This is filed pursuant to Rule 497(e)
File No. 33-18647

[A/B]
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                     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, 2016, as amended January 9, 2017

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            This Statement of Additional Information ("SAI") is not a prospectus
but supplements and should be read in conjunction with the prospectuses dated
May 1, 2016, as Supplemented January 9, 2017 for AB Variable Products Series
(VPS) Fund, Inc. (the "Fund") that offer Class A shares and Class B shares of
the Fund's Portfolios (each a "Prospectus", and together, the "Prospectuses").
Financial statements for each Portfolio of the Fund for the year or period ended
December 31, 2015, and financial statements for the six-month period ended June
30, 2016 for the Growth and Income Portfolio are included in the Portfolio's
annual report (or semi-annual report with respect to the Growth and Income
Portfolio) 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.........................3

INVESTMENT RESTRICTIONS.......................................................49

MANAGEMENT OF THE FUND........................................................51

EXPENSES OF THE PORTFOLIOS...................................................101

PURCHASE AND REDEMPTION OF SHARES............................................107

NET ASSET VALUE..............................................................112

PORTFOLIO TRANSACTIONS.......................................................116

DIVIDENDS, DISTRIBUTIONS AND TAXES...........................................124

GENERAL INFORMATION..........................................................125

FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM.......................................................142

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 objectives 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 rate into shares
of the underlying common stock. Prior to their conversion, convertible
securities have the same general characteristics as non-convertible debt
securities, which provide a stable stream of income with generally higher yields
than those of equity securities of the same or similar issuers. As with 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 tangible asset underlying the forward contract to an
agreed-upon location at a future date (rather than settled by cash) or will be
rolled forward into a new forward contract. Non-deliverable forwards ("NDFs")
specify a cash payment upon maturity.

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

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

            Swaps. A swap 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 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 require certain
            standardized derivatives, including many types of swaps, to be
            subject to mandatory central clearing. Under these new requirements,
            a central clearing organization is substituted as the counterparty
            to each side of the derivatives transaction. Each party to
            derivatives transactions is required to maintain its positions with
            a clearing organization through one or more clearing brokers.
            Central clearing is intended to reduce, but not eliminate,
            counterparty risk. A Portfolio is 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. Various U.S. Government entities, including the
            CFTC and the Securities and Exchange Commission ("SEC"), are in the
            process of adopting and implementing additional regulations
            governing derivatives markets required by, among other things, the
            Dodd-Frank Act, including clearing as discussed above, margin,
            reporting and registration requirements. The SEC has recently
            proposed a new rule regarding derivatives imposing, among other
            things, limits on the amount of leverage a fund could be exposed to
            through derivatives and other senior securities transactions. 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, which could adversely affect
            investors. In addition, Congress, various exchanges and regulatory
            and self-regulatory authorities have undertaken reviews of futures,
            options and swaps markets 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, and increased margin
            requirements for various types of futures and swaps 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
certain amount of trading in futures contracts, commodity options, certain 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 that are commodity pools are subject to additional registration,
recordkeeping, reporting and disclosure 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 recordkeeping, reporting and disclosure 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 recordkeeping, reporting and disclosure requirements but,
under rules adopted by the CFTC, compliance with SEC disclosure and filing
requirements, for the most part, constitutes 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 the exercise price 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 exercise price of 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., OTC)
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 of the 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 a cash payment based
upon the value of that security, but are generally exercisable over a longer
term than typical options. These types of instruments may be American style,
which means that they can be exercised at any time on or before the expiration
date of the international warrant, or European style, which means that they may
be exercised only on the expiration date.

            Other types of synthetic foreign equity securities in which 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 foreign securities, to foreign risk
and currency risk.

            International warrants also include equity warrants, index warrants,
and interest rate warrants. Equity warrants are generally issued in conjunction
with an issue of bonds or shares, although they also may be issued as part of a
rights issue or scrip issue. When issued with bonds or shares, they usually
trade separately from the bonds or shares after issuance. Most warrants trade in
the same currency as the underlying stock (domestic warrants), but also may be
traded in different currency (euro-warrants). Equity warrants are traded on a
number of foreign exchanges and in 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 ("Rule
144A Securities"). To the extent permitted by applicable law, Rule 144A
Securities will not be treated as illiquid for purposes of the foregoing
restriction so long as such securities meet the liquidity guidelines established
by the 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 of these companies 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. Any such money market fund is 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, collateralized mortgage obligations ("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 and 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 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. ARMS bear 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 U.S. 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 multi-class structures featuring senior
and subordinated classes. Commercial mortgage-backed securities may pay fixed or
floating rates of interest. The commercial mortgage loans that underlie
commercial mortgage-related securities have certain distinct risk
characteristics. Commercial mortgage loans generally lack standardized terms,
which may complicate their structure, tend to have shorter maturities than
residential mortgage loans and may not be fully amortizing. Commercial
properties themselves tend to be unique and are more difficult to value than
single-family residential properties. In addition, commercial properties,
particularly industrial and warehouse properties, are subject to environmental
risks and the burdens and costs of compliance with environmental laws and
regulations.

            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
constitutes 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.

            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 underlying 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. ("Dominion") 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. 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. 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 CMOs.
The maturities of the U.S. Government securities listed in paragraphs (i) and
(ii) above usually range from three months to 30 years. Such securities, except
GNMA certificates, normally provide for periodic payments of interest in fixed
amount with principal payments at maturity or specified call dates.

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

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

            IPS tend to react to changes in real interest rates. In general, the
price of 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 the carrying costs of leveraged transactions approaches the net
return on the leveraged portion of a Portfolio's investment portfolio, the
benefit of leverage to a Portfolio's shareholders will be reduced, and if the
interest expense on borrowings or 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. As noted above under "Risks of Derivatives and
Other Regulatory Issues - Regulatory Risk", the SEC has recently proposed a rule
regarding derivatives and similar transactions. The proposed rule would replace
the SEC's guidance on asset segregation with new standardized requirements that
may, if adopted, limit the Portfolio's flexibility to enter into these
transactions by increasing asset segregation amounts.

            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 Foreign Securities
------------------------------------------

            Investors should understand and consider carefully the substantial
risks involved in securities of foreign companies and governments of foreign
nations, some of which are referred to below, and which are in addition to the
usual risks inherent in domestic investments. Investing in securities of
non-U.S. companies, which are generally denominated in foreign currencies, and
utilization of derivative investment products denominated in, or the value of
which is dependent upon movements in the relative value of, a foreign currency,
involve certain considerations comprising both risk and opportunity not
typically associated with investing in U.S. companies. These considerations
include changes in exchange rates and exchange control regulations, political
and social instability, expropriation, imposition of foreign taxes, less liquid
markets and less available information than are generally the case in the 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 foreign securities 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.

            In June 2016, the United Kingdom ("UK") voted in a referendum to
leave the European Union ("EU"). It is expected that the UK will seek to
withdraw from the EU with an anticipated completion date within two years of
notifying the European Council of its intention to withdraw. There is still
considerable uncertainty relating to the potential consequences and timeframe of
the withdrawal. During this period and beyond, the impact on the UK and European
economies and the broader global economy could be significant, resulting in
increased volatility and illiquidity, currency fluctuations, impacts on
arrangements for trading and on other existing cross-border cooperation
arrangements (whether economic, tax, fiscal, legal, regulatory or otherwise),
and in potentially lower growth for companies in the UK, Europe and globally,
which could have an adverse effect on the value of a Portfolio's investments.

            Foreign investment in certain foreign securities is restricted or
controlled to varying degrees. These restrictions or controls may at times limit
or preclude foreign investment in certain foreign securities and increase the
costs and expenses of 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 foreign securities, there are U.S. Dollar-denominated ADRs
that are traded in the United States on exchanges or OTC. 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,
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, 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 the
Portfolio.

            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
Portfolio are "non-diversified" investment companies, which means the Portfolios
are not limited in the proportion of their 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 each Portfolio under the supervision of the Board, and to serve as
the "manager of managers" of 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 Portfolio'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 December 31, 2015, totaling
approximately $468 billion. The Adviser provides management services for many of
the largest U.S. public and private employee benefit plans, endowments,
foundations, public employee retirement funds, banks, insurance companies and
high net worth individuals worldwide.
            As of December 31, 2015, the ownership structure of the Adviser,
expressed as a percentage of general and limited partnership interests, was as
follows:

                AXA and its subsidiaries                    62.3%
                AllianceBernstein Holding L.P.              36.4
                Unaffiliated holders                         1.3
                                                   -------------------------
                                                           100.0%
                                                   =========================

            AXA is a societe anonyme organized under the laws of France and the
holding company for an international group of insurance and related financial
services companies, through certain of its subsidiaries ("AXA and its
subsidiaries"). AllianceBernstein Holding L.P. ("Holding") is a Delaware limited
partnership the units of which ("Holding Units"), are traded publicly on the
Exchange under the ticker symbol "AB". As of December 31, 2015, AXA owned
approximately 1.4% of the issued and outstanding assignments of beneficial
ownership of Holding Units.

            AllianceBernstein Corporation (an indirect wholly-owned subsidiary
of AXA) is the general partner of both Holding and the Adviser.
AllianceBernstein Corporation owns 100,000 general partnership units in Holding
and a 1% general partnership interest in the Adviser. Including both the general
partnership and limited partnership interests in Holding and the Adviser, AXA
and its subsidiaries had an approximate 62.8% economic interest in the Adviser
as of December 31, 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 to the
Portfolio.
            The Fund has under the Advisory Agreements assumed the obligation
for 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 Fund, including clerical, accounting,
legal and other services ("administrative services"), and associated overhead
costs, such as office space, supplies and information technology. The
administrative services are provided to the Fund on a fully-costed basis (i.e.,
includes 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, 2015.

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

Intermediate Bond Portfolio                                     $50,998
Large Cap Growth Portfolio                                      $50,998
Growth and Income Portfolio                                     $50,998
Growth Portfolio                                                $50,998
International Growth Portfolio                                  $50,338
Global Thematic Growth Portfolio                                $50,998
Small Cap Growth Portfolio                                      $50,834
Real Estate Investment Portfolio                                $50,834
International Value Portfolio                                   $50,834
Small/Mid Cap Value Portfolio                                   $50,834
Value Portfolio                                                 $50,834
Balanced Wealth Strategy Portfolio                              $50,833
Dynamic Asset Allocation Portfolio                              $50,768
Global Bond Portfolio*                                          $     0
Global Risk Allocation--Moderate Portfolio*                     $     0
--------
* Waived by the Adviser.

            The Advisory Agreement, with respect to all Portfolios except 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 each Portfolio'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 5-7, 2015, August 4-5, 2015 and November 3-5, 2015.

            The Advisory Agreement for Global Bond Portfolio and Global Risk
Allocation--Moderate Portfolio became effective on April 28, 2015. The Advisory
Agreement for Multi-Manager Alternative Strategies Portfolio became effective on
December 16, 2015. Each such Advisory Agreement 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 respective Portfolio or
by the Directors, and, in either case, by a majority of the Directors who are
not parties to the Advisory Agreement or "interested persons" of any such party
at a meeting in person called for the purpose of voting on such matter.

            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 Portfolios. 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 purchase or sale thereof
by one or more Portfolios. 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 Portfolios. When two or more of the clients of the
Adviser (including the Portfolios) 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
aggregate 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


            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 AVERAGE NET ASSETS
---------                                             -----------------------------------
                                                   
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

Global Risk Allocation - Moderate Portfolio           .60 of 1% of average net assets

Global Bond Portfolio                                 .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

Multi-Manager Alternative Strategies Portfolio        1.90% 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             2013                    $     434,235
                                        2014                    $     362,166
                                        2015                    $     322,798

Large Cap Growth Portfolio              2013                    $   2,852,269
                                        2014                    $   3,096,216
                                        2015                    $   3,357,846

Growth and Income Portfolio             2013                    $   4,768,536
                                        2014                    $   4,707,511
                                        2015                    $   4,609,822

Growth Portfolio                        2013                    $     567,821
                                        2014                    $     559,706
                                        2015                    $     549,437

International Growth Portfolio          2013                    $   1,169,423
                                        2014                    $     760,928
                                        2015                    $     624,965

Global Thematic Growth Portfolio        2013                    $     982,709
                                        2014                    $     995,970
                                        2015                    $     981,829

Small Cap Growth Portfolio              2013                    $     472,772
                                        2014                    $     588,638
                                        2015                    $     480,909

Real Estate Investment Portfolio        2013                    $     431,175
                                        2014                    $     264,976
                                        2015                    $     280,612

Small/Mid Cap Value Portfolio           2013                    $   4,524,964
                                        2014                    $   4,992,339
                                        2015                    $   4,753,253

Value Portfolio                         2013                    $     835,428
                                        2014                    $     677,619
                                        2015                    $     555,496

International Value Portfolio           2013                    $   6,918,754
                                        2014                    $   5,571,673
                                        2015                    $   4,986,705

Balanced Wealth Strategy Portfolio      2013                    $   2,977,291
                                        2014                    $   2,088,276
                                        2015                    $   1,956,957

Dynamic Asset Allocation Portfolio      2013                    $   1,954,572
                                        2014                    $   3,027,986
                                        2015                    $   3,609,273

            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          2013               $106,958
                                            2014               $  5,544


                                            2015               $      0

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 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, 2017 in an amount equal to the Portfolio's share of all fees and
expenses of any AB Mutual Funds in which the Portfolio invests. During the
fiscal period ended December 31, 2015, the Adviser received $0 in management
fees from the Portfolio (net of $33,463 which was waived by the Adviser due to
the expense limitation agreement).

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 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, 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. During the fiscal period ended December 31, 2015, the Adviser received $0
in management fees from the Portfolio (net of $105,505 which was waived by the
Adviser due to the expense limitation agreement).

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 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 May 1, 2017 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%. During the fiscal period ended
December 31, 2015, the Adviser received $0 in management fees from the Portfolio
(net of $779 which was waived by the Adviser due to the expense limitation
agreement).

            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., Bernstein Fund, Inc., Sanford C. Bernstein Fund II, Inc.,
The AB Pooling Portfolios and The AB Portfolios, all registered 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
                                                                              IN            COMPANY
                                  PRINCIPAL                                   AB FUND       DIRECTORSHIPS
                                  OCCUPATION(S)                               COMPLEX       CURRENTLY
NAME, ADDRESS*, AGE AND           DURING PAST FIVE YEARS                      OVERSEEN      HELD
(YEAR FIRST ELECTED**)            OR LONGER                                   BY DIRECTOR   BY DIRECTOR
----------------------            ---------                                   -----------   -----------
                                                                                    

INDEPENDENT
DIRECTORS

Marshall C. Turner, Jr.,#         Private Investor since prior to             110           Xilinx, Inc.
Chairman of the Board             2011. Former Chairman and CEO of                          (programmable logic
74                                Dupont Photomasks, Inc.                                   semi-conductors) since
(2005)                            (components of semi-conductor                             2007
                                  manufacturing). He has extensive
                                  operating leadership and venture
                                  capital investing experience,
                                  including five interim or
                                  full-time CEO roles, and prior
                                  service as 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 AB Funds since February
                                  2014.

John H. Dobkin,#                  Independent Consultant since                110           None
74                                prior to 2011. 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, 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             110            Asia Pacific Fund, Inc.
72                                2011.  Formerly, managing partner                         (registered investment
(2005)                            of Lexington Capital, LLC                                 company) since prior to
                                  (investment advisory firm) from                           2011
                                  December 1997 until December
                                  2003.  He has 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                   110           None
83                                Independent Consultant since
(1990)                            prior to 2011. 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                110           None
80                                Computers, Inc.
(2005)                            (semi-conductors), with which he
                                  has been associated since prior
                                  to 2011. He served as Chairman of
                                  the Board of PLX Technology
                                  (semi-conductors) since prior to
                                  2011 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                110           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.

Carol C. McMullen,#               Managing Director of Slalom                 110           None
61                                Consulting (consulting) since 2014,
(2016)                            private investor and member of the
                                  Partners Healthcare Investment
                                  Committee. Formerly, Director of
                                  Norfolk & Dedham Group (mutual
                                  property and casualty insurance)
                                  from 2012 until November 2016;
                                  Director of Partners Community
                                  Physicians Organization
                                  (healthcare) since 2014 until
                                  December 2016; and Managing
                                  Director of The Crossland Group
                                  (consulting) from 2012 to 2013.
                                  She has held a number of senior
                                  positions in the asset and wealth
                                  management industries, including at
                                  Eastern Bank (where her roles
                                  included President of Eastern
                                  Wealth Management), Thomson
                                  Financial (Global Head of Sales for
                                  Investment Management), and Putnam
                                  Investments (where her roles
                                  included Head of Global Investment
                                  Research). She has served on a
                                  number of private company and
                                  nonprofit boards, and as a director
                                  or trustee of the AB Funds since
                                  June 2016.

Garry L. Moody,#                  Independent Consultant. Formerly,           110           None
64                                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            110           None
76                                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                110           None
55                                Adviser++ and the head of
(2010)                            AllianceBernstein Investments,
                                  Inc. ("ABI")++ since July 2008;
                                  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) since prior to 2011 until
July 2014, Mr. Downey was a director of The Merger Fund (a registered investment
company) since prior to 2011 until 2013, Mr. Guzy was a director of Cirrus Logic
Corporation (semi-conductors) from prior to 2011 until July 2011 and served as
Chairman of the Board of PLX Technology (semi-conductors) since prior to 2011
until November 2013, 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 Committees 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, 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; Ms. McMullen has
experience as management consultant and as a director of various private
companies and nonprofit organizations, as well as extensive asset management
experience at a number of companies, including as an executive in the areas of
portfolio management, research, and sales and marketing; 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 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 Chairman of 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 Risk 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 met one time
during the Portfolio's most recently completed fiscal period with respect to
Global Bond Portfolio and Global Risk Allocation--Moderate Portfolio and has not
yet met with respect to 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 met two times during the Portfolio's most recently
completed fiscal period with respect to Global Bond Portfolio and Global Risk
Allocation--Moderate Portfolio and has not yet met with respect to 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, shareholders 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 not
less than 120 days before the date of the proxy statement for the previous
year's annual meeting of shareholders. If the Fund did not hold an annual
meeting of shareholders in the previous year, the submission must be delivered
or mailed and received within a reasonable amount of time before the Fund begins
to print and mail its proxy materials. Public notice of such upcoming annual
meeting of shareholders may be given in a shareholder report or other mailing to
shareholders or by other means deemed by the Governance and Nominating Committee
or the Board to be reasonably calculated to inform shareholders.

            Shareholders submitting a candidate for consideration by the
Governance and Nominating Committee must provide the following information to
the Governance and Nominating Committee: (i) a statement in writing setting
forth (A) the name, date of birth, business address and residence address of the
candidate; (B) any position or business relationship of the candidate, currently
or within the preceding five years, with the shareholder or an associated person
of the shareholder as defined below; (C) the class or series and number of all
shares of 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 that the
Independent Directors Committee met five times during the Portfolio's most
recently completed fiscal period with respect to Global Bond Portfolio and
Global Risk Allocation--Moderate Portfolio, and met on February 3-4, 2015 to
approve the Advisory and Distribution Services Agreements for the 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              AGGREGATE DOLLAR RANGE
                           EQUITY SECURITIES            OF EQUITY SECURITIES IN
                           IN THE PORTFOLIOS            THE AB FUND COMPLEX
                           AS OF                        AS OF
                           DECEMBER 31, 2015*           DECEMBER 31, 2015
                           ------------------           -----------------
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
Carol C. McMullen**               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.
**    Ms. McMullen was elected as a Director of the Portfolios effective June
      22, 2016.

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 and              Senior Vice President and
70                                   Independent Compliance Officer         Independent Compliance Officer of
                                                                            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.

Tawhid Ali,                          Vice President                         Senior Vice President of the
45                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Bruce K. Aronow,                     Vice President                         Senior Vice President of the
49                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Takeo Aso,                           Vice President                         Senior Vice President of the
51                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Brian T. Brugman,                    Vice President                         Senior Vice President of the
35                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Michael S. Canter,                   Vice President                         Senior Vice President of the
46                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

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 2011.

Paul J. DeNoon,                      Vice President                         Senior Vice President of the
54                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Scott A. DiMaggio,                   Vice President                         Senior Vice President of the
44                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Vincent C. DuPont,                   Vice President                         Senior Vice President of the
53                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

John H. Fogarty,                     Vice President                         Senior Vice President of the
46                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Eric J. Franco,                      Vice President                         Senior Vice President of the
56                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Marc H. Gamsin,                      Vice President                         Senior Vice President of the
60                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Cem Inal,                            Vice President                         Senior Vice President of the
47                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Shawn E. Keegan,                     Vice President                         Senior Vice President of the
44                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

N. Kumar Kirpalani,                  Vice President                         Senior Vice President of the
62                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Samantha S. Lau,                     Vice President                         Senior Vice President of the
43                                                                          Adviser**, with which she has been
                                                                            associated since prior to 2011.

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 2011.

Daniel J. Loewy,                     Vice President                         Senior Vice President of the
41                                                                          Adviser**, with which he has been
                                                                            associated in a substantially
                                                                            similar capacity to his current
                                                                            position since prior to 2011.

James W. MacGregor,                  Vice President                         Senior Vice President of the
48                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Christopher H. Nikolich,             Vice President                         Senior Vice President of the
46                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Greg Outcalt,                        Vice President                         Senior Vice President of the
54                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Joseph G. Paul,                      Vice President                         Senior Vice President of the
56                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Douglas J. Peebles,                  Vice President                         Senior Vice President of the
50                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Daniel C. Roarty,                    Vice President                         Senior Vice President of the
45                                                                          Adviser**, with which he has been
                                                                            associated since May 2011, and Chief
                                                                            Investment Officer of Global Growth
                                                                            and Thematic Team since 2013. Prior
                                                                            thereto, he was in research and
                                                                            portfolio management at Nuveen
                                                                            Investments since prior to 2011.

Matthew S. Sheridan,                 Vice President                         Senior Vice President of the
41                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Shri Singhvi,                        Vice President                         Senior Vice President of the
45                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Kevin F. Simms,                      Vice President                         Senior Vice President of the
50                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Wen-Tse Tseng,                       Vice President                         Senior Vice President of the
50                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Greg J. Wilensky,                    Vice President                         Senior Vice President of the
49                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Leon Zhu,                            Vice President                         Senior Vice President of the
48                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Vadim Zlotnikov,                     Vice President                         Senior Vice President of the
54                                                                          Adviser**, with which he has been
                                                                            associated since prior to 2011.

Joseph J. Mantineo,                  Treasurer and                          Senior Vice President of ABIS**,
57                                   Chief Financial                        with which he has been associated
                                     Officer                                since prior to 2011.

Vincent S. Noto,                     Chief Compliance Officer               Senior Vice President since 2015 and
51                                                                          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
                                                                            2011.

Emilie D. Wrapp,                     Secretary                              Senior Vice President, Assistant
60                                                                          General Counsel and Assistant
                                                                            Secretary of ABI**, with which she
                                                                            has been associated since prior to
                                                                            2011.

Phyllis J. Clarke,                   Controller and Chief Accounting        Vice President of ABIS**,with
55                                   Officer                                which she has been associated
                                                                            since prior to 2011.


--------
*     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" (as defined in Section
2(a)(19) of the 1940 Act) of the Fund. The aggregate compensation paid by the
Fund's Portfolios to each of the Directors during each Portfolio's fiscal year
or period ended December 31, 2015, the aggregate compensation paid to each of
the Directors during calendar year 2015 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 Intermediate    From Large Cap       From Growth and         From Growth
Name of Director            Bond Portfolio       Growth Portfolio     Income Portfolio        Portfolio
----------------            --------------       ---------------      ----------------        -------------
                                                                                     
John H. Dobkin                  $ 2,385              $ 2,385              $ 2,385                $ 2,386
Michael J. Downey               $ 2,385              $ 2,470              $ 2,549                $ 2,386
William H. Foulk, Jr.           $ 2,385              $ 2,385              $ 2,385                $ 2,386
D. James Guzy                   $ 2,416              $ 2,565              $ 2,732                $ 2,416
Nancy P. Jacklin                $ 2,536              $ 2,588              $ 2,645                $ 2,536
Robert M. Keith                 $     0              $     0              $     0                $     0
Carol C. McMullen*              $     0              $     0              $     0                $     0
Garry L. Moody                  $ 2,678              $ 2,759              $ 2,833                $ 2,679
Marshall C. Turner, Jr.         $ 4,029              $ 4,086              $ 4,163                $ 4,029
Earl D. Weiner                  $ 2,385              $ 2,385              $ 2,385                $ 2,386







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

John H. Dobkin                  $ 2,385              $ 2,385              $ 2,385                $ 2,385
Michael J. Downey               $ 2,385              $ 2,402              $ 2,385                $ 2,385
William H. Foulk, Jr.           $ 2,385              $ 2,385              $ 2,385                $ 2,385
D. James Guzy                   $ 2,420              $ 2,439              $ 2,411                $ 2,397
Nancy P. Jacklin                $ 2,536              $ 2,536              $ 2,536                $ 2,536
Robert M. Keith                 $     0              $     0              $     0                $     0
Carol C. McMullen*              $     0              $     0              $     0                $     0
Garry L. Moody                  $ 2,678              $ 2,690              $ 2,678                $ 2,678
Marshall C. Turner, Jr.         $ 4,031              $ 4,037              $ 4,031                $ 4,018
Earl D. Weiner                  $ 2,385              $ 2,385              $ 2,385                $ 2,385





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

John H. Dobkin                  $ 2,385              $ 2,385              $ 2,385                $ 2,385
Michael J. Downey               $ 2,515              $ 2,511              $ 2,385                $ 2,450
William H. Foulk, Jr.           $ 2,385              $ 2,385              $ 2,385                $ 2,385
D. James Guzy                   $ 2,661              $ 2,651              $ 2,428                $ 2,533
Nancy P. Jacklin                $ 2,622              $ 2,620              $ 2,536                $ 2,579
Robert M. Keith                 $     0              $     0              $     0                $     0
Carol C. McMullen*              $     0              $     0              $     0                $     0
Garry L. Moody                  $ 2,800              $ 2,797              $ 2,678                $ 2,745
Marshall C. Turner, Jr.         $ 4,129              $ 4,128              $ 4,035                $ 4,079
Earl D. Weiner                  $ 2,385              $ 2,385              $ 2,385                $ 2,385




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

John H. Dobkin                  $ 2,385              $ 1,771              $ 1,771                $   648
Michael J. Downey               $ 2,485              $ 1,771              $ 1,771                $   648
William H. Foulk, Jr.           $ 2,385              $ 1,771              $ 1,771                $   648
D. James Guzy                   $ 2,594              $ 1,771              $ 1,771                $   648
Nancy P. Jacklin                $ 2,597              $ 1,883              $ 1,883                $   689
Robert M. Keith                 $     0              $     0              $     0                $     0
Carol C. McMullen*              $     0              $     0              $     0                $     0
Garry L. Moody                  $ 2,773              $ 1,989              $ 1,989                $   728
Marshall C. Turner, Jr.         $ 4,098              $ 2,983              $ 2,983                $ 1,091
Earl D. Weiner                  $ 2,385              $ 1,771              $ 1,771                $   648





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

John H. Dobkin                    $ 285,000                  32                       110
Michael J. Downey                 $ 285,000                  32                       110
William H. Foulk, Jr.             $ 285,000                  32                       110
D. James Guzy                     $ 285,000                  32                       110
Nancy P. Jacklin                  $ 303,000                  32                       110
Robert M. Keith                   $       0                  32                       110
Carol C. McMullen*                $       0                  32                       110
Garry L. Moody                    $ 320,000                  32                       110
Marshall C. Turner, Jr.           $ 480,000                  32                       110
Earl D. Weiner                    $ 285,000                  32                       110

--------
*     Ms. McMullen was elected as a Director of the Portfolios effective June
      22, 2016.

            As of December 30, 2016, 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 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.
Michael S. Canter, Mr. Paul J. DeNoon, Mr. Shawn E. Keegan, 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 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, 2015.


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

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

Michael S. Canter              None                  None                 None                   None
Paul J. DeNoon                   17             $8,755,000,000            None                   None
Shawn E. Keegan                   2               $404,000,000            None                   None
Douglas J. Peebles               32            $11,893,000,000            None                   None
Greg J. Wilensky                 40             $9,497,000,000            None                   None




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


                         Total Number                                                       Total Assets of
                         of Other                                  Number of Other          Other Pooled
                         Pooled               Total Assets of      Pooled Investment        Investment
                         Investment           Other Pooled         Vehicles Managed         Vehicles Managed
                         Vehicles             Investment           with Performance-        with Performance-
Portfolio Manager        Managed              Vehicles Managed     based Fees               based Fees
------------------------ ------------------ --------------------- --------------------- -----------------------
                                                                                     
Michael S. Canter                 5                $916,000,000           None                   None
Paul J. DeNoon                   36             $26,706,000,000           None                   None
Shawn E. Keegan                  20             $17,497,000,000           None                   None
Douglas J. Peebles               47              $5,742,000,000           None                   None
Greg J. Wilensky                 32              $1,201,000,000           None                   None




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


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

Michael S. Canter                  2               $967,000,000            1                $405,000,000
Paul J. DeNoon                    15            $10,100,000,000            2              $1,449,000,000
Shawn E. Keegan                   38            $60,024,000,000            1              $3,992,000,000
Douglas J. Peebles                85            $26,758,000,000            4              $2,405,000,000
Greg J. Wilensky                 124             $9,098,000,000            3                $570,000,000



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 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, 2015.


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


                                                                      Number of             Total 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                    28             $9,839,000,000            None                  None
Vincent C. DuPont                  10             $4,024,000,000            None                  None
John H. Fogarty                    24             $6,709,000,000            None                  None




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


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

Frank V. Caruso                    16              $3,096,000,000           None                  None
Vincent C. DuPont                  13              $2,908,000,000           None                  None
John H. Fogarty                    16              $3,411,000,000           None                  None




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


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

Frank V. Caruso                  28,060          $15,437,000,000            None                 None
Vincent C. DuPont                 3,421           $1,408,000,000            None                 None
John H. Fogarty                   3,429           $2,124,000,000            None                 None



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, 2015.


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


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

            28                     $9,500,000,000                   None                       None




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


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

            16                     $3,096,000,000                   None                        None




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


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

          28,060                 $15,437,000,000                   None                        None



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, 2015.

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


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

Bruce K. Aronow                    22            $5,607,000,000              None                  None
Frank V. Caruso                    28           $10,227,000,000              None                  None
John H. Fogarty                    24            $7,098,000,000              None                  None




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


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

Bruce K. Aronow                   20              $154,000,000                None                  None
Frank V. Caruso                   16             $3,096,000,000               None                  None
John H. Fogarty                   16             $3,411,000,000               None                  None




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


                             Total                                      Number of          Total Assets of
                             Number of                                  Other Accounts     Other Accounts
                             Other                                      Managed with       Managed with
                             Accounts         Total Assets of Other     Performance-       Performance-based
Portfolio Manager            Managed          Accounts Managed          based Fees         Fees
---------------------------- ---------------- ------------------------- ------------------ -----------------------
                                                                                    
Bruce K. Aronow                      31            $3,122,000,000              4                $610,000,000
Frank V. Caruso                  28,060           $15,437,000,000             None                  None
John H. Fogarty                   3,429            $2,124,000,000             None                  None



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 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 Mr. Roarty 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, 2015.


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


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

Daniel C. Roarty                    23            $5,601,000,000                None                  None




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


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

Daniel C. Roarty                  84               $24,328,000,000              1                $89,000,000




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


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

Daniel C. Roarty                  226             $17,823,000,000              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 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 Mr. Roarty 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, 2015.


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


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

Daniel C. Roarty                      23            $5,651,000,000           None                  None




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


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

Daniel C. Roarty                      84          $24,328,000,000             1                $89,000,000




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


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

Daniel C. Roarty                     226          $17,823,000,000           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, 2015.

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


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

Bruce K. Aronow                   22             $5,633,000,000             None                  None
N. Kumar Kirpalani                21             $5,562,000,000             None                  None
Samantha Lau                      21             $5,562,000,000             None                  None
Wen-Tse Tseng                     21             $5,562,000,000             None                  None




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


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

Bruce K. Aronow                   20           $154,000,000                 None                  None
N. Kumar Kirpalani                20           $154,000,000                 None                  None
Samantha Lau                      20           $154,000,000                 None                  None
Wen-Tse Tseng                     20           $154,000,000                 None                  None




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


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

Bruce K. Aronow                   31            $3,122,000,000               4                $610,000,000
N. Kumar Kirpalani                27            $2,735,000,000               4                $610,000,000
Samantha Lau                      27            $2,735,000,000               4                $610,000,000
Wen-Tse Tseng                     27            $2,735,000,000               4                $610,000,000



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 Mr. Franco 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, 2015.


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

                                                        Number of
                                                        Registered              Total Assets of
                               Total Assets of          Investment              Registered Investment
Total Number of                Registered               Companies Managed       Companies Managed
Registered Investment          Investment               with Performance-       with Performance-based
Companies Managed              Companies Managed        based Fees              Fees
------------------------------ ------------------------ ------------------------- -----------------------------
                                                                                     
             25                     $840,000,000                  None                        None




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


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

                                                                                     
             36                     $561,000,000                  None                        None




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


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

                                                                                     
              9                     $508,000,000                  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. Effective June 30, 2016, Mr. Simms will
be replaced by Tawhid Ali.

            The following tables provide information regarding registered
investment companies other than the Portfolio, other pooled investment vehicles
and other accounts over which the Portfolio's portfolio managers also have
day-to-day management responsibilities.(3) The tables provide the numbers of
such accounts, the total assets in such accounts and the number of accounts and
total assets whose fees are based on performance. The information is provided as
of the Portfolio's fiscal year ended December 31, 2015.

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


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

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

Tawhid Ali                   None                None                    None                     None
Takeo Aso                     26            $3,496,000,000               None                     None
Avi Lavi                      25            $3,496,000,000               None                     None
Kevin F. Simms                57           $12,414,000,000               None                     None




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


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

Tawhid Ali                     4            $1,341,000,000                None                    None
Takeo Aso                     50            $2,242,000,000                  2                 $107,000,000
Avi Lavi                      37            $2,605,000,000                  2                 $107,000,000
Kevin F. Simms               144           $26,003,000,000                  4                 $205,000,000




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

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

Tawhid Ali                    10              $710,000,000               None                     None
Takeo Aso                     49            $8,837,000,000                5                  $1,732,000,000
Avi Lavi                      43            $7,219,000,000                1                    $348,000,000
Kevin F. Simms               102           $29,433,000,000                7                  $1,931,000,000



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, 2015.


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

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

James W. MacGregor                 23           $4,282,000,000              None                  None
Joseph G. Paul                     41           $14,110,000,000             None                  None
Shri Singhvi                       23           $4,282,000,000              None                  None




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


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

James W. MacGregor                 28            $604,000,000               None                  None
Joseph G. Paul                    101         $22,280,000,000                1                $179,000,000
Shri Singhvi                       26            $451,000,000               None                  None




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


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

James W. MacGregor                 37            $1,449,000,000              None               None
Joseph G. Paul                   28,988         $34,166,000,000              None               None
Shri Singhvi                       37           $1,449,000,000               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. Cem
Inal and Mr. Joseph G. Paul 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, 2015.
--------
(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 Assets of
                                                                 Number of                 Registered
                        Total Number       Total Assets of       Registered                Investment
                        of Registered      Registered            Investment                Companies
                        Investment         Investment            Companies Managed         Managed with
Portfolio               Companies          Companies             with Performance-         Performance-based
Manager                 Managed            Managed               based Fees                Fees
---------------------- ------------------ --------------------- ------------------------ ----------------------
                                                                                      
Cem Inal                          12           $2,692,000,000             None                    None
Joseph G. Paul                    41          $14,602,000,000             None                    None



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

                            Total Number                                                  Total Assets of
                            of Other                                 Number of Other      Other Pooled
                            Pooled            Total Assets of        Pooled Investment    Investment
                            Investment        Other Pooled           Vehicles Managed     Vehicles Managed
                            Vehicles          Investment             with Performance-    with Performance-
Portfolio Manager           Managed           Vehicles Managed       based Fees           based Fees
--------------------------- ----------------- --------------------- --------------------- ---------------------
                                                                                  
Cem Inal                          10            $260,000,000               None                   None
Joseph G. Paul                   101         $22,280,000,000                1                 $179,000,000



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

                                                                                     Total Assets of Other
Total Number of                                           Number of Other            Accounts Managed with
Other Accounts                Total Assets of Other       Accounts Managed with      Performance-
Managed                       Accounts Managed            Performance-based Fees     based Fees
--------------------------- --------------------------- ---------------------------- --------------------------
                                                                                      
Cem Inal                        4,330          $3,270,000,000              None                   None
Joseph G. Paul                  28,988        $34,166,000,000          None                       None


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 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, 2015.

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

                                                                                           Total Assets of
                                                                 Number of                 Registered
                        Total Number       Total Assets of       Registered                Investment
                        of Registered      Registered            Investment                Companies
                        Investment         Investment            Companies Managed         Managed with
Portfolio               Companies          Companies             with Performance-         Performance-based
Manager                 Managed            Managed               based Fees                Fees
---------------------- ------------------ --------------------- ------------------------ ----------------------
                                                                                         
Daniel J. Loewy                    50            $10,463,000,000                None                 None
Christopher H. Nikolich            11               $314,000,000                None                 None
Vadim Zlotnikov                    84            $11,678,000,000                None                 None




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


                            Total Number                                                  Total Assets of
                            of Other                                 Number of Other      Other Pooled
                            Pooled            Total Assets of        Pooled Investment    Investment
                            Investment        Other Pooled           Vehicles Managed     Vehicles Managed
                            Vehicles          Investment             with Performance-    with Performance-
Portfolio Manager           Managed           Vehicles Managed       based Fees           based Fees
--------------------------- ----------------- --------------------- --------------------- ---------------------
                                                                                         
Daniel J. Loewy                      209          $21,434,000,000               None                 None
Christopher H. Nikolich              204          $20,909,000,000               None                 None
Vadim Zlotnikov                      209          $21,644,000,000               None                 None



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

                                                                      Number of Other       Total Assets of
                              Total Number                            Accounts Managed      Other Accounts
                              of Other           Total Assets of      With Performance-     Managed With
Portfolio                     Accounts           Other Accounts       based Fees            Performance-
Manager                       Managed            Managed                                    based Fees
----------------------------- ------------------ -------------------- --------------------- ----------------------
                                                                                   
Daniel J. Loewy                      53           $25,218,000,000             None                  None
Christopher H. Nikolich              20           $17,336,000,000             None                  None
Vadim Zlotnikov                      115          $35,364,000,000              24              $8,258,000,000



DYNAMIC ASSET ALLOCATION PORTFOLIO

            The management of, and investment decisions for, the Portfolio's
portfolio are made by the Adviser's Dynamic Asset Allocation Team. Mr. Brian T.
Brugman, 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, 2015.


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

                                                                                           Total Assets of
                                                                 Number of                 Registered
                        Total Number       Total Assets of       Registered                Investment
                        of Registered      Registered            Investment                Companies
                        Investment         Investment            Companies Managed         Managed with
Portfolio               Companies          Companies             with Performance-         Performance-based
Manager                 Managed            Managed               based Fees                Fees
---------------------- ------------------ --------------------- ------------------------ ----------------------
                                                                                         
Brian T. Brugman                     37              $9,986,000                 None                 None
Daniel J. Loewy                      51            $10,795,000,000              None                 None
Vadim Zlotnikov                      85            $12,009,000,000              None                 None



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



                            Total Number                                                  Total Assets of
                            of Other                                 Number of Other      Other Pooled
                            Pooled            Total Assets of        Pooled Investment    Investment
                            Investment        Other Pooled           Vehicles Managed     Vehicles Managed
                            Vehicles          Investment             with Performance-    with Performance-
Portfolio Manager           Managed           Vehicles Managed       based Fees           based Fees
--------------------------- ----------------- --------------------- --------------------- ---------------------
                                                                                         
Brian T. Brugman                    None                None                    None                 None
Daniel J. Loewy                     208           $20,867,000,000               None                 None
Vadim Zlotnikov                     208           $21,077,000,000               None                 None



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


                                                                                     Total Assets of Other
Total Number of                                           Number of Other            Accounts Managed with
Other Accounts                Total Assets of Other       Accounts Managed with      Performance-
Managed                       Accounts Managed            Performance-based Fees     based Fees
--------------------------- --------------------------- ---------------------------- --------------------------
                                                                                    
Brian T. Brugman                     33            $7,882,000,000               None                 None
Daniel J. Loewy                      53            $25,218,000,000              None                 None
Vadim Zlotnikov                     115            $35,364,000,000               24             $8,258,000,000


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. 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 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, 2015.


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

                                                                                           Total Assets of
                                                                 Number of                 Registered
                        Total Number       Total Assets of       Registered                Investment
                        of Registered      Registered            Investment                Companies
                        Investment         Investment            Companies Managed         Managed with
Portfolio               Companies          Companies             with Performance-         Performance-based
Manager                 Managed            Managed               based Fees                Fees
---------------------- ------------------ --------------------- ------------------------ ----------------------
                                                                                    
Paul J. DeNoon                17              $ 8,755,000,000              None                 None
Scott A. DiMaggio             30              $11,490,000,000              None                 None
Douglas J. Peebles            32              $11,893,000,000              None                 None
Matthew S. Sheridan           39              $15,157,000,000              None                 None



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



                            Total Number                                                  Total Assets of
                            of Other                                 Number of Other      Other Pooled
                            Pooled            Total Assets of        Pooled Investment    Investment
                            Investment        Other Pooled           Vehicles Managed     Vehicles Managed
                            Vehicles          Investment             with Performance-    with Performance-
Portfolio Manager           Managed           Vehicles Managed       based Fees           based Fees
--------------------------- ----------------- --------------------- --------------------- ---------------------
                                                                                    
Paul J. DeNoon                36               $26,706,000,000            None                  None
Scott A. DiMaggio             41               $3,080,000,000             None                  None
Douglas J. Peebles            47               $5,742,000,000             None                  None
Matthew S. Sheridan           52              $25,736,000,000             None                  None



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

                                                                                     Total Assets of Other
Total Number of                                           Number of Other            Accounts Managed with
Other Accounts                Total Assets of Other       Accounts Managed with      Performance-
Managed                       Accounts Managed            Performance-based Fees     based Fees
--------------------------- --------------------------- ---------------------------- --------------------------
                                                                             
Paul J. DeNoon                 15             $10,100,000,000               2            $1,449,000,000
Scott A. DiMaggio              60             $23,902,000,000               4            $2,405,000,000
Douglas J. Peebles             85             $26,758,000,000               4            $2,405,000,000
Matthew S. Sheridan            47             $22,138,000,000               4            $2,405,000,000



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.
Daniel J. Loewy 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 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, 2015.

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

                                                                                           Total Assets of
                                                                 Number of                 Registered
                        Total Number       Total Assets of       Registered                Investment
                        of Registered      Registered            Investment                Companies
                        Investment         Investment            Companies Managed         Managed with
Portfolio               Companies          Companies             with Performance-         Performance-based
Manager                 Managed            Managed               based Fees                Fees
---------------------- ------------------ --------------------- ------------------------ ----------------------
                                                                                      
Daniel J. Loewy                    50            $10,790,000,000            None                  None
Leon Zhu                            1              $550,000,000             None                  None




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



                            Total Number                                                  Total Assets of
                            of Other                                 Number of Other      Other Pooled
                            Pooled            Total Assets of        Pooled Investment    Investment
                            Investment        Other Pooled           Vehicles Managed     Vehicles Managed
                            Vehicles          Investment             with Performance-    with Performance-
Portfolio Manager           Managed           Vehicles Managed       based Fees           based Fees
--------------------------- ----------------- --------------------- --------------------- ---------------------
                                                                                      
Daniel J. Loewy                    209           $21,434,000,000            None                  None
Leon Zhu                          None                None                  None                  None




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



                                                                                     Total Assets of Other
Total Number of                                           Number of Other            Accounts Managed with
Other Accounts                Total Assets of Other       Accounts Managed with      Performance-
Managed                       Accounts Managed            Performance-based Fees     based Fees
--------------------------- --------------------------- ---------------------------- --------------------------
                                                                                     
Daniel J. Loewy                    53            $25,218,000,000            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 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, 2015.

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

                                                                                           Total Assets of
                                                                 Number of                 Registered
                        Total Number       Total Assets of       Registered                Investment
                        of Registered      Registered            Investment                Companies
                        Investment         Investment            Companies Managed         Managed with
Portfolio               Companies          Companies             with Performance-         Performance-based
Manager                 Managed            Managed               based Fees                Fees
---------------------- ------------------ --------------------- ------------------------ ----------------------
                                                                                      
Marc H. Gamsin                      8             $1,765,000,000            None                  None
Greg Outcalt                        8             $1,765,000,000            None                  None



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

                            Total Number                                                  Total Assets of
                            of Other                                 Number of Other      Other Pooled
                            Pooled            Total Assets of        Pooled Investment    Investment
                            Investment        Other Pooled           Vehicles Managed     Vehicles Managed
                            Vehicles          Investment             with Performance-    with Performance-
Portfolio Manager           Managed           Vehicles Managed       based Fees           based Fees
--------------------------- ----------------- --------------------- --------------------- ---------------------
                                                                                 
Marc H. Gamsin                     14            $9,881,000,000               3              $8,462,000,000
Greg Outcalt                       14            $9,881,000,000               3              $8,462,000,000



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


                                                                                     Total Assets of Other
Total Number of                                           Number of Other            Accounts Managed with
Other Accounts                Total Assets of Other       Accounts Managed with      Performance-
Managed                       Accounts Managed            Performance-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 our employees to meet
their fiduciary duties.

            Employee Personal Trading. The Adviser has adopted a Code of
Business Conduct and Ethics that is designed to detect and prevent conflicts of
interest when investment professionals and other personnel of the Adviser own,
buy or sell securities which may be owned by, or bought or sold for, clients.
Personal securities transactions by an employee may raise a potential conflict
of interest when an employee owns or trades in a security that is owned or
considered for purchase or sale by a client, or recommended for purchase or sale
by an employee to a client. Subject to the reporting requirements and other
limitations of its Code of Business Conduct and Ethics, the Adviser permits its
employees to engage in personal securities transactions, and also allows them to
acquire investments in certain Funds managed by the Adviser. The Adviser's Code
of Business Conduct and Ethics requires disclosure of all personal accounts and
maintenance of brokerage accounts with designated broker-dealers approved by the
Adviser. The Code of Business Conduct and Ethics also requires preclearance of
all securities transactions (except transactions in U.S. Treasuries and open-end
mutual funds) and imposes a 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 5-7, 2015.

            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 or period ended December 31, 2015, 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                       $47,557          .25%
Large Cap Growth Portfolio                       $635,197          .25%
Growth and Income Portfolio                    $1,694,691          .25%
Growth Portfolio                                 $113,273          .25%
International Growth Portfolio                   $114,712          .25%
Global Thematic Growth Portfolio                 $247,899          .25%
Small Cap Growth Portfolio                        $91,109          .25%
Real Estate Investment Portfolio                  $34,038          .25%
International Value Portfolio                  $1,533,880          .25%
Small/Mid Cap Value Portfolio                  $1,065,897          .25%
Value Portfolio                                  $248,265          .25%
Balanced Wealth Strategy Portfolio               $800,322          .25%
Dynamic Asset Allocation Portfolio             $1,288,044          .25%
Global Bond Portfolio                                 $17          .25%
Global Risk Allocation--Moderate Portfolio        $33,647          .25%
Multi-Manager Alternative Strategies
Portfolio                                              $1          .25%

            For the fiscal year or period ended December 31, 2015, 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                         $64                 $849                   $2,283

Printing and Mailing                           36                  486                    1,283
of Prospectuses and Semi-Annual
and Annual Reports to Other Than
Current Shareholders

Compensation to Underwriters               47,377              635,693                1,691,910

Compensation to Dealers                    42,442              529,722                1,481,693

Compensation to Sales Personnel             4,543               61,108                  162,077

Interest, Carrying or Other                     0                    0                        0
Financing Charges

Other (includes personnel costs             3,533               47,378                  125,926
of those home office employees
involved in the distribution
effort and the travel-related
expenses incurred by the
marketing personnel conducting
seminars)

Totals                                    $97,995           $1,275,236               $3,465,172






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

Advertising/                         $152                 $156                 $335                 $115
Marketing

Printing and Mailing of                86                   86                  187                   67
Prospectuses and
Semi-Annual and Annual
Reports to Other than
Current Shareholders

Compensation to                   113,404              114,460              247,427               89,366
Underwriters

Compensation to Dealers            98,926              100,387              215,597               98,333

Compensation to Sales              10,833               10,926               23,670                8,518
Personnel

Interest, Carrying or                   0                    0                    0                    0
Other Financing Charges

Other (includes personnel           8,421                8,496               18,400                6,687
costs of those home
office employees involved
in the distribution
effort and the
travel-related expenses
incurred by the marketing
personnel conducting
seminars)

Totals                           $231,822             $234,511             $505,616             $203,086




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

Advertising/                         $45                  $2,086                 $1,449                   $338
Marketing

Printing and Mailing of               26                   1,155                    804                    186
Prospectuses and
Semi-Annual and Annual
Reports to Other than
Current Shareholders

Compensation to                   34,040               1,531,394              1,066,264                247,565
Underwriters

Compensation to Dealers           28,246               1,345,485                924,909                226,541

Compensation to Sales              3,267                 146,127                101,568                 23,622
Personnel

Interest, Carrying or                  0                       0                      0                      0
Other Financing Charges

Other (includes personnel          2,534                 113,691                 79,079                 18,371
costs of those home
office employees involved
in the distribution
effort and the
travel-related expenses
incurred by the marketing
personnel conducting
seminars)

Totals                           $68,158              $3,139,938             $2,174,073               $516,623



                                                                                                                     Multi-
                                                                                                 Global Risk        Manager
                                                                               Global            Allocation-       Alternative
Category of                    Balanced Wealth          Dynamic Asset           Bond             Moderate          Strategies
Expense                        Strategy Portfolio     Allocation Portfolio    Portfolio          Portfolio         Portfolio
-----------                    ------------------     --------------------    ---------          -----------       -------------
                                                                                                       

Advertising/                         $1,081                    $1,736             $0                $42               $0
Marketing

Printing and                            604                       979              0                 31                0
Mailing of
Prospectuses and
Semi-Annual and
Annual Reports to
Other than Current
Shareholders

Compensation to                     799,875                 1,288,672              0             36,265                0
Underwriters

Compensation to                     697,106                 1,082,144              0                331                0
Dealers

Compensation to                      76,442                   123,325              2              3,715                0
Sales Personnel

Interest, Carrying                        0                         0              0                  0                0
or Other Financing
Charges

Other (includes                      59,435                    95,895              1              2,789                0
personnel costs of
those home office
employees involved
in the
distribution
effort and the
travel-related
expenses incurred
by the marketing
personnel
conducting
seminars)

Totals                           $1,634,543                $2,592,751             $3            $43,173               $0




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

                       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 Purchases 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 and realization of taxable capital gains.

            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 the 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.

            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.

            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.

            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 and may
include payments for distribution analytical data regarding Portfolio sales by
the Insurer. The costs and expenses associated with these efforts may include
travel, lodging, entertainment and meals.

            For 2016, ABI's additional payments to these firms for distribution
services and educational support are expected to be approximately $450,000. In
2015, ABI paid additional payments of approximately $400,000 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
         Jackson National Life
         Lincoln Financial Advisors
         MetLife Investors Group, Inc.
         Minnesota Life Insurance Company
         Ohio National Financial Services
         Prudential Financial
         Riversource Distributors
         SunAmerica
         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, if
market quotations are not readily available or are unreliable, 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 ask 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 ask 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 market priced by an approved vendor;

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

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

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

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

                             PORTFOLIO TRANSACTIONS

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

            Subject to the general oversight of the Board, the Adviser is
responsible for the investment decisions and the placing of orders for portfolio
transactions 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 impracticable 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 OTC 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 OTC markets (including most
fixed-income securities) are purchased from and sold to dealers acting as
principal. OTC 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
in accordance with a similar strategy by the 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 of the
Adviser.


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

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

Growth Portfolio                            2013                        $54,411
                                            2014                         41,565
                                            2015                         29,080

Intermediate Bond Portfolio                 2013                           $247
                                            2014                            269
                                            2015                          1,473

Growth and Income Portfolio                 2013                       $778,196
                                            2014                        595,695
                                            2015                        683,647

Large Cap Growth Portfolio                  2013                       $223,215
                                            2014                        214,811
                                            2015                        211,315

Small Cap Growth Portfolio                  2013                        $91,885
                                            2014                        106,179
                                            2015                         88,397

Real Estate Investment Portfolio            2013                       $251,843
                                            2014                         89,780
                                            2015                         76,908

Global Thematic Growth Portfolio            2013                       $248,709
                                            2014                        100,481
                                            2015                        103,898

International Growth Portfolio              2013                       $151,936
                                            2014                        107,593
                                            2015                         40,968

Small/Mid Cap Value Portfolio               2013                       $935,929
                                            2014                        826,048
                                            2015                        656,741

Value Portfolio                             2013                       $160,176
                                            2014                         97,465
                                            2015                         78,465

International Value Portfolio               2013                     $1,382,847
                                            2014                        985,467
                                            2015                        945,298

Balanced Wealth Strategy Portfolio          2013                       $477,345
                                            2014                        245,755
                                            2015                        214,022

Dynamic Asset Allocation Portfolio          2013                       $144,333
                                            2014                        110,261
                                            2015                        133,039

Global Bond Portfolio                       2015                           $161

Global Risk Allocation--Moderate Portfolio  2015                         $5,487

Multi-Manager Alternative Strategies        2015                             $0
Portfolio

            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
                       Fiscal Year or      Brokerage Commissions      Aggregate Brokerage      Payment of Commissions
                        Period Ended              Paid to             Commissions Paid to             Through
Portfolio                December 31         Affiliated Brokers       Affiliated Brokers          Affiliated Brokers
---------                -----------         ------------------       -------------------      --------------------------
                                                                                                 

Growth and Income           2015                        $1                       0%                          0%
Portfolio                   2014                         0
                            2013                     2,741

Growth Portfolio            2015                       $70                    0.24%                          0%
                            2014                       254
                            2013                       513

International               2015                        $0                       0%                          0%
Growth Portfolio            2014                         0
                            2013                         0

Global Thematic             2015                        $0                       0%                          0%
Growth Portfolio            2014                        32
                            2013                       653

Small Cap Growth            2015                       $11                    0.01%                          0%
Portfolio                   2014                        45
                            2013                        52

Real Estate                 2015                        $0                       0%                          0%
Investment                  2014                         0
Portfolio                   2013                       979

International Value         2015                        $0                       0%                          0%
Portfolio                   2014                         0
                            2013                       549

Balanced Wealth             2015                        $0                       0%                          0%
Strategy Portfolio          2014                       260
                            2013                       736

Global Bond                 2015                        $0                       0%                          0%
Portfolio

Global Risk                 2015                        $0                       0%                          0%
Allocation--Moderate
Portfolio

Multi-Manager               2015                        $0                       0%                          0%
Alternative
Strategies
Portfolio



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 11, 2016 and as of December 30, 2016 with respect to
Growth and Income Portfolio. As of May 1, 2016, shares of Multi-Manager
Alternative Strategies Portfolio were held solely by the Adviser.



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: Patrick Booker
                       2727A Allen Parkway, MS Life 4-D1
                       Houston, TX 77019-2107                            3,576,824               80.69%

                       The United States Life Insurance
                       Company in the City of New York
                       Attn: Chris Beauman
                       2727A Allen Parkway, MS 4D-1
                       Houston, TX 77019-2116                              389,753                8.79%

Large Cap Growth       American General Life
Portfolio              Insurance Company of Delaware
                       Attn: Patrick Booker
                       2727A Allen Parkway, MS Life 4-D1
                       Houston, TX 77019-2107                              665,336               17.61%

                       Transamerica Advisors Life Insurance
                       Company
                       Merrill Lynch Life Variable Annuity
                       4333 Edgewood Road NE, MS 4410
                       Cedar Rapids, IA 52499-0001                       1,677,799               44.42%

                       Transamerica Advisors Life Insurance
                       Company
                       Merrill Lynch Variable Life Separate
                       Account
                       4333 Edgewood Road NE, MS 4410
                       Cedar Rapids, IA  52499-0001                        286,839                7.59%

                       Transamerica Advisors Life Insurance
                       Company
                       Merrill Lynch Variable Life Separate
                       4333 Edgewood Road NE, MS 4410
                       Cedar Rapids, IA  52499-0001                        248,920                6.59%

Growth and Income      American General Life
Portfolio              Insurance Company of Delaware
                       Attn: Patrick Booker
                       2727A Allen Parkway MS Life 4-D1
                       Houston, TX 77019-2107                            1,289,301               25.81%

                       Jefferson National Life Insurance Company
                       Attn: Separate Accounts
                       10350 Ormsby Park Place, Suite 600
                       Louisville, KY 40223-6175                           353,602                7.08%

                       Lincoln Life Variable Annuity
                       Fund Accounting
                       1300 S. Clinton Street
                       Fort Wayne, IN 46802-3506                           957,789               19.17%

                       Nationwide Life Insurance Company
                       c/o IPO Portfolio Accounting
                       P.O. Box 182029
                       Columbus, OH  43218-2029                            791,166               15.84%

                       Transamerica Advisors Life Insurance
                       Company
                       Merrill Lynch Life Variable Annuity
                       4333 Edgewood Road NE, MS 4410
                       Cedar Rapids, IA 52499-0001                         254,812                5.10%

Growth Portfolio       American General Life
                       Insurance Company of Delaware
                       Attn: Patrick Booker
                       2727A Allen Parkway, MS Life 4-D1
                       Houston, TX 77019-2107                              503,959               58.60%

                       American General Life
                       Insurance Company of Delaware
                       Attn: Patrick Booker
                       2727A Allen Parkway, MS Life 4-D1
                       Houston, TX 77019-2107                               56,236                6.54%

                       Great-West Life & Annuity Insurance
                       Company
                       FBO Schwab Annuities
                       8515 E. Orchard Road
                       Greenwood, CO 80111-5002                             67,020                7.79%

                       The United States Life Insurance
                       Company in the City of New York
                       Attn: Chris Beauman
                       2727A Allen Parkway, MS 4-D1
                       Houston, TX 77019-2116                               99,829               11.61%

International Growth   American General Life
Portfolio              Insurance Company of Delaware
                       Attn: Patrick Booker
                       2727A Allen Parkway, MS Life 4-D1
                       Houston, TX 77019-2107                              887,273               51.10%

                       Great-West Life & Annuity
                       FBO Variable Annuity 1 Oncesource
                       8515 E. Orchard Road, #2T2
                       Greenwood, CO 80111-5002                            413,525               23.82%

                       Great-West Life & Annuity
                       FBO Variable Annuity 1 Select
                       8515 E. Orchard Road, #2T2
                       Greenwood Village, CO 80111-5002                    114,224                6.58%

Global Thematic        American General Life
Growth Portfolio       Insurance Company of Delaware
                       Attn: Patrick Booker
                       2727A Allen Parkway, MS Life 4-D1
                       Houston, TX 77019-2107                              415,938               30.11%

                       Lincoln Life Variable Annuity
                       Fund Accounting
                       1300 S. Clinton Street
                       Fort Wayne, IN  46802-3506                          414,190               29.98%

                       Transamerica Advisors Life Insurance
                       Company
                       Merrill Lynch Life Variable Annuity
                       4333 Edgewood Road NE, MS 4410
                       Cedar Rapids, IA  52499-0001                        237,908               17.22%

                       Transamerica Financial Life Insurance
                       Company
                       ML of New York Variable Annuity Separate
                       4333 Edgewood Road NE, MSC 4410
                       Cedar Rapids, IA  52499-0001                         76,030                5.50%

                       The United States Life Insurance
                       Company in the City of New York
                       Attn: Chris Beauman
                       2727A Allen Parkway, MS 4D-1
                       Houston, TX  77019-2116                              79,229                5.74%

Small Cap Growth       American General Life
Portfolio              Insurance Company of Delaware
                       Attn: Patrick Booker
                       2727A Allen Parkway, MS Life 4-D1
                       Houston, TX 77019-2107                              817,552               58.04%

                       Principal Life Insurance Co.
                       Attn: Individual Accounting
                       711 High Street
                       Des Moines, IA 50392-0001                           252,042               17.89%

Real Estate            American General Life
Investment Portfolio   Insurance Company of Delaware
                       Attn: Patrick Booker
                       2727A Allen Parkway, MS Life 4-D1
                       Houston, TX 77019-2107                            1,015,200               26.00%

                       Great West Life & Annuity
                       Insurance Company
                       FBO Schwab Annuities
                       Attn: Investment Div.
                       8515 E. Orchard Road, #2T2
                       Englewood, CO 80111-5002                          1,880,861               48.17%

                       Nationwide Life Insurance Company
                       c/o IPO Portfolio Accounting
                       P.O. Box 182029
                       Columbus, OH 43218-2029                             454,481               11.64%

International Value    American General Life
Portfolio              Insurance Company of Delaware
                       Attn: Patrick Booker
                       2727A Allen Parkway, MS Life 4-D1
                       Houston, TX 77019-2107                              452,445               12.63%

                       Great West Life & Annuity
                       Insurance Company
                       FBO Schwab Annuities
                       Attn: Investment Div.
                       8515 E. Orchard Road, #2T2
                       Englewood, CO 80111-5002                            201,119                5.61%

                       Lincoln Life Variable Annuity
                       Fund Accounting
                       1300 S. Clinton Street
                       Fort Wayne, IN  46802-3506                          940,293               26.25%

                       National Life Group
                       Sentinel Advantage
                       1 National Life Drive
                       Montpelier, VT 05604-1000                           181,837                5.08%

                       Nationwide Life Insurance Company
                       c/o IPO Portfolio Accounting
                       P.O. Box 182029
                       Columbus, OH 43218-2029                             436,805               12.19%

                       Nationwide Life Insurance Company
                       c/o IPO Portfolio Accounting
                       P.O. Box 182029
                       Columbus, OH 43218-2029                             605,854               16.91%

Small/Mid Cap          American General Life
Value Portfolio        Insurance Company of Delaware
                       Attn: Patrick Booker
                       2727A Allen Parkway, MS Life 4-D1
                       Houston, TX 77019-2107                              883,910                8.11%

                       Lincoln Life Variable Annuity
                       Fund Accounting
                       1300 S. Clinton Street
                       Fort Wayne, IN 46802-3506                         5,995,301               55.04%

                       Nationwide Life Insurance Company
                       c/o IPO Portfolio Accounting
                       P.O. Box 182029
                       Columbus, OH 43218-2029                           1,030,012                9.46%

                       New York Life Insurance and Annuity
                       Corporation
                       169 Lackawanna Avenue
                       Parsippany, NJ 07054-1007                           722,190                6.63%

Value Portfolio        National Life Group
                       Varitrak
                       1 National Life Drive
                       Montpelier, VT 05604-1000                             4,763                5.07%

                       Transamerica Advisors Life Insurance
                       Company
                       Merrill Lynch Life Variable Annuity
                       4333 Edgewood Road NE, MS 4410
                       Cedar Rapids, IA  52499-0001                         77,156               82.16%

                       Transamerica Financial Life Insurance
                       Company
                       ML of New York Variable Annuity Separate
                       4333 Edgewood Road NE, MSC 4410
                       Cedar Rapids, IA  52499-0001                          8,724                9.29%

Balanced Wealth        American General Life
Strategy Portfolio     Insurance Company of Delaware
                       Attn: Patrick Booker
                       2727A Allen Parkway, MS Life 4-D1
                       Houston, TX 77019-2107                            2,592,174               86.85%

                       The United States Life Insurance
                       Company in the City of New York
                       Attn: Chris Beauman
                       2727A Allen Parkway, MS 4-D1
                       Houston, TX 77019-2116                              172,663                5.79%

Dynamic Asset          Nationwide Life Insurance Co.
Allocation Portfolio   c/o IPO Portfolio Accounting
                       P.O. Box 182029
                       Columbus, OH  43218-2029                              8,162               19.97%

                       Nationwide Life Insurance Co.
                       c/o IPO Portfolio Accounting
                       P.O. Box 182029
                       Columbus, OH  43218-2029                              4,179               10.22%

                       Nationwide Life Insurance Co.
                       c/o IPO Portfolio Accounting
                       P.O. Box 182029
                       Columbus, OH  43218-2029                             14,184               34.70%

                       Nationwide Life & Annuity Insurance Co.
                       c/o IPO Portfolio Accounting
                       P.O. Box 182029
                       Columbus, OH  43218-2029                             14,322               35.04%

Global Bond Portfolio  AllianceBernstein L.P.
                       Attn: Brett Mather-Seed Account
                       1 N. Lexington Avenue
                       White Plains, NY 10601-1712                         999,000              100.00%

Global Risk            AllianceBernstein L.P.
Allocation--Moderate   Attn: Brett Mather-Seed Account
Portfolio              1 N. Lexington Avenue
                       White Plains, NY 10601-1712                           1,100              100.00%





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

Intermediate Bond         Allmerica Financial Life
Portfolio                 Insurance & Annuity Company
                          One Security Benefit Place
                          Topeka, KS 66636-1000                                  84,342                 5.29%

                          Hartford Life Separate Account 1A
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                               217,590                13.65%

                          SunAmerica Annuity and Life
                          Assurance Company
                          Attn: Variable Annuity Accounting
                          2727A Allen Parkway, 4-DI
                          Houston, TX 77019                                   1,100,086                69.03%

Large Cap Growth          Allmerica Financial Life
Portfolio                 Insurance & Annuity Company
                          One Security Benefit Place
                          Topeka, KS 66636-1000                                 649,533                11.89%

                          Allstate Life Insurance Company
                          3100 Sanders Road, #N4A
                          Northbrook, IL  60062-7156                            314,163                 5.75%

                          American General Life Insurance Company
                          of Delaware
                          Attn: Ed Bacon
                          2727A Allen Parkway, #4D1
                          Houston, TX  77019-2107                               398,226                 7.29%

                          GE Life and Annuity
                          Assurance Company
                          6610 W. Broad Street
                          Building 3, 5th Floor
                          Attn: Variable Accounting
                          Richmond, VA 23230-1702                               539,165                 9.87%

                          Horace Mann
                          Life Insurance Company
                          Separate Account
                          Horace Mann
                          Springfield, IL 62715-0001                            961,074                17.59%

                          IDS Life Insurance Company
                          702 2nd Ave. SO
                          Route H19/5889
                          Minneapolis, MN 55402-2405                            859,650                15.73%

                          Transamerica Life Insurance Company
                          4333 Edgewood Road NE, MS 4410
                          Cedar Rapids, IA  52499-0001                          622,786                11.40%

Growth and Income         GE Life and Annuity
Portfolio                 Assurance Company
                          6610 W. Broad Street
                          Building 3, 5th Floor
                          Attn: Variable Accounting
                          Richmond, VA 23230-1702                             1,566,912                 5.45%

                          Guardian Insurance &
                          Annuity Co., Inc.
                          Attn: James Nemeth
                          3900 Burgess Place
                          Retirement Solutions FM&C NRO
                          Bethlehem, PA 18017-8993                            4,930,142                17.14%

                          Guardian Insurance &
                          Annuity Co., Inc.
                          Attn: James Nemeth
                          3900 Burgess Place
                          Retirement Solutions FM&C NRO
                          Bethlehem, PA 18017-8993                            2,506,826                 8.71%

                          IDS Life Insurance Corp.
                          702 2nd Ave. SO
                          Route H19/5889
                          Minneapolis, MN 55402-2405                          4,794,511                16.67%

                          Transamerica Life Insurance Company
                          Separate Account V A B
                          4333 Edgewood Road, NE MS
                          Cedar Rapids, IA 52499-0001                         7,145,147                24.84%

Growth Portfolio          Allstate Life Insurance Company
                          3100 Sanders Road, #N4A
                          Northbrook, IL 60062-7156                             527,673                36.89%

                          American General Life
                          Insurance Company of Delaware
                          Attn: Ed Bacon
                          2727A Allen Parkway, #4D1
                          Houston, TX 77019-2107                                398,211                27.84%

                          SunAmerica Annuity and Life
                          Assurance Company
                          Attn: Variable Annuity Accounting
                          2727A Allen Parkway, 4 DI
                          Houston, TX 77019                                     236,436                16.53%

International Growth      AXA Equitable Life Separate Account
Portfolio                 1290 Avenue of the Americas
                          11th Floor
                          New York, NY 10104-1472                               475,309                22.41%

                          Hartford Life & Annuity
                          Separate Account
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                               181,019                 8.54%

                          Hartford Life and Annuity
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                               369,659                17.43%

                          Hartford Life Separate Account 1A
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                               144,531                 6.82%

                          Delaware Life Insurance Company
                          One SunLife Executive Park
                          Wellesley Hills, MA 02481                             468,142                22.08%

                          SunAmerica Annuity and Life
                          Assurance Company
                          Attn: Variable Annuity Accounting
                          2727A Allen Parkway, 4 DI
                          Houston, TX 77019                                     222,119                10.47%

Global Thematic Growth    American General Life
Portfolio                 Insurance Company of Delaware
                          Attn: Ed Bacon
                          2727A Allen Parkway, # 4D1
                          Houston, TX 77019-2107                                220,620                 5.35%

                          IDS Life Insurance Co.
                          702 2nd Avenue SO
                          Route H19/5889
                          Minneapolis, MN 55402-2405                            347,795                 8.43%

                          Lincoln Life Variable Annuity
                          Fund Accounting
                          1300 S. Clinton Street
                          Fort Wayne, IN 46802-3506                           2,288,670                55.48%

Small Cap Growth          Delaware Life Insurance Company
Portfolio                 Variable Account
                          One SunLife Executive Park
                          Wellesley Hills, MA 02481                              73,692                 6.27%

                          GE Life and Annuity
                          Assurance Company
                          6610 W. Broad Street
                          Building 3, 5th Floor
                          Attn: Variable Accounting
                          Richmond, VA 23230-1702                               463,329                39.41%

                          Horace Mann
                          Life Insurance Company
                          Separate Account
                          Horace Mann
                          Springfield, IL 62715-0001                            194,703                16.56%

                          Jefferson National Life Insurance Company
                          Attn: Separate Accounts
                          10350 Ormsby Park Place, Ste. 600
                          Louisville, KY 40223-6175                              62,754                 5.34%

                          SunAmerica Annuity and Life
                          Assurance Company
                          Attn: Variable Annuity Accounting
                          2727A Allen Parkway, 4 DI
                          Houston, TX 77019                                     275,099                23.40%

Real Estate Investment    AXA Equitable Life Separate Account-70
Portfolio                 1290 Avenue of the Americas
                          11th Floor
                          New York, NY 10104-1472                               202,215                13.17%

                          Guardian Insurance & Annuity Co. Inc.
                          3900 Burgess Place
                          Bethlehem, PA 18017-9097                              158,979                10.35%

                          Guardian Insurance & Annuity Co. Inc.
                          3900 Burgess Place
                          Bethlehem, PA 18017-9097                              445,034                28.98%

                          Hartford Life & Annuity
                          Separate Account
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT  06104-2999                              159,458                10.38%

                          Midland National Life Insurance Co.
                          Attn: Product Valuation
                          5801 SW 6th Avenue
                          Topeka, KS 66636-1001                                 133,031                 8.66%

                          SunAmerica Annuity and Life
                          Assurance Company
                          Attn: Variable Annuity Accounting
                          2727A Allen Parkway, 4 DI
                          Houston, TX 77019                                     392,167                25.53%

International Value       Delaware Life Insurance Company
Portfolio                 One SunLife Executive Park
                          Wellesley Hills, MA 02481                           3,005,697                 7.49%

                          GE Life and Annuity
                          Assurance Company
                          6610 W. Broad Street
                          Building 3, 5th Floor
                          Attn: Variable Accounting
                          Richmond, VA 23230-1702                             5,201,070                12.97%

                          Hartford Life and Annuity
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                             5,934,093                14.80%

                          Hartford Life Separate Account 1A
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                             3,025,090                 7.54%

                          IDS Life Insurance Corp.
                          707 2nd Ave. SO
                          Route H19/5889
                          Minneapolis, MN 55402-2405                         14,466,889                36.07%

Small/Mid                 Hartford Life and Annuity
Cap Value                 Separate Account
Portfolio                 Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                             1,128,912                 5.08%

                          Hartford Life and Annuity
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                             1,565,490                 7.05%

                          Lincoln Life Variable Annuity
                          Fund Accounting
                          1300 S. Clinton Street
                          Fort Wayne, IN 46802-3506                           9,798,956                44.13%

                          Nationwide Life Insurance Company
                          c/o IPO Portfolio Accounting
                          P.O. Box 182029
                          Columbus, OH 43218-2029                             5,171,383                23.29%

Value Portfolio           American General Life
                          Insurance Company of Delaware
                          Attn: Ed Bacon
                          2727A Allen Parkway, #4D1
                          Houston, TX 77019-2107                                871,350                14.64%

                          Hartford Life and Annuity
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                             2,448,893                41.13%

                          Hartford Life Separate Account 1A
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT  06104-2999                            1,406,467                23.62%

                          SunAmerica Annuity and Life
                          Assurance Company
                          Attn: Variable Annuity Accounting
                          2727A Allen Parkway, 4 DI
                          Houston, TX 77019                                     540,123                 9.07%

Balanced Wealth           Delaware Life Insurance Company
Strategy Portfolio        One SunLife Executive Park
                          Wellesley Hills, MA 02481                           5,274,779                19.71%

                          GE Life and Annuity
                          Assurance Company
                          6610 W. Broad Street
                          Building 3, 5th Floor
                          Attn: Variable Accounting
                          Richmond, VA 23230-1702                             1,693,805                 6.33%

                          Hartford Life and Annuity
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT 06104-2999                             4,013,516                15.00%

                          Hartford Life
                          Attn: UIT Operations
                          P.O. Box 2999
                          Hartford, CT  06104-2999                            1,908,077                 7.13%

                          SunAmerica Annuity and Life
                          Assurance Company
                          Attn: Variable Annuity Accounting
                          2727A Allen Parkway, 4 DI
                          Houston, TX 77019                                   2,280,736                 8.52%

                          Transamerica Life Insurance Co.
                          4333 Edgewood Road NE, MS 4410
                          Cedar Rapids, IA 52499-0001                         8,567,507                32.01%

Dynamic Asset Allocation  Delaware Life Insurance Company
Portfolio                 One SunLife Executive Park
                          Wellesley Hills, MA 02481                           9,123,228                20.04%

                          Minnesota Mutual Life
                          Mail Station
                          400 Robert Street N
                          Saint Paul, MN 55101-2099                           9,818,372                21.57%

                          Ohio National Life Insurance Co.
                          FBO Its Separate Accounts
                          One Financial Way
                          Attn: Cathy Gehr, Mail Code 56
                          Cincinnati, OH 45242-5851                          22,058,755                48.47%

Global Bond               AllianceBernstein L.P.
Portfolio                 Attn: Brent Mather-Seed Account
                          1 N. Lexington Avenue
                          White Plains, NY 10601-1712                             1,000                80.00%

                          Forethought Life Insurance Company
                          300 N. Meridian Street, Suite 1800
                          Indianapolis, IN 46204-1762                               250                20.00%

Global Risk               Ohio National Life Insurance Co.
Allocation--Moderate      FBO Its Separate Accounts
Portfolio                 One Financial Way
                          Attn: Cathy Gehr, Mail Code 56
                          Cincinnati, OH 45242-5851                           5,951,149               99.38%

Custodian and Accounting Agent
------------------------------


            State Street Bank and Trust Company ("State Street"), c/o State
Street Corporation CCB/5, 1 Iron Street, Boston, Massachusetts 02210, acts as
the custodian and as accounting agent for 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 subcustodial 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 are 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 or period ended December 31, 2015 and the report of Ernst & Young
LLP, 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 24, 2016. The unaudited financial statements of
Growth and Income Portfolio for the six-month period ended June 30, 2016 are
incorporated herein by reference to the Portfolio's semi-annual report. The
semi-annual report was filed on Form N-CSRS with the SEC on August 19, 2016.
These reports are available without charge upon request by calling ABIS at (800)
(800) 227-4618 or on the Internet at www.ABglobal.com.


                                                                      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 statement 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 policies and procedures
are implemented consistently. Copies of the Policy, the RI Policy and our
voting records, as noted below in "Voting Transparency", 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 at least three times a year and 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 both principles-based and 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
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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
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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
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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
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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 that sponsors a retirement plan we
manage (or administer), that distributes AB-sponsored mutual funds, or with
which we or one or more of our employees have 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.