- 130 126,750 7.375%, 2/01/16 35 34,125 -0- -0- -0- 35 34,125 Reliant Energy, Inc. 7.625%, 6/15/14 -0- -0- 65 64,350 -0- 65 64,350 ------------------ ------------- ------- ------------- 224,875 250,187 -0- 475,062 ------------------ ------------- ------- ------------- FINANCIAL INSTITUTIONS - 0.1% Banking - 0.1% Northern Rock PLC 5.60%, 4/30/14 (d)(e) -0- -0- 445 275,900 -0- 445 275,900 ------------------ ------------- ------- ------------- INSURANCE - 0.0% Liberty Mutual Group, Inc. 7.80%, 3/15/37 (e) -0- -0- 100 88,340 -0- 100 88,340 ------------------ ------------- ------- ------------- REITS - 0.0% American Real Estate Partners LP 7.125%, 2/15/13 (e) 25 23,500 -0- -0- -0- 25 23,500 7.125%, 2/15/13 20 18,800 -0- -0- -0- 20 18,800 ------------------ ------------- ------- ------------- 42,300 -0- -0- 42,300 ------------------ ------------- ------- ------------- Total Corporates - Non-Investment Grades (cost $1,009,151 and $2,408,853) 958,238 2,164,556 -0- 3,122,794 ------------------ ------------- ------- ------------- MORTGAGE CMO'S - 0.2% NON-AGENCY FIXED RATE - 0.1% Deutsche Mortgage Securities, Inc. Series 2005-WF1, Class 1A1 5.054%, 6/26/35 (e) 143 142,418 146 144,874 -0- 289 287,292
------------------------------------------------------------------------------------------------------------------------------------ Pro Forma Alliance- Alliance- Alliance- Bernstein Bernstein Alliance- Bernstein Pro Forma Variable Alliance- Variable Bernstein Variable Alliance- Products Bernstein Products Variable Products Bernstein Series Fund Variable Series Fund Products Series Fund Variable Balanced Products Balanced Series Balanced Products Wealth Series Fund Shares Fund Wealth Series Fund Portfolio Balanced Portfolio Balanced Portfolio Balanced Shares or Wealth Shares or Shares Shares or Wealth Principal Portfolio Principal Portfolio Principal Portfolio Amount (U.S. Amount (U.S. Amount (U.S. Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value) ------------------------------------------------------------------------------------------------------------------------------------ Merrill Lynch Mortgage Investors, Inc. Series 2005-A8, Class A1C1 5.25%, 8/25/36 (d) $ 106 $ 101,573 $ -0- $ -0- $ -0- $ 106 $ 101,573 Residential Accredit Loans, Inc. Series 2007-QS1, Class 1A1 6.00%, 1/25/37 145 149,652 -0- -0- -0- 145 149,652 ------------------ ------------- ------- ------------- 393,643 144,874 -0- 538,517 ------------------ ------------- ------- ------------- NON-AGENCY ADJUSTABLE RATE - 0.1% Countrywide Alternative Loan Trust Series 2005-62, Class 2A1 5.788%, 12/25/35 (c) 60 56,345 -0- -0- -0- 60 56,345 Series 2006-OA14, Class 3A1 5.638%, 11/25/46 (c) 189 178,319 -0- -0- -0- 189 178,319 Series 2007-OA3, Class M1 5.175%, 4/25/47 (c) 75 49,347 110 72,375 -0- 185 121,722 ------------------ ------------- ------- ------------- 284,011 72,375 -0- 356,386 ------------------ ------------- ------- ------------- Total Mortgage CMO's (cost $717,141 and $253,735) 677,654 217,249 -0- 894,903 ------------------ ------------- ------- ------------- INFLATION-LINKED SECURITIES - 0.4% U.S. Treasury Notes 2.375%, 4/15/11 (TIPS) (cost $1,419,144) -0- -0- 1,437 1,497,596 -0- 1,437 1,497,596 ------------------ ------------- ------- ------------- PREFERRED STOCKS - 0.1% CONSUMER DISCRETIONARY - 0.1% AUTOMOBILES - 0.1% Porsche AG Zero Coupon (cost $226,034) 120 241,495 -0- -0- -0- 120 241,495 ------------------ ------------- ------- ------------- NON-CONVERTIBLE - REFERRED STOCKS - 0.4% UTILITY- 0.1% ELECTRIC - 0.1% DTE Energy Trust I 7.80% -0- -0- 20,000 499,000 -0- 20,000 499,000 ------------------ ------------- ------- ------------- INDUSTRIAL - 0.1% COMMUNICATIONS - TELECOMMUNICATIONS - 0.1% Centaur Funding Corp. 9.08% (e) -0- -0- 200 232,125 -0- 200 232,125 ------------------ ------------- ------- ------------- FINANCIAL INSTITUTIONS - 0.0% BANKING - 0.0% Royal Bank of Scotland Group PLC 5.75% -0- -0- 10,000 179,500 -0- 10,000 179,500 ------------------ ------------- ------- ------------- NON CORPORATE SECTORS - 0.3% AGENCIES - GOVERNMENT SPONSORED - 0.3% Federal Home Loan Mortgage Corp. Zero Coupon -0- -0- 2,225 58,184 -0- 2,225 58,184 8.375% 2,525 66,029 -0- -0- -0- 2,525 66,029 Federal National Mortgage Association 8.25% 3,075 79,181 2,675 68,881 -0- 5,750 148,062 ------------------ ------------- ------- ------------- 145,210 127,065 -0- 272,275 ------------------ ------------- ------- ------------- INFORMATION TECHNOLOGY - 0.0% SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.0% Samsung Electronics Co. Ltd. (a) 200 90,741 -0- -0- -0- 200 90,741 ------------------ ------------- ------- ------------- Total Non-Convertible - Preferred Stocks (cost $232,993 and $1,105,116) 235,951 1,037,690 -0- 1,273,641 ------------------ ------------- ------- ------------- SHORT-TERM INVESTMENTS - 3.0% TIME DEPOSIT - 3.0% The Bank of New York 3.25%, 1/02/08 (cost $9,830,000) 9,830 9,830,000 1,678 1,678,000 -0- 11,508 11,508,000 ------------------ ------------- ------- ------------- TOTAL INVESTMENTS - 98.0% (cost $195,898,770 and $148,274,64 208,363,405 166,033,290 -0- 374,396,695 Other assets less liabilities - 2.0% 3,087,016 4,433,360 -0- 7,520,376 ------------------ ------------- ------- ------------- NET ASSETS - 100.0% 211,450,421 170,466,650 -0- 381,917,071 ------------------ ------------- ------- -------------
COMMON STOCKS - 62.2% Financials - 20.4% Banking - 2.3% Bank of America Corp. 29,400 $ 1,213,044 Citigroup, Inc. 28,400 836,096 Comerica, Inc. 3,800 165,414 Federal Home Loan Mortgage Corp. 4,600 156,722 Federal National Mortgage Association 6,800 271,864 Fifth Third Bancorp 5,400 135,702 JPMorgan Chase & Co. 23,100 1,008,315 Keycorp 4,100 96,145 National City Corp. 2,200 36,212 SunTrust Banks, Inc. 2,150 134,354 U.S. Bancorp 8,200 260,268 Wachovia Corp. 4,500 171,135 Washington Mutual, Inc. 6,600 89,826 Wells Fargo & Co. 9,200 277,748 ----------- 4,852,845 ----------- Capital Markets - 2.1% 3i Group PLC 10,223 202,409 Bank of New York Mellon Corp. 16,320 $ 795,763 The Blackstone Group LP 19,400 429,322 Credit Suisse Group 8,550 514,672 Deutsche Bank AG 2,500 326,730 Franklin Resources, Inc. 9,375 1,072,781 The Goldman Sachs Group, Inc. 2,065 444,078 Julius Baer Holding AG 5,574 457,376 Lehman Brothers Holdings, Inc. 3,800 248,672 Macquarie Group Ltd. 4,716 315,535 Man Group PLC 42,277 479,918 ----------- 4,491,493 ----------- Commercial Banks - 1.8% Banco Santander Central Hispano SA 2,247 48,531 Bank Leumi Le-Israel (a) 14,400 69,842 Barclays PLC 33,800 341,357 BNP Paribas SA 3,100 336,350 China Construction Bank Corp.-Class H 157,000 131,477 Credit Agricole SA 9,821 331,324 Hana Financial Group, Inc. (a) 1,100 59,060 HBOS PLC 29,920 435,068 Kookmin Bank (a)(b) 1,200 88,457 Mitsubishi UFJ Financial Group, Inc. 42,800 403,601 Royal Bank of Scotland Group PLC 47,331 417,908 Societe Generale 2,460 355,788 Standard Chartered PLC 9,114 332,631 Sumitomo Mitsui Financial Group, Inc. 50 370,014 ----------- 3,721,408 ----------- Consumer Finance - 0.2% American Express Co. 3,000 156,060 Discover Financial Services 5,400 81,432 ORIX Corp. 1,480 248,917 ----------- 486,409 ----------- Diversified Financial Services - 1.3% CME Group, Inc.-Class A 1,675 1,149,050 Deutsche Boerse AG 2,970 582,934 Fortis (Euronext Brussels) 9,666 253,044 ING Group NV 9,300 362,378 Moody's Corp. 2,400 85,680 NYSE Euronext 3,700 324,749 ----------- 2,757,835 ----------- Financial Services - 0.5% CIT Group, Inc. 5,700 136,971 Janus Capital Group, Inc. 1,300 42,705 MBIA, Inc. 2,400 44,712 Merrill Lynch & Co., Inc. 5,000 268,400 Morgan Stanley 8,900 472,679 ----------- 965,467 ----------- Insurance - 2.8% ACE Ltd. 4,600 284,188 Allianz SE 1,900 409,695 Allstate Corp. 6,600 344,718 AMBAC Financial Group, Inc. 2,700 69,579 American International Group, Inc. 14,900 868,670 AON Corp. 2,900 138,301 Assicurazioni Generali SpA 2,765 125,161 Aviva PLC 15,154 201,964 Chubb Corp. 5,900 322,022 Everest Re Group Ltd. 1,900 190,760 Fidelity National Financial, Inc.-Class A 6,200 90,582 Fondiaria-Sai SpA (ordinary shares) 2,300 94,349 Fondiaria-Sai SpA (saving shares) 700 19,679 Genworth Financial, Inc.-Class A 10,600 269,770 Hartford Financial Services Group, Inc. 2,600 226,694 Marsh & McLennan Cos, Inc. 9,400 248,818 MetLife, Inc. 5,700 351,234 Muenchener Rueckversicherungs AG 1,700 329,931 Old Republic International Corp. 7,900 121,739 PartnerRe Ltd. 2,200 181,566 QBE Insurance Group Ltd. 12,595 365,668 Torchmark Corp. 1,875 113,494 The Travelers Cos, Inc. 7,200 387,360 Unum Group 9,900 235,521 ----------- 5,991,463 ----------- Real Estate Investment Trusts (REITs) - 6.3% Alexandria Real Estate Equities, Inc. 1,825 185,548 Allied Properties Real Estate Investment Trust 9,740 204,669 AMB Property Corp. 2,300 132,388 Apartment Investment & Management Co.-Class A 4,600 159,758 Ascendas Real Estate Investment Trust 84,000 142,205 Ashford Hospitality Trust, Inc. 9,300 66,867 AvalonBay Communities, Inc. 900 84,726 Boardwalk Real Estate Investment Trust (a) 5,888 265,773 Boston Properties, Inc. 1,800 165,258 British Land Co. PLC 10,644 199,603 Canadian Real Estate Investment Trust 8,434 247,723 CapitaMall Trust 146,600 347,602 Cominar Real Estate Investment Trust (a) 6,582 136,049 DB RREEF Trust 267,963 467,771 Derwent Valley Holdings PLC 7,450 207,144 DiamondRock Hospitality Co. 5,500 82,390 Digital Realty Trust, Inc. 8,300 318,471 Dundee Real Estate Investment Trust (a) 3,601 123,030 Entertainment Properties Trust 3,100 145,700 Equity Residential 5,500 200,585 Essex Property Trust, Inc. 425 41,433 FelCor Lodging Trust, Inc. 3,100 48,329 First Industrial Realty Trust, Inc. 2,900 100,340 Fonciere des Murs 2,800 93,092 Fonciere Des Regions 475 60,227 General Growth Properties, Inc. 9,700 399,446 General Property Group 34,988 123,145 Great Portland Estates PLC 15,400 143,491 H&R Real Estate Investment 1 17 Hammerson PLC 8,750 178,325 HCP, Inc. 3,600 125,208 Health Care REIT, Inc. 3,900 174,291 Highwoods Properties, Inc. 4,400 129,272 Home Properties, Inc. 3,100 139,035 Host Hotels & Resorts, Inc. 11,829 201,566 ING Office Fund 131,600 185,886 Japan Real Estate Investment Corp.-Class A 16 198,575 Kimco Realty Corp. 4,250 154,700 Klepierre 8,595 439,306 Land Securities Group PLC 5,842 175,070 LaSalle Hotel Properties 2,300 73,370 Liberty International PLC 10,400 222,203 Macerich Co. 2,300 163,438 Mid-America Apartment Communities, Inc. 2,250 96,187 Mirvac Group 80,182 419,038 National Retail Properties 3,700 86,506 Nationwide Health Properties, Inc. 6,700 210,179 Nippon Building Fund, Inc.-Class A 21 293,261 Nomura Real Estate Office Fund, Inc.-Class A 19 178,797 Omega Healthcare Investors, Inc. 5,500 88,275 Primaris Retail Real Estate Investment Trust (a) 7,149 132,559 Prologis 6,775 429,399 Public Storage 2,050 150,490 Rayonier, Inc. 5,300 250,372 RioCan Real Estate Investment Trust 7,491 165,609 RioCan Real Estate Investment Trust (a) 1,400 30,952 Segro PLC 8,769 81,581 Simon Property Group, Inc. 7,350 638,421 SL Green Realty Corp. 550 51,403 Stockland 19,479 142,973 Stockland-New (b) 422 3,027 Strategic Hotels & Resorts, Inc. 4,400 73,612 Sunstone Hotel Investors, Inc. 3,600 65,844 Tanger Factory Outlet Centers 5,050 190,435 Taubman Centers, Inc. 4,900 241,031 UDR, Inc. 4,050 80,392 Unibail 2,525 553,306 Ventas, Inc. 6,950 314,487 Vornado Realty Trust 4,000 351,800 Westfield Group 33,589 614,092 ----------- 13,387,053 ----------- Real Estate Management & Development - 3.1% Beni Stabili SpA 76,800 83,325 Brookfield Properties Corp. 2,225 42,831 Citycon Oyj 33,942 181,072 Forest City Enterprises, Inc.-Class A 1,650 73,326 Hang Lung Properties Ltd. 141,000 629,996 Henderson Land Development Co., Ltd. 18,000 167,168 IVG Immobilien AG 3,900 128,728 Keppel Land Ltd. 44,000 220,151 Kerry Properties Ltd. 86,131 684,864 Lend Lease Corp. Ltd. 32,000 483,197 Mitsubishi Estate Co., Ltd. 15,000 357,374 Mitsui Fudosan Co., Ltd. 13,100 282,521 New World Development Co., Ltd. 125,997 441,117 Norwegian Property ASA 20,500 249,072 NTT Urban Development Corp. (a) 390 624,363 Sino Land Co. 79,950 279,968 Sponda OYJ 10,300 122,463 Sumitomo Realty & Development 8,000 195,649 Sun Hung Kai Properties Ltd. 46,700 980,866 Tokyu Land Corp. 31,000 265,246 ----------- 6,493,297 ----------- 43,147,270 ----------- Information Technology - 7.6% Communications Equipment - 1.9% Cisco Systems, Inc. (b) 60,450 1,636,381 Nokia OYJ (ADR) 19,700 756,283 Nokia OYJ 17,244 662,469 Research In Motion Ltd. (b) 9,075 1,029,105 ----------- 4,084,238 ----------- Computers & Peripherals - 2.3% Apple, Inc. (b) 12,430 2,462,134 Asustek Computer, Inc. (a) 43,000 127,951 Compal Electronics, Inc. (a) 56,280 61,282 EMC Corp. (b) 15,500 287,215 Fujitsu Ltd. 38,000 254,200 Hewlett-Packard Co. 27,700 1,398,296 Toshiba Corp. 26,000 191,879 ----------- 4,782,957 ----------- Electronic Equipment & Instruments - 0.1% AU Optronics Corp. (a) 86,692 167,186 HON HAI Precision Industry Co. Ltd. (a) 8,200 50,541 Tyco Electronics Ltd. 1,250 46,412 ----------- 264,139 ----------- Internet Software & Services - 1.3% Google, Inc.-Class A (b) 3,900 2,696,772 ----------- Office Electronics - 0.0% Konica Minolta Holdings, Inc. 5,500 96,421 ----------- Semiconductors & Semiconductor Equipment - 1.2% Broadcom Corp.-Class A (b) 25,000 653,500 Hynix Semiconductor, Inc. (a)(b) 5,900 161,598 Intel Corp. 18,850 502,541 Nvidia Corp. (b) 24,425 830,938 Samsung Electronics Co. Ltd. (a) 140 82,390 United Microelectronics Corp. (a) 398,207 247,387 ----------- 2,478,354 ----------- Software - 0.8% Adobe Systems, Inc. (b) 14,700 628,131 Microsoft Corp. 20,400 726,240 Nintendo Co. Ltd. 400 234,861 Oracle Corp. (b) 5,700 128,706 ----------- 1,717,938 ----------- 16,120,819 ----------- Energy - 5.8% Energy Equipment & Services - 1.5% Baker Hughes, Inc. 13,950 1,131,345 Cameron International Corp. (b) 6,300 303,219 Schlumberger Ltd. 14,700 1,446,039 Technip SA 2,010 159,878 ----------- 3,040,481 ----------- Energy Sources - 2.5% Chevron Corp. 14,400 1,343,952 ConocoPhillips 11,300 997,790 Exxon Mobil Corp. 22,700 2,126,763 Marathon Oil Corp. 5,600 340,816 Occidental Petroleum Corp. 1,900 146,281 Royal Dutch Shell PLC (Euronext Amsterdam)-Class A 9,657 407,670 ----------- 5,363,272 ----------- Oil, Gas & Consumable Fuels - 1.8% China Petroleum & Chemical Corp.-Class H 108,000 160,105 China Shenhua Energy Co. Ltd.-Class H 42,000 247,413 ENI SpA 9,800 357,665 EOG Resources, Inc. 7,150 638,137 Gazprom OAO (Sponsored) (ADR) 4,476 253,789 LUKOIL (ADR) 2,000 169,000 Petro-Canada (a) 1,200 64,745 Petroleo Brasileiro SA (ADR) 2,800 322,672 Petroleo Brasileiro SA (Sponsored) (ADR) 1,900 182,818 Royal Dutch Shell PLC 12,600 531,172 StatoilHydro ASA 8,900 274,572 Total SA 7,166 593,348 ----------- 3,795,436 ----------- 12,199,189 ----------- Industrials - 4.7% Aerospace & Defense - 1.2% BAE Systems PLC 44,621 442,814 Boeing Co. 2,350 205,531 Honeywell International, Inc. 19,200 1,182,144 Spirit Aerosystems Holdings, Inc.-Class A (b) 14,300 493,350 United Technologies Corp. 2,500 191,350 ----------- 2,515,189 ----------- Airlines - 0.1% Air France-KLM 3,200 111,835 Deutsche Lufthansa AG 4,600 122,418 ----------- 234,253 ----------- Commercial Services & Supplies - 0.2% Allied Waste Industries, Inc. (b) 16,100 177,422 Capita Group PLC 5,713 79,202 Pitney Bowes, Inc. 3,800 144,552 ----------- 401,176 ----------- Construction & Engineering - 0.3% Fluor Corp. 5,000 728,600 ----------- Electrical Equipment - 0.8% ABB Ltd. 19,079 550,082 ABB Ltd. (Sponsored) (ADR) 19,200 552,960 Emerson Electric Co. 7,350 416,451 Renewable Energy Corp. (b) 1,917 96,154 ----------- 1,615,647 ----------- Industrial Conglomerates - 0.6% 3M Co. 1,800 151,776 Mcdermott Intl Inc. (b) 2,200 129,866 Siemens AG 3,108 492,182 Textron, Inc. 7,250 516,925 Tyco International Ltd. 1,250 49,563 ----------- 1,340,312 ----------- Machinery - 1.1% Caterpillar, Inc. 2,900 210,424 Deere & Co. 10,950 1,019,664 Ingersoll-Rand Co. Ltd.-Class A 6,000 278,820 Komatsu Ltd. 5,700 152,869 NGK Insulators Ltd. 9,000 241,302 PACCAR, Inc. 3,600 196,128 Sumitomo Heavy Industries Ltd. 800 7,294 Terex Corp. (b) 2,100 137,697 ----------- 2,244,198 ----------- Marine - 0.1% Mitsui OSK Lines Ltd. 10,000 126,423 Nippon Yusen KK (a) 16,000 126,048 ----------- 252,471 ----------- Road & Rail - 0.0% Avis Budget Group, Inc. (b) 3,600 46,800 ----------- Trading Companies & Distributors - 0.3% Mitsubishi Corp. 4,100 110,965 Mitsui & Co. Ltd. 26,000 542,949 ----------- 653,914 ----------- 10,032,560 ----------- Health Care - 4.3% Biotechnology - 1.1% Celgene Corp. (b) 12,450 575,314 CSL Ltd./Australia 3,038 96,243 Genentech, Inc. (b) 7,650 513,086 Gilead Sciences, Inc. (b) 26,850 1,235,369 ----------- 2,420,012 ----------- Health Care Equipment & Supplies - 0.9% Alcon, Inc. 7,375 1,054,920 Covidien Ltd. 1,250 55,363 Essilor International SA 3,934 250,941 Hologic, Inc. (b) 7,300 501,072 ----------- 1,862,296 ----------- Health Care Providers & Services - 0.8% Medco Health Solutions, Inc. (b) 6,750 684,450 WellPoint, Inc. (b) 11,300 991,349 ----------- 1,675,799 ----------- Pharmaceuticals - 1.5% Abbott Laboratories 21,100 1,184,765 AstraZeneca PLC 1,900 81,782 GlaxoSmithKline PLC 6,400 162,538 Merck & Co., Inc. 7,800 453,258 Roche Holding AG 1,152 199,141 Sanofi-Aventis SA 3,200 292,929 Teva Pharmaceutical Industries Ltd. (ADR) 16,050 746,004 ----------- 3,120,417 ----------- 9,078,524 ----------- Materials - 3.7% Chemicals - 1.6% Air Products & Chemicals, Inc. 7,300 719,999 Ashland, Inc. 2,600 123,318 BASF AG 3,600 533,063 Bayer AG 5,987 546,114 Mitsubishi Chemical Holdings Corp. 30,500 232,705 Mitsui Chemicals, Inc. (a) 12,400 80,499 Monsanto Co. 10,450 1,167,160 ----------- 3,402,858 ----------- Construction Materials - 0.0% Buzzi Unicem SpA 3,000 82,909 ----------- Containers & Packaging - 0.1% Ball Corp. 4,000 180,000 Crown Holdings, Inc. (b) 4,600 117,990 ----------- 297,990 ----------- Metals & Mining - 1.9% Alcoa, Inc. 10,600 387,430 Anglo American PLC 2,514 152,603 Antofagasta PLC 11,100 157,366 ArcelorMittal 4,068 327,120 BHP Billiton PLC 6,854 209,002 Cia Vale do Rio Doce (ADR) 9,000 294,030 Cia Vale do Rio Doce (Sponsored) (ADR) 6,100 170,678 JFE Holdings, Inc. 8,900 446,283 Kazakhmys PLC 2,800 75,756 Nippon Steel Corp. 41,000 250,958 POSCO (a) 200 120,836 Rio Tinto PLC 5,848 615,458 Xstrata PLC 9,837 690,272 ----------- 3,897,792 ----------- Paper & Forest Products - 0.1% Stora Enso Oyj-Class R 11,300 168,685 ----------- 7,850,234 ----------- Consumer Staples - 3.6% Beverages - 0.4% The Coca-Cola Co. 3,300 202,521 PepsiCo, Inc. 8,500 645,150 ----------- 847,671 ----------- Beverages & Tobacco - 0.5% Altria Group, Inc. 7,700 581,966 Coca-Cola Enterprises, Inc. 8,300 216,049 Kraft Foods, Inc.-Class A 2,300 75,049 Molson Coors Brewing Co.-Class B 3,800 196,156 ----------- 1,069,220 ----------- Food & Household Products - 0.4% ConAgra Foods, Inc. 4,100 97,539 General Mills, Inc. 2,425 138,225 Kellogg Co. 3,100 162,533 Sara Lee Corp. 12,700 203,962 Supervalu, Inc. 7,000 262,640 ----------- 864,899 ----------- Food & Staples Retailing - 0.2% Koninklijke Ahold NV 17,860 247,340 Tesco PLC 20,213 192,277 ----------- 439,617 ----------- Food Products - 0.8% Associated British Foods PLC 9,400 167,680 Nestle SA 1,291 592,815 Unilever PLC 9,595 359,859 WM Wrigley Jr Co. 9,800 573,790 ----------- 1,694,144 ----------- Household Products - 1.1% Colgate-Palmolive Co. 6,650 518,434 Procter & Gamble Co. 20,200 1,483,084 Reckitt Benckiser PLC 5,205 302,463 ----------- 2,303,981 ----------- Personal Products - 0.1% L'Oreal SA 1,645 235,560 ----------- Tobacco - 0.1% British American Tobacco PLC 5,495 214,817 ----------- 7,669,909 ----------- Consumer Discretionary - 2.7% Auto Components - 0.2% Compagnie Generale des Etablissements Michelin-Class B 1,700 194,358 Denso Corp. 4,100 166,846 Hyundai Mobis (a) 1,710 158,008 ----------- 519,212 ----------- Automobiles - 0.7% Fiat SpA 8,775 225,825 General Motors Corp. 9,800 243,922 Nissan Motor Co. Ltd. 39,200 427,848 Porsche AG 120 241,496 Renault SA 3,000 425,468 ----------- 1,564,559 ----------- Hotels, Restaurants & Leisure - 0.5% Las Vegas Sands Corp. (b) 1,400 144,270 Marriott International, Inc.-Class A 3,800 129,884 McDonald's Corp. 9,400 553,754 Starwood Hotels & Resorts Worldwide, Inc. 625 27,519 Yum! Brands, Inc. 7,750 296,592 ----------- 1,152,019 ----------- Household Durables - 0.2% Centex Corp. 2,900 73,254 KB Home 2,800 60,480 Sharp Corp. 15,000 267,572 ----------- 401,306 ----------- Leisure Equipment & Products - 0.0% Brunswick Corp. 3,200 54,560 ----------- Media - 0.2% Comcast Corp.-Special-Class A (b) 7,950 144,054 Lagardere SCA 2,200 164,759 ----------- 308,813 ----------- Multiline Retail - 0.5% Dollar Tree Stores, Inc. (b) 900 23,328 Family Dollar Stores, Inc. 4,800 92,304 Kohl's Corp. (b) 7,125 326,325 Macy's, Inc. 7,500 194,025 New World Department Store China Ltd. (b) 872 1,222 Target Corp. 6,200 310,000 ----------- 947,204 ----------- Specialty Retail - 0.4% Esprit Holdings Ltd. 16,700 245,912 Home Depot, Inc. 10,100 272,094 Inditex SA 3,901 236,050 ----------- 754,056 ----------- 5,701,729 ----------- Capital Equipment - 1.6% Aerospace & Defense - 0.2% Lockheed Martin Corp. 1,000 105,260 Northrop Grumman Corp. 3,900 306,696 ----------- 411,956 ----------- Automobiles - 0.2% Autoliv, Inc. 2,300 121,233 BorgWarner, Inc. 2,750 133,128 Johnson Controls, Inc. 3,300 118,932 Lear Corp. (b) 3,100 85,746 ----------- 459,039 ----------- Industrial Components - 0.1% Eaton Corp. 2,900 281,155 ----------- Machinery & Engineering - 0.1% Cummins, Inc. 1,400 178,318 ----------- Multi-Industry - 1.0% General Electric Co. 49,500 1,834,965 SPX Corp. 1,425 146,561 ----------- 1,981,526 ----------- 3,311,994 ----------- Telecommunications - 1.4% AT&T, Inc. 39,800 1,654,088 Sprint Nextel Corp. 30,700 403,091 Verizon Communications, Inc. 20,300 886,907 ----------- 2,944,086 ----------- Utilities - 1.3% Electric Utilities - 0.3% E.ON AG 1,600 340,196 The Tokyo Electric Power Co. 9,900 256,274 ----------- 596,470 ----------- Independent Power Producers & Energy Traders - 0.1% Iberdrola Renovables (b) 12,874 106,347 International Power PLC 20,376 183,675 ----------- 290,022 ----------- Multi-Utilities - 0.5% Ameren Corp. 4,100 222,261 CMS Energy Corp. 3,000 52,140 RWE AG 1,380 194,398 Suez SA 4,017 273,421 Veolia Environnement 2,851 259,694 ----------- 1,001,914 ----------- Utility (Electric & Gas) - 0.4% Allegheny Energy, Inc. 1,800 114,498 American Electric Power Co., Inc. 5,300 246,768 Constellation Energy Group, Inc. 2,200 225,566 Entergy Corp. 900 107,568 Pinnacle West Capital Corp. 3,600 152,676 Wisconsin Energy Corp. 2,350 114,468 ----------- 961,544 ----------- 2,849,950 ----------- Consumer Cyclical - 1.2% Appliances & Household Durables - 0.1% Black & Decker Corp. 1,400 97,510 Newell Rubbermaid, Inc. 1,900 49,172 ----------- 146,682 ----------- Broadcasting & Publishing - 0.6% CBS Corp.-Class B 7,800 212,550 Gannett Co., Inc. 6,500 253,500 Idearc, Inc. 5,800 101,848 Time Warner, Inc. 13,600 224,536 Viacom, Inc.-Class B (b) 4,700 206,424 The Walt Disney Co. 11,400 367,992 ----------- 1,366,850 ----------- Business & Public Services - 0.0% Interpublic Group of Cos., Inc. (b) 5,500 44,605 ----------- Merchandising - 0.3% The Gap, Inc. 8,400 178,752 The Kroger Co. 5,200 138,892 Lowe's Cos, Inc. 5,800 131,196 Office Depot, Inc. (b) 3,300 45,903 Safeway, Inc. 5,600 191,576 Wal-Mart Stores, Inc. 1,400 66,542 ----------- 752,861 ----------- Recreation & Other Consumer - 0.1% Mattel, Inc. 7,700 146,608 ----------- Textiles & Apparel - 0.1% Jones Apparel Group, Inc. 9,600 153,504 ----------- 2,611,110 ----------- Telecommunication Services - 1.1% Diversified Telecommunication Services - 0.5% China Netcom Group Corp. Ltd. 59,000 175,783 Nippon Telegraph & Telephone Corp. (a) 31 154,099 Telefonica SA 15,993 518,435 TeliaSonera AB (a) 17,574 164,186 ----------- 1,012,503 ----------- Wireless Telecommunication Services - 0.6% America Movil SAB de CV Series L (ADR) 6,800 417,452 Vodafone Group PLC 251,545 944,280 ----------- 1,361,732 ----------- 2,374,235 ----------- Medical - 1.0% Health & Personal Care - 1.0% AmerisourceBergen Corp.-Class A 5,000 224,350 Cardinal Health, Inc. 3,300 190,575 Eli Lilly & Co. 5,900 315,001 International Flavors & Fragrances, Inc. 1,550 74,602 McKesson Corp. 3,200 209,632 Pfizer, Inc. 48,100 1,093,313 ----------- 2,107,473 ----------- Industrial Commodities - 0.6% Chemicals - 0.4% Dow Chemical Co. 9,300 366,606 E.I. Du Pont de Nemours & Co. 8,700 383,583 Lubrizol Corp. 1,525 82,594 ----------- 832,783 ----------- Containers & Packaging - 0.1% Sonoco Products Co. 3,500 114,380 ----------- Forest & Paper - 0.0% Smurfit-Stone Container Corp. (b) 7,000 73,920 ----------- Miscellaneous Materials - 0.1% Bemis, Inc. 2,700 73,926 Owens-Illinois, Inc. (b) 3,300 163,350 ----------- 237,276 ----------- 1,258,359 ----------- Technology/Electronics - 0.6% Data Processing - 0.3% Dell, Inc. (b) 6,600 161,766 Electronic Data Systems Corp. 3,200 66,336 International Business Machines Corp. 3,000 324,300 Sanmina-SCI Corp. (b) 9,400 17,108 ----------- 569,510 ----------- Electrical & Electronics - 0.1% Lexmark International, Inc.-Class A (b) 4,100 142,926 Tech Data Corp. (b) 1,400 52,808 ----------- 195,734 ----------- Electronic Components & Instruments - 0.2% Arrow Electronics, Inc. (b) 4,400 172,832 Avnet, Inc. (b) 6,100 213,317 Flextronics International Ltd. (b) 1,300 15,678 ----------- 401,827 ----------- 1,167,071 ----------- Finance - 0.2% Insurance - 0.1% Safeco Corp. 2,400 133,632 ----------- Property - Casualty Insurance - 0.1% The Progressive Corp. 14,500 277,820 ----------- 411,452 ----------- Consumer Growth - 0.2% Hospital Supplies - 0.2% Johnson & Johnson 5,200 346,840 ----------- Food & Drug Retailers - 0.1% Financial Services - 0.1% Ameriprise Financial, Inc. 2,800 154,308 ----------- Consumer Manufacturing - 0.1% Auto & Related - 0.1% AutoNation, Inc. (b) 7,500 117,450 ----------- Non-Financial - 0.0% Home Building - 0.0% Pulte Homes, Inc. 7,200 75,888 ----------- Construction & Housing - 0.0% Real Estate - 0.0% Canadian Apartment Properties 1 16 ----------- Total Common Stocks (cost $119,710,792) 131,530,466 -----------
Principal Amount (000) ---------- MORTGAGE PASS-THRU'S - 7.2% Fixed Rate 30-Year - 5.6% Federal Gold Loan Mortgage Corp. Series 2005 4.50%, 8/01/35 $ 239 225,592 Series 2007 7.00%, 2/01/37 663 688,707 Federal Home Loan Mortgage Corp. Series 2007 5.50%, 7/01/35 252 252,418 Federal National Mortgage Association 5.50%, 8/01/37 2,850 2,863,828 Series 2003 5.00%, 11/01/33 687 671,437 Series 2004 5.50%, 11/01/34 498 497,878 6.00%, 9/01/34 582 591,609 Series 2005 4.50%, 8/01/35 725 686,249 Series 2006 5.00%, 2/01/36 925 903,100 6.50%, 9/01/36 2,449 2,517,625 Series 2007 4.50%, 9/01/35 - 8/01/37 1,741 1,649,530 5.00%, 7/01/36 279 272,857 ---------- 11,820,830 ---------- Agency ARMS - 1.2% Federal Home Loan Mortgage Corp. Series 2006 5.829%, 12/01/36 (c) 1,202 1,221,655 Series 2007 6.037%, 10/01/37 (c) 312 317,213 Federal National Mortgage Association Series 2005 5.322%, 9/01/35 (c) 87 87,406 Series 2006 5.463%, 5/01/36 (c) 63 63,894 5.799%, 3/01/36 (c) 147 149,549 5.851%, 11/01/36 (c) 115 117,133 5.916%, 6/01/36 (c) 107 109,612 Series 2007 5.769%, 1/01/37 (c) 161 163,491 6.025%, 11/01/36 (c) 110 112,123 6.081%, 3/01/37 (c) 305 311,244 ---------- 2,653,320 ---------- Non-Agency ARMS - 0.4% Bear Stearns Alt-A Trust Series 2006-1, Class 22A1 5.40%, 2/25/36 (d) 208 201,643 Series 2006-3, Class 22A1 6.218%, 5/25/36 (d) 64 62,260 Series 2007-1, Class 21A1 5.728%, 1/25/47 (d) 67 64,567 Citigroup Mortgage Loan Trust, Inc. Series 2005-2, Class 1A4 5.11%, 5/25/35 (d) 131 128,047 Series 2006-AR1, Class 3A1 5.50%, 3/25/36 (c) 143 142,861 Indymac Index Mortgage Loan Trust Series 2006-AR7, Class 4A1 6.228%, 5/25/36 (d) 88 87,521 Residential Funding Mortgage Securities, Inc. Series 2005-SA3, Class 3A 5.235%, 8/25/35 (d) 139 136,783 ---------- 823,682 ---------- Total Mortgage Pass-Thru's (cost $15,105,886) 15,297,832 ---------- U.S. TREASURIES - 6.5% U.S. Treasury Bonds 4.50%, 2/15/36 3,920 3,939,906 8.75%, 5/15/17 3 4,081 U.S. Treasury Notes 4.25%, 11/15/17 3,555 3,616,935 4.875%, 5/31/11 5,940 6,260,202 ---------- Total U.S. Treasuries (cost $13,369,047) 13,821,124 ---------- CORPORATES - INVESTMENT GRADES - 5.2% Financial Institutions - 2.4% Banking - 0.9% Bank of America Corp. 3.375%, 2/17/09 70 69,094 4.50%, 8/01/10 100 100,049 Chase Manhattan Corp. 6.00%, 2/15/09 170 171,487 Citicorp Series MTNF 6.375%, 11/15/08 31 31,421 Citigroup, Inc. 3.625%, 2/09/09 135 133,190 4.625%, 8/03/10 75 74,591 5.286%, 6/09/09 (c) 20 19,846 JPMorgan Chase & Co. 6.75%, 2/01/11 80 83,999 JPMorgan Chase Capital XXV 6.80%, 10/01/37 51 49,035 Morgan J P & Co., Inc. 6.25%, 1/15/09 157 158,896 National City Bk Of Ohio 6.25%, 3/15/11 250 257,080 Royal Bank Of Scotland Group PLC 6.40%, 4/01/09 108 109,969 SouthTrust Corp. 5.80%, 6/15/14 175 180,713 UBS Preferred Funding Trust I 8.622%, 10/01/10 (d) 40 43,129 Union Bank Of California 5.95%, 5/11/16 250 239,977 Wachovia Corp. 5.625%, 12/15/08 46 45,911 Washington Mutual, Inc. 4.20%, 1/15/10 14 12,507 Wells Fargo & Co. 4.20%, 1/15/10 35 34,779 Zions Bancorporation 5.50%, 11/16/15 35 32,823 ---------- 1,848,496 ---------- Brokerage - 0.5% The Bear Stearns Co., Inc. 5.55%, 1/22/17 165 147,875 7.625%, 12/07/09 98 100,742 The Bear Stearns Cos, Inc. 5.70%, 11/15/14 145 137,503 The Goldman Sachs Group, Inc. 3.875%, 1/15/09 134 132,628 4.75%, 7/15/13 35 34,282 7.35%, 10/01/09 36 37,626 Lehman Brothers Holdings, Inc. 5.00%, 1/14/11 60 59,118 6.20%, 9/26/14 33 33,610 6.50%, 7/19/17 54 54,640 7.875%, 11/01/09 75 78,169 Series MTNG 4.80%, 3/13/14 42 39,089 Merrill Lynch & Co., Inc. 4.79%, 8/04/10 105 104,042 6.00%, 2/17/09 47 47,384 6.05%, 5/16/16 145 142,473 Series MTNC 4.125%, 1/15/09 52 51,322 ---------- 1,200,503 ---------- Finance - 0.8% Capital One Bank 4.25%, 12/01/08 160 156,569 Capital One Financial Corp. 5.50%, 6/01/15 20 18,447 6.75%, 9/15/17 43 41,242 CIT Group, Inc. 5.00%, 2/01/15 75 65,195 5.125%, 9/30/14 40 35,235 5.85%, 9/15/16 150 132,432 7.625%, 11/30/12 135 136,837 Countrywide Financial Corp. 6.25%, 5/15/16 58 33,383 Series MTN 5.80%, 6/07/12 75 54,787 Countrywide Home Loans, Inc. Series MTNL 4.00%, 3/22/11 69 49,822 General Electric Capital Corp. 4.375%, 11/21/11 25 24,803 6.75%, 3/15/32 135 153,277 Household Finance Corp. 4.125%, 12/15/08 90 89,176 HSBC Finance Corp. 6.50%, 11/15/08 80 80,878 7.00%, 5/15/12 85 89,060 iStar Financial, Inc. 5.15%, 3/01/12 50 43,211 5.65%, 9/15/11 95 84,894 SLM Corp. 4.50%, 7/26/10 55 50,446 5.375%, 1/15/13 - 5/15/14 375 334,306 ---------- 1,674,000 ---------- Insurance - 0.2% Assurant, Inc. 5.625%, 2/15/14 35 34,250 Berkshire Hathaway Finance Corp. 4.20%, 12/15/10 50 50,259 Liberty Mutual Group, Inc. 5.75%, 3/15/14 (e) 35 35,644 UnitedHealth Group, Inc. 4.125%, 8/15/09 67 66,603 5.25%, 3/15/11 165 166,846 WellPoint, Inc. 4.25%, 12/15/09 80 79,071 ---------- 432,673 ---------- 5,155,672 ---------- Industrial - 2.4% Basic - 0.1% The Dow Chemical Co. 7.375%, 11/01/29 10 10,999 International Paper Co. 5.30%, 4/01/15 55 53,681 International Steel Group, Inc. 6.50%, 4/15/14 60 61,609 Lubrizol Corp. 4.625%, 10/01/09 20 20,085 Westvaco Corp. 8.20%, 1/15/30 15 16,038 Weyerhaeuser Co. 5.95%, 11/01/08 35 35,284 ---------- 197,696 ---------- Capital Goods - 0.1% Boeing Capital Corp. 4.75%, 8/25/08 35 35,119 Caterpillar Financial Services 4.50%, 6/15/09 46 46,017 Textron Financial Corp. 4.125%, 3/03/08 80 79,922 Tyco International Group SA 6.00%, 11/15/13 85 87,366 Waste Management, Inc. 6.875%, 5/15/09 40 41,067 ---------- 289,491 ---------- Communications - Media - 0.3% British Sky Broadcasting PLC 8.20%, 7/15/09 20 20,924 Comcast Cable Communications Holdings, Inc. 9.455%, 11/15/22 55 69,940 Comcast Cable Communications LLC 6.875%, 6/15/09 50 51,429 Comcast Cable Communications, Inc. 6.20%, 11/15/08 66 66,537 Comcast Corp. 5.30%, 1/15/14 40 39,224 5.50%, 3/15/11 50 50,478 Cox Enterprises, Inc. 4.375%, 5/01/08 (e) 40 39,872 News America, Inc. 6.55%, 3/15/33 45 44,950 RR Donnelley & Sons Co. 4.95%, 4/01/14 25 23,570 Time Warner Entertainment Co. 8.375%, 3/15/23 130 153,126 WPP Finance Corp. 5.875%, 6/15/14 25 26,606 ---------- 586,656 ---------- Communications - Telecommunications - 0.8% AT&T Corp. 7.30%, 11/15/11 40 43,340 8.00%, 11/15/31 15 18,421 British Telecommunications PLC 8.625%, 12/15/10 100 109,735 Embarq Corp. 6.738%, 6/01/13 5 5,172 7.082%, 6/01/16 240 247,291 New Cingular Wireless Services, Inc. 7.875%, 3/01/11 95 102,882 8.75%, 3/01/31 50 64,799 Nextel Communications, Inc. Series E 6.875%, 10/31/13 45 44,331 Qwest Corp. 5.625%, 11/15/08 110 109,450 7.875%, 9/01/11 150 156,000 8.875%, 3/15/12 110 117,700 Sprint Capital Corp. 8.375%, 3/15/12 120 129,963 Telecom Italia Capital SA 4.00%, 1/15/10 120 117,532 6.00%, 9/30/34 65 63,206 Telefonos de Mexico SAB de CV 4.50%, 11/19/08 157 156,231 Verizon Communications, Inc. 4.90%, 9/15/15 35 34,049 Verizon New Jersey, Inc. Series A 5.875%, 1/17/12 45 46,341 Vodafone Group PLC 5.50%, 6/15/11 60 60,637 ---------- 1,627,080 ---------- Consumer Cyclical - Automotive - 0.0% DaimlerChrysler North America 4.875%, 6/15/10 25 24,889 ---------- Consumer Cyclical - Other - 0.2% Centex Corp. 5.45%, 8/15/12 164 144,247 Starwood Hotels & Resorts Worldwide, Inc. 7.375%, 11/15/15 81 83,622 7.875%, 5/01/12 84 89,259 Toll Brothers Finance Corp. 5.15%, 5/15/15 20 18,149 6.875%, 11/15/12 40 39,071 ---------- 374,348 ---------- Consumer Cyclical - Retailers - 0.0% Ltd. Brands, Inc. 6.90%, 7/15/17 25 24,155 ---------- Consumer Non-Cyclical - 0.5% Altria Group, Inc. 7.75%, 1/15/27 85 109,513 Bunge Ltd Finance Corp. 5.10%, 7/15/15 69 65,352 Cadbury Schweppes US Finance LLC 5.125%, 10/01/13 (e) 135 134,921 ConAgra Foods, Inc. 7.875%, 9/15/10 19 20,394 Fisher Scientific International, Inc. 6.125%, 7/01/15 19 18,873 6.75%, 8/15/14 29 29,724 Kraft Foods, Inc. 4.125%, 11/12/09 115 114,008 Reynolds American, Inc. 7.25%, 6/01/13 150 158,660 7.625%, 6/01/16 145 154,134 Safeway, Inc. 4.125%, 11/01/08 18 17,806 6.50%, 3/01/11 15 15,693 Tyson Foods, Inc. 6.85%, 4/01/16 150 153,923 Wyeth 5.50%, 2/01/14 40 40,627 ---------- 1,033,628 ---------- Energy - 0.2% Amerada Hess Corp. 7.875%, 10/01/29 55 65,099 Gazprom 6.212%, 11/22/16 (e) 315 305,613 Valero Energy Corp. 6.875%, 4/15/12 45 48,017 ---------- 418,729 ---------- Technology - 0.2% Electronic Data Systems Corp. Series B 6.50%, 8/01/13 145 146,617 International Business Machines Corp. 4.375%, 6/01/09 20 20,183 Motorola, Inc. 6.50%, 9/01/25 70 67,977 7.50%, 5/15/25 15 15,961 7.625%, 11/15/10 5 5,356 Xerox Corp. 7.625%, 6/15/13 30 31,306 9.75%, 1/15/09 111 116,041 ---------- 403,441 ---------- 4,980,113 ---------- Utility - 0.4% Electric - 0.3% Carolina Power & Light Co. 6.50%, 7/15/12 65 69,181 Consumers Energy Co. Series C 4.25%, 4/15/08 25 24,916 Exelon Corp. 6.75%, 5/01/11 25 26,148 FirstEnergy Corp. Series B 6.45%, 11/15/11 65 67,120 Series C 7.375%, 11/15/31 85 93,265 MidAmerican Energy Holdings Co. 5.875%, 10/01/12 30 31,094 Nisource Finance Corp. 7.875%, 11/15/10 40 42,433 Pacific Gas & Electric Co. 4.80%, 3/01/14 65 63,194 Progress Energy, Inc. 7.10%, 3/01/11 19 20,220 Public Service Company of Colorado 7.875%, 10/01/12 30 33,666 SPI Electricity & Gas Australia Holdings Pty Ltd. 6.15%, 11/15/13 (e) 238 242,852 ---------- 714,089 ---------- Natural Gas - 0.1% Duke Energy Field Services Corp. 7.875%, 8/16/10 15 16,091 Enterprise Products Operating LP Series B 5.60%, 10/15/14 25 24,950 Williams Cos, Inc. 7.875%, 9/01/21 40 44,350 ---------- 85,391 ---------- 799,480 ---------- Total Corporates - Investment Grades (cost $11,025,886) 10,935,265 ---------- COMMERCIAL MORTGAGE-BACKED SECURITIES - 3.8% Non-Agency Fixed Rate CMBS - 3.8% Banc of America Commercial Mortgage, Inc. Series 2001-PB1, Class A2 5.787%, 5/11/35 164 167,898 Series 2004-4, Class A3 4.128%, 7/10/42 200 197,530 Series 2004-6, Class A2 4.161%, 12/10/42 140 137,776 Series 2005-6, Class A4 5.181%, 9/10/47 (d) 315 310,604 Series 2006-5, Class A4 5.414%, 9/10/47 355 355,201 Bear Stearns Commercial Mortgage Securities, Inc. 5.70%, 6/11/50 365 376,041 Series 2006-PW12, Class A4 5.711%, 9/11/38 100 102,615 Citigroup Commercial Mortgage Trust Series 2004-C1, Class A4 5.356%, 4/15/40 (d) 110 111,331 Credit Suisse First Boston Mortgage Securities Corp. Series 2003-CK2, Class A2 3.861%, 3/15/36 32 32,065 Series 2004-C1, Class A4 4.75%, 1/15/37 (d) 70 68,342 Credit Suisse Mortgage Capital Certificates Series 2006-C3, Class A3 5.827%, 6/15/38 (d) 90 92,952 Series 2006-C4, Class A3 5.467%, 9/15/39 235 235,629 GE Capital Commercial Mortgage Corp. Series 2005-C3, Class A3FX 4.863%, 7/10/45 360 358,003 Greenwich Capital Commercial Funding Corp. Series 2007-GG9, Class A4 5.444%, 3/10/39 215 216,269 GS Mortgage Securities Corp. II Series 2001-ROCK, Class C 6.878%, 5/03/18 (e) 605 639,962 Series 2004-GG2, Class A6 5.396%, 8/10/38 (d) 80 80,544 Series 2007-GG10, Class A2 5.778%, 8/10/45 490 499,415 JPMorgan Chase Commercial Mortgage Securities Corp. Series 2004-C1, Class A2 4.302%, 1/15/38 60 58,895 Series 2005-CB11, Class A4 5.335%, 8/12/37 170 170,349 Series 2005-LDP3, Class A2 4.851%, 8/15/42 100 99,324 Series 2005-LDP4, Class A2 4.79%, 10/15/42 210 208,337 Series 2005-LDP5, Class A2 5.198%, 12/15/44 60 60,043 Series 2006-CB14, Class A4 5.481%, 12/12/44 (d) 50 50,178 Series 2006-CB15, Class A4 5.814%, 6/12/43 (d) 110 112,971 Series 2006-CB16, Class A4 5.552%, 5/12/45 200 201,766 Series 2006-CB17, Class A4 5.429%, 12/12/43 350 351,943 LB-UBS Commercial Mortgage Trust Series 2003-C3, Class A4 4.166%, 5/15/32 150 143,440 Series 2004-C4, Class A4 5.126%, 6/15/29 (d) 40 40,520 Series 2004-C8, Class A2 4.201%, 12/15/29 125 123,152 Series 2005-C1, Class A4 4.742%, 2/15/30 120 116,572 Series 2005-C7, Class A4 5.197%, 11/15/30 (d) 50 48,932 Series 2006-C3, Class A4 5.661%, 3/15/39 (d) 285 290,049 Series 2006-C4, Class A4 5.883%, 6/15/38 (d) 275 285,381 Series 2006-C6, Class A4 5.372%, 9/15/39 330 329,097 Series 2007-C6, Class A4 5.858%, 7/15/40 210 217,192 Merrill Lynch Mortgage Trust Series 2005-CKI1, Class A6 5.244%, 11/12/37 (d) 40 39,871 Series 2005-MKB2, Class A2 4.806%, 9/12/42 320 318,394 Merrill Lynch/Countrywide Commercial Mortgage Trust Series 2006-2, Class A4 5.909%, 6/12/46 (d) 110 114,209 Series 2006-3, Class A4 5.414%, 7/12/46 (d) 280 279,856 Morgan Stanley Capital I Series 2004-HQ4, Class A5 4.59%, 4/14/40 190 187,626 Series 2007-T27, Class A4 5.651%, 6/13/42 210 215,469 ---------- 8,045,743 ---------- Non-Agency Adjustable Rate CMBS - 0.0% GS Mortgage Securities Corp. II Series 2007-EOP, Class E 5.692%, 3/06/20 (c)(e) 75 72,281 ---------- Total Commercial Mortgage-Backed Securities (cost $8,007,866) 8,118,024 ---------- GOVERNMENT-RELATED - U.S. AGENCIES - 3.2% Agency Debentures - 3.2% Federal Home Loan Bank 4.625%, 10/10/12 470 483,739 5.00%, 11/17/17 3,120 3,234,931 Federal Home Loan Mortgage Corp. 5.125%, 11/17/17 2,670 2,785,988 Federal National Mortgage Association Series 2005 3.875%, 2/15/10 200 201,339 ---------- Total Government-Related - U.S. Agencies (cost $6,639,440) 6,705,997 ---------- GOVERNMENT-RELATED - AGENCIES - 1.6% Development Bank of Japan 1.75%, 6/21/10 JPY 200,000 1,830,694 Kreditanstalt fuer Wiederaufbau 1.75%, 3/23/10 (a) 114,000 1,041,107 Series INTL 1.85%, 9/20/10 (a) 64,000 587,937 ---------- Total Government-Related - Agencies (cost $3,315,964) 3,459,738 ---------- EMERGING MARKETS - NON-INVESTMENT GRADES - 1.0% Non Corporate Sectors - 1.0% Sovereign - 1.0% Republic of Brazil 8.25%, 1/20/34 (a) $ 725 917,125 Republic of Panama 9.375%, 4/01/29 (a) 200 273,000 Republic of Peru 7.35%, 7/21/25 (a) 215 245,100 8.75%, 11/21/33 185 245,125 Republic of Philippines 8.25%, 1/15/14 261 292,320 8.875%, 3/17/15 46 54,119 ---------- Total Emerging Markets - Non-Investment Grades (cost $1,913,602) 2,026,789 ---------- GOVERNMENT-RELATED - SOVEREIGNS - 0.9% Government of Poland Series 1110 6.00%, 11/24/10 (a) PLN 1,745 706,841 Mexican Bonos Series MI10 8.00%, 12/19/13 MXN 14,185 1,296,569 ---------- Total Government-Related - Sovereigns (cost $2,013,711) 2,003,410 ---------- ASSET-BACKED SECURITIES - 0.8% Home Equity Loans - Floating Rate - 0.6% Bear Stearns Asset Backed Securities, Inc. Series 2005-SD1, Class 1A1 5.015%, 4/25/22 (c) $ 2 2,214 Series 2007-HE3, Class M1 5.315%, 4/25/37 (c) 100 64,310 Credit-Based Asset Servicing & Securities, Inc. Series 2005-CB7, Class AF2 5.147%, 11/25/35 (f) 88 87,025 Home Equity Asset Trust Series 2007-3, Class M1 5.215%, 8/25/37 (c) 275 189,522 Home Equity Mortgage Trust Series 2006-1, Class A2 5.367%, 5/25/36 (f) 30 15,019 HSI Asset Securitization Corp. Trust Series 2006-OPT2, Class 2A1 4.945%, 1/25/36 (c) 15 14,774 Indymac Residential Asset Backed Trust Series 2006-D, Class 2A2 4.975%, 11/25/36 (c) 295 277,991 IXIS Real Estate Capital Trust Series 2006-HE3, Class A2 4.965%, 1/25/37 (c) 195 183,940 Lehman XS Trust Series 2007-4N, Class M1 5.315%, 3/25/47 (c) 265 193,001 RAAC Series Series 2006-SP3, Class A1 4.945%, 8/25/36 (c) 128 124,149 Residential Asset Securities Corp. Series 2003-KS3, Class A2 5.465%, 5/25/33 (c) 2 2,214 Specialty Underwriting & Residential Finance Series 2006-BC1, Class A2A 4.945%, 12/25/36 (c) 11 10,965 Structured Asset Investment Loan Trust Series 2006-1, Class A1 4.945%, 1/25/36 (c) 20 20,378 ---------- 1,185,502 ---------- Home Equity Loans - Fixed Rate - 0.2% Countrywide Asset-Backed Certificates Series 2007-S1, Class A3 5.81%, 11/25/36 (d) 275 228,013 Credit-Based Asset Servicing & Securities, Inc. Series 2003-CB1, Class AF 3.45%, 1/25/33 (f) 35 35,034 Home Equity Mortgage Trust Series 2005-4, Class A3 4.742%, 1/25/36 (f) 35 28,187 Residential Funding Mortgage Securities II, Inc. Series 2005-HI2, Class A3 4.46%, 5/25/35 71 70,101 ---------- 361,335 ---------- Credit Cards - Fixed Rate - 0.0% MBNA Credit Card Master Note Trust Series 2003-A6, Class A6 2.75%, 10/15/10 85 84,388 ---------- Autos - Fixed Rate - 0.0% Capital One Prime Auto Receivables Trust Series 2005-1, Class A3 4.32%, 8/15/09 26 25,701 ---------- Total Asset-Backed Securities (cost $1,943,188) 1,656,926 ---------- GOVERNMENT-RELATED - NON-U.S. ISSUERS - 0.5% Sovereigns - 0.4% Russian Federation 7.50%, 3/31/30 (a)(e) 812 923,423 ---------- Supranationals - 0.1% European Investment Bank 5.125%, 5/30/17 175 182,568 ---------- Total Government-Related - Non-U.S. Issuers (cost $1,077,608) 1,105,991 ---------- CORPORATES - NON-INVESTMENT GRADES - 0.5% Industrial - 0.4% Basic - 0.1% Ineos Group Holdings PLC 8.50%, 2/15/16 (e) 75 66,750 Packaging Corp. of America 5.75%, 8/01/13 30 30,660 ---------- 97,410 ---------- Communications - Media - 0.1% Cablevision Systems Corp. Series B 8.00%, 4/15/12 45 43,650 Clear Channel Communications, Inc. 5.50%, 9/15/14 85 64,790 DirecTV Holdings LLC 6.375%, 6/15/15 40 38,400 Echostar DBS Corp. 6.625%, 10/01/14 17 16,915 7.125%, 2/01/16 48 48,960 ---------- 212,715 ---------- Communications - Telecommunications - 0.0% Qwest Communications International, Inc. 7.50%, 2/15/14 25 24,937 Series B 7.50%, 2/15/14 15 14,963 ---------- 39,900 ---------- Consumer Cyclical - Automotive - 0.1% Ford Motor Credit Co. 7.375%, 10/28/09 160 150,599 General Motors Corp. 8.25%, 7/15/23 70 55,650 ---------- 206,249 ---------- Consumer Cyclical - Other - 0.1% Harrah's Operating Co., Inc 5.625%, 6/01/15 30 21,900 5.75%, 10/01/17 11 7,452 6.50%, 6/01/16 39 29,055 MGM Mirage 8.375%, 2/01/11 40 40,900 ---------- 99,307 ---------- Transportation - Services - 0.0% Hertz Corp. 8.875%, 1/01/14 35 35,481 ---------- 691,062 ---------- Utility - 0.1% Electric - 0.1% Dynegy Holdings, Inc. 8.375%, 5/01/16 70 68,425 Edison Mission Energy 7.00%, 5/15/17 60 58,950 NRG Energy, Inc. 7.25%, 2/01/14 65 63,375 7.375%, 2/01/16 35 34,125 ---------- 224,875 ---------- Financial Institutions - 0.0% REITS - 0.0% American Real Estate Partners LP 7.125%, 2/15/13 (e) 25 23,500 7.125%, 2/15/13 20 18,800 ---------- 42,300 ---------- Total Corporates - Non-Investment Grades (cost $1,009,151) 958,237 ---------- MORTGAGE CMO'S - 0.3% Non-Agency Fixed Rate - 0.2% Deutsche Mortgage Securities, Inc. Series 2005-WF1, Class 1A1 5.054%, 6/26/35 (e) 143 142,418 Merrill Lynch Mortgage Investors, Inc. Series 2005-A8, Class A1C1 5.25%, 8/25/36 (d) 106 101,573 Residential Accredit Loans, Inc. Series 2007-QS1, Class 1A1 6.00%, 1/25/37 145 149,652 ---------- 393,643 ---------- Non-Agency Adjustable Rate - 0.1% Countrywide Alternative Loan Trust Series 2005-62, Class 2A1 5.788%, 12/25/35 (c) 60 56,345 Series 2006-OA14, Class 3A1 5.638%, 11/25/46 (c) 189 178,319 Series 2007-OA3, Class M1 5.175%, 4/25/47 (c) 75 49,347 ---------- 284,011 ---------- Total Mortgage CMO's (cost $717,141) 677,654 ----------
Shares ------ NON-CONVERTIBLE - PREFERRED STOCKS - 0.1% Non Corporate Sectors - 0.1% Agencies - Government Sponsored - 0.1% Federal Home Loan Mortgage Corp. 8.375% 2,525 66,029 Federal National Mortgage Association 8.25%A 3,075 79,181 ------- 145,210 ------- Information Technology - 0.0% Semiconductors & Semiconductor Equipment - 0.0% Samsung Electronics Co. Ltd. Zero Coupon (a) 200 90,740 ------- Total Non-Convertible - Preferred Stocks (cost $232,993) 235,950 -------
Principal Amount (000) --------- SHORT-TERM INVESTMENTS - 4.7% Time Deposit - 4.7% The Bank of New York Mellon Corp. 3.25%, 1/02/08 (cost $9,830,000) 9,830 9,830,000 ------------- Total Investments - 98.5% (cost $195,912,275) 208,363,403 Other assets less liabilities - 1.5% 3,087,018 ------------- Net Assets - 100.0% $ 211,450,421 -------------
COMMON STOCKS - 64.2% Financials - 15.8% Capital Markets - 3.9% Bank of New York Mellon Corp. 16,320 795,763 Franklin Resources, Inc. 11,700 1,338,831 The Goldman Sachs Group, Inc. 1,600 344,080 Lehman Brothers Holdings, Inc. 9,900 647,856 Merrill Lynch & Co., Inc. 22,400 1,202,432 Northern Trust Corp. 29,300 2,243,794 ------------ 6,572,756 ------------ Commercial Banks - 0.7% Wells Fargo & Co. 39,200 1,183,448 ------------ Diversified Financial Services - 5.2% Bank of America Corp. 45,800 1,889,708 Citigroup, Inc. 64,700 1,904,768 JPMorgan Chase & Co. 117,600 5,133,240 ------------ 8,927,716 ------------ Insurance - 6.0% ACE Ltd. 55,900 3,453,502 American International Group, Inc. 67,500 3,935,250 Axis Capital Holdings Ltd. 52,700 2,053,719 Hartford Financial Services Group, Inc. 6,200 540,578 Willis Group Holdings Ltd. 5,900 224,023 ------------ 10,207,072 ------------ 26,890,992 ------------ Health Care - 10.3% Health Care Equipment & Supplies - 0.6% Becton Dickinson & Co. 13,100 1,094,898 ------------ Health Care Providers & Services - 5.4% Aetna, Inc. 27,400 1,581,802 UnitedHealth Group, Inc. 60,200 3,503,640 WellPoint, Inc. (a) 46,600 4,088,218 ------------ 9,173,660 ------------ Pharmaceuticals - 4.3% Eli Lilly & Co. 38,100 2,034,159 Forest Laboratories, Inc. (a) 17,800 648,810 Merck & Co., Inc. 28,100 1,632,891 Pfizer, Inc. 59,600 1,354,708 Schering-Plough Corp. 21,400 570,096 Wyeth 23,500 1,038,465 ------------ 7,279,129 ------------ 17,547,687 ------------ Energy - 9.4% Energy Equipment & Services - 1.2% Baker Hughes, Inc. 11,310 917,241 Cameron International Corp. (a) 6,200 298,406 Nabors Industries Ltd. (a) 30,100 824,439 ------------ 2,040,086 ------------ Oil, Gas & Consumable Fuels - 8.2% Chevron Corp. 32,000 2,986,560 ConocoPhillips 9,100 803,530 Exxon Mobil Corp. 52,300 4,899,987 Marathon Oil Corp. 15,700 955,502 Noble Energy, Inc. 15,900 1,264,368 Total SA (ADR) 37,900 3,130,540 ------------ 14,040,487 ------------ 16,080,573 ------------ Information Technology - 8.8% Communications Equipment - 0.8% Cisco Systems, Inc. (a) 51,000 1,380,570 ------------ Computers & Peripherals - 2.7% Hewlett-Packard Co. 8,400 424,032 International Business Machines Corp. 15,200 1,643,120 Sun Microsystems, Inc. (a) 141,325 2,562,223 ------------ 4,629,375 ------------ IT Services - 1.3% Accenture Ltd.-Class A 63,200 2,277,096 ------------ Semiconductors & Semiconductor Equipment - 2.3% Applied Materials, Inc. 35,700 634,032 Broadcom Corp.-Class A (a) 2,400 62,736 Integrated Device Technology, Inc. (a) 42,900 485,199 Intel Corp. 54,100 1,442,306 Nvidia Corp. (a) 35,700 1,214,514 ------------ 3,838,787 ------------ Software - 1.7% Adobe Systems, Inc. (a) 9,200 393,116 Microsoft Corp. 70,200 2,499,120 ------------ 2,892,236 ------------ 15,018,064 ------------ Consumer Staples - 7.5% Beverages - 0.4% PepsiCo, Inc. 8,100 614,790 ------------ Food & Staples Retailing - 1.3% Safeway, Inc. 65,300 2,233,913 ------------ Food Products - 0.9% HJ Heinz Co. 31,300 1,461,084 ------------ Household Products - 1.0% Procter & Gamble Co. 24,200 1,776,764 ------------ Tobacco - 3.9% Altria Group, Inc. 64,400 4,867,352 Loews Corp. - Carolina Group 20,600 1,757,180 ------------ 6,624,532 ------------ 12,711,083 ------------ Industrials - 6.3% Aerospace & Defense - 2.6% Honeywell International, Inc. 12,100 744,997 Lockheed Martin Corp. 8,200 863,132 United Technologies Corp. 37,700 2,885,558 ------------ 4,493,687 ------------ Commercial Services & Supplies - 0.3% Dun & Bradstreet Corp. 6,300 558,369 ------------ Electrical Equipment - 2.6% Emerson Electric Co. 77,400 4,385,484 ------------ Industrial Conglomerates - 0.8% General Electric Co. 35,640 1,321,175 ------------ 10,758,715 ------------ Consumer Discretionary - 3.2% Media - 2.4% Comcast Corp.-Class A (a) 14,070 256,918 News Corp.-Class A 73,000 1,495,770 Time Warner, Inc. 79,700 1,315,847 Viacom, Inc.-Class B (a) 23,800 1,045,296 ------------ 4,113,831 ------------ Multiline Retail - 0.8% Kohl's Corp. (a) 28,000 1,282,400 ------------ 5,396,231 ------------ Telecommunication Services - 2.3% Diversified Telecommunication Services - 2.3% AT&T, Inc. 48,000 1,994,880 CenturyTel, Inc. 17,400 721,404 Verizon Communications, Inc. 29,700 1,297,593 ------------ 4,013,877 ------------ Materials - 0.6% Chemicals - 0.6% Air Products & Chemicals, Inc. 7,200 710,136 Dow Chemical Co. 8,300 327,186 ------------ 1,037,322 ------------ Total Common Stocks (cost $90,864,744) 109,454,544 ------------
CORPORATES - INVESTMENT GRADES - 15.4% Industrial - 7.6% Basic - 0.7% The Dow Chemical Co. 7.375%, 11/01/29 15 16,499 Eastman Chemical Co. 7.25%, 1/15/24 100 108,861 Inco Ltd. 7.75%, 5/15/12 325 354,574 Lubrizol Corp. 5.50%, 10/01/14 180 178,707 Noranda, Inc. 6.00%, 10/15/15 205 207,850 Southern Copper Corp. 7.50%, 7/27/35 195 206,526 Weyerhaeuser Co. 7.375%, 3/15/32 170 170,603 ------------ 1,243,620 ------------ Capital Goods - 0.5% CRH America, Inc. 6.00%, 9/30/16 90 88,019 Hanson Australia Funding Ltd. 5.25%, 3/15/13 120 119,726 Hutchison Whampoa International Ltd. 7.45%, 11/24/33 (b) 100 114,047 Masco Corp. 7.75%, 8/01/29 165 178,625 Tyco International Group SA 6.00%, 11/15/13 115 118,202 Waste Management, Inc. 6.375%, 11/15/12 175 185,031 ------------ 803,650 ------------ Communications - Media - 0.9% BSKYB Finance UK PLC 5.625%, 10/15/15 (b) 85 83,633 News America Holdings, Inc. 8.25%, 10/17/96 60 69,688 9.25%, 2/01/13 65 75,978 News America, Inc. 5.30%, 12/15/14 190 189,022 RR Donnelley & Sons Co. 5.50%, 5/15/15 185 178,004 The Thomson Corp. 5.75%, 2/01/08 460 459,876 Time Warner Cos, Inc. 7.57%, 2/01/24 70 75,918 Time Warner Entertainment Co. 8.375%, 3/15/23 250 294,474 Viacom, Inc. 7.875%, 7/30/30 60 65,117 WPP Finance Corp. 5.875%, 6/15/14 125 133,030 ------------ 1,624,740 ------------ Communications - Telecommunications - 1.9% AT&T Corp. 7.30%, 11/15/11 250 270,877 Bellsouth Capital Funding Corp. 7.12%, 7/15/97 360 376,225 BellSouth Corp. 5.20%, 9/15/14 270 269,465 Embarq Corp. 6.738%, 6/01/13 250 258,594 7.082%, 6/01/16 280 288,507 GTE Corp. 8.75%, 11/01/21 270 330,870 New Cingular Wireless Services, Inc. 8.75%, 3/01/31 155 200,877 Nextel Communications, Inc. Series F 5.95%, 3/15/14 165 155,095 Qwest Corp. 7.50%, 10/01/14 165 167,475 7.875%, 9/01/11 115 119,600 Telefonos de Mexico SAB de CV 4.50%, 11/19/08 139 138,319 Telus Corp. 8.00%, 6/01/11 100 108,347 Verizon Virginia, Inc. Series A 4.625%, 3/15/13 365 352,558 Vodafone Group PLC 7.875%, 2/15/30 155 182,617 ------------ 3,219,426 ------------ Consumer Cyclical - Automotive - 0.0% DaimlerChrysler North America 4.875%, 6/15/10 70 69,689 ------------ Consumer Cyclical - Other - 0.2% Starwood Hotels & Resorts Worldwide, Inc. 7.375%, 11/15/15 141 145,564 7.875%, 5/01/12 98 104,135 Toll Brothers Finance Corp. 5.15%, 5/15/15 30 27,224 ------------ 276,923 ------------ Consumer Cyclical - Retailers - 0.1% CVS Corp. 6.125%, 8/15/16 150 153,973 ------------ Consumer Non-Cyclical - 1.6% Altria Group, Inc. 7.75%, 1/15/27 145 186,817 Anheuser-Busch Cos, Inc. 6.50%, 2/01/43 100 107,125 Bristol-Myers Squibb Co. 6.875%, 8/01/97 425 448,722 Cadbury Schweppes US Finance LLC 5.125%, 10/01/13 (b) 190 189,889 Fisher Scientific International, Inc. 6.125%, 7/01/15 410 407,267 Kraft Foods, Inc. 5.25%, 10/01/13 150 147,473 Reynolds American, Inc. 7.25%, 6/01/12 160 168,906 7.625%, 6/01/16 160 170,079 Safeway, Inc. 4.95%, 8/16/10 400 402,100 5.80%, 8/15/12 155 160,374 Wyeth 6.50%, 2/01/34 285 302,477 ------------ 2,691,229 ------------ Energy - 0.5% Amerada Hess Corp. 7.30%, 8/15/31 140 157,258 Gazprom 6.212%, 11/22/16 (b) 350 339,570 Norsk Hydro 6.36%, 1/15/09 45 45,712 Transocean, Inc. 7.50%, 4/15/31 155 170,273 Valero Energy Corp. 4.75%, 6/15/13 125 121,198 XTO Energy, Inc. 7.50%, 4/15/12 100 109,315 ------------ 943,326 ------------ Services - 0.2% The Western Union Co. 5.93%, 10/01/16 315 314,329 ------------ Technology - 0.7% Electronic Data Systems Corp. Series B 6.50%, 8/01/13 310 313,458 Hewlett-Packard Co. 3.625%, 3/15/08 475 473,895 Motorola, Inc. 6.50%, 9/01/25 105 101,966 7.50%, 5/15/25 20 21,281 7.625%, 11/15/10 64 68,552 Xerox Corp. 7.625%, 6/15/13 35 36,524 9.75%, 1/15/09 104 108,723 ------------ 1,124,399 ------------ Transportation - Airlines - 0.2% Southwest Airlines Co. 5.25%, 10/01/14 415 404,449 ------------ Transportation - Railroads - 0.1% CSX Corp. 5.50%, 8/01/13 50 49,835 Norfolk Southern Corp. 7.90%, 5/15/97 45 52,103 ------------ 101,938 ------------ 12,971,691 ------------ Financial Institutions - 6.5% Banking - 3.7% Bank of Tokyo-Mitsubishi UFJ L 7.40%, 6/15/11 200 216,309 Barclays Bank PLC 8.55%, 6/15/11 (b)(c) 50 52,665 BB&T Capital Trust IV 6.82%, 6/12/57 (c) 175 164,635 Chase Manhattan Corp. 6.00%, 2/15/09 155 156,355 The Chuo Mitsui Trust & Banking Co., Ltd. 5.506%, 4/15/15 (b)(c) 300 275,847 Citicorp Series MTNF 6.375%, 11/15/08 30 30,407 Citigroup, Inc. 3.625%, 2/09/09 160 157,855 Dresdner Funding Trust I 8.151%, 6/30/31 (b) 295 300,879 Fuji JGB Investment 9.87%, 6/30/08 (b)(c) 240 242,192 HBOS PLC 5.375%, 11/01/13 (b)(c) 250 227,905 6.413%, 10/01/35 (b)(c) 400 325,462 HSBC Bank USA 5.875%, 11/01/34 310 284,479 Morgan J P & Co., Inc. 6.25%, 1/15/09 139 140,678 MUFG Capital Finance 1 Ltd. 6.346%, 7/25/16 (c) 170 161,013 Popular North America, Inc. 4.25%, 4/01/08 470 468,995 Rabobank Capital Funding II 5.26%, 12/31/13 (b)(c) 230 214,286 RBS Capital Trust III 5.512%, 9/30/14 (c) 495 455,053 Regions Financing Trust II 6.625%, 5/15/47 (c) 170 140,485 Resona Preferred Global Securities 7.191%, 7/30/15 (b)(c) 413 409,794 Royal Bank of Scotland Group PLC 7.648%, 9/30/31 (c) 250 257,934 Sumitomo Mitsui Banking Corp. 5.625%, 10/15/15 (b)(c) 135 126,055 UBS Preferred Funding Trust II 7.247%, 6/26/11 (c) 250 262,454 UBS Preferred Funding Trust V Series 1 6.243%, 5/15/16 (c) 465 447,729 UFJ Finance Aruba AEC 6.75%, 7/15/13 335 363,934 Unicredito Italiano Capital Trust II 9.20%, 10/05/10 (b)(c) 330 359,623 Wachovia Capital Trust III 5.80%, 3/15/11 (c) 85 75,952 Washington Mutual, Inc. 4.20%, 1/15/10 13 11,614 ------------ 6,330,589 ------------ Brokerage - 0.5% The Goldman Sachs Group, Inc. 3.875%, 1/15/09 126 124,710 5.70%, 9/01/12 325 334,367 7.35%, 10/01/09 34 35,536 Lehman Brothers Holdings, Inc. 7.875%, 8/15/10 150 158,984 Merrill Lynch & Co., Inc Series MTNC 4.125%, 1/15/09 47 46,387 Merrill Lynch & Co., Inc. Series MTNC 4.125%, 9/10/09 160 157,434 ------------ 857,418 ------------ Finance - 0.9% Capital One Bank 6.50%, 6/13/13 200 196,179 Capital One Financial Corp. 5.50%, 6/01/15 23 21,214 CIT Group, Inc. 3.375%, 4/01/09 150 144,539 Countrywide Financial Corp. 6.25%, 5/15/16 297 170,944 Series MTN 5.80%, 6/07/12 86 62,823 Countrywide Home Loans, Inc. Series MTNL 4.00%, 3/22/11 10 7,221 General Electric Capital Corp. 5.875%, 2/15/12 285 296,943 International Lease Finance Corp. 6.375%, 3/15/09 150 151,696 iStar Financial, Inc. 5.15%, 3/01/12 30 25,926 6.00%, 12/15/10 200 182,064 Series B 5.95%, 10/15/13 65 56,640 SLM Corp. 5.375%, 1/15/13 190 169,964 ------------ 1,486,153 ------------ Insurance - 1.3% The Allstate Corp. 6.125%, 5/15/37 (c) 160 154,371 American RE Corp. Series B 7.45%, 12/15/26 140 144,875 CNA Financial Corp. 5.85%, 12/15/14 85 85,140 Hartford Financial Services Group, Inc. 6.375%, 11/01/08 125 126,364 ING Groep NV 5.775%, 12/08/15 (c) 470 433,523 Liberty Mutual Group, Inc. 5.75%, 3/15/14 (b) 200 203,683 Lincoln National Corp. 7.00%, 5/17/66 (c) 345 346,388 North Front Pass Through Trust 5.81%, 12/15/24 (b)(c) 500 478,409 UnitedHealth Group, Inc. 5.25%, 3/15/11 110 111,231 WellPoint, Inc. 5.25%, 1/15/16 75 72,613 ------------ 2,156,597 ------------ REITS - 0.1% Regency Centers LP 5.25%, 8/01/15 225 213,260 ------------ 11,044,017 ------------ Utility - 1.2% Electric - 0.6% Consumers Energy Co. Series D 5.375%, 4/15/13 215 214,405 Dominion Resources, Inc./VA 7.50%, 6/30/66 (c) 305 301,543 FPL Group Capital, Inc. 6.35%, 10/01/66 (c) 55 52,018 6.65%, 6/15/67 (c) 170 163,729 SPI Electricity & Gas Australia Holdings Pty Ltd. 6.15%, 11/15/13 (b) 250 255,096 ------------ 986,791 ------------ Natural Gas - 0.6% CenterPoint Energy Resources Corp. Series B 7.875%, 4/01/13 285 312,926 Enterprise Products Operating LP Series B 5.60%, 10/15/14 150 149,699 Texas Eastern Transmission Corp. 7.30%, 12/01/10 350 375,188 TransCanada Pipelines Ltd. 6.35%, 5/15/67 (c) 180 168,710 ------------ 1,006,523 ------------ 1,993,314 ------------ Non Corporate Sectors - 0.1% Agencies - Not Government Guaranteed - 0.1% Petronas Capital, Ltd. 7.00%, 5/22/12 (b) 150 163,316 ------------ Total Corporates - Investment Grades (cost $26,585,983) 26,172,338 ------------ U.S. TREASURIES - 5.3% U.S. Treasury Bonds 4.50%, 2/15/36 3,385 3,402,189 8.75%, 5/15/17 2,623 3,568,510 U.S. Treasury Notes 4.25%, 11/15/17 1,935 1,968,711 4.875%, 5/31/11 15 15,809 ------------ Total U.S. Treasuries (cost $8,723,761) 8,955,219 ------------ COMMERCIAL MORTGAGE-BACKED SECURITIES - 2.4% Non-Agency Fixed Rate CMBS - 2.4% Banc of America Commercial Mortgage, Inc. Series 2001-PB1, Class A2 5.787%, 5/11/35 1,526 1,563,852 GS Mortgage Securities Corp. II Series 2004-GG2, Class A6 5.396%, 8/10/38 600 604,080 LB-UBS Commercial Mortgage Trust Series 2006-C6, Class A4 5.372%, 9/15/39 235 234,357 Series 2007-C7, Class A3 5.866%, 9/15/45 620 641,337 Morgan Stanley Capital I Series 2005-HQ5, Class A4 5.168%, 1/14/42 1,035 1,029,128 ------------ Total Commercial Mortgage-Backed Securities (cost $4,046,251) 4,072,754 ------------ MORTGAGE PASS-THRU'S - 2.0% Agency ARMS - 1.0% Federal Home Loan Mortgage Corp. Series 2006 6.029%, 9/01/36 (d) 514 522,667 Series 2007 6.05%, 4/01/37 (d) 332 337,144 Federal National Mortgage Association Series 2007 5.925%, 2/01/37 (d) 527 536,241 6.027%, 2/01/37 (d) 326 332,401 ------------ 1,728,453 ------------ Fixed Rate 30-Year - 0.9% Federal Gold Loan Mortgage Corp. Series 2006 7.00%, 8/01/36 928 964,232 Federal National Mortgage Association Series 2006 6.50%, 9/01/36 525 539,491 ------------ 1,503,723 ------------ Non-Agency ARMS - 0.1% Bear Stearns Alt-A Trust Series 2006-3, Class 22A1 6.218%, 5/25/36 (c) 230 224,826 ------------ Total Mortgage Pass-Thru's (cost $3,442,539) 3,457,002 ------------ EMERGING MARKETS - NON-INVESTMENT GRADES - 1.3% Non Corporate Sectors - 1.3% Sovereign - 1.3% Republic of Brazil 8.25%, 1/20/34 855 1,081,575 Republic of Panama 9.375%, 4/01/29 270 368,550 Republic of Peru 8.75%, 11/21/33 395 523,375 Republic of Philippines 8.25%, 1/15/14 231 258,720 8.875%, 3/17/15 44 51,766 ------------ Total Emerging Markets - Non-Investment Grades (cost $2,286,763) 2,283,986 ------------ CORPORATES - NON-INVESTMENT GRADES - 1.3% Industrial - 0.9% Basic - 0.2% Freeport-McMoRan Copper & Gold, Inc. 8.25%, 4/01/15 60 63,600 8.375%, 4/01/17 60 64,350 Packaging Corp. of America 4.375%, 8/01/08 200 198,162 ------------ 326,112 ------------ Capital Goods - 0.0% Bombardier, Inc. 6.75%, 5/01/12 (b) 100 101,250 ------------ Communications - Media - 0.2% Clear Channel Communications, Inc. 5.50%, 9/15/14 150 114,335 Echostar DBS Corp. 6.625%, 10/01/14 18 17,910 7.125%, 2/01/16 47 47,940 RH Donnelley Corp. Series A-3 8.875%, 1/15/16 140 130,900 ------------ 311,085 ------------ Communications - Telecommunications - 0.2% Mobile Telesystems Finance 9.75%, 1/30/08 (b) 230 230,000 Windstream Corp. 8.125%, 8/01/13 149 154,215 ------------ 384,215 ------------ Consumer Cyclical - Automotive - 0.1% Ford Motor Credit Co. 4.95%, 1/15/08 135 134,910 ------------ Consumer Cyclical - Other - 0.2% DR Horton, Inc. 6.50%, 4/15/16 80 69,410 Harrah's Operating Co., Inc 5.625%, 6/01/15 116 84,680 5.75%, 10/01/17 10 6,775 6.50%, 6/01/16 39 29,055 MGM Mirage 6.75%, 9/01/12 60 58,425 Wynn Las Vegas LLC/Corp. 6.625%, 12/01/14 45 44,212 ------------ 292,557 ------------ 1,550,129 ------------ Financial Institutions - 0.2% Banking - 0.2% Northern Rock PLC 5.60%, 4/30/14 (b)(c) 445 275,900 ------------ Insurance - 0.0% Liberty Mutual Group, Inc. 7.80%, 3/15/37 (b) 100 88,340 ------------ 364,240 ------------ Utility - 0.2% Electric - 0.2% Dynegy Holdings, Inc. 8.375%, 5/01/16 70 68,425 Edison Mission Energy 7.00%, 5/15/17 55 54,037 NRG Energy, Inc. 7.25%, 2/01/14 65 63,375 Reliant Energy, Inc. 7.625%, 6/15/14 65 64,350 ------------ 250,187 ------------ Total Corporates - Non-Investment Grades (cost $2,408,853) 2,164,556 ------------ GOVERNMENT-RELATED - NON-U.S. ISSUERS - 1.2% Sovereigns - 1.1% Russian Federation 7.50%, 3/31/30 (b)(e) 955 1,086,711 United Mexican States 5.625%, 1/15/17 680 689,180 ------------ 1,775,891 ------------ Agencies - 0.1% Korea Development Bank 5.75%, 9/10/13 200 206,662 ------------ Total Government-Related - Non-U.S. Issuers (cost $1,973,671) 1,982,553 ------------ ASSET-BACKED SECURITIES - 1.0% Home Equity Loans - Floating Rate - 0.6% Credit-Based Asset Servicing & Securities, Inc. Series 2005-CB7, Class AF2 5.147%, 11/25/35 (e) 83 81,906 Household Home Equity Loan trust Series 2007-1, Class M1 5.329%, 3/20/36 (d) 365 255,500 Newcastle Mortgage Securities Trust Series 2007-1, Class 2A1 4.919%, 4/25/37 (d) 301 287,611 Option One Mortgage Loan Trust Series 2007-2, Class M1 5.225%, 3/25/37 (d) 125 77,575 RAAC Series Series 2006-SP3, Class A1 4.945%, 8/25/36 (d) 61 59,118 Soundview Home Equity Loan Trust Series 2007-OPT2, Class 2A2 4.919%, 7/25/37 (d) 300 287,766 ------------ 1,049,476 ------------ Home Equity Loans - Fixed Rate - 0.3% Countrywide Asset-Backed Certificates Series 2007-S1, Class A3 5.81%, 11/25/36 375 310,926 Credit-Based Asset Servicing & Securities, Inc. Series 2003-CB1, Class AF 3.45%, 1/25/33 (e) 184 181,502 Home Equity Mortgage Trust Series 2005-4, Class A3 4.742%, 1/25/36 (e) 69 54,890 ------------ 547,318 ------------ Autos - Fixed Rate - 0.1% Capital One Prime Auto Receivables Trust Series 2005-1, Class A3 4.32%, 8/15/09 89 88,710 ------------ Other - Floating Rate - 0.0% Libertas Preferred Funding Ltd. Series 2007-3A, Class 2 5.893%, 4/09/47 (b)(d)(f) 260 26,000 ------------ Total Asset-Backed Securities (cost $2,157,277) 1,711,504 ------------ INFLATION-LINKED SECURITIES - 0.9% U.S. Treasury Notes 2.375%, 4/15/11 (TIPS) 1,437 1,497,596 (cost $1,419,144) ------------ NON-CONVERTIBLE - PREFERRED STOCKS - 0.6% Utility - 0.3% Electric - 0.3% Dte Energy Trust I 7.80%A 20,000 499,000 ------------ Industrial - 0.1% Communications - Telecommunications - 0.1% Centaur Funding Corp. Zero Coupon (b) 200 232,125 ------------ Financial Institutions - 0.1% Banking - 0.1% Royal Bank of Scotland Group PLC Zero Coupon 10,000 179,500 ------------ Non Corporate Sectors - 0.1% Agencies - Government Sponsored - 0.1% Federal Home Loan Mortgage Corp. Zero Coupon 2,225 58,184 Federal National Mortgage Association 8.25%A 2,675 68,881 ------------ 127,065 ------------ Total Non-Convertible - Preferred Stocks (cost $1,105,116) 1,037,690 ------------ GOVERNMENT-RELATED - U.S. AGENCIES - 0.5% Agency Debentures - 0.5% Federal Home Loan Bank 5.00%, 11/17/17 $ 655 679,128 Federal Home Loan Mortgage Corp. 5.125%, 11/17/17 245 255,643 ------------ Total Government-Related - U.S. Agencies (cost $919,607) 934,771 ------------ GOVERNMENT-RELATED - U.S. OTHER ISSUERS - 0.2% Texas - 0.2% Dallas-Fort Worth Int'l Arpt Fac Impr Corp. MBIA FSA 7.07%, 11/01/24 (cost $409,203) 400 413,528 ------------ MORTGAGE CMO'S - 0.1% Non-Agency Fixed Rate - 0.1% Deutsche Mortgage Securities, Inc. Series 2005-WF1, Class 1A1 5.054%, 6/26/35 (b) 146 144,874 ------------ Non-Agency Adjustable Rate - 0.0% Countrywide Alternative Loan Trust Series 2007-OA3, Class M1 5.175%, 4/25/47 (d) 110 72,375 ------------ Total Mortgage CMO's (cost $253,735) 217,249 ------------ SHORT-TERM INVESTMENTS - 1.0% Time Deposit - 1.0% The Bank of New York Mellon Corp. 3.25%, 1/02/08 (cost $1,678,000) 1,678 1,678,000 ------------ Total Investments - 97.4% (cost $148,274,647) 166,033,290 Other assets less liabilities - 2.6% 4,433,360 ------------ Net Assets - 100.0% 170,466,650 ------------
(a) Non-income producing security. (b) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities are considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2007, the aggregate market value of these securities amounted to $6,547,551 or 3.8% of net assets. (c) Variable rate coupon, rate shown as of December 31, 2007. (d) Floating Rate Security. Stated interest rate was in effect at December 31, 2007. (e) Coupon rate adjusts periodically based upon a predetermined schedule. Stated interest rate in effect at December 31, 2007. (f) Illiquid security, valued at fair value. (See note A) Glossary: ADR - American Depositary Receipt FSA - Financial Security Assurance Inc. MBIA - Municipal Bond Investors Assurance TIPS - Treasury Inflation Protected Security FINANCIAL FUTURES CONTRACTS (see Note D)
Value at Unrealized Number of Expiration Original December 31, Appreciation/ Type Contracts Month Value 2007 (Depreciation) --------------------------------------------------------------------------------------- Purchased Contracts EURO STOXX 50 March Index 8 2008 $516,316 $518,736 $ 2,420
FORWARD CURRENCY EXCHANGE CONTRACTS (see Note D)
U.S. $ Contract Value on U.S. $ Value at Unrealized Amount Origination December 31, Appreciation/ (000) Date 2007 (Depreciation) -------------------------------------------------------------------------------- Buy Contracts: Swedish Krona settling 1/17/08 3,715 $ 568,184 $ 574,897 $ 6,712 Sale Contracts: Japanese Yen settling 1/08/08 385,336 3,517,796 3,451,649 66,147 Mexican Nuevo Peso settling 1/28/08 14,654 1,334,696 1,340,134 (5,439) Polish Zloty settling 3/06/08 1,747 698,461 709,282 (10,822) Swedish Krona settling 1/17/08 3,715 580,101 574,897 5,204
---------- (a) Position, or a portion thereof, has been segregated to collateralize forward currency exchange contracts. The aggregate market value of these securities amounted to $8,247,721. (b) Non-income producing security. (c) Floating Rate Security. Stated interest rate was in effect at December 31, 2007. (d) Variable rate coupon, rate shown as of December 31, 2007. (e) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities are considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2007, the aggregate market value of these securities amounted to $2,627,236 or 1.2% of net assets. (f) Coupon rate adjusts periodically based upon a predetermined schedule. Stated interest rate in effect at December 31, 2007. An amount equivalent to U.S. $14,474 has been segregated to collateralize margin requirements for the open futures contracts at December 31, 2007. Currency Abbreviations: JPY - Japanese Yen MXN - Mexican Peso PLN - Polish Zloty Glossary: ADR - American Depositary Receipt FSA - Financial Security Assurance, Inc. MBIA - Municipal Bond Investors Assurance TIPS - Treasury Inflation-Protected Security See notes to financial statments. STATEMENT OF OPERATIONS PRO FORMA ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND BALANCED WEALTH STRATEGY PORTFOLIO AllianceBernstein Variable Products Series Fund Balanced Wealth Strategy Portfolio Twelve Months Ended December 31, 2007 (unaudited) AllianceBernstein Variable Products Series Fund Balanced Shares Portfolio ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma AllianceBernstein AllianceBernstein AllianceBernstein Variable Products Variable Products Variable Products Series Fund Series Fund Series Fund Balanced Wealth Balanced Shares Balanced Wealth Strategy Portfolio Portfolio Adjustments Strategy Portfolio -------------------- ------------------- ------------ ------------------- INVESTMENT INCOME Interest (net of foreign taxes withheld of $95 and $0, respectively) $ 3,178,652 $ 3,830,074 $ -0- $ 7,008,726 Dividends (net of foreign taxes withheld of $96,899 and $3,185, respectively) 2,135,969 2,421,960 -0- 4,557,929 -------------------- ------------------- ------------ ------------------- 5,314,621 6,252,034 -0- 11,566,655 -------------------- ------------------- ------------ ------------------- EXPENSES Advisory fee (see Note C) 939,791 1,059,633 -0- 1,999,424 Distribution fee - Class B 409,112 105,170 -0- 514,282 Transfer agency 2,105 1,838 (1,762) 2,181 Custodian 266,655 147,974 (117,081) 297,548 Administrative 94,000 94,000 (94,000) 94,000 Audit & Legal 58,513 55,827 (54,340) 60,000 Printing 28,685 41,161 (19,846) 50,000 Directors' fees 1,550 1,550 (1,550) 1,550 Miscellaneous 17,242 5,674 (2,916) 20,000 -------------------- ------------------- ------------ ------------------- Total expenses 1,817,653 1,512,827 (291,495) 3,038,985 Less: expenses waived and reimbursed by the Adviser (see Note C) (116,796) -0- 116,796 -0- -------------------- ------------------- ------------ ------------------- Net expenses 1,700,857 1,512,827 (174,699) 3,038,985 -------------------- ------------------- ------------ ------------------- Net investment income 3,613,764 4,739,207 174,699 8,527,670 -------------------- ------------------- ------------ ------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS Net realized gain (loss) on: Investment transactions 5,795,832 14,787,087 -0- 20,582,919 Futures 67,564 -0- -0- 67,564 Foreign currency transactions 146,216 -0- -0- 146,216 Net change in unrealized appreciation/depreciation of: Investments (2,158,259)(a) (13,736,973) -0- (15,895,232) Futures (2,781) -0- -0- (2,781) Foreign currency denominated assets and liabilities 1,513 -0- -0- 1,513 -------------------- ------------------- ------------ ------------------- Net gain on investment and foreign currency transactions 3,850,085 1,050,114 -0- 4,900,199 -------------------- ------------------- ------------ ------------------- Contribution from Adviser -0- 352,186 -0- 352,186 -------------------- ------------------- ------------ ------------------- NET INCREASE IN NET ASSETS FROM OPERATIONS $ 7,463,849 $ 6,141,507 $ 174,699 $ 13,780,055 ==================== =================== ============ ===================
-------------------------------------------------------------------------------- (a) Net of accrued foreign capital gain taxes of $1,104. See Notes to Pro Forma AllianceBernstein Variable Products Series Fund Balanced Wealth Strategy Portfolio. STATEMENT OF ASSETS AND LIABILITIES PRO FORMA ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND BALANCED WEALTH STRATEGY PORTFOLIO AllianceBernstein Variable Products Series Fund Balanced Wealth Strategy Portfolio December 31, 2007 (unaudited) AllianceBernstein Variable Products Series Fund Balanced Shares Portfolio --------------------------------------------------------------------------------------------------------------------------------
Pro Forma AllianceBernstein AllianceBernstein AllianceBernstein Variable Products Variable Products Variable Products Series Fund Series Fund Series Fund Balanced Wealth Balanced Shares Balanced Wealth Strategy Portfolio Portfolio Adjustments Strategy Portfolio ------------------ ---------------- ---------------- ------------------- ASSETS Investments in securities, at value (cost $344,173,417) $ 208,363,405 $ 166,033,290 $ -0- $ 374,396,695 Cash 1,040 46 -0- 1,086 Foreign cash, at value (cost $665,922) 713,326(a) -0- -0- 713,326(a) Unrealized appreciation of forward currency exchange contracts 78,063 -0- -0- 78,063 Receivable for investment securities sold 3,032,531 3,984,426 -0- 7,016,957 Receivable for capital stock sold 997,136 6,374 -0- 1,003,510 Dividends and interest receivable 802,380 845,189 -0- 1,647,569 ---------------- ---------------- ---------------- ---------------- Total assets 213,987,881 170,869,325 -0- 384,857,206 ---------------- ---------------- ---------------- ---------------- LIABILITIES Unrealized depreciation of forward currency exchange contracts 16,261 -0- -0- 16,261 Payable for investment securities purchased and foreign currency contracts 2,255,160 -0- -0- 2,255,160 Advisory fee payable 138,373 80,896 -0- 219,269 Custodian fee payable 57,387 50,426 -0- 107,813 Distribution fee payable 44,055 8,357 -0- 52,412 Payable for capital stock redeemed 13,637 179,228 -0- 192,865 Printing fee payable 5,172 53,466 -0- 58,638 Payable for variation margin on futures contracts 1,052 -0- -0- 1,052 Transfer Agent fee payable 116 116 -0- 232 Administrative fee payable -0- 23,749 -0- 23,749 Accrued expenses 6,247 6,437 -0- 12,684 ---------------- ---------------- ---------------- ---------------- Total liabilities 2,537,460 402,675 -0- 2,940,135 ---------------- ---------------- ---------------- ---------------- NET ASSETS $ 211,450,421 $ 170,466,650 $ -0- $ 381,917,071 ---------------- ---------------- ---------------- ---------------- COMPOSITION OF NET ASSETS Capital stock, at par $ 16,309 $ 8,567 $ -0- $ 24,876 Additional paid-in capital 191,255,093 133,507,905 -0- 324,762,998 Undistributed net investment income investment income 2,682,853 4,719,229 -0- 7,402,082 Accumulated net realized gain (loss) on investment and foreign currency transactions 4,957,255 14,472,306 -0- 19,429,561 Net unrealized appreciation (depreciation) of investments and foreign currency denominated assets and liabilities 12,538,911 17,758,643 -0- 30,297,554 ---------------- ---------------- ---------------- ---------------- $ 211,450,421 $ 170,466,650 $ -0- $ 381,917,071 ---------------- ---------------- ---------------- ---------------- CLASS A SHARES Net Assets (b) $ 9,986 $ 131,662,500 (68,609) $ 131,603,877 Shares of capital stock outstanding 765 6,606,433 3,482,932 10,090,130 ---------------- ---------------- ---------------- ---------------- Net asset value per share $ 13.05 $ 19.93 $ 13.04 ---------------- ---------------- ---------------- CLASS B SHARES Net Assets (b) $ 211,440,435 $ 38,804,150 (130,391) $ 250,114,194 Shares of capital stock outstanding 16,308,472 1,960,464 1,030,869 19,299,805 ---------------- ---------------- ---------------- ---------------- Net asset value per share $ 12.97 $ 19.79 $ 12.96 ---------------- ---------------- ----------------
-------------------------------------------------------------------------------- See Notes to Pro Forma AllianceBernstein Variable Products Series Fund Balanced Wealth Strategy Portfolio. (a) An amount equivalent to U.S. $38,598 has been segregated to collateralize margin requirements for the open futures contracts at December 31, 2007. (b) Includes adjustment for estimated proxy costs. NOTES TO FINANCIAL STATEMENTS PRO FORMA ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND BALANCED WEALTH STRATEGY PORTFOLIO December 31, 2007 (unaudited) NOTE A: General The Pro Forma AllianceBernstein Variable Products Series Fund Balanced Wealth Strategy Portfolio Financial Statements give effect to the proposed acquisition (the "Acquisition") of the assets and liabilities of AllianceBernstein Variable Products Series Fund Balanced Shares Portfolio (the "Acquired Portfolio") by AllianceBernstein Variable Products Series Fund Balanced Wealth Strategy Portfolio (the "Portfolio" or "Acquiring Portfolio") pursuant to the Agreement and Plan of Reorganization. The Acquisition would be accomplished by a tax-free exchange of the assets and liabilities of AllianceBernstein Variable Products Series Fund Balanced Shares Portfolio for shares of the Portfolio. The AllianceBernstein Variable Products Series Fund (the "Fund") was incorporated under the laws of the state of Maryland on November 17, 1987. The Portfolio's unaudited Pro Forma Portfolio of Investments, Statement of Assets and Liabilities and Statement of Operations are prepared as though the Acquisition was effective for the period January 1, 2007 - December 31, 2007. You should read them in conjunction with the Portfolio's historical financial statements, which are included in the Portfolio's Statement of Additional Information. The Portfolio's Pro Forma Statement of Operations reflects the assumption that certain expenses would be lower for the combined Portfolio as a result of the Acquisition. Each Portfolio will bear the expenses of the Acquisition on a relative net asset basis, including the cost of proxy solicitation. NOTE B: Significant Accounting Policies The Portfolio's Pro Forma financial statements have been prepared in conformity with U.S. generally accepted accounting principles, which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 1. Security Valuation Portfolio securities are valued at their current market value determined on the basis of market quotations or, if market quotations are not readily available or are deemed unreliable, at "fair value" as determined in accordance with procedures established by and under the general supervision of the Fund's Board of Directors. In general, the market value of securities which are readily available and deemed reliable are determined as follows. Securities listed on a national securities exchange (other than securities listed on The NASDAQ Stock Market, Inc. ("NASDAQ")) or on a foreign securities exchange are valued at the last sale price at the close of the exchange or foreign securities exchange. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices on such day. Securities listed on more than one exchange are valued by reference to the principal exchange on which the securities are traded; securities listed only on NASDAQ are valued in accordance with the NASDAQ Official Closing Price; listed put or call options are valued at the last sale price. If there has been no sale on that day, such securities will be valued at the closing bid prices on that day; open futures contracts and options thereon are valued using the closing settlement price or, in the absence of such a price, the most recent quoted bid price. If there are no quotations available for the day of valuation, the last available closing settlement price is used; securities traded in the over-the-counter market ("OTC") are valued at the mean of the current bid and asked prices as reported by the National Quotation Bureau or other comparable sources; U.S. Government securities and other debt instruments having 60 days or less remaining until maturity are valued at amortized cost if their original maturity was 60 days or less or by amortizing their fair value as of the 61st day prior to maturity if their original term to maturity exceeded 60 days; fixed-income securities, including mortgage backed and asset backed securities, may be valued on the basis of prices provided by a pricing service or at a price obtained from one or more of the major broker/dealers. In cases where broker/dealer quotes are obtained, AllianceBernstein L.P. (the "Adviser") may establish procedures whereby changes in market yields or spreads are used to adjust, on a daily basis, a recently obtained quoted price on a security; and OTC and other derivatives are valued on the basis of a quoted bid price or spread from a major broker/dealer in such security. Securities for which market quotations are not readily available (including restricted securities) or are deemed unreliable are valued at fair value. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, analysis of the issuer's financial statements or other available documents. In addition, the Fund may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Fund values its securities at 4:00 p.m., Eastern Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. To account for this, the Fund may frequently value many of its foreign equity securities using fair value prices based on third party vendor modeling tools to the extent available. 2. Currency Translation Assets and liabilities denominated in foreign currencies and commitments under forward currency exchange contracts are translated into U.S. dollars at the mean of the quoted bid and asked prices of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated into U.S. dollars at the rates of exchange prevailing when such securities were acquired or sold. Income and expenses are translated into U.S. dollars at rates of exchange prevailing when accrued. Net realized gain or loss on foreign currency transactions represents foreign exchange gains and losses from sales and maturities of foreign fixed income investments, foreign currency exchange contracts, holding of foreign currencies, currency gains or losses realized between the trade and settlement dates on foreign investment transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains and losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of net unrealized appreciation and depreciation of investments and foreign currency denominated assets and liabilities. 3. Taxes It is the policy of the Portfolio to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its investment company taxable income and net realized gains, if any, to shareholders. Therefore, no provisions for federal income or excise taxes are required. The Portfolio may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation/depreciation as such income and/or gains are earned. 4. Investment Income and Investment Transactions Dividend income is recorded on the ex-dividend date or as soon as the Portfolio is informed of the dividend. Interest income is accrued daily. Investment transactions are accounted for on the trade date securities are purchased or sold. Investment gains and losses are determined on the identified cost basis. The Portfolio amortizes premiums and accretes discounts as adjustments to interest income. 5. Class Allocations All income earned and expenses incurred by the Portfolio are borne on a pro-rata basis by each outstanding class of shares, based on the proportionate interest in the Portfolio represented by the net assets of such class, except for class specific expenses which are allocated to the respective class. Realized and unrealized gains and losses are allocated among the various share classes based on their respective net assets. 6. Dividends and Distributions The Portfolio declares and distributes dividends and distributions from net investment income and net realized gains, respectively, if any, at least annually. Income dividends and capital gains distributions to shareholders are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with U.S. generally accepted accounting principles. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification. Any income and/or capital gain distributions (if necessary) on the Acquired Portfolio would be made to shareholders of the Portfolio prior to the merger date. 7. Repurchase Agreements It is the policy of the Portfolio that its custodian or designated sub-custodian take control of securities as collateral under repurchase agreements and to determine on a daily basis that the value of such securities are sufficient to cover the value of the repurchase agreements. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of collateral by the Portfolio may be delayed or limited. NOTE C: Advisory Fee and Other Transactions with Affiliates Under the terms of the investment advisory agreement, the Portfolio pays the Adviser an advisory fee at an annual rate of .55% of the first $2.5 billion, .45% of the next $2.5 billion and .40% in excess $5 billion, of the Portfolio's average daily net assets. The fee is accrued daily and paid monthly. The Adviser has agreed to waive its fees and bear certain expenses to the extent necessary to limit total operating expenses on an annual basis to .75% and 1.00% of the daily average net assets for Class A and Class B shares, respectively. Prior to February 12, 2007, the Portfolio's total operating expenses on an annual basis were limited to 1.20% and 1.45% of the daily average net assets for Class A and Class B shares, respectively. For the year ended December 31, 2007 the Adviser waived advisory fees in the amount of $22,796. Pursuant to the advisory agreement, the Portfolio has agreed to reimburse the Adviser for the cost of providing the Portfolio with certain legal and accounting services. Due to the Adviser's agreement to limit total operating expenses as described above, the Adviser waived reimbursement for such services in the amount of $94,000 for the year ended December 31, 2007. The Portfolio compensates AllianceBernstein Investor Services, Inc. ("ABIS"), a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Portfolio. NOTE D: Distribution Plan The Portfolio has adopted a Distribution Plan (the "Plan") for Class B shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Plan the Portfolio pays distribution and servicing fees to AllianceBernstein Investments, Inc. (the "Distributor"), a wholly owned subsidiary of the Adviser, at an annual rate of up to .50% of the Portfolio's average daily net assets attributable to Class B shares. The fees are accrued daily and paid monthly. The Board of Directors currently limits payments under the Plan to .25% of the Portfolio's average daily net assets attributable to Class B shares. The Plan provides that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. NOTE E: Capital Stock The pro-forma combining net asset value per share assumes the issuance of Acquiring Portfolio shares to Acquired Portfolio shareholders in connection with the proposed merger. The number of shares assumed to be issued is equal to the net asset value per share of the Acquired Portfolio divided by the net asset value per share of the Acquiring Portfolio as of December 31, 2007. The pro-forma number of shares outstanding, by class for the combined entity consists of the following at December 31, 2007. Shares of Additional Shares Total Shares Acquiring Portfolio Assumed Issued Outstanding Class of Shares Pre-Combination with Merger Post-Combination ---------------- ---------------------- ------------------ ----------------- Class A 765 10,089,365 10,090,130 Class B 16,308,472 2,991,333 19,299,805 PART C OTHER INFORMATION Item 15. Indemnification It is the Registrant's policy to indemnify its directors and officers, employees and other agents to the maximum extent permitted by Section 2-418 of the General Corporation Law of the State of Maryland, which is incorporated by reference herein and as set forth in Article EIGHTH of Registrant's Charter, filed as Exhibit (a), Article IX of the Registrant's Amended and Restated By-Laws filed as Exhibit (b) and Section 9 of the Distribution Services Agreement filed as Exhibit (e)(1) and Class B Distribution Services Agreement filed as Exhibit (e)(2) in response to Item 23 of the Registrant's Registration Statement filed on Form N-1A (filed Nos. 33-18647 and 811-5398), as set forth below. The Adviser's liability for any loss suffered by the Registrant or its shareholders is set forth in Section 4 of the Advisory Agreement filed as Exhibit (d)(1) in response to Item 23 of the Registrant's Registration Statement filed on Form N-1A (filed Nos. 33-18647 and 811-5398), as set forth below. Article EIGHTH of the Registrant's Charter reads as follows: EIGHTH: (1) To the maximum extent that Maryland law in effect from time to time permits limitation of the liability of directors and officers of a corporation, no present or former director or officer of the Corporation shall be liable to the Corporation or its stockholders for money damages. (2) The Corporation shall have the power, to the maximum extent permitted by Maryland law in effect from time to time, to obligate itself to indemnify, and to pay or reimburse reasonable expenses in advance of final disposition of a proceeding to, (a) any individual who is a present or former director or officer of the Corporation or (b) any individual who, while a director or officer of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner or trustee of another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise from and against any claim or liability to which such person may become subject or which such person may incur by reason of his status as a present or former director or officer of the Corporation. The Corporation shall have the power, with the approval of the Board of Directors, to provide such indemnification and advancement of expenses to a person who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation. (3) The provisions of this Article EIGHTH shall be subject to the limitations of the Investment Company Act. (4) Neither the amendment nor repeal of this Article EIGHTH, nor the adoption or amendment of any other provision of the Charter or Bylaws inconsistent with this Article EIGHTH, shall apply to or affect in any respect the applicability of the preceding sections of this Article EIGHTH with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption. The Advisory Agreement between the Registrant and AllianceBernstein L.P. provides that AllianceBernstein L.P. will not be liable under such agreements for any mistake of judgment or in any event whatsoever except for lack of good faith and that nothing therein shall be deemed to protect, or purport to protect, AllianceBernstein L.P. against any liability to Registrant or its security holders to which it would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties thereunder, or by reason of reckless disregard of its obligations or duties thereunder. The Distribution Services Agreement between the Registrant and AllianceBernstein Investments, Inc. ("ABI") provides that the Registrant will indemnify, defend and hold ABI, and any person who controls it within the meaning of Section 15 of the Securities Act of 1933, as amended (the "Securities Act"), free and harmless from and against any and all claims, demands, liabilities and expenses which ABI or any controlling person may incur arising out of or based upon any alleged untrue statement of a material fact contained in Registrant's Registration Statement or Prospectus or Statement of Additional Information or arising out of, or based upon any alleged omission to state a material fact required to be stated in either thereof or necessary to make the statements in any thereof not misleading, provided that nothing therein shall be so construed as to protect ABI against any liability to Registrant or its security holders to which it would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties, or be reason of reckless disregard of its obligations or duties thereunder. The foregoing summaries are qualified by the entire text of Registrant's Articles of Incorporation, the Advisory Agreement between the Registrant and AllianceBernstein L.P. and the Distribution Services Agreement between the Registrant and ABI. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. In accordance with Release No. IC-11330 (September 2, 1980), the Registrant will indemnify its directors, officers, investment manager and principal underwriters only if (1) a final decision on the merits was issued by the court or other body before whom the proceeding was brought that the person to be indemnified (the indemnitee) was not liable by reason or willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office (disabling conduct) or (2) a reasonable determination is made, based upon a review of the facts, that the indemnitee was not liable by reason of disabling conduct, by (a) the vote of a majority of a quorum of the directors who are neither interested persons of the Registrant as defined in section 2(a)(19) of the Investment Company Act of 1940 nor parties to the proceeding (disinterested, non-party directors), or (b) an independent legal counsel in a written opinion. The Registrant will advance attorneys fees or other expenses incurred by its directors, officers, investment adviser or principal underwriters in defending a proceeding, upon the undertaking by or on behalf of the indemnitee to repay the advance unless it is ultimately determined that he is entitled to indemnification and, as a condition to the advance, (1) the indemnitee shall provide a security for his undertaking, (2) the Registrant shall be insured against losses arising by reason of any lawful advances, or (3) a majority of a quorum of disinterested, non-party directors of the Registrant, or an independent legal counsel in a written opinion, shall determine, based on a review of readily available facts (as opposed to a full trial-type inquiry), that there is reason to believe that the indemnitee ultimately will be found entitled to indemnification. ARTICLE IX of the Registrant's Amended and Restated By-laws reads as follows: ARTICLE IX. Indemnification. To the maximum extent permitted by Maryland law in effect from time to time, the Corporation shall indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, shall pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (a) any individual who is a present or former director or officer of the Corporation and who is made or threatened to be made a party to the proceeding by reason of his or her service in any such capacity or (b) any individual who, while a director or officer of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner or trustee of another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in any such capacity. The Corporation may, with the approval of its Board of Directors or any duly authorized committee thereof, provide such indemnification and advance for expenses to a person who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation. The termination of any claim, action, suit or other proceeding involving any person, by judgment, settlement (whether with or without court approval) or conviction or upon a plea of guilty or nolo contendere, or its equivalent, shall not create a presumption that such person did not meet the standards of conduct required for indemnification or payment of expenses to be required or permitted under Maryland law, these Bylaws or the Charter. Any indemnification or advance of expenses made pursuant to this Article shall be subject to applicable requirements of the 1940 Act. The indemnification and payment of expenses provided in these Bylaws shall not be deemed exclusive of or limit in any way other rights to which any person seeking indemnification or payment of expenses may be or may become entitled under any bylaw, regulation, insurance, agreement or otherwise. Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of the Bylaws or Charter inconsistent with this Article, shall apply to or affect in any respect the applicability of the preceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption. The Registrant participates in a joint directors and officers liability insurance policy issued by the ICI Mutual Insurance Company. Coverage under this policy has been extended to directors, trustees and officers of the investment companies managed by AllianceBernstein L.P. Under this policy, outside trustees and directors are covered up to the limits specified for any claim against them for acts committed in their capacities as trustee or director. A pro rata share of the premium for this coverage is charged to each investment company and to the Adviser. ITEM 16. EXHIBITS: (1) (a) Articles of Amendment and Restatement of the Registrant dated February 1, 2006 - Incorporated by reference to Exhibit (a)(2) to Post-Effective Amendment No. 41 of Registrant's Registration Statement on Form N-1A (File Nos. 33-18647 and 811-5398) filed with the Securities and Exchange Commission on March 1, 2006. (b) Articles of Amendment of Articles of Incorporation of the Registrant, dated January 9, 2008 and filed January 16, 2008 - Incorporated by reference to Exhibit (a)(2) to Post-Effective Amendment No. 44 of Registrant's Registration Statement on Form N-1A (File Nos. 33-18647 and 811-5398), filed with the Securities and Exchange Commission on March 3, 2008. (c) Articles of Amendment of Articles of Incorporation of the Registrant, dated April 28, 2008 and filed April 28, 2008 - Incorporated by reference to Exhibit (a)(3) to Post-Effective Amendment No. 46 of Registrant's Registration Statement on Form N-1A (File Nos. 33-18647 and 811-5398), filed with the Securities and Exchange Commission on April 28, 2008. (d) Articles of Amendment of Articles of Incorporation of the Registrant, dated April 28, 2008 and filed April 28, 2008 - Incorporated by reference to Exhibit (a)(4) to Post-Effective Amendment No. 46 of Registrant's Registration Statement on Form N-1A (File Nos. 33-18647 and 811-5398), filed with the Securities and Exchange Commission on April 28, 2008. (2) Amended and Restated By-Laws of the Registrant - Incorporated by reference to Exhibit 99.77Q1 - Other Exhibits to Form NSAR-A for the Registrant filed with the Securities and Exchange Commission on August 29, 2006. (3) Not applicable. (4) Form of Plan of Acquisition and Liquidation between AllianceBernstein Balanced Wealth Strategy Portfolio and AllianceBernstein Balanced Shares Portfolio, each a series of AllianceBernstein Variable Products Series Fund, Inc. - Constitutes Appendix F to Part A hereof. (5) Not applicable. (6) (a) Form of Investment Advisory Agreement between Registrant and AllianceBernstein L.P. - Incorporated by reference to Exhibit (d)(1) to Post-Effective Amendment No. 40 of Registrant's Registration Statement on Form N-1A (File Nos. 33-18647 and 811-5398) filed with the Securities and Exchange Commission on April 27, 2005. (b) Sub-Advisory Agreement between AllianceBernstein L.P. and Law, Dempsey & Company Limited, relating to the Global Bond Portfolio - Incorporated by reference to Exhibit (5)(b) to Post-Effective Amendment No. 22 of Registrant's Registration Statement on Form N-1A (File Nos. 33-18647 and 811-5398) filed with the Securities and Exchange Commission on April 29, 1998. (7) (a) Distribution Services Agreement between the Registrant and AllianceBernstein Investments, Inc. - Incorporated by reference to Exhibit (6) to Post-Effective Amendment No. 22 of Registrant's Registration Statement on Form N-1A (File Nos. 33-18647 and 811-5398) filed with the Securities and Exchange Commission on April 29, 1998. (b) Class B Distribution Services Agreement between the Registrant and AllianceBernstein Investments, Inc. - Incorporated by reference to Exhibit (c)(2) to Post-Effective Amendment No. 27 of Registrant's Registration Statement on Form N-1A (File Nos. 33-18647 and 811-5398) filed with the Securities and Exchange Commission on May 3, 1999. (8) Not applicable. (9) Custody Agreement between the Registrant and The Bank of New York - Incorporated by reference to Exhibit (g)(1) to Post-Effective Amendment No. 42 of Registrant's Registration Statement on Form N-1A (File Nos. 33-18647 and 811-5398) filed with the Securities and Exchange Commission on April 28, 2006. (10) (a) Rule 12b-1 Class B Distribution Plan - Incorporated by reference to Exhibit (m) to Post-Effective Amendment No. 27 of Registrant's Registration Statement on Form N-1A (File Nos. 33-18647 and 811-5398) filed with the Securities and Exchange Commission on May 3, 1999. (b) Amended and Restated Rule 18f-3 Plan - Incorporated by reference to Exhibit (n) to Post-Effective Amendment No. 36 of the Registrant's Registration Statement on Form N-1A (File Nos. 33-18647 and 811-5398) filed with the Securities and Exchange Commission on February 11, 2004. (11) Form of Opinion and Consent of Seward & Kissel LLP regarding the legality of securities being registered - Filed herewith. (12) Form of Opinion and Consent of Seward & Kissel LLP as to Tax matters - To be filed by amendment. (13) (a) Transfer Agency Agreement between the Registrant and AllianceBernstein Investor Services, Inc. - Incorporated by reference to Exhibit (9) to Post-Effective Amendment No. 22 of Registrant's Registration Statement on Form N-1A (File Nos. 33-18647 and 811-5398) filed with the Securities and Exchange Commission on April 29, 1998. (b) Expense Limitation Undertaking by AllianceBernstein L.P. - Incorporated by reference to Exhibit (h)(2) to Post-Effective Amendment No. 40 of Registrant's Registration Statement on Form N-1A (File Nos. 33-18647 and 811-5398) filed with the Securities and Exchange Commission on April 27, 2005. (c) Form of Expense Limitation Undertaking by AllianceBernstein L.P. - Incorporated by reference to Post-Effective Amendment No. 41 of Registrant's Registration Statement on Form N-1A (File Nos. 33-18647 and 811-5398) filed with the Securities and Exchange Commission on March 1, 2006. (d) Code of Ethics for the Fund - Incorporated by reference to Exhibit (p)(1) to Post-Effective Amendment No. 31 of Registrant's Registration Statement on Form N-1A (File Nos. 33-18647 and 811-5398) filed with the Securities and Exchange Commission on April 26, 2001. (e) Code of Ethics for the AllianceBernstein L.P. and AllianceBernstein Investments, Inc. - Incorporated by reference to Exhibit (p)(2) to Post-Effective Amendment No. 4 of the Registration Statement on Form N-1A of The AllianceBernstein Pooling Portfolios (File Nos. 333-120487 and 811-21673) filed with the Securities and Exchange Commission on December 29, 2006. (14) Consent of Independent Registered Public Accounting Firm - Filed herewith. (15) Not applicable. (16) Powers of Attorney for: David H. Dievler, John H. Dobkin, Michael J. Downey, William H. Foulk, Jr., D. James Guzy, Nancy P. Jacklin, Marc O. Mayer, Marshall C. Turner, Jr. and Earl D. Weiner - Incorporated by reference to Exhibit 16 of Registrant's Registration on Form N-14 (File No. 333-149286), filed with the Securities and Exchange Commission on February 15, 2008. (17) Not applicable. ITEM 17. Undertakings (1) The undersigned registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act 17 CFR 230.145(c), the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The undersigned registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the 1933 Act, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. (3) The undersigned registrant undertakes to file a post-effective amendment to this registration statement upon the closing of the Acquisition described in this registration statement that contains an opinion of counsel supporting the tax matters discussed in this registration statement. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as the Registrant has duly caused this Registration Statement on Form N-14 to be signed on its behalf by the undersigned, duly authorized, in the City of New York and State of New York, on the 26th day of June, 2008. ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. By: Marc O. Mayer* -------------- Marc O. Mayer President Pursuant to the requirements of the Securities Act of 1933, as amended Registration Statement has been signed below by the following persons in the capacities and on the date indicated: SIGNATURE TITLE DATE --------- ----- ---- 1. Principal Executive Officer Marc O. Mayer* President and Chief Executive Officer June 26, 2008 2. Principal Financial and Accounting Officer /s/ Joseph J. Mantineo Treasurer and ------------------------- Chief Financial Joseph J. Mantineo Officer June 26, 2008 3. Majority of the Directors: David H. Dievler* John H. Dobkin* William H. Foulk, Jr.* Michael Downey* D. James Guzy* Nancy P. Jacklin* Marc O. Mayer* Marshall C. Turner, Jr.* Earl D. Weiner* *By: /s/ Andrew L. Gangolf June 26, 2008 ----------------------- Andrew L. Gangolf (Attorney-in-fact) INDEX TO EXHIBITS Exhibit No. Description of Exhibits (11) Form of Opinion and Consent of Seward & Kissel LLP (14) Consent of Independent Registered Public Accounting Firm SK 00250 0157 883816 v2