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



[A/B]
[LOGO]

                     AB 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
                             GLOBAL BOND PORTFOLIO
                   GLOBAL RISK ALLOCATION--MODERATE PORTFOLIO
                 MULTI-MANAGER ALTERNATIVE STRATEGIES 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
                    For Literature: Toll Free (800) 221-5672
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            STATEMENT OF ADDITIONAL INFORMATION May 1, 2015
                          (updated December 16, 2015)
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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, 2015 for 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, Value Portfolio, Balanced
Wealth Strategy Portfolio, Dynamic Asset Allocation Portfolio, Global Bond
Portfolio, and Global Risk Allocation--Moderate Portfolio of AB Variable
Products Series (VPS) Fund, Inc. (the "Fund") and the current prospectuses dated
December 16, 2015 for Multi-Manager Alternative Strategies Portfolio of 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, except the Global Bond Portfolio, Global Risk
Allocation--Moderate Portfolio and Multi-Manager Alternative Strategies
Portfolio, for the year ended December 31, 2014, 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.ABglobal.com.



                               TABLE OF CONTENTS
                                                                            PAGE

INFORMATION ABOUT THE PORTFOLIOS AND THEIR INVESTMENTS.........................4

INVESTMENT RESTRICTIONS.......................................................50

MANAGEMENT OF THE FUND........................................................52

EXPENSES OF THE PORTFOLIOS...................................................100

PURCHASE AND REDEMPTION OF SHARES............................................106

NET ASSET VALUE..............................................................111

PORTFOLIO TRANSACTIONS.......................................................115

DIVIDENDS, DISTRIBUTIONS AND TAXES...........................................121

GENERAL INFORMATION..........................................................122

FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT REGISTERED PUBLIC
     ACCOUNTING FIRM.........................................................138

APPENDIX A: PROXY VOTING POLICY STATEMENT....................................A-1

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is a registered trademark 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 "Insurers"). 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
sixteen 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.

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

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

Investments in Investment Companies
-----------------------------------

      The Multi-Manager Alternative Strategies Portfolio and Global Risk
Allocation--Moderate Portfolio invest in shares of one or more underlying funds
that, in turn, invest directly in portfolio securities ("Underlying Funds").
Investing in shares of the Underlying Funds involves substantially the same
risks as investing directly in the underlying instruments, but may involve
additional expenses similar to those borne directly by the Portfolios, including
other operating expenses. Certain investments, techniques and risks will only
apply to the Multi-Manager Alternative Strategies Portfolio and Global Risk
Allocation--Moderate Portfolio to the extent those Portfolios are invested in an
Underlying Fund that invests in or engages in those investments, techniques, or
strategies or directly invests in or engages in such investments, techniques, or
strategies. For the purposes of this discussion, references to the Fund or a
Portfolio include an Underlying Fund unless the context otherwise requires.

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

            Convertible securities include bonds, debentures, corporate notes
and preferred stocks that are convertible at a stated exchange ratio 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 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
contracts, 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 include listed and cleared transactions where the Portfolio's
derivative trade counterparty is an exchange or clearinghouse and non-cleared
bilateral "over-the-counter" ("OTC") transactions, where the Portfolio's
derivative trade counterparty is a financial institution. Exchange-traded or
cleared derivatives transactions tend to be more liquid and subject to less
counterparty 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
security, commodity or other asset for an agreed-upon price at a future
date. A forward contract generally is settled by physical delivery of the
security, commodity or other 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 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). Generally, the notional
principal amount is used solely to calculate the payment streams but is not
exchanged. Certain standardized swaps, including certain interest rate swaps and
credit default swaps, are (or soon will be) subject to mandatory central
clearing. Cleared swaps are transacted through futures commission merchants
("FCMs") that are members of central clearinghouses with the clearinghouse
serving as central counterparty, similar to transactions in futures contracts.
Funds post initial and variation margin to support their obligations under
cleared swaps by making payments to their clearing member FCMs. Central clearing
is expected to reduce counterparty credit risks and increase liquidity, but
central clearing does not make swap transactions risk free. Centralized clearing
will be required for additional categories of swaps on a phased-in basis based
on Commodity Futures Trading Commission ("CFTC") approval of contracts for
central clearing. Bilateral swap agreements are two-party contracts entered into
primarily by institutional investors and are not cleared through a third party.

            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
            derivatives traded on an exchange or through a clearinghouse is
            generally less than for uncleared OTC derivatives, since the
            exchange or clearinghouse, which is the issuer or counterparty to
            each 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 uncleared OTC derivatives, there is no similar clearing
            agency guarantee. Therefore, a Portfolio considers the
            creditworthiness of each counterparty to an uncleared OTC derivative
            in evaluating potential credit risk.

            - Counterparty Risk. The value of an OTC derivative will depend on
            the ability and willingness of a Portfolio's counterparty to perform
            its obligations under the transaction. If the counterparty defaults,
            a Portfolio will have contractual remedies but may choose not to
            enforce them to avoid the cost and unpredictability of legal
            proceedings. In addition, if a counterparty fails to meet its
            contractual obligations, a Portfolio could miss investment
            opportunities or otherwise be required to retain investments it
            would prefer to sell, resulting in losses for the Portfolio.
            Participants in OTC derivatives markets generally are not subject to
            the same level of credit evaluation and regulatory oversight as are
            exchanges or clearinghouses. As a result, OTC derivatives generally
            expose a Portfolio to greater counterparty risk than derivatives
            traded on an exchange or through a clearinghouse.

            New regulations affecting derivatives transactions now, or will
            soon, require certain standardized derivatives, including many types
            of swaps, to be subject to mandatory central clearing. Under these
            new requirements, a central clearing organization will be
            substituted as the counterparty to each side of the derivatives
            transaction. Each party to derivatives transactions will be required
            to maintain its positions with a clearing organization through one
            or more clearing brokers. Central clearing is expected to reduce,
            but not eliminate, counterparty risk. A Portfolio will be subject to
            the risk that its clearing member or clearing organization will
            itself be unable to perform its obligations.

            - 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.

            - Regulatory Risk. The U.S. Government is in the process of adopting
            and implementing additional regulations governing derivatives
            markets, including clearing as discussed above, margin, reporting
            and registration requirements. While the full extent and cost of
            these regulations is currently unclear, these regulations could,
            among other things, restrict a Portfolio's ability to engage in
            derivatives transactions and/or increase the cost of such
            derivatives transactions (through increased margin or capital
            requirements). In addition, Congress, various exchanges and
            regulatory and self-regulatory authorities have undertaken reviews
            of options and futures trading in light of market volatility. Among
            the actions that have been taken or proposed to be taken are new
            limits and reporting requirements for speculative positions, new or
            more stringent daily price fluctuation limits for futures and
            options transactions, and increased margin requirements for various
            types of futures transactions. These regulations and actions may
            adversely affect the instruments in which a Portfolio invests and
            its ability to execute 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 CFTC thereunder.
Under CFTC rules, a registered investment company that conducts more than a
minimal amount of trading in futures contracts, commodity options, swaps and
other commodity interests is a commodity pool and its adviser must register as a
commodity pool operator, or CPO. Under such rules, registered investment
companies are subject to additional registration and reporting requirements.
AllianceBernstein L.P., the Portfolios' adviser (the "Adviser") and the
Portfolios, except for the Dynamic Asset Allocation Portfolio, Global Bond
Portfolio, Global Risk Allocation--Moderate Portfolio and Multi-Manager
Alternative Strategies Portfolio, have claimed an exclusion from the definition
of CPO under CFTC Rule 4.5 under the CEA with respect to the Portfolios and are
not currently subject to these registration and reporting requirements. The
trading exemption in Rule 4.5 is not available to the Dynamic Asset Allocation
Portfolio, Global Bond Portfolio, Global Risk Allocation--Moderate Portfolio or
Multi-Manager Alternative Strategies Portfolio, and the Adviser has registered
as a CPO with respect to these Portfolios. This registration subjects the
Dynamic Asset Allocation Portfolio, Global Bond Portfolio, Global Risk
Allocation--Moderate Portfolio and Multi-Manager Alternative Strategies
Portfolio to certain registration and reporting requirements but, under rules
recently adopted by the CFTC, compliance with Securities and Exchange Commission
("SEC") disclosure and filing requirements will, for the most part, constitute
compliance with comparable CFTC requirements.

Use of Options, Futures Contracts, 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 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, which could be substantial, 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 in part, by the premiums received on the
writing of the two options. Conversely, if the price of the security declines by
a sufficient amount, the put will likely be exercised. The writing of straddles
will likely be effective, therefore, only where the price of the security
remains stable and neither the call nor the put is exercised. In those instances
where one of the options is exercised, the loss on the purchase or sale of the
underlying security may exceed the amount of the premiums received.

            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 on 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
contracts 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 are used
for hedging or risk management 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 in 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 in 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.
Currency swaps may involve the exchange of actual principal amounts of
currencies by the counterparties at the initiation, and again upon termination
of the transaction. Currency swaps may be bilateral and privately negotiated,
with the Portfolio expecting to achieve an acceptable degree of correlation
between its portfolio investments and its currency swaps positions. A Portfolio
will not enter into any currency swap unless the credit quality of the unsecured
senior debt or the claims-paying ability of the counterparty thereto is rated in
the highest short-term rating category of at least one nationally recognized
statistical rating organization ("NRSRO") at the time of entering into the
transaction.

            - 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 bilateral swap agreements, including interest rate
swap, swaptions, cap or floor transactions only with counterparties who have
credit ratings of at least A- (or the equivalent) from any one NRSRO or
counterparties with guarantors with debt securities having such a rating. For
cleared interest rate swaps, the Adviser will monitor the creditworthiness of
each of the central clearing counterparty, clearing broker and executing broker
but there will be no prescribed NRSRO rating requirements for these entities.

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

            --Special Risks Associated with Swaps. Risks may arise as a result
of the failure of the counterparty to a bilateral swap contract to comply with
the terms of the swap contract. The loss incurred by the failure of a
counterparty is generally limited to the net interim payment to be received by a
Portfolio, and/or the termination value at the end of the contract. Therefore,
the Portfolio considers the creditworthiness of the counterparty to a bilateral
swap contract. The risk is mitigated by having a netting arrangement between the
Portfolio and the counterparty and by the posting of collateral by the
counterparty to the Portfolio to cover the Portfolio's exposure to the
counterparty. Certain standardized swaps, including interest rate swaps and
credit default swaps, are, or soon will be subject to mandatory central
clearing. Central clearing is expected, among other things, to reduce
counterparty credit risk, but does not eliminate it completely.

            Additionally, risks may arise from unanticipated movements in
interest rates or in the value of the underlying securities. The Portfolio
accrues for the changes in value on swap contracts on a daily basis, with the
net amount recorded within unrealized appreciation/depreciation of swap
contracts on the statement of assets and liabilities. Once the interim payments
are settled in cash, the net amount is recorded as realized gain/(loss) on swaps
on the statement of operations, in addition to any realized gain/(loss) recorded
upon the termination of swap contracts. Fluctuations in the value of swap
contracts are recorded as a component of net change in unrealized
appreciation/depreciation of swap contracts on the statement of operations.

            - Synthetic Foreign Equity Securities. 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 OTC 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 contracts and options on futures contracts, 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).

Event-linked Securities
-----------------------

            Event-linked securities are variable rate or fixed rate fixed-income
securities or types of equity securities for which the return of principal and
payment of interest are contingent on the non-occurrence of various catastrophe
exposures, which may be specific trigger events or a diversified group of
events, such as hurricanes, typhoons, wind events or earthquakes. The most
common type of fixed-income securities are known as "catastrophe" or "CAT"
bonds. In some cases, the trigger event(s) will not be deemed to have occurred
unless the event(s) happened in a particular geographic area and was of a
certain magnitude (based on independent scientific readings) or caused a certain
amount of actual or modeled loss. If the trigger event(s) occurs prior to the
securities' maturity, a Portfolio may lose all or a portion of its principal and
forgo additional interest.

            These securities may have a special condition that states that if
the issuer (i.e., an insurance or reinsurance company) suffers a loss from a
particular pre-defined catastrophe, then the issuer's obligation to pay interest
and/or repay the principal is either deferred or completely forgiven. For
example, if a Portfolio holds a fixed-income security that covers an insurer's
losses due to a hurricane with a "trigger" at $1 billion and a hurricane hits
causing $1 billion or more in losses to such insurer, then the Portfolio will
lose all or a portion of its principal invested in the security and forgo any
future interest payments. If the trigger event(s) does not occur, the Portfolio
will recover its principal plus interest. Interest typically accrues and is paid
on a quarterly basis. Although principal typically is repaid only on the
maturity date, it may be repaid in installments, depending on the terms of the
securities.

            Event-linked securities may be issued by government agencies,
insurance companies, reinsurers, special purpose companies or other on-shore or
off-shore entities. Event-linked securities are a relatively new type of
financial instrument. As a result, there is no significant trading history of
these securities and these securities may be illiquid or the markets for these
instruments may not be liquid at all times. These securities may be rated,
generally below investment grade or the unrated equivalent, and have the same or
equivalent risks as higher yield debt securities ("junk bonds"). The rating
primarily reflects the rating agency's calculated probability that a pre-defined
trigger event will occur as well as the overall expected loss to the principal
of the security.

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 generally 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 OTC and the cover for options written by the Portfolio
OTC, 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. To the
extent permitted by applicable law, Rule 144A Securities will not be treated as
illiquid for purposes of the foregoing restriction so long as such securities
meet the liquidity guidelines established by the Board. Pursuant to these
guidelines, the Adviser will monitor the liquidity of a Portfolio's investment
in Rule 144A Securities. 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 SEC with
respect to such type of securities.

Investments in Pre-IPO Securities
---------------------------------

            The Portfolios may invest in pre-IPO securities. Pre-IPO securities,
or venture capital investments, are investments in new and early stage
companies, often funded by venture capital and referred to as "venture capital
companies", whose securities have not been offered to the public and that are
not publicly traded. These investments may present significant opportunities for
capital appreciation but involve a high degree of risk that may result in
significant decreases in the value of these investments. Venture capital
companies may not have established products, experienced management or earnings
history. The Portfolios may not be able to sell such investments when the
portfolio managers and/or investment personnel deem it appropriate to do so
because they are not publicly traded. As such, these investments are generally
considered to be illiquid until a company's public offering (which may never
occur) and are often subject to additional contractual restrictions on resale
following any public offering that may prevent the Portfolios from selling their
shares for a period of time. Market conditions, developments within a company,
investor perception or regulatory decisions may adversely affect a venture
capital company and delay or prevent a venture capital company from ultimately
offering its securities to the public.

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

            The Portfolios 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.

            The Portfolios may also invest in investment companies other than
ETFs as permitted by the 1940 Act or the rules and regulations or exemptive
orders thereunder. As with ETF investments, if the Portfolios acquire 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 Portfolios' 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
approved by the Board and expected to be managed 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. In periods of falling interest rates, the
rate of prepayment tends to increase, thereby shortening the actual average life
of a pool of mortgage-related securities. Conversely, in periods of rising
interest rates the rate of prepayment tends to decrease, thereby lengthening the
actual average life of the pool. Historically, actual average life has been
consistent with the 12-year assumption referred to above. Actual prepayment
experience may cause the yield to differ from the assumed average life yield.
Reinvestment of prepayments may occur at higher or lower interest rates than the
original investment, thus affecting the yield of a Portfolio. The compounding
effect from reinvestment of monthly payments received by a Portfolio will
increase the yield to shareholders compared with bonds that pay interest
semi-annually.

            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 provided additional
funding to the GSEs, but recently the GSEs have been paying dividends to the
U.S. Treasury in a cumulative amount almost equal to the payments made to the
GSEs by the U.S. Treasury since 2008. The future of the GSEs 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 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, constitutes 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") 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. 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, a 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.

            Inflation-protected securities tend to react to changes in real
interest rates. In general, the price of these securities can fall when real
interest rates rise, and can rise when real interest rates fall. In addition,
the value of these securities may be vulnerable to changes in expectations of
inflation. Interest payments on these securities 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. 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 a 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 a Portfolio's shareholders to realize a higher net return than if the
Portfolio were not leveraged. However, to the extent that the interest expense
on borrowings or 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 carrying costs of leveraged transactions were
to exceed the net return to shareholders, a 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 could be a greater
decrease in NAV per share than if a Portfolio were not leveraged. In an extreme
case, if a 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.

            Cyber Security Risk. As the use of the Internet and other
technologies has become more prevalent in the course of business, the Portfolios
and their service providers, including the Adviser, have become more susceptible
to operational and financial risks associated with cyber security. Cyber
security incidents can result from deliberate attacks such as gaining
unauthorized access to digital systems (e.g., through "hacking" or malicious
software coding) for purposes of misappropriating assets or sensitive
information, corrupting data, or causing operational disruption, or from
unintentional events, such as the inadvertent release of confidential
information. Cyber security failures or breaches of the Portfolios or their
service providers or the issuers of securities in which the Portfolios invest
have the ability to cause disruptions and affect business operations,
potentially resulting in financial losses, the inability of Portfolio
shareholders to transact business, violations of applicable privacy and other
laws, regulatory fines, reputational damage, reimbursement or other compensation
costs, and/or additional compliance costs. While measures have been developed
that are designed to reduce the risks associated with cyber security, there is
no guarantee that those measures will be effective, particularly since the
Portfolios do not control the cyber security defenses or plans of their service
providers, financial intermediaries and companies in which they invest or with
which they do business.

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

            If a Portfolio, including, in particular, the 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 the 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.

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
a 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 OTC 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 a 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 that are traded in the United States on exchanges or
over-the-counter. 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
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 in 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 OTC 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 OTC 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 OTC 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, OTC 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 OTC 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, OTC 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 OTC transaction only with parties
whose creditworthiness has been reviewed and found to be satisfactory by the
Adviser.

            Transactions in OTC 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 OTC 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 OTC 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 OTC 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, other than Global Bond
Portfolio, Global Risk Allocation--Moderate Portfolio and Multi-Manager
Alternative Strategies 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, Global Bond Portfolio, Global
Risk Allocation--Moderate Portfolio and Multi-Manager Alternative Strategies are
"non-diversified" investment companies, which means the Portfolios are not
limited in the proportion of its assets that may be invested in the securities
of a single issuer. This policy may be changed without a shareholder vote.
Because Global Bond Portfolio, Global Risk Allocation--Moderate Portfolio and
Multi-Manager Alternative Strategies Portfolio are non-diversified investment
companies, they may invest in a smaller number of individual issuers than a
diversified investment company, and an investment in the Portfolios may, under
certain circumstances, present greater risk to an investor than an investment in
a diversified investment company.

            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 investment advisory agreements (the "Advisory Agreements") to provide
investment advice and, in general, to conduct the management and investment
program of the Fund under the supervision of the Board, and to serve as the
"manager of managers" of for the Multi-Manager Alternative Strategies Portfolio.
As manager of managers, the Adviser determines the allocations to the
Multi-Manager Alternative Strategies Portfolio's sub-advisers, if any, and may
also manage a portion of the Fund's assets directly. Subject to oversight by the
Board, the Adviser has ultimate responsibility for monitoring and coordinating
the management of the Multi-Manager Alternative Strategies Portfolio, including
monitoring sub-advisers for the Portfolio and ensuring that asset allocations
are consistent with the guidelines that have been approved by 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 September 30, 2015, totaling
approximately $463 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 September 30, 2015, the ownership structure of the Adviser,
expressed as a percentage of general and limited partnership interests, was as
follows:

             AXA and its subsidiaries            62.8%
             AllianceBernstein Holding L.P.      35.8
             Unaffiliated holders                 1.4
                                              -----------------
                                                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 September 30, 2015, AXA owned
approximately 1.5% 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 63.4% economic interest in the Adviser
as of September 30, 2015.

Advisory Agreements 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 Agreements, 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 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). With respect to Multi-Manager Alternative
Strategies Portfolio, the Adviser is also responsible, under that Portfolio's
Advisory Agreement, for providing administrative and accounting services for the
Portfolio.

            The Fund has, under the Advisory Agreements, 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. The Advisory Agreements, except the Advisory Agreement for
Multi-Manager Alternative Strategies Portfolio, provide for reimbursement to the
Adviser of the costs of certain non-advisory services provided to the Fund.
These reimbursable costs include the costs of the Adviser's personnel performing
certain administrative services for the Funds, including clerical, accounting,
legal and other services ("administrative services"), and associated overhead
costs, such as office space, supplies and information technology. The
administrative services will be provided to the Fund on a fully-costed basis and
will include each personnel's total compensation and a factor reflecting the
Adviser's total cost relating to that personnel, including all related overhead
expenses. The reimbursement of these costs to the Adviser will 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, 2014.

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

Intermediate Bond Portfolio                            $49,294
Large Cap Growth Portfolio                             $48,204
Growth and Income Portfolio                            $48,204
Growth Portfolio                                       $48,203
International Growth Portfolio                         $48,204
Global Thematic Growth Portfolio                       $48,204
Small Cap Growth Portfolio                             $48,434
Real Estate Investment Portfolio                       $48,434
International Value Portfolio                          $49,439
Small/Mid Cap Value Portfolio                          $48,434
Value Portfolio                                        $48,434
Balanced Wealth Strategy Portfolio                     $49,439
Dynamic Asset Allocation Portfolio                     $48,567

            The Advisory Agreement, with respect to all Portfolios except the
Global Bond Portfolio, Global Risk Allocation--Moderate Portfolio and
Multi-Manager Alternative Strategies Portfolio, 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, with respect to all Portfolios except the Global Bond
Portfolio, Global Risk Allocation--Moderate Portfolio and Multi-Manager
Alternative Strategies Portfolio, 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 6-8, 2014, August 5-7, 2014 and November 4-6, 2014.

            The Advisory Agreement for the Global Bond Portfolio, Global Risk
Allocation--Moderate Portfolio and Multi-Manager Alternative Strategies
Portfolio became effective on May 1, 2015 and will continue in effect for two
years from its effective date and thereafter from year to year provided that
such continuance is specifically approved at least annually by majority vote of
the holders of the outstanding voting securities of the Portfolios or by the
Directors, and, in either case, by a majority of the Directors who are not
parties to the Advisory Agreements or "interested persons" of any such party at
a meeting in person called for the purpose of voting on such matter.

            Any material amendment to the Advisory Agreements 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 Agreements are 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 their assignment. The Advisory Agreements provide 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 listed below pay the Adviser 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 the Portfolios listed, 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                     2012             $   537,093
                                                2013             $   434,235
                                                2014             $   362,166

Large Cap Growth Portfolio                      2012             $ 2,763,102
                                                2013             $ 2,852,269
                                                2014             $ 3,096,216

Growth and Income Portfolio                     2012             $ 4,970,692
                                                2013             $ 4,768,536
                                                2014             $ 4,707,511

Growth Portfolio                                2012             $   588,623
                                                2013             $   567,821
                                                2014             $   559,706

International Growth Portfolio                  2012             $ 1,134,380
                                                2013             $ 1,169,423
                                                2014             $   760,928

Global Thematic Growth Portfolio                2012             $ 1,041,640
                                                2013             $   982,709
                                                2014             $   995,970

Small Cap Growth Portfolio                      2012             $   449,446
                                                2013             $   472,772
                                                2014             $   588,638

Real Estate Investment Portfolio                2012             $   446,395
                                                2013             $   431,175
                                                2014             $   264,976

Small/Mid Cap Value Portfolio                   2012             $ 3,713,115
                                                2013             $ 4,524,964
                                                2014             $ 4,992,339

Value Portfolio                                 2012             $   929,258
                                                2013             $   835,428
                                                2014             $   677,619

International Value Portfolio                   2012             $ 8,309,168
                                                2013             $ 6,918,754
                                                2014             $ 5,571,673

Balanced Wealth Strategy Portfolio              2012             $ 3,039,523
                                                2013             $ 2,977,291
                                                2014             $ 2,088,276

Dynamic Asset Allocation Portfolio              2012             $   715,573
                                                2013             $ 1,954,572
                                                2014             $ 3,027,986

            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                 2012         $268,372
                                                   2013         $106,958
                                                   2014         $  5,544

GLOBAL BOND PORTFOLIO
---------------------

            Effective as of April 28, 2015, the Portfolio has contractually
agreed to pay a monthly fee to the Adviser at an annualized rate of .50 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 of the Portfolio's average
daily net assets. The Adviser has not received advisory fees from the Portfolio
because the Portfolio has not yet commenced operations. The Adviser has
contractually agreed to waive its fee and bear certain expenses so that total
expenses (excluding Acquired Fund Fees and Expenses other than the fees and
expenses of any AB Mutual Funds in which the Portfolio may invest, interest
expense, expenses associated with securities sold short, brokerage commissions
and other transaction costs, taxes and extraordinary expenses) do not exceed on
an annual basis .64% and .89% of average daily net assets, respectively, for
Class A and Class B shares. This fee waiver and/or expense reimbursement
agreement may not be terminated before May 1, 2017. Fees waived and expenses
borne by the Adviser are subject to reimbursement until the end of the third
fiscal year after the fiscal period in which the fee was waived or the expense
was borne. No reimbursement payment will be made that would cause the
Portfolio's total annualized operating expenses to exceed the amounts listed
above. In addition, to the extent not effectively implemented as a result of the
expense limitations, the Adviser has contractually agreed to waive its
management fees and/or bear Portfolio expenses through May 1, 2016 in an amount
equal to the Portfolio's share of all fees and expenses of any AB Mutual Funds
in which the Portfolio invests.

GLOBAL RISK ALLOCATION--MODERATE PORTFOLIO
------------------------------------------

            Effective as of April 28, 2015, the Portfolio has contractually
agreed to pay a monthly fee to the Adviser at an annualized rate of .60% of the
Portfolio's average daily net assets. The Adviser has not received advisory fees
from the Portfolio because the Portfolio has not yet commenced operations. The
Adviser has contractually agreed to waive its fee and bear certain expenses so
that total expenses (excluding interest expense, expenses associated with
securities sold short, brokerage commissions and other transaction costs, taxes
and extraordinary expenses) do not exceed on an annual basis .75% and 1.00% of
average daily net assets, respectively, for Class A and Class B shares. This fee
waiver and/or expense reimbursement agreement may not be terminated before May
1, 2016. Fees waived and expenses borne by the Adviser are subject to
reimbursement until the end of the third fiscal year after the fiscal period in
which the fee was waived or the expense was borne. No reimbursement payment will
be made that would cause the Portfolio's total annualized operating expenses to
exceed the amounts listed above.

MULTI-MANAGER ALTERNATIVE STRATEGIES PORTFOLIO
----------------------------------------------

            Effective as of December 16, 2015, the Portfolio has contractually
agreed to pay a monthly fee to the Adviser at an annualized rate of 1.90% of the
Portfolio's average daily net assets. The Adviser has not received advisory fees
from the Portfolio because the Portfolio has not yet commenced operations. The
Adviser has contractually agreed to waive its fee and bear certain expenses so
that total expenses (excluding interest expense, expenses associated with
securities sold short, brokerage commissions and other transaction costs, taxes
and extraordinary expenses) do not exceed on an annual basis 2.15% and 2.40% of
average daily net assets, respectively, for Class A and Class B shares. This fee
waiver and/or expense reimbursement agreement may not be terminated before
December 16, 2017. Fees waived and expenses borne by the Adviser are subject to
reimbursement until the end of the third fiscal year after the fiscal period in
which the fee was waived or the expense was borne. No reimbursement payment will
be made that would cause the Portfolio's total annualized operating expenses to
exceed the amounts listed above. In addition, to the extent not effectively
implemented as a result of the expense limitations, the Adviser has
contractually agreed through December 16, 2016 to waive its management fees
and/or bear Portfolio expenses in an amount equal to the Portfolio's share of
all fees and expenses of any AB Mutual Funds in which the Portfolio invests, and
to waive its management fee so that the effective management fee payable with
respect to Portfolio assets invested in Acquired Funds that are not AB Mutual
Funds is 0.20%.

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

MANAGER OF MANAGERS STRUCTURE
-----------------------------

            Subject to the ultimate responsibility of the Board, the Adviser has
the responsibility to oversee the Multi-Manager Alternative Strategies
Portfolio's sub-advisers (when and if retained) and to recommend their hiring,
termination and replacement. The Adviser received exemptive relief from the SEC
that permits the Adviser, with respect to the Portfolio, to appoint and replace
sub-advisers, and enter into, amend and terminate sub-advisory agreements with
sub-advisers, subject to Board approval but without shareholder approval (the
"Manager of Managers Structure"). The use of the Manager of Managers Structure
with respect to the Portfolio is subject to certain conditions set forth in the
SEC exemptive order.

            The Manager of Managers Structure enables the Portfolio to operate
with greater efficiency and without incurring the expense and delays associated
with obtaining approvals of a new sub-advisory (or trading) agreement. The
Manager of Managers Structure does not permit the Adviser's investment
management fees to increase without shareholder approval.


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

            Certain information concerning the Directors is set forth below.



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

Marshall C. Turner, Jr.,#         Private Investor since prior to         109          Xilinx, Inc.
Chairman of the Board             2010.  Former Chairman and CEO of                    (programmable logic
74                                Dupont Photomasks, Inc. (components                  semi-conductors)
(2005)                            of semi-conductor manufacturing).                    since 2007
                                  He has extensive operating,
                                  leadership and venture capital
                                  investing experience, including
                                  five interim or full-time CEO
                                  roles, and prior service as a
                                  general partner of institutional
                                  venture capital partnerships. He
                                  also has extensive non-profit board
                                  leadership experience, and
                                  currently serves on the boards of
                                  two education and science-related
                                  non-profit organizations.  He has
                                  served as a director of one AB fund
                                  since 1992, and director or trustee
                                  of multiple AB funds since 2005.
                                  He has been Chairman of the AB
                                  Funds since January 2014, and the
                                  Chairman of the Independent
                                  Directors Committees of such Funds
                                  since February 2014.


John H. Dobkin,#                  Independent Consultant since            109          None
73                                prior to 2010.  Formerly,
(1992)                            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, he was Director of
                                  the National Academy of Design.
                                  He has served as a director or
                                  trustee of various AB Funds since
                                  1992 and as Chairman of the Audit
                                  Committees of a number of such
                                  Funds from 2001-2008.

Michael J. Downey,#               Private Investor since prior to         109          Asia Pacific Fund, Inc.
71                                2010.  Formerly, managing partner                    (registered investment
(2005)                            of Lexington Capital, LLC                            company) since prior to
                                  (investment advisory firm) from                      2010
                                  December 1997 until December
                                  2003. He was Director of the
                                  Merger Fund (registered investment
                                  company) since prior to 2012 until
                                  2013. He also served as a Director
                                  of Prospect Acquisition Corp.
                                  (financial services) from 2007
                                  until 2009. 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 AB Funds since 2005
                                  and is a director and Chairman of
                                  one other registered investment
                                  company.

William H. Foulk, Jr.,#           Investment Adviser and an               109          None
83                                Independent Consultant since
(1990)                            prior to 2010.  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 AB Funds since
                                  1983, and was Chairman of the
                                  Independent Directors Committees
                                  of the AB Funds from 2003 until
                                  early February 2014. He served as
                                  Chairman of such Funds from 2003
                                  through December 2013. He is also
                                  active in a number of mutual fund
                                  related organizations and
                                  committees.

D. James Guzy,#                   Chairman of the Board of SRC            109          None
79                                Computers, Inc.
(2005)                            (semi-conductors), with which he
                                  has been associated since prior
                                  to 2010. He served as Chairman of
                                  the Board of PLX Technology
                                  (semi-conductors) since prior to
                                  2010 until November 2013.  He was
                                  a director of Intel Corporation
                                  (semi-conductors) 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 AB Funds since 1982.

Nancy P. Jacklin,#                Professorial Lecturer at the            109          None
67                                Johns Hopkins School of Advanced
(2006)                            International Studies (2008-2015).
                                  U.S. Executive Director of the
                                  International Monetary Fund
                                  (which is responsible for
                                  ensuring the stability of the
                                  international monetary system)
                                  (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 AB Funds since
                                  2006 and has been Chairman of the
                                  Governance and Nominating
                                  Committees of the AB Funds since
                                  August 2014.

Garry L. Moody,#                  Independent Consultant. Formerly,       109          None
63                                Partner, Deloitte & Touche LLP
(2008)                            (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 and
                                  Managing Partner of its Chicago
                                  Office Tax department.  He is a
                                  member of the Trustee Advisory
                                  Board of BoardIQ, a biweekly
                                  publication focused on issues
                                  and news affecting directors of
                                  mutual funds. He has served as
                                  a director or trustee, and as
                                  Chairman of the Audit Committees,
                                  of the AB Funds since 2008.

Earl D. Weiner,#                  Of Counsel, and Partner prior to        109          None
75                                January 2007, of the law firm
(2007)                            Sullivan & Cromwell LLP, and is a
                                  former member of the ABA Federal
                                  Regulation of Securities
                                  Committee Task Force to draft
                                  editions of the Fund Director's
                                  Guidebook. He also serves as a
                                  director or trustee of various
                                  non-profit organizations and has
                                  served as Chairman or Vice
                                  Chairman of a number of them. He
                                  has served as a director or
                                  trustee of the AB Funds since
                                  2007 and served as Chairman of
                                  the Governance and Nominating
                                  Committees of the AB Funds from
                                  2007 until August 2014.

INTERESTED DIRECTOR

Robert M. Keith,+                 Senior Vice President of the            109          None
1345 Avenue of the Americas,      Adviser++ and the head of
New York, NY 10105                AllianceBernstein Investments,
55                                Inc. ("ABI")++ since July 2008;
(2010)                            Director of ABI and President of
                                  the AB 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.

+     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.


            In addition to the public company directorships currently held by
the Directors set forth in the table above, Mr. Turner was a director of
SunEdison, Inc. (solar materials and power plants) from prior to 2010 until July
2014, Mr. Downey was a director of The Merger Fund (a registered investment
company) from prior to 2010 until April 2013, Mr. Guzy was a director of PLX
Technology (semi-conductors) from prior to 2010 until November 2013 and a
director of Cirrus Logic Corporation (semi-conductors) from prior to 2010 until
July 2011, and Mr. Moody was a director of Greenbacker Renewable Energy Company
LLC (renewable energy and energy efficiency projects) from August 2013 until
January 2014.

            The management of the business and affairs of the Fund are overseen
by 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 shareholders at any annual or special
meeting of shareholders. 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 shareholders. 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 AB 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 Committees of many of the
AB 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-AB funds and as Chairman of a non-AB
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 Independent Directors Committee from 2003
until early February 2014, served as Chairman of the AB Funds from 2003 through
December 2013, 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, and
has served as Chairman of the Governance and Nominating Committees of the AB
Funds since August 2014; Mr. Keith has experience as an executive of the Adviser
with responsibility for, among other things, the AB 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 both the governing council of an organization of
independent directors of mutual funds, and the Trustee Advisory Board of
BoardIQ, a biweekly publication focused on issues and news affecting directors
of mutual funds, and has served as a director or trustee and Chairman of the
Audit Committees of the AB 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 has served as
Chairman of the AB Funds since January 2014 and the Independent Directors
Committee of such Funds since February 2014 and the Independent Directors
Committees of such Funds since February 2014; and Mr. Weiner has experience as a
securities lawyer whose practice includes registered investment companies and as
director or trustee of various non-profit organizations and Chairman or Vice
Chairman of a number of them, and served as Chairman of the Governance and
Nominating Committees of the AB Funds from 2007 until August 2014. 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
three standing committees - the Audit, Governance and Nominating and Independent
Directors 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, including
cyber 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 Chief Compliance Officer and the Global Heads of Investment Risk
and Trading Risk of the Adviser), the Fund's Senior Officer (who is also the
Fund's Independent Compliance Officer), the Fund's Chief Compliance Officer, its
independent registered public accounting firm and counsel, the Adviser's Chief
Compliance Officer and internal auditors for the Adviser, as appropriate,
regarding risks faced by the Fund and its Portfolios and the Adviser's risk
management programs. In addition, the Directors receive regular updates on cyber
security matters from the Adviser.

            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 three standing committees - an Audit
Committee, a Governance and Nominating Committee and an Independent Directors
Committee. The members of the Audit, Governance and Nominating and Independent
Directors Committees are identified above.

            The function of the Audit Committee is to assist the Board in its
oversight of the Portfolios' accounting and financial reporting policies and
practices. The Audit Committee met three times during each Portfolio's most
recently completed fiscal year, except that the Audit Committee has not yet met
with respect to Global Bond Portfolio, Global Risk Allocation--Moderate
Portfolio and Multi-Manager Alternative Strategies Portfolio.

            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, except that the Governance and
Nominating Committee has not yet met with respect to Global Bond Portfolio,
Global Risk Allocation--Moderate Portfolio and Multi-Manager Alternative
Strategies Portfolio.

            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.

            Pursuant to the Charter, 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. 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 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, with respect to each Portfolio except the Global Bond
Portfolio, Global Risk Allocation--Moderate Portfolio and Multi-Manager
Alternative Strategies Portfolio. The Independent Directors Committee met on
February 3-4, 2015 to approve the Advisory and Distribution Services Agreements
for the Global Bond Portfolio, Global Risk Allocation--Moderate Portfolio and
Multi-Manager Alternative Strategies Portfolio.

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

                             DOLLAR RANGE OF EQUITY     AGGREGATE DOLLAR RANGE
                             SECURITIES IN THE          OF EQUITY SECURITIES IN
                             PORTFOLIOS AS OF           THE AB FUND COMPLEX AS
                             DECEMBER 31, 2014*         OF DECEMBER 31, 2014
                             ----------------------     -----------------------

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                             None
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.
55                                   Executive Officer

Philip L. Kirstein,                  Senior Vice President                  Senior Vice President and
70                                   and Independent                        Independent Compliance Officer of
                                     Compliance Officer                     the AB Funds, 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 March 2003.

Bruce K. Aronow,                     Vice President                         Senior Vice President of the
49                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010.

Takeo Aso,                           Vice President                         Senior Vice President of the
51                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010.

Frank V. Caruso,                     Vice President                         Senior Vice President and Chief
59                                                                          Investment Officer of U.S. Growth
                                                                            Equities of the Adviser**, with
                                                                            which he has been associated since
                                                                            prior to 2010.

Paul J. DeNoon,                      Vice President                         Senior Vice President of the
53                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010.

Michael DePalma,                     Vice President                         Senior Vice President of the
48                                                                          Adviser,** with which he has been
                                                                            associated since prior to 2010. He
                                                                            has been Chief Investment Officer of
                                                                            Quantitative Investment Strategies
                                                                            since 2011. Prior thereto, he headed
                                                                            the quantitative research effort of
                                                                            the Adviser's fixed income division
                                                                            since prior to 2010.

Scott A. DiMaggio,                   Vice President                         Senior Vice President of the
44                                                                          Adviser,** with which he has been
                                                                            associated since prior to 2010.

Vincent C. DuPont,                   Vice President                         Senior Vice President of the
53                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010.

John H. Fogarty,                     Vice President                         Senior Vice President of the
45                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010.

Eric J. Franco,                      Vice President                         Senior Vice President of the
55                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010.

Marc H. Gamsin,                      Vice President                         Senior Vice President of the
59                                                                          Adviser** and Head and co-Chief
                                                                            Investment Officer of its
                                                                            Alternative Investment Management
                                                                            Group ("AIMG") since October 2010.
                                                                            Prior thereto, President of
                                                                            SunAmerica Alternative Investments
                                                                            since prior to 2010.

Shawn E. Keegan,                     Vice President                         Vice President of the Adviser**,
44                                                                          with which he has been associated
                                                                            since prior to 2010.

N. Kumar Kirpalani,                  Vice President                         Senior Vice President of the
61                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010.

Samantha S. Lau,                     Vice President                         Senior Vice President of the
43                                                                          Adviser**, with which she has been
                                                                            associated since prior to 2010.

Avi Lavi,                            Vice President                         Senior Vice President and Co-Chief
49                                                                          Investment Officer of Global Value
                                                                            of the Adviser**, with which he has
                                                                            been associated since prior to 2010.

Daniel J. Loewy,                     Vice President                         Senior Vice President, of the Adviser**,
41                                                                          with which he has been associated in
                                                                            a substantially similar capacity to his
                                                                            current position since prior to 2010,
                                                                            and Chief Investment Officer and Co-Head
                                                                            of Multi-Asset Solutions and Chief
                                                                            Investment Officer of Dynamic Asset
                                                                            Allocation.

James W. MacGregor,                  Vice President                         Senior Vice President of the Adviser**,
48                                                                          with which he has been associated since
                                                                            prior to 2010.

Alison M. Martier,                   Vice President                         Senior Vice President of the
58                                                                          Adviser**, with which she has been
                                                                            associated since prior to 2010.

Christopher W. Marx,                 Vice President                         Senior Vice President of the
47                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010.

Michael L. Mon,                      Vice President                         Senior Vice President of the
46                                                                          Adviser,** with which he has been
                                                                            associated since prior to 2010.

Christopher H. Nikolich,             Vice President                         Senior Vice President of the
45                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010, and
                                                                            Head of Research and Investment
                                                                            Design--Defined Contribution.

Greg Outcalt,                        Vice President                         Senior Vice President of the
53                                                                          Adviser** and co-Chief Investment
                                                                            Officer of its AIMG, with which he
                                                                            has been associated since October
                                                                            2010. Prior thereto, Executive Vice
                                                                            President of SunAmerica Alternative
                                                                            Investments since prior to 2010.

Joseph G. Paul,                      Vice President                         Senior Vice President of the
55                                                                          Adviser**, with which he has been
                                                                            associated  since prior to 2010.

Douglas J. Peebles,                  Vice President                         Senior Vice President of the
50                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010.

Gregory L. Powell,                   Vice President                         Senior Vice President of the
56                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010.

Daniel C. Roarty,                    Vice President                         Senior Vice President of the
43                                                                          Adviser**, with which he has been
                                                                            associated since 2011.  Prior
                                                                            thereto, he was in research and
                                                                            portfolio management at Nuveen
                                                                            Investments since prior to 2010.

Patrick J. Rudden,                   Vice President                         Senior Vice President of the
52                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010.

Matthew S. Sheridan,                 Vice President                         Senior Vice President of the
40                                                                          Adviser,** with which he has been
                                                                            associated since prior to 2010.

Shri Singhvi,                        Vice President                         Senior Vice President of the
41                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010.

Kevin F. Simms,                      Vice President                         Senior Vice President of the
49                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010.

Tassos M. Stassopoulos,              Vice President                         Senior Vice President of the
46                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010.

Wen-Tse Tseng,                       Vice President                         Senior Vice President of the
50                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010.

Greg J. Wilensky,                    Vice President                         Senior Vice President of the
48                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2010.

Leon Zhu,                            Vice President                         Senior Vice President of the
47                                                                          Adviser,** with which he has been
                                                                            associated since prior to 2010.

Vadim Zlotnikov,                     Vice President                         Senior Vice President, Chief Market
53                                                                          Strategist, Co-Head of Multi-Asset
                                                                            Solutions, and Chief Investment
                                                                            Officer of Systematic and Index
                                                                            Strategies of the Adviser**.
                                                                            Previously, he was Chief Investment
                                                                            Officer of Growth Equities from 2008
                                                                            until 2010.

Joseph J. Mantineo,                  Treasurer and Chief                    Senior Vice President of ABIS**,
56                                   Financial Officer                      with which he has been associated
                                                                            since prior to 2010.

Vincent S. Noto,                     Chief Compliance Officer               Senior Vice President since 2015
51                                                                          and Mutual Fund Chief Compliance
                                                                            Officer of the Adviser** since 2014.
                                                                            Prior thereto, he was Vice President
                                                                            and Director of Mutual Fund
                                                                            Compliance of the Adviser** since
                                                                            prior to 2010.

Emilie D. Wrapp,                     Secretary                              Senior Vice President, Assistant
59                                                                          General Counsel and Assistant
                                                                            Secretary of ABI**, with which she
                                                                            has been associated since prior to 2010.

Phyllis J. Clarke,                   Controller and Chief                   Vice President of ABIS**, with which
54                                   Accounting Officer                     she has been associated since prior
                                                                            to 2010.


--------
*     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, 2014 or estimated
compensation that will be paid to each Director by the Global Bond Portfolio,
Global Risk Allocation--Moderate Portfolio and Multi-Manager Alternative
Strategies Portfolio for such Portfolios' fiscal year ending December 31, 2015,
the aggregate compensation paid to each of the Directors during calendar year
2014 by the AB Fund Complex, and the total number of registered investment
companies (and separate investment portfolios within those companies) in the AB
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 AB 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 AB Fund Complex.

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

John H. Dobkin           $  506          $  503        $  503       $  503
Michael J. Downey        $  506          $  591        $  688       $  503
William H. Foulk, Jr.    $  506          $  554        $  610       $  503
D. James Guzy            $  537          $  662        $  837       $  533
Nancy P. Jacklin         $  521          $  579        $  654       $  518
Robert M. Keith          $    0          $    0        $    0       $    0
Garry L. Moody           $  574          $  651        $  740       $  570
Marshall C. Turner, Jr.  $  821          $1,116        $1,483       $  810
Earl D. Weiner           $  526          $  524        $  524       $  524

                                         Aggregate
                         Aggregate       Compensation               Aggregate
                         Compensation    From          Aggregate    Compensation
                         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           $  503          $  503        $  503       $  503
Michael J. Downey        $  510          $  515        $  503       $  503
William H. Foulk, Jr.    $  515          $  509        $  503       $  503
D. James Guzy            $  540          $  555        $  532       $  509
Nancy P. Jacklin         $  518          $  518        $  518       $  518
Robert M. Keith          $    0          $    0        $    0       $    0
Garry L. Moody           $  577          $  581        $  570       $  571
Marshall C. Turner, Jr.  $  835          $  890        $  835       $  797
Earl D. Weiner           $  523          $  524        $  524       $  523

                                                                    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           $  503          $  503        $  503       $  503
Michael J. Downey        $  666          $  647        $  515       $  585
William H. Foulk, Jr.    $  608          $  587        $  509       $  576
D. James Guzy            $  800          $  767        $  552       $  651
Nancy P. Jacklin         $  638          $  624        $  518       $  569
Robert M. Keith          $    0          $    0        $    0       $    0
Garry L. Moody           $  721          $  703        $  581       $  646
Marshall C. Turner, Jr.  $1,392          $1,318        $  879       $1,096
Earl D. Weiner           $  524          $  524        $  524       $  524

                         Aggregate                     Aggregate    Aggregate
                         Compensation    Aggregate     Compensation Compensation
                         From            Compensation  From         From Multi-
                         Dynamic         From          Global Risk  Manager
                         Asset           Global        Allocation-  Alternative
                         Allocation      Bond          Moderate     Strategies
Name of Director         Portfolio       Portfolio*    Portfolio*   Portfolio*
----------------         ------------    ------------  ------------ ------------

John H. Dobkin           $  503          $  503        $  503       $  503
Michael J. Downey        $  593          $  593        $  593       $  593
William H. Foulk, Jr.    $  547          $  547        $  547       $  547
D. James Guzy            $  666          $  666        $  666       $  666
Nancy P. Jacklin         $  580          $  580        $  580       $  580
Robert M. Keith          $    0          $    0        $    0       $    0
Garry L. Moody           $  651          $  651        $  651       $  651
Marshall C. Turner, Jr.  $1,145          $1,145        $1,145       $1,145
Earl D. Weiner           $  524          $  524        $  524       $  524
---------------

-----------------
*     Estimated  compensation  that  will  be  paid by the Portfolios during the
      fiscal period ending December 31, 2015.

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

John H. Dobkin            $262,000              31             109
Michael J. Downey         $262,000              31             109
William H. Foulk, Jr.     $262,000              31             109
D. James Guzy             $262,000              31             109
Nancy P. Jacklin          $269,500              31             109
Robert M. Keith           $      0              31             109
Garry L. Moody            $297,000              31             109
Marshall C. Turner, Jr.   $457,000              31             109
Earl D. Weiner            $272,500              31             109

            As of March 13, 2015, 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, 2014.


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

                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)

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

                                                                  Total
                                                    Number of     Assets of
                                                    Registered    Registered
                    Total Number   Total Assets of  Investment    Investment
                    of 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            14       $10,137,000,000      None          None
Shawn E. Keegan           13       $ 9,945,000,000      None          None
Alison M. Martier         75       $10,351,000,000      None          None
Douglas J. Peebles        55       $10,195,000,000      None          None
Greg J. Wilensky          76       $10,427,000,000      None          None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                                  Total
                                                    Number of     Assets of
                    Total Number                    Other Pooled  Other Pooled
                    of Other       Total 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
-----------------   ------------   ---------------  ------------  ------------

Paul J. DeNoon            38       $33,354,000,000      None          None
Shawn E. Keegan           22       $44,513,000,000      None          None
Alison M. Martier         78       $   185,000,000      None          None
Douglas J. Peebles        51       $ 6,556,000,000      None          None
Greg J. Wilensky          84       $   929,000,000      None          None

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

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

Paul J. DeNoon            26       $ 7,620,000,000       1        $1,089,000,000
Shawn E. Keegan          136       $57,130,000,000       3        $3,550,000,000
Alison M. Martier        114       $ 8,577,000,000      None           None
Douglas J. Peebles        92       $38,153,000,000       6        $2,714,000,000
Greg J. Wilensky         119       $ 9,631,000,000       1        $  393,000,000

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

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, 2014.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Fund)
--------------------------------------------------------------------------------

                                                                  Total
                                                    Number of     Assets of
                                                    Registered    Registered
                    Total Number   Total Assets of  Investment    Investment
                    of 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           58       $7,924,000,000      None          None
Vincent C. DuPont         55       $7,099,000,000      None          None
John H. Fogarty           57       $7,199,000,000      None          None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                                  Total
                                                    Number of     Assets of
                    Totla Number                    Other Pooled  Other Pooled
                    of Other       Total 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
-----------------   ------------   ---------------  ------------  ------------

Frank V. Caruso           22       $  831,000,000       None          None
Vincent C. DuPont         17       $  766,000,000       None          None
John H. Fogarty           19       $1,152,000,000       None          None

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

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

Frank V. Caruso       44,609       $15,587,000,000       2        $25,000,000
Vincent C. DuPont     26,959       $ 5,689,000,000       1        $13,000,000
John H. Fogarty       26,962       $ 5,886,000,000       1        $13,000,000

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, 2014.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)
--------------------------------------------------------------------------------

                                                      Total
                                      Number of       Assets of
                                      Registered      Registered
Total Number        Total Assets      Investment      Investment
of Registered       of Registered     Companies       Companies
Investment          Investment        Managed with    Managed with
Companies           Companies         Performance-    Performance-
Managed             Managed           based Fees      based fees
-------------       --------------    ------------    ------------
    58              $7,481,000,000     None             None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                      Total
                                      Number of       Assets of
                                      Other Pooled    Other Pooled
Total Number        Total Assets of   Investment      Investment
of Other Pooled     Other Pooled      Vehicles        Vehicles
Investment          Investment        Managed with    Managed with
Vehicles            Vehicles          Performance-    Performance-
Managed             Managed           based Fees      based fees
-------------       ---------------   ------------    ------------
    22              $831,000,000          None            None

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

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

                                      Number of       Total Assets
                                      Other           of Other
Total Number        Total Assets of   Accounts        Accounts
Other               Other             Managed with    Managed with
Accounts            Accounts          Performance-    Performance-
Managed             Managed           based Fees      based fees
-------------       ---------------   ------------    -------------
  44,609            $15,587,000,000        2           $25,000,000

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, 2014.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Fund)
--------------------------------------------------------------------------------

                                                                  Total
                                                    Number of     Assets of
                                                    Registered    Registered
                    Total Number   Total Assets of  Investment    Investment
                    of 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         56         $6,004,000,000       None          None
Frank V. Caruso         58         $8,277,000,000       None          None
John H. Fogarty         57         $7,552,000,000       None          None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                                  Total
                                                    Number of     Assets of
                    Total Number                    Other Pooled  Other Pooled
                    of Other       Total 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
-----------------   -------------  ---------------  ------------  ------------
Bruce K. Aronow          21        $  192,000,000       None         None
Frank V. Caruso          22        $  831,000,000       None         None
John H. Fogarty          19        $1,152,000,000       None         None

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

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


Bruce K. Aronow          33        $ 3,092,000,000        4       $648,000,000
Frank V. Caruso      44,609        $15,587,000,000        2       $ 25,000,000
John H. Fogarty      26,962        $ 5,886,000,000        1       $ 13,000,000

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 Growth and Thematic
Investment Team. 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 Mr. Daniel C. Roarty and Mr. Tassos M.
Stassopoulos 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,
2014.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Fund)
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Registered    Registered
                      Total Number   Total Assets of  Investment    Investment
                      of Registered  Registered       Companies     Companies
                      Investment     Investment       Managed with  Managed with
                      Companies      Companies        Performance-  Performance-
Portfolio Manager     Managed        Managed          based Fees    based fees
-----------------     -------------  ---------------  ------------  ------------

Daniel C. Roarty          12         $ 6,729,000,000      None         None
Tassos M. Stassopoulos    16         $11,815,000,000      None         None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Other Pooled  Other Pooled
                    Total Number     Total Assets of  Investment    Investment
                    of 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 C. Roarty        205          $30,143,000,000       2        $371,000,000
Tassos M. Stassopoulos  210          $30,334,000,000       2        $371,000,000

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

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

Daniel C. Roarty        236         $9,085,000,000      None           None
Tassos M. Stassopoulos  237         $9,250,000,000      None           None

INTERNATIONAL GROWTH PORTFOLIO

            The management of, and investment decisions for, the Portfolio's
portfolio are made by the Adviser's Global Growth and Thematic Investment Team.
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, 2014.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Registered    Registered
                      Total Number   Total Assets of  Investment    Investment
                      of Registered  Registered       Companies     Companies
                      Investment     Investment       Managed with  Managed with
                      Companies      Companies        Performance-  Performance-
Portfolio Manager     Managed        Managed          based Fees    based fees
-----------------     -------------  ---------------  ------------  ------------

Daniel C. Roarty           12        $ 6,770,000,000      None          None
Tassos M. Stassopoulos     16        $11,855,000,000      None          None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Other Pooled  Other Pooled
                    Total Number     Total Assets of  Investment    Investment
                    of 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 C. Roarty        205          $30,143,000,000      2         $371,000,000
Tassos M. Stassopoulos  210          $30,334,000,000      2         $371,000,000

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

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

Daniel C. Roarty        236         $9,085,000,000      None           None
Tassos M. Stassopoulos  237         $9,250,000,000      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, 2014.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Registered    Registered
                      Total Number   Total Assets of  Investment    Investment
                      of 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           56          $5,990,000,000      None          None
N. Kumar Kirpalani        54          $5,890,000,000      None          None
Samantha Lau              54          $5,890,000,000      None          None
Wen-Tse Tseng             54          $5,890,000,000      None          None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Other Pooled  Other Pooled
                    Total Number     Total Assets of  Investment    Investment
                    of 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         21             $192,000,000       None          None
N. Kumar Kirpalani      20             $190,000,000       None          None
Samantha Lau            20             $190,000,000       None          None
Wen-Tse Tseng           20             $190,000,000       None          None

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

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

Bruce K. Aronow        33           $3,092,000,000       4          $648,000,000
N. Kumar Kirpalani     28           $2,745,000,000       4          $648,000,000
Samantha Lau           28           $2,745,000,000       4          $648,000,000
Wen-Tse Tseng          28           $2,745,000,000       4          $648,000,000

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, 2014.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)
--------------------------------------------------------------------------------

                                              Total
                                Number of     Assets of
                                Registered    Registered
Total Number   Total Assets of  Investment    Investment
of Registered  Registered       Companies     Companies
Investment     Investment       Managed with  Managed with
Companies      Companies        Performance-  Performance-
Managed        Managed          based Fees    based fees
-------------  ---------------  ------------  ------------

    58          $848,000,000        None         None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                Total
                                  Number of     Assets of
                                  Other Pooled  Other Pooled
Total Number     Total Assets of  Investment    Investment
of Other Pooled  Other Pooled     Vehicles      Vehicles
Investment       Investment       Managed with  Managed with
Vehicles         Vehicles         Performance-  Performance-
Managed          Managed          based Fees    based fees
-------------    ---------------  ------------  ------------

    83            $560,000,000        None           None

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

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

    11           $587,000,000       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, 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)

--------
(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.

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, 2014.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Registered    Registered
                      Total Number   Total Assets of  Investment    Investment
                      of Registered  Registered       Companies     Companies
                      Investment     Investment       Managed with  Managed with
                      Companies      Companies        Performance-  Performance-
Portfolio Manager     Managed        Managed          based Fees    based fees
-----------------     -------------  ---------------  ------------  ------------

Takeo Aso                 236        $ 4,001,000,000      None         None
Avi Lavi                  235        $ 3,932,000,000      None         None
Kevin F. Simms            395        $14,632,000,000      None         None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Other Pooled  Other Pooled
                    Total Number     Total Assets of  Investment    Investment
                    of 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               221          $ 3,033,000,000       3        $422,000,000
Avi Lavi                211          $ 2,182,000,000       2        $141,000,000
Kevin F. Simms          371          $30,996,000,000       5        $546,000,000

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

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

Takeo Aso              49          $ 8,698,000,000       1        $  377,000,000
Avi Lavi               46          $ 8,138,000,000       1        $  377,000,000
Kevin F. Simms         91          $21,514,000,000       3        $1,276,000,000

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. Shri Singhvi 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, 2014.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Registered    Registered
                      Total Number   Total Assets of  Investment    Investment
                      of 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         50        $ 4,364,000,000      None          None
Joseph G. Paul             59        $14,705,000,000      None          None
Shri Singhvi               50        $ 4,364,000,000      None          None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Other Pooled  Other Pooled
                    Total Number     Total Assets of  Investment    Investment
                    of 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       24          $   394,000,000      None         None
Joseph G. Paul          115          $27,072,000,000      None      $179,000,000
Shri Singhvi             24          $   394,000,000      None         None

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

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

James W. MacGregor        38       $ 1,608,000,000      None           None
Joseph G. Paul        45,712       $26,600,000,000       1           $25,000,000
Shri Singhvi              36       $ 1,455,000,000      None           None

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, 2014.

--------
(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
                                                      Registered    Registered
                      Total Number   Total Assets of  Investment    Investment
                      of 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      183         $ 1,661,000,000      None          None
Joseph G. Paul            59         $15,251,000,000      None          None
Gregory L. Powell         44         $ 4,286,000,000      None          None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Other Pooled  Other Pooled
                    Total Number     Total Assets of  Investment    Investment
                    of 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       57         $   154,000,000     None          None
Joseph G. Paul           115         $27,072,000,000     None       $179,000,000
Gregory L. Powell         13         $   282,000,000     None          None

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

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

Christopher W. Marx    23,547      $ 2,534,000,000     None           None
Joseph G. Paul         45,712      $26,600,000,000       1           $25,000,000
Gregory L. Powell      28,051      $ 8,260,000,000       1           $13,000,000

BALANCED WEALTH STRATEGY PORTFOLIO

            The management of, and investment decisions for, the Portfolio's
portfolio are made by the Multi-Asset Solutions Team. Mr. Daniel J. Loewy, Mr.
Christopher H. Nikolich, Mr. Patrick J. Rudden and Mr. Vadim Zlotnikov 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, 2014.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Registered    Registered
                      Total Number   Total Assets of  Investment    Investment
                      of 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           88         $ 7,081,000,000      None          None
Christopher H. Nikolich   35         $ 1,060,000,000      None          None
Patrick J. Rudden         13         $11,455,000,000      None          None
Vadim Zlotnikov          108         $21,254,000,000      None          None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Other Pooled  Other Pooled
                    Total Number     Total Assets of  Investment    Investment
                    of 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           284        $21,395,000,000      None          None
Christopher H. Nikolich   133        $21,155,000,000      None          None
Patrick J. Rudden          77        $27,073,000,000        1       $204,000,000
Vadim Zlotnikov           216        $ 7,413,000,000        1       $179,000,000

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

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

Daniel J. Loewy          19         $8,386,000,000      None           None
Christopher H. Nikolich  12         $8,321,000,000      None           None
Patrick J. Rudden        28         $9,253,000,000        1         $25,000,000
Vadim Zlotnikov          47         $1,842,000,000      None           None

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. Vadim Zlotnikov 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, 2014.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Fund)
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Registered    Registered
                      Total Number   Total Assets of  Investment    Investment
                      of 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             88       $ 6,965,000,000      None           None
Vadim Zlotnikov            108       $21,138,000,000      None           None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Other Pooled  Other Pooled
                    Total Number     Total Assets of  Investment    Investment
                    of 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         284          $21,395,000,000      None         None
Vadim Zlotnikov         216          $ 7,413,000,000        1       $179,000,000

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

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

Daniel J. Loewy       19           $8,386,000,000       None            None
Vadim Zlotnikov       47           $1,842,000,000       None            None

GLOBAL BOND PORTFOLIO

            The day-to-day management of, and investment decisions for, the
Portfolio are made by the Adviser's Global Fixed Income Investment Team. Mr.
Paul J. DeNoon, Mr. Scott A. DiMaggio, Mr. Michael L. Mon, Mr. Douglas J.
Peebles and Mr. Matthew S. Sheridan 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. DeNoon, Mr. DiMaggio, Mr. Mon, Mr. Peebles and
Mr. Sheridan 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, 2014.

--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                           (excluding the Portfolio)
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Registered    Registered
                      Total Number   Total Assets of  Investment    Investment
                      of 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             13        $10,137,000,000      None          None
Scott A. DiMaggio          35        $ 9,085,000,000      None          None
Michael L. Mon             17        $ 3,466,000,000      None          None
Douglas J. Peebles         37        $ 9,558,000,000      None          None
Matthew S. Sheridan        44        $15,985,000,000      None          None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Other Pooled  Other Pooled
                    Total Number     Total Assets of  Investment    Investment
                    of 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          32           $33,354,000,000      None          None
Scott A. DiMaggio       43           $ 3,845,000,000      None          None
Michael L. Mon          53           $ 9,182,000,000        1       $144,000,000
Douglas J. Peebles      50           $ 6,556,000,000      None          None
Matthew S. Sheridan     48           $31,746,000,000      None          None

--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

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

Paul J. DeNoon         26          $ 7,260,000,000       1        $1,089,000,000
Scott A. DiMaggio      68          $33,531,000,000       6        $2,714,000,000
Michael L. Mon         34          $10,337,000,000       1        $1,089,000,000
Douglas J. Peebles     94          $38,789,000,000       6        $2,714,000,000
Matthew S. Sheridan    59          $31,602,000,000       6        $2,714,000,000


GLOBAL RISK ALLOCATION--MODERATE PORTFOLIO

            The management of, and investment decisions for, the Portfolio's
portfolio are made by the Adviser's Quantitative Investment Strategies Team. Mr.
Michael DePalma and Mr. Leon Zhu 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. DePalma and Mr. Zhu 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, 2014.


--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                              (excluding the Fund)
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Registered    Registered
                      Total Number   Total Assets of  Investment    Investment
                      of Registered  Registered       Companies     Companies
                      Investment     Investment       Managed with  Managed with
                      Companies      Companies        Performance-  Performance-
Portfolio Manager     Managed        Managed          based Fees    based fees
-----------------     -------------  ---------------  ------------  ------------

Michael DePalma            4           $416,000,000       None          None
Leon Zhu                   1           $406,000,000       None          None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Other Pooled  Other Pooled
                    Total Number     Total Assets of  Investment    Investment
                    of Other Pooled  Other Pooled     Vehicles      Vehicles
                    Investment       Investment       Managed with  Managed with
                    Vehicles         Vehicles         Performance-  Performance-
Portfolio Manager   Managed          Managed          based Fees    based fees
-----------------   -------------    ---------------  ------------  ------------

Michael DePalma        None              None            None           None
Leon Zhu                 4             $64,000,000       None           None


--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

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

Michael DePalma       None             None             None          None
Leon Zhu              None             None             None          None


MULTI-MANAGER ALTERNATIVE STRATEGIES PORTFOLIO

            The management of, and investment decisions for, the Portfolio's
portfolio are made by the Adviser's Multi-Manager Alternative Team. Mr. Marc H.
Gamsin and Mr. Greg Outcalt 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. Gamsin and Outcalt 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
October 31, 2015.


--------------------------------------------------------------------------------
                        REGISTERED INVESTMENT COMPANIES
                              (excluding the Fund)
--------------------------------------------------------------------------------

                                                                    Total
                                                      Number of     Assets of
                                                      Registered    Registered
                      Total Number   Total Assets of  Investment    Investment
                      of Registered  Registered       Companies     Companies
                      Investment     Investment       Managed with  Managed with
                      Companies      Companies        Performance-  Performance-
Portfolio Manager     Managed        Managed          based Fees    based fees
-----------------     -------------  ---------------  ------------  ------------

Marc H. Gamsin            13         $1,747,000,000       None           None
Greg Outcalt              13         $1,747,000,000       None           None

--------------------------------------------------------------------------------
                        OTHER POOLED INVESTMENT VEHICLES
--------------------------------------------------------------------------------

                                                                  Total
                                                    Number of     Assets of
                    Total Number                    Other Pooled  Other Pooled
                    of Other       Total 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
-----------------   -------------  ---------------  ------------  ------------

Marc H. Gamsin          28         $10,168,000,000       10       $8,889,000,000
Greg Outcalt            28         $10,168,000,000       10       $8,889,000,000


--------------------------------------------------------------------------------
                                 OTHER ACCOUNTS
--------------------------------------------------------------------------------

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

Marc H. Gamsin        None             None             None             None
Greg Outcalt          None             None             None             None

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

            As an investment adviser and fiduciary, the Adviser owes its clients
and shareholders an undivided duty of loyalty. The Adviser recognizes that
conflicts of interest are inherent in its business and accordingly has 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 AB 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. The Adviser places
the interests of its clients first and expects all of its 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 60-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
clients of the Adviser 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 6-8, 2014.

            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, 2014, 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
                                    Distribution          of the aggregate
                                    services fees         average daily net
                                    for expenditures      assets attributable
Fund                                payable to ABI        to Class B shares
----                                --------------        -----------------

Intermediate Bond Portfolio            $   53,389               .25%

Large Cap Growth Portfolio             $  571,201               .25%

Growth and Income Portfolio            $1,730,726               .25%

Growth Portfolio                       $  118,441               .25%

International Growth Portfolio         $  129,152               .25%

Global Thematic Growth Portfolio       $  252,112               .25%

Small Cap Growth Portfolio             $  120,835               .25%

Real Estate Investment Portfolio       $   32,008               .25%

International Value Portfolio          $1,719,739               .25%

Small/Mid Cap Value Portfolio          $1,130,137               .25%

Value Portfolio                        $  302,455               .25%

Balanced Wealth Strategy Portfolio     $  852,412               .25%

Dynamic Asset Allocation Portfolio     $1,082,584               .25%

            For the fiscal year ended December 31, 2014, 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
Category of Expense                  Bond Portfolio    Growth Portfolio         Income Portfolio
-------------------                  --------------    ----------------         ----------------
                                                                             
Advertising/Marketing                        $116               $1,222                   $3,764

Printing and Mailing                            2                   17                       52
 of Prospectuses and Semi-Annual
and Annual Reports to Other Than
Current Shareholders

Compensation to Underwriters                3,117               33,447                  101,240

Compensation to Dealers                    97,962            1,046,405                3,207,157

Compensation to Sales Personnel             4,259               45,825                  138,063

Interest, Carrying or Other                     0                    0                        0
Financing Charges

Other (includes personnel costs             2,585               27,573                   83,694
of those home office employees
involved in the distribution
effort and the travel-related
expenses incurred by the
marketing personnel conducting
seminars)


      Totals                             $108,041           $1,154,489               $3,533,970





                                Growth             International        Global Thematic      Small Cap
Category of Expense             Bond Portfolio     Growth Portfolio     Growth Portfolio     Growth Portfolio
-------------------             --------------     ----------------     ----------------     ----------------
                                                                                     
Advertising/                         $258                 $287                 $553                 $199
Marketing

Printing and Mailing of                 4                    4                    8                    3
Prospectuses and
Semi-Annual and Annual
Reports to Other than
Current Shareholders

Compensation to                     6,938                7,535               14,718                7,071
Underwriters

Compensation to Dealers           220,547              242,074              467,537              212,024

Compensation to Sales               9,560               10,279               20,160                9,891
Personnel

Interest, Carrying or                   0                    0                    0                    0
Other Financing Charges

Other (includes personnel           5,735                6,252               12,207                5,743
costs of those home
office employees involved
in the distribution
effort and the
travel-related expenses
incurred by the marketing
personnel conducting
seminars)

Totals                           $243,042             $266,431             $515,183             $234,931






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

                                                                                           
Advertising/                         $70                  $3,878                 $2,513                   $676
Marketing

Printing and Mailing of                1                      54                     35                      9
Prospectuses and
Semi-Annual and Annual
Reports to Other than
Current Shareholders

Compensation to                    1,871                 100,356                 66,056                 17,662
Underwriters

Compensation to Dealers           58,880               3,260,648              2,106,392                573,347

Compensation to Sales              2,548                 137,198                 90,174                 24,144
Personnel

Interest, Carrying or                  0                       0                      0                      0
Other Financing Charges

Other (includes personnel          1,550                  83,402                 54,787                 14,659
costs of those home
office employees involved
in the distribution
effort and the
travel-related expenses
incurred by the marketing
personnel conducting
seminars)

Totals                           $64,920              $3,585,536             $2,319,957               $630,497





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

                                                 
Advertising/                         $1,882               $2,281
Marketing

Printing and Mailing of                  26                   31
Prospectuses and
Semi-Annual and Annual
Reports to Other than
Current Shareholders

Compensation to                      49,784               63,344
Underwriters

Compensation to Dealers           1,638,021            1,940,098

Compensation to Sales                68,004               86,042
Personnel

Interest, Carrying or                     0                    0
Other Financing Charges

Other (includes personnel            41,267               52,188
costs of those home
office employees involved
in the distribution
effort and the
travel-related expenses
incurred by the marketing
personnel conducting
seminars)

Totals                           $1,798,984           $2,143,984


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

                       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 ordinarily 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 2015, ABI's additional payments to these firms for distribution
services and educational support are expected to be approximately $400,000. In
2014, ABI paid additional payments of approximately $350,000 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:

         AXA Equitable
         Great West Life & Annuity Company
         ING
         Lincoln Financial Advisors
         MetLife Investors Group, Inc.
         Ohio National Financial Services
         Pacific Life Insurance Company
         Principal Financial Group
         Riversource Distributors
         Securian Financial Services
         Transamerica Capital, Inc.

            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 AB 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 calculated at
the close of regular trading on any 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) an equity security listed on the Exchange, or on another
national or foreign exchange (other than securities listed on the NASDAQ Stock
Exchange ("NASDAQ")) is valued at the last sale price reflected on the
consolidated tape at the close of the exchange. If there has been no sale on the
relevant business day, the security is then valued at the last traded price;

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

            (c) an OTC equity security is valued at the mid level between the
current bid and asked prices. If the mid price is not available, the security
will be valued at the bid price. An equity 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 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 are 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) U.S. Government securities and any other debt instrument having
60 days or less remaining until maturity generally are valued at market by an
independent pricing service, if a market price is available. If a market price
is not available, the securities are valued at amortized cost. This methodology
pertains to short-term securities that have an original maturity of 60 days or
less, as well as short term securities that had an original term to maturity
that exceeded 60 days. In instances in which amortized cost is utilized, the
Valuation Committee must reasonably conclude that the utilization of amortized
cost is approximately the same as the fair value of the security. The factors
the Valuation Committee will consider include, but are not limited to, an
impairment of the creditworthiness of the issuer or material changes in interest
rates. The Adviser is responsible for monitoring any instances when a market
price is not applied to a short term security and will report any instances to
the Valuation Committee for review;

            (j) a fixed-income security is typically valued on the basis of bid
prices provided by an approved pricing vendor when the Adviser reasonably
believes that such prices reflect the fair 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
such prices reflect the conventions of the particular markets. The prices
provided by an approved 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 security 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. If the Adviser
receives multiple broker quotes that are deemed to be reliable, then the Adviser
will utilize the second highest broker quote. 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;

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

            (l) bridge loans are valued at fair value, which equates to the
outstanding loan amount, unless it is determined by the Adviser that any
particular bridge loan should be valued at something other than the 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;

            (m) whole loans: residential and commercial mortgage whole loans and
whole loan pools are fair market priced by an approved vendor;

            (n) forward and spot currency pricing is provided by an independent
vendor. The rate provided by the approved vendor is a mid price for forward and
spot rates. In most instances whenever both an "onshore" rate and an "offshore"
(i.e., NDF) rate is available, the Adviser will use the offshore (NDF) rate. NDF
contracts are used for currencies where it is difficult (and sometimes
impossible) to take actual delivery of the currency;

            (o) OTC derivatives pricing: various independent pricing vendors are
used to obtain derivatives values or obtain information used to derive a price
for each investment. This information is placed into various pricing models that
can be sourced by the Adviser or from approved vendors (depending on the type of
derivative) to derive a price for each investment. These pricing models are
monitored/reviewed on an ongoing basis by the Adviser;

            (p) mutual funds and other pooled vehicles: the Adviser receives
pricing information for mutual funds and other pooled vehicles from various
sources (including AllianceBernstein Global Fund Administrator and the external
custodian banks). Open-end mutual funds are valued at the closing NAV per share
and closed-end funds and ETFs are valued at the closing market price per share;

            (q) repurchase agreements and reverse repurchase agreements:
repurchase agreements and reverse repurchase agreements will be valued based on
their original cost plus accrued interest;

            (r) hedge funds: hedge funds will be priced at the most recent
available closing NAV per share;

            (s) equity-linked notes: prices are sourced at the end of the
pricing day from approved vendors. The vendor methodology is to source the
relevant underlying non-U.S. dollar exchange closing prices and convert them to
U.S. dollars; and

            (t) credit-linked notes: prices are sourced on the reference bond
consistent with fixed-income security methodology as noted above, which are
passed through as the price on the credit-linked note. Alternatively, broker
marks are obtained.

            If the Adviser becomes aware of any news/market events that would
cause the Valuation Committee to believe the last traded or market-based price,
as applicable, does not reflect fair value, the security is then valued in good
faith at fair value by, or in accordance with, procedures approved by 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 ordinarily
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, if 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. A broker-dealer may provide the Adviser with research or related
services with an expectation, but not necessarily an explicit agreement or
contract, that the Adviser will use the broker-dealer to execute client
transactions in the future. 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 impractical to place an actual
dollar value on such investment information, the Adviser believes that its
receipt probably does not reduce the overall expenses of the Adviser to any
material extent.

            The investment information provided to the Adviser is of the type
described in Section 28(e)(3) of the Securities Exchange Act of 1934, 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 OTC
market. In addition, most transactions for the Intermediate Bond Portfolio are
executed in the OTC 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.

            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.

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


                                                               Aggregate
                                     Fiscal                    Amount of
                                     Year Ended                Brokerage
Portfolio                            December 31               Commissions
---------                            -----------               -----------
Growth Portfolio                        2012                    $   79,251
                                        2013                        54,411
                                        2014                        41,565

Intermediate Bond Portfolio             2012                    $      217
                                        2013                           247
                                        2014                           269

Growth and Income Portfolio             2012                    $1,263,653
                                        2013                       778,196
                                        2014                       595,695

Large Cap Growth Portfolio              2012                    $  435,586
                                        2013                       223,215
                                        2014                       214,811

Small Cap Growth Portfolio              2012                    $  117,081
                                        2013                        91,885
                                        2014                       106,179

Real Estate Investment Portfolio        2012                    $  235,230
                                        2013                       251,843
                                        2014(1)                     89,780

Global Thematic Growth Portfolio        2012                    $  457,410
                                        2013                       248,709
                                        2014(2)                    100,481

International Growth Portfolio          2012                    $  213,153
                                        2013                       151,936
                                        2014                       107,593

Small/Mid Cap Value Portfolio           2012                    $  644,721
                                        2013                       935,929
                                        2014                       826,048

Value Portfolio                         2012                    $  161,524
                                        2013                       160,176
                                        2014                        97,465

International Value Portfolio           2012                    $1,451,452
                                        2013                     1,382,847
                                        2014(2)                    985,467

Balanced Wealth Strategy Portfolio      2012                    $  516,365
                                        2013                       477,345
                                        2014(2)                    245,755

Dynamic Asset Allocation Portfolio      2012                    $   46,640
                                        2013                       144,333
                                        2014                       110,261
---------------
(1)       The aggregate brokerage commissions paid by the Portfolio decreased
          materially in 2014 due to more efficient trading practices.

(2)       The aggregate brokerage commissions paid by the Portfolio decreased
          materially in 2014 due to a decrease in the Portfolio's assets and
          trading transactions.
            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 Amount of Brokerage
                                            Aggregate Amount Of        % of Portfolio's      Transactions Involving The
                                          Brokerage Commissions      Aggregate Brokerage       Payment Of Commissions
                      Fiscal Year Ended           Paid To            Commissions Paid To              Through
Portfolio                December 31        Affiliated Brokers        Affiliated Brokers          Affiliated Brokers
---------                -----------        ------------------        ------------------          ------------------
                                                                                              
                            2014                       $0
Growth and Income           2013                    2,741                        0%                          0%
Portfolio                   2012                    1,692
                            2014                     $254
                            2013                      513                     0.61%                       0.84%
Growth Portfolio            2012                      635
                            2014                       $0
International               2013                        0                        0%                          0%
Growth Portfolio            2012                    3,063
                            2014                      $32
Global Thematic             2013                      653
Growth Portfolio            2012                    6,078                     0.03%                       0.05%
                            2014                      $45
Small Cap Growth            2013                       52                     0.04%                       0.08%
Portfolio                   2012                      251

Real Estate                 2014                       $0                        0%                          0%
Investment                  2013                      979
Portfolio                   2012                       70
                            2014                       $0
International Value         2013                      549                        0%                          0%
Portfolio                   2012                   10,923

Balanced Wealth             2014                     $260                     0.11%                       0.04%
Strategy Portfolio          2013                      736
                            2012                      824



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.ABglobal.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 determine 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 has 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) Institutional
Shareholder Services, Inc. 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 and "AB
Variable Products Series Fund, Inc." on March 30, 2015.

            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
listed below as of March 13, 2015. As of the date of this SAI, shares of Global
Bond Portfolio and Global Risk Allocation--Moderate Portfolio are held solely by
the Adviser. As of the date of this SAI, no shares of Multi-Manager Alternative
Strategies Portfolio have been issued.




  CLASS A SHARES
                                                                       NUMBER OF                 % OF
  PORTFOLIO              NAME AND ADDRESS                              CLASS A SHARES            CLASS A SHARES
  ---------              ----------------                              --------------            --------------
                                                                                               
  Intermediate Bond      American General Life
  Portfolio              Insurance Company of Delaware
                         Attn: Ed Bacon
                         2727A Allen Parkway
                         Houston, TX 77019-2107                           3,850,520                  81.44%

                         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                             349,983                   7.40%

  Large Cap Growth       American General Life
  Portfolio              Insurance Company of Delaware
                         Attn: Ed Bacon
                         2727A Allen Parkway
                         Houston, TX 77019-2107                             665,078                  17.39%

                         Transamerica Advisors Life Insurance
                         Company
                         Merrill Lynch Life Variable Annuity
                         4333 Edgewood Road, NE
                         Cedar Rapids, IA 52499-0001                      1,723,168                  45.05%

                         Transamerica Advisors Life Insurance
                         Company
                         Merrill Lynch Variable Life
                         4333 Edgewood Road, NE
                         Cedar Rapids, IA  52499-0001                       295,501                   7.73%

                         Transamerica Advisors Life Insurance
                         Company
                         Merrill Lynch Variable Life
                         4333 Edgewood Road, NE
                         Cedar Rapids, IA  52499-0001                       224,826                   5.88%

  Growth and Income      American General Life
  Portfolio              Insurance Company of Delaware
                         Attn: Ed Bacon
                         2727A Allen Parkway
                         Houston, TX 77019-2107                           1,440,870                  26.21%

                         ING Life Insurance and Annuity Company
                         Attn: ING Fund Operations TN41
                         1 Orange Way, #B3N
                         Windsor, CT 06095-4773                             367,550                   6.69%

                         Jefferson National Life Insurance Company
                         Attn: Separate Accounts
                         10350 Ormsby Park Place, Suite 600
                         Louisville, KY 40223-6175                          306,801                   5.58%

                         Lincoln Life Variable Annuity
                         1300 S. Clinton Street
                         Fort Wayne, IN 46802-3506                        1,048,612                  19.08%

                         Nationwide Life Insurance Company
                         C/O IPO Portfolio Accounting
                         P.O. Box 182029
                         Columbus, OH  43218-2029                           776,159                  14.12%

                         Transamerica Advisors Life Insurance
                         Company
                         Merrill Lynch Life Variable Annuity
                         Separate Account
                         4333 Edgewood Road, NE
                         Cedar Rapids, IA 52499-0001                        306,820                   5.58%

  Growth Portfolio       American General Life
                         Insurance Company of Delaware
                         Attn: Ed Bacon
                         2727A Allen Parkway
                         Houston, TX 77019-2107                             469,175                  59.03%

                         American General Life
                         Insurance Company of Delaware
                         Attn: Ed Bacon
                         2727A Allen Parkway
                         Houston, TX 77019-2107                              50,434                   6.35%

                         Great-West Life & Annuity Insurance
                         Company
                         FBO Schwab Annuities
                         8515 E. Orchard Road
                         Greenwood, CO 80111-5002                            48,439                   6.09%

                         The United States Life Insurance
                         Company In the City of New York
                         Attn: Ed Bacon
                         2727A Allen Parkway
                         Houston, TX 77019-2116                              86,310                  10.86%

                         UBS Life Insurance Co.
                         P.O. Box 1795
                         Erie, PA 16512-1795                                 50,572                   6.36%

  International Growth   American General Life
  Portfolio              Insurance Company of Delaware
                         Attn: Ed Bacon
                         2727A Allen Parkway
                         Houston, TX 77019-2107                             965,354                  47.97%

                         Great-West Life & Annuity
                         FBO Variable Annuity 1 Oncesource
                         8515 E. Orchard Road
                         Greenwood, CO 80111-5002                           573,255                  28.48%

                         Great-West Life & Annuity
                         FBO Variable Annuity 1 Select
                         8515 E. Orchard Road
                         Greenwood Village, CO 80111-5002                   142,335                   7.07%

  Global Thematic        American General Life
  Growth Portfolio       Insurance Company of Delaware
                         Attn: Ed Bacon
                         2727A Allen Parkway # 4D1
                         Houston, TX 77019-2107                             457,521                  33.02%

                         Lincoln Life Variable Annuity
                         1300 S. Clinton Street
                         Fort Wayne, IN  46802-3506                         327,233                  23.62%

                         Transamerica Advisors Life Insurance
                         Company
                         Merrill Lynch Life Variable Annuity
                         Separate Account
                         4333 Edgewood Road, NE
                         Cedar Rapids, IA  52499-0001                       264,357                  19.08%

                         Transamerica Advisors Life Insurance
                         Company
                         Merrill Lynch of New York Variable Annuity
                         Separate Account A
                         4333 Edgewood Road, NE
                         Cedar Rapids, IA  52499-0001                        81,808                   5.90%

                         The United States Life Insurance
                         Company In the City of New York
                         Attn: Ed Bacon
                         2727A Allen Parkway
                         Houston, TX  77019-2116                             97,297                   7.02%

  Small Cap Growth       American General Life
  Portfolio              Insurance Company of Delaware
                         Attn: Ed Bacon
                         2727A Allen Parkway
                         Houston, TX 77019-2107                             767,301                  59.15%

                         Principal Life Insurance Co.
                         Attn: Individual Accounting
                         711 High Street
                         Des Moines, IA 50392-0001                          227,152                  17.51%

  Real Estate            American General Life
  Investment Portfolio   Insurance Company of Delaware
                         Attn: Ed Bacon
                         2727A Allen Parkway
                         Houston, TX 77019-2107                           1,001,576                  25.85%

                         Great West Life & Annuity
                         Insurance Company
                         FBO Schwab Annuities
                         Attn: Investment Div
                         8515 E. Orchard Road
                         Englewood, CO 80111-5002                         2,003,653                  51.71%

                         Nationwide Life Insurance Company
                         c/o IPO Portfolio Accounting
                         P.O. Box 182029
                         Columbus, OH 43218-2029                            432,069                  11.15%

  International Value    American General Life
  Portfolio              Insurance Company of Delaware
                         Attn: Ed Bacon
                         2727A Allen Parkway
                         Houston, TX 77019-2107                             505,757                  13.89%

                         Great West Life & Annuity
                         Insurance Company
                         FBO Schwab Annuities
                         Attn: Investment Div
                         8515 E. Orchard Road
                         Englewood, CO 80111-5002                           216,755                   5.95%

                         Lincoln Life Variable Annuity
                         1300 S. Clinton Street
                         Fort Wayne, IN  46802-3506                         958,916                  26.34%

                         National Life Group
                         Sentinel Advantage
                         1 National Life Drive
                         Montpelier, VT 05604-1000                          236,322                   6.49%

                         Nationwide Life Insurance Company
                         c/o IPO Portfolio Accounting
                         P.O. Box 182029
                         Columbus, OH 43218-2029                            561,888                  15.43%

                         Nationwide Life Insurance Company
                         c/o IPO Portfolio Accounting
                         P.O. Box 182029
                         Columbus, OH 43218-2029                            441,097                  12.12%

  Small/Mid Cap          American General Life
  Value Portfolio        Insurance Company of Delaware
                         Attn: Ed Bacon
                         2727A Allen Parkway
                         Houston, TX 77019-2107                             853,073                   8.96%

                         Lincoln Life Variable Annuity
                         1300 S. Clinton Street
                         Fort Wayne, IN 46802-3506                        5,223,059                  54.86%

                         Nationwide Life Insurance Company
                         c/o IPO Portfolio Accounting
                         P.O. Box 182029
                         Columbus, OH 43218-2029                            893,822                   9.39%

                         New York Life Insurance and Annuity
                         Corporation
                         169 Lackawanna Avenue
                         Parsippany, NJ 07054-1007                          613,258                   6.44%

  Value Portfolio        Transamerica Advisors Life Insurance
                         Company
                         Merrill Lynch Life Variable Annuity
                         Separate Account
                         4333 Edgewood Road, NE
                         Cedar Rapids, IA  52499-0001                        90,658                  75.37%

                         Transamerica Advisors Life Insurance
                         Company
                         Merrill Lynch of New York Variable Annuity
                         Separate Account
                         4333 Edgewood Road, NE
                         Cedar Rapids, IA  52499-0001                        20,451                  17.00%

  Balanced Wealth        American General Life
  Strategy Portfolio     Insurance Company of Delaware
                         Attn: Ed Bacon
                         2727A Allen Parkway
                         Houston, TX 77019-2107                           2,574,692                  87.11%

                         The United States Life Insurance
                         Company In the City of New York
                         Attn: Ed Bacon
                         2727A Allen Parkway
                         Houston, TX 77019-2116                             176,998                   5.99%

  Dynamic Asset          Nationwide Life Insurance Co.
  Allocation Portfolio   c/o IPO Portfolio Accounting
                         P.O. Box 182029
                         Columbus, OH  43218-2029                            10,095                  29.61%

                         Nationwide Life Insurance Co.
                         c/o IPO Portfolio Accounting
                         P.O. Box 182029
                         Columbus, OH  43218-2029                             5,475                  16.06%

                         Nationwide Life & Annuity Insurance Co.
                         c/o IPO Portfolio Accounting
                         P.O. Box 182029
                         Columbus, OH  43218-2029                             6,070                  17.81%

                         Nationwide Life Insurance Co.
                         c/o IPO Portfolio Accounting
                         P.O. Box 182029
                         Columbus, OH  43218-2029                            11,383                  33.39%





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

                                                                                               
Intermediate Bond         Delaware Life Insurance Company
Portfolio                 Keyport Variable Account
                          1 Sun Life Park
                          Wellesley Hills, MA 02481-5699                    128,995                   7.44%

                          Hartford Life Separate Account
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                           240,841                  13.89%

                          SunAmerica Annuity and Life
                          Assurance Company
                          Attn: Variable Annuity Accounting
                          2727 A Allen Parkway
                          Houston, TX 77019                               1,169,494                  67.46%

Large Cap Growth          Allmerica Financial Life
Portfolio                 Insurance & Annuity Company
                          One Security Benefit Place
                          Topeka, KS 66636-1000                             652,882                  12.69%

                          Allstate Life Insurance Company
                          3101 Sanders Road
                          Northbrook, IL  60062-7156                        335,536                   6.52%

                          American General Life Insurance Company
                          of Delaware
                          Attn: Ed Bacon
                          2727A Allen Parkway
                          Houston, TX  77019-2107                           411,734                   8.00%

                          GE Life and Annuity
                          Assurance Company
                          6610 W. Broad Street
                          Building 3, 5th Floor
                          Attn: Variable Accounting
                          Richmond, VA 23230-1702                           447,428                   8.70%

                          Horace Mann
                          Life Insurance Company
                          Separate Account
                          Horace Mann
                          Springfield, IL 62715-0001                        942,311                  18.31%

                          IDS Life Insurance Company
                          10468 Ameriprise Financial Center
                          Minneapolis, MN  55474-0014                       505,885                   9.83%

                          Transamerica Life Insurance Company
                          Separate Account
                          4333 Edgewood Road, NE
                          Cedar Rapids, IA  52499-0001                      723,985                  14.07%

Growth and Income         Allmerica Financial Life
Portfolio                 Insurance & Annuity Company
                          One Security Benefit Place
                          Topeka, KS 66636-1000                           1,585,290                   6.77%

                          Allstate Life Insurance Company
                          3100 Sanders Road
                          Northbrook, IL  60062-7156                      1,769,191                   7.55%

                          American General Life
                          Insurance Company of Delaware
                          Attn: Ed Bacon
                          2727A Allen Parkway
                          Houston, TX 77019-2107                          1,396,863                   5.96%

                          GE Life and Annuity
                          Assurance Company
                          6610 W. Broad Street
                          Building 3, 5th Floor
                          Attn: Variable Accounting
                          Richmond, VA 23230-1702                         1,870,421                   7.99%

                          IDS Life Insurance Corp.
                          1438 AXP Financial Center
                          Minneapolis, MN 55474-0014                      5,795,943                  24.75%

                          Transamerica Life Insurance Co.
                          4333 Edgewood Road, NE MS
                          Cedar Rapids, IA 52499-0001                     6,686,285                  28.55%

Growth Portfolio          Allstate Life Insurance Company
                          3102 Sanders Road, #N4A
                          Northbrook, IL 60062                              530,533                  39.28%

                          American General Life
                          Insurance Company of Delaware
                          Attn: Ed Bacon
                          2727A Allen Parkway
                          Houston, TX 77019-2107                            370,396                  27.42%

                          SunAmerica Annuity and Life
                          Assurance Company
                          Attn: Variable Annuity Accounting
                          2727 A Allen Parkway
                          Houston, TX 77019                                 228,738                  16.94%

International Growth      AXA Equitable Life Separate
Portfolio                 1290 Avenue of the Americas
                          11th Floor
                          New York, NY 10104-1472                           466,743                  18.72%

                          Hartford Life & Annuity
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                           522,094                  20.94%

                          Hartford Life and Annuity
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                           206,749                   8.29%

                          Hartford Life Separate Account
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                           187,034                   7.50%

                          Delaware Life Insurance Company
                          One SunLife Executive Park
                          Wellesley Hills, MA 02481                         542,003                  21.74%

                          SunAmerica Annuity and Life
                          Assurance Company
                          Attn: Variable Annuity Accounting
                          2727 A Allen Parkway
                          Houston, TX 77019                                 255,975                  10.27%

Global Thematic Growth    American General Life
Portfolio                 Insurance Company of Delaware
                          Attn: Ed Bacon
                          2727A Allen Parkway
                          Houston, TX 77019-2107                            250,728                   5.44%

                          IDS Life Insurance Co.
                          222 AXP Financial Center
                          Minneapolis, MN 55474-0014                        409,840                   8.89%

                          Lincoln Life Variable Annuity
                          1300 S. Clinton Street
                          Fort Wayne, IN 46802-3506                       2,382,677                  51.68%

Small Cap Growth          GE Capital Life Assurance Co. of New York
Portfolio                 6610 W. Broad St.
                          Building 3, 5th Floor
                          Attn: Variable Accounting
                          Richmond, VA 23230-1702                           213,587                   7.56%

                          GE Life and Annuity
                          Assurance Company
                          6610 W. Broad Street
                          Building 3, 5th Floor
                          Attn: Variable Accounting
                          Richmond, VA 23230-1702                         1,984,140                  70.24%

                          Horace Mann
                          Life Insurance Company
                          Separate Account
                          Horace Mann
                          Springfield, IL 62715-0001                        165,350                   5.85%

                          SunAmerica Annuity and Life
                          Assurance Company
                          Attn: Variable Annuity Accounting
                          2727 A Allen Parkway
                          Houston, TX 77019                                 264,478                   9.36%

Real Estate Investment    Guardian Insurance & Annuity Co. Inc.
Portfolio                 3900 Burgess Place
                          Bethlehem, PA 18017-9097                          451,714                  33.51%

                          Guardian Insurance & Annuity Co. Inc.
                          3900 Burgess Place
                          Bethlehem, PA 18017-9097                          143,789                  10.67%

                          Hartford Life & Annuity
                          Separate Account
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT  06104-2999                          139,558                  10.35%

                          Midland National Life Insurance Co.
                          4546 Corporate Dr., Suite 100
                          West Des Moines, IA 50266-5911                     72,196                   5.36%

                          SunAmerica Annuity and Life
                          Assurance Company
                          Attn: Variable Annuity Accounting
                          2727 A Allen Parkway
                          Houston, TX 77019                                 433,828                  32.18%

International Value       Delaware Life Insurance Company
Portfolio                 One SunLife Executive Park
                          Wellesley Hills, MA 02481                       3,882,856                   8.61%

                          GE Life and Annuity
                          Assurance Company
                          6610 W. Broad Street
                          Building 3, 5th Floor
                          Attn: Variable Accounting
                          Richmond, VA 23230-1702                         4,677,831                  10.37%

                          Hartford Life and Annuity
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                         7,321,141                  16.23%

                          Hartford Life Separate Account
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                         3,858,452                   8.55%

                          IDS Life Insurance Corp.
                          1438 AXP Financial Center
                          Minneapolis, MN 55474-0014                     15,995,703                  35.45%

Small/Mid                 Hartford Life and Annuity
Cap Value                 Attn: UIT Operations
Portfolio                 P.O. Box 2999
                          Hartford, CT 06104-2999                         1,613,036                   8.02%

                          Lincoln Life Variable Annuity
                          1300 S. Clinton Street
                          Fort Wayne, IN 46802-3506                       8,766,085                  43.59%

                          Nationwide Life Insurance Company
                          c/o IPO Portfolio Accounting
                          P.O. Box 182029
                          Columbus, OH 43218-2029                         4,397,616                  21.87%

Value Portfolio           American General Life
                          Insurance Company of Delaware
                          Attn: Ed Bacon
                          2727A Allen Parkway, #4D1
                          Houston, TX 77019-2107                            981,700                  14.17%

                          Hartford Life
                          Separate Account
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                         1,664,827                  24.03%

                          Hartford Life and Annuity
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT  06104-2999                        2,884,316                  41.63%

                          SunAmerica Annuity and Life
                          Assurance Company
                          Attn: Variable Annuity Accounting
                          2727 A Allen Parkway
                          Houston, TX 77019                                 612,631                   8.84%

Balanced Wealth           GE Life and Annuity
Strategy Portfolio        Assurance Company
                          6610 W. Broad Street
                          Building 3, 5th Floor
                          Attn: Variable Accounting
                          Richmond, VA 23230-1702                         1,672,550                   6.25%

                          Hartford Life and Annuity
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                         4,688,190                  17.52%

                          Hartford Life
                          Separate Account
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT  06104-2999                        2,106,749                   7.87%

                          Delaware Life Insurance Company
                          One SunLife Executive Park
                          Wellesley Hills, MA 02481                       5,289,089                  19.77%

                          SunAmerica Annuity and Life
                          Assurance Company
                          Attn: Variable Annuity Accounting
                          2727 A Allen Parkway
                          Houston, TX 77019                               2,440,260                   9.12%

                          Transamerica Life Insurance Co.
                          4333 Edgewood Road, NE
                          Cedar Rapids, IA 52499-0001                     7,768,554                  29.04%

Dynamic Asset Allocation  Minnesota Mutual Life
Portfolio                 Mail Station A6-4105
                          400 Robert Street N
                          Saint Paul, MN 55101-2099                       5,204,700                  12.33%

                          Ohio National Life Insurance Co.
                          FBO Its Separate Accounts
                          One Financial Way
                          Attn: Cathy Gehr, Mail Code 56
                          Cincinnati, OH 45242-5851                      23,135,782                  54.80%

                          Delaware Life Insurance Company
                          One SunLife Executive Park
                          Wellesley Hills, MA 02481                       9,986,238                  23.65%




Custodian
---------

            State Street Bank and Trust Company ("State Street"), c/o State
Street Corporation CCB/5, 1 Iron Street, Boston, Massachusetts 02210, acts as
custodian for the securities and cash and as accounting agent 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, NY 10105, serves as the Fund's Principal
Underwriter.

Transfer Agent
--------------

            ABIS, an indirect wholly-owned subsidiary of the Adviser located
principally at 8000 IH 10 W, 4th Floor, San Antonio, Texas 78230, acts as the
transfer agent for the Fund. ABIS registers the transfer, issuance and
redemption of Fund shares and disburses dividends and other distributions to
Fund shareholders.

Counsel
-------

            Legal matters in connection with the issuance of the shares of the
Fund offered hereby will be passed upon by Seward & Kissel LLP, 901 K Street NW,
Suite 800, Washington, DC 20001.

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

            Ernst & Young LLP, 5 Times Square, New York, NY, 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. A description of the Adviser's proxy voting policies and procedures
is 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.ABglobal.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, 2014 and the report of Ernst & Young LLP, the
independent registered public accounting firm, are incorporated herein by
reference to the Portfolios' annual report. The annual report was filed on Form
N-CSR with the SEC on February 23, 2015. It is available without charge upon
request by calling ABIS at (800) 227-4618 or on the Internet at
www.ABglobal.com. No financial statements are available for the Global Bond
Portfolio, Global Risk Allocation--Moderate Portfolio and Multi-Manager
Alternative Strategies Portfolio because they had not commenced operations as of
the date of the Prospectus.



                                                                      Appendix A
                                                                      ----------
[A/B]
[LOGO]

                         Proxy Voting Policy Statement

Introduction

As an investment adviser, we are shareholder advocates and have a fiduciary duty
to make investment decisions that are in our clients' best interests by
maximizing the value of their shares. Proxy voting is an integral part of this
process, through which we support strong corporate governance structures,
shareholder rights, and transparency.

We have an obligation to vote proxies in a timely manner and we apply the
principles in our Proxy Voting Policy ("Proxy Voting Policy" or "Policy") and
this policy to our proxy decisions. We believe a company's environmental, social
and governance ("ESG") practices may have a significant effect on the value of
the company, and we take these factors into consideration when voting. For
additional information regarding our ESG policies and practices, please refer to
our firm's Statement of Policy Regarding Responsible Investment ("RI Policy").

Our Proxy Voting Policy, which outlines our policies for proxy voting and
includes a wide range of issues that often appear on proxies, applies to all of
AB's investment management subsidiaries and investment services groups investing
on behalf of clients globally. Both this Statement and the Policy are intended
for use by those involved in the proxy voting decision-making process and those
responsible for the administration of proxy voting ("Proxy Managers"), in order
to ensure that our proxy voting ("Proxy Managers")m policies and procedures are
implemented consistently. Copies of the Policy, our voting records, as noted
below in "Voting Transparency", and other related documents can be found on our
Internet site (www.abglobal.com).

We sometimes manage accounts where proxy voting is directed by clients or
newly-acquired subsidiary companies. In these cases, voting decisions may
deviate from the Policy.

Research Underpins Decision Making

As a research-driven firm, we approach our proxy voting responsibilities with
the same commitment to rigorous research and engagement that we apply to all of
our investment activities. The different investment philosophies utilized by our
investment teams may occasionally result in different conclusions being drawn
regarding certain proposals and, in turn, may result in the Proxy Manager making
different voting decisions on the same proposal. Nevertheless, the Proxy Manager
votes proxies with the goal of maximizing the value of the securities in client
portfolios.

In addition to our firm-wide proxy voting policies, we have a Proxy Committee,
which provides oversight and includes senior investment professionals from
Equities, Legal personnel and Operations personnel. It is the responsibility of
the Proxy Committee to evaluate and maintain proxy voting procedures and
guidelines, to evaluate proposals and issues not covered by these guidelines, to
consider changes in policy, and to review this Statement and the Policy no less
frequently than annually. In addition, the Proxy Committee meets as necessary to
address special situations.

Research Services

We subscribe to the corporate governance and proxy research services of
Institutional Shareholder Services ("ISS"). All our investment professionals can
access these materials via the Proxy Manager and/or Proxy Committee.

Engagement

In evaluating proxy issues and determining our votes, we welcome and seek out
the points of view of various parties. Internally, the Proxy Manager may consult
the Proxy Committee, Chief Investment Officers, Directors of Research, and/or
Research Analysts across our equities platforms, and Portfolio Managers in whose
managed accounts a stock is held. Externally, we may engage with companies in
advance of their Annual General Meeting, and throughout the year. We believe
engagement provides the opportunity to share our philosophy, our corporate
governance values, and more importantly, affect positive change. Also, these
meetings often are joint efforts between the investment professionals, who are
best positioned to comment on company-specific details, and the Proxy
Manager(s), who offer a more holistic view of governance practices and relevant
trends. In addition, we engage with shareholder proposal proponents and other
stakeholders to understand different viewpoints and objectives.

Proxy Voting Guidelines

Our proxy voting guidelines are principles-based rather than rules-based. We
adhere to a core set of principles that are described in the Proxy Voting
Policy. We assess each proxy proposal in light of these 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 generally
should 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.

Our proxy voting guidelines pertaining to specific issues are set forth in the
Policy and include guidelines relating to board and director proposals,
compensation proposals, capital changes and anti-takeover proposals, auditor
proposals, shareholder access and voting proposals, and environmental, social
and disclosure proposals. The following are examples of specific issues within
each of these broad categories:

Board and Director Proposals: Election of Directors
The election of directors is an important vote. We expect directors to represent
shareholder interests at the company and maximize shareholder value. We
generally vote in favor of the management-proposed slate of directors while
considering a number of factors, including local market best practice. We
believe companies should have a majority of independent directors and
independent key committees. However, we will incorporate local market regulation
and corporate governance codes into our decision making. We may support more
progressive requirements than those implemented in a local market if we believe
more progressive requirements may improve corporate governance practices. We
will generally regard a director as independent if the director satisfies the
criteria for independence (i) espoused by the primary exchange on which the
company's shares are traded, or (ii) set forth in the code we determine to be
best practice in the country where the subject company is domiciled. We consider
the election of directors who are "bundled" on a single slate on a case-by-case
basis considering the amount of information available and an assessment of the
group's qualifications.

Compensation Proposals: Approved Remuneration Reports and Policies
In certain markets, (e.g., Australia, Canada, Germany and the United States),
publicly traded issuers are required by law to submit their company's
remuneration report to a non-binding shareholder vote. The report contains,
among other things, the nature and amount of the compensation of the directors
and certain executive officers as well as a discussion of the company's
performance. In other markets, remuneration policy resolutions are binding.

We evaluate remuneration reports and policies on a case-by-case basis, taking
into account the reasonableness of the company's compensation structure and the
adequacy of the disclosure. Where a company permits retesting of
performance-based awards in its compensation plan, we will evaluate the specific
terms of the plan, including the volatility of the industry and the number and
duration of the retests, before determining whether or not to support the
company's remuneration report. We may abstain or vote against a report if
disclosure of the remuneration details is inadequate or the report is not
provided to shareholders with sufficient time prior to the meeting to consider
its terms.

In markets where remuneration reports are not required for all companies, we
will support shareholder proposals asking the board to adopt a policy (i.e.,
"say on pay") that the company's shareholders be given the opportunity to vote
on an advisory resolution to approve the compensation committee's report.
Although say on pay votes are by nature only broad indications of shareholder
views, they do lead to more compensation-related dialogue between management and
shareholders and help ensure that management and shareholders meet their common
objective: maximizing the value of the company.

Capital Changes and Anti-Takeover Proposals: Authorize Share Repurchase
We generally support share repurchase proposals that are part of a
well-articulated and well-conceived capital strategy. We assess proposals to
give the board unlimited authorization to repurchase shares on a case-by-case
basis. Furthermore, we would generally support the use of derivative instruments
(e.g., put options and call options) as part of a share repurchase plan absent a
compelling reason to the contrary. Also, absent a specific concern at the
company, we will generally support a repurchase plan that could be continued
during a takeover period.

Auditor Proposals: Appointment of Auditors
We believe that the company is in the best position to choose its accounting
firm, and we generally support management's recommendation.

We recognize that there may be inherent conflicts when a company's independent
auditors perform substantial non-audit related services for the company.
Therefore, in reviewing a proposed auditor, we will consider the amount of fees
paid for non-audit related services performed compared to the total audit fees
paid by the company to the auditing firm, and whether there are any other
reasons for us to question the independence or performance of the firm's auditor
such as, for example, tenure. We generally will deem as excessive the non-audit
fees paid by a company to its auditor if those fees account for 50% or more of
total fees paid. In the UK market, which utilizes a different standard, we
adhere to a non-audit fee cap of 100% of audit fees. Under these circumstances,
we generally vote against the auditor and the directors, in particular the
members of the company's audit committee. In addition, we generally vote against
authorizing the audit committee to set the remuneration of such auditors. We
exclude from this analysis non-audit fees related to IPOs, bankruptcy emergence,
and spin-offs and other extraordinary events. We may vote against or abstain due
to a lack of disclosure of the name of the auditor while taking into account
local market practice.

Shareholder Access and Voting Proposals: Proxy Access for Annual Meetings
These proposals allow "qualified shareholders" to nominate directors. We
generally vote in favor of management and shareholder proposals for proxy access
that employ guidelines reflecting the SEC framework for proxy access (adopted by
the US Securities and Exchange Commission ("SEC") in 2010, but vacated by the DC
Circuit Court of Appeals in 2011), which would have allowed a single
shareholder, or group of shareholders, who hold at least 3% of the voting power
for at least three years continuously to nominate up to 25% of the current board
seats, or two directors, for inclusion in the subject company's annual proxy
statement alongside management nominees.

We will generally vote against proposals that use requirements that are stricter
than the SEC's framework and against individual board members, or entire boards,
who exclude from their ballot properly submitted shareholder proxy access
proposals or include their own competing, more strict, proposals on the same
ballot.

We will evaluate on a case-by-case basis proposals with less stringent
requirements than the vacated SEC framework.

From time to time we may receive requests to join with other shareholders to
support a shareholder action. We may, for example, receive requests to join a
voting block for purposes of influencing management. If the third parties
requesting our participation are not affiliated with us and have no business
relationships with us, we will consider the request on a case-by-case basis.
However, where the requesting party has a business relationship with us (e.g.,
the requesting party is a client or a significant service provider), agreeing to
such a request may pose a potential conflict of interest. As a fiduciary we have
an obligation to vote proxies in the best interest of our clients (without
regard to our own interests in generating and maintaining business with our
other clients) and given our desire to avoid even the appearance of a conflict,
we will generally decline such a request.

Environmental, Social and Disclosure Proposals: Lobbying and Political Spending
We generally vote in favor of proposals requesting increased disclosure of
political contributions and lobbying expenses, including those paid to trade
organizations and political action committees, whether at the federal, state, or
local level. These proposals may increase transparency.

We generally vote proposals in accordance with these guidelines but, consistent
with our "principles-based" approach to proxy voting, we may deviate from the
guidelines if warranted by the specific facts and circumstances of the situation
(i.e., if, under the circumstances, we believe that deviating from our stated
policy is necessary to help maximize long-term shareholder value). In addition,
these guidelines are not intended to address all issues that may appear on all
proxy ballots. Proposals not specifically addressed by these guidelines, whether
submitted by management or shareholders, will be evaluated on a case-by-case
basis, always keeping in mind our fiduciary duty to make voting decisions that,
by maximizing long-term shareholder value, are in our clients' best interests.

Conflicts of Interest

As a fiduciary, we always must act in our clients' best interests. We strive to
avoid even the appearance of a conflict that may compromise the trust our
clients have placed in us, and we insist on strict adherence to fiduciary
standards and compliance with all applicable federal and state securities laws.
We have adopted a comprehensive Code of Business Conduct and Ethics ("Code") to
help us meet these obligations. As part of this responsibility and as expressed
throughout the Code, we place the interests of our clients first and attempt to
avoid any perceived or actual conflicts of interest.

We recognize that there may be a potential material conflict of interest when we
vote a proxy solicited by an issuer whose retirement plan we manage, or we
administer, who distributes AB-sponsored mutual funds, or with whom we or an
employee has another business or personal relationship that may affect how we
vote on the issuer's proxy. Similarly, we may have a potential material conflict
of interest when deciding how to vote on a proposal sponsored or supported by a
shareholder group that is a client. In order to avoid any perceived or actual
conflict of interest, we have established procedures for use when we encounter a
potential conflict to ensure that our voting decisions are based on our clients'
best interests and are not the product of a conflict. These procedures include
compiling a list of companies and organizations whose proxies may pose potential
conflicts of interest (e.g., if such company is our client) and reviewing our
proposed votes for these companies and organizations in light of the Policy and
ISS's recommendations. If our proposed vote is contrary to, or not contemplated
in, the Policy, is consistent with a client's position and is contrary to ISS's
recommendation, we refer to proposed vote to our Independent Compliance Officer
for his determination.

In addition, our Proxy Committee takes reasonable steps to verify that ISS
continues to be independent, including an annual review of ISS's conflict
management procedures. When reviewing these conflict management procedures, we
consider, among other things, whether ISS (i) has the capacity and competency to
adequately analyze proxy issues; and (ii) can offer research in an impartial
manner and in the best interests of our clients.

Voting Transparency

We publish our voting records on our Internet site (www.abglobal.com) quarterly,
30 days after the end of the previous quarter. Many clients have requested that
we provide them with periodic reports on how we voted their proxies. Clients may
obtain information about how we voted proxies on their behalf by contacting
their Advisor. Alternatively, clients may make a written request to the Chief
Compliance Officer.

Recordkeeping

All of the records referenced in our Policy will be kept in an easily accessible
place for at least the length of time required by local regulation and custom,
and, if such local regulation requires that records are kept for less than five
years from the end of the fiscal year during which the last entry was made on
such record, we will follow the U.S. rule of five years. We maintain the vast
majority of these records electronically. We will keep paper records, if any, in
one of our offices for at least two years.