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



[LOGO]

                ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC.

                          INTERMEDIATE BOND PORTFOLIO
                           LARGE CAP GROWTH PORTFOLIO
                          GROWTH AND INCOME PORTFOLIO
                                GROWTH PORTFOLIO
                         INTERNATIONAL GROWTH PORTFOLIO
                        GLOBAL THEMATIC GROWTH PORTFOLIO
                           SMALL CAP GROWTH PORTFOLIO
                        REAL ESTATE INVESTMENT PORTFOLIO
                         INTERNATIONAL VALUE PORTFOLIO
                         SMALL/MID CAP VALUE PORTFOLIO
                                VALUE PORTFOLIO
                       BALANCED WEALTH STRATEGY PORTFOLIO
                       DYNAMIC ASSET ALLOCATION PORTFOLIO
            (each a "Portfolio" and collectively, the "Portfolios")

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                 c/o AllianceBernstein Investor Services, Inc.
              P.O. Box 786003, San Antonio, Texas 78278-6003
                            Toll Free (800) 221-5672
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                      STATEMENT OF ADDITIONAL INFORMATION
                      May 1, 2013, as amended June 3, 2013

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            This Statement of Additional Information ("SAI") is not a prospectus
but supplements and should be read in conjunction with the current prospectuses
dated May 1, 2013, for AllianceBernstein(R) Variable Products Series (VPS) Fund,
Inc. (the "Fund") that offer Class A shares and Class B shares of the Fund's
Portfolios (each a "Prospectus", and together, the "Prospectuses"). Financial
statements for each Portfolio of the Fund for the year ended December 31, 2012,
are included in the Portfolio's annual report and are incorporated into this SAI
by reference. Copies of the Prospectuses and annual reports may be obtained by
contacting AllianceBernstein Investor Services, Inc. ("ABIS") at the address or
the "For Literature" telephone number shown above or on the Internet at
www.AllianceBernstein.com.



                               TABLE OF CONTENTS
                                                                           PAGE

INFORMATION ABOUT THE PORTFOLIOS AND THEIR INVESTMENTS.......................3

INVESTMENT RESTRICTIONS.....................................................46

MANAGEMENT OF THE FUND......................................................47

EXPENSES OF THE PORTFOLIOS..................................................90

PURCHASE AND REDEMPTION OF SHARES...........................................96

NET ASSET VALUE............................................................101

PORTFOLIO TRANSACTIONS.....................................................104

DIVIDENDS, DISTRIBUTIONS AND TAXES.........................................112

GENERAL INFORMATION........................................................113

FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT REGISTERED
        PUBLIC ACCOUNTING FIRM.............................................129


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

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



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             INFORMATION ABOUT THE PORTFOLIOS AND THEIR INVESTMENTS

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Introduction to the Portfolios
------------------------------

            The Fund is an open-end series investment company designed to fund
variable annuity contracts and variable life insurance policies offered by the
separate accounts of certain life insurance companies. The Fund currently offers
an opportunity to choose among the separately managed pools of assets (the
"Portfolios") described in the Portfolios' Prospectuses, each of which has
differing investment objectives and policies. The Fund currently has thirteen
Portfolios, all of which are described in this SAI.

            Except as noted, the investment objective and policies described
below are not "fundamental policies" within the meaning of the Investment
Company Act of 1940 (the "1940 Act"), and may, therefore, be changed by the
Board of Directors of the Fund (the "Board" or the "Directors") without
shareholder approval. However, no Portfolio will change its investment objective
without at least 60 days' prior written notice to shareholders. There is no
guarantee that a Portfolio will achieve its investment objective. Whenever any
investment policy or restriction states a minimum or maximum percentage of a
Portfolio's assets that may be invested in any security or other asset, it is
intended that such minimum or maximum percentage limitation be determined
immediately after and as a result of such Portfolio's acquisition of such
security or other asset. Accordingly, any later increase or decrease in
percentage beyond the specified limitations resulting from a change in value or
net assets will not be considered a violation of this percentage limitation.

            The Portfolios' shares are offered to insurance company separate
accounts that fund both annuity and life insurance contracts of affiliated and
unaffiliated participating insurance companies. Due to differences of tax
treatment or other considerations, the interests of various contractholders
participating in a Portfolio might at some time be in conflict. The Board of
Directors will monitor for any material conflicts and determine what action, if
any, should be taken.

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

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

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

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

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

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

            A Portfolio may invest in depositary receipts. American Depositary
Receipts ("ADRs") are depositary receipts typically issued by a U.S. bank or
trust company that evidence ownership of underlying securities issued by a
foreign corporation. European Depositary Receipts ("EDRs"), Global Depositary
Receipts ("GDRs") or other types of depositary receipts are typically issued by
non-U.S. banks or trust companies and evidence ownership of underlying
securities issued by either a U.S. or non-U.S. company. Transactions in these
securities may not necessarily be settled in the same currency as transactions
in the securities into which they represent. In addition, the issuers of the
securities of unsponsored depositary receipts are not obligated to disclose
material information in the United States. Generally, ADRs, in registered form,
are designed for use in the U.S. securities markets; EDRs, in bearer form, are
designed for use in European securities markets; and GDRs, in bearer form, are
designed for use in two or more securities markets, such as those of Europe and
Asia.

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

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

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

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

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

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

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

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

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

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

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

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

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

            - Risk of Governmental Regulation of Derivatives. Among other
            things, recent legislation and regulatory developments will
            eventually require the clearing and exchange trading of most
            over-the-counter derivatives investments. It is possible that new
            government regulation of various types of derivative instruments,
            including futures and swaps, may affect a Portfolio's ability to use
            such instruments as a part of its investment strategy.

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

            Other. A Portfolio may purchase and sell derivative instruments only
to the extent that such activities are consistent with the requirements of the
Commodity Exchange Act ("CEA") and the rules adopted by the Commodity Futures
Trading Commission ("CFTC") thereunder. Under CFTC rules, a registered
investment company that conducts more than a minimal amount of trading in
futures, commodity options, swaps and other commodity interests is a commodity
pool and its adviser must register as a commodity pool operator. Under such
rules, registered investment companies are subject to additional disclosure and
reporting requirements. The Adviser and the Portfolios, except for the Dynamic
Asset Allocation Portfolio, have claimed an exclusion from the definition of
commodity pool operator under CFTC Rule 4.5 and are not currently subject to
these registration, disclosure and reporting requirements. This exclusion is not
available to the Dynamic Asset Allocation Portfolio, and the Adviser has
registered as a CPO with respect to this Portfolio. As a result, the Dynamic
Asset Allocation Portfolio will be subject to additional disclosure and
reporting requirements. The CFTC has not yet adopted final rules for these
additional requirements and, therefore, the scope of these requirements is
currently unclear but could potentially affect the Portfolio's expenses.

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

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

            A Portfolio may, for example, enter into forward currency exchange
contracts to attempt to minimize the risk to the Portfolio from adverse changes
in the relationship between the U.S. Dollar and other currencies. A Portfolio
may purchase or sell forward currency exchange contracts for hedging purposes
similar to those described below in connection with its transactions in foreign
currency futures contracts. A Portfolio may also purchase or sell forward
currency exchange contracts for non-hedging purposes as a means of making direct
investments in foreign currencies, as described below under "Currency
Transactions".

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

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

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

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

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

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

            A Portfolio may purchase put options to hedge against a decline in
the value of portfolio securities. If such decline occurs, the put options will
permit the Portfolio to sell the securities at the exercise price or to close
out the options at a profit. By using put options in this way, a Portfolio will
reduce any profit it might otherwise have realized on the underlying security by
the amount of the premium paid for the put option and by transaction costs.

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

            A Portfolio may purchase or write options on securities of the types
in which it is permitted to invest in privately-negotiated (i.e.,
over-the-counter) transactions. By writing a call option, a Portfolio limits its
opportunity to profit from any increase in the market value of the underlying
security above the exercise price of the option. By writing a put option, a
Portfolio assumes the risk that it may be required to purchase the underlying
security for an exercise price above its then current market value, resulting in
a capital loss unless the security subsequently appreciates in value. Where
options are written for hedging purposes, such transactions constitute only a
partial hedge against declines in the value of portfolio securities or against
increases in the value of securities to be acquired, up to the amount of the
premium.

            A Portfolio will effect such transactions only with investment
dealers and other financial institutions (such as commercial banks or savings
and loan institutions) deemed creditworthy by the Adviser, and the Adviser has
adopted procedures for monitoring the creditworthiness of such entities. Options
purchased or written in negotiated transactions may be illiquid and it may not
be possible for the Portfolios to effect a closing transaction at a time when
the Adviser believes it would be advantageous to do so.

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

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

            A Portfolio may also write put or call options on securities indices
to, among other things, earn income. If the value of the chosen index declines
below the exercise price of the put option, the Portfolio has the risk of loss
of the amount of the difference between the exercise price and the closing level
of the chosen index, which it would be required to pay to the buyer of the put
option and which may not be offset by the premium it received upon sale of the
put option. Similarly, if the value of the index is higher than the exercise
price of the call option, the Portfolio has the risk of loss of the amount of
the difference between the exercise price and the closing level of the chosen
index, which may not be offset by the premium it received upon sale of the call
option. If the decline or increase in the value securities index is
significantly below or above the exercise price of the written option, the
Portfolio could experience a substantial loss.

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

            - Other Option Strategies. In an effort to earn extra income, to
adjust exposure to individual securities or markets, or to protect all or a
portion of its portfolio from a decline in value, sometimes within certain
ranges, a Portfolio that invests in equity securities may use option strategies
such as the concurrent purchase of a call or put option, including on individual
securities and stock indices, futures contracts (including on individual
securities and stock indices) or shares of exchange-traded funds ("ETFs") at one
strike price and the writing of a call or put option on the same individual
security, stock index, futures contract or ETF at a higher strike price in the
case of a call option or at a lower strike price in the case of a put option.
The maximum profit from this strategy would result for the call options from an
increase in the value of the individual security, stock index, futures contract
or ETF above the higher strike price or for the put options the decline in the
value of the individual security, stock index, futures contract or ETF below the
lower strike price. If the price of the individual security, stock index,
futures contract or ETF declines in the case of the call option or increases in
the case of the put option, the Portfolio has the risk of losing the entire
amount paid for the call or put options.

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

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

            A Portfolio may write options on foreign currencies for hedging
purposes or to increase return. For example, where a Portfolio anticipates a
decline in the dollar value of non-U.S. Dollar-denominated securities due to
adverse fluctuations in exchange rates it could, instead of purchasing a put
option, write a call option on the relevant currency. If the expected decline
occurs, the option will most likely not be exercised, and the diminution in
value of portfolio securities could be offset by the amount of the premium
received.

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

            - Currency Swaps. A Portfolio may enter into currency swaps for
hedging purposes in an attempt to protect against adverse changes in exchange
rates between the U.S. Dollar and other currencies or for non-hedging purposes
as a means of making direct investments in foreign currencies, as described
below under "Currency Transactions". Currency swaps involve the exchange by a
Portfolio with another party of a series of payments in specified currencies.
Actual principal amounts of currencies may be exchanged by the counterparties at
the initiation, and again upon termination of the transaction. Since currency
swaps are typically individually negotiated, a Portfolio expects to achieve an
acceptable degree of correlation between its portfolio investments and its
currency swaps positions. Therefore, the entire principal value of a currency
swap is subject to the risk that the other party to the swap will default on its
contractual delivery obligations. If there is a default by the other party to
such a transaction, a Portfolio will have contractual remedies pursuant to the
agreements related to the transactions.

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

            Interest rate swaps involve the exchange by a Portfolio with another
party of payments calculated by reference to specified interest rates (e.g., an
exchange of floating-rate payments for fixed-rate payments) computed based on a
contractually-based principal (or "notional") amount.

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

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

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

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

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

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

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

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

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

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

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

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

            The use of forward commitments enables a Portfolio to protect
against anticipated changes in exchange rates, interest rates and/or prices. For
instance, a Portfolio may enter into a forward contract when it enters into a
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. Dollar price of the security
("transaction hedge"). In addition, when a Portfolio believes that a foreign
currency may suffer a substantial decline against the U.S. Dollar, it may enter
into a forward sale contract to sell an amount of that foreign currency
approximating the value of some or all of that Portfolio's securities
denominated in such foreign currency, or when a Portfolio believes that the U.S.
Dollar may suffer a substantial decline against a foreign currency, it may enter
into a forward purchase contract to buy that foreign currency for a fixed dollar
amount ("position hedge"). If the Adviser were to forecast incorrectly the
direction of exchange rate movements, a Portfolio might be required to complete
such when-issued or forward transactions at prices inferior to the then current
market values. When-issued securities and forward commitments may be sold prior
to the settlement date, but a Portfolio enters into when-issued and forward
commitments only with the intention of actually receiving securities or
delivering them, as the case may be. If a Portfolio chooses to dispose of the
right to acquire a when-issued security prior to its acquisition or dispose of
its right to deliver or receive against a forward commitment, it may incur a
gain or loss. Any significant commitment of a Portfolio's assets to the purchase
of securities on a "when, as and if issued" basis may increase the volatility of
the Portfolio's NAV.

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

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

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

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

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

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

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

Investment in Exchange-Traded Funds and Other Investment Companies
------------------------------------------------------------------

            A Portfolio may invest in shares of ETFs, subject to the
restrictions and limitations of the 1940 Act or any applicable rules, exemptive
orders or regulatory guidance. ETFs are pooled investment vehicles, which may be
managed or unmanaged, that generally seek to track the performance of a specific
index. ETFs will not track their underlying indices precisely since the ETFs
have expenses and may need to hold a portion of their assets in cash, unlike the
underlying indices, and the ETFs may not invest in all of the securities in the
underlying indices in the same proportion as the underlying indices for various
reasons. The Portfolios will incur transaction costs when buying and selling ETF
shares, and indirectly bear the expenses of the ETFs. In addition, the market
value of an ETF's shares, which is based on supply and demand in the market for
the ETF's shares, may differ from its NAV. Accordingly, there may be times when
an ETF's shares trade at a discount to its NAV.

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

Loans of Portfolio Securities
-----------------------------

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

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

            A Portfolio will invest any cash collateral in a money market fund
that complies with Rule 2a-7 under the 1940 Act, has been approved by the Board
and is expected to be advised by the Adviser. Any such investment of cash
collateral will be subject to the money market fund's investment risk. The
Portfolio may pay reasonable finders', administrative, and custodial fees in
connection with a loan.

            A Portfolio will not have the right to vote any securities having
voting rights during the existence of the loan. The Portfolio will have the
right to regain record ownership of loaned securities or equivalent securities
in order to exercise voting or ownership rights. When the Portfolio lends its
securities, its investment performance will continue to reflect the value of
securities on loan.

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

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

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

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

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

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

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

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

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

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

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

            Stripped Mortgage-Related Securities. Stripped mortgage-related
securities (SMRS) are mortgage-related securities that are usually structured
with separate classes of securities collateralized by a pool of mortgages or a
pool of mortgage backed bonds or pass-through securities, with each class
receiving different proportions of the principal and interest payments from the
underlying assets. A common type of SMRS has one class of interest-only
securities (IOs) receiving all of the interest payments from the underlying
assets and one class of principal-only securities (POs) receiving all of the
principal payments from the underlying assets. IOs and POs are extremely
sensitive to interest rate changes and are more volatile than mortgage-related
securities that are not stripped. IOs tend to decrease in value as interest
rates decrease and are extremely sensitive to the rate of principal payments
(including prepayments) on the related underlying mortgage assets, and a rapid
rate of principal prepayments may have a material adverse effect on the yield to
maturity of the IO class. POs generally increase in value as interest rates
decrease. If prepayments of the underlying mortgages are greater than
anticipated, the amount of interest earned on the overall pool will decrease due
to the decreasing principal balance of the assets. Due to their structure and
underlying cash flows, SMRS may be more volatile than mortgage-related
securities that are not stripped. Changes in the values of IOs and POs can be
substantial and occur quickly, such as occurred in the first half of 1994 when
the value of many POs dropped precipitously due to increases in interest rates.

            A Portfolio will only invest in SMRS that are issued by the U.S.
Government, its agencies or instrumentalities and supported by the full faith
and credit of the United States. Although SMRS are purchased and sold by
institutional investors through several investment banking firms acting as
brokers or dealers, the complexity of these instruments and the smaller number
of investors in the sector can lend to illiquid markets in the sector.

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

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

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

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

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

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

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

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

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

            Structured Securities. A Portfolio may invest in securities issued
in structured financing transactions, which generally involve aggregating types
of debt assets in a pool or special purpose entity and then issuing new
securities. Types of structured financings include, for example,
mortgage-related and other asset-backed securities. A Portfolio's investments
include investments in structured securities that represent interests in
entities organized and operated solely for the purpose of restructuring the
investment characteristics of debt obligations. This type of restructuring
involves the deposit with or purchase by an entity, such as a corporation or
trust, of specified instruments (such as commercial bank loans) and the issuance
by that entity of one or more classes of securities ("Structured Securities")
backed by, or representing interests in, the underlying instruments. The cash
flow on the underlying instruments may be apportioned among the newly issued
Structured Securities to create securities with different investment
characteristics such as varying maturities, payment priorities and interest rate
provisions, and the extent of the payments made with respect to Structured
Securities is dependent on the extent of the cash flow on the underlying
instruments. Because Structured Securities of the type in which a Portfolio
anticipates it will invest typically involve no credit enhancement, their credit
risk generally will be equivalent to that of the underlying instruments.

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

            Under the terms of subordinated securities, payments that would be
made to their holders may be required to be made to the holders of more senior
securities and/or the subordinated or junior securities may have junior liens,
if they have any rights at all, in any collateral (meaning proceeds of the
collateral are required to be paid first to holders of more senior securities).
As a result, subordinated or junior securities will be disproportionately
affected by a default or even a perceived decline in the creditworthiness of the
issuer.

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

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

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

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

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

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

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

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

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

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

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

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

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

            Reverse repurchase agreements are identical to repurchase agreements
except that rather than buying securities for cash subject to their repurchase
by the seller, a Portfolio sells portfolio assets concurrently with an agreement
by the Portfolio to repurchase the same assets at a later date at a fixed price
slightly higher than the sale price. During the reverse repurchase agreement
period, the Portfolio continues to receive principal and interest payments on
these securities. Generally, the effect of a reverse repurchase agreement is
that the Portfolio can recover all or most of the cash invested in the portfolio
securities involved during the term of the reverse repurchase agreement, while
it will be able to keep the interest income associated with those portfolio
securities. Such transactions are advantageous only if the "interest cost" to
the Portfolio of the reverse repurchase transaction, i.e., the difference
between the sale and repurchase price for the securities, is less than the cost
of otherwise obtaining the cash invested in portfolio securities.

            Reverse repurchase agreements involve the risk that the market value
of the securities the Portfolio is obligated to repurchase under the agreement
may decline below the repurchase price. In the event the buyer of securities
under a reverse repurchase agreement files for bankruptcy or becomes insolvent,
the Portfolio's use of the proceeds of the agreement may be restricted pending a
determination by the other party, or its trustee or receiver, whether to enforce
the Portfolio's obligation to repurchase the securities. In addition, the use of
these investments results in leveraging the Portfolio's common stocks because
the Portfolio uses the proceeds to make investments in other securities. See
"Borrowing and Use of Leverage" below.

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

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

Securities Acquired in Restructurings and Workouts
--------------------------------------------------

            A Portfolio's investments may include fixed-income securities
(particularly lower-rated fixed-income securities) or loan participations that
default or are in risk of default ("Distressed Securities"). A Portfolio's
investments may also include senior obligations of a borrower issued in
connection with a restructuring pursuant to Chapter 11 of the U.S. Bankruptcy
Code (commonly known as "debtor-in-possession" or "DIP" financings). Distressed
Securities may be the subject of restructurings outside of bankruptcy court in a
negotiated workout or in the context of bankruptcy proceedings. In connection
with these investments or an exchange or workout of such securities, a Portfolio
may determine or be required to accept various instruments. These instruments
may include, but are not limited to, equity securities, warrants, rights,
participation interests in sales of assets and contingent-interest obligations.
Depending upon, among other things, the Adviser's evaluation of the potential
value of such securities in relation to the price that could be obtained at any
given time if they were sold, a Portfolio may determine to hold the securities
in its portfolio.

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

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

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

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

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

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

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

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

            A Portfolio may make short sales of securities or maintain a short
position. A short sale is effected by selling a security that a Portfolio does
not own, or if the Portfolio does own such security, it is not to be delivered
upon consummation of sale. A short sale is against the box to the extent that a
Portfolio contemporaneously owns or has the right to obtain securities identical
to those sold. A short sale of a security involves the risk that, instead of
declining, the price of the security sold short will rise. If the price of the
securities sold short increases between the time of a short sale and the time a
Portfolio replaces the borrowed security, the Portfolio will incur a loss;
conversely, if the price declines, the Portfolio will realize a gain. The
potential for the price of a fixed-income security sold short to rise is a
function of both the remaining maturity of the obligation, its creditworthiness
and its yield. Unlike short sales of equities or other instruments, potential
for the price of a fixed-income security to rise may be limited due to the fact
that the security will be no more than par at maturity. However, the short sale
of other instruments or securities generally, including fixed-income securities
convertible into equities or other instruments, a fixed-income security trading
at a deep discount from par or which pays a coupon that is high in relative or
absolute terms, or which is denominated in a currency other than the U.S.
Dollar, involves the possibility of a theoretically unlimited loss since there
is a theoretically unlimited potential for the market price of the security sold
short to increase.

Special Situations
------------------

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

Standby Commitment Agreements
-----------------------------

            A Portfolio may, from time to time, enter into standby commitment
agreements. Such agreements commit a Portfolio, for a stated period of time, to
purchase a stated amount of a security that may be issued and sold to the
Portfolio at the option of the issuer. The price and coupon of the security are
fixed at the time of the commitment. At the time of entering into the agreement
a Portfolio is paid a commitment fee, regardless of whether or not the security
is ultimately issued, which is typically approximately 0.5% of the aggregate
purchase price of the security which the Portfolio has committed to purchase.
The fee is payable whether or not the security is ultimately issued. A Portfolio
will enter into such agreements only for the purpose of investing in the
security underlying the commitment at a yield and price which are considered
advantageous to the Portfolio and which are unavailable on a firm commitment
basis.

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

            The purchase of a security subject to a standby commitment agreement
and the related commitment fee will be recorded on the date on which the
security can reasonably be expected to be issued, and the value of the security
will thereafter be reflected in the calculation of a Portfolio's NAV. The cost
basis of the security will be adjusted by the amount of the commitment fee. In
the event the security is not issued, the commitment fee will be recorded as
income on the expiration date of the standby commitment.

Structured Products
-------------------

            A Portfolio may invest in structured products. Structured products,
including indexed or structured securities, combine the elements of futures
contracts or options with those of debt, preferred equity or a depositary
instrument. Generally, the principal amount, amount payable upon maturity or
redemption, or interest rate of a structured product is tied (either positively
or negatively) to prices, changes in prices, or differences between prices, of
underlying assets, such as securities, currencies, intangibles, goods, articles
or commodities or by reference to an unrelated benchmark related to an objective
index, economic factor or other measure, such as interest rates, currency
exchange rates, commodity indices, and securities indices. The interest rate or
(unlike most fixed-income securities) the principal amount payable at maturity
of a structured product may be increased or decreased depending on changes in
the value of the underlying asset or benchmark.

            Structured products may take a variety of forms. Most commonly, they
are in the form of debt instruments with interest or principal payments or
redemption terms determined by reference to the value of a currency or commodity
or securities index at a future point in time, but may also be issued as
preferred stock with dividend rates determined by reference to the value of a
currency or convertible securities with the conversion terms related to a
particular commodity.

            Investing in structured products may be more efficient and less
expensive for a Portfolio than investing in the underlying assets or benchmarks
and the related derivative. These investments can be used as a means of pursuing
a variety of investment goals, including currency hedging, duration management
and increased total return. In addition, structured products may be a
tax-advantaged investment in that they generate income that may be distributed
to shareholders as income rather than short-term capital gains that may
otherwise result from a derivatives transaction.

            Structured products, however, have more risk than traditional types
of debt or other securities. These products may not bear interest or pay
dividends. The value of a structured product or its interest rate may be a
multiple of a benchmark and, as a result, may be leveraged and move (up or down)
more steeply and rapidly than the benchmark. Under certain conditions, the
redemption value of a structured product could be zero. Structured products are
potentially more volatile and carry greater market risks than traditional debt
instruments. The prices of the structured instrument and the benchmark or
underlying asset may not move in the same direction or at the same time.
Structured products may be less liquid and more difficult to price than less
complex securities or instruments or more traditional debt securities. The risk
of these investments can be substantial with the possibility that the entire
principal amount is at risk. The purchase of structured products also exposes a
Portfolio to the credit risk of the issuer of the structured product.

            Structured Notes and Indexed Securities: A Portfolio may invest in a
particular type of structured instrument sometimes referred to as a "structured
note". The terms of these notes may be structured by the issuer and the
purchaser of the note. Structured notes are derivative debt instruments, the
interest rate or principal of which is determined by an unrelated indicator (for
example, a currency, security, commodity or index thereof). Indexed securities
may include structured notes as well as securities other than debt securities,
the interest rate or principal of which is determined by an unrelated indicator.
The terms of structured notes and indexed securities may provide that in certain
circumstances no principal is due at maturity, which may result in a total loss
of invested capital. Structured notes and indexed securities may be positively
or negatively indexed, so that appreciation of the unrelated indicator may
produce an increase or a decrease in the interest rate or the value of the
structured note or indexed security at maturity may be calculated as a specified
multiple of the change in the value of the unrelated indicator. Therefore, the
value of such notes and securities may be very volatile. Structured notes and
indexed securities may entail a greater degree of market risk than other types
of debt securities because the investor bears the risk of the unrelated
indicator. Structured notes or indexed securities also may be more volatile,
less liquid, and more difficult to accurately price than less complex securities
and instruments or more traditional debt securities.

            Commodity Index-Linked Notes and Commodity-Linked Notes: Structured
products may provide exposure to the commodities markets. These structured notes
may include leveraged or unleveraged commodity index-linked notes, which are
derivative debt instruments with principal and/or coupon payments linked to the
performance of commodity indices. They also include commodity-linked notes with
principal and/or coupon payments linked to the value of particular commodities
or commodities futures contracts, or a subset of commodities and commodities
future contracts. The value of these notes will rise or fall in response to
changes in the underlying commodity, commodity futures contract, subset of
commodities or commodities futures contracts or commodity index. These notes
expose a Portfolio economically to movements in commodity prices. These notes
also are subject to risks, such as credit, market and interest rate risks, that
in general affect the values of debt securities. In addition, these notes are
often leveraged, increasing the volatility of each note's market value relative
to changes in the underlying commodity, commodity futures contract or commodity
index. Therefore, the Portfolio might receive interest or principal payments on
the note that are determined based upon a specified multiple of the change in
value of the underlying commodity, commodity futures contract or index.

            Credit-Linked Securities: Credit-linked securities are issued by a
limited purpose trust or other vehicle that, in turn, invests in a basket of
derivative instruments, such as credit default swaps, interest rate swaps and
other securities, in order to provide exposure to certain high-yield or other
fixed-income markets. For example, a Portfolio may invest in credit-linked
securities as a cash management tool in order to gain exposure to certain
high-yield markets and/or to remain fully invested when more traditional
income-producing securities are not available. Like an investment in a bond,
investments in credit-linked securities represent the right to receive periodic
income payments (in the form of distributions) and payment of principal at the
end of the term of the security. However, these payments are conditioned on the
trust's receipt of payments from, and the trust's potential obligations to, the
counterparties to the derivative instruments and other securities in which the
trust invests. For instance, the trust may sell one or more credit default
swaps, under which the trust would receive a stream of payments over the term of
the swap agreements provided that no event of default has occurred with respect
to the referenced debt obligation upon which the swap is based. If a default
occurs, the stream of payments may stop and the trust would be obligated to pay
the counterparty the par value (or other agreed-upon value) of the referenced
debt obligation. This, in turn, would reduce the amount of income and principal
that a Portfolio would receive as an investor in the trust. A Portfolio's
investments in these instruments are indirectly subject to the risks associated
with derivative instruments, including, among others, credit risk, default or
similar event risk, counterparty risk, interest rate risk, and leverage risk and
management risk. These securities are generally structured as Rule 144A
securities so that they may be freely traded among institutional buyers.
However, changes in the market for credit-linked securities or the availability
of willing buyers may result in the securities becoming illiquid.


Trust Preferred Securities
--------------------------

            Trust preferred securities are preferred securities typically issued
by a special purpose trust subsidiary and backed by subordinated debt of that
subsidiary's parent corporation. Unlike typical asset-backed securities, which
have many underlying payors and usually are overcollateralized, trust preferred
securities have only one underlying payor and are not overcollateralized. Trust
preferred securities may have varying maturity dates, at times in excess of 30
years, or may have no specified maturity date with an onerous interest rate
adjustment if not called on the first call date. Dividend payments of the trust
preferred securities generally coincide with interest payments on the underlying
subordinated debt. Issuers of trust preferred securities and their parents
currently enjoy favorable tax treatment. If the tax characterization of trust
preferred securities were to change, they could be redeemed by the issuers,
resulting in a loss to a Portfolio. Trust preferred securities are subject to
special risks. Dividend payments only will be paid if interest payments on the
underlying obligations are made. These interest payments are dependent on the
financial condition of the parent corporation and may be deferred for up to 20
consecutive quarters. There is also the risk that the underlying obligations,
and thus the trust preferred securities, may be prepaid after a stated call date
or as a result of certain tax or regulatory events, resulting in a lower yield
to maturity.

U.S. Government Securities
--------------------------

            U.S. Government securities may be backed by the full faith and
credit of the United States, supported only by the right of the issuer to borrow
from the U.S. Treasury or backed only by the credit of the issuing agency
itself. These securities include: (i) the following U.S. Treasury securities,
which are backed by the full faith and credit of the United States and differ
only in their interest rates, maturities and times of issuance: U.S. Treasury
bills (maturities of one year or less with no interest paid and hence issued at
a discount and repaid at full face value upon maturity), U.S. Treasury notes
(maturities of one to ten years with interest payable every six months) and U.S.
Treasury bonds (generally maturities of greater than ten years with interest
payable every six months); (ii) obligations issued or guaranteed by U.S.
Government agencies and instrumentalities that are supported by the full faith
and credit of the U.S. Government, such as securities issued by GNMA, the
Farmers Home Administration, the Department of Housing and Urban Development,
the Export-Import Bank, the General Services Administration and the Small
Business Administration, including obligations that are issued by private
issuers that are guaranteed as to principal or interest by the U.S. Government,
its agencies or instrumentalities; and (iii) obligations issued or guaranteed by
U.S. Government agencies and instrumentalities that are not supported by the
full faith and credit of the U.S. Government or a right to borrow from the U.S.
Treasury, such as securities issued by the FNMA and FHLMC (which are, as
described above, now in effect, backed by the full faith and credit of the U.S.
Government due to the conservatorship of the agencies), and governmental
collateralized mortgage obligations ("CMOs"). The maturities of the U.S.
Government securities listed in paragraphs (i) and (ii) above usually range from
three months to 30 years. Such securities, except GNMA certificates, normally
provide for periodic payments of interest in fixed amount with principal
payments at maturity or specified call dates.

            U.S. Government securities also include zero-coupon securities and
principal-only securities and certain stripped mortgage-related securities.
Zero-coupon securities are described in more detail in "Zero-Coupon Treasury
Securities" below, and stripped mortgage-related securities and principal-only
securities are described in more detail in "Mortgage-Related Securities and
Other Asset-Backed Securities-Stripped Mortgage-Related Securities" above. In
addition, other U.S. Government agencies and instrumentalities have issued
stripped securities that are similar to SMRS.

            Inflation-protected securities, or IPS, such as Treasury
Inflation-Protected Securities, or TIPS, are fixed-income securities whose
principal value is periodically adjusted according to the rate of inflation. If
the index measuring inflation falls, the principal value of these securities
will be adjusted downward, and consequently the interest payable on these
securities (calculated with respect to a smaller principal amount) will be
reduced. Repayment of the original bond principal upon maturity (as adjusted for
inflation) is guaranteed in the case of U.S. Treasury inflation-protected
securities. For bonds that do not provide a similar guarantee, the adjusted
principal value of the bond repaid at maturity may be less than the original
principal.

            IPS tend to react to changes in real interest rates. In general, the
price of IPS can fall when real interest rates rise, and can rise when real
interest rates fall. In addition, the value of IPS may be vulnerable to changes
in expectations of inflation. Interest payments on IPS can be unpredictable and
will vary as the principal and/or interest is adjusted for inflation.

            TIPS, which are issued by the U.S Treasury, use the Consumer Price
Index for Urban Consumers, or the CPI, as the inflation measure. The principal
of TIPS increases with inflation and decreases with deflation, as measured by
the CPI. When TIPS mature, the holder is paid the adjusted principal or original
principal, whichever is greater. TIPS pay interest twice a year, at a fixed
rate, which is determined by auction at the time the TIPS are issued. The rate
is applied to the adjusted principal; so, like the principal, interest payments
rise with inflation and fall with deflation. TIPS are issued in terms of 5, 10,
and 30 years.

            Guarantees of securities by the U.S. Government or its agencies or
instrumentalities guarantee only the payment of principal and interest on the
securities, and do not guarantee the securities' yield or value or the yield or
value of the shares of the Portfolio that holds the securities.

            U.S. Government securities are considered among the safest of
fixed-income investments. As a result, however, their yields are generally lower
than the yields available from other fixed-income securities.

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

            Currently the only U.S. Treasury security issued without coupons is
the Treasury bill. Although the U.S. Treasury does not itself issue treasury
notes and bonds without coupons, under the U.S. Treasury STRIPS program interest
and principal on certain long term treasury securities may be maintained
separately in the Federal Reserve book entry system and may be separately traded
and owned. However, in the last few years a number of banks and brokerage firms
have separated ("stripped") the principal portions ("corpus") from the coupon
portions of the U.S. Treasury bonds and notes and sold them separately in the
form of receipts or certificates representing undivided interests in these
instruments (which instruments are generally held by a bank in a custodial or
trust account).

Variable, Floating and Inverse Floating Rate Securities
-------------------------------------------------------

            These securities have interest rates that are reset at periodic
intervals, usually by reference to some interest rate index or market interest
rate. Some of these securities are backed by pools of mortgage loans. Although
the rate adjustment feature may act as a buffer to reduce sharp changes in the
value of these securities, they are still subject to changes in value based on
changes in market interest rates or changes in the issuer's creditworthiness.
Because the interest rate is reset only periodically, changes in the interest
rate on these securities may lag behind changes in prevailing market interest
rates. Also, some of these securities (or the underlying mortgages) are subject
to caps or floors that limit the maximum change in the interest rate during a
specified period or over the life of the security.

Variable Notes
--------------

            Variable amount master demand notes and variable amount
floating-rate notes are obligations that permit the investment of fluctuating
amounts by a Portfolio at varying rates of interest pursuant to direct
arrangements between the Portfolio, as lender, and the borrower. Master demand
notes permit daily fluctuations in the interest rate while the interest rate
under variable amount floating rate notes fluctuate on a weekly basis. These
notes permit daily changes in the amounts borrowed. A Portfolio has the right to
increase the amount under these notes at any time up to the full amount provided
by the note agreement, or to decrease the amount, and the borrower may repay up
to the full amount of the notes without penalty. Because these types of notes
are direct lending arrangements between the lender and the borrower, it is not
generally contemplated that such instruments will be traded and there is no
secondary market for these notes. Master demand notes are redeemable (and, thus,
immediately repayable by the borrower) at face value plus accrued interest at
any time. Variable amount floating-rate notes are subject to next-day redemption
for 14 days after the initial investment therein. With both types of notes,
therefore, a Portfolio's right to redeem depends on the ability of the borrower
to pay principal and interest on demand. In connection with both types of note
arrangements, the Portfolio considers earning power, cash flow and other
liquidity ratios of the issuer. These notes, as such, are not typically rated by
credit rating agencies. Unless they are so rated, a Portfolio may invest in them
only if, at the time of an investment, the issuer has an outstanding issue of
unsecured debt rated Aa3 or better by Moody's or AA- or better by S&P or Fitch.

General
-------

            The Fund has voluntarily agreed that each Portfolio with the ability
to invest in foreign issuers will adhere to the foreign security diversification
guidelines promulgated by certain State Insurance Departments. Pursuant to these
guidelines, each such Portfolio will invest in issuers from a minimum of five
different foreign countries. This minimum will be reduced to four different
foreign countries when securities of foreign issuers comprise less than 80% of
the Portfolio's NAV, three different foreign countries when securities of
foreign issuers comprise less than 60% of the Portfolio's NAV, two different
foreign countries when securities of foreign issuers comprise less than 40% of
the Portfolio's NAV and one foreign country when securities of foreign issuers
comprise less than 20% of the Portfolio's NAV. The Fund has also voluntarily
agreed that each Portfolio that may invest in securities of foreign issuers will
limit its investment in the securities of issuers located in any one country to
20% of the Portfolio's NAV, except that the Portfolio may have an additional 15%
of its NAV invested in securities of issuers located in Australia, Canada,
France, Japan, the United Kingdom or Germany.

            In addition, the Fund has adopted an investment policy, which is not
designated a "fundamental policy" within the meaning of the 1940 Act, of
intending to have each Portfolio comply at all times with the diversification
requirements prescribed in Section 817(h) of the Code or any successor thereto
and the applicable Treasury Regulations thereunder. This policy may be changed
upon notice to shareholders of the Fund, but without their approval. For more
information, see "Dividends, Distributions and Taxes" below.

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

            Borrowing and Use of Leverage. A Portfolio may use borrowings for
investment purposes, subject to the restrictions of the 1940 Act. Borrowings by
a Portfolio result in leveraging of the Portfolio's shares of common stock. The
proceeds of such borrowings will be invested in accordance with the Portfolio's
investment objective and policies. A Portfolio may also create leverage through
the use of derivatives or use leverage for investment purposes by entering into
transactions such as reverse repurchase agreements and forward contracts. This
means that the Portfolio uses the cash proceeds made available during the term
of these transactions to make investments in other securities.

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

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

Real Estate Investments
-----------------------

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

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

Risks of Investments in Securities of Foreign Issuers.
------------------------------------------------------

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

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

            It is contemplated that securities of foreign issuers will be
purchased in over-the-counter markets or on stock exchanges located in the
countries in which the respective principal offices of the issuers of the
various securities are located, if that is the best available market. Foreign
securities markets are generally not as developed or efficient as those in the
United States. While growing in volume, they usually have substantially less
volume than the New York Stock Exchange (the "Exchange"), and securities of some
foreign companies are less liquid and more volatile than securities of
comparable U.S. companies. Similarly, volume and liquidity in most foreign bond
markets is less than in the United States and, at times, volatility of price can
be greater than in the United States. Fixed commissions on foreign stock
exchanges are generally higher than negotiated commissions on U.S. exchanges,
although a Portfolio will endeavor to achieve the most favorable net results on
its portfolio transactions. There is generally less government supervision and
regulation of stock exchanges, brokers and listed companies than in the United
States.

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

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

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

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

            Investors should understand that the expense ratio of a fund
investing in securities of foreign issuers may be higher than investment
companies investing only in domestic securities since, among other things, the
cost of maintaining the custody of securities of foreign issuers is higher and
the purchase and sale of portfolio securities may be subject to higher
transaction charges, such as stamp duties and turnover taxes.

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

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

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

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

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

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

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

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

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

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

            Further, over-the-counter transactions are not subject to the
guarantee of an exchange clearinghouse, and a Portfolio will therefore be
subject to the risk of default by, or the bankruptcy of, the financial
institution serving as its counterparty. The Portfolio will enter into an
over-the-counter transaction only with parties whose creditworthiness has been
reviewed and found to be satisfactory by the Adviser.

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

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

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



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

                            INVESTMENT RESTRICTIONS

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

            Fundamental Investment Policies. The following investment
restrictions may not be changed without approval by the vote of (1) 67% or more
of the shares of that Portfolio represented at a meeting at which more than 50%
of the outstanding shares are present in person or by proxy or (2) more than 50%
of the outstanding shares of that Portfolio, whichever is less.

            As a fundamental policy, a Portfolio:

            (a) may not concentrate investments in an industry as concentration
may be defined under the 1940 Act or the rules and regulations thereunder (as
such statute, rules or regulations may be amended from time to time) or by
guidance regarding, interpretations of, or exemptive orders under, the 1940 Act
or the rules or regulations thereunder published by appropriate regulatory
authorities;(1)

--------------------
(1)   The Real Estate Investment Portfolio has not adopted a policy to
      concentrate investments in any one industry. Although it invests generally
      in the real estate industry sector, the primary economic characteristics
      of companies in this sector are materially different. For example, the
      Real Estate Investment Portfolio invests in equity and mortgage REITs,
      each of which seeks different types of investments. Equity REITs invest
      directly in real estate properties, and mortgage REITs make loans to real
      estate owners and purchase mortgages on real estate. In addition, there
      are many different types of REITs in which the Real Estate Investment
      Portfolio may invest, including, for example, those that invest in
      shopping malls, industrial and office buildings, apartments, warehouses,
      lodging and hotels, and health care facilities. REITs may also invest in
      specific regions, states, or countries. Foreign REITs or other non-U.S.
      real estate investments may have significantly different characteristics
      than those in the United States.

            (b) may not issue any senior security (as that term is defined in
the 1940 Act) or borrow money, except to the extent permitted by the 1940 Act or
the rules and regulations thereunder (as such statute, rules or regulations may
be amended from time to time) or by guidance regarding, or interpretations of,
or exemptive orders under, the 1940 Act or the rules or regulations thereunder
published by appropriate regulatory authorities. For purposes of this
restriction, margin and collateral arrangements, including, for example, with
respect to permitted borrowings, options, futures contracts, options on futures
contracts and other derivatives such as swaps are not deemed to involve the
issuance of a senior security;

            (c) may not make loans except through (i) the purchase of debt
obligations in accordance with its investment objective and policies; (ii) the
lending of portfolio securities; (iii) the use of repurchase agreements; or (iv)
the making of loans to affiliated funds as permitted under the 1940 Act, the
rules and regulations thereunder (as such statutes, rules or regulations may be
amended from time to time), or by guidance regarding, and interpretations of, or
exemptive orders under, the 1940 Act;

            (d) may not purchase or sell real estate except that it may dispose
of real estate acquired as a result of the ownership of securities or other
instruments. This restriction does not prohibit a Portfolio from investing in
securities or other instruments backed by real estate or in securities of
companies engaged in the real estate business;

            (e) may purchase or sell commodities or options thereon to the
extent permitted by applicable law; and

            (f) may not act as an underwriter of securities, except that a
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.

            As a fundamental policy, each Portfolio is diversified (as that term
is defined in the 1940 Act). This means that at least 75% of the Portfolio's
assets consist of:

            o     Cash or cash items;

            o     Government securities;

            o     Securities of other investment companies; and

            o     Securities of any one issuer that represent not more than 10%
                  of the outstanding voting securities of the issuer of the
                  securities and not more than 5% of the total assets of the
                  Portfolio.

Non-Fundamental Investment Policies
-----------------------------------

            As a matter of non-fundamental policy, each Portfolio has adopted a
policy that provides that the Portfolio may not purchase securities on margin,
except (i) as otherwise provided under rules adopted by the SEC under the 1940
Act or by guidance regarding the 1940 Act, or interpretations thereof, and (ii)
that the 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.

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

                             MANAGEMENT OF THE FUND

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

The Adviser
-----------

            The Adviser, a Delaware limited partnership with principal offices
at 1345 Avenue of the Americas, New York, New York 10105, has been retained
under an investment advisory agreement (the "Advisory Agreement") to provide
investment advice and, in general, to conduct the management and investment
program of the Fund under the supervision of the Board. The Adviser is an
investment adviser registered under the Investment Advisers Act of 1940, as
amended.

            The Adviser is a leading global investment management firm
supervising client accounts with assets as of December 31, 2012, totaling
approximately $430 billion. The Adviser provides management services for many of
the largest U.S. public and private employee benefit plans, endowments,
foundations, public employee retirement funds, banks, insurance companies and
high net worth individuals worldwide.

            As of December 31, 2012, the ownership structure of the Adviser,
expressed as a percentage of general and limited partnership interests, was as
follows:

               AXA and its subsidiaries                  61.0%

               Holding                                   37.5

               Unaffiliated holders                       1.5
                                                 ------------------

                                                        100.0%
                                                 ==================

            AXA is a societe anonyme organized under the laws of France and the
holding company for an international group of insurance and related financial
services companies, through certain of its subsidiaries ("AXA and its
subsidiaries"). AllianceBernstein Holding L.P. ("Holding") is a Delaware limited
partnership the units of which ("Holding Units"), are traded publicly on the
Exchange under the ticker symbol "AB". As of December 31, 2012, AXA owned
approximately 1.4% of the issued and outstanding assignments of beneficial
ownership of Holding Units.

            AllianceBernstein Corporation (an indirect wholly-owned subsidiary
of AXA) is the general partner of both Holding and the Adviser.
AllianceBernstein Corporation owns 100,000 general partnership units in Holding
and a 1% general partnership interest in the Adviser. Including both the general
partnership and limited partnership interests in Holding and the Adviser, AXA
and its subsidiaries had an approximate 65.5% economic interest in the Adviser
as of December 31, 2012.

Advisory Agreement and Expenses
-------------------------------

            The Adviser serves as investment manager and adviser of each of the
Portfolios, continuously furnishes an investment program for each Portfolio, and
manages, supervises and conducts the affairs of each Portfolio, subject to the
oversight of the Board.

            Under the Advisory Agreement, the Adviser furnishes advice and
recommendations with respect to the Portfolios' portfolios of securities and
investments, and provides persons satisfactory to the Board to act as officers
of the Fund. Such officers or employees may be employees of the Adviser or of
its affiliates.

            The Adviser is, under each Portfolio's Advisory Agreement,
responsible for certain expenses incurred by the Portfolios, including, for
example, office facilities and certain administrative services, and any expenses
incurred in promoting the sale of shares of the Portfolios (other than the
portion of the promotional expenses borne by the Portfolios in accordance with
an effective plan pursuant to Rule 12b-1 under the 1940 Act, and the costs of
printing prospectuses of the Fund and other reports to shareholders and fees
related to registration with the SEC and with state regulatory authorities).

            The Fund has, under the Advisory Agreement, assumed obligation to
payment of all other expenses. As to the obtaining of services other than those
specifically provided to the Fund by the Adviser, the Fund may employ its own
personnel. For such services, the Fund may also utilize personnel employed by
the Adviser or its affiliates and, in such event, the services will be provided
to the Fund at cost and the payments therefore must be specifically approved by
the Board. The following table shows, for the Portfolios listed, the amounts the
Adviser received for such services during the fiscal year ended December 31,
2012.

PORTFOLIO                                          AMOUNT RECEIVED
---------                                          ---------------

Intermediate Bond Portfolio                            $44,915
Large Cap Growth Portfolio                             $45,150
Growth and Income Portfolio                            $44,814
Growth Portfolio                                       $44,841
International Growth Portfolio                         $44,879
Global Thematic Growth Portfolio                       $45,432
Small Cap Growth Portfolio                             $44,986
Real Estate Investment Portfolio                       $45,659
International Value Portfolio                          $44,851
Small/Mid Cap Value Portfolio                          $45,506
Value Portfolio                                        $45,169
Balanced Wealth Strategy Portfolio                     $45,528
Dynamic Asset Allocation Portfolio                     $49,297


            The Advisory Agreement continues in effect with respect to each
Portfolio, provided that such continuance is specifically approved at least
annually by a vote of a majority of the Fund's outstanding voting securities or
by the Board, including in either case approval by a majority of the Directors
who are not parties to the Advisory Agreement or "interested persons" of such
parties, as defined by the 1940 Act. Most recently, continuance of the Advisory
Agreement was approved for an additional annual term by the Board, including a
majority of the Directors who are not parties to the Advisory Agreement or
interested persons of any such party, at meetings held on May 1-3, 2012, July
31-August 2, 2012 and November 6-8, 2012.

            Any material amendment to the Advisory Agreement must be approved by
the vote of a majority of the outstanding securities of the relevant Portfolio
and by the vote of a majority of the Directors who are not interested persons of
the Fund or the Adviser. The Advisory Agreement is terminable without penalty on
60 days' written notice by a vote of a majority of the outstanding voting
securities of each Portfolio, by a vote of a majority of the Directors, or by
the Adviser on 60 days' written notice, and will automatically terminate in the
event of its assignment. The Advisory Agreement provides that in the absence of
willful misfeasance, bad faith or gross negligence on the part of the Adviser,
or of reckless disregard of its obligations thereunder, the Adviser shall not be
liable for any action or failure to act in accordance with its duties
thereunder.

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

            For services rendered by the Adviser under the Advisory Agreement,
the Portfolios paid the Adviser, effective September 7, 2004, the annual
percentage rates of the average daily NAV as listed below.

                                      CONTRACTUAL FEE, AS A PERCENTAGE OF
PORTFOLIO                             THE PORTFOLIO'S AGGREGATE NET ASSETS
---------                             -------------------------------------

Intermediate Bond Portfolio           .45 of 1% of the first $2.5 billion,
                                      .40 of 1% of the excess over $2.5 billion
                                      up to $5 billion and .35 of 1% of the
                                      excess over $5 billion

Large Cap Growth Portfolio            .75 of 1% of the first $2.5 billion, .65
                                      of 1% of the excess over $2.5 billion up
                                      to $5 billion and .60 of 1% of the excess
                                      over $5 billion

Growth and Income Portfolio           .55 of 1% of the first $2.5 billion,.45
                                      of 1% of the excess over $2.5 billion up
                                      to $5 billion and .40 of 1% of the excess
                                      over $5 billion

International Growth Portfolio        .75 of 1% of the first $2.5 billion, .65
                                      of 1% of the excess over $2.5 billion up
                                      to $5 billion and .60 of 1% of the excess
                                      over $5 billion

Growth Portfolio                      .75 of 1% of the first $2.5 billion, .65
                                      of 1% of the excess over $2.5 billion up
                                      to $5 billion and .60 of 1% of the excess
                                      over $5 billion

Global Thematic Growth Portfolio      .75 of 1% of the first $2.5 billion, .65
                                      of 1% of the excess over $2.5 billion up
                                      to $5 billion and .60 of 1% of the excess
                                      over $5 billion

Small Cap Growth Portfolio            .75 of 1% of the first $2.5 billion, .65
                                      of 1% of the excess over $2.5 billion up
                                      to $5 billion and .60 of 1% of the excess
                                      over $5 billion

Real Estate Investment Portfolio      .55 of 1% of the first $2.5 billion, .45
                                      of 1% of the excess over $2.5 billion up
                                      to $5 billion and .40 of 1% of the excess
                                      over $5 billion

International Value Portfolio         .75 of 1% of the first $2.5 billion, .65
                                      of 1% of the excess over $2.5 billion up
                                      to $5 billion and .60 of 1% of the excess
                                      over $5 billion

Small/Mid Cap Value Portfolio         .75 of 1% of the first $2.5 billion, .65
                                      of 1% of the excess over $2.5 billion up
                                      to $5 billion and .60 of 1% of the excess
                                      over $5 billion

Value Portfolio                       .55 of 1% of the first $2.5 billion, .45
                                      of 1% of the excess over $2.5 billion up
                                      to $5 billion and .40 of 1% of the excess
                                      over $5 billion

Balanced Wealth Strategy Portfolio    .55 of 1% of the first $2.5 billion, .45
                                      of 1% of the excess over $2.5 billion up
                                      to $5 billion and .40 of 1% of the
                                      excess over $5 billion

Dynamic Asset Allocation Portfolio    .70 of 1% of average net assets

            These fees are accrued daily and paid monthly. The Adviser has
contractually agreed for the period from the effective date of the Portfolios'
Prospectuses to the effective date of the subsequent Prospectuses incorporating
the Portfolios' annual financial statements (the "Period") to waive its fee and
bear certain expenses so that total expenses do not exceed, on an annual basis,
the percentages of average daily net assets for the share classes of the
Portfolios listed below. This fee waiver and/or expense reimbursement agreement
automatically extends each year unless the Adviser provides notice to the
Portfolios at least 60 days prior to the end of the Period.

                  Portfolios                       Expense Caps
                  ----------                       ------------

International Value Portfolio                    Class A    1.20%
                                                 Class B    1.45%

Small/Mid Cap Value Portfolio                    Class A    1.20%
                                                 Class B    1.45%

Value Portfolio                                  Class A    1.20%
                                                 Class B    1.45%

Balanced Wealth Strategy Portfolio               Class A     .75%
                                                 Class B    1.00%

Dynamic Asset Allocation Portfolio               Class A     .85%
                                                 Class B    1.10%


            The following table shows, for each Portfolio, the amounts the
Adviser received for such services for the last three fiscal years (or since
commencement of operations).

                                        FISCAL YEAR END
PORTFOLIO                                 DECEMBER 31        AMOUNT RECEIVED
---------                               ---------------      ---------------

Intermediate Bond Portfolio                  2010             $   756,946
                                             2011             $   663,933
                                             2012             $   537,093

Large Cap Growth Portfolio                   2010             $ 3,074,645
                                             2011             $ 3,016,811
                                             2012             $ 2,763,102

Growth and Income Portfolio                  2010             $ 5,452,055
                                             2011             $ 5,209,331
                                             2012             $ 4,970,692

Growth Portfolio                             2010             $   716,734
                                             2011             $   688,064
                                             2012             $   588,623

International Growth Portfolio               2010             $ 1,406,212
                                             2011             $ 1,346,487
                                             2012             $ 1,134,380

Global Thematic Growth Portfolio             2010             $ 1,437,042
                                             2011             $ 1,394,681
                                             2012             $ 1,041,640

Small Cap Growth Portfolio                   2010             $   314,995
                                             2011             $   450,810
                                             2012             $   449,446

Real Estate Investment Portfolio             2010             $   378,158
                                             2011             $   424,010
                                             2012             $   446,395

Small/Mid Cap Value Portfolio                2010             $ 3,552,405
                                             2011             $ 3,851,236
                                             2012             $ 3,713,115

Value Portfolio                              2010             $ 1,135,415
                                             2011             $ 1,066,870
                                             2012             $   929,258

International Value Portfolio                2010             $11,570,726
                                             2011             $ 9,735,549
                                             2012             $ 8,309,168

Balanced Wealth Strategy Portfolio           2010             $ 2,985,277
                                             2011             $ 3,138,158
                                             2012             $ 3,039,523

Dynamic Asset Allocation Portfolio           2011             $         0
                                             2012             $   715,573

            The amounts received in the table above are net of the amounts the
Adviser waived under a contractual fee waiver or otherwise. Amounts waived were:


                                            AMOUNT WAIVED UNDER
                                          CONTRACTUAL FEE WAIVER OR
                                                   OTHERWISE
                                                   ---------

Dynamic Asset Allocation Portfolio            2011              $259,480*
                                              2012              $268,372

--------
* Waiver excludes administrative fee waiver. The Adviser reimbursed the
Portfolio an additional amount of $112,620 in 2011 for certain of its
non-advisory expenses.

            The Adviser may act as an investment adviser to other persons, firms
or corporations, including investment companies, and is investment adviser to
the following registered investment companies: AllianceBernstein Blended Style
Series, Inc., AllianceBernstein Bond Fund, Inc., AllianceBernstein Cap Fund,
Inc., AllianceBernstein Core Opportunities Fund, Inc., AllianceBernstein
Corporate Shares, AllianceBernstein Discovery Growth Fund, Inc.,
AllianceBernstein Equity Income Fund, Inc., AllianceBernstein Exchange Reserves,
AllianceBernstein Fixed-Income Shares, Inc., AllianceBernstein Global Bond Fund,
Inc., AllianceBernstein Global Real Estate Investment Fund, Inc.,
AllianceBernstein Global Risk Allocation Fund, Inc., AllianceBernstein Global
Thematic Growth Fund, Inc., AllianceBernstein Growth and Income Fund, Inc.,
AllianceBernstein High Income Fund, Inc., AllianceBernstein Institutional Funds,
Inc., AllianceBernstein International Growth Fund, Inc., AllianceBernstein Large
Cap Growth Fund, Inc., AllianceBernstein Municipal Income Fund, Inc.,
AllianceBernstein Municipal Income Fund II, AllianceBernstein Trust,
AllianceBernstein Unconstrained Bond Fund, Inc., Sanford C. Bernstein Fund,
Inc., Sanford C. Bernstein Fund II, Inc., The AllianceBernstein Pooling
Portfolios and The AllianceBernstein Portfolios, all open-end investment
companies; and to AllianceBernstein Global High Income Fund, Inc.,
AllianceBernstein Income Fund, Inc., AllianceBernstein Multi-Manager Alternative
Fund, AllianceBernstein National Municipal Income Fund, Inc., Alliance
California Municipal Income Fund, Inc. and Alliance New York Municipal Income
Fund, Inc., all registered closed-end investment companies. The registered
investment companies for which the Adviser serves as investment adviser are
referred to collectively below as the "AllianceBernstein Fund Complex", while
all of these investment companies, except the Sanford C. Bernstein Fund, Inc.
and the AllianceBernstein Multi-Manager Alternative Fund, are referred to
collectively below as the "AllianceBernstein Funds".



Board of Directors Information
------------------------------

            Certain information concerning the Directors is set forth below.


                                                                    OTHER PUBLIC
                                              PORTFOLIOS            COMPANY
NAME,                 PRINCIPAL               IN ALLIANCEBERNSTEIN  DIRECTORSHIPS
ADDRESS*,             OCCUPATION(S)           FUND                  HELD BY
AGE AND               DURING PAST             COMPLEX               DIRECTOR IN
(YEAR FIRST           FIVE YEARS OR           OVERSEEN              THE PAST
ELECTED**)            LONGER                  BY DIRECTOR           FIVE YEARS
----------            -------------           ------------          -------------
                                                           
INDEPENDENT
DIRECTORS

Chairman of the
Board
William H. Foulk,     Investment Adviser         101                None
Jr., #, ##            and an Independent
80                    Consultant since
(1990)                prior to 2008.
                      Previously, he was
                      Senior Manager of
                      Barrett Associates,
                      Inc., a registered
                      investment adviser.
                      He was formerly
                      Deputy Comptroller
                      and Chief Investment
                      Officer of the State
                      of New York and,
                      prior thereto, Chief
                      Investment Officer of
                      the New York Bank for
                      Savings.  He has
                      served as a director
                      or trustee of various
                      AllianceBernstein
                      Funds since 1983 and
                      has been Chairman of
                      the AllianceBernstein
                      Funds and of the
                      Independent Directors
                      Committee of such
                      Funds since 2003.

John H. Dobkin, #     Independent                101                None
71                    Consultant since
(1992)                prior to 2008.
                      Formerly, President
                      of Save Venice, Inc.
                      (preservation
                      organization) from
                      2001 - 2002; Senior
                      Advisor from June
                      1999 - June 2000 and
                      President of Historic
                      Hudson Valley
                      (historic
                      preservation) from
                      December 1989 - May
                      1999.  Previously,
                      Director of the
                      National Academy of
                      Design. He has served
                      as a director or
                      trustee of various
                      AllianceBernstein
                      Funds since 1992.

Michael J. Downey, #  Private Investor           101                Asia Pacific Fund,
69                    since prior to 2008.                          Inc. and The Merger
(2005)                Formerly, managing                            Fund since prior to
                      partner of Lexington                          2008, and Prospect
                      Capital, LLC                                  Acquisition Corp.
                      (investment advisory                          (financial services)
                      firm) from December                           from 2007 until 2009
                      1997 until December
                      2003.  From 1987
                      until 1993, Chairman
                      and CEO of Prudential
                      Mutual Fund
                      Management, director
                      of the Prudential
                      mutual funds and
                      member of the
                      Executive Committee
                      of Prudential
                      Securities Inc. He
                      has served as a
                      director or trustee
                      of the
                      AllianceBernstein
                      Funds since 2005.

D. James Guzy, #      Chairman of the Board      101                Cirrus Logic
77                    of PLX Technology                             Corporation
(2005)                (semi-conductors) and                         (semi-conductors)
                      of SRC Computers                              and PLX Technology
                      Inc., with which he                           (semi-conductors)
                      has been associated                           since prior to 2008
                      since prior to 2008.                          and Intel
                      He was a director of                          Corporation
                      Intel Corporation                             (semi-conductors)
                      (semi-conductors)                             until 2008
                      from 1969 until 2008,
                      and served as
                      Chairman of the
                      Finance Committee of
                      such company for
                      several years until
                      May 2008. He has
                      served as a director
                      or trustee of one or
                      more of the
                      AllianceBernstein
                      Funds since 1982.

Nancy P. Jacklin, #   Professorial Lecturer      101                None
64                    at the Johns Hopkins
(2006)                School of Advanced
                      International Studies
                      since 2008.
                      Formerly, U.S.
                      Executive Director of
                      the International
                      Monetary Fund
                      (December 2002-May
                      2006); Partner,
                      Clifford Chance
                      (1992-2002); Sector
                      Counsel,
                      International Banking
                      and Finance, and
                      Associate General
                      Counsel, Citicorp
                      (1985-1992);
                      Assistant General
                      Counsel
                      (International),
                      Federal Reserve Board
                      of Governors
                      (1982-1985); and
                      Attorney Advisor,
                      U.S. Department of
                      the Treasury
                      (1973-1982).  Member
                      of the Bar of the
                      District of Columbia
                      and of New York; and
                      member of the Council
                      on Foreign Relations.
                      She has served as a
                      director or trustee
                      of the
                      AllianceBernstein
                      Funds since 2006.

Garry L. Moody, #     Independent                101                None
61                    Consultant. Formerly,
(2008)                Partner, Deloitte &
                      Touche LLP
                      (1995-2008) where he
                      held a number of
                      senior positions,
                      including Vice
                      Chairman, and U.S.
                      and Global Investment
                      Management Practice
                      Managing Partner;
                      President, Fidelity
                      Accounting and
                      Custody Services
                      Company (1993-1995);
                      and Partner, Ernst &
                      Young LLP
                      (1975-1993), where he
                      served as the
                      National Director of
                      Mutual Fund Tax
                      Services. He has
                      served as a director
                      or trustee, and as
                      Chairman of the Audit
                      Committee, of the
                      AllianceBernstein
                      Funds since 2008.

Marshall C. Turner,   Private Investor           101                Xilinx, Inc.
Jr., #                since prior to 2008.                          (programmable logic
71                    Interim CEO of MEMC                           semi-conductors)
(2005)                Electronic Materials,                         and MEMC Electronic
                      Inc. (semi-conductor                          Materials, Inc.
                      and solar cell                                (semi-conductor and
                      substrates) from                              solar cell
                      November 2008 until                           substrates) since
                      March 2009. He was                            prior to 2008
                      Chairman and CEO of
                      Dupont Photomasks,
                      Inc. (components of
                      semi-conductor
                      manufacturing),
                      2003-2005, and
                      President and CEO,
                      2005-2006, after the
                      company was acquired
                      and renamed Toppan
                      Photomasks, Inc.  He
                      has served as a
                      director or trustee
                      of one or more of the
                      AllianceBernstein
                      Funds since 1992.

Earl D. Weiner, #     Of Counsel, and            101                None
73                    Partner prior to
(2007)                January 2007, of the
                      law firm Sullivan &
                      Cromwell LLP and
                      member of ABA Federal
                      Regulation of
                      Securities Committee
                      Task Force to draft
                      editions of the Fund
                      Director's Guidebook.
                      He has served as a
                      director or trustee
                      of the AllianceBernstein
                      Funds since 2007 and is
                      Chairman of the Governance
                      and Nominating Committees
                      of the Funds.

INTERESTED DIRECTOR
-------------------

Robert M. Keith +     Senior Vice President      101                None
1345 Avenue of the    of the Adviser++ and
Americas, New York,   head of
NY 10105              AllianceBernstein
52                    Investments, Inc.
(2010)                ("ABI")++ since July
                      2008; Director of ABI
                      and President of the
                      AllianceBernstein
                      Mutual Funds.
                      Previously, he served
                      as Executive Managing
                      Director of ABI from
                      December 2006 to June
                      2008.  Prior to
                      joining ABI in 2006,
                      Executive Managing
                      Director of Bernstein
                      Global Wealth
                      Management, and prior
                      thereto, Senior
                      Managing Director and
                      Global Head of Client
                      Service and Sales of
                      the Adviser's
                      institutional
                      investment management
                      business since 2004.
                      Prior thereto, he was
                      Managing Director and
                      Head of North
                      American Client
                      Service and Sales in
                      the Adviser's
                      institutional
                      investment management
                      business, with which
                      he had been
                      associated since
                      prior to 2004.


-------
*     The address for each of the Fund's Directors is c/o AllianceBernstein
      L.P., Attention: Philip L. Kirstein, 1345 Avenue of the Americas, New
      York, NY 10105.
**    There is no stated term of office for the Fund's Directors.
#     Member of the Audit Committee, the Governance and Nominating Committee and
      the Independent Directors Committee.
##    Member of the Fair Value Pricing Committee.
+     Mr. Keith is an "interested person", as defined in Section 2(a)(19) of the
      1940 Act, of the Fund due to his position as a Senior Vice President of
      the Adviser.
++    The Adviser and ABI are affiliates of the Fund.

            The business and affairs of the Fund are managed under the direction
of the Board. Directors who are not "interested persons" of the Fund as defined
in the 1940 Act, are referred to as "Independent Directors", and Directors who
are "interested persons" of the Fund are referred to as "Interested Directors".
Certain information concerning the Fund's governance structure and each Director
is set forth below.

            Experience, Skills, Attributes, and Qualifications of the Fund's
Directors. The Governance and Nominating Committee of the Board, which is
composed of Independent Directors, reviews the experience, qualifications,
attributes and skills of potential candidates for nomination or election by the
Board, and conducts a similar review in connection with the proposed nomination
of current Directors for re-election by stockholders at any annual or special
meeting of stockholders. In evaluating a candidate for nomination or election as
a Director the Governance and Nominating Committee takes into account the
contribution that the candidate would be expected to make to the diverse mix of
experience, qualifications, attributes and skills that the Governance and
Nominating Committee believes contributes to good governance for the Fund.
Additional information concerning the Governance and Nominating Committee's
consideration of nominees appears in the description of the Committee below.

            The Board believes that, collectively, the Directors have balanced
and diverse experience, qualifications, attributes, and skills, which allow the
Board to operate effectively in governing the Fund and protecting the interests
of stockholders. The Board has concluded that, based on each Director's
experience, qualifications, attributes or skills on an individual basis and in
combination with those of the other Directors, each Director is qualified and
should continue to serve as such.

            In determining that a particular Director was and continues to be
qualified to serve as a Director, the Board has considered a variety of
criteria, none of which, in isolation, was controlling. In addition, the Board
has taken into account the actual service and commitment of each Director during
his or her tenure (including the Director's commitment and participation in
Board and committee meetings, as well as his or her current and prior leadership
of standing and ad hoc committees) in concluding that each should continue to
serve. Additional information about the specific experience, skills, attributes
and qualifications of each Director, which in each case led to the Board's
conclusion that the Director should serve (or continue to serve) as a trustee or
director of the Fund, is provided in the table above and in the next paragraph.

            Among other attributes and qualifications common to all Directors
are their ability to review critically, evaluate, question and discuss
information provided to them (including information requested by the Directors),
to interact effectively with the Adviser, other service providers, counsel and
the Fund's independent registered public accounting firm, and to exercise
effective business judgment in the performance of their duties as Directors. In
addition to his or her service as a Director of the Fund and other
AllianceBernstein Funds as noted in the table above: Mr. Dobkin has experience
as an executive of a number of organizations and served as Chairman of the Audit
Committee of many of the AllianceBernstein Funds from 2001 to 2008; Mr. Downey
has experience in the investment advisory business including as Chairman and
Chief Executive Officer of a large fund complex and as director of a number of
non-AllianceBernstein funds and as Chairman of a non-AllianceBernstein
closed-end fund; Mr. Foulk has experience in the investment advisory and
securities businesses, including as Deputy Comptroller and Chief Investment
Officer of the State of New York (where his responsibilities included bond
issuances, cash management and oversight of the New York Common Retirement
Fund), has served as Chairman of the AllianceBernstein Funds and of the
Independent Directors Committee since 2003, and is active in a number of mutual
fund-related organizations and committees; Mr. Guzy has experience as a
corporate director including as Chairman of a public company and Chairman of the
Finance Committee of a large public technology company; Ms. Jacklin has
experience as a financial services regulator including as U.S. Executive
Director of the International Monetary Fund, which is responsible for ensuring
the stability of the international monetary system, and as a financial services
lawyer in private practice; Mr. Keith has experience as an executive of the
Adviser with responsibility for, among other things, the AllianceBernstein
Funds; Mr. Moody has experience as a certified public accountant including
experience as Vice Chairman and U.S. and Global Investment Management Practice
Partner for a major accounting firm, is a member of the governing council of an
organization of independent directors of mutual funds, and has served as
Chairman of the Audit Committee of the AllianceBernstein Funds since 2008; Mr.
Turner has experience as a director (including as Chairman and Chief Executive
officer of a number of companies) and as a venture capital investor including
prior service as general partner of three institutional venture capital
partnerships; and Mr. Weiner has experience as a securities lawyer whose
practice includes registered investment companies and as Chairman, director or
trustee of a number of boards, and has served as Chairman of the Governance and
Nominating Committee of the AllianceBernstein Funds since 2007. The disclosure
herein of a director's experience, qualifications, attributes and skills does
not impose on such director any duties, obligations, or liability that are
greater than the duties, obligations and liability imposed on such director as a
member of the Board and any committee thereof in the absence of such experience,
qualifications, attributes and skills.

            Board Structure and Oversight Function. The Board is responsible for
oversight of the Fund. The Fund has engaged the Adviser to manage the Fund's
Portfolios on a day-to-day basis. The Board is responsible for overseeing the
Adviser and the Fund's other service providers in the operations of the Fund in
accordance with each Portfolio's investment objective and policies and otherwise
in accordance with its prospectus, the requirements of the 1940 Act and other
applicable Federal, state and other securities and other laws, and the Fund's
charter and bylaws. The Board typically meets in-person at regularly scheduled
meetings eight times throughout the year. In addition, the Directors may meet
in-person or by telephone at special meetings or on an informal basis at other
times. The Independent Directors also regularly meet without the presence of any
representatives of management. As described below, the Board has established
four standing committees - the Audit, Governance and Nominating, Independent
Directors, and Fair Value Pricing Committees - and may establish ad hoc
committees or working groups from time to time, to assist the Board in
fulfilling its oversight responsibilities. Each committee is composed
exclusively of Independent Directors. The responsibilities of each committee,
including its oversight responsibilities, are described further below. The
Independent Directors have also engaged independent legal counsel, and may, from
time to time, engage consultants and other advisors, to assist them in
performing their oversight responsibilities.

            An Independent Director serves as Chairman of the Board. The
Chairman's duties include setting the agenda for each Board meeting in
consultation with management, presiding at each Board meeting, meeting with
management between Board meetings, and facilitating communication and
coordination between the Independent Directors and management. The Directors
have determined that the Board's leadership by an Independent Director and its
committees composed exclusively of Independent Directors is appropriate because
they believe it sets the proper tone to the relationships between the Fund, on
the one hand, and the Adviser and other service providers, on the other, and
facilitates the exercise of the Board's independent judgment in evaluating and
managing the relationships. In addition, the Fund is required to have an
Independent Director as Chairman pursuant to certain 2003 regulatory settlements
involving the Adviser.

            Risk Oversight. The Fund and its Portfolios are subject to a number
of risks, including investment, compliance and operational risks. Day-to-day
risk management with respect to the Fund and its Portfolios resides with the
Adviser or other service providers (depending on the nature of the risk),
subject to supervision by the Adviser. The Board has charged the Adviser and its
affiliates with (i) identifying events or circumstances the occurrence of which
could have demonstrable and material adverse effects on the Fund or its
Portfolios; (ii) to the extent appropriate, reasonable or practicable,
implementing processes and controls reasonably designed to lessen the
possibility that such events or circumstances occur or to mitigate the effects
of such events or circumstances if they do occur; and (iii) creating and
maintaining a system designed to evaluate continuously, and to revise as
appropriate, the processes and controls described in (i) and (ii) above.

            Risk oversight forms part of the Board's general oversight of the
Portfolios' investment programs and operations and is addressed as part of
various regular Board and committee activities. The Fund's investment management
and business affairs are carried out by or through the Adviser and other service
providers. Each of these persons has an independent interest in risk management
but the policies and the methods by which one or more risk management functions
are carried out may differ from the Fund's and each other's in the setting of
priorities, the resources available or the effectiveness of relevant controls.
Oversight of risk management is provided by the Board and the Audit Committee.
The Directors regularly receive reports from, among others, management
(including the Global Heads of Investment Risk and Trading Risk of the Adviser),
the Fund's Senior Officer (who is also the Fund's chief compliance officer),
independent registered public accounting firm and counsel, and internal auditors
for the Adviser, as appropriate, regarding risks faced by the Fund and its
Portfolios and the Adviser's risk management programs.

            Not all risks that may affect the Fund and its Portfolios can be
identified, nor can controls be developed to eliminate or mitigate their
occurrence or effects. It may not be practical or cost-effective to eliminate or
mitigate certain risks, the processes and controls employed to address certain
risks may be limited in their effectiveness, and some risks are simply beyond
the reasonable control of the Fund or the Adviser, its affiliates or other
service providers. Moreover, it is necessary to bear certain risks (such as
investment-related risks) to achieve the Portfolios' goals. As a result of the
foregoing and other factors the Fund's and its Portfolios' ability to manage
risk is subject to substantial limitations.

            Board Committees. The Board has four standing committees - an Audit
Committee, a Governance and Nominating Committee, a Fair Value Pricing Committee
and an Independent Directors Committee. The members of the Audit, Governance and
Nominating, Fair Value Pricing, and Independent Directors Committees are
identified above.

            The function of the Audit Committee is to assist the Board in its
oversight of the Portfolios' financial reporting process. The Audit Committee
met twice during each Portfolios' most recently completed fiscal year.

            The function of the Governance and Nominating Committee includes the
nomination of persons to fill any vacancies or newly created positions on the
Board. The Governance and Nominating Committee met three times during each
Portfolios' most recently completed fiscal year.

            The Board has adopted a charter for its Governance and Nominating
Committee. Pursuant to the charter, the Committee assists the Board in carrying
out its responsibilities with respect to governance of the Fund and identifies,
evaluates, selects and nominates candidates for the Board. The Committee may
also set standards or qualifications for Directors and reviews at least annually
the performance of each Director, taking into account factors such as attendance
at meetings, adherence to Board policies, preparation for and participation at
meetings, commitment and contribution to the overall work of the Board and its
committees, and whether there are health or other reasons that might affect the
Director's ability to perform his or her duties. The Committee may consider
candidates as Directors submitted by the Fund's current Board members, officers,
the Adviser, stockholders and other appropriate sources.

            The Governance and Nominating Committee will consider candidates for
nomination as a Director submitted by a shareholder or group of shareholders who
have beneficially owned at least 5% of a Portfolio's common stock or shares of
beneficial interest for at least two years prior to the time of submission and
who timely provide specified information about the candidates and the nominating
shareholder or group. To be timely for consideration by the Governance and
Nominating Committee, the submission, including all required information, must
be submitted in writing to the attention of the Secretary at the principal
executive offices of the Fund no less than 120 days before the date of the proxy
statement for the previous year's annual meeting of shareholders. If the Fund
did not hold an annual meeting of shareholders in the previous year, the
submission must be delivered or mailed and received within a reasonable amount
of time before the Fund begins to print and mail its proxy materials. Public
notice of such upcoming annual meeting of shareholders may be given in a
shareholder report or other mailing to shareholders or by other means deemed by
the Governance and Nominating Committee or the Board to be reasonably calculated
to inform shareholders.

            Shareholders submitting a candidate for consideration by the
Governance and Nominating Committee must provide the following information to
the Governance and Nominating Committee: (i) a statement in writing setting
forth (A) the name, date of birth, business address and residence address of the
candidate; (B) any position or business relationship of the candidate, currently
or within the preceding five years, with the shareholder or an associated person
of the shareholder as defined below; (C) the class or series and number of all
shares of a Portfolio owned of record or beneficially by the candidate; (D) any
other information regarding the candidate that is required to be disclosed about
a nominee in a proxy statement or other filing required to be made in connection
with the solicitation of proxies for election of Directors pursuant to Section
20 of the 1940 Act and the rules and regulations promulgated thereunder; (E)
whether the shareholder believes that the candidate is or will be an "interested
person" of the Fund (as defined in the 1940 Act) and, if believed not to be an
"interested person", information regarding the candidate that will be sufficient
for the Fund to make such determination; and (F) information as to the
candidate's knowledge of the investment company industry, experience as a
director or senior officer of public companies, directorships on the boards of
other registered investment companies and educational background; (ii) the
written and signed consent of the candidate to be named as a nominee and to
serve as a Director if elected; (iii) the written and signed agreement of the
candidate to complete a directors' and officers' questionnaire if elected; (iv)
the shareholder's consent to be named as such by the Fund; (v) the class or
series and number of all shares of each Portfolio of the Fund owned beneficially
and of record by the shareholder and any associated person of the shareholder
and the dates on which such shares were acquired, specifying the number of
shares owned beneficially but not of record by each, and stating the names of
each as they appear on the Fund's record books and the names of any nominee
holders for each; and (vi) a description of all arrangements or understandings
between the shareholder, the candidate and/or any other person or persons
(including their names) pursuant to which the recommendation is being made by
the shareholder. "Associated person of the shareholder" means any person who is
required to be identified under clause (vi) of this paragraph and any other
person controlling, controlled by or under common control with, directly or
indirectly, (a) the shareholder or (b) the associated person of the shareholder.

            The Governance and Nominating Committee may require the shareholder
to furnish such other information as it may reasonably require or deem necessary
to verify any information furnished pursuant to the nominating procedures
described above or to determine the qualifications and eligibility of the
candidate proposed by the shareholder to serve on the Board. If the shareholder
fails to provide such other information in writing within seven days of receipt
of written request from the Governance and Nominating Committee, the
recommendation of such candidate as a nominee will be deemed not properly
submitted for consideration, and will not be considered, by the Committee.

            The Governance and Nominating Committee will consider only one
candidate submitted by such a shareholder or group for nomination for election
at an annual meeting of shareholders. The Governance and Nominating Committee
will not consider self-nominated candidates. The Governance and Nominating
Committee will consider and evaluate candidates submitted by shareholders on the
basis of the same criteria as those used to consider and evaluate candidates
submitted from other sources. These criteria include the candidate's relevant
knowledge, experience, and expertise, the candidate's ability to carry out his
or her duties in the best interests of the Fund, and the candidate's ability to
qualify as an Independent Director or Director. When assessing a candidate for
nomination, the Committee considers whether the individual's background, skills,
and experience will complement the background, skills, and experience of other
nominees and will contribute to the diversity of the Board.

            The function of the Fair Value Pricing Committee is to consider, in
advance if possible, any fair valuation decision of the Adviser's Valuation
Committee relating to a security held by a Portfolio made under unique or highly
unusual circumstances not previously addressed by the Valuation Committee that
would result in a change in the Portfolio's NAV by more than $0.01 per share.
The Fair Value Pricing Committee did not meet during the Portfolios' most
recently completed fiscal year.

            The function of the Independent Directors Committee is to consider
and take action on matters that the Board or Committee believes should be
addressed in executive session of the Independent Directors, such as review and
approval of the Advisory and Distribution Services Agreements. The Independent
Directors Committee met eight times during the Portfolios' most recently
completed fiscal year.

            The dollar range of the Fund's securities owned by each Director and
the aggregate dollar range of securities of funds in the AllianceBernstein Fund
Complex owned by each Director are set forth
below.

                              DOLLAR RANGE OF           AGGREGATE DOLLAR RANGE
                              EQUITY SECURITIES         OF EQUITY SECURITIES IN
                              IN THE PORTFOLIOS         THE ALLIANCEBERNSTEIN
                              AS OF                     FUND COMPLEX AS OF
                              DECEMBER 31, 2012*        DECEMBER 31, 2012
                              ------------------        -----------------

John H. Dobkin                  None                       Over $100,000
Michael J. Downey               None                       Over $100,000
William H. Foulk, Jr.           None                       Over $100,000
D. James Guzy                   None                       Over $100,000
Nancy P. Jacklin                None                       Over $100,000
Robert M. Keith                 None                             $0
Garry L. Moody                  None                       Over $100,000
Marshall C. Turner, Jr.         None                       Over $100,000
Earl D. Weiner                  None                       Over $100,000

----------
*     The Directors cannot directly invest in the Fund's Portfolios, because
      direct investments in the Portfolios may be made only by variable annuity
      and variable life insurance separate accounts.

Officer Information
-------------------

            Certain information concerning the Fund's officers is set forth
below.

NAME, ADDRESS*             POSITION(S)             PRINCIPAL OCCUPATION
AND AGE                    HELD WITH FUND          DURING PAST FIVE YEARS
--------------             --------------          -----------------------

Robert M. Keith,           President and Chief     See biography above.
52                         Executive Officer

Philip L. Kirstein,        Senior Vice President   Senior Vice President and
67                         and Independent         Independent Compliance
                           Compliance Officer      Officer of the Funds in
                                                   the AllianceBernstein
                                                   Fund Complex, with which
                                                   he has been associated
                                                   since 2004.  Prior
                                                   thereto, he was Of
                                                   Counsel to Kirkpatrick &
                                                   Lockhart, LLP from
                                                   October 2003 to October
                                                   2004, and General Counsel
                                                   of Merrill Lynch
                                                   Investment Managers L.P.
                                                   since prior to 2008.

Robert Alster,             Vice President          Senior Vice President of
52                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Bruce K. Aronow,           Vice President          Senior Vice President of
46                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Takeo Aso,                 Vice President          Senior Vice President of
48                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Joseph G. Carson,          Vice President          Senior Vice President of
61                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Frank V. Caruso,           Vice President          Senior Vice President of
56                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Paul J. DeNoon,            Vice President          Senior Vice President of
51                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Vincent C. DuPont,         Vice President          Senior Vice President of
50                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Sharon E. Fay,             Vice President          Senior Vice President of
52                                                 the Adviser**, with which
                                                   she has been associated
                                                   since prior to 2008.

John H. Fogarty,           Vice President          Senior Vice President of
43                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Eric J. Franco,            Vice President          Senior Vice President of
53                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

William A. Johnston,       Vice President          Senior Vice President of
52                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Shawn E. Keegan,           Vice President          Vice President of the
41                                                 Adviser**, with which he
                                                   has been associated since
                                                   prior to 2008.

N. Kumar Kirpalani,        Vice President          Senior Vice President of
59                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Samantha S. Lau,           Vice President          Senior Vice President of
40                                                 the Adviser**, with which
                                                   she has been associated
                                                   since prior to 2008.

Avi Lavi,                  Vice President          Senior Vice President of
46                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Dokyoung Lee,              Vice President          Senior Vice President of
47                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Daniel J. Loewy,           Vice President          Senior Vice President of
38                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

James W. MacGregor,        Vice President          Senior Vice President of
45                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Alison M. Martier,         Vice President          Senior Vice President of
56                                                 the Adviser**, with which
                                                   she has been associated
                                                   since prior to 2008.

Christopher W. Marx,       Vice President          Senior Vice President of
45                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Seth J. Masters,           Vice President          Senior Vice President of
53                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Christopher H. Nikolich,   Vice President          Senior Vice President of
43                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Joseph G. Paul,            Vice President          Senior Vice President of
53                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Douglas J. Peebles,        Vice President          Senior Vice President of
47                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Gregory L. Powell,         Vice President          Senior Vice President of
54                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Amy P. Raskin,             Vice President          Senior Vice President of
41                                                 the Adviser**, with which
                                                   she has been associated
                                                   since prior to 2008.

Daniel C. Roarty,          Vice President          Senior Vice President of
41                                                 the Adviser**, with which
                                                   he has been associated
                                                   since 2011.  Prior
                                                   thereto, he was in
                                                   research and portfolio
                                                   management at Nuveen
                                                   Investments since prior
                                                   to 2008.

Patrick J. Rudden,         Vice President          Senior Vice President of
50                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Kevin F. Simms,            Vice President          Senior Vice President of
47                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Tassos M. Stassopoulos,    Vice President          Senior Vice President of
44                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Wen-Tse Tseng,             Vice President          Senior Vice President of
47                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Andrew J. Weiner,          Vice President          Senior Vice President of
44                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Greg J. Wilensky,          Vice President          Senior Vice President of
46                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Catherine A. Wood,         Vice President          Senior Vice President of
57                                                 the Adviser**, with which
                                                   she has been associated
                                                   since prior to 2008.

Vadim Zlotnikov,           Vice President          Senior Vice President of
51                                                 the Adviser**, with which
                                                   he has been associated
                                                   since prior to 2008.

Joseph J. Mantineo,        Treasurer and           Senior Vice President of
54                         Chief Financial         ABIS**, with which he has
                           Officer                 been associated since
                                                   prior to 2008.

Emilie D. Wrapp,           Secretary               Senior Vice President,
57                                                 Assistant General Counsel
                                                   and Assistant Secretary
                                                   of ABI**, with which she
                                                   has been associated since
                                                   prior to 2008.

Phyllis J. Clarke,         Controller              Vice President of ABIS**,
52                                                 with which she has been
                                                   associated since prior to
                                                   2008.

--------
*     The address for each of the Fund's Officers is 1345 Avenue of the
      Americas, New York, NY 10105.
**    The Adviser, ABI and ABIS are affiliates of the Fund.

            The Fund's Portfolios do not pay any fees to, or reimburse expenses
of, its Directors who are considered "interested persons" of the Fund. The
aggregate compensation paid by the Fund's Portfolios to each of the Directors
during each Portfolio's fiscal year ended December 31, 2012, the aggregate
compensation paid to each of the Directors during calendar year 2012 by the
AllianceBernstein Fund Complex, and the total number of registered investment
companies (and separate investment portfolios within those companies) in the
AllianceBernstein Fund Complex with respect to which each of the Directors
serves as a director or trustee, are set forth below. Neither the Fund or its
Portfolios nor any other registered investment company in the AllianceBernstein
Fund Complex provides compensation in the form of pension or retirement benefits
to any of its directors or trustees. Each of the Directors is a director or
trustee of one or more registered investment companies in the AllianceBernstein
Fund Complex.

                        Aggregate       Aggregate     Aggregate
                        Compensation    Compensation  Compensation  Aggregate
                        From            From Large    From Growth   Compensation
                        Intermediate    Cap Growth    and Income    From Growth
Name of Director        Bond Portfolio  Portfolio     Portfolio     Portfolio
----------------        --------------- -----------   -----------   -----------

John H. Dobkin           $472             $472         $  473         $472
Michael J. Downey        $477             $537         $  631         $472
William H. Foulk, Jr.    $896             $944         $1,029         $891
D. James Guzy            $520             $627         $  849         $500
Nancy P. Jacklin         $477             $532         $  620         $472
Robert M. Keith          $  0             $  0         $    0         $  0
Garry L. Moody           $524             $580         $  674         $524
Marshall C. Turner, Jr.  $493             $569         $  711         $477
Earl D. Weiner           $505             $505         $  505         $505

                        Aggregate       Aggregate                   Aggregate
                        Compensation    Compensation  Aggregate     Compensation
                        From            From Global   Compensation  From Real
                        International   Thematic      From Small    Estate
                        Growth          Growth        Cap Growth    Investment
Name of Director        Portfolio       Portfolio     Portfolio     Portfolio
----------------        -------------   ------------  -----------   ------------

John H. Dobkin           $472             $472         $472           $472
Michael J. Downey        $490             $489         $472           $472
William H. Foulk, Jr.    $909             $898         $891           $891
D. James Guzy            $534             $530         $490           $505
Nancy P. Jacklin         $489             $488         $472           $472
Robert M. Keith          $  0             $  0         $  0           $  0
Garry L. Moody           $542             $535         $524           $524
Marshall C. Turner, Jr.  $512             $503         $472           $478
Earl D. Weiner           $505             $505         $505           $505

                                                                    Aggregate
                        Aggregate       Aggregate                   Compensation
                        Compensation    Compensation  Aggregate     From
                        From            From Small/   Compensation  Balanced
                        International   Mid Cap       From          Wealth
                        Value           Value         Value         Strategy
Name of Director        Portfolio       Portfolio     Portfolio     Portfolio
----------------        -------------   ------------  ------------  ------------

John H. Dobkin           $ 474            $472         $472           $472
Michael J. Downey        $ 670            $559         $499           $569
William H. Foulk, Jr.    $1,055           $961         $911           $970
D. James Guzy            $ 934            $679         $543           $702
Nancy P. Jacklin         $ 654            $553         $497           $562
Robert M. Keith          $   0            $  0         $  0           $  0
Garry L. Moody           $ 708            $606         $550           $616
Marshall C. Turner, Jr.  $ 753            $600         $515           $617
Earl D. Weiner           $ 505            $505         $505           $505

                            Aggregate
                            Compensation
                            From Dynamic
                            Asset Allocation
Name of Director            Portfolio
----------------            ----------------

John H. Dobkin                $472
Michael J. Downey             $485
William H. Foulk, Jr.         $913
D. James Guzy                 $529
Nancy P. Jacklin              $479
Robert M. Keith               $  0
Garry L. Moody                $537
Marshall C. Turner, Jr.       $521
Earl D. Weiner                $505

                                                                   Total
                                             Total                 Number of
                                             Number                Investment
                                             of Registered         Portfolios
                                             Investment            in the
                                             Companies             Alliance-
                            Total            in the Alliance-      Bernstein
                            Compensation     Bernstein Fund        Fund
                            From the         Complex,              Complex,
                            Alliance-        Including the         Including
                            Bernstein        Fund, as to           the Fund,
                            Fund             which the             as to which
                            Complex,         Director is a         the Director
                            Including the    Director or           is a Director
Name of Director            Fund             Trustee               or Trustee
----------------            -------------    ---------------       -------------

John H. Dobkin              $252,000             31                  101
Michael J. Downey           $252,000             31                  101
William H. Foulk, Jr.       $477,000             31                  101
D. James Guzy               $252,000             31                  101
Nancy P. Jacklin            $252,000             31                  101
Robert M. Keith             $      0             31                  101
Garry L. Moody              $280,000             31                  101
Marshall C. Turner, Jr.     $252,000             31                  101
Earl D. Weiner              $270,000             31                  101

            As of April 1, 2013, the Directors and officers of the Fund as a
group owned less than 1% of the shares of the Fund.

Additional Information About The Portfolios' Portfolio Managers
---------------------------------------------------------------

            Additional information regarding the investment professional(s)(2)
primarily responsible for the day-to-day management of each Portfolio's
portfolio may be found below. For additional information about the portfolio
management of each Portfolio, see "Management of the Portfolios - Portfolio
Managers" in the Portfolio's Prospectuses.

            None of the investment professionals identified below owned any
equity securities of the Portfolio directly or indirectly because shares of the
Portfolio are held through the separate accounts of certain life insurance
companies (the "Insurers").

--------
(2)   Investment professionals at the Adviser include portfolio managers and
      research analysts. Investment professionals are part of investment groups
      (or teams) that service individual fund portfolios. The number of
      investment professionals assigned to a particular Portfolio will vary from
      Portfolio to Portfolio.

INTERMEDIATE BOND PORTFOLIO

            The day-to-day management of, and investment decisions for, the
Portfolio are made by the Adviser's U.S. Core Fixed Income Investment Team. Mr.
Paul J. DeNoon, Mr. Shawn E. Keegan, Ms. Alison M. Martier, Mr. Douglas J.
Peebles and Mr. Greg J. Wilensky are the investment professionals with the most
significant responsibility for the day-to-day management of the Portfolio.

            The following tables provide information regarding registered
investment companies other than the Portfolio, other pooled investment vehicles
and other accounts over which Mr. Paul J. DeNoon, Mr. Shawn E. Keegan, Ms.
Alison M. Martier, Mr. Douglas J. Peebles and Mr. Greg J. Wilensky also have
day-to-day management responsibilities. The tables provide the numbers of such
accounts, the total assets in such accounts and the number of accounts and total
assets whose fees are based on performance. The information is provided as of
December 31, 2012.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)
--------------------------------------------------------------------------------
                                                                  Total
                                                   Number of      Assets of
                    Total         Total            Registered     Registered
                    Number of     Assets of        Investment     Investment
                    Registered    Registered       Companies      Companies
                    Investment    Investment       Managed with   Managed with
                    Companies     Companies        Performance-   Performance-
Portfolio Manager   Managed       Managed          based Fees     based Fees
-----------------   -------       -------          ----------     ----------

Paul J. DeNoon       90           $32,497,000,000    None           None
Shawn E. Keegan      10           $10,322,000,000    None           None
Alison M. Martier     6           $ 7,368,000,000    None           None
Douglas J. Peebles   54           $26,909,000,000    None           None
Greg J. Wilensky     39           $ 9,970,000,000    None           None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                   Number of      of Other
                     Total        Total            Other Pooled   Pooled
                     Number of    Assets of        Investment     Investment
                     Other Pooled Other Pooled     Vehicles       Vehicles
                     Investment   Investment       Managed with   Managed with
                     Vehicles     Vehicles         Performance-   Performance-
Portfolio Manager    Managed      Managed          based Fees     based Fees
-----------------    ------------ ------------     -------------  -------------

Paul J. DeNoon       109          $50,397,000,000      2          $137,000,000
Shawn E. Keegan       42          $12,152,000,000    None             None
Alison M. Martier     29          $   151,000,000    None             None
Douglas J. Peebles   119          $65,263,000,000      3          $280,000,000
Greg J. Wilensky      62          $   941,000,000      1          $ 80,000,000

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------
                                                                   Total Assets
                                                     Number        of Other
                     Total        Total              of Other      Accounts
                     Number       Assets             Accounts      Managed
                     of Other     of Other           Managed with  with
                     Accounts     Accounts           Performance-  Performance-
Portfolio Manager    Managed      Managed            based Fees    based Fees
-----------------    --------     --------           -----------   -----------

Paul J. DeNoon       245          $ 51,853,000,000    6           $3,401,000,000
Shawn E. Keegan      192          $ 66,334,000,000    2           $2,894,000,000
Alison M. Martier     48          $  5,716,000,000   None              None
Douglas J. Peebles   393          $110,109,000,000    9           $6,529,000,000
Greg J. Wilensky     145          $ 12,254,000,000    1           $  390,000,000

LARGE CAP GROWTH PORTFOLIO

            The management of, and investment decisions for, the Portfolio's
portfolio are made by the Adviser's U.S. Large Cap Growth Investment Team. Mr.
Frank V. Caruso, Mr. Vincent C. DuPont and Mr. John H. Fogarty are the
investment professionals with the most significant responsibility for the
day-to-day management of the Portfolio.

            The following tables provide information regarding registered
investment companies other than the Portfolio, other pooled investment vehicles
and other accounts over which Mr. Frank V. Caruso, Mr. Vincent C. DuPont and Mr.
John H. Fogarty also have day-to-day management responsibilities. The tables
provide the numbers of such accounts, the total assets in such accounts and the
number of accounts and total assets whose fees are based on performance. The
information is provided as of December 31, 2012.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                              (excluding the Fund)
--------------------------------------------------------------------------------
                                                                  Total
                                                   Number of      Assets of
                    Total         Total            Registered     Registered
                    Number of     Assets of        Investment     Investment
                    Registered    Registered       Companies      Companies
                    Investment    Investment       Managed with   Managed with
                    Companies     Companies        Performance-   Performance-
Portfolio Manager   Managed       Managed          based Fees     based Fees
-----------------   ----------    ----------       ------------   ------------

Frank V. Caruso         28        $6,759,000,000     None            None
Vincent C. DuPont       27        $6,195,000,000     None            None
John H. Fogarty         28        $6,759,000,000     None            None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                   Number of      of Other
                     Total        Total            Other Pooled   Pooled
                     Number of    Assets of        Investment     Investment
                     Other Pooled Other Pooled     Vehicles       Vehicles
                     Investment   Investment       Managed with   Managed with
                     Vehicles     Vehicles         Performance-   Performance-
Portfolio Manager    Managed      Managed          based Fees     based Fees
-----------------    ------------ ------------     -------------  -------------

Frank V. Caruso         24        $317,000,000           None        None
Vincent C. DuPont       20        $393,000,000           None        None
John H. Fogarty         20        $317,000,000           None        None

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                    Number        of Other
                     Total        Total             of Other      Accounts
                     Number       Assets            Accounts      Managed
                     of Other     of Other          Managed with  with
                     Accounts     Accounts          Performance-  Performance-
Portfolio Manager    Managed      Managed           based Fees    based Fees
-----------------    --------     --------          -----------   -----------

Frank V. Caruso       50,522      $6,762,000,000        1         $16,000,000
Vincent C. DuPont     27,438      $4,880,000,000        1         $16,000,000
John H. Fogarty       27,438      $4,880,000,000        1         $16,000,000

GROWTH AND INCOME PORTFOLIO

            Mr. Frank V. Caruso is the investment professional primarily
responsible for the day-to-day management of the Portfolio's portfolio. Mr.
Caruso does not own any equity securities of the Portfolio directly or
indirectly because shares of the Portfolio are held through the separate
accounts of certain Insurers.

            The following tables provide information regarding
registered investment companies other than the Portfolio, other pooled
investment vehicles and other accounts over which Mr. Caruso also has day-to-day
management responsibilities. The tables provide the numbers of such accounts,
the total assets in such accounts and the number of accounts and total assets
whose fees are based on performance. The information is provided as of the
Portfolio's fiscal year ended December 31, 2012.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)
--------------------------------------------------------------------------------
                                                    Total
                                 Number of          Assets of
Total         Total              Registered         Registered
Number of     Assets of          Investment         Investment
Registered    Registered         Companies          Companies
Investment    Investment         Managed with       Managed with
Companies     Companies          Performance-       Performance-
Managed       Managed            based Fees         based Fees
----------    ----------         ------------       ------------

    28        $6,215,000,000        None               None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
                                                      Total Assets
                                    Number of         of Other
Total              Total            Other Pooled      Pooled
Number of          Assets of        Investment        Investment
Other Pooled       Other Pooled     Vehicles          Vehicles
Investment         Investment       Managed with      Managed with
Vehicles           Vehicles         Performance-      Performance-
Managed            Managed          based Fees        based Fees
------------       ------------     -------------     -------------

    24             $393,000,000         None            None

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------
                                                      Total Assets
                                     Number           of Other
Total              Total             of Other         Accounts
Number             Assets            Accounts         Managed
of Other           of Other          Managed with     with
Accounts           Accounts          Performance-     Performance-
Managed            Managed           based Fees       based Fees
--------           --------          -----------      -----------

    50,522         $6,762,000,000        1            $16,000,000

GROWTH PORTFOLIO

            The management of, and investment decisions for, the Portfolio's
portfolio are made by the Adviser's Growth Investment Team. Mr. Bruce K. Aronow,
Mr. Frank V. Caruso and Mr. John H. Fogarty are the investment professionals
with the most significant responsibility for the day-to-day management of the
Portfolio's portfolio.

            The following tables provide information regarding registered
investment companies other than the Portfolio, other pooled investment vehicles
and other accounts over which the Portfolio's portfolio managers also have
day-to-day management responsibilities. The tables provide the numbers of such
accounts, the total assets in such accounts and the number of accounts and total
assets whose fees are based on performance. The information is provided as of
the Portfolio's fiscal year ended December 31, 2012.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                              (excluding the Fund)
--------------------------------------------------------------------------------
                                                                  Total
                                                   Number of      Assets of
                    Total         Total            Registered     Registered
                    Number of     Assets of        Investment     Investment
                    Registered    Registered       Companies      Companies
                    Investment    Investment       Managed with   Managed with
                    Companies     Companies        Performance-   Performance-
Portfolio Manager   Managed       Managed          based Fees     based Fees
-----------------   ----------    ----------       ------------   ------------

Bruce K. Aronow       30          $3,354,000,000      None           None
Frank V. Caruso       28          $7,038,000,000      None           None
John H. Fogarty       28          $7,038,000,000      None           None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                   Number of      of Other
                     Total        Total            Other Pooled   Pooled
                     Number of    Assets of        Investment     Investment
                     Other Pooled Other Pooled     Vehicles       Vehicles
                     Investment   Investment       Managed with   Managed with
                     Vehicles     Vehicles         Performance-   Performance-
Portfolio Manager    Managed      Managed          based Fees     based Fees
-----------------    ------------ ------------     -------------  -------------

Bruce K. Aronow       29          $147,000,000        None            None
Frank V. Caruso       24          $393,000,000        None            None
John H. Fogarty       20          $317,000,000        None            None

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                    Number        of Other
                     Total        Total             of Other      Accounts
                     Number       Assets            Accounts      Managed
                     of Other     of Other          Managed with  with
                     Accounts     Accounts          Performance-  Performance-
Portfolio Manager    Managed      Managed           based Fees    based Fees
-----------------    --------     --------          -----------   -----------

Bruce K. Aronow           27      $2,587,000,000        3         $315,000,000
Frank V. Caruso       50,522      $6,762,000,000        1         $ 16,000,000
Vadim Zlotnikov       27,438      $4,880,000,000        7         $ 16,000,000

GLOBAL THEMATIC GROWTH PORTFOLIO

            The day-to-day management of, and investment decisions for, the
Portfolio's portfolio are made by the Adviser's Global Thematic Growth
Investment Team, headed by Ms. Catherine D. Wood and comprised of
representatives of the Adviser's Global Economic Research Team, Quantitative
Research Team, Early Stage Growth Team and Research on Strategic Change Team.
Each Investment Team relies heavily on the fundamental analysis and research of
the Adviser's large internal research staff.

            The following tables provide information regarding registered
investment companies other than the Portfolio, other pooled investment vehicles
and other accounts over which Ms. Catherine D. Wood, Mr. Joseph G. Carson, Ms.
Amy P. Raskin, and Mr. Vadim Zlotnikov also have day-to-day management
responsibilities. The tables provide the numbers of such accounts, the total
assets in such accounts and the number of accounts and total assets whose fees
are based on performance. The information is provided as of the Portfolio's
fiscal year ended December 31, 2012.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                              (excluding the Fund)
--------------------------------------------------------------------------------
                                                                  Total
                                                   Number of      Assets of
                    Total         Total            Registered     Registered
                    Number of     Assets of        Investment     Investment
                    Registered    Registered       Companies      Companies
                    Investment    Investment       Managed with   Managed with
                    Companies     Companies        Performance-   Performance-
Portfolio Manager   Managed       Managed          based Fees     based Fees
-----------------   ----------    ----------       ------------   ------------

Catherine D. Wood      7          $  252,000,000      None           None
Joseph G. Carson       7          $  252,000,000      None           None
Amy P. Raskin         12          $2,028,000,000      None           None
Vadim Zlotnikov       41          $6,155,000,000      None           None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
                                                                   Total Assets
                                                    Number of      of Other
                     Total         Total            Other Pooled   Pooled
                     Number of     Assets of        Investment     Investment
                     Other Pooled  Other Pooled     Vehicles       Vehicles
                     Investment    Investment       Managed with   Managed with
                     Vehicles      Vehicles         Performance-   Performance-
Portfolio Manager    Managed       Managed          based Fees     based Fees
-----------------    ------------  ------------     -------------  -------------

Catherine D. Wood       37        $2,797,000,000       None            None
Joseph G. Carson        37        $2,797,000,000       None            None
Amy P. Raskin           60        $4,858,000,000        1           $65,000,000
Vadim Zlotnikov        100        $6,748,000,000        2           $82,000,000

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                    Number        of Other
                     Total        Total             of Other      Accounts
                     Number       Assets            Accounts      Managed
                     of Other     of Other          Managed with  with
                     Accounts     Accounts          Performance-  Performance
Portfolio Manager    Managed      Managed           based Fees    based Fees
-----------------    --------     --------          -----------   -----------

Catherine D. Wood     111         $  414,000,000      None            None
Joseph G. Carson      111         $  414,000,000      None            None
Amy P. Raskin         124         $1,866,000,000      None            None
Vadim Zlotnikov       130         $2,540,000,000        1          $39,000,000

BALANCED WEALTH STRATEGY PORTFOLIO

            The management of, and investment decisions for, the Portfolio's
portfolio are made by the Multi-Asset Solutions Team. Mr. Dokyoung Lee, Mr. Seth
J. Masters, Mr. Christopher H. Nikolich and Mr. Patrick J. Rudden are the
investment professionals with the most significant responsibility for the
day-to-day management of the Portfolio's portfolio.

            The following tables provide information regarding registered
investment companies other than the Portfolio, other pooled investment vehicles
and other accounts over which the Portfolio's portfolio managers also have
day-to-day responsibilities for coordinating investments. The tables provide the
numbers of such accounts, the total assets in such accounts and the number of
accounts and total assets whose fees are based on performance. The information
is provided as of the Portfolio's fiscal year ended December 31, 2012.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                      (excluding the referenced Portfolio)
--------------------------------------------------------------------------------
                                                                    Total
                                                     Number of      Assets of
                      Total         Total            Registered     Registered
                      Number of     Assets of        Investment     Investment
                      Registered    Registered       Companies      Companies
                      Investment    Investment       Managed with   Managed with
                      Companies     Companies        Performance-   Performance-
Portfolio Manager     Managed       Managed          based Fees     based Fees
-----------------     ----------    ----------       ------------   ------------

Dokyoung Lee               44       $13,097,000,000     None           None
Seth J. Masters            59       $20,848,000,000     None           None
Christopher H. Nikolich    22       $ 5,448,000,000     None           None
Patrick J. Rudden          44       $13,097,000,000     None           None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
                                                                   Total Assets
                                                    Number of      of Other
                      Total        Total            Other Pooled   Pooled
                      Number of    Assets of        Investment     Investment
                      Other Pooled Other Pooled     Vehicles       Vehicles
                      Investment   Investment       Managed with   Managed with
                      Vehicles     Vehicles         Performance-   Performance-
Portfolio Manager     Managed      Managed          based Fees     based Fees
-----------------     ------------ ------------     -------------  ------------

Dokyoung Lee                200    $23,064,000,000       2         $167,000,000
Seth J. Masters             210    $23,111,000,000       2         $167,000,000
Christopher H. Nikolich      49    $16,421,000,000      None           None
Patrick J. Rudden           200    $23,064,000,000       2         $167,000,000

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------
                                                                    Total Assets
                                                      Number        of Other
                       Total        Total             of Other      Accounts
                       Number       Assets            Accounts      Managed
                       of Other     of Other          Managed with  with
                       Accounts     Accounts          Performance-  Performance-
Portfolio Manager      Managed      Managed           based Fees    based Fees
-----------------     --------      --------          -----------   -----------

Dokyoung Lee               38       $10,437,000,000      1          $32,000,000
Seth J. Masters            54       $15,026,000,000      1          $32,000,000
Christopher H. Nikolich     7       $ 6,626,000,000     None           None
Patrick J. Rudden          38       $10,437,000,000      1          $32,000,000

INTERNATIONAL GROWTH PORTFOLIO

            The management of, and investment decisions for, the Portfolio's
portfolio are made by the Adviser's International Growth sector heads, with
oversight by the Adviser's International Growth Investment Advisory Members. Mr.
Robert Alster, Mr. William A. Johnston, Mr. Daniel C. Roarty and Mr. Tassos M.
Stassopoulos are the investment professionals with the most significant
responsibility for the day-to-day management of the Portfolio's portfolio.

            The following tables provide information regarding registered
investment companies other than the Portfolio, other pooled investment vehicles
and other accounts over which the Portfolio's portfolio managers also have
day-to-day management responsibilities. The tables provide the numbers of such
accounts, the total assets in such accounts and the number of accounts and total
assets whose fees are based on performance. The information is provided as of
the Portfolio's fiscal year ended December 31, 2012.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)
--------------------------------------------------------------------------------
                                                                    Total
                                                     Number of      Assets of
                         Total       Total           Registered     Registered
                         Number of   Assets of       Investment     Investment
                         Registered  Registered      Companies      Companies
                         Investment  Investment      Managed with   Managed with
                         Companies   Companies       Performance-   Performance-
Portfolio Manager        Managed     Managed         based Fees     based Fees
-----------------        ----------  ----------      ------------   ------------
Robert Alster               4        $1,066,000,000      None           None
William A. Johnston         3        $1,056,000,000      None           None
Daniel C. Roarty            3        $1,056,000,000      None           None
Tassos M. Stassopoulos      3        $1,056,000,000      None           None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
                                                                    Total Assets
                         Total                       Number of      of Other
                         Number      Total           Other Pooled   Pooled
                         of Other    Assets of       Investment     Investment
                         Pooled      Other Pooled    Vehicles       Vehicles
                         Investment  Investment      Managed with   Managed with
                         Vehicles    Vehicles        Performance-   Performance-
Portfolio Manager        Managed     Managed         based Fees     based Fees
-----------------        ----------  ------------    -------------  ------------
Robert Alster               24       $2,072,000,000       1         $65,000,000
William A. Johnston         24       $2,072,000,000       1         $65,000,000
Daniel C. Roarty            23       $2,061,000,000       1         $65,000,000
Tassos M. Stassopoulos      23       $2,061,000,000       1         $65,000,000

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------
                                                                    Total Assets
                                                     Number         of Other
                         Total       Total           of Other       Accounts
                         Number      Assets          Accounts       Managed
                         of Other    of Other        Managed with   with
                         Accounts    Accounts        Performance-   Performance-
Portfolio Manager        Managed     Managed         based Fees     based Fees
-----------------        --------    --------        ------------   ------------

Robert Alster              16        $1,966,000,000     None           None
William A. Johnston        16        $1,966,000,000     None           None
Daniel C. Roarty           13        $1,451,000,000     None           None
Tassos M. Stassopoulos     13        $1,451,000,000     None           None

SMALL CAP GROWTH PORTFOLIO

            The management of, and investment decisions for, the Portfolio's
portfolio are made by the Small Cap Growth Investment Team. Mr. Bruce K. Aronow,
Mr. N. Kumar Kirpalani, Ms. Samantha Lau and Mr. Wen-Tse Tseng are the
investment professionals with the most significant responsibility for the
day-to-day management of the Portfolio's portfolio.

            The following tables provide information regarding registered
investment companies other than the Portfolio, other pooled investment vehicles
and other accounts over which the Portfolio's portfolio managers also have
day-to-day management responsibilities. The tables provide the numbers of such
accounts, the total assets in such accounts and the number of accounts and total
assets whose fees are based on performance. The information is provided as of
the Portfolio's fiscal year ended December 31, 2012.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)
--------------------------------------------------------------------------------
                                                                  Total
                                                   Number of      Assets of
                    Total         Total            Registered     Registered
                    Number of     Assets of        Investment     Investment
                    Registered    Registered       Companies      Companies
                    Investment    Investment       Managed with   Managed with
                    Companies     Companies        Performance-   Performance-
Portfolio Manager   Managed       Managed          based Fees     based Fees
-----------------   ----------    ----------       ------------   ------------

Bruce K. Aronow        29         $3,480,000,000      None          None
N. Kumar Kirpalani     29         $3,480,000,000      None          None
Samantha Lau           29         $3,480,000,000      None          None
Wen-Tse Tseng          29         $3,480,000,000      None          None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                   Number of      of Other
                     Total        Total            Other Pooled   Pooled
                     Number of    Assets of        Investment     Investment
                     Other Pooled Other Pooled     Vehicles       Vehicles
                     Investment   Investment       Managed with   Managed with
                     Vehicles     Vehicles         Performance-   Performance-
Portfolio Manager    Managed      Managed          based Fees     based Fees
-----------------    ------------ ------------     -------------  -------------

Bruce K. Aronow        29         $147,000,000         None         None
N. Kumar Kirpalani     29         $147,000,000         None         None
Samantha Lau           29         $147,000,000         None         None
Wen-Tse Tseng          29         $147,000,000         None         None

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                    Number        of Other
                     Total        Total             of Other      Accounts
                     Number       Assets            Accounts      Managed
                     of Other     of Other          Managed with  with
                     Accounts     Accounts          Performance-  Performance-
Portfolio Manager    Managed      Managed           based Fees    based Fees
-----------------    --------     --------          -----------   -----------

Bruce K. Aronow        27         $2,587,000,000        3         $315,000,000
N. Kumar Kirpalani     27         $2,587,000,000        3         $315,000,000
Samantha Lau           27         $2,587,000,000        3         $315,000,000
Wen-Tse Tseng          27         $2,587,000,000        3         $315,000,000

REAL ESTATE INVESTMENT PORTFOLIO

            The management of, and investment decisions for, the Portfolio's
portfolio are made by the REIT Senior Investment Management Team. Mr. Eric J.
Franco is the investment professional with the most significant responsibility
for the day-to-day management of the Portfolio's portfolio.

            The following tables provide information regarding registered
investment companies other than the Portfolio, other pooled investment vehicles
and other accounts over which the Portfolio's portfolio manager also has
day-to-day management responsibilities. The tables provide the numbers of such
accounts, the total assets in such accounts and the number of accounts and total
assets whose fees are based on performance. The information is provided as of
the Portfolio's fiscal year ended December 31, 2012.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)
--------------------------------------------------------------------------------
                                                                  Total
                                                   Number of      Assets of
                    Total         Total            Registered     Registered
                    Number of     Assets of        Investment     Investment
                    Registered    Registered       Companies      Companies
                    Investment    Investment       Managed with   Managed with
                    Companies     Companies        Performance-   Performance-
Portfolio Manager   Managed       Managed          based Fees     based Fees
-----------------   ----------    ----------       ------------   ------------

Eric J. Franco         22         $1,137,000,000       None         None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                   Number of      of Other
                     Total        Total            Other Pooled   Pooled
                     Number of    Assets of        Investment     Investment
                     Other Pooled Other Pooled     Vehicles       Vehicles
                     Investment   Investment       Managed with   Managed with
                     Vehicles     Vehicles         Performance-   Performance-
Portfolio Manager    Managed      Managed          based Fees     based Fees
-----------------    ------------ ------------     -------------  -------------

Eric J. Franco         54         $395,000,000         None         None

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                    Number        of Other
                     Total        Total             of Other      Accounts
                     Number       Assets            Accounts      Managed
                     of Other     of Other          Managed with  with
                     Accounts     Accounts          Performance-  Performance-
Portfolio Manager    Managed      Managed           based Fees    based Fees
-----------------    --------     --------          -----------   -----------

Eric J. Franco          9         $392,000,000         None         None

INTERNATIONAL VALUE PORTFOLIO

            The management of, and investment decisions for, the Portfolio's
portfolio are made by the International Value Senior Investment Management Team.
Mr. Takeo Aso, Ms. Sharon E. Fay, Mr. Avi Lavi and Mr. Kevin F. Simms are the
investment professionals with the most significant responsibility for the
day-to-day management of the Portfolio's portfolio.

            The following tables provide information regarding registered
investment companies other than the Portfolio, other pooled investment vehicles
and other accounts over which the Portfolio's portfolio managers also have
day-to-day management responsibilities(3). The tables provide the numbers of
such accounts, the total assets in such accounts and the number of accounts and
total assets whose fees are based on performance. The information is provided as
of the Portfolio's fiscal year ended December 31, 2012.

--------
(3)   Each investment vehicle or account represented in the chart, for which the
      investment professionals have portfolio management responsibility, is
      based upon one of eleven model portfolios. Each vehicle or account differs
      from its respective model portfolio only to a limited extent based on
      specific client requirements relating to tax considerations, cash flows
      due to the frequency and amount of investments, the client's country of
      residence and currency strategies related thereto, and/or client-imposed
      investment restrictions regarding particular types of companies or
      industries.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)
--------------------------------------------------------------------------------
                                                                  Total
                                                   Number of      Assets of
                    Total         Total            Registered     Registered
                    Number of     Assets of        Investment     Investment
                    Registered    Registered       Companies      Companies
                    Investment    Investment       Managed with   Managed with
                    Companies     Companies        Performance-   Performance-
Portfolio Manager   Managed       Managed          based Fees     based Fees
-----------------   ----------    ----------       ------------   ------------

Takeo Aso               35        $ 4,986,000,000      None         None
Sharon E. Fay           75        $12,352,000,000      None         None
Avi Lavi                87        $10,554,000,000      None         None
Kevin F. Simms          71        $11,140,000,000      None         None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                   Number of      of Other
                     Total        Total            Other Pooled   Pooled
                     Number of    Assets of        Investment     Investment
                     Other Pooled Other Pooled     Vehicles       Vehicles
                     Investment   Investment       Managed with   Managed with
                     Vehicles     Vehicles         Performance-   Performance-
Portfolio Manager    Managed      Managed          based Fees     based Fees
-----------------    ------------ ------------     -------------  -------------

Takeo Aso                90       $4,321,000,000         3        $349,000,000
Sharon E. Fay           140       $7,852,000,000         6        $745,000,000
Avi Lavi                163       $3,801,000,000         3        $349,000,000
Kevin F. Simms          119       $6,867,000,000         5        $680,000,000

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                    Number        of Other
                     Total        Total             of Other      Accounts
                     Number       Assets            Accounts      Managed
                     of Other     of Other          Managed with  with
                     Accounts     Accounts          Performance-  Performance-
Portfolio Manager    Managed      Managed           based Fees    based Fees
-----------------    --------     --------          -----------   -------------

Takeo Aso                 102     $13,639,000,000        6        $1,290,000,000
Sharon E. Fay          27,962     $25,202,000,000       10        $2,863,000,000
Avi Lavi               27,936     $19,494,000,000        7        $1,306,000,000
Kevin F. Simms         27,952     $23,988,000,000       10        $2,863,000,000

SMALL/MID CAP VALUE PORTFOLIO

            The management of, and investment decisions for, the Portfolio's
portfolio are made by the Small/Mid Cap Value Senior Investment Management Team.
Mr. James W. MacGregor, Mr. Joseph G. Paul and Mr. Andrew J. Weiner are the
investment professionals with the most significant responsibility for the
day-to-day management of the Portfolio's portfolio.

            The following tables provide information regarding registered
investment companies other than the Portfolio, other pooled investment vehicles
and other accounts over which the Portfolio's portfolio managers also have
day-to-day management responsibilities. The tables provide the numbers of such
accounts, the total assets in such accounts and the number of accounts and total
assets whose fees are based on performance. The information is provided as of
the Portfolio's fiscal year ended December 31, 2012.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)
--------------------------------------------------------------------------------
                                                                  Total
                                                   Number of      Assets of
                    Total         Total            Registered     Registered
                    Number of     Assets of        Investment     Investment
                    Registered    Registered       Companies      Companies
                    Investment    Investment       Managed with   Managed with
                    Companies     Companies        Performance-   Performance-
Portfolio Manager   Managed       Managed          based Fees     based Fees
-----------------   ----------    ----------       ------------   ------------

James W. MacGregor     85         $13,235,000,000     None           None
Joseph G. Paul         85         $13,235,000,000     None           None
Andrew J. Weiner       50         $ 7,200,000,000     None           None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                   Number of      of Other
                     Total        Total            Other Pooled   Pooled
                     Number of    Assets of        Investment     Investment
                     Other Pooled Other Pooled     Vehicles       Vehicles
                     Investment   Investment       Managed with   Managed with
                     Vehicles     Vehicles         Performance-   Performance-
Portfolio Manager    Managed      Managed          based Fees     based Fees
-----------------    ------------ ------------     -------------  -------------

James W. MacGregor     131        $2,592,000,000         2         $119,000,000
Joseph G. Paul         135        $2,668,000,000         2         $119,000,000
Andrew J. Weiner        55        $  476,000,000       None            None

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                    Number        of Other
                     Total        Total             of Other      Accounts
                     Number       Assets            Accounts      Managed
                     of Other     of Other          Managed with  with
                     Accounts     Accounts          Performance-  Performance-
Portfolio Manager    Managed      Managed           based Fees    based Fees
-----------------    --------     --------          -----------   -----------

James W. MacGregor    27,925      $16,838,000,000       4         $940,000,000
Joseph G. Paul        51,009      $18,720,000,000       4         $940,000,000
Andrew J. Weiner      27,863      $ 7,710,000,000       1         $ 16,000,000

VALUE PORTFOLIO

            The management of, and investment decisions for, the Portfolio's
portfolio are made by the U.S. Value Senior Investment Management Team. Mr.
Christopher W. Marx, Mr. Joseph G. Paul, and Mr. Gregory L. Powell are the
investment professionals with the most significant responsibility for the
day-to-day management of the Portfolio's portfolio.

            The following tables provide information regarding registered
investment companies other than the Portfolio, other pooled investment vehicles
and other accounts over which the Portfolio's portfolio managers also have
day-to-day management responsibilities.(4) The tables provide the numbers of
such accounts, the total assets in such accounts and the number of accounts and
total assets whose fees are based on performance. The information is provided as
of the Portfolio's fiscal year ended December 31, 2012.

--------
(4)   Each investment vehicle or account represented in the chart, for which the
      investment professionals have portfolio management responsibility, is
      based upon one of three model portfolios. Each vehicle or account differs
      from its respective model portfolio only to a limited extent based on
      specific client requirements relating to tax considerations, cash flows
      due to the frequency and amount of investments, the client's country of
      residence and currency strategies related thereto, and/or client-imposed
      investment restrictions regarding particular types of companies or
      industries.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)
--------------------------------------------------------------------------------
                                                                  Total
                                                   Number of      Assets of
                    Total         Total            Registered     Registered
                    Number of     Assets of        Investment     Investment
                    Registered    Registered       Companies      Companies
                    Investment    Investment       Managed with   Managed with
                    Companies     Companies        Performance-   Performance-
Portfolio Manager   Managed       Managed          based Fees     based Fees
-----------------   ----------    ----------       ------------   ------------

Christopher W. Marx     None            None            None         None
Joseph G. Paul           85       $13,581,000,000       None         None
Gregory L. Powell        63       $10,222,000,000       None         None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
                                                                    Total Assets
                                                    Number of       of Other
                     Total         Total            Other Pooled    Pooled
                     Number of     Assets of        Investment      Investment
                     Other Pooled  Other Pooled     Vehicles        Vehicles
                     Investment    Investment       Managed with    Managed with
                     Vehicles      Vehicles         Performance-    Performance-
Portfolio Manager    Managed       Managed          based Fees      based Fees
-----------------    ------------  ------------     -------------   ------------


Christopher W. Marx        4       $   76,000,000      None             None
Joseph G. Paul           135       $2,668,000,000        2          $119,000,000
Gregory L. Powell         98       $2,337,000,000        2          $119,000,000

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                    Number        of Other
                     Total        Total             of Other      Accounts
                     Number       Assets            Accounts      Managed
                     of Other     of Other          Managed with  with
                     Accounts     Accounts          Performance-  Performance-
Portfolio Manager    Managed      Managed           based Fees    based Fees
-----------------    --------     --------          -----------   -----------

Christopher W. Marx   23,084      $ 1,882,000,000      None           None
Joseph G. Paul        51,009      $18,720,000,000        4        $940,000,000
Gregory L. Powell     27,894      $15,928,000,000        4        $940,000,000

DYNAMIC ASSET ALLOCATION PORTFOLIO

            The management of, and investment decisions for, the Portfolio's
portfolio are made by the Adviser's Dynamic Asset Allocation Team. Mr. Daniel J.
Loewy and Mr. Seth J. Masters are the investment professionals primarily
responsible for the day-to-day management of the Portfolio's portfolio.

            The following tables provide information regarding registered
investment companies other than the Portfolio, other pooled investment vehicles
and other accounts over which the Portfolio's portfolio managers also have
day-to-day management responsibilities. The tables provide the numbers of such
accounts, the total assets in such accounts and the number of accounts and total
assets whose fees are based on performance. The information is provided as of
December 31, 2012.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                              (excluding the Fund)
--------------------------------------------------------------------------------
                                                                  Total
                                                   Number of      Assets of
                    Total         Total            Registered     Registered
                    Number of     Assets of        Investment     Investment
                    Registered    Registered       Companies      Companies
                    Investment    Investment       Managed with   Managed with
                    Companies     Companies        Performance-   Performance-
Portfolio Manager   Managed       Managed          based Fees     based Fees
-----------------   ----------    ----------       ------------   ------------

Daniel J. Loewy         54        $13,762,000,000      None          None
Seth J. Masters         59        $21,176,000,000      None          None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                   Number of      of Other
                     Total        Total            Other Pooled   Pooled
                     Number of    Assets of        Investment     Investment
                     Other Pooled Other Pooled     Vehicles       Vehicles
                     Investment   Investment       Managed with   Managed with
                     Vehicles     Vehicles         Performance-   Performance-
Portfolio Manager    Managed      Managed          based Fees     based Fees
-----------------    ------------ ------------     -------------  -------------

Daniel J. Loewy          62       $16,472,000,000      None          None
Seth J. Masters         210       $23,111,000,000        2        $167,000,000

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------
                                                                  Total Assets
                                                    Number        of Other
                     Total        Total             of Other      Accounts
                     Number       Assets            Accounts      Managed
                     of Other     of Other          Managed with  with
                     Accounts     Accounts          Performance-  Performance-
Portfolio Manager    Managed      Managed           based Fees    based Fees
-----------------    --------     --------          -----------   -----------

Daniel J. Loewy          33       $11,696,000,000      None          None
Seth J. Masters          54       $15,026,000,000        1        $32,000,000


Investment Professional Conflict of Interest Disclosure
-------------------------------------------------------

            As an investment adviser and fiduciary, the Adviser owes its clients
and shareholders an undivided duty of loyalty. We recognize that conflicts of
interest are inherent in our business and accordingly have developed policies
and procedures (including oversight monitoring) reasonably designed to detect,
manage and mitigate the effects of actual or potential conflicts of interest in
the area of employee personal trading, managing multiple accounts for multiple
clients, including AllianceBernstein Mutual Funds, and allocating investment
opportunities. Investment professionals, including portfolio managers and
research analysts, are subject to the above-mentioned policies and oversight
monitoring to ensure that all clients are treated equitably. We place the
interests of our clients first and expect all of our employees to meet their
fiduciary duties.

            Employee Personal Trading. The Adviser has adopted a Code of
Business Conduct and Ethics that is designed to detect and prevent conflicts of
interest when investment professionals and other personnel of the Adviser own,
buy or sell securities which may be owned by, or bought or sold for, clients.
Personal securities transactions by an employee may raise a potential conflict
of interest when an employee owns or trades in a security that is owned or
considered for purchase or sale by a client, or recommended for purchase or sale
by an employee to a client. Subject to the reporting requirements and other
limitations of its Code of Business Conduct and Ethics, the Adviser permits its
employees to engage in personal securities transactions, and also allows them to
acquire investments in certain Funds managed by the Adviser. The Adviser's Code
of Business Conduct and Ethics requires disclosure of all personal accounts and
maintenance of brokerage accounts with designated broker-dealers approved by the
Adviser. The Code of Business Conduct and Ethics also requires preclearance of
all securities transactions (except transactions in U.S. Treasuries and open-end
mutual funds) and imposes a 90-day holding period for securities purchased by
employees to discourage short-term trading.

            Managing Multiple Accounts for Multiple Clients. The Adviser has
compliance policies and oversight monitoring in place to address conflicts of
interest relating to the management of multiple accounts for multiple clients.
Conflicts of interest may arise when an investment professional has
responsibilities for the investments of more than one account because the
investment professional may be unable to devote equal time and attention to each
account. The investment professional or investment professional teams for each
client may have responsibilities for managing all or a portion of the
investments of multiple accounts with a common investment strategy, including
other registered investment companies, unregistered investment vehicles, such as
hedge funds, pension plans, separate accounts, collective trusts and charitable
foundations. Among other things, the Adviser's policies and procedures provide
for the prompt dissemination to investment professionals of initial or changed
investment recommendations by analysts so that investment professionals are
better able to develop investment strategies for all accounts they manage. In
addition, investment decisions by investment professionals are reviewed for the
purpose of maintaining uniformity among similar accounts and ensuring that
accounts are treated equitably. Investment professional compensation reflects a
broad contribution in multiple dimensions to long-term investment success for
our clients and is generally not tied specifically to the performance of any
particular client's account, nor is it generally tied directly to the level or
change in level of assets under management.

            Allocating Investment Opportunities. The investment professionals at
the Adviser routinely are required to select and allocate investment
opportunities among accounts. The Adviser has adopted policies and procedures
intended to address conflicts of interest relating to the allocation of
investment opportunities. These policies and procedures are designed to ensure
that information relevant to investment decisions is disseminated promptly
within its portfolio management teams and investment opportunities are allocated
equitably among different clients. The policies and procedures require, among
other things, objective allocation for limited investment opportunities (e.g.,
on a rotational basis), and documentation and review of justifications for any
decisions to make investments only for select accounts or in a manner
disproportionate to the size of the account. Portfolio holdings, position sizes,
and industry and sector exposures tend to be similar across similar accounts,
which minimizes the potential for conflicts of interest relating to the
allocation of investment opportunities. Nevertheless, access to portfolio funds
or other investment opportunities may be allocated differently among accounts
due to the particular characteristics of an account, such as size of the
account, cash position, tax status, risk tolerance and investment restrictions
or for other reasons.

            The Adviser's procedures are also designed to address potential
conflicts of interest that may arise when the Adviser has a particular financial
incentive, such as a performance-based management fee, relating to an account.
An investment professional may perceive that he or she has an incentive to
devote more time to developing and analyzing investment strategies and
opportunities or allocating securities preferentially to accounts for which the
Adviser could share in investment gains.


Portfolio Manager Compensation
------------------------------

            The Adviser's compensation program for portfolio managers is
designed to align with clients' interests, emphasizing each portfolio manager's
ability to generate long-term investment success for the Adviser's clients,
including the Portfolios. The Adviser also strives to ensure that compensation
is competitive and effective in attracting and retaining the highest caliber
employees.

            Portfolio managers receive a base salary, incentive compensation and
contributions to AllianceBernstein's 401(k) plan. Part of the annual incentive
compensation is generally paid in the form of a cash bonus, and part through an
award under the firm's Incentive Compensation Award Plan (ICAP). The ICAP awards
vest over a four-year period. Deferred awards are paid in the form of restricted
grants of the firm's Master Limited Partnership Units, and award recipients have
the ability to receive a portion of their awards in deferred cash. The amount of
contributions to the 401(k) plan is determined at the sole discretion of the
Adviser. On an annual basis, the Adviser endeavors to combine all of the
foregoing elements into a total compensation package that considers industry
compensation trends and is designed to retain its best talent.

            The incentive portion of total compensation is determined by
quantitative and qualitative factors. Quantitative factors, which are weighted
more heavily, are driven by investment performance. Qualitative factors are
driven by contributions to the investment process and client success.

            The quantitative component includes measures of absolute, relative
and risk-adjusted investment performance. Relative and risk-adjusted returns are
determined based on the benchmark in the Portfolios' Prospectuses and versus
peers over one-, three- and five-year calendar periods, with more weight given
to longer-time periods. Peer groups are chosen by Chief Investment Officers, who
consult with the product management team to identify products most similar to
our investment style and most relevant within the asset class. Portfolio
managers of the Portfolios do not receive any direct compensation based upon the
investment returns of any individual client account, and compensation is not
tied directly to the level or change in level of assets under management.

            Among the qualitative components considered, the most important
include thought leadership, collaboration with other investment colleagues,
contributions to risk-adjusted returns of other portfolios in the firm, efforts
in mentoring and building a strong talent pool and being a good corporate
citizen. Other factors can play a role in determining portfolio managers'
compensation, such as the complexity of investment strategies managed, volume of
assets managed and experience.

            The Adviser emphasizes four behavioral competencies--relentlessness,
ingenuity, team orientation and accountability--that support its mission to be
the most trusted advisor to its clients. Assessments of investment professionals
are formalized in a year-end review process that includes 360-degree feedback
from other professionals from across the investment teams and the Adviser.


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

                           EXPENSES OF THE PORTFOLIOS

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

Distribution Services Agreement
-------------------------------

            The Fund has entered into a Distribution Services Agreement (the
"Agreement") with ABI, the Fund's principal underwriter, to permit ABI to
distribute the Portfolios' shares and to permit each Portfolio of the Fund to
pay distribution services fees to defray expenses associated with distribution
of its Class B shares in accordance with a plan of distribution that is included
in the Agreement and that has been duly adopted and approved in accordance with
Rule 12b-1 adopted by the SEC under the 1940 Act (the "Plan").

            In approving the Plan, the Directors determined that there was a
reasonable likelihood that the Plan would benefit each Portfolio and its Class B
shareholders. The Adviser may, from time to time, and from its own funds or such
other resources as may be permitted by rules of the SEC, make payments for
distribution services to ABI; the latter may in turn pay part or all of such
compensation to brokers or other persons for their distribution assistance.

            The Plan will continue in effect for successive one-year periods,
provided that each such continuance is specifically approved at least annually
by a majority of the Independent Directors of the Fund who have no direct or
indirect financial interest in the operation of the Plan or in any agreement
relating to the Plan ("Qualified Directors") and by a vote of a majority of the
entire Board at a meeting called for that purpose. Most recently, continuance of
the Agreement was approved for an additional annual term by the Board, including
a majority of the Directors who are not parties to the Agreement or interested
persons of such party, at a meeting held on May 1-3, 2012.

            All material amendments to the Plan will become effective only on
approval as specified in the preceding paragraph and the Plan may not be amended
in order to materially increase the costs that the Portfolios may bear pursuant
to the Plan without the approval of a majority of the holders of the outstanding
voting shares of the Class B shares of the Portfolios.

            The Agreement may be terminated with respect to a Portfolio (i) by
ABI or (ii) by a Portfolio without payment of any penalty upon the vote of a
majority of the outstanding voting securities of the Portfolio, voting
separately by class, or by vote of a majority of the Qualified Directors. To
terminate an Agreement, any party must give the other 60 days' written notice;
to terminate a Plan only, a Portfolio is not required to give prior notice to
ABI. The Agreement will terminate automatically in the event of an assignment.
The Plan is of a type known as a "compensation plan", which means that it
compensates the distributor for services rendered even if the amount paid
exceeds the distributor's expenses.

            In the event that the Agreement is terminated by either party or not
continued with respect to the Class B shares of a Portfolio, (i) no distribution
services fees (other than current amounts accrued but not yet paid) would be
owed by the Fund to ABI with respect to Class B shares of such Portfolio and
(ii) the Fund would not be obligated to pay ABI for any amounts expended under
the Agreement not previously recovered by ABI from distribution services fees in
respect of shares of such class.

            During the fiscal year ended December 31, 2012, the Portfolios paid
distribution services fees for expenditures under the Agreement, with respect to
Class B shares, in aggregate amounts as described in the table below.

                                                            Percentage per annum
                                                            of the aggregate
                                    Distribution services   average daily net
                                    Fees for expenditures   assets attributable
Fund                                payable to ABI          to Class B shares
----                                ---------------------   -------------------

Intermediate Bond Portfolio           $   78,314                  .25%

Large Cap Growth Portfolio            $  498,774                  .25%

Growth and Income Portfolio           $1,918,752                  .25%

Growth Portfolio                      $  126,305                  .25%

International Growth Portfolio        $  149,521                  .25%

Global Thematic Growth Portfolio      $  242,265                  .25%

Small Cap Growth Portfolio            $   74,116                  .25%

Real Estate Investment Portfolio      $   35,666                  .25%

International Value Portfolio         $2,642,116                  .25%

Small/Mid Cap Value Portfolio         $  846,302                  .25%

Value Portfolio                       $  418,618                  .25%

Balanced Wealth Strategy Portfolio    $1,266,577                  .25%

Dynamic Asset Allocation Portfolio    $  347,719                  .25%

            For the fiscal year ended December 31, 2012, expenses incurred by
each Portfolio and costs allocated to each Portfolio in connection with
activities primarily intended to result in the sale of Class B shares were as
follows:

                                Intermediate       Large Cap       Growth and
                                Bond               Growth          Income
Category of Expense             Portfolio          Portfolio       Portfolio
-------------------             ------------       ----------      ----------

Advertising/Marketing           $   2,640          $  7,712             17,885

Printing and Mailing                    9               24                 45
of Prospectuses and
Semi-Annual and
Annual Reports to
Other Than Current
Shareholders


Compensation to Underwriters       25,242            87,153           202,982


Compensation to Dealers            98,928           937,284         3,603,008


Compensation to Sales              60,220           195,180           452,280
Personnel


Interest, Carrying or Other             0                 0                 0
Financing Charges

Other (includes personnel          31,310           100,729           232,223
costs of those home
office employees
involved in the
distribution effort and
the travel-related
expenses incurred by
the marketing personnel
conducting seminars)

      Totals                     $218,349        $1,328,082        $4,508,423



                                                          Global
                                          International   Thematic    Small Cap
                            Growth        Growth          Growth      Growth
Category of Expense         Portfolio     Portfolio       Portfolio   Portfolio
-------------------        ----------    ----------      ----------  ----------

Advertising/               $    4,074     $    4,352      $  4,480    $  1,535
Marketing

Printing and Mailing               15             16            16           7
of Prospectuses and
Semi-Annual and
Annual Reports to
Other than Current
 Shareholders

Compensation to                39,144         44,097        51,076      20,871
Underwriters

Compensation to               225,998        271,749       463,147     128,594
Dealers


Compensation to Sales          93,384         97,598       116,051      50,886
Personnel

Interest, Carrying or               0              0             0           0
Other Financing Charges

Other (includes                47,431         51,834        59,432      23,360
personnel costs of
those home office
employees involved
in the distribution
effort and the
travel-related
expenses incurred
by the marketing
personnel conducting
seminars)

Totals                       $410,046       $469,646      $694,202    $225,253



                         Real Estate   International   Small/Mid
                         Investment    Value           Cap Value    Value
Category of Expense      Portfolio     Portfolio       Portfolio    Portfolio
-------------------      -----------   ----------      ----------   ----------

Advertising/              $  1,446     $   23,270      $    8,434   $    6,516
Marketing

Printing and Mailing             5             58              23           21
of Prospectuses and
Semi-Annual and
Annual Reports to
Other than Current
Shareholders

Compensation to             12,675        268,904          97,744       71,479
Underwriters

Compensation to             56,766      5,064,692       1,588,640      791,574
Dealers

Compensation to             31,357        596,927         217,422      163,591
Sales Personnel

Interest, Carrying               0              0               0            0
or Other Financing
Charges

Other (includes             15,564        308,202         113,111       84,016
personnel costs of
those home office
employees involved
in the distribution
effort and the
travel-related
expenses incurred
by the marketing
personnel conducting
seminars)

Totals                    $117,813     $6,262,053      $2,025,374   $1,117,197

                                                       Dynamic Asset
                           Balanced Wealth             Allocation
Category of Expense        Strategy Portfolio          Portfolio
-------------------        ------------------          -------------

Advertising/                 $  13,810                 $  6,721
Marketing

Printing and Mailing of             38                       20
Prospectuses and
Semi-Annual and Annual
Reports to Other than
Current Shareholders

Compensation to                152,824                   70,992
Underwriters


Compensation to Dealers      2,294,540                  576,924

Compensation to Sales          344,139                  163,535
Personnel

Interest, Carrying or                0                        0
Other Financing Charges

Other (includes personnel      177,004                   83,381
costs of those home
office employees involved
in the distribution
effort and the
travel-related expenses
incurred by the marketing
personnel conducting
seminars)

Totals                      $2,982,355                 $901,573



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

                       PURCHASE AND REDEMPTION OF SHARES

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

            The following information supplements that set forth in the
Portfolios' Prospectuses under the heading "Investing in the Portfolios".

            Shares of each Portfolio are offered at NAV on a continuous basis to
the separate accounts of the Insurers without any sales or other charge. The
separate accounts of insurance companies place orders to purchase shares based
on, among other things, the amount of premium payments to be invested and
surrendered and transfer requests to be effected pursuant to variable contracts
funded by shares of the Portfolio. The Fund reserves the right to suspend the
sale of its shares in response to conditions in the securities markets or for
other reasons. See the prospectus of the separate account of the participating
insurance company for more information on the purchase of shares.

            The Insurers maintain omnibus account arrangements with the Fund in
respect of one or more Portfolios and place aggregate purchase, redemption and
exchange orders for shares of a Portfolio corresponding to orders placed by the
Insurers' customers ("Contractholders") who have purchased contracts from the
Insurers, in each case, in accordance with the terms and conditions of the
relevant contract. Omnibus account arrangements maintained by the Insurers are
discussed below.

Frequent Purchase and Sales of Portfolio Shares
-----------------------------------------------

            The Board 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. There is no guarantee that a Portfolio will be
able to detect excessive or short-term trading or to identify Contractholders
engaged in such practices. Contractholders engaged in such practices,
particularly with respect to transactions in omnibus accounts. Contractholders
should be aware that application of these policies may have adverse
consequences, as described below, and should avoid frequent trading in Portfolio
shares through purchases, sales and exchanges of shares. Each 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 Fund will try to prevent market timing by utilizing the procedures
described below, these procedures may not be successful in identifying or
stopping excessive or short-term trading attributable to particular
Contractholders in all circumstances. By realizing profits through short-term
trading, Contractholders that engage in rapid purchases and sales or exchanges
of a Portfolio's shares dilute the value of shares held by long-term
Contractholders. Volatility resulting from excessive purchases and sales or
exchanges of shares of a Portfolio, especially involving large dollar amounts,
may disrupt efficient portfolio management and cause a Portfolio to sell
portfolio securities at inopportune times to raise cash to accommodate
redemptions relating to short-term trading activity. In particular, a 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. In addition, a Portfolio may incur
increased administrative and other expenses due to excessive or short-term
trading and increased brokerage costs.

            Investments in securities of foreign issuers may be particularly
susceptible to short-term trading strategies. This is because securities of
foreign issuers are typically traded on markets that close well before the time
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 share prices that are based on
closing prices of securities of foreign issuers established some time before a
Portfolio calculates its own share price (referred to as "time zone arbitrage").
Each of the Portfolios has procedures, referred to as fair value pricing,
designed to adjust closing market prices of securities of foreign issuers to
reflect what is believed to be fair value of those securities at the time the
Portfolio calculates its NAV. While there is no assurance, each of the
Portfolios 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 securities of foreign
issuers. Any Portfolio that invests in securities that are, among other things,
thinly traded, traded infrequently, or relatively illiquid has the risk that the
current market price for the securities may not accurately reflect current
market values. Contractholders may seek to engage in short-term trading to take
advantage of these pricing differences (referred to as "price arbitrage"). All
Portfolios may be adversely affected by price arbitrage.

            Policy Regarding Short-term Trading. Purchases and exchanges of
shares of the Portfolios should be made for investment purposes only. The Fund
seeks to prevent patterns of excessive purchases and sales or exchanges of
shares of the Portfolios. The Fund seeks to prevent such practices to the extent
they are detected by the procedures described below, subject to the Fund's
ability to monitor purchase, sale and exchange activity. Insurers utilizing
omnibus account arrangements may not identify to the Fund, ABI or ABIS
Contractholders' transaction activity relating to shares of a particular
Portfolio on an individual basis. Consequently, the Fund, ABI and ABIS may not
be able to detect excessive or short-term trading in shares of a Portfolio
attributable to a particular Contractholder who effects purchase and redemption
and/or exchange activity in shares of the Portfolio through an Insurer acting in
an omnibus capacity. In seeking to prevent excessive or short-term trading in
shares of the Portfolios, including the maintenance of any transaction
surveillance or account blocking procedures, the Fund, ABI and ABIS consider the
information actually available to them at the time. The Fund reserves the right
to modify this policy, including any surveillance or account blocking procedures
established from time to time to effectuate this policy, at any time without
notice.

      o     Transaction Surveillance Procedures. The Portfolios, through their
            agents, ABI and ABIS, maintain 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 seek 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.

      o     Account Blocking Procedures. If the Fund determines, in its sole
            discretion, that a particular transaction or pattern of transactions
            identified by the transaction surveillance procedures described
            above is excessive or short-term trading in nature, the relevant
            Insurers' omnibus account(s) will be immediately "blocked" and no
            future purchase or exchange activity will be permitted, except to
            the extent the Fund, ABI or ABIS has been informed in writing that
            the terms and conditions of a particular contract may limit the
            Fund'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 one or more Portfolios 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. As a result, unless the Contractholder
            redeems his or her shares, the Contractholder effectively may be
            "locked" into an investment in shares of one or more of the
            Portfolios that the Contractholder did not intend to hold on a
            long-term basis or that may not be appropriate for the
            Contractholder's risk profile. 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 should avoid frequent trading in Portfolio
            shares. An Insurer's omnibus account that is blocked will generally
            remain blocked unless and until the Insurer provides evidence or
            assurance acceptable to the Fund that one or more Contractholders
            did not or will not in the future engage in excessive or short-term
            trading.

      o     Applications of Surveillance Procedures and Restrictions to Omnibus
            Accounts. The Portfolios apply their surveillance procedures to
            Insurers. As required by SEC rules, the Portfolios have entered into
            agreements with all of their financial intermediaries that require
            the financial intermediaries to provide the Portfolios, upon the
            request of the Portfolios or their agents, with individual account
            level information about their transactions. If the Portfolios detect
            excessive trading through their monitoring of omnibus accounts,
            including trading at the individual account level, Insurers will
            also execute instructions from the Portfolios to take actions to
            curtail the activity, which may include applying blocks to accounts
            to prohibit future purchases and exchanges of Portfolio shares.

Redemption of Shares
--------------------

            An insurance company separate account may redeem all or any portion
of the shares in its account at any time at the NAV next determined after a
redemption request in the proper form is furnished to the Fund. Any certificates
representing shares being redeemed must be submitted with the redemption
request. Shares do not earn dividends on the day they are redeemed, regardless
of whether the redemption request is received before or after the time of
computation of NAV that day. There is no redemption charge. The redemption
proceeds will normally be sent within 7 days.

            The right of redemption may be suspended or the date of payment may
be postponed for any period during which the Exchange is closed (other than
customary weekend and holiday closings) or during which the SEC determines that
trading thereon is restricted, or for any period during which an emergency (as
determined by the SEC) exists as a result of which disposal by the Fund of
securities owned by a Portfolio is not reasonably practicable or as a result of
which it is not reasonably practicable for the Fund fairly to determine the
value of a Portfolio's net assets, or for such other periods as the SEC may by
order permit for the protection of security holders of the Portfolios. For
information regarding how to redeem shares in the Portfolios, please see your
insurance company's separate account prospectus.

            The value of a shareholder's shares on redemption or repurchase may
be more or less than the cost of such shares to the shareholder, depending upon
the market value of the Portfolio's securities at the time of such redemption or
repurchase. Payment either in cash or in portfolio securities received by a
shareholder upon redemption or repurchase of his shares, assuming the shares
constitute capital assets in his hands, will result in long-term or short-term
capital gains (or losses) depending upon the shareholder's holding period and
basis in respect of the shares redeemed.

Payments to Financial Intermediaries
------------------------------------

            Financial intermediaries, such as the Insurers, market and sell
shares of the Portfolios and typically receive compensation for selling shares
of the Portfolios. This compensation is paid from various sources, including any
Rule 12b-1 fee that you or the Portfolios may pay.

            In the case of Class B shares, up to 100% of the Rule 12b-1 fee
applicable to Class B shares each year may be paid to the financial intermediary
that sells Class B shares.

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

            o     Rule 12b-1 fees;

            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.

            Please read your Portfolio's Prospectus carefully for information on
this compensation.

            ABI and/or the Adviser may pay Insurers or other financial
intermediaries to perform recordkeeping and administrative services in
connection with the Portfolios. Such payments will generally not exceed 0.35% of
the average daily net assets of each Portfolio attributable to the Insurer.

            Other Payments for Educational Support and Distribution Assistance.
In addition to the fees described above, ABI, at its expense, currently provides
additional payments to the Insurers. 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 Portfolios
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 2013, ABI's additional payments to these firms for distribution
services and educational support are expected to be approximately $600,000. In
2012, ABI paid additional payments of approximately $600,000 for the 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 Funds, 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:

         Ameriprise Financial
         ING
         Lincoln Financial
         Merrill Lynch
         Metlife Investors Group Inc.
         Morgan Stanley Smith Barney
         Ohio National
         Pacific Life Insurance Co.
         Principal Financial Group
         SunAmerica
         The Hartford
         Transamerica Capital

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

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

                                NET ASSET VALUE

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

            For all of the Portfolios the NAV of each Portfolio is computed at
the close of regular trading on each day the Exchange is open (ordinarily 4:00
p.m., Eastern Time, but sometimes earlier, as in the case of scheduled half-day
trading or unscheduled suspensions of trading) following receipt of a purchase
or redemption order by a Portfolio on each Portfolio business day on which such
an order is received and on such other days as the Board deems appropriate or
necessary in order to comply with Rule 22c-1 under the 1940 Act. Each
Portfolio's per share NAV is calculated by dividing the value of a Portfolio's
total assets, less its liabilities, by the total number of its shares then
outstanding. A Portfolio business day is any weekday on which the Exchange is
open for trading.

            Portfolio securities are valued at current market value or at fair
value as determined in accordance with applicable rules under the 1940 Act and
the Portfolio's pricing policies and procedures (the "Pricing Policies")
established by and under the general supervision of the Board. The Board has
delegated to the Adviser, subject to the Board's continuing oversight, certain
of the Board's duties with respect to the Pricing Policies. The Adviser has
established a Valuation Committee, which operates under policies and procedures
approved by the Board, to value a Portfolio's assets on behalf of the Portfolio.

            Whenever possible, securities are valued based on market information
on the business day as of which the value is being determined, as follows:

            (a) a security listed on the Exchange, or on other national or
foreign exchange (other than securities listed on the NASDAQ Stock Exchange
("NASDAQ")) is valued at the last sale price reflected on the consolidated tape
at the close of the exchange. If there has been no sale on the relevant business
day, the security is valued at the last traded price from the previous day. On
the following day, the security is valued in good faith at fair value by, or in
accordance with procedures approved by, the Board;

            (b) a security traded on NASDAQ is valued at the NASDAQ Official
Closing Price;

            (c) a security traded on more than one exchange is valued in
accordance with paragraph (a) above by reference to the principal exchange (as
determined by the Adviser) on which the security is traded;

            (d) a listed or OTC put or call option is valued at the mid level
between the current bid and asked prices (for options or futures contracts, see
item (e)). If neither a current bid nor a current ask price is available, the
Adviser will have discretion to determine the best valuation (e.g., last trade
price) and then bring the issue to the Board's Valuation Committee the next day;

            (e) an open futures contract and any option thereon is valued at the
closing settlement price or, in the absence of such a price, the most recent
quoted bid price. If there are no quotations available for the relevant business
day, the security is valued at the last available closing settlement price;

            (f) a listed right is valued at the last traded price provided by
approved pricing vendors. If there has been no sale on the relevant business
day, the right is valued at the last traded price from the previous day. On the
following day, the security is valued in good faith at fair value. For an
unlisted right, the calculation used in determining a value is the price of the
reference security minus the subscription price multiplied by the terms of the
right. There may be some instances when the subscription price is greater than
the referenced security right. In such instances, the right would be valued as
worthless;

            (g) a listed warrant is valued at the last traded price provided by
approved vendors. If there is no sale on the relevant business day, the warrant
is valued at the last traded price from the previous day. On the following day,
the security is valued in good faith at fair value. All unlisted warrants are
valued in good faith at fair value. Once a warrant has expired, it will no
longer be valued;

            (h) preferred securities are valued based on prices received from
approved vendors that use last trade data for listed preferreds and evaluated
bid prices for non-listed preferreds, as well as for listed preferreds when
there is no trade activity;

            (i) a U.S. Government security and any other debt instrument having
60 days or less remaining until maturity generally is valued at amortized cost
if its original maturity was 60 days or less, or by amortizing its fair value as
of the 61st day prior to maturity if the original term to maturity exceeded 60
days, unless in either case the Adviser determines, in accordance with
procedures established by the Board, that this method does not represent fair
value. The Adviser is responsible for monitoring whether any circumstances have
occurred that indicate that the use of amortized cost method for any security is
not appropriate due to such factors as, but not limited to, an impairment of the
creditworthiness of the issuer or material changes in interest rates;

            (j) a fixed-income security is typically valued on the basis of bid
prices provided by an approved pricing vendor when the Adviser believes that
such prices reflect the market value of the security. In certain markets, the
market convention may be to use the mid price between bid and offer.
Fixed-income securities may be valued on the basis of mid prices when either the
approved pricing vendor normally provides mid prices, reflecting the conventions
of the particular markets. The prices provided by a pricing vendor may take into
account many factors, including institutional size, trading in similar groups of
securities and any developments related to specific securities. If the Adviser
determines that an appropriate pricing vendor does not exist for a security in a
market that typically values such securities on the basis of a bid price, the
security is valued on the basis of a quoted bid price or spread over the
applicable yield curve (a bid spread) by a broker-dealer in such security. The
second highest price will be utilized whenever two or more quoted bid prices are
obtained. If an appropriate pricing vendor does not exist for a security in a
market where convention is to use the mid price, the security is valued on the
basis of a quoted mid price by a broker-dealer in such security. The second
highest price will be utilized whenever two or more quoted mid prices are
obtained;

            (k) a mortgage-backed or other asset-backed security is valued on
the basis of bid prices obtained from pricing vendors or bid prices obtained
from multiple major broker-dealers in the security when the Adviser believes
that these prices reflect the market value of the security. In cases in which
broker-dealer quotes are obtained, the Adviser has procedures for using changes
in market yields or spreads to adjust, on a daily basis, a recently obtained
quoted bid price on a security. The second highest price will be utilized
whenever two or more quoted bid prices are obtained;

            (l) bank loans are valued on the basis of bid prices provided by a
pricing vendor;

            (m) bridge loans are valued at the outstanding loan amount, unless
it is determined by the Valuation Committee that any particular bridge loan
should be valued at something other than outstanding loan amount. This may occur
due to, for example, a significant change in the high-yield market and/or a
significant change in the status of any particular issuer or issuers of bridge
loans;

            (n) whole loans: residential and commercial mortgage whole loans and
whole loan pools are fair market priced by Clayton IPS (Independent Pricing
Service);

            (o) forward and spot currency pricing is provided by WM Reuters;

            (p) a swap is valued by the Adviser utilizing various external
sources to obtain inputs for variables in pricing models;

            (q) interest rate caps and floors are valued at the present value of
the agreements, which are provided by approved vendors; and

            (r) open end mutual funds are valued at the closing NAV per share
and closed-end funds are valued at the closing market price per share.

            Each Portfolio values its securities at their current market value
determined on the basis of market quotations as described above or, if market
quotations are not readily available or are unreliable, at "fair value" as
determined in accordance with procedures established by and under the general
supervision of the Board. When a Portfolio uses fair value pricing, it may take
into account any factors it deems appropriate. A Portfolio may determine fair
value based upon developments related to a specific security, current valuations
of foreign stock indices (as reflected in U.S. futures markets) and/or U.S.
sector or broader stock market indices. The prices of securities used by a
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.

            Each 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. A Portfolio may use fair value pricing more
frequently for securities primarily traded in non-U.S. markets because, among
other things, most foreign markets close well before each Portfolio values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim. For example, a Portfolio
believes that foreign security values may be affected by events that occur after
the close of foreign securities markets. To account for this, the Portfolio may
frequently value many of its foreign equity securities using fair value prices
based on third party vendor modeling tools to the extent available.


            Each Portfolio may suspend the determination of its NAV (and the
offering and sales of shares), subject to the rules of the SEC and other
governmental rules and regulations, at a time when: (1) the Exchange is closed,
other than customary weekend and holiday closings, (2) an emergency exists as a
result of which it is not reasonably practicable for a Portfolio to dispose of
securities owned by it or to determine fairly the value of its net assets, or
(3) for the protection of shareholders, the SEC by order permits a suspension of
the right of redemption or a postponement of the date of payment on redemption.

            For purposes of determining each Portfolio's NAV per share, all
assets and liabilities initially expressed in a foreign currency will be
converted into U.S. Dollars at the mean of the current bid and asked prices of
such currency against the U.S. Dollar last quoted by a major bank that is a
regular participant in the relevant foreign exchange market or on the basis of a
pricing service that takes into account the quotes provided by a number of such
major banks. If such quotations are not available as of the close of the
Exchange, the rate of exchange will be determined in good faith by, or under the
direction of, the Board.

            The assets attributable to the Class A shares and Class B shares are
invested together in a single portfolio for each Portfolio. The NAV of each
class will be determined separately by subtracting the liabilities allocated to
that class from the assets belonging to that class in conformance with the
provisions of a plan adopted by each Portfolio in accordance with Rule 18f-3
under the 1940 Act (the "18f-3 Plan").

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

                             PORTFOLIO TRANSACTIONS

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

            Subject to the general oversight of the Board, the Adviser is
responsible for the investment decisions and of placing of orders for portfolio
transactions of the Portfolios. The Adviser determines the broker or dealer to
be used in each specific transaction with the objective of negotiating a
combination of the most favorable commission (for transactions on which a
commission is payable) and the best price obtainable on each transaction
(generally defined as "best execution"). In connection with seeking best price
and execution, the Portfolios do not consider sales of shares of the Portfolios
or other investment companies managed by the Adviser as a factor in the
selection of brokers and dealers to effect portfolio transactions and has
adopted a policy and procedures reasonably designed to preclude such
considerations.

            When consistent with the objective of obtaining best execution,
brokerage may be directed to persons or firms supplying investment information
to the Adviser. There may be occasions where the transaction cost charged by a
broker may be greater than that which another broker may charge if a Portfolio
determines in good faith that the amount of such transaction cost is reasonable
in relation to the value of the brokerage, research and statistical services
provided by the executing broker.

            Neither the Portfolios nor the Adviser has entered into agreements
or understandings with any brokers or dealers regarding the placement of
securities transactions because of research or statistical services they
provide. To the extent that such persons or firms supply investment information
to the Adviser for use in rendering investment advice to a Portfolio, such
information may be supplied at no cost to the Adviser and, therefore, may have
the effect of reducing the expenses of the Adviser in rendering advice to the
Portfolio. While it is impossible to place an actual dollar value on such
investment information, its receipt by the Adviser probably does not reduce the
overall expenses of the Adviser to any material extent.

            The investment information provided to the Adviser is of the type
described in Section 28(e) of the Securities Exchange Act of 1934, as amended,
and is designed to augment the Adviser's own internal research and investment
strategy capabilities. Research and statistical services furnished by brokers
through which the Fund effects securities transactions are used by the Adviser
in carrying out its investment management responsibilities with respect to all
its client accounts but not all such services may be utilized by the Adviser in
connection with the Portfolios.

            The extent to which commissions that will be charged by
broker-dealers selected by a Portfolio may reflect an element of value for
research cannot presently be determined. To the extent that research services of
value are provided by broker-dealers with or through whom the Portfolio places
portfolio transactions, the Adviser may be relieved of expenses which it might
otherwise bear. Research services furnished by broker-dealers as a result of the
placement of portfolio transactions could be useful and of value to the Adviser
in servicing its other clients as well as the Portfolio; on the other hand,
certain research services obtained by the Adviser as a result of the placement
of portfolio brokerage of other clients could be useful and of value to it in
servicing the Portfolio.

            A Portfolio may deal in some instances in equity securities which
are not listed on a national securities exchange but are traded in the
over-the-counter market. In addition, most transactions for the Intermediate
Bond Portfolio are executed in the over-the-counter market. Where transactions
are executed in the over-the-counter market, a Portfolio will seek to deal with
the primary market makers, but when necessary in order to obtain the best price
and execution, it will utilize the services of others. In all cases, the
Portfolio will attempt to negotiate best execution.

            Investment decisions for a Portfolio are made independently from
those for other investment companies and other advisory accounts managed by the
Adviser. It may happen, on occasion, that the same security is held in the
portfolio of a Portfolio and one or more of such other companies or accounts.
Simultaneous transactions are likely when several funds or accounts are managed
by the same Adviser, particularly when a security is suitable for the investment
objectives of more than one of such companies or accounts. When two or more
companies or accounts managed by the Adviser are simultaneously engaged in the
purchase or sale of the same security, the transactions are allocated to the
respective companies or accounts both as to amount and price, in accordance with
a method deemed equitable to each company or account. In some cases this system
may adversely affect the price paid or received by a Portfolio or the size of
the position obtainable for the Portfolio.

            Allocations are made by the officers of a Portfolio or of the
Adviser. Purchases and sales of portfolio securities are determined by the
Adviser and are placed with broker-dealers by the order department for the
Adviser.

            The Portfolios' portfolio transactions in equity securities may
occur on foreign stock exchanges. Transactions on stock exchanges involve the
payment of brokerage commissions. On many foreign stock exchanges these
commissions are fixed. Securities traded in foreign over-the-counter markets
(including most fixed-income securities) are purchased from and sold to dealers
acting as principal. Over-the-counter transactions generally do not involve the
payment of a stated commission, but the price usually includes an undisclosed
commission or markup. The prices of underwritten offerings, however, generally
include a stated underwriter's discount. The Adviser expects to effect the bulk
of its transactions in securities of companies based in foreign countries
through brokers, dealers or underwriters located in such countries. U.S.
Government or other U.S. securities constituting permissible investments will be
purchased and sold through U.S. brokers, dealers or underwriters.


            The aggregate brokerage commissions paid by the Portfolios during
the three most recent fiscal years or since inception are set forth below:

                                           Fiscal
                                          Year Ended        Aggregate Amount of
Portfolio                                December 31       Brokerage Commissions
---------                                ------------      ---------------------

Growth Portfolio                             2010               $138,028
                                             2011                113,496
                                             2012                 79,251

Intermediate Bond Portfolio                  2010                     $0
                                             2011                    405
                                             2012                    217

Growth and Income Portfolio                  2010             $1,259,175
                                             2011              1,384,525
                                             2012              1,263,653

Large Cap Growth Portfolio                   2010               $535,536
                                             2011                512,272
                                             2012                435,586

Small Cap Growth Portfolio                   2010                $93,410
                                             2011                119,513
                                             2012                117,081

Real Estate Investment Portfolio             2010               $134,670
                                             2011                 74,018
                                           2012(1)               235,230

Global Thematic Growth Portfolio             2010               $506,110
                                             2011                653,101
                                           2012(2)               457,410

International Growth Portfolio               2010               $477,109
                                             2011                311,071
                                           2012(3)               213,153

Small/Mid Cap Value Portfolio                2010               $668,406
                                             2011              1,185,566
                                             2012                644,721

Value Portfolio                              2010               $292,823
                                             2011                259,034
                                           2012(4)               161,524

International Value Portfolio                2010             $1,897,893
                                             2011              1,815,021
                                           2012(5)             1,451,452

Balanced Wealth Strategy Portfolio           2010               $490,114
                                             2011                496,625
                                             2012                516,365

Dynamic Asset Allocation Portfolio*          2011                $10,031
                                           2012(6)                46,640


(1)   The aggregate brokerage commissions paid by the Portfolio increased
      materially in 2012 due to an increase in the number of transactions.

(2)   The aggregate brokerage commissions paid by the Portfolio decreased
      materially in 2012 due to a decrease in the value of transactions.

(3)   The aggregate brokerage commissions paid by the Portfolio decreased
      materially in 2012 due to a decrease in the value of transactions.

(4)   The aggregate brokerage commissions paid by the Portfolio decreased
      materially in 2012 due to a decrease in the number of transactions.

(5)   The aggregate brokerage commissions paid by the Portfolio decreased
      materially in 2012 due to a decrease in the number of transactions.

(6)   The aggregate brokerage commissions paid by the Portfolio increased
      materially in 2012 due to an increase in the number and value of
      transactions.

*     Fund commenced operations on April 1, 2011.

            The Fund may, from time to time, place orders for the purchase or
sale of securities (including listed call options) with Sanford C. Bernstein &
Co. and Sanford C. Bernstein Limited, affiliates of the Adviser (the "Affiliated
Brokers"). In such instances, the placement of orders with such brokers would be
consistent with each Portfolio's objective of obtaining best execution and would
not be dependent upon the fact that the Affiliated Brokers are affiliates of the
Adviser. With respect to orders placed with the Affiliated Brokers for execution
on a securities exchange, commissions received must conform to Section
17(e)(2)(A) of the 1940 Act and Rule 17e-1 thereunder, which permit an
affiliated person of a registered investment company (such as the Fund), or any
affiliated person of such person, to receive a brokerage commission from such
registered investment company provided that such commission is reasonable and
fair compared to the commissions received by other brokers in connection with
comparable transactions involving similar securities during a comparable period
of time.

            The aggregate amount of brokerage commissions paid to Affiliated
Brokers during each Portfolio's three most recent fiscal years or since
inception, and, during the most recent fiscal year, the Affiliated Brokers'
percentage of the aggregate brokerage commissions and the aggregate dollar
amount of brokerage transactions, respectively, are set forth below:



                                                               % of Portfolio's
                                                              Aggregate Dollar
                                                   % of          Amount of
                              Aggregate        Portfolio's       Brokerage
                              Amount Of         Aggregate       Transactions
                              Brokerage         Brokerage      Involving The
              Fiscal Year    Commissions       Commissions       Payment Of
                 Ended         Paid To           Paid To        Commissions
               December       Affiliated        Affiliated        Through
Portfolio         31,          Brokers           Brokers      Affiliated Brokers
---------     -----------    -----------       -----------    ------------------

Large Cap        2012        $        0              0%                  0%
Growth           2011                 0
Portfolio        2010               427


                 2012        $        0              0%                  0%
Intermediate     2011                 0
Bond Portfolio   2010                 0

Growth and       2012        $    1,692           0.13%               0.14%
Income           2011                 0
Portfolio        2010               496

                 2012        $      635           0.80%               1.42%
Growth           2011               107
Portfolio        2010               131

International    2012        $    3,063           1.44%               3.07%
Growth           2011               227
Portfolio        2010                 0

Global
Thematic         2012        $    6,078           1.33%               1.26%
Growth           2011             2,875
Portfolio        2010                75

Small Cap        2012        $      251           0.21%               0.16%
Growth           2011               523
Portfolio        2010               742

Real Estate      2012        $       70           0.03%               0.13%
Investment       2011                27
Portfolio        2010               108

Small/Mid Cap    2012        $        0              0%                  0%
Value            2011                 0
Portfolio        2010                 0

                 2012        $        0              0%                  0%
Value            2011                 0
Portfolio        2010                 0

International    2012        $   10,923           0.75%               1.42%
Value            2011             7,187
Portfolio        2010            14,809

Balanced Wealth  2012        $      824           0.16%               0.42%
Strategy         2011               220
Portfolio        2010               137

Dynamic Asset    2012        $        0              0%                  0%
Allocation       2011                 0
Portfolio*

*Fund commenced operations on April 1, 2011.

Disclosure of Portfolio Holdings
--------------------------------

            The Fund believes that the ideas of the Adviser's investment staff
should benefit the Portfolios and their shareholders, and does not want to
afford speculators an opportunity to profit by anticipating Portfolio trading
strategies or using Portfolio information for stock picking. However, the Fund
also believes that knowledge of each Portfolio's portfolio holdings can assist
shareholders in monitoring their investment, making asset allocation decisions,
and evaluating portfolio management techniques.

            The Adviser has adopted, on behalf of the Portfolios, policies and
procedures relating to disclosure of the Portfolios' portfolio securities. The
policies and procedures relating to disclosure of the Portfolios' portfolio
securities are designed to allow disclosure of portfolio holdings information
where necessary to the operation of the Portfolios or useful to the Portfolios'
shareholders without compromising the integrity or performance of the
Portfolios. Except when there are legitimate business purposes for selective
disclosure and other conditions (designed to protect the Portfolios and their
shareholders) are met, the Portfolios do not provide or permit others to provide
information about a Portfolio's portfolio holdings on a selective basis.

            The Portfolios include portfolio holdings information as required in
regulatory filings and shareholder reports, disclose portfolio holdings
information as required by federal or state securities laws and may disclose
portfolio holdings information in response to requests by governmental
authorities. In addition, the Adviser may post portfolio holdings information on
the Adviser's website (www.AllianceBernstein.com). For each portfolio security,
the posted information includes its name, the number of shares held by a
Portfolio, the market value of the Portfolio's holdings, and the percentage of
the Portfolio's assets represented by the Portfolio's holdings. The day after
portfolio holdings information is publicly available on the website, it may be
mailed, e-mailed or otherwise transmitted to any person.

            The Adviser may distribute or authorize the distribution of
information about a Portfolio's portfolio holdings that is not publicly
available, on the website or otherwise, to the Adviser's employees and
affiliates that provide services to the Fund. In addition, the Adviser may
distribute or authorize distribution of information about a Portfolio's
portfolio holdings that is not publicly available, on the website or otherwise,
to the Fund's service providers who require access to the information in order
to fulfill their contractual duties relating to the Portfolios, to facilitate
the review of the Portfolios by rating agencies, for the purpose of due
diligence regarding a merger or acquisition, or for the purpose of effecting
in-kind redemption of securities to facilitate orderly redemption of portfolio
assets and minimal impact on remaining Portfolio shareholders. The Adviser does
not expect to disclose information about a Portfolio's portfolio holdings that
is not publicly available to the Portfolio's individual or institutional
investors or to intermediaries that distribute the Portfolio's shares.
Information may be disclosed with any frequency and any lag, as appropriate.

            Before any non-public disclosure of information about a Portfolio's
portfolio holdings is permitted, however, the Adviser's Chief Compliance Officer
(or his designee) must determine that the Portfolio has a legitimate business
purpose for providing the portfolio holdings information, that the disclosure is
in the best interests of the Portfolio's shareholders, and that the recipient
agrees or has a duty to keep the information confidential and agrees not to
trade directly or indirectly based on the information or to use the information
to form a specific recommendation about whether to invest in the Portfolio or
any other security. Under no circumstances may the Adviser or its affiliates
receive any consideration or compensation for disclosing the information.

            The Adviser has established procedures to ensure that a Portfolio's
portfolio holdings information is only disclosed in accordance with these
policies. Only the Adviser's Chief Compliance Officer (or his designee) may
approve the disclosure, and then only if he or she and a designated senior
officer in the Adviser's product management group determines that the disclosure
serves a legitimate business purpose of a Portfolio and is in the best interest
of the Portfolio's shareholders. The Adviser's Chief Compliance Officer (or his
designee) approves disclosure only after considering the anticipated benefits
and costs to the Portfolio and its shareholders, the purpose of the disclosure,
any conflicts of interest between the interests of the Portfolio and its
shareholders and the interests of the Adviser or any of its affiliates, and
whether the disclosure is consistent with the policies and procedures governing
disclosure. Only someone approved by the Adviser's Chief Compliance Officer (or
his designee) may make approved disclosures of portfolio holdings information to
authorized recipients. The Adviser reserves the right to request certifications
from senior officers of authorized recipients that the recipient is using the
portfolio holdings information only in a manner consistent with the Adviser's
policy and any applicable confidentiality agreement. The Adviser's Chief
Compliance Officer (or his designee) or another member of the compliance team
reports all arrangements to disclose portfolio holdings information to the
Fund's Board on a quarterly basis. If the Directors determine that disclosure
was inappropriate, the Adviser will promptly terminate the disclosure
arrangement.

            In accordance with these procedures, each of the following third
parties have been approved to receive information concerning the Portfolios'
portfolio holdings: (i) the Fund's independent registered public accounting
firm, for use in providing audit opinions; (ii) Data Communique International,
RR Donnelley Financial and, from time to time, other financial printers, for the
purpose of preparing Portfolio regulatory filings; (iii) the Fund's custodian in
connection with its custody of the assets of the Portfolios; (iv) Risk Metrics
for proxy voting services; and (v) data aggregators, such as Vestek. Information
may be provided to these parties at any time with no time lag. Each of these
parties is contractually and ethically prohibited from sharing a Portfolio's
portfolio holdings information unless specifically authorized.

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

                       DIVIDENDS, DISTRIBUTIONS AND TAXES

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

            Each Portfolio of the Fund qualified and intends to continue to
qualify to be taxed as a regulated investment company under the Code. If so
qualified, each Portfolio will not be subject to federal income and excise taxes
on its investment company taxable income and net capital gain to the extent such
investment company taxable income and net capital gain are distributed to the
separate accounts of insurance companies which hold its shares. Under current
tax law, capital gains or dividends from any Portfolio are not currently taxable
to the holder of a variable annuity or variable life insurance contract when
left to accumulate within such variable annuity or variable life insurance
contract. Distributions of net investment income and net short-term capital
gains will be treated as ordinary income and distributions of net long-term
capital gains will be treated as long-term capital gain in the hands of the
insurance companies.

            Investment income received by a Portfolio from sources within
foreign countries may be subject to foreign income taxes withheld at the source.
If more than 50% of the value of a Portfolio's total assets at the close of its
taxable year consists of stocks or securities of foreign corporations (which for
this purpose should include obligations issued by foreign governments), such
Portfolio will be eligible to file an election with the Internal Revenue Service
to pass through to its shareholders the amount of foreign taxes paid by the
Portfolio. If eligible, each such Portfolio intends to file such an election,
although there can be no assurance that such Portfolio will be able to do so.

            Section 817(h) of the Code requires that the investments of a
segregated asset account of an insurance company be adequately diversified, in
accordance with Treasury Regulations promulgated thereunder, in order for the
holders of the variable annuity contracts or variable life insurance policies
underlying the account to receive the tax-deferred or tax-free treatment
generally afforded holders of annuities or life insurance policies under the
Code. The Department of the Treasury has issued Regulations under section 817(h)
that, among other things, provide the manner in which a segregated asset account
will treat investments in a regulated investment company for purposes of the
applicable diversification requirements. Under the Regulations, an insurance
company segregated account is permitted to look-through a Portfolio to satisfy
asset diversification tests and treat its underlying securities, rather than the
Portfolio, as investments subject to certain diversification limits. A Portfolio
will be considered adequately diversified if no more than 55% of its assets are
represented by any one investment, no more than 70% of its assets are
represented by any two investments, no more than 80% of its assets are
represented by any three investments and no more than 90% of its assets are
represented by any four investments. For this purpose, all securities issued by
an issuer are treated as a single investment. Each Portfolio plans to satisfy
these conditions at all times so that the shares of such Portfolio owned by a
segregated asset account of a life insurance company will be subject to this
treatment under the Code.

            For information concerning the federal income tax consequences for
the holders of variable annuity contracts and variable life insurance policies,
such holders should consult the prospectus used in connection with the issuance
of their particular contracts or policies.

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

                              GENERAL INFORMATION

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

Description of the Portfolios
-----------------------------

            The Fund was organized as a Maryland corporation in 1987 under the
name "Alliance Variable Products Series Fund, Inc." The name of the Fund became
"AllianceBernstein Variable Products Series Fund, Inc." on May 1, 2003.

            All shares of the Fund when duly issued will be fully paid and
nonassessable. The Board is authorized to reclassify any unissued shares into
any number of additional series and classes without shareholder approval.
Accordingly, the Board in the future, for reasons such as the desire to
establish one or more additional Portfolio's with different investment
objectives, policies or restrictions or to establish additional channels of
distribution, may create additional series and classes of shares. Any issuance
of shares of such additional series and classes would be governed by the 1940
Act and the laws of the State of Maryland.

            Generally, shares of each Portfolio would vote as a single series
for the election of directors and on any other matter that affected each
Portfolio in substantially the same manner. As to matters affecting each
Portfolio differently, such as approval of the Advisory Agreement and changes in
investment policy, shares of each Portfolio would vote as separate series.
Moreover, the Class B shares of each Portfolio will vote separately with respect
to matters relating to the 12b-1 Plan(s) adopted in accordance with Rule 12b-1
under the 1940 Act.

             It is anticipated that annual meetings of shareholders will not be
held; shareholder meetings will only be held when required by federal or state
law or in accordance with an undertaking by the Adviser to the SEC. Shareholders
have available certain procedures for the election of Directors.

            Pursuant to an order received from the SEC, the Fund maintains
participation agreements with insurance company separate accounts that obligate
the insurance companies to pass any proxy solicitations through to underlying
contractholders who in turn are asked to designate voting instructions. In the
event that an insurance company does not receive voting instructions from
contractholders, it is obligated to vote the shares that correspond to such
contractholders in the same proportion as instructions received from all other
applicable contractholders.

            To the knowledge of the Fund, the following persons owned of record
or beneficially, 5% or more of a class of outstanding shares of each Portfolio
as of April 1, 2013:

CLASS A
SHARES                                                    NUMBER OF     % OF
                                                          CLASS A       CLASS A
PORTFOLIO       NAME AND ADDRESS                          SHARES        SHARES
---------       -----------------                         ----------    -------

Intermediate    American General Life
Bond            Insurance Company of Delaware
Portfolio       Attn: Ed Bacon
                2727A Allen Parkway, #4D1
                Houston, TX 77019-2107                    4,877,152.4     80.50%

                The United States Life Insurance
                Company In the City of New York
                Attn: Ed Bacon
                2727A Allen Parkway, MS 4D-1
                Houston, TX 77019-2116                      546,325.3      9.02%

Large Cap       Allmerica Financial Life
Growth          Insurance & Annuity Company
Portfolio       One Security Benefit Place
                Topeka, KS  66636-1000                      251,731.4      5.05%

                American General Life
                Insurance Company of Delaware
                Attn: Ed Bacon
                2727A Allen Parkway, #4D1
                Houston, TX 77019-2107                      957,961.9     19.23%

                Merrill Lynch Life Insurance Company
                ML-Life V
                4333 Edgewood Road, NE
                Cedar Rapids, IA 52499-0001                 364,783.7      7.32%

                Merrill Lynch Life Insurance Company
                ML-Retirement Plus A
                4333 Edgewood Road, NE
                Cedar Rapids, IA  52499-0001              2,146,690.2     43.09%

Growth and      American General Life
Income          Insurance Company of Delaware
Portfolio       Attn: Ed Bacon
                2727A Allen Parkway, #4D1
                Houston, TX 77019-2107                    1,939,635.9     32.33%

                ING Life Insurance and Annuity Company
                Attn: ING Fund Operations
                1 Orange Way, #B3N
                Windsor, CT 06095-4773                      492,628.8      8.21%

                Lincoln Life Variable Annuity Account
                Fund Accounting
                1300 S. Clinton Street
                Fort Wayne, IN 46802-3506                 1,126,978.9     18.78%

                Merrill Lynch Life Insurance Company
                ML-Retirement Power
                4333 Edgewood Road, NE
                Cedar Rapids, IA 52499-0001                 376,237.6      6.27%

                Nationwide Life Insurance Company
                C/O IPO Portfolio Accounting
                P.O. Box 182029
                Columbus, OH  43218-2029                    431,293.2      7.19%

Growth          American General Life
Portfolio       Insurance Company of Delaware
                Attn: Ed Bacon
                2727A Allen Parkway, #4D1
                Houston, TX 77019-2107                      607,883.4     58.98%

                American General Life
                Insurance Company of Delaware
                Attn: Ed Bacon
                2727A Allen Parkway, #4D1
                Houston, TX 77019-2107                       59,192.4      5.74%

                The United States Life Insurance
                Company In the City of New York
                Attn: Ed Bacon
                2727A Allen Parkway, MS 4D-1
                Houston, TX 77019-2116                      134,658.5     13.06%

                UBS Life Insurance Co.
                P.O. Box 1795
                Erie, PA 16507-1795                          55,655.3      5.40%

International   American General Life
Growth          Insurance Company of Delaware
Portfolio       Attn: Ed Bacon
                2727A Allen Parkway, #4D1
                Houston, TX 77019-2107                    1,351,615.0     24.11%

                Great-West Life & Annuity
                FBO Variable Annuity OneSource
                Attn: Investment Div 2T2
                8515 E. Orchard Road
                Englewood, CO 80111-5002                    662,507.8     11.82%

                The Prudential Insurance
                Company of America
                c/o Prubenefit Laureate
                80 Livingston Avenue, Bldg. ROS3
                Roseland, NJ  07068-1753                  3,004,512.6     53.60%

Global          American General Life
Thematic        Insurance Company of Delaware
Growth          Attn: Ed Bacon
Portfolio       2727A Allen Parkway, #4D1
                Houston, TX 77019-2107                      679,183.8     28.82%

                Lincoln Life Variable Annuity Account
                Fund Accounting
                1300 S. Clinton Street
                Fort Wayne, IN  46802-3506                  969,927.9     41.15%

                Merrill Lynch Life Insurance Company
                ML-Retirement Plus A
                4333 Edgewood Road, NE
                Cedar Rapids, IA 52499-0001                 283,559.6     12.03%

                The United States Life Insurance
                Company In the City of New York
                Attn: Ed Bacon
                2727A Allen Parkway, MS 4D-1
                Houston, TX  77019-2116                     145,622.1      6.18%

Small Cap       American General Life
Growth          Insurance Company of Delaware
Portfolio       Attn: Ed Bacon
                2727A Allen Parkway, #4D1
                Houston, TX 77019-2107                      829,663.8     58.10%

                Principal Life Insurance Co.
                Attn: Individual Accounting
                711 High Street
                Des Moines, IA 50392-0001                   219,925.4     15.40%

                Nationwide Life Insurance Company
                c/o IPO Portfolio Accounting
                P.O. Box 182029
                Columbus, OH 43218-2029                     124,385.1      8.71%

                The United States Life Insurance
                Company In the City of New York
                Attn: Ed Bacon
                2727A Allen Parkway, MS 4D-1
                Houston, TX 77019-2116                       77,004.9      5.39%

Real Estate     American General Life
Investment      Insurance Company of Delaware
Portfolio       Attn: Ed Bacon
                2727A Allen Parkway, #4D1
                Houston, TX 77019-2107                      967,404.4     16.77%

                Great West Life & Annuity
                Insurance Company
                FBO Schwab Annuities
                Attn: Investment Div 2T2
                8515 E. Orchard Road
                Englewood, CO 80111-5002                  1,358,716.2     23.56%

                The Prudential Insurance
                Company of America
                c/o Prubenefit Laureate
                80 Livingston Avenue, Bldg. ROS3
                Roseland, NJ 07068-1753                   2,997,954.5     51.98%

International   American General Life
Value           Insurance Company of Delaware
Portfolio       Attn: Ed Bacon
                2727A Allen Parkway, #4D1
                Houston, TX 77019-2107                      654,367.1     18.32%

                Great West Life & Annuity
                Insurance Company
                FBO Schwab Annuities
                Attn: Investment Div 2T2
                8515 E. Orchard Road
                Englewood, CO 80111-5002                    257,842.5      7.22%

                Lincoln Life Variable Annuity
                Account Fund Accounting
                1300 S. Clinton Street
                Fort Wayne, IN  46802-3506                  900,723.2     25.22%

                National Life Group
                Sentinel Advantage
                1 National Life Drive
                Montpelier, VT 05604-1000                   302,633.9      8.47%

                Nationwide Life Insurance Company
                c/o IPO Portfolio Accounting
                P.O. Box 182029
                Columbus, OH 43218-2029                     612,564.1     17.15%

Small/Mid       American General Life
Cap             Insurance Company of Delaware
Value           Attn: Ed Bacon
Portfolio       2727A Allen Parkway, #4D1
                Houston, TX 77019-2107                    1,016,102.4     11.48%

                AUL American Individual Variable
                Annuity Unit Trust
                Separate Accounts Administration
                P.O. Box 368
                Indianapolis, IN 46206-0368                 688,728.7      7.78%

                Lincoln Life Variable Annuity Account
                Fund Accounting
                1300 S. Clinton Street
                Fort Wayne, IN 46802-3506                 4,257,774.6     48.08%

                Nationwide Life Insurance Company
                c/o IPO Portfolio Accounting
                P.O. Box 182029
                Columbus, OH 43218-2029                     595,985.2      6.73%

                New York Life Insurance And Annuity
                Corporation
                169 Lackawanna Avenue
                Parsippany, NJ 07054-1007                   523,452.9      5.91%

Value           Merrill Lynch Life Insurance Company
Portfolio       ML - IVC Investors Series
                4333 Edgewood Road, NE
                Cedar Rapids, IA 52499-0001                 122,849.2     81.51%

                Merrill Lynch Life Insurance
                Company of New York
                Investors Series
                4333 Edgewood Road, NE
                Cedar Rapids, IA 52499-0001                  23,187.3     15.38%

Balanced        American General Life
Wealth          Insurance Company of Delaware
Strategy        Attn: Ed Bacon
Portfolio       2727A Allen Parkway, #4D1
                Houston, TX 77019-2107                    2,906,787.2     88.66%

                The United States Life Insurance
                Company In the City of New York
                Attn: Ed Bacon
                2727A Allen Parkway, MS 4D-1
                Houston, TX 77019-2116                      208,350.3      6.35%

Dynamic         AllianceBernstein L.P.
Asset           Attn: Brent Mather-Seed Acct
Allocation      1 N. Lexington Avenue
Portfolio       White Plains, NY 10601-1712                   1,000.0     21.67%

                Nationwide Life Insurance Co.
                c/o IPO Portfolio Accounting
                P.O. Box 182029
                Columbus, OH  43218-2029                        429.0      9.30%

                Nationwide Life Insurance Co.
                c/o Portfolio Accounting
                P.O. Box 182029
                Columbus, OH  43218-2029                      1,674.6     36.29%

                Nationwide Life Insurance Co.
                c/o Portfolio Accounting
                P.O. Box 182029
                Columbus, OH  43218-2029                        479.8     10.40%

                Nationwide Life & Annuity
                Insurance Co.
                c/o IPO Portfolio Accounting
                P.O. Box 182029
                Columbus, OH  43218-2029                      1,031.1     22.35%



CLASS B
SHARES                                                    NUMBER OF     % OF
                                                          CLASS B       CLASS B
PORTFOLIO       NAME AND ADDRESS                          SHARES        SHARES
---------       -----------------                         ----------    -------

Intermediate    Hartford Life Separate Account               218,838.3     9.36%
Bond            Attn: UIT Operations
Portfolio       P.O. Box 2999
                Hartford, CT 06104-2999

                SunAmerica Annuity and Life                1,667,149.1    71.29%
                Assurance Company
                Attn: Variable Annuity Accounting
                21650 Oxnard Street, MS 6-9
                Suite 750
                Woodland Hills, CA 91367-4901

                Sun Life Assurance                           192,356.1     8.23%
                Company of Canada (U.S.)
                Attn: Product Accounting
                SC 2282
                1 Sun Life Park
                Wellesley Hills, MA 02481-5699

Large Cap       Allmerica Financial Life                     863,519.0    14.18%
Growth          Insurance & Annuity Company
Portfolio       One Security Benefit Place
                Topeka, KS 66636-1000

                Allstate Life Insurance Company              551,812.5     9.06%
                3100 Sanders Road, #N4A
                Northbrook, IL  60062-7156

                American General Life Insurance              581,432.3     9.55%
                Company of Delaware
                Attn: Ed Bacon
                2727A Allen Parkway, #4D1
                Houston, TX  77019-2107

                GE Life and Annuity                          375,798.2     6.17%
                Assurance Company
                6610 W. Broad Street
                Building 3, 5th Floor
                Attn: Variable Accounting
                Richmond, VA 23230-1702

                Horace Mann                                1,077,670.6    17.69%
                Life Insurance Company
                Separate Account
                Horace Mann
                Springfield, IL 62715-0001

                IDS Life Insurance Company                   318,778.6     5.23%
                10468 Ameriprise Financial Center
                Minneapolis, MN  55474-0014

                Transamerica Life Insurance Co.              498,847.3     8.19%
                FMD Operational Accounting
                4333 Edgewood Road, NE
                Cedar Rapids, IA  52499-0001

Growth and      Allmerica Financial Life                   2,170,624.8     6.06%
Income          Insurance & Annuity Company
Portfolio       One Security Benefit Place
                Topeka, KS 66636-1000

                Allstate Life Insurance Company            2,754,444.7     7.69%
                3100 Sanders Road, #N4A
                Northbrook, IL  60062-7156

                American General Life                      1,925,660.2     5.38%
                Insurance Company of Delaware
                Attn: Ed Bacon
                2727A Allen Parkway, #4D1
                Houston, TX 77019-2107

                GE Life and Annuity                        2,468,493.2     6.89%
                Assurance Company
                6610 W. Broad Street
                Building 3, 5th Floor
                Attn: Variable Accounting
                Richmond, VA 23230-1702

                IDS Life Insurance Corp.                   7,435,578.3    20.77%
                1438 AXP Financial Ctr.
                Minneapolis, MN 55474-0014

                Lincoln Life Variable Annuity Account      8,567,287.4    23.93%
                Fund Accounting
                1300 S. Clinton Street
                Fort Wayne, IN 46802-3506

                Transamerica Life Insurance Co.            2,513,595.8     7.02%
                FMD Operational Accounting
                4333 Edgewood Road, NE
                Cedar Rapids, IA 52499-0001

Growth          Allstate Life Insurance Company              897,202.8    44.58%
Portfolio       3100 Sanders Road, #N4A
                Northbrook, IL 60062

                American General Life                        519,614.4    25.82%
                Insurance Company of Delaware
                Attn: Ed Bacon
                2727A Allen Parkway, #4D1
                Houston, TX 77019-2107

                AXA Equitable Life Insurance Company         323,478.6     9.76%
                Separate Account
                1290 Avenue of the Americas
                11th Floor
                New York, NY 10104-1472

                Hartford Life and Annuity                    259,914.0     7.84%
                Separate Account
                Attn: UIT Operations
                P.O. Box 2999
                Hartford, CT 06104-2999

                SunAmerica Annuity and Life                  323,955.1    16.10%
                Assurance Company
                Attn: Variable Annuity Accounting
                21650 Oxnard Street, MS 6-9
                Suite 750
                Woodland Hills, CA 91367-4997

                Sun Life Assurance                           696,646.0    21.02%
                Company of Canada (U.S.)
                One Sun Life Executive Park
                Wellesley Hills, MA 02481-9133

International   Hartford Life and Annuity                  1,048,424.3    31.64%
Growth          Separate Account
Portfolio       Attn: UIT Operations
                P.O. Box 2999
                Hartford CT, 06104-2999

                Hartford Life Separate Account               299,803.8     9.05%
                Attn:UIT Operations
                P.O. Box 2999
                Hartford, CT 06104-2999

                Sun Life Assurance                           696,646.0    21.02%
                Company of Canada (U.S.)
                One Sunlife Executive Park
                Wellesley Hills, MA 02481

                SunAmerica Annuity and Life                  332,116.7    10.02%
                Assurance Company
                Attn: Variable Annuity Accounting
                21650 Oxnard Street, MS 6-9
                Suite 750
                Woodland Hills, CA 91367-4997

Global          American General Life                        321,838.0     6.04%
Thematic        Insurance Company of Delaware
Growth          Attn: Ed Bacon
Portfolio       2727A Allen Parkway, #4D1
                Houston, TX 77019-2107

                IDS Life Insurance Co.                       502,137.3     9.43%
                222 AXP Financial Ctr.
                Minneapolis, MN 55474-0014

                Lincoln Life Variable Annuity              2,673,159.8    50.19%
                Account Fund Accounting
                1300 S. Clinton Street
                Fort Wayne, IN 46802-3506

Small Cap       GE Life and Annuity                          791,075.4    55.64%
Growth          Assurance Company
Portfolio       6610 W. Broad Street
                Building 3, 5th Floor
                Attn: Variable Accounting
                Richmond, VA 23230-1702

                Horace Mann                                  143,758.0    10.11%
                Life Insurance Company
                Separate Account
                Horace Mann
                Springfield, IL 62715-0001

                Jefferson National Life                       96,107.7     6.76%
                Insurance Company
                Attn: Separate Accounts
                10350 Ormsby Park Place,
                Suite 600
                Louisville, KY 40223-6178

                SunAmerica Annuity and Life                  273,928.8    19.27%
                Assurance Company
                Attn: Variable Annuity Accounting
                21650 Oxnard Street, MS 6-9
                Suite 750
                Woodland Hills, CA 91367-4997

Real Estate     Guardian Ins & Annuity Co Inc                178,937.5    16.41%
Investment      S/A
Portfolio       3900 Burgess Place
                Bethlehem, PA 18017-9097

                Guardian Ins & Annuity Co Inc                427,676.4    39.21%
                S/A
                3900 Burgess Place
                Bethlehem, PA 18017-9097

                Hartford Life & Annuity                       73,474.5     6.74%
                Separate Account
                Attn: UIT Operations
                P.O. Box 2999
                Hartford, CT  06104-2999

                SunAmerica Annuity and Life                  355,159.6    32.56%
                Assurance Company
                Attn: Variable Annuity Accounting
                21650 Oxnard Street, MS 6-9
                Suite 750
                Woodland Hills, CA 91367-4997

International   GE Life and Annuity                        6,799,608.3     8.87%
Value           Assurance Company
Portfolio       6610 W. Broad Street
                Building 3, 5th Floor
                Attn: Variable Accounting
                Richmond, VA 23230-1702

                Hartford Life and Annuity                 13,716,582.3    17.89%
                Separate Account
                Attn: UIT Operations
                P.O. Box 2999
                Hartford, CT 06104-2999

                Hartford Life                              5,954,400.9     7.75%
                Separate Account
                Attn: UIT Operations
                P.O. Box 2999
                Hartford, CT 06104-2999

                IDS Life Insurance Co.                    19,287,179.0    25.15%
                1438 AXP Financial Ctr.
                Minneapolis, MN 55474-0014

                Lincoln Life Variable Annuity             14,581,384.3    19.01%
                Account Fund Accounting
                1300 S. Clinton Street
                Fort Wayne, IN 46802-3506

                Sun Life Assurance                         4,693,678.9     6.12%
                Company of Canada (U.S.)
                One Sunlife Executive Park
                Wellesley Hills, MA 02481

Small/Mid       Hartford Life and Annuity                  2,513,909.7    12.69%
Cap Value       Separate Account
Portfolio       Attn: UIT Operations
                P.O. Box 2999
                Hartford, CT 06104-2999

                Lincoln Life Variable Annuity              8,194,927.1    41.37%
                Account Fund Accounting
                1300 S. Clinton Street
                Fort Wayne, IN 46802-3506

                Nationwide Life Insurance Company          3,549,989.8    17.92%
                c/o IPO Portfolio Accounting
                P.O. Box 182029
                Columbus, OH 43218-2029

Value           American General Life                      1,328,508.6     9.52%
Portfolio       Insurance Company of Delaware
                Attn: Ed Bacon
                2727A Allen Parkway, #4D1
                Houston, TX 77019-2107

                Hartford Life                              3,559,200.4    25.49%
                Separate Account
                Attn: UIT Operations
                P.O. Box 2999
                Hartford, CT 06104-2999

                Hartford Life and Annuity                  7,256,590.0    51.98%
                Separate Account
                Attn: UIT Operations
                P.O. Box 2999
                Hartford, CT  06104-2999

Balanced        Hartford Life and Annuity                  7,748,416.7    18.75%
Wealth          Separate Account
Strategy        Attn: UIT Operations
Portfolio       P.O. Box 2999
                Hartford, CT 06104-2999

                Hartford Life                              3,139,424.6     7.60%
                Separate Account
                Attn: UIT Operations
                P.O. Box 2999
                Hartford, CT  06104-2999

                Separate Account A of Pacific             11,610,338.9    28.09%
                Life Insurance Company
                700 Newport Center Drive
                Newport Beach, CA 92660-6307

                SunAmerica Annuity and Life                3,110,662.1     7.53%
                Assurance Company
                Attn: Variable Annuity Accounting
                21650 Oxnard Street, MS 6-9
                Suite 750
                Woodland Hills, CA 91367-4997

                Sunlife Assurance                          4,863,936.6    11.77%
                Company of Canada (U.S.)
                One Sunlife Executive Park
                Wellesley Hills, MA 02481

                Transamerica Life Insurance Co.            2,348,073.4     5.68%
                FMD Operational Accounting
                4333 Edgewood Road, NE
                Cedar Rapids, IA 52499-0001

Dynamic Asset   Ohio National Life Insurance Co.          16,820,146.9    72.90%
Allocation      FBO Its Separate Accounts
Portfolio       One Financial Way
                Attn: Cathy Gehr, Mail Code 56
                Cincinnati, OH 45242-5851

                Sunlife Assurance                          5,345,316.3    23.17%
                Company of Canada (U.S.)
                One Sunlife Executive Park
                Wellesley Hills, MA 02481

Custodian
---------

            State Street Bank and Trust Company ("State Street"), One Lincoln
Street, Boston, MA 02111, acts as custodian for the securities and cash of the
Fund but plays no part in deciding the purchase or sale of portfolio securities.
Subject to the supervision of the Board, State Street may enter into
sub-custodial agreements for the holding of the Fund's securities of foreign
issuers.

Principal Underwriter
---------------------

            ABI, an indirect wholly-owned subsidiary of the Adviser, located at
1345 Avenue of the Americas, New York, New York 10105, serves as the Fund's
Principal Underwriter.

Counsel
-------

            Legal matters in connection with the issuance of the shares of the
Fund offered hereby will be passed upon by Seward & Kissel LLP, New York, New
York, 10004.

Independent Registered Public Accounting Firm
---------------------------------------------

            Ernst & Young LLP, 5 Times Square, New York, New York, 10036, has
been appointed as the independent registered public accounting firm for the
Fund.

Code of Ethics And Proxy Voting Policies And Procedures
-------------------------------------------------------

            The Fund, the Adviser and ABI have each adopted codes of ethics
pursuant to Rule 17j-1 of the 1940 Act. These codes of ethics permit personnel
subject to the codes to invest in securities, including securities that may be
purchased or held by the Fund.

            The Fund has adopted the Adviser's proxy voting policies and
procedures. The Adviser's proxy voting policies and procedures are attached as
Appendix A.

            Information regarding how the Portfolios voted proxies related to
portfolio securities during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 227-4618; or on or
through the Fund's website at www.AllianceBernstein.com; or both; and (2) on the
SEC's website at www.sec.gov.



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

        FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT REGISTERED PUBLIC
                                ACCOUNTING FIRM

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

            The financial statements of the Portfolios of the Fund for the
fiscal year ended December 31, 2012 and the report of Ernst & Young LLP, the
independent registered public accounting firm, are incorporated herein by
reference to the Portfolios' annual reports. The annual report was filed on Form
N-CSR with the SEC on February 22, 2013. It is available without charge upon
request by calling ABIS at (800) 227-4618 or on the Internet at
www.AllianceBernstein.com.



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

                                  APPENDIX A:

             STATEMENT OF POLICIES AND PROCEDURES FOR PROXY VOTING

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

1.    Introduction

      As a registered investment adviser, AllianceBernstein L.P.
      ("AllianceBernstein", "we" or "us") has a fiduciary duty to act solely in
      the best interests of our clients. We recognize that this duty requires us
      to vote client securities in a timely manner and make voting decisions
      that are intended to maximize long-term shareholder value. Generally, our
      clients' objective is to maximize the financial return of their portfolios
      within appropriate risk parameters. We have long recognized that
      environmental, social and governance ("ESG") issues can impact the
      performance of investment portfolios. Accordingly, we have sought to
      integrate ESG factors into our investment process to the extent that the
      integration of such factors is consistent with our fiduciary duty to help
      our clients achieve their investment objectives and protect their economic
      interests. Our Statement of Policy Regarding Responsible Investment ("RI
      Policy") is attached to this Statement as an Exhibit.

      We consider ourselves shareholder advocates and take this responsibility
      very seriously. Consistent with our commitments, we will disclose our
      clients' voting records only to them and as required by mutual fund vote
      disclosure regulations. In addition, our proxy committees may, after
      careful consideration, choose to respond to surveys so long as doing so
      does not compromise confidential voting.

      This statement is intended to comply with Rule 206(4)-6 of the Investment
      Advisers Act of 1940. It sets forth our policies and procedures for voting
      proxies for our discretionary investment advisory clients, including
      investment companies registered under the Investment Company Act of 1940.
      This statement applies to AllianceBernstein's investment groups investing
      on behalf of clients in both U.S. and non-U.S. securities.

2.    Proxy Policies

      Our proxy voting policies are principle-based rather than rules-based. We
      adhere to a core set of principles that are described in this Statement
      and in our Proxy Voting Manual. We assess each proxy proposal in light of
      those principles. Our proxy voting "litmus test" will always be what we
      view as most likely to maximize long-term shareholder value. We believe
      that authority and accountability for setting and executing corporate
      policies, goals and compensation should generally rest with the board of
      directors and senior management. In return, we support strong investor
      rights that allow shareholders to hold directors and management
      accountable if they fail to act in the best interests of shareholders. In
      addition, if we determine that ESG issues that arise with respect to an
      issuer's past, current or anticipated behaviors are, or are reasonably
      likely to become, material to its future earnings, we address these
      concerns in our proxy voting and engagement.

      This statement is designed to be responsive to the wide range of proxy
      voting subjects that can have a significant effect on the investment value
      of the securities held in our clients' accounts. These policies are not
      exhaustive due to the variety of proxy voting issues that we may be
      required to consider. AllianceBernstein reserves the right to depart from
      these guidelines in order to make voting decisions that are in our
      clients' best interests. In reviewing proxy issues, we will apply the
      following general policies:

      2.1.  Corporate Governance

            We recognize the importance of good corporate governance in our
            proxy voting policies and engagement practices in ensuring that
            management and the board of directors fulfill their obligations to
            shareholders. We favor proposals promoting transparency and
            accountability within a company. We support the appointment of a
            majority of independent directors on key committees and generally
            support separating the positions of chairman and chief executive
            officer, except in cases where a company has sufficient
            counter-balancing governance in place. Because we believe that good
            corporate governance requires shareholders to have a meaningful
            voice in the affairs of the company, we generally will support
            shareholder proposals which request that companies amend their
            by-laws to provide that director nominees be elected by an
            affirmative vote of a majority of the votes cast. Furthermore, we
            have written to the SEC in support of shareholder access to
            corporate proxy statements under specified conditions with the goal
            of serving the best interests of all shareholders.

      2.2.  Elections of Directors

            Unless there is a proxy fight for seats on the Board or we determine
            that there are other compelling reasons to oppose directors, we will
            vote in favor of the management proposed slate of directors. That
            said, we believe that directors have a duty to respond to
            shareholder actions that have received significant shareholder
            support. Therefore, we may vote against directors (or withhold votes
            for directors where plurality voting applies) who fail to act on key
            issues such as failure to implement proposals to declassify the
            board, failure to implement a majority vote requirement, failure to
            submit a rights plan to a shareholder vote or failure to act on
            tender offers where a majority of shareholders have tendered their
            shares. In addition, we will vote against directors who fail to
            attend at least seventy-five percent of board meetings within a
            given year without a reasonable excuse, and we may abstain or vote
            against directors of non-U.S. issuers where there is insufficient
            information about the nominees disclosed in the proxy statement.
            Also, we will generally not oppose directors who meet the definition
            of independence promulgated by the primary exchange on which the
            company's shares are traded or set forth in the code we determine to
            be best practice in the country where the subject company is
            domiciled. Finally, because we believe that cumulative voting in
            single shareholder class structures provides a disproportionately
            large voice to minority shareholders in the affairs of a company, we
            will generally vote against such proposals and vote for management
            proposals seeking to eliminate cumulative voting. However, in dual
            class structures (such as A&B shares) where the shareholders with a
            majority economic interest have a minority voting interest, we will
            generally vote in favor of cumulative voting.

      2.3.  Appointment of Auditors

            AllianceBernstein believes that the company is in the best position
            to choose its auditors, so we will generally support management's
            recommendation. However, we recognize that there are inherent
            conflicts when a company's independent auditor performs substantial
            non-audit services for the company. The Sarbanes-Oxley Act of 2002
            prohibits certain categories of services by auditors to U.S.
            issuers, making this issue less prevalent in the U.S. Nevertheless,
            in reviewing a proposed auditor, we will consider the fees paid for
            non-audit services relative to total fees and whether there are
            other reasons for us to question the independence or performance of
            the auditors.

      2.4.  Changes in Legal and Capital Structure

            Changes in a company's charter, articles of incorporation or by-laws
            are often technical and administrative in nature. Absent a
            compelling reason to the contrary, AllianceBernstein will cast its
            votes in accordance with management's recommendations on such
            proposals. However, we will review and analyze on a case-by-case
            basis any non-routine proposals that are likely to affect the
            structure and operation of the company or have a material economic
            effect on the company. For example, we will generally support
            proposals to increase authorized common stock when it is necessary
            to implement a stock split, aid in a restructuring or acquisition,
            or provide a sufficient number of shares for an employee savings
            plan, stock option plan or executive compensation plan. However, a
            satisfactory explanation of a company's intentions must be disclosed
            in the proxy statement for proposals requesting an increase of
            greater than 100% of the shares outstanding. We will oppose
            increases in authorized common stock where there is evidence that
            the shares will be used to implement a poison pill or another form
            of anti-takeover device. We will support shareholder proposals that
            seek to eliminate dual class voting structures.

      2.5.  Corporate Restructurings, Mergers and Acquisitions

            AllianceBernstein believes proxy votes dealing with corporate
            reorganizations are an extension of the investment decision.
            Accordingly, we will analyze such proposals on a case-by-case basis,
            weighing heavily the views of our research analysts that cover the
            company and our investment professionals managing the portfolios in
            which the stock is held.

      2.6.  Proposals Affecting Shareholder Rights

            AllianceBernstein believes that certain fundamental rights of
            shareholders must be protected. We will generally vote in favor of
            proposals that give shareholders a greater voice in the affairs of
            the company and oppose any measure that seeks to limit those rights.
            However, when analyzing such proposals we will weigh the financial
            impact of the proposal against the impairment of shareholder rights.

      2.7.  Anti-Takeover Measures

            AllianceBernstein believes that measures that impede corporate
            transactions (such as takeovers) or entrench management not only
            infringe on the rights of shareholders but may also have a
            detrimental effect on the value of the company. Therefore, we will
            generally oppose proposals, regardless of whether they are advanced
            by management or shareholders, when their purpose or effect is to
            entrench management or excessively or inappropriately dilute
            shareholder ownership. Conversely, we support proposals that would
            restrict or otherwise eliminate anti-takeover or anti-shareholder
            measures that have already been adopted by corporate issuers. For
            example, we will support shareholder proposals that seek to require
            the company to submit a shareholder rights plan to a shareholder
            vote. We will evaluate, on a case-by-case basis, proposals to
            completely redeem or eliminate such plans. Furthermore, we will
            generally oppose proposals put forward by management (including the
            authorization of blank check preferred stock, classified boards and
            supermajority vote requirements) that appear to be anti-shareholder
            or intended as management entrenchment mechanisms.

      2.8.  Executive Compensation

            AllianceBernstein believes that company management and the
            compensation committee of the board of directors should, within
            reason, be given latitude to determine the types and mix of
            compensation and benefits offered to company employees. Whether
            proposed by a shareholder or management, we will review proposals
            relating to executive compensation plans on a case-by-case basis to
            ensure that the long-term interests of management and shareholders
            are properly aligned. In general, we will analyze the proposed plan
            to ensure that shareholder equity will not be excessively diluted
            taking into account shares available for grant under the proposed
            plan as well as other existing plans. We generally will oppose plans
            that allow stock options to be granted with below market value
            exercise prices on the date of issuance or permit re-pricing of
            underwater stock options without shareholder approval. Other factors
            such as the company's performance and industry practice will
            generally be factored into our analysis. In markets where
            remuneration reports or advisory votes on executive compensation are
            not required for all companies, we will generally support
            shareholder proposals asking the board to adopt a policy (i.e., "say
            on pay") that the company's shareholders be given the opportunity to
            vote on an advisory resolution to approve the compensation practices
            of the company. Although "say on pay" votes are by nature only broad
            indications of shareholder views, they do lead to more
            compensation-related dialogue between management and shareholders
            and help ensure that management and shareholders meet their common
            objective: maximizing the value of the company. In markets where
            votes to approve remuneration reports or advisory votes on executive
            compensation are required, we review the compensation practices on a
            case-by-case basis. With respect to companies that have received
            assistance through government programs such as TARP, we will
            generally oppose shareholder proposals that seek to impose greater
            executive compensation restrictions on subject companies than are
            required under the applicable program because such restrictions
            could create a competitive disadvantage for the subject company. We
            believe the U.S. Securities and Exchange Commission ("SEC") took
            appropriate steps to ensure more complete and transparent disclosure
            of executive compensation when it issued modified executive
            compensation and corporate governance disclosure rules in 2006 and
            February 2010. Therefore, while we will consider them on a
            case-by-case basis, we generally vote against shareholder proposals
            seeking additional disclosure of executive and director
            compensation, including proposals that seek to specify the
            measurement of performance-based compensation, if the company is
            subject to SEC rules. We will support requiring a shareholder vote
            on management proposals to provide severance packages that exceed
            2.99 times the sum of an executive officer's base salary plus bonus
            that are triggered by a change in control. Finally, we will support
            shareholder proposals requiring a company to expense compensatory
            employee stock options (to the extent the jurisdiction in which the
            company operates does not already require it) because we view this
            form of compensation as a significant corporate expense that should
            be appropriately accounted for.

      2.9.  ESG

            We are appointed by our clients as an investment manager with a
            fiduciary responsibility to help them achieve their investment
            objectives over the long term. Generally, our clients' objective is
            to maximize the financial return of their portfolios within
            appropriate risk parameters. We have long recognized that ESG issues
            can impact the performance of investment portfolios. Accordingly, we
            have sought to integrate ESG factors into our investment and proxy
            voting processes to the extent that the integration of such factors
            is consistent with our fiduciary duty to help our clients achieve
            their investment objectives and protect their economic interests.
            For additional information regarding our approach to incorporating
            ESG issues in our investment and decision-making processes, please
            refer to our RI Policy, which is attached to this Statement as an
            Exhibit.

            Shareholder proposals relating to environmental, social (including
            political) and governance issues often raise complex and
            controversial issues that may have both a financial and
            non-financial effect on the company. And while we recognize that the
            effect of certain policies on a company may be difficult to
            quantify, we believe it is clear that they do affect the company's
            long-term performance. Our position in evaluating these proposals is
            founded on the principle that we are a fiduciary. As such, we
            carefully consider any factors that we believe could affect a
            company's long-term investment performance (including ESG issues) in
            the course of our extensive fundamental, company-specific research
            and engagement, which we rely on in making our investment and proxy
            voting decisions. Maximizing long-term shareholder value is our
            overriding concern when evaluating these matters, so we consider the
            impact of these proposals on the future earnings of the company. In
            so doing, we will balance the assumed cost to a company of
            implementing one or more shareholder proposals against the positive
            effects we believe implementing the proposal may have on long-term
            shareholder value.

3.    Proxy Voting Procedures

      3.1.  Proxy Voting Committees

            Our growth and value investment groups have formed separate proxy
            voting committees ("Proxy Committees") to establish general proxy
            policies for AllianceBernstein and consider specific proxy voting
            matters as necessary. These Proxy Committees periodically review
            these policies and new types of environmental, social and governance
            issues, and decide how we should vote on proposals not covered by
            these policies. When a proxy vote cannot be clearly decided by an
            application of our stated policy, the appropriate Proxy Committee
            will evaluate the proposal. In addition, the Proxy Committees, in
            conjunction with the analyst that covers the company, may contact
            corporate management, interested shareholder groups and others as
            necessary to discuss proxy issues. Members of the Proxy Committees
            include senior investment personnel and representatives of the Legal
            and Compliance Department.

            Different investment philosophies may occasionally result in
            different conclusions being drawn regarding certain proposals and,
            in turn, may result in the Proxy Committees making different voting
            decisions on the same proposal for value and growth holdings.
            Nevertheless, the Proxy Committees always vote proxies with the goal
            of maximizing the value of the securities in client portfolios.

            It is the responsibility of the Proxy Committees to evaluate and
            maintain proxy voting procedures and guidelines, to evaluate
            proposals and issues not covered by these guidelines, to evaluate
            proxies where we face a potential conflict of interest (as discussed
            below), to consider changes in policy and to review the Proxy Voting
            Statement and the Proxy Voting Manual no less frequently than
            annually. In addition, the Proxy Committees meet as necessary to
            address special situations.

      3.2.  Engagement

            In evaluating proxy issues and determining our votes, we welcome and
            seek out the points of view of various parties. Internally, the
            Proxy Committees may consult chief investment officers, directors of
            research, research analysts across our value and growth equity
            platforms, portfolio managers in whose managed accounts a stock is
            held and/or other Investment Policy Group members. Externally, the
            Proxy Committees may consult company management, company directors,
            interest groups, shareholder activists and research providers. If we
            believe an ESG issue is, or is reasonably likely to become,
            material, we engage a company's management to discuss the relevant
            issues.

            Our engagement with companies and interest groups continues to
            expand as we have had more such meetings in the past few years.

      3.3.  Conflicts of Interest

            AllianceBernstein recognizes that there may be a potential conflict
            of interest when we vote a proxy solicited by an issuer whose
            retirement plan we manage or administer, who distributes
            AllianceBernstein-sponsored mutual funds, or with whom we have, or
            one of our employees has, a business or personal relationship that
            may affect (or may be reasonably viewed as affecting) how we vote on
            the issuer's proxy. Similarly, AllianceBernstein may have a
            potentially material conflict of interest when deciding how to vote
            on a proposal sponsored or supported by a shareholder group that is
            a client. We believe that centralized management of proxy voting,
            oversight by the proxy voting committees and adherence to these
            policies ensures that proxies are voted based solely on our clients'
            best interests. Additionally, we have implemented procedures to
            ensure that our votes are not the product of a material conflict of
            interest, including: (i) on an annual basis, the Proxy Committees
            taking reasonable steps to evaluate (A) the nature of
            AllianceBernstein's and our employees' material business and
            personal relationships (and those of our affiliates) with any
            company whose equity securities are held in client accounts and (B)
            any client that has sponsored or has a material interest in a
            proposal upon which we will be eligible to vote; (ii) requiring
            anyone involved in the decision making process to disclose to the
            chairman of the appropriate Proxy Committee any potential conflict
            that he or she is aware of (including personal relationships) and
            any contact that he or she has had with any interested party
            regarding a proxy vote; (iii) prohibiting employees involved in the
            decision making process or vote administration from revealing how we
            intend to vote on a proposal in order to reduce any attempted
            influence from interested parties; and (iv) where a material
            conflict of interests exists, reviewing our proposed vote by
            applying a series of objective tests and, where necessary,
            considering the views of third party research services to ensure
            that our voting decision is consistent with our clients' best
            interests.

            Because under certain circumstances AllianceBernstein considers the
            recommendation of third party research services, the Proxy
            Committees takes reasonable steps to verify that any third party
            research service is, in fact, independent taking into account all of
            the relevant facts and circumstances. This includes reviewing the
            third party research service's conflict management procedures and
            ascertaining, among other things, whether the third party research
            service (i) has the capacity and competency to adequately analyze
            proxy issues, and (ii) can make recommendations in an impartial
            manner and in the best interests of our clients.

      3.4.  Proxies of Certain Non-U.S. Issuers

            Proxy voting in certain countries requires "share blocking."
            Shareholders wishing to vote their proxies must deposit their shares
            shortly before the date of the meeting with a designated depositary.
            During this blocking period, shares that will be voted at the
            meeting cannot be sold until the meeting has taken place and the
            shares are returned to the clients' custodian banks. Absent
            compelling reasons to the contrary, AllianceBernstein believes that
            the benefit to the client of exercising the vote is outweighed by
            the cost of voting (i.e., not being able to sell the shares during
            this period). Accordingly, if share blocking is required we
            generally choose not to vote those shares.

            AllianceBernstein seeks to vote all proxies for securities held in
            client accounts for which we have proxy voting authority. However,
            in non-US markets administrative issues beyond our control may at
            times prevent AllianceBernstein from voting such proxies. For
            example, AllianceBernstein may receive meeting notices after the
            cut-off date for voting or without sufficient time to fully consider
            the proxy. As another example, certain markets require periodic
            renewals of powers of attorney that local agents must have from our
            clients prior to implementing AllianceBernstein's voting
            instructions.

      3.5.  Loaned Securities

            Many clients of AllianceBernstein have entered into securities
            lending arrangements with agent lenders to generate additional
            revenue. AllianceBernstein will not be able to vote securities that
            are on loan under these types of arrangements. However, under rare
            circumstances, for voting issues that may have a significant impact
            on the investment, we may request that clients recall securities
            that are on loan if we determine that the benefit of voting
            outweighs the costs and lost revenue to the client or fund and the
            administrative burden of retrieving the securities.

      3.6.  Proxy Voting Records

            Clients may obtain information about how we voted proxies on their
            behalf by contacting their AllianceBernstein administrative
            representative. Alternatively, clients may make a written request
            for proxy voting information to: Mark R. Manley, Senior Vice
            President & Chief Compliance Officer, AllianceBernstein L.P., 1345
            Avenue of the Americas, New York, NY 10105.



                                                                         Exhibit

                         Statement of Policy Regarding
                             Responsible Investment
                     Principles for Responsible Investment,
                    ESG, and Socially Responsible Investment

1. Introduction
AllianceBernstein L.P. ("AllianceBernstein" or "we") is appointed by our clients
as an investment manager with a fiduciary responsibility to help them achieve
their investment objectives over the long term. Generally, our clients'
objective is to maximize the financial return of their portfolios within
appropriate risk parameters. AllianceBernstein has long recognized that
environmental, social and governance ("ESG") issues can impact the performance
of investment portfolios. Accordingly, we have sought to integrate ESG factors
into our investment process to the extent that the integration of such factors
is consistent with our fiduciary duty to help our clients achieve their
investment objectives and protect their economic interests.

Our policy draws a distinction between how the Principles for Responsible
Investment ("PRI" or "Principles"), and Socially Responsible Investing ("SRI")
incorporate ESG factors. PRI is based on the premise that, because ESG issues
can affect investment performance, appropriate consideration of ESG issues and
engagement regarding them is firmly within the bounds of a mainstream investment
manager's fiduciary duties to its clients. Furthermore, PRI is intended to be
applied only in ways that are consistent with those mainstream fiduciary duties.

SRI, which refers to a spectrum of investment strategies that seek to integrate
ethical, moral, sustainability and other non-financial factors into the
investment process, generally involves exclusion and/or divestment, as well as
investment guidelines that restrict investments. AllianceBernstein may accept
such guideline restrictions upon client request.

2. Approach to ESG
Our long-standing policy has been to include ESG factors in our extensive
fundamental research and consider them carefully when we believe they are
material to our forecasts and investment decisions. If we determine that these
aspects of an issuer's past, current or anticipated behavior are material to its
future expected returns, we address these concerns in our forecasts, research
reviews, investment decisions and engagement. In addition, we have
well-developed proxy voting policies that incorporate ESG issues and engagement.

3. Commitment to the PRI
In recent years, we have gained greater clarity on how the PRI initiative, based
on information from PRI Advisory Council members and from other signatories,
provides a framework for incorporating ESG factors into investment research and
decision-making. Furthermore, our industry has become, over time, more aware of
the importance of ESG factors. We acknowledge these developments and seek to
refine what has been our process in this area.

After careful consideration, we determined that becoming a PRI signatory would
enhance our current ESG practices and align with our fiduciary duties to our
clients as a mainstream investment manager. Accordingly, we became a signatory,
effective November 1, 2011.

In signing the PRI, AllianceBernstein as an investment manager publicly commits
to adopt and implement all six Principles, where consistent with our fiduciary
responsibilities, and to make progress over time on implementation of the
Principles.

The six Principles are:

1. We will incorporate ESG issues into investment research and decision-making
processes. AllianceBernstein Examples: ESG issues are included in the research
analysis process. In some cases, external service providers of ESG-related tools
are utilized; we have conducted proxy voting training and will have continued
and expanded training for investment professionals to incorporate ESG issues
into investment analysis and decision-making processes across our firm.

2. We will be active owners and incorporate ESG issues into our ownership
policies and practices.

AllianceBernstein Examples: We are active owners through our proxy voting
process (for additional information, please refer to our Statement of Policies
and Procedures for Proxy Voting Manual); we engage issuers on ESG matters in our
investment research process (we define "engagement" as discussions with
management about ESG issues when they are, or we believe they are reasonably
likely to become, material).

3. We will seek appropriate disclosure on ESG issues by the entities in which we
invest.

AllianceBernstein Examples: Generally, we support transparency regarding ESG
issues when we conclude the disclosure is reasonable. Similarly, in proxy
voting, we will support shareholder initiatives and resolutions promoting ESG
disclosure when we conclude the disclosure is reasonable.

4. We will promote acceptance and implementation of the Principles within the
investment industry.

AllianceBernstein Examples: By signing the PRI, we have taken an important first
step in promoting acceptance and implementation of the six Principles within our
industry.

5. We will work together to enhance our effectiveness in implementing the
Principles.

AllianceBernstein Examples: We will engage with clients and participate in
forums with other PRI signatories to better understand how the PRI are applied
in our respective businesses. As a PRI signatory, we have access to information,
tools and other signatories to help ensure that we are effective in our
endeavors to implement the PRI.

6. We will report on our activities and progress towards implementing the
Principles.

AllianceBernstein Examples: We will respond to the 2012 PRI questionnaire and
disclose PRI scores from the questionnaire in response to inquiries from clients
and in requests for proposals; we will provide examples as requested concerning
active ownership activities (voting, engagement or policy dialogue).

4. RI Committee

Our firm's RI Committee provides AllianceBernstein stakeholders, including
employees, clients, prospects, consultants and service providers alike, with a
resource within our firm on which they can rely for information regarding our
approach to ESG issues and how those issues are incorporated in different ways
by the PRI and SRI. Additionally, the RI Committee is responsible for assisting
AllianceBernstein personnel to further implement our firm's RI policies and
practices, and, over time, to make progress on implementing all six Principles.

The RI Committee has a diverse membership, including senior representatives from
investments, distribution/sales and legal. The Committee is chaired by Linda
Giuliano, Senior Vice President and Chief Administrative Officer-Equities.

If you have questions or desire additional information about this Policy, we
encourage you to contact the RI Committee at RIinquiries@alliancebernstein.com
or reach out to a Committee member:

Erin Bigley: SVP-Fixed Income, New York
Alex Chaloff: SVP-Private Client, Los Angeles
Nicholas Davidson: SVP-Value, London
Kathy Fisher: SVP-Private Client, New York
Linda Giuliano: SVP-Equities, New York
Christopher Kotowicz: VP-Growth, Chicago
David Lesser: VP-Legal, New York
Mark Manley: SVP-Legal, New York
Takuji Oya: VP-Growth, Japan
Guy Prochilo: SVP-Institutional Investments, New York
Nitish Sharma: VP-Institutional Investments, Australia
Liz Smith: SVP-Institutional Investments, New York
Willem Van Gijzen: VP-Institutional Investments, Netherlands