As filed with the Securities and Exchange
Commission on February 15, 2008
Registration No :
Investment Company Act Registration No. 811-5398
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No.
--------------------------------------------
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (800) 221-5672
---------------------------------------------------------------
EMILIE D. WRAPP
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York l0105
(Name and address of agent for service)
Copies of communications to:
Kathleen K. Clarke
Seward & Kissel LLP
1200 G Street, Nw
Suite 350
Washington, DC 20005
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement becomes effective.
It is proposed that this filing will become effective on March 17, 2008 pursuant
to Rule 488 under the Securities Act of 1933.
No filing fee is required because an indefinite number of shares has previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended.
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC.
CONTENTS OF FORM N-14 REGISTRATION STATEMENT
This Registration Statement contains the following papers and documents:
o Cover Sheet
o Contents of Registration Statement
o Form N-14 Cross Reference Sheet
o Letter to Shareholders
o Notice of Special Meetings of Shareholders
o Part A - Proxy Statement/Prospectus
o Part B - Statement of Additional Information
o Part C - Other Information
o Signatures
o Exhibits
CROSS REFERENCE SHEET
ITEM NO. PROXY/PROSPECTUS
Part A
1. Beginning of Registration Statement and Cover Page/Questions & Answers
Outside Front Cover Page of Prospectus
2. Beginning of Outside Back Cover Page of Questions & Answers
Prospectus
3. Fee Table, Synopsis Information and Risk Summary, Appendix A
Factors
4. Information about the Transaction Letter to Stockholders,
Questions and Answers, Summary,
Information About the Proposed
Transaction
5. Information about the Registrant Letters to Stockholders,
Questions and Answers,
Summary, Information About the
Funds
6. Information about the Company Being Letters to Stockholders,
Questions and Answers, Acquired
Summary, Information About the
Funds
7. Voting Information Voting Information
8. Interest of Certain Persons and Experts Experts
9. Additional Information Required for Not Applicable
Reoffering by Persons Deemed to be
Underwriters
Part B
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. Additional Information About the SAI
Registrant
13. Additional Information about the Company SAI
being Acquired
14. Financial Statements Incorporated by Reference to
the SAI
15-17. Information required to be
included in Part C is set forth
under the appropriate item, so
numbered, in Part C of this
Registration
Statement
[LOGO]
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. --
ALLIANCEBERNSTEIN HIGH YIELD PORTFOLIO
ALLIANCEBERNSTEIN GLOBAL BOND PORTFOLIO
ALLIANCEBERNSTEIN AMERICAS GOVERNMENT INCOME PORTFOLIO
ALLIANCEBERNSTEIN GLOBAL DOLLAR GOVERNMENT PORTFOLIO
1345 Avenue of the Americas
New York, New York 10105
[____________], 2008
INFORMATION ABOUT ACQUISITIONS
Dear Variable Annuity Contractholder:
We are sending this information to you because you hold an interest in a
separate account offered by an insurance company that funds a variable insurance
product. Certain of the purchase payments made under your contract by you as a
contractholder have been allocated to portfolios of AllianceBernstein Variable
Products Series Fund, Inc. ("AVP") that invest in fixed-income securities,
including AllianceBernstein High Yield Portfolio ("High Yield"),
AllianceBernstein Global Bond Portfolio ("Global Bond"), AllianceBernstein
Americas Government Income Portfolio ("AGI") and AllianceBernstein Global Dollar
Government Portfolio ("Global Dollar"). We sometimes refer to each of High
Yield, Global Bond, AGI and Global Dollar as an "Acquired Portfolio" and
together, the "Acquired Portfolios".
The Board of Directors (the "Directors") of AVP is pleased to announce the
acquisitions of the assets and liabilities of the Acquired Portfolios by
AllianceBernstein U.S. Government/High Grade Securities Portfolio ("High
Grade"), another AVP portfolio, which also invests in fixed-income securities
but, as described below, will have a broader investment mandate. We sometimes
refer to each of the Acquired Portfolios and High Grade as a "Portfolio" and
together, the "Portfolios". The acquisitions, which are expected to become
effective early in the second quarter of 2008, do not require a shareholder vote
and are described in more detail in the attached Prospectus. You should review
the Prospectus carefully and retain it for future reference.
The Portfolios currently pursue different investment strategies, exploiting
different sectors of the fixed-income market. The Acquired Portfolios are
relatively small Portfolios that focus on quality (Global Bond), region (AGI) or
sector (High Yield, Global Dollar). After the proposed acquisitions, High Grade
will be renamed AllianceBernstein Intermediate Bond Portfolio and will have
broadened investment policies as a multi-sector bond fund that invests in a
diversified portfolio of fixed-income securities. We anticipate that the
acquisitions will result in benefits to the shareholders of the Acquired
Portfolios as discussed more fully in the Prospectus. As a general matter, we
believe that acquisitions will provide the potential for a more efficient
investment opportunities for the Acquired Portfolio shareholders in light of
Intermediate Bond's multi-sector investment strategy, which includes investments
in corporate debt, foreign currency-denominated debt (including emerging market
debt), and below investment grade debt (subject to 25% maximum), as well as U.S.
Government debt. The acquisitions should also result in a lower expense ratio
for the Acquired Portfolio shareholders.
In approving the acquisitions, the Directors have considered, among other
things, the investment objectives and investment policies of the Portfolios, the
changes in the marketplace for variable annuity contracts since the Acquired
Portfolios commenced operations and their prospects for future sales, expense
ratio reductions expected to result from the acquisitions, changes in portfolio
management, the comparison of fees for the Portfolios and the pro forma combined
Portfolio, repositioning of the securities held by the Acquired Portfolios as a
result of the acquisitions, the costs of the acquisitions and the allocation
thereof, and the tax-free nature of the acquisitions and have concluded that the
acquisitions are in the best interests of the Portfolios.
Upon the acquisitions of the Acquired Portfolios by High Grade, insurance
company shareholders of the Acquired Portfolios will receive shares of High
Grade of the same class of shares as the shares they currently own, which have
an aggregate net asset value ("NAV") equal to the aggregate NAV of the
shareholder's shares in the Acquired Portfolios. The Acquired Portfolios would
then terminate. The contractholders of Acquired Portfolios will not be assessed
any sales charges or other shareholder fees in connection with the acquisitions.
Sincerely,
Marc O. Mayer
President
PROSPECTUS
Acquisition of the Assets and Assumption of the Liabilities of
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. --
ALLIANCEBERNSTEIN HIGH YIELD PORTFOLIO
ALLIANCEBERNSTEIN GLOBAL BOND PORTFOLIO
ALLIANCEBERNSTEIN AMERICAS GOVERNMENT INCOME PORTFOLIO
ALLIANCEBERNSTEIN GLOBAL DOLLAR GOVERNMENT PORTFOLIO
By, and in Exchange for Shares of,
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. --
ALLIANCEBERNSTEIN U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
[____________], 2008
TABLE OF CONTENTS
Questions and Answers [__]
Acquisitions of High Yield, Global Bond, AGI and Global
Dollar by High Grade [__]
Summary [__]
Comparison of Fees [__]
Comparison of Investment Advisory Fees [__]
Comparison of Investment Objectives and Policies [__]
Principal Risks [__]
Federal Income Tax Consequences [__]
Comparison of Distribution and Purchase Procedures [__]
Service Providers [__]
Comparison of Business Structures [__]
Information about the Transactions [__]
Description of the Plans [__]
Reasons for the Acquisitions [__]
Description of Securities to be Issued [__]
Dividends and Other Distributions [__]
Federal Income Tax Consequences [__]
Capitalization Information [__]
Information about the Portfolios [__]
Management of the Portfolios [__]
Advisory Agreement and Fees [__]
Distributor [__]
Other Service Providers [__]
Legal Matters [__]
Experts [__]
Financial Highlights [__]
Appendix A -- Comparison of Investment Objectives and Policies [__]
Appendix B -- Portfolio Performance [__]
Appendix C -- Description of Principal Risks of the Portfolios [__]
Appendix D -- Certain Information Applicable to Class A and
Class B Shares of High Grade [__]
Appendix E -- Other Information [__]
Appendix F -- Form of Plan of Acquisition and Liquidation [__]
Appendix G -- Capitalization [__]
Appendix H -- Legal Proceedings [__]
Appendix I -- Share Ownership Information [__]
Appendix J -- Financial Highlights [__]
QUESTIONS AND ANSWERS
The following questions and answers provide an overview of key features of the
acquisitions and of the information contained in this Prospectus.
1. What is this document and why did we send this document to you?
This is a Prospectus that provides you with information about the acquisitions
(the "Acquisitions") by AllianceBernstein U.S. Government/High Grade Securities
Portfolio ("High Grade"), a series of AllianceBernstein Variable Products Series
Fund, Inc. ("AVP"), of the assets and liabilities of the following series of
AVP:
o AllianceBernstein High Yield Portfolio ("High Yield");
o AllianceBernstein Global Bond Portfolio ("Global Bond");
o AllianceBernstein Americas Government Income Portfolio ("AGI"); and
o AllianceBernstein Global Dollar Government Portfolio ("Global
Dollar").
We refer to each of High Yield, Global Bond, AGI and Global Dollar as an
"Acquired Portfolio" and collectively, the "Acquired Portfolios". We also refer
to each of the Acquired Portfolios and High Grade as a "Portfolio" and,
collectively, the "Portfolios."
On February 7, 2008, the Board of Directors (the "Directors") of AVP approved
and declared advisable the Acquisitions of the Acquired Portfolios by High
Grade. The Acquisitions do not require approval by the Acquired Portfolios'
shareholders.
The Directors also approved a modification of High Grade's investment objective
and certain changes in High Grade's non-fundamental investment policies to
enable it to pursue a multi-sector strategy and provide greater diversification.
For a more complete discussion of the investment objective and investment policy
revisions of High Grade, see "Comparison of Investment Objectives and Policies"
in the Summary.
Shares of the Portfolios are not sold directly to individuals. The Portfolios
only offer their shares through the separate accounts of life insurance
companies ("Insurers"). As a contractholder, you hold a contract with an Insurer
that offers the Portfolios as an investment option. The Insurers are the
shareholders of record but the contractholders have a beneficial interest in the
Portfolios. References to "you" or "shareholders" in this prospectus include the
Insurers, as the shareholders of record, and contractholders.
Shareholders may contact a Portfolio at 1-800-221-5672 or write to a Portfolio
at 1345 Avenue of the Americas, New York, NY 10105.
2. How will the Acquisitions work?
The Plans of Acquisition and Liquidation dated as of [_____________], 2008 (the
"Plans") provide for (i) the transfer of all the assets of the Acquired
Portfolios to High Grade, (ii) the assumption by High Grade of all the
liabilities of the Acquired Portfolios, (iii) the issuance to the Acquired
Portfolios' shareholders of the equivalent class of shares of High Grade, equal
in aggregate net asset value ("NAV") to the NAV of their former Acquired
Portfolio shares in redemption of their Acquired Portfolio shares, and (iv) the
termination of the Acquired Portfolios.
The shareholders of the Acquired Portfolios are insurance company separate
accounts ("Separate Accounts") used to fund variable life and annuity products
("Variable Products"). As a Variable Product owner, you have a beneficial
interest in the insurance company's shares of the Acquired Portfolios. The
insurance companies will receive shares of a class of High Grade corresponding
to the class of shares of the Acquired Portfolios they now own. The High Grade
shares that shareholders of the Acquired Portfolios receive will have the same
aggregate NAV as the shares of the Acquired Portfolios held before the
Acquisitions. Shareholders of the Acquired Portfolios will not be assessed any
sales charges or other shareholder fees in connection with the Acquisitions.
Class B shares of both the Acquired Portfolios and High Grade are subject to
distribution fees.
3. Why are the Acquisitions taking place?
After considering the recommendation of AllianceBernstein L.P. (the "Adviser"),
the Directors concluded that participation by each of the Acquired Portfolios in
the Acquisitions is in the best interests of each of the Acquired Portfolios.
The Directors also concluded that the Acquisitions would benefit each Acquired
Portfolio's shareholders by resulting in, among other things, a reduction in
expenses, and would not dilute shareholders' interests. In reaching this
conclusion, the Directors considered, among other things, the investment
objectives and investment policies of the Portfolios, the changes in the
marketplace for Variable Products since Acquired Portfolios commenced
operations, the expense ratio reductions expected to result from the
Acquisitions, changes in portfolio management, the comparison of fees for the
Portfolios and the pro forma combined Portfolio, the costs of the Acquisitions
and the allocation thereof, and the tax-free nature of the Acquisitions.
4. When will the Acquisitions take place?
The Acquisitions are expected to take place early in the second quarter of 2008.
5. Who will bear the expenses of the Acquisitions?
The expenses of the Acquisitions will be borne proportionately by the Acquired
Portfolios based on their net assets at the time of the Acquisitions.
6. Where may I find additional information regarding the Portfolios?
Additional information about the Portfolios is available in the Statement of
Additional Information ("SAI") dated [__________], 2008 that has been filed with
the Securities and Exchange Commission ("SEC") in connection with this
Prospectus. The SAI and each Portfolio's Annual Report to Shareholders, which
contains audited financial statements for the Portfolios' fiscal year ended
December 31, 2007, are incorporated by reference into this Prospectus. In
addition, the Prospectus and SAI for each Portfolio dated May 1, 2007 (the
"Prospectuses") and each Portfolio's Semi-Annual Report dated June 30, 2007 are
also incorporated by reference into this Prospectus.
Additional copies of the Annual and Semi-Annual Reports and the Prospectus for
each Portfolio are available at www.AllianceBernstein.com and are also
available, along with this Prospectus and SAI, upon request, without charge, by
writing to the address or calling the telephone number listed below.
By mail: AllianceBernstein Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
By phone: For Information: 1-800-221-5672
For Literature: 1-800-227-4618
All of this additional information is also available in documents filed with the
SEC. You may view or obtain these documents from the SEC:
In person: at the SEC's Public Reference Room in Washington, DC
By phone: 1-202-551-8090 (for information on the operations of the Public
Reference Room only)
By mail: Public Reference Section, Securities and Exchange Commission,
Washington, DC 20549-0102 (duplicating fee required)
By electronic mail: publicinfo@sec.gov (duplicating fee required)
On the Internet: www.sec.gov
Other Important Things to Note:
o You may lose money by investing in the Portfolios.
o The SEC has not approved or disapproved these securities or passed
upon the adequacy of this Prospectus. Any representation to the
contrary is a criminal offense.
ACQUISITIONS OF HIGH YIELD, GLOBAL BOND, AGI AND GLOBAL DOLLAR BY HIGH GRADE
On February 7, 2008, the Directors declared advisable and voted to approve
the Plans and the Acquisitions. The Plans provide for (i) the transfer of all
the assets of the Acquired Portfolios to High Grade, (ii) the assumption by High
Grade of all the liabilities of the Acquired Portfolios, (iii) the issuance to
the Acquired Portfolios' shareholders of shares of an equivalent class of shares
of High Grade, equal in aggregate NAV to the NAV of their former Acquired
Portfolio shares in redemption of their Acquired Portfolio shares, and (iv) the
termination of the Acquired Portfolios.
Each Acquired Portfolio shareholder will receive the number of full and
fractional shares of an equivalent class of shares of High Grade having an
aggregate NAV that, on the effective date of the Acquisitions, is equal to the
aggregate NAV of the shareholder's shares of the Acquired Portfolio.
Shareholders of the Acquired Portfolios will recognize no gain or loss. The
Acquisitions are expected to occur early in the second quarter of 2008. The
Acquisitions do not require shareholder approval.
The Directors concluded that participation by each of the Acquired
Portfolios in the Acquisitions is in the best interests of each of the Acquired
Portfolios. The Directors also concluded that the Acquisitions would not dilute
shareholders' interests. In reaching this conclusion, the Directors considered,
among other things, the investment objectives and investment policies of the
Portfolios, the changes in the marketplace for Variable Products since the
Acquired Portfolios commenced operations, expense ratio reductions for
shareholders expected to result from the Acquisitions, changes in portfolio
management, the comparison of fees for the Portfolios and the pro forma combined
Portfolio, the costs of the Acquisitions and the allocation thereof, and the
tax-free nature of the Acquisitions. For a more complete discussion of the
factors considered by the Directors in approving the Acquisitions, see "Reasons
for the Acquisitions" in "Information about the Transactions."
SUMMARY
The following summary highlights differences between High Grade and the
Acquired Portfolios. This summary is not complete; for more complete
information, please read this entire document. Note that certain information is
presented as of September 30, 2007. At the February 5-7, 2008 Regular Board
Meeting (the "Board Meeting"), the Portfolios' Adviser, AllianceBernstein L.P.,
represented to the Directors that, if the information were updated, it would not
differ in any material respect.
The following is a brief summary of information about each Portfolio:
o High Yield is a diversified open-end fund, with assets, as of
September 30, 2007, of approximately $36 million, that invests
primarily in high yield debt securities, also known as "junk bonds",
which are rated below investment grade;
o Global Bond is a non-diversified open-end fund, with assets, as of
September 30, 2007, of approximately $39 million, that invests
primarily in a globally diversified portfolio of high-quality debt
securities denominated in the U.S. Dollar and a range of currencies
other than the U.S. Dollar;
o AGI is a non-diversified open-end fund, with assets, as of September
30, 2007, of approximately $38 million, that invests primarily in debt
securities issued or guaranteed by the governments of the United
States, Canada, and Mexico, their political subdivisions, agencies,
instrumentalities or authorities; and
o Global Dollar is a non-diversified open-end fund, with assets, as of
September 30, 2007, of approximately $26 million, that invests
primarily in government securities, including sovereign debt
obligations, and substantially all of its assets in lower-rated
securities.
The average annual total returns for Class A shares of each of the
Portfolios, as of December 31, 2007, were as follows:
1 year 5 years 10 years
------ ------- --------
High Grade 4.85% 3.68% 5.08%
High Yield 0.89% 8.16% 2.79%
Global Bond 10.35% 5.84% 5.32%
AGI 8.38% 6.50% 7.21%
Global Dollar 4.53% 13.11% 10.23%
These performance numbers do not reflect charges associated with the
Variable Products or contractholders' accounts.
As discussed below, at the Board Meeting the Directors approved revisions
to High Grade's investment policies to enable the Portfolio to pursue a
multi-sector strategy and invest in a diversified portfolio of fixed-income
securities. In particular, High Grade will no longer be required to limit its
investments to U.S. Dollar-denominated debt securities and investment grade
securities and will be able to invest up to 25% of its assets in non-U.S.
Dollar-denominated foreign fixed-income securities and up to 25% of its assets
in securities rated below investment grade. To reflect High Grade's broader
policies, the Directors also approved a change in its name to AllianceBernstein
Intermediate Bond Portfolio ("Intermediate Bond").
Comparison of Fees
The expense ratios of the High Grade Class A and Class B shares are lower
than the expense ratios of the Acquired Portfolios' Class A and Class B shares.
In addition, the larger asset size of the combined Portfolio will result in a
decrease in expenses. As the table below shows, High Grade would have a
significantly lower expense ratio after the Acquisitions. The following table
shows the Portfolios' expense ratios and pro forma expense ratio of the combined
Portfolio for Class A and Class B shares as of September 30, 2007.
Class A Class A Class B Class B
Total Annual Total Annual Total Annual Total Annual
Expense Expense Expense Expense
Ratio Ratio Ratio Ratio
(excluding (including (excluding (including
interest interest interest interest
expense) expense) expense expense)
-------- -------- ------- --------
High Yield 1.32% - 1.57% -
Global Bond 1.26% - 1.51% -
AGI 1.26% 2.61% 1.51% 2.86%
Global Dollar 1.61% 1.63% 1.86% 1.88%
High Grade 0.81% - 1.06% -
High Grade (pro forma) 0.63% - 0.88% -
As the table indicates, the expense per share would be reduced for both
Class A and Class B shares of High Yield and Global Bond by .69% and .63%,
respectively, after the Acquisitions. The expense per share would be reduced for
both Class A and Class B shares of AGI and Global Dollar by .63% and .98%,
respectively, excluding interest expense, and by 1.98% and 1.00%, respectively,
including interest expense. This expense information does not include any fees
and expenses that may be applied at the separate account level or contract level
for any charges that may be incurred under a contract. Inclusion of these
charges would increase the expenses reflected above.
The following Fee Table provides more information about the expenses of the
Portfolios. The purpose of the table below is to assist an investor in
understanding the various costs and expenses that a shareholder bears directly
and indirectly from an investment in the Portfolios. The table allows you to
compare the expenses of each Portfolio and estimates for the pro forma combined
Portfolio in its first year following the Acquisitions.
Fee Table
Shareholder Fees (fees paid directly from your investment)
N/A
Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio
assets)
The operating expenses information below is designed to assist
contractholders of variable products that invest in the Portfolios in
understanding the fees and expenses that they may pay as an investor. Because
the information does not reflect deductions at the separate account level or
contract level for any charges that may be incurred under a contract,
contractholders that invest in a Portfolio should refer to the variable contract
prospectus for a description of fees and expenses that apply to contractholders.
Inclusion of these charges would increase the fees and expenses provided below.
High
High Global Global High Grade
Yield Bond AGI Dollar Grade (pro forma)
Class A Class A Class A Class A Class A Class A
------- ------- ------- ------- ------- -------
Management Fees .50% .45% .50% .50% .45% .45%
Other Expenses .79% .78% .70% 1.02% .33% .18%
Interest Expense - - 1.08% .04% - -
Total Portfolio
Operating Expenses 1.29%* 1.23%* 2.28%* 1.56%* .78%* .63%
High
High Global Global High Grade
Yield Bond AGI Dollar Grade (pro forma)
Class B Class B Class B Class B Class B Class B
------- ------- ------- ------- ------- -------
Management Fees .50% .45% .50% .50% .45% .45%
Distribution and/or
Service (12b-1) Fees .25% .25% .25% .25% .25% .25%
Other Expenses .79% .77% .70% 1.02% .33% .18%
Interest Expense - - 1.10% .03% - -
Total Portfolio
Operating Expenses 1.54%* 1.47%* 2.55%* 1.80%* 1.03%* .88%
* The ratio includes expenses attributable to costs of proxy solicitation.
Examples
The Examples are to help you compare the cost of investing in each
Portfolio with the cost of investing in the combined Portfolio on a pro forma
combined basis. The Examples do not give effect to any separate account or
contract level fees that might be paid by a contractholder. They assume that you
invest $10,000 in a Portfolio for the time periods indicated and then redeem all
of your shares at the end of those periods. They also assume that your
investment has a 5% return each year, that a Portfolio's operating expenses stay
the same and that all dividends and distributions are reinvested.
High Grade
High Yield Global Bond AGI Global Dollar High Grade (pro forma)
Class A Class A Class A Class A Class A Class A
------- ------- ------- ------- ------- -----------
After 1 Year $131 $125 $231 $159 $80 $64
After 3 Years $409 $390 $712 $493 $249 $202
After 5 Years $708 $676 $1,220 $850 $433 $351
After 10 Years $1,556 $1,489 $2,615 $1,856 $966 $786
High Grade
High Yield Global Bond AGI Global Dollar High Grade (pro forma)
Class B Class B Class B Class B Class B Class B
------- ------- ------- ------- ------- -------
After 1 Year $157 $150 $258 $183 $105 $90
After 3 Years $486 $465 $793 $566 $328 $281
After 5 Years $839 $803 $1,355 $975 $569 $488
After 10 Years $1,834 $1,757 $2,885 $2,116 $1,259 $1,084
The projected post-Acquisition pro forma Annual Portfolio Operating
Expenses and Examples presented above are based upon numerous material
assumptions. Although these projections represent good faith estimates, there
can be no assurance that any particular level of expenses or expense reductions
will be achieved, because expenses depend on a variety of factors, including the
future level of fund assets, many of which are beyond the control of High Grade
and the Adviser.
Comparison of Investment Advisory Fees
High Grade pays investment advisory fees to the Adviser at the same rate as
does Global Bond and at a lower rate than does High Yield, AGI and Global
Dollar. The advisory fees paid by each Portfolio are:
Advisory Fee
Rate
---------------
High Yield 0.50%
Global Bond 0.45%
AGI 0.50%
Global Dollar 0.50%
High Grade 0.45%
High Grade (pro forma) 0.45%
In addition, the advisory agreements provide for the Portfolios to
reimburse the Adviser for expenses incurred in providing administrative services
to the Portfolios. In 2006, these reimbursements amounted to .10% for High
Grade, .20% for High Yield, .20% for Global Bond, .20% for AGI and .30% for
Global Dollar.
Comparison of Investment Objectives and Policies
At the Board Meeting, the Directors approved changes to High Grade's
investment objective and certain of its non-fundamental investment policies to
allow High Grade to pursue broader investment opportunities by revising or
eliminating restrictions regarding, among other things, types of investments,
credit quality and currencies. The changes to High Grade's investment objective
and strategies are designed to match one of Adviser's retail fund offerings, as
well as an investment strategy currently provided to institutional investors.
The revised investment objective and policies include:
o Adopting a new investment objective for High Grade. Its new investment
objective will be "to generate income and price appreciation without
assuming what the Adviser considers undue risk" replacing its former
investment objective of seeking "high current income with preservation
of capital".
o Changing its policy to invest, under normal circumstances, at least
80% of its net assets in U.S. Government or high grade fixed-income
securities rated A or better by S&P and Moody's or equivalent rating.
High Grade's revised policy will require it to invest, under normal
circumstances, at least 80% of its net assets in fixed-income
securities.
o Permitting High Grade to invest up to 25% of its net assets in below
investment grade securities. As noted above, High Grade currently
invests 80% of its assets investment grade securities. While it will
continue to invest primarily in investment grade securities, High
Grade will have the flexibility to seek investment opportunities with
higher return potential by investing a portion of its assets in lower
rated securities.
o Permitting High Grade to invest up to 25% of its net assets in
non-U.S. Dollar-denominated foreign fixed-income securities. All of
High Grade's investments are currently U.S. Dollar-denominated and
High Grade will continue to be able to invest without limit in U.S.
Dollar-denominated fixed-income securities with the added flexibility
to make investments denominated in other currencies.
o Adopting a maturity policy consistent with the Portfolio's name. As
noted above, in connection with these policy changes, the Directors
approved a change in High Grade's name to Intermediate Bond Portfolio.
The use of the name "intermediate" in the Portfolio's name will be
reflected in its maturity policy, which will be to maintain a
dollar-weighted average maturity of three to ten years and an average
duration of three to six years.
The name, investment objective and non-fundamental investment policy changes are
expected to become effective upon the completion of the Acquisitions, which are
expected to occur early in the second quarter of 2008.
As noted above, in connection with these policy changes, the Directors
approved a change in High Grade's name. For the purposes of this discussion and
the discussion of principal risks below, we will refer to High Grade by its new
name, Intermediate Bond. The following table shows the investment objective and
principal investment strategies of each Portfolio.
Investment Objective Principal Investment Strategies
-------------------- -------------------------------
High Yield The Portfolio's investment objective is The Portfolio invests, under normal
to earn the highest level of current circumstances, at least 80% of its net
income available without assuming undue assets in high yield fixed-income
risk by investing principally in securities.
high-yielding fixed-income securities
rated Baa or lower by Moody's or BBB or The Portfolio invests in a diversified
lower by S&P or Fitch or, if unrated, of mix of high yield, below investment
comparable quality as determined by the grade fixed-income securities, known as
Adviser. "junk bonds."
As a secondary objective, the Portfolio The Portfolio may invest up to 25% of
seeks capital appreciation. its net assets in U.S.
Dollar-denominated securities issued by
non-U.S. entities and up to 20% of its
net assets in non-U.S.
Dollar-denominated securities of such
issuers.
Global Bond The Portfolio's investment The Portfolio invests, under normal
objective is to provide a high circumstances, at least 80% of its
level of return through a net assets in bonds and other
combination of current income and fixed-income securities.
capital appreciation by investing
in a globally diversified portfolio The Portfolio normally invests at
of high-quality debt securities least 65% of its net assets in
denominated in the U.S. Dollar and fixed-income securities of at least
a range of currencies other than three countries.
the U.S. Dollar.
The Portfolio invests in U.S.
Government securities, securities
issued by governments other than
the U.S. Government or
supranational organization debt
securities, corporate debt
obligations, and commercial paper
of banks and bank holding
companies.
The Portfolio's non-U.S.
investments are generally
denominated in currencies other
than the U.S. Dollar.
The Portfolio invests approximately
25% of its net assets in U.S.
Dollar-denominated fixed-income
securities.
AGI The Portfolio's investment The Portfolio normally invests at
objective is to maximize current least 80% of its net assets in
income, consistent with what the fixed-income securities of issuers
Adviser considers to be prudent located in countries in North,
investment risk, that is available Central, or South America and at
from a portfolio of debt securities least 80% of its net assets in
issued or guaranteed by the government securities.
governments of the United States,
Canada, and Mexico, their political The Portfolio primarily invests in
subdivisions (including Canadian fixed-income securities issued or
Provinces, but excluding states of guaranteed by (i) the federal
the United States), agencies, governments of the United States,
instrumentalities or authorities Canada, and Mexico; (ii)
("Government Securities"). government-related entities in the
United States, Canada, and Mexico;
and (iii) the provincial
governments of Canada and Mexico.
To the extent that its assets are
not invested in Government
Securities, the Portfolio may
invest the balance of its net
assets in investment grade
fixed-income securities issued by,
and denominated in the local
currencies of, governments of
countries located in Central and
South America or any of their
political subdivisions, agencies,
instrumentalities or authorities,
provided that such securities are
denominated in their local
currencies. The Portfolio limits
its investments in fixed-income
securities issued by the
governmental entities of any one
such country to 10% of its net
assets.
The Portfolio invests in investment
grade securities denominated in the
U.S. Dollar, the Canadian Dollar,
and the Mexican Peso and expects to
maintain at least 25% of its assets
in U.S. Dollar denominated
securities
Intermediate The Portfolio's investment The combined Portfolio will invest,
Bond objective is to generate income and under normal circumstances, at
price appreciation without assuming least 80% of its net assets in
what the Adviser considers undue fixed-income securities. The
risk. Portfolio expects to maintain a
dollar-weighted average maturity of
three to ten years and an average
duration of three to six years.
The Portfolio expects to invest in
readily marketable fixed-income
securities. The Portfolio may
invest in mortgage-related and
other asset-backed securities, loan
participations, inflation-protected
securities, structured securities,
variable, floating and inverse
floating rate instruments,
preferred stocks, and may use other
investment techniques.
The Portfolio may invest without
limit in U.S. Dollar-denominated
foreign fixed-income securities and
may invest up to 25% of its assets
in non-U.S. Dollar-denominated
foreign fixed-income securities.
These investments may include, in
each case, developed and emerging
market securities
Each of the Portfolios invests primarily in the fixed-income securities
but, as noted in the table above, focuses on different sectors of the bond
market. All of the Portfolios may invest in foreign fixed-income securities, but
Global Dollar's investments are all U.S. Dollar-denominated, while the other
Portfolios have greater flexibility to invest in non-U.S. Dollar-denominated
securities. In addition, while High Yield and Global Dollar invest substantially
all of their assets in below investment grade securities, or junk bonds, Global
Bond and AGI generally limit their investments to higher-quality fixed-income
securities and Intermediate Bond's investments in below investment grade
securities will be limited to 25% of its net assets.
Global Bond, AGI and Global Dollar are non-diversified funds and High Yield
and Intermediate Bond are diversified, which means that they can invest in a
larger number of issuers of fixed-income securities and that they may be less
risky investments. Intermediate Bond's investment strategy will be less
restricted by sector limitations than the Acquired Portfolios' and the combined
Portfolio will be able to pursue income opportunities from government,
corporate, emerging market and high yield sources. All of the Portfolios may use
leverage techniques, such as reverse repurchase agreements. A more detailed
comparison of the investment strategies and policies of the Portfolios is
provided in Appendix A and the historical performance of the Portfolios is
provided in Appendix B. You can find additional information on the Portfolios in
the SAI.
The Portfolios currently pursue different investment strategies, exploiting
different sectors of the fixed-income market. Because of the multi-sector
approach to be followed by the combined Portfolio, the Adviser expects to
reposition the Acquired Portfolios' portfolios. The Adviser expects that up to
one-half of the assets of each Acquired Portfolio, other than AGI, will be
repositioned as a result of the Acquisitions. The Adviser currently expects that
the combined Portfolio will retain all of AGI's assets. The remaining securities
will be transferred or liquidated prior to the acquisitions. The costs
associated with this repositioning are expected to total approximately $150,000.
Principal Risks
The Portfolios are subject to substantially similar principal risks. Those
risks are noted in the table below. A description of each of these risks and
other risks of the Portfolios are provided in Appendix C.
Interest Inflation Non-U.S. Emerging
Market Rate Credit Rate (Foreign) Currency Market
PORTFOLIO Risk Risk Risk Risk Risk Risk Risk
------------------------------------------------------------------------------------------------------------------------------------
AllianceBernstein High Yield Portfolio o o o o o o
AllianceBernstein Global Bond Portfolio o o o o o o
AllianceBernstein Americas Government Income
Portfolio o o o o o o o
AllianceBernstein Global Dollar Government
Portfolio o o o o o o o
AllianceBernstein Intermediate Bond Portfolio o o o o o o o
Federal Income Tax Consequences
As long as the contracts funded through the separate accounts of the
insurance company shareholders qualify as annuity contracts under section 72 of
the Internal Revenue Code of 1986, as amended (the "Code"), the Acquisitions
will not create any tax liability for contractholders.
No gain or loss will be recognized by the Acquired Portfolios or their
shareholders as a result of the Acquisitions. The aggregate tax basis of the
shares of High Grade received by a shareholder of an Acquired Portfolio
(including any fractional shares to which the shareholder may be entitled) will
be the same as the aggregate tax basis of the shareholder's shares of the
Acquired Portfolio. The holding period of the shares of High Grade received by a
shareholder of an Acquired Portfolio (including any fractional share to which
the shareholder may be entitled) will include the holding period of the shares
of the Acquired Portfolio held by the shareholder, provided that such shares are
held as capital assets by the shareholder of the Acquired Portfolio at the time
of the Acquisition. The holding period and tax basis of each asset of the
Acquired Portfolios in the hands of High Grade as a result of the Acquisitions
will be the same as the holding period and tax basis of each such asset in the
hands of the Acquired Portfolios prior to the Acquisitions. Provided that the
Acquired Portfolio shares surrendered constitute capital assets in the hands of
the shareholder, such gain or loss realized by the shareholder will be capital
gain or loss upon disposition of the shares. This tax information is based on
the advice of Seward & Kissel LLP, counsel to each of the Portfolios. It is a
condition to the closing of the Acquisitions that such advice be confirmed in a
written opinion of counsel. An opinion of counsel is not binding on the Internal
Revenue Service ("IRS").
No distribution of capital gains to the Acquired Portfolios shareholders
prior to the closing of the Acquisitions is anticipated. Prior to the closing of
the Acquisitions, AVP, if necessary, will declare a distribution to the Acquired
Portfolios shareholders which, together with all previous distributions, will
have the effect of distributing to the Acquired Portfolios shareholders all of
the Acquired Portfolio's investment company taxable income (computed without
regard to the deduction for dividends paid) and net realized capital gains, if
any, through the closing.
A portion of the assets of the Acquired Portfolios may be sold in
connection with the Acquisitions. The actual tax impact of such sales will
depend on the difference between the price at which such portfolio assets are
sold and the Acquired Portfolios' basis in such assets. Any capital gains
recognized in these sales will be distributed to the Acquired Portfolios'
shareholders (but not contractholders) as capital gain dividends (to the extent
of the excess of net realized long-term capital gains over net realized
short-term capital losses) and ordinary dividends (to the extent of net realized
short-term capital gains) during or with respect to the year of sale, and such
distributions will be taxable to shareholders (but not to the contractholders).
Additional tax considerations are discussed under the section on "Federal
Income Tax Consequences" in "Information about the Transactions".
Comparison of Distribution and Purchase Procedures
The purchase procedures for the Portfolios are the same. The Portfolios
offer their shares through the separate accounts of life insurance companies
(the "Insurers"). You may only purchase and sell shares through these separate
accounts. See the prospectus of the separate account of the participating
insurance company for information on the purchase and sale of the Portfolios'
shares. AllianceBernstein Investments, Inc. ("ABI") may from time to time
receive payments from Insurers in connection with the sale of the Portfolios'
shares through the Insurer's separate accounts. More information on distribution
and purchase procedures of High Grade is provided in Appendix D.
Service Providers
The Portfolios have the same service providers, which will continue in
their capacity after the Acquisitions.
Comparison of Business Structures
Each Portfolio is a series of AVP, which is organized as a Maryland
corporation and is governed by its Charter, Bylaws and Maryland law. For more
information on the organizational structure and governance of the Portfolios,
see Appendix E.
INFORMATION ABOUT THE TRANSACTIONS
Description of the Plans
As provided in the Plans, High Grade will acquire all the assets and assume
all the liabilities, expenses and obligations of the Acquired Portfolios at the
effective time of the Acquisitions (the "Effective Time"). In return, High Grade
will issue, and the Acquired Portfolios will distribute to their shareholders, a
number of full and fractional shares of High Grade, determined by dividing the
net value of all the assets of each of the Acquired Portfolios by the NAV of one
share of High Grade. For this purpose, the Plans provide the times for and
methods of determining the net value of the assets of each Portfolio. The Plans
provide that shareholders of the Acquired Portfolios will be credited with
shares of High Grade corresponding to the aggregate NAV of the Acquired
Portfolio shares that the shareholder holds of record at the Effective Time.
Following the distribution of High Grade shares in full liquidation of the
Acquired Portfolios, the Acquired Portfolios will wind up their affairs and
terminate as soon as is reasonably possible after the Acquisitions.
The projected expenses of the Acquisitions, largely those for legal,
accounting, printing and proxy solicitation expenses, are estimated to total
approximately $301,000. The projected expenses will be borne proportionately by
the Acquired Portfolios based on their net assets at the time of the
Acquisitions.
The Acquisitions are expected to occur early in the second quarter of 2008.
Under applicable legal and regulatory requirements, none of the Acquired
Portfolio's shareholders will be entitled to exercise objecting shareholders'
appraisal rights, i.e., to demand the fair value of their shares in connection
with the Acquisitions. Therefore, shareholders will be bound by the terms of the
Acquisitions under the Plan. However, any shareholder of the Acquired Portfolios
may redeem shares of common stock prior to the Acquisitions.
Completion of the Acquisitions are subject to certain conditions set forth
in the Plans. The Directors may terminate a Plan under certain circumstances.
Among other circumstances, the Directors may terminate a Plan upon a
determination that proceeding with the Plan is not in the best interests of a
Portfolio or of its shareholders.
A copy of a form of the Plans for the Acquisitions is attached as Appendix
F.
Reasons for the Acquisitions
At the Board Meeting, the Adviser recommended that the Directors approve
the proposed Plans and Acquisitions. The Directors considered the factors
discussed below from the point of view of the interests of the Acquired
Portfolios and its shareholders. The Directors also considered each Acquisition
from the point of view of High Grade and its shareholders. After careful
consideration, the Directors (including all Directors who are not "interested
persons" of the Portfolios, the Adviser or its affiliates) determined that each
Acquisition would be in the best interests of the respective Acquired Portfolio
and that the interests of existing shareholders of such Portfolio would not be
diluted as a result of the Acquisitions. The Directors have unanimously approved
the Plans and Acquisitions.
The Adviser presented the following reasons in favor of the Acquisitions:
o The Adviser discussed with the Directors that there has been a shift
away from a multiple series fund, such as AVP as the preferred funding
vehicle for Variable Products, to a customized "private-labeled"
platform of investment options subadvised by a number of different
investment advisers. While AVP's style-pure and blended equity
portfolios remain desirable for some insurance companies, the Adviser
believes that combining its smaller and expensive sector and region
specific AVP portfolios, such as the Acquired Portfolios, into a more
general, multi-sector fixed-income fund offering, such as High Grade
after its policy changes, will satisfy the existing insurance company
shareholders' needs and may attract new issuers of Variable Products.
The combination of the smaller portfolios will allow insurance
companies and underlying contractholders to benefit from lower expense
ratios, which should result in improved risk-adjusted performance.
o The Adviser also discussed with the Directors that it believes that
each Acquisition would benefit the respective Acquired Portfolio and
its shareholders by resulting in lower expenses.
At the Board Meeting, the Directors (with the advice and assistance of
independent counsel) also considered, among other things:
o potential shareholder benefits, including the fact that total expenses
of each class of shares of the combined Portfolio are expected to be
significantly lower than the current expenses of comparable classes of
shares of each Acquired Portfolio;
o planned repositioning of the Acquired Portfolios, which are
anticipated to occur shortly after the Acquisitions, (assets of High
Grade are not expected to be repositioned as a result of the
Acquisitions) including that the Adviser expects that (i) High Grade
with its proposed multi-sector approach will be able to retain
approximately 50% of the assets of the Acquired Portfolios, which
invest in different sectors of the fixed-income market except for AGI,
for which 100% of its assets will be retained, (ii) approximately 50%
of each Acquired Portfolio's assets, except for AGI will be
repositioned as a result of the Acquisition, and (iii) transaction
costs associated with the repositioning will be approximately
$150,000, or approximately .06% of the combined Portfolio's pro forma
net assets;
o the current asset levels of each of the Acquired Portfolios and the
combined pro forma asset level of the combined Portfolio;
o the historical performance of the Portfolios;
o the investment objectives and principal investment strategies of the
Portfolios; and
o the fact that the portfolio managers with day-to-day responsibility
for managing the Acquired Portfolios and High Grade are different, but
that High Grade's portfolio managers are composed of members of the
Core Fixed Income Investment Team, and that, following the
Acquisition, the same portfolio managers will share responsibility for
management of the combined Portfolio.
The Directors also considered, among other things:
o the fact that, because the Separate Accounts are not subject to
federal income tax on a current basis, there is no need to consider
the impact on shareholders of the Acquisition on the Portfolios'
capital loss carryforwards;
o the form of the Plan and the terms and conditions of the Acquisition;
o the fact that the Portfolios have identical investment advisory
agreements and pay the same or (in the case of High Yield, AGI and
Global Dollar ) higher advisory fee rates;
o whether the Acquisition would result in the dilution of shareholders'
interests;
o the fact that no changes in service providers would result from the
Acquisition;
o the benefits of the Acquisition to the Adviser, which will benefit
from the elimination of separate monitoring and administration of the
Acquired Portfolios;
o the fact that High Grade will assume all the liabilities, expenses and
obligations of the Acquired Portfolios;
o the expected federal income tax consequences of the Acquisition;
o the costs of the Acquisition, which will be borne proportionately by
the Acquired Portfolios based on their assets at the time of the
Acquisitions; and
o the fact that the Adviser has agreed to indemnify the Acquired
Portfolios for a three-year period against any undisclosed or other
liabilities not disclosed or not reflected in the NAV of the Acquired
Portfolios at the time of the Acquisition, to reimburse High Grade for
any costs in connection with investigating any such liability, and to
continue certain insurance coverage for a six-year period.
Also at the Board Meeting, the Directors approved the Plan on behalf of
High Grade, after finding that it was in the best interests of High Grade and
that the interests of High Grade's shareholders would not be diluted as a result
of the Acquisitions.
Description of Securities to be Issued
Under the Plans, High Grade will issue additional shares of its Class A and
Class B common stock for distribution to corresponding classes of shares of the
Acquired Portfolios. Under AVP's Charter, High Grade may issue up to 500,000,000
shares of common stock, par value $.001 per share, for each of these Classes.
When the acquisitions of the Acquired Portfolios by High Grade are
consummated, Class A and Class B shareholders of each Acquired Portfolio will
receive shares of a corresponding class of High Grade having an aggregate NAV
equal to the aggregate NAV of the shareholder's shares in the Acquired
Portfolio.
Each share of High Grade represents an equal proportionate interest with
other shares of High Grade. Each share has equal earnings, assets, and voting
privileges, and is entitled to dividends and other distributions out of the
income earned and gain realized on the assets belonging to High Grade as
authorized by the Directors. Shares of High Grade entitle their holders to one
vote per full share and fractional votes for fractional shares held. Shares of
High Grade received by the Acquired Portfolios in the Acquisitions will be
issued at NAV, without a sales charge, and will be fully paid and
non-assessable.
Dividends and Other Distributions
On or before the Closing Date, as defined in the Plans, the Acquired
Portfolios will, if necessary, declare and pay as a distribution substantially
all their undistributed net investment income, net short-term capital gain, net
long-term capital gain and net gains from foreign currency transactions as
applicable to maintain their treatment as a regulated investment company.
Federal Income Tax Consequences
As long as the variable contracts funded through the separate accounts of
the insurance company shareholders qualify as annuity contracts under section 72
of the Code, the Acquisitions will not create any tax liability for
contractholders.
Subject to certain stated assumptions contained therein, each Acquired
Portfolio will receive an opinion of Seward & Kissel LLP, its counsel,
substantially to the following effect: (i) the Acquisition will constitute a
"reorganization" within the meaning of section 368(a) of the Code and that the
Acquired Portfolio and High Grade will each be "a party to a reorganization"
within the meaning of section 368(b) of the Code; (ii) a shareholder of the
Acquired Portfolio will recognize no gain or loss on the exchange of the
shareholder's shares of the Acquired Portfolio solely for shares of High Grade;
(iii) neither the Acquired Portfolio nor High Grade will recognize any gain or
loss upon the transfer of all of the assets of the Acquired Portfolio to High
Grade in exchange for shares of High Grade and the assumption by High Grade of
the liabilities of the Acquired Portfolio pursuant to the Plan or upon the
distribution of shares of High Grade to shareholders of the Acquired Portfolio
in exchange for their respective shares of the Acquired Portfolio; (iv) the
holding period and tax basis of the assets of the Acquired Portfolio acquired by
High Grade will be the same as the holding period and tax basis that the
Acquired Portfolio had in such assets immediately prior to the Acquisition; (v)
the aggregate tax basis of shares of High Grade received in connection with the
Acquisition by each shareholder of the Acquired Portfolio (including any
fractional share to which the shareholder may be entitled) will be the same as
the aggregate tax basis of the shares of the Acquired Portfolio surrendered in
exchange therefor; (vi) the holding period of shares of High Grade received in
connection with the Acquisition by each shareholder of the Acquired Portfolio
(including any fractional share to which the shareholder may be entitled) will
include the holding period of the shares of the Acquired Portfolio surrendered
in exchange therefore, provided that such the Acquired Portfolio shares
constitute capital assets in the hands of the shareholder as of the Closing
Date; and (vii) High Grade will succeed to the capital loss carryovers of the
Acquired Portfolio but the use of High Grade's existing capital loss carryovers
(as well as the carryovers of the Acquired Portfolio) may be subject to
limitation under section 383 of the Code after the Acquisition. This opinion of
counsel will not be binding on the IRS or a court and there is no assurance that
the IRS or a court will not take a view contrary to those expressed in the
opinion.
A portion of the assets of the Acquired Portfolios may be sold in
connection with the Acquisitions. The actual tax impact of such sales will
depend on the difference between the price at which such portfolio assets are
sold and the Acquired Portfolios' basis in such assets. Any capital gains
recognized in these sales will be distributed to the Acquired Portfolios'
shareholders (but not to the contractholders) as capital gain dividends (to the
extent of the excess of net realized long-term capital gains over net realized
short-term capital losses) and ordinary dividends (to the extent of net realized
short-term capital gains) during or with respect to the year of sale, and such
distributions will be taxable to shareholders (but not to the contractholders).
No distribution of capital gains to the Acquired Portfolios' shareholders
prior to the closing of the Acquisitions is anticipated. Prior to the closing of
the Acquisitions, AVP, if necessary, will declare a distribution to the Acquired
Portfolio shareholders which, together with all previous distributions, will
have the effect of distributing to the Acquired Portfolio shareholders all of
the Acquired Portfolios' investment company taxable income (computed without
regard to the deduction for dividends paid) and net realized capital gains, if
any, through the closing.
Shareholders of the Acquired Portfolios are encouraged to consult their tax
advisers regarding the effect, if any, of the Acquisitions in light of their
individual circumstances. Because the foregoing discussion only relates to the
federal income tax consequences of the Acquisitions, those shareholders also
should consult their tax advisers as to state and local tax consequences, if
any, of the Acquisitions.
Capitalization Information
For information on the existing capitalization of the Portfolios and the
pro forma capitalization of High Grade, see Appendix G.
INFORMATION ABOUT THE PORTFOLIOS
The Portfolios are each a series of AVP, an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act") and organized as a Maryland corporation in 1987 under the name
Alliance Variable Products Series Fund, Inc. The company's name became
AllianceBernstein Variable Products Series Fund, Inc. on April 30, 2003.
Management of the Portfolios
The Directors of AVP direct the management of the business and affairs of
the Portfolios. The Directors approve all significant agreements between the
respective Portfolio and persons or companies furnishing services to it,
including a Portfolio's agreements with the Adviser and the Portfolio's
custodian, transfer and dividend disbursing agent. The day-to-day operations of
a Portfolio are delegated to its officers and the Portfolio's Adviser, subject
to the Portfolio's investment objective and policies and to general supervision
by the Directors.
The management of and investment decisions for each of the Portfolio's
portfolios are made by certain Investment Policy Groups or Investment Teams.
Each Investment Policy Group or Investment Team relies heavily on the
fundamental analysis and research of the Adviser's large internal research
staff. No one person is principally responsible for making recommendations for
each Portfolio's portfolio.
The Portfolios are managed by different portfolio management teams,
although some of the individual team members serve on more than one team.
Subsequent to the consummation of the Acquisitions, the Adviser's Core
Fixed-Income Investment Team, which is currently primarily responsible for the
day-to-day management of High Grade, will continue to be primarily responsible
for day-to-day management of the combined Portfolio. The following table lists
the Investment Policy Groups or Investment Teams, the persons within each
Investment Policy Group or Investment Team with the most significant
responsibility for the day-to-day management of the Portfolio's portfolio, the
length of time that each person has been jointly and primarily responsible for
the Portfolio, and each person's principal occupation during the past five
years. The SAI provides additional information about the portfolio managers'
compensation, other accounts managed by the portfolio managers, and the
portfolio managers' ownership of securities of the Portfolios.
Portfolio and Principal Occupation During
Responsible Group Employee; Year; Title The Past Five (5) Years
----------------- --------------------- -----------------------
AllianceBernstein U.S Alison Martier; since 2005; Senior Vice Senior Vice President of the Adviser
Government/High Grade President of the Adviser and Director of U.S. with which she has been associated since
Securities Portfolio Core Fixed-Income prior to 2002, and Director of U.S. Core
Fixed-Income.
U.S. Core Fixed-Income Greg Wilensky; since 2005; Senior Vice Senior Vice President of the Adviser,
Investment Management President of the Adviser and Director of with which he has been associated since
Team Stable Value Investments prior to 2002, and Director of Stable
Value Investments.
Shawn E. Keegan, since 2007, Vice Vice President of the Adviser, with
President of the Adviser which he has been associated since prior
to 2002.
Joran Laird, since 2007, Vice President Vice President of the Adviser, with
of the Adviser which he has been associated since prior
to 2002.
Jeffery S. Phlegar, since 2007, Executive Vice President of the Adviser,
Executive Vice President of the Adviser, with which he has been associated since
Chief Investment Officer and Co-Head of prior to 2002, and Chief Investment
Fixed Income Officer and Co-Head of Fixed Income.
Douglas J. Peebles; since 2007; Executive Vice President of the Adviser,
Executive Vice President of the Adviser, with which he has been associated since
Chief Investment Officer and Co-Head of prior to 2002, and Chief Investment
Fixed Income Officer and Co-Head of Fixed Income.
AllianceBernstein High Douglas J. Peebles; since 2006; (see (see above)
Yield Portfolio above)
Global Credit Team Andrew M. Aran; since 2006; Senior Vice Senior Vice President of the Adviser, with
President of the Adviser and Director of which he has been associated since prior
Global Strategies to 2002, and Director of Global Credit
Strategies.
Joel J. McKoan; since 2006; Senior Vice Senior Vice President of the Adviser,
President of the Adviser and Director of with which he has been associated since
Global Credit 2003 and Director of the Global Credit
Team. Prior to 2003, he was a Managing
Director at UBS Warburg where he headed
the North American Debt Syndicate Group,
with responsibility for primary trading
of corporate debt, emerging market debt
and structured products and was Global
Co-Head of the CDO Group at UBS Warburg
since prior to 2002.
Gershon Distenfield; since 2005; Vice Vice President of the Adviser, with
President of the Adviser which he has been associated since prior
to 2002.
AllianceBernstein Global Michael L. Mon; since 2005; Vice Vice President of the Adviser with which
Bond Portfolio President of the Adviser he has been associated since prior to
2002.
Global Fixed-Income Douglas J. Peebles; since 2006; (see (see above)
Investment Team above)
Matthew Sheridan; since 2005; Vice Vice President of the Adviser with which he
President of the Adviser has been associated since prior to 2002.
AllianceBernstein Paul J. DeNoon; since 2002; Senior Vice Senior Vice President of the Adviser
Americas Government President of the Adviser and Director of with which he has been associated since
Income Portfolio Emerging Market Debt prior to 2002, and Director Emerging
Market Debt.
Global Fixed-Income Fernando Grisales; since 2007; Assistant Assistant Vice President of the Adviser,
Investment Team Vice President of the Adviser with which he has been associated since
prior to 2002.
Michael L. Mon; since 2003; (see above) (see above)
Douglas J. Peebles; since 2006; (see above) (see above)
Scott DiMaggio; since 2005; Senior Vice Senior Vice President of the Adviser,
President of the Adviser and Director of with which he has been associated since
Canada Fixed Income prior to 2002, and Director of Canada
Fixed Income.
Matthew Sheridan; since 2007; (see above) (see above)
AllianceBernstein Global Paul J. DeNoon; since August 2002; (see (see above)
Dollar Government above)
Portfolio
Global Fixed Income Fernando Grisales; since January 2005; (see above)
Emerging Markets (see above)
Investment Team
Michael L. Mon; since July 1999; (see above) (see above)
Douglas J. Peebles; since inception; (see (see above)
above)
Matthew Sheridan; since October 2005; (see (see above)
above)
Combined Portfolio Alison Martier; (see above) (see above)
Core Fixed-Income Greg Wilensky; (see above) (see above)
Investment Team
Shawn E. Keegan; (see above) (see above)
Joran Laird; (see above) (see above)
Jeffery S. Phlegar; (see above) (see above)
Advisory Agreement and Fees
Each Portfolio's investment adviser is AllianceBernstein L.P., 1345 Avenue
of the Americas, New York, New York 10105. The Adviser is a leading
international investment adviser managing client accounts with assets as of
September 30, 2007 totaling more than $813.0 billion (of which approximately
$104.1 billion represented the assets of investment companies). As of September
30, 2007, the Adviser managed retirement assets for many of the largest public
and private employee benefit plans (including 55 of the nation's FORTUNE 100
companies), for public employee retirement funds in 37 states, for investment
companies, and for foundations, endowments, banks and insurance companies
worldwide. The 40 registered investment companies managed by the Adviser,
comprising 122 separate investment portfolios, currently have approximately 4.0
million shareholder accounts. The Adviser also serves as administrator for each
Portfolio.
Under each Portfolio's advisory agreement with the Adviser (each, an
"Advisory Agreement"), the Adviser provides investment advisory services and
order placement facilities for the Portfolio and pays all compensation of
directors and officers of the Portfolio who are affiliated persons of the
Adviser. Under the Advisory Agreements of Global Bond and High Grade, each
Portfolio pays the Adviser an advisory fee at an annual rate of .45% of its
average daily net assets. Under the Advisory Agreements of High Yield, Global
Dollar and AGI, each Portfolio pays the Adviser an advisory fee at an annual
rate of .50% of its average daily net assets.
The Advisory Agreements, by their terms, continue in effect from year to
year if such continuance is specifically approved, at least annually, by a
majority vote of the Directors of a Portfolio who neither are interested persons
of the Portfolio nor have any direct or indirect financial interest in the
Advisory Agreement, cast in person at a meeting called for the purpose of voting
on such approval. A discussion regarding the basis for the Directors' approval
of the investment advisory contracts of the Portfolios is available in each
Portfolio's Annual Report to Shareholders for the fiscal year ended December 31,
2007.
The Adviser is the subject of certain legal proceedings and a discussion of
those proceedings is presented in Appendix H.
Distributor
AllianceBernstein Investments, Inc. ("ABI" or the "Distributor"), a
wholly-owned subsidiary of the Adviser, serves as the distributor of each
Portfolio's shares. Under a Distribution Services Agreement, adopted under each
Portfolio's Rule 12b-1 plan, the Portfolios pay distribution and service fees to
the Distributor at an annual rate of 25% of each Portfolio's average daily net
assets attributable to their Class B shares. The Distribution Agreement provides
that the Distributor will use such payments in their entirety for distribution
assistance and promotional activities.
Other Service Providers
The Portfolios will have the same service providers after the Acquisitions.
AllianceBernstein Investor Services, Inc. ("ABIS"), an affiliate of the Adviser,
provides shareholder services for the Portfolios. The Portfolios compensate ABIS
for these services. The Bank of New York, 1 Wall Street, New York, New York
10286, serves as custodian for the Portfolios. ABIS, P.O. Box 786003, San
Antonio, TX 78278-6003, serves as transfer agent for the Portfolios. After the
Acquisitions, The Bank of New York and ABIS will serve, respectively, as
custodian and transfer agent for the combined Portfolio. Ernst & Young LLP
serves as the independent registered public accounting firm for the Portfolios
and will continue to serve in that capacity for the combined Portfolio after the
Acquisition.
LEGAL MATTERS
The validity of the shares of High Grade offered hereby will be passed upon
for High Yield, Global Bond, AGI and Global Dollar by Seward & Kissel LLP.
EXPERTS
The audited financial statements and financial highlights in the Prospectus
and the SAI have been included in reliance on the report of Ernst & Young LLP, 5
Times Square, New York, New York, 10036, the independent registered public
accounting firm for each of the Portfolios, given on its authority as experts in
auditing and accounting.
FINANCIAL HIGHLIGHTS
Financial highlights information for the Portfolios is available at
Appendix J.
APPENDIX A
COMPARISON OF INVESTMENT POLICIES
------------------------------------------------------------------------------------------------------------------------------------
Combined Portfolio Proposed
High Yield High Grade Policy Changes
------------------------------------------------------------------------------------------------------------------------------------
Investment Objective The Portfolio's The Portfolio's The Portfolio's
investment objective is investment objective is investment objective is
to earn the highest level high current income to generate income and
of current income consistent with price appreciation
available without preservation of capital. without assuming what the
assuming undue risk by Adviser considers undue
investing principally in risk.
high-yielding
fixed-income securities
rated Baa or lower by
Moody's or BBB or lower
by S&P or Fitch or, if
unrated, of comparable
quality as determined by
the Adviser.
As a secondary objective,
the Portfolio seeks
capital appreciation.
------------------------------------------------------------------------------------------------------------------------------------
Investment Policies(1)
------------------------------------------------------------------------------------------------------------------------------------
Status The Portfolio is The Portfolio is No change.
diversified. (F) diversified. (F)
Rule 35d-1-80% Policy The Portfolio invests, The Portfolio invests, The combined Portfolio
under normal under normal will invest, under normal
circumstances, at least circumstances, at least circumstances, at least
80% of its net assets in 80% of its net assets in 80% of its net assets in
high yield fixed-income U.S. Government or fixed-income securities.
securities. high-grade fixed-income
securities rated A or The combined Portfolio
better by S&P and will be renamed the
Moody's or equivalent Intermediate Bond
rating. Portfolio.
Other Investments The Portfolio invests in The Portfolio's The Portfolio expects to
a diversified mix of high investments include invest in readily
yield, below investment mortgage-backed marketable fixed-income
grade fixed-income securities and securities. The
securities, known as repurchase agreements Portfolio may invest in
"junk bonds." relating to U.S. mortgage-related and
The Portfolio may invest Government securities. other asset-backed
up to 25% of its net U.S. Government securities, loan
assets in U.S. securities in which the participations,
Dollar-denominated Portfolio invests may inflation-protected
securities issued by include a significant securities, structured
non-U.S. entities and up amount of securities securities, variable,
to 20% of its net assets issued by floating and inverse
in non-U.S. government-sponsored floating rate
Dollar-denominated entities, such as the instruments, preferred
securities of such Federal National stocks, and may use other
issuers. Mortgage Association, or investment techniques.
FNMA, or the Federal
Home Loan Mortgage The Portfolio may invest
Corporation, or FHLMC, without limit in U.S.
which are neither issued Dollar-denominated
nor guaranteed by the foreign fixed-income
U.S. Government. securities and may invest
up to 25% of its assets
The Portfolio may also in non-U.S.
invest in investment Dollar-denominated
grade corporate and foreign fixed-income
other debt securities. securities. These
These include hybrid and investments may include,
structured debt in each case, developed
instruments as well as and emerging market
U.S. Dollar-denominated securities.
securities issued by
non-U.S. corporations
and governments.
------------------------------------------------------------------------------------------------------------------------------------
Credit Quality The Portfolio normally The Portfolio will not The combined Portfolio
does not invest in invest in any security will be able to invest up
securities rated below rated below BBB- by S&P to 25% of its assets in
Caa3 by Moody's or CCC- or Baa3 by Moody's or below investment grade
by S&P or equivalent equivalent quality. securities.
rating.
------------------------------------------------------------------------------------------------------------------------------------
Maturity The Portfolio may invest The Portfolio may invest In addition, the
in fixed-income in fixed-income Portfolio expects to
securities with a range securities with a range invest in fixed-income
of maturities from short- of maturities from securities with a
to long-term. short- to long-term. dollar-weighted average
maturity of generally
between three to ten
years and an average
duration of three to six
years.
------------------------------------------------------------------------------------------------------------------------------------
Mortgage-Related and The Portfolio may invest Same. No change.
Other Asset-Backed in mortgage-backed
Securities securities and other
asset-backed securities.
------------------------------------------------------------------------------------------------------------------------------------
Structured The Portfolio may invest Same. In addition, the
Securities/Basket in securities issued in Portfolio may invest in
Securities structured financing basket securities.
transactions, which generally
involve aggregating types
of debt assets in a pool or
special purpose entity and
then issuing new
securities.
------------------------------------------------------------------------------------------------------------------------------------
Inflation-Protected The Portfolio may invest The Portfolio may invest No change.
Securities in inflation-protected in inflation-protected
securities. securities.
------------------------------------------------------------------------------------------------------------------------------------
Derivatives The Portfolio may, but is Same. No change.
not required to, use
derivatives for risk
management purposes or as
part of its investment
strategies. The
Portfolio may use forward
contracts, forward
currency exchange
contracts, futures
contracts and options on
futures contracts,
options, swap
transactions and credit
default swap agreements.
------------------------------------------------------------------------------------------------------------------------------------
Credit Default Swap The Portfolio will not None. No change.
Agreements enter into a credit
default swap if the swap
provides for settlement
by physical delivery and
such delivery would
result in the Portfolio
investing less than 80%
of its net assets in high
yield debt securities.
------------------------------------------------------------------------------------------------------------------------------------
Foreign Currencies/Forward The Portfolio may buy and None. The Adviser will actively
Currency Exchange sell currencies other manage the Portfolio's
Contracts than the U.S. Dollar or currency exposures and
enter into currency may seek investment
exchange contracts opportunities by taking
principally for the long or short positions
purpose of preserving the in currencies through the
value of securities use of currency-related
denominated in currencies derivatives, including
other than the U.S. forward currency exchange
Dollar or in anticipation contracts, futures and
of purchasing such options on futures, swaps
securities. and options. The
Portfolio 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 and selling
currencies).
------------------------------------------------------------------------------------------------------------------------------------
Preferred Stock The Portfolio may invest None. The Portfolio may invest
in preferred stocks. in preferred stocks.
------------------------------------------------------------------------------------------------------------------------------------
Repurchase The Portfolio may enter The Portfolio may enter The Portfolio may enter
Agreements into repurchase into repurchase into repurchase
agreements terminable agreements pertaining to agreements.
within seven days and so U.S. Government
long as such investments Securities.
do not in the aggregate
exceed the Portfolio's
investment restrictions.
------------------------------------------------------------------------------------------------------------------------------------
Variable and The Portfolio may invest Same. No change.
Floating Rate in variable, floating and
Instruments inverse floating rate
instruments.
------------------------------------------------------------------------------------------------------------------------------------
Forward The Portfolio may The Portfolio may enter No change.
Commitment purchase or sell into forward commitments
Transactions and securities on a forward for the purchase or sale
When-Issued commitment basis and may of securities. Such
Delayed Delivery purchase securities transactions may include
Securities offered on a when-issued purchases on a
basis. The value of the "when-issued" basis or
Portfolio's commitments purchases or sales on a
to purchase the "delayed delivery" basis.
securities of any one
issuer, together with the
value of all securities
of such issuer owned by
the Portfolio, may not
exceed 5% of the value of
the Portfolio's total
assets at the time the
initial commitment to
purchase such securities
is made.
------------------------------------------------------------------------------------------------------------------------------------
Zero Coupon Securities None. The Portfolio may invest No change.
in zero coupon Treasury
securities.
------------------------------------------------------------------------------------------------------------------------------------
Reverse Repurchase None. The Portfolio may enter No change.
Agreements and into reverse repurchase
Dollar Rolls agreements
and dollar rolls,
subject to the
Portfolio's
limitations on
borrowings..
------------------------------------------------------------------------------------------------------------------------------------
Rights and None. None. No change.
Warrants
------------------------------------------------------------------------------------------------------------------------------------
Loan Participations The Portfolio may invest Same. No change.
in corporate loans either
by participating as
co-lender at the time the
loan is originated or by
buying an interest in the
loan in the secondary
market from a financial
institution or
institutional investor.
------------------------------------------------------------------------------------------------------------------------------------
Standby None. None. No change.
Commitment
Agreements
------------------------------------------------------------------------------------------------------------------------------------
Other Investment The Portfolio may invest Same. No change.
Companies in other investment
companies as permitted by
the Investment Company
Act of 1940, as amended, or
the rules and regulations
thereunder. The Portfolio
intends to invest uninvested
cash balances in an affiliated
money market fund as permitted
by Rule 12d1-1
under the 1940 Act.
------------------------------------------------------------------------------------------------------------------------------------
Illiquid Securities The Portfolio will limit Same. No change.
its investments in
illiquid securities to no
more than 15% of its net
assets or such other
amount permitted by
guidance regarding the
1940 Act.
------------------------------------------------------------------------------------------------------------------------------------
Margin The Portfolio may not Same. No change.
purchase securities on
margin, except (i) as
otherwise provided under
rules adopted by the
Commission 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.
------------------------------------------------------------------------------------------------------------------------------------
Short Sales The Portfolio may make Same. No change.
short sales a part of
overall portfolio
management or to offset a
potential decline in the
value of a security.
------------------------------------------------------------------------------------------------------------------------------------
Securities Lending For the purposes of Same. No change.
achieving income, the
Portfolio may make
secured loans of
portfolio securities to
brokers, dealers and
financial institutions,
provided a number of
conditions are satisfied,
including that the loan
is fully collateralized.
The Portfolio may pay
reasonable finders',
administrative, and custodial
fees in connection
with a loan.
------------------------------------------------------------------------------------------------------------------------------------
Borrowing The Portfolio may not Same. No change.
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 the purposes of this
restriction, margin and
collateral arrangements,
including, for example,
with respect to permitted
borrowings, options,
futures contracts,
options on futures
contracts and other
derivatives such as
swaps, are not deemed to
be the issuance of a
senior security. (F)
------------------------------------------------------------------------------------------------------------------------------------
Lending The Portfolio may not Same. No change.
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, rule
or regulations may be
amended from time to
time), or by guidance
regarding, and
interpretations of, or
exemptive orders under,
the 1940 Act. (F)
------------------------------------------------------------------------------------------------------------------------------------
Underwriting The Portfolio may not act Same. No change.
as an underwriter of
securities, except that
the Portfolio may acquire
restricted securities
under circumstances in
which, if such securities
were sold, the Portfolio
might be deemed to be an
underwriter for purposes
of the Securities Act of
1933, as amended. (F)
------------------------------------------------------------------------------------------------------------------------------------
Industry The Portfolio may not Same. No change.
Concentration 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.(F)
------------------------------------------------------------------------------------------------------------------------------------
Real Estate The Portfolio may not Same. No change.
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 the Portfolio
from investing in
securities or other
instruments backed by
real estate or in
securities of companies
engaged in the real
estate business. (F)
------------------------------------------------------------------------------------------------------------------------------------
Commodities The Portfolio may not Same. No change.
purchase or sell
commodities regulated by
the Commodity Futures
Trading Commission under
the Commodity Exchange
Act or commodities
contracts except for
futures contracts and
options on futures
contracts. (F)
----------
(1) Policies with the notation "F" are fundamental polices.
------------------------------------------------------------------------------------------------------------------------------------
Combined Portfolio
Global Bond High Grade Proposed Policy Changes
------------------------------------------------------------------------------------------------------------------------------------
Investment Objective The Portfolio's investment The Portfolio's The Portfolio's
objective is to provide a investment objective is investment objective is
high level of return high current income to generate income and
through a combination of consistent with price appreciation
current income and capital preservation of capital. without assuming what
appreciation by investing the Adviser considers
in a globally diversified undue risk.
portfolio of high-quality
debt securities denominated
in the U.S. Dollar and a
range of currencies other
than the U.S. Dollar.
------------------------------------------------------------------------------------------------------------------------------------
Investment Policies
------------------------------------------------------------------------------------------------------------------------------------
Status The Portfolio is The Portfolio is No change.
non-diversified. diversified. (F)
------------------------------------------------------------------------------------------------------------------------------------
Rule 35d-1-80% Policy The Portfolio invests, The Portfolio invests, The combined Portfolio
under normal circumstances, under normal will invest, under
at least 80% of its net circumstances, at least normal circumstances, at
assets in bonds and other 80% of its net assets in least 80% of its net
fixed-income securities. U.S. Government or assets in fixed-income
high-grade fixed-income securities.
securities rated A or
better by S&P and Moody's The combined Portfolio
or equivalent rating. will be renamed the
Intermediate Bond
Portfolio.
------------------------------------------------------------------------------------------------------------------------------------
Other Investments The Portfolio normally The Portfolio's The Portfolio expects to
invests at least 65% of its investments include invest in readily
net assets in fixed-income mortgage-backed marketable fixed-income
securities of at least securities and repurchase securities. The
three countries. agreements relating to Portfolio may invest in
The Portfolio invests in U.S. Government mortgage-related and
U.S. Government securities, securities. U.S. other asset-backed
securities issued by Government securities in securities, loan
governments other than the which the Portfolio participations,
U.S. Government or invests may include a inflation-protected
supranational organization significant amount of securities, structured
debt securities, corporate securities issued by securities, variable,
debt obligations, and government-sponsored floating and inverse
commercial paper of banks entities, such as the floating rate
and bank holding Federal National Mortgage instruments, preferred
companies. The Portfolio's Association, or FNMA, or stocks, and may use
non-U.S. investments are the Federal Home Loan other investment
generally denominated in Mortgage Corporation, or techniques.
currencies other than the FHLMC, which are neither
U.S. Dollar. issued nor guaranteed by The Portfolio may invest
the U.S. Government. without limit in U.S.
The Portfolio invests Dollar-denominated
approximately 25% of its The Portfolio may also foreign fixed-income
net assets in U.S. invest in investment securities and may
Dollar-denominated grade corporate and other invest up to 25% of its
fixed-income securities. debt securities. These assets in non-U.S.
include hybrid and Dollar-denominated
structured debt foreign fixed-income
instruments as well as securities. These
U.S. Dollar-denominated investments may include,
securities issued by in each case, developed
non-U.S. corporations and and emerging market
governments. securities.
------------------------------------------------------------------------------------------------------------------------------------
Credit Quality The Portfolio seeks to The Portfolio will not The combined Portfolio
minimize investment risk by invest in any security will be able to invest
limiting its investments to rated below BBB- by S&P up to 25% of its assets
high-quality fixed-income or Baa3 by Moody's or in below investment
securities and normally equivalent quality. grade securities.
invests in securities rated
in the two highest ratings
categories.
Investments in securities
rated below AA will be
considered, but the Adviser
does not anticipate such
investments to exceed 5% of
net assets.
------------------------------------------------------------------------------------------------------------------------------------
Maturity The Portfolio's investments The Portfolio may invest In addition, the
are expected to have an in fixed-income Portfolio expects to
average weighted maturity securities with a range invest in fixed-income
that varies between one of maturities from short- securities with a
year or less and 10 years. to long-term. dollar-weighted average
maturity of generally
between three to ten
years and an average
duration of three to six
years.
------------------------------------------------------------------------------------------------------------------------------------
Mortgage-Related and Other The Portfolio may invest in Same. No change.
Asset-Backed Securities mortgage-backed securities
and other asset-backed
securities.
------------------------------------------------------------------------------------------------------------------------------------
Structured The Portfolio may invest in Same. In addition, the
Securities/Basket securities issued in Portfolio may invest in
Securities structured financing basket securities.
transactions, which generally
involve aggregating types of
debt assets in a pool or
special purpose entity and then
issuing new securities.
------------------------------------------------------------------------------------------------------------------------------------
Inflation-Protected None. The Portfolio may invest No change.
Securities in inflation-protected
securities.
------------------------------------------------------------------------------------------------------------------------------------
Derivatives The Portfolio may, but is Same. No change.
not required to, use
derivatives for risk
management purposes or as
part of its investment
strategies. The Portfolio
may use forward contracts,
forward currency exchange
contracts, futures
contracts and options on
futures contracts, options,
swap transactions and
credit default swap
agreements.
------------------------------------------------------------------------------------------------------------------------------------
Credit Default Swap The Portfolio will not None. No change.
Agreements enter into a credit default
swap if the swap provides
for settlement by physical
delivery and such delivery
would result in the Portfolio
investing inconsistently with
its policy of investing in
high-quality debt securities.
------------------------------------------------------------------------------------------------------------------------------------
Foreign Currencies/Forward None. None. The Adviser will actively Currency
Exchange Contracts manage the
Portfolio's currency exposures and
may seek investment opportunities
by taking long or short positions
in currencies through the use of
currency-related derivatives,
including forward currency exchange
contracts, futures and options on
futures, swaps and options. The
Portfolio 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 and selling
currencies).
------------------------------------------------------------------------------------------------------------------------------------
Preferred Stock None. None. The Portfolio may invest in
preferred stocks.
------------------------------------------------------------------------------------------------------------------------------------
Repurchase The Portfolio may enter The Portfolio may enter The Portfolio may enter
Agreements into repurchase agreements. into repurchase agreements into repurchase
pertaining to U.S. agreements.
Government Securities.
------------------------------------------------------------------------------------------------------------------------------------
Variable and The Portfolio may invest in Same. No change.
Floating Rate variable, floating and
Instruments inverse floating rate
instruments.
------------------------------------------------------------------------------------------------------------------------------------
Forward None. The Portfolio may enter No change.
Commitment into forward commitments
Transactions and for the purchase or sale
When-Issued of securities. Such
Delayed Delivery transactions may include
Securities purchases on a
"when-issued" basis or
purchases or sales on a
"delayed delivery" basis.
------------------------------------------------------------------------------------------------------------------------------------
Zero Coupon Securities None. The Portfolio may invest No change.
in zero coupon Treasury
securities.
------------------------------------------------------------------------------------------------------------------------------------
Reverse Repurchase None. The Portfolio may enter No change.
Agreements and into reverse repurchase
Dollar Rolls agreements
and dollar rolls, subject
to the Portfolio's
limitations on borrowings.
------------------------------------------------------------------------------------------------------------------------------------
Rights and The Portfolio may invest in None. No change.
Warrants rights and warrants.
------------------------------------------------------------------------------------------------------------------------------------
Loan Participations The Portfolio may invest in Same. No change.
corporate loans either by
participating as co-lender
at the time the loan is
originated or by buying an
interest in the loan in the
secondary market from a
financial institution or
institutional investor.
------------------------------------------------------------------------------------------------------------------------------------
Standby None. None. No change.
Commitment
Agreements
------------------------------------------------------------------------------------------------------------------------------------
Other Investment The Portfolio may invest in Same. No change.
Companies other investment companies
as permitted by the Investment
Company Act of 1940, as amended,
or the rules and regulations
thereunder. The Portfolio
intends to invest uninvested
cash balances in an affiliated
money market fund as permitted
by Rule 12d1-1 under the 1940 Act.
------------------------------------------------------------------------------------------------------------------------------------
Illiquid Securities The Portfolio will limit Same. No change.
its investments in illiquid
securities to no more than
15% of its net assets or
such other amount permitted
by guidance regarding the
1940 Act.
------------------------------------------------------------------------------------------------------------------------------------
Margin The Portfolio may not Same. No change.
purchase securities on
margin, except (i) as
otherwise provided under
rules adopted by the
Commission 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.
------------------------------------------------------------------------------------------------------------------------------------
Short Sales The Portfolio may make Same. No change.
short sales a part of
overall portfolio
management or to offset a
potential decline in the
value of a security.
------------------------------------------------------------------------------------------------------------------------------------
Securities Lending For the purposes of Same. No change.
achieving income, the
Portfolio may make secured
loans of portfolio
securities to brokers,
dealers and financial
institutions, provided a
number of conditions are
satisfied, including that
the loan is fully
collateralized. The
Portfolio may pay
reasonable finders',
administrative, and
custodial fees in
connection with a loan.
------------------------------------------------------------------------------------------------------------------------------------
Borrowing The Portfolio may not issue Same. No change.
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 the purposes of this
restriction, margin and
collateral arrangements,
including, for example,
with respect to permitted
borrowings, options,
futures contracts, options
on futures contracts and
other derivatives such as
swaps, are not deemed to be
the issuance of a senior
security. (F)
------------------------------------------------------------------------------------------------------------------------------------
Lending The Portfolio may not make Same. No change.
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, rule or
regulations may be amended
from time to time), or by
guidance regarding, and
interpretations of, or
exemptive orders under, the
1940 Act. (F)
------------------------------------------------------------------------------------------------------------------------------------
Underwriting The Portfolio may not act Same. No change.
as an underwriter of
securities, except that the
Portfolio may acquire
restricted securities under
circumstances in which, if
such securities were sold,
the Portfolio might be
deemed to be an underwriter
for purposes of the
Securities Act of 1933, as
amended. (F)
------------------------------------------------------------------------------------------------------------------------------------
Industry The Portfolio may not Same. No change.
Concentration 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. (F)
------------------------------------------------------------------------------------------------------------------------------------
Real Estate The Portfolio may not Same. No change.
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 the Portfolio from
investing in securities or
other instruments backed by
real estate or in
securities of companies
engaged in the real estate
business. (F)
------------------------------------------------------------------------------------------------------------------------------------
Commodities The Portfolio may not Same. No change.
purchase or sell
commodities regulated by
the Commodity Futures
Trading Commission under
the Commodity Exchange Act
or commodities contracts
except for futures
contracts and options on
futures contracts. (F)
------------------------------------------------------------------------------------------------------------------------------------
Combined Portfolio Proposed
AGI High Grade Policy Changes
------------------------------------------------------------------------------------------------------------------------------------
Investment Objective The Portfolio's investment The Portfolio's investment The Portfolio's
objective is to maximize objective is high current investment objective is
current income, consistent income consistent with to generate income and
with what the Adviser preservation of capital. price appreciation
considers to be prudent without assuming what the
investment risk, that is Adviser considers undue
available from a portfolio risk.
of debt securities issued or
guaranteed by the
governments of the United
States, Canada, and Mexico,
their political subdivisions
(including Canadian
Provinces, but excluding
states of the United
States), agencies,
instrumentalities or
authorities ("Government
Securities").
------------------------------------------------------------------------------------------------------------------------------------
Investment Policies
------------------------------------------------------------------------------------------------------------------------------------
Status The Portfolio is The Portfolio is No change.
non-diversified. diversified. (F)
------------------------------------------------------------------------------------------------------------------------------------
Rule 35d-1-80% Policy The Portfolio normally The Portfolio invests, The combined Portfolio
invests at least 80% of its under normal will invest, under normal
net assets in fixed-income circumstances, at least circumstances, at least
securities of issuers 80% of its net assets in 80% of its net assets in
located in countries in U.S. Government or fixed-income securities.
North, Central, or South high-grade fixed-income
America and at least 80% of securities rated A or The combined Portfolio
its net assets in government better by S&P and Moody's will be renamed the
securities. or equivalent rating. Intermediate Bond
Portfolio.
------------------------------------------------------------------------------------------------------------------------------------
Other Investments The Portfolio primarily The Portfolio's The Portfolio expects to
invests in fixed-income investments include invest in readily
securities issued or mortgage-backed securities marketable fixed-income
guaranteed by (i) the and repurchase agreements securities. The
federal governments of the relating to U.S. Portfolio may invest in
United States, Canada, and Government securities. mortgage-related and
Mexico; (ii) U.S. Government securities other asset-backed
government-related entities in which the Portfolio securities, loan
in the United States, invests may include a participations,
Canada, and Mexico; and significant amount of inflation-protected
(iii) the provincial securities issued by securities, structured
governments of Canada and government-sponsored securities, variable,
Mexico. entities, such as the floating and inverse
To the extent that its Federal National Mortgage floating rate
assets are not invested in Association, or FNMA, or instruments, preferred
Government Securities, the the Federal Home Loan stocks, and may use other
Portfolio may invest the Mortgage Corporation, or investment techniques.
balance of its net assets in FHLMC, which are neither
investment grade issued nor guaranteed by The Portfolio may invest
fixed-income securities the U.S. Government. without limit in U.S.
issued by, and denominated Dollar-denominated
in the local currencies of, The Portfolio may also foreign fixed-income
governments of countries invest in investment grade securities and may invest
located in Central and South corporate and other debt up to 25% of its assets
America or any of their securities. These include in non-U.S.
political subdivisions, hybrid and structured debt Dollar-denominated
agencies, instrumentalities instruments as well as foreign fixed-income
or authorities, provided U.S. Dollar-denominated securities. These
that such securities are securities issued by investments may include,
denominated in their local non-U.S. corporations and in each case, developed
currencies. The Portfolio governments. and emerging market
limits its investments in securities.
fixed-income securities
issued by the governmental
entities of any one such
country to 10% of its net
assets.
The Portfolio invests in
investment grade securities
denominated in the U.S. Dollar,
the Canadian Dollar, and the
Mexican Peso and expects to
maintain at least 25% of its
assets in U.S. Dollar
denominated securities.
------------------------------------------------------------------------------------------------------------------------------------
Credit Quality The Portfolio expects that The Portfolio will not The combined Portfolio
it will not retain a debt invest in any security will be able to invest up
security that is downgraded rated below BBB- by S&P or to 25% of its assets in
below BBB- or Baa3, or, if Baa3 by Moody's or below investment grade
unrated, determined by the equivalent quality. securities.
Adviser to have undergone
similar credit quality
deterioration.
------------------------------------------------------------------------------------------------------------------------------------
Maturity The Portfolio may invest in The Portfolio may invest In addition, the
fixed-income securities with in fixed-income securities Portfolio expects to
a range of maturities from with a range of maturities invest in fixed-income
short- to long-term. from short- to long-term. securities with a
dollar-weighted average
maturity of generally
between three to ten
years and an average
duration of three to six
years.
------------------------------------------------------------------------------------------------------------------------------------
Mortgage-Related and Other The Portfolio may invest in Same. No change.
mortgage-backed securities
Asset-Backed Securities and other asset-backed
securities.
------------------------------------------------------------------------------------------------------------------------------------
Structured The Portfolio may invest in Same. In addition, the
Securities/Basket securities issued in Portfolio may invest in
Securities structured financing basket securities.
transactions, which generally
involve aggregating types of
debt assets in a pool or
special purpose entity and then
issuing new securities.
------------------------------------------------------------------------------------------------------------------------------------
Inflation-Protected The Portfolio may invest in The Portfolio may invest No change.
Securities inflation-protected in inflation-protected
securities. securities.
------------------------------------------------------------------------------------------------------------------------------------
Derivatives The Portfolio may, but is Same. No change.
not required to, use
derivatives for risk
management purposes or as
part of its investment
strategies. The Portfolio
may use forward contracts,
forward currency exchange
contracts, futures contracts
and options on futures
contracts, options, swap
transactions and credit
default swap agreements.
------------------------------------------------------------------------------------------------------------------------------------
Credit Default Swap The Portfolio will not enter None. No change.
Agreements into a credit default swap
if the swap provides for
settlement by physical
delivery and such delivery
would result in the
Portfolio investing (i) less
than 80% of its net assets in
investment grade securities, or
(ii) more than 20% of its net
assets in non-investment grade
securities rated, at the
time of investment, at least
B- or B3.
------------------------------------------------------------------------------------------------------------------------------------
Foreign Currencies/Forward None. None. The Adviser will actively
Currency Exchange Contracts manage the Portfolio's
currency exposures and
may seek investment
opportunities by taking
long or short positions
in currencies through the
use of currency-related
derivatives, including
forward currency exchange
contracts, futures and
options on futures, swaps
and options. The
Portfolio 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 and
selling currencies).
------------------------------------------------------------------------------------------------------------------------------------
Preferred Stock None. None. The Portfolio may invest
in preferred stocks.
------------------------------------------------------------------------------------------------------------------------------------
Repurchase The Portfolio may enter into The Portfolio may enter The Portfolio may enter
Agreements repurchase agreements into repurchase agreements into repurchase
pertaining to the types of pertaining to U.S. agreements.
securities in which it Government Securities.
invests.
------------------------------------------------------------------------------------------------------------------------------------
Variable and The Portfolio may invest in Same. No change.
Floating Rate variable, floating and
Instruments inverse floating rate
instruments.
------------------------------------------------------------------------------------------------------------------------------------
Forward The Portfolio may enter into The Portfolio may enter No change.
Commitment forward commitments. into forward commitments
Transactions and for the purchase or sale
When-Issued of securities. Such
Delayed Delivery transactions may include
Securities purchases on a
"when-issued" basis or
purchases or sales on a
"delayed delivery" basis.
------------------------------------------------------------------------------------------------------------------------------------
Zero Coupon Securities The Portfolio may invest in The Portfolio may invest No change.
zero coupon Treasury in zero coupon Treasury
securities. securities.
------------------------------------------------------------------------------------------------------------------------------------
Reverse Repurchase The Portfolio may enter into Same. No change.
Agreements and reverse repurchase
Dollar Rolls agreements and dollar rolls,
subject to the Portfolio's
limitations on borrowings.
------------------------------------------------------------------------------------------------------------------------------------
Rights and The Portfolio may invest in None. No change.
Warrants warrants.
------------------------------------------------------------------------------------------------------------------------------------
Loan Participations Same. Same. No change.
------------------------------------------------------------------------------------------------------------------------------------
Standby The Portfolio may enter into None. No change.
Commitment standby commitment
Agreements agreements.
------------------------------------------------------------------------------------------------------------------------------------
Other Investment The Portfolio may invest in Same. No change.
Companies other investment companies as
permitted by the Investment
Company Act of 1940, as
amended, or the rules and
regulations thereunder. The
Portfolio intends to invest
uninvested cash balances in an
affiliated money market fund
as permitted by Rule 12d1-1
under the 1940 Act.
------------------------------------------------------------------------------------------------------------------------------------
Illiquid Securities The Portfolio will limit its Same. No change.
investments in illiquid
securities to no more than
15% of its net assets or
such other amount permitted
by guidance regarding the
1940 Act.
------------------------------------------------------------------------------------------------------------------------------------
Margin The Portfolio may not purchase Same. No change.
securities on margin, except
(i) as otherwise provided
under rules adopted by the
Commission 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.
------------------------------------------------------------------------------------------------------------------------------------
Short Sales The Portfolio may make short Same. No change.
sales a part of overall
portfolio management or to
offset a potential decline
in the value of a security.
------------------------------------------------------------------------------------------------------------------------------------
Securities Lending For the purposes of Same. No change.
achieving income, the
Portfolio may make secured
loans of portfolio
securities to brokers,
dealers and financial
institutions, provided a
number of conditions are
satisfied, including that
the loan is fully
collateralized. The
Portfolio may pay reasonable
finders', administrative,
and custodial fees in
connection with a loan.
------------------------------------------------------------------------------------------------------------------------------------
Borrowing The Portfolio may not Same. No change.
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 the purposes of this
restriction, margin and
collateral arrangements,
including, for example,
with respect to permitted
borrowings, options,
futures contracts,
options on futures
contracts and other
derivatives such as
swaps, are not deemed to
be the issuance of a
senior security. (F)
------------------------------------------------------------------------------------------------------------------------------------
Lending The Portfolio may not make Same. No change.
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, rule or
regulations may be amended
from time to time), or by
guidance regarding, and
interpretations of, or
exemptive orders under, the
1940 Act. (F)
------------------------------------------------------------------------------------------------------------------------------------
Underwriting The Portfolio may not act as Same. No change.
an underwriter of
securities, except that the
Portfolio may acquire
restricted securities under
circumstances in which, if
such securities were sold,
the Portfolio might be
deemed to be an underwriter
for purposes of the
Securities Act of 1933, as
amended. (F)
------------------------------------------------------------------------------------------------------------------------------------
Industry The Portfolio may not Same. No change.
Concentration 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. (F)
------------------------------------------------------------------------------------------------------------------------------------
Real Estate The Portfolio may not Same. No change.
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 the Portfolio from
investing in securities or
other instruments backed by
real estate or in securities
of companies engaged in the
real estate business. (F)
------------------------------------------------------------------------------------------------------------------------------------
Commodities The Portfolio may not Same. No change.
purchase or sell commodities
regulated by the Commodity
Futures Trading Commission
under the Commodity Exchange
Act or commodities contracts
except for futures contracts
and options on futures
contracts. (F)
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Combined Portfolio Proposed
Global Dollar High Grade Policy Changes
------------------------------------------------------------------------------------------------------------------------------------
Investment Objective The Portfolio's investment The Portfolio's investment The Portfolio's investment
objective is to seek a high objective is high current objective is to generate
level of current income. income consistent with income and price
preservation of capital. appreciation without
Its secondary objective is assuming what the Adviser
capital appreciation. considers undue risk.
------------------------------------------------------------------------------------------------------------------------------------
Investment Policies
------------------------------------------------------------------------------------------------------------------------------------
Status The Portfolio is The Portfolio is No change.
non-diversified. diversified. (F)
------------------------------------------------------------------------------------------------------------------------------------
Rule 35d-1-80% Policy The Portfolio invests, under The Portfolio invests, The combined Portfolio will
normal circumstances, at under normal circumstances, invest, under normal
least 80% of its net assets at least 80% of its net circumstances, at least 80%
in government securities. assets in U.S. Government of its net assets in
or high-grade fixed-income fixed-income securities.
securities rated A or
better by S&P and Moody's The combined Portfolio will
or equivalent rating. be renamed the Intermediate
Bond Portfolio.
------------------------------------------------------------------------------------------------------------------------------------
Other Investments The Portfolio invests at The Portfolio may, In addition, the combined
least 65% of its net assets consistent with its Portfolio will be able to
in interests in entities investment objectives, invest up to 25% of its
organized and operated invest up to 20% of its net assets in non-U.S.
solely for the purpose of assets in securities other Dollar-denominated
restructuring the investment than U.S. Government securities.
characteristics of sovereign securities and high grade
debt obligations. debt securities, including
(i) investment grade
corporate debt securities
The Portfolio's investments of a type other than the
in sovereign debt high grade debt securities
obligations will emphasize high grade debt securities
debt obligations issued by collateralized mortgage
countries in the J.P. Morgan obligations) and (ii)
Emerging Markets Bond Index certificates of deposit,
Global, which currently bankers' acceptances and
includes approximately 31 interest-bearing savings
countries whose economies deposits of banks having
are concluded to be total assets of more than
developing or emerging from $1 billion and which are
underdevelopment. members of the FDIC.
The Portfolio's non-U.S.
investments emphasize The Portfolio may invest in
emerging markets and qualifying bank deposits.
developing countries. The
Portfolio limits its The Portfolio may invest up
investments in the sovereign to 20% of its net assets in
debt obligations of any one foreign/Yankee debt
country to less than 25% of (sovereign and corporate
its net assets, although the debt of developed and
Portfolio may invest up to emerging markets).
30% of its net assets in the
sovereign debt obligations
and corporate fixed-income
securities of issuers in
each of the countries that
constitute part of the
Portfolio's focus, including
Brazil, Mexico, the
Philippines, Russia, Turkey
and Venezuela. The Portfolio
expects that it will not
invest more than 10% of its
net assets in any other
single country outside the
U.S. The Portfolio's
investments in sovereign
debt obligations and
corporate debt securities
are U.S. Dollar-denominated.
The Portfolio invests
substantially all of its
assets in lower-rated
securities or unrated
securities of equivalent
investment quality. The
Portfolio also may invest in
U.S. and non-U.S. corporate
fixed-income securities.
------------------------------------------------------------------------------------------------------------------------------------
Credit Quality The Portfolio invests The Portfolio will not The combined Portfolio
substantially all of its invest in any security will be able to invest up
assets in lower-rated rated below BBB- by S&P or to 25% of its assets in
securities, which may Baa3 by Moody's or below investment grade
include securities having equivalent quality. securities.
the lowest rating for
non-subordinated debt (i.e.,
rated C by Moody's or CCC or
lower by S&P and Fitch) or
unrated securities of
equivalent investment
quality.
------------------------------------------------------------------------------------------------------------------------------------
Maturity The Portfolio may invest in The Portfolio may invest in No change.
fixed-income securities with fixed-income securities
a range of maturities from with a range of maturities
short- to long-term. from short- to long-term.
------------------------------------------------------------------------------------------------------------------------------------
Mortgage-Related and The Portfolio may invest in Same. No change.
Other Asset-Backed mortgage-backed securities
Securities and other asset-backed
securities.
------------------------------------------------------------------------------------------------------------------------------------
Structured The Portfolio may invest in Same. No change.
Securities/Basket securities issued in
Securities structured financing
transactions, which
generally involve
aggregating types of debt
assets in a pool or special
purpose entity and then
issuing new securities.
------------------------------------------------------------------------------------------------------------------------------------
Inflation-Protected None. The Portfolio may invest in No change.
Securities inflation-protected
securities.
------------------------------------------------------------------------------------------------------------------------------------
Derivatives The Portfolio may, but is Same. No change.
not required to, use
derivatives for risk
management purposes or as
part of its investment
strategies. The Portfolio
may use forward contracts,
forward currency exchange
contracts, futures contracts
and options on futures
contracts, options, swap
transactions and credit
default swap agreements.
------------------------------------------------------------------------------------------------------------------------------------
Credit Default Swap The Portfolio will not enter None. No change.
Agreements into a credit default swap
if the swap provides for
settlement by physical
delivery and such delivery
would result in the
Portfolio investing less
than 65% of its total
assets in sovereign debt
obligations or in investments
inconsistent with its restrictions
on investing in specific countries.
------------------------------------------------------------------------------------------------------------------------------------
Foreign Currencies/Forward None. None. No change.
Currency Exchange
Contracts
------------------------------------------------------------------------------------------------------------------------------------
Preferred Stock The Portfolio may invest in None. No change.
preferred stocks of
corporate issuers.
------------------------------------------------------------------------------------------------------------------------------------
Repurchase The Portfolio may enter into The Portfolio may enter No change.
Agreements repurchase agreements. into repurchase agreements
pertaining to U.S.
Government Securities.
------------------------------------------------------------------------------------------------------------------------------------
Variable and The Portfolio may invest in Same. No change.
Floating Rate variable, floating and
Instruments inverse floating rate
instruments.
------------------------------------------------------------------------------------------------------------------------------------
Forward The Portfolio may enter into The Portfolio may enter No change.
Commitment forward commitments for the into forward commitments
Transactions and purchase or sale of for the purchase or sale of
When-Issued securities. Such securities. Such
Delayed Delivery transactions may include transactions may include
Securities purchases on a "when-issued" purchases on a
basis or purchases or sales "when-issued" basis or
on a "delayed delivery" purchases or sales on a
basis. "delayed delivery" basis.
------------------------------------------------------------------------------------------------------------------------------------
Zero Coupon Securities None. The Portfolio may invest in No change.
zero coupon Treasury
securities.
------------------------------------------------------------------------------------------------------------------------------------
Reverse Repurchase The Portfolio may enter into Same. No change.
Agreements and reverse repurchase
Dollar Rolls agreements and dollar rolls,
subject to the Portfolio's
limitations on borrowings.
------------------------------------------------------------------------------------------------------------------------------------
Rights and The Portfolio may invest in None. No change.
Warrants warrants for debt securities
or warrants for equity
securities that are acquired
in connection with debt
instruments.
------------------------------------------------------------------------------------------------------------------------------------
Loan Participations The Portfolio may invest in Same. No change.
corporate loans either by
participating as co-lender
at the time the loan is
originated or by buying an
interest in the loan in the
secondary market from a
financial institution or
institutional investor.
------------------------------------------------------------------------------------------------------------------------------------
Standby The Portfolio may enter into None. No change.
Commitment standby commitment
Agreements agreements.
------------------------------------------------------------------------------------------------------------------------------------
Other Investment The Portfolio may invest in Same. No change.
Companies other investment companies
as permitted by the Investment
Company Act of 1940, as amended,
or the rules and regulations
thereunder. The Portfolio
intends to invest uninvested
cash balances in an affiliated
money market fund as permitted
by Rule 12d1-1 under
the 1940 Act.
------------------------------------------------------------------------------------------------------------------------------------
Illiquid Securities The Portfolio will limit its Same. No change.
investments in illiquid
securities to no more than
15% of its net assets or
such other amount permitted
by guidance regarding the
1940 Act.
------------------------------------------------------------------------------------------------------------------------------------
Margin The Portfolio may not Same. No change.
purchase securities on
margin, except (i) as
otherwise provided under
rules adopted by the
Commission 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.
------------------------------------------------------------------------------------------------------------------------------------
Short Sales The Portfolio may make short Same. No change.
sales a part of overall
portfolio management or to
offset a potential decline
in the value of a security.
------------------------------------------------------------------------------------------------------------------------------------
Securities Lending For the purposes of Same. No change.
achieving income, the
Portfolio may make secured
loans of portfolio
securities to brokers,
dealers and financial
institutions, provided a
number of conditions are
satisfied, including that
the loan is fully
collateralized. The
Portfolio may pay reasonable
finders', administrative,
and custodial fees in
connection with a loan.
------------------------------------------------------------------------------------------------------------------------------------
Borrowing The Portfolio may not issue Same. No change.
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
the purposes of this
restriction, margin and
collateral arrangements,
including, for example, with
respect to permitted
borrowings, options, futures
contracts, options on futures
contracts and other
derivatives such as swaps, are
not deemed to be the issuance
of a senior security. (F)
------------------------------------------------------------------------------------------------------------------------------------
Lending The Portfolio may not make Same. No change.
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, rule or
regulations may be amended
from time to time), or by
guidance regarding, and
interpretations of, or
exemptive orders under, the
1940 Act. (F)
------------------------------------------------------------------------------------------------------------------------------------
Underwriting The Portfolio may not act as Same. No change.
an underwriter of
securities, except that the
Portfolio may acquire
restricted securities under
circumstances in which, if
such securities were sold,
the Portfolio might be
deemed to be an underwriter
for purposes of the
Securities Act of 1933, as
amended. (F)
------------------------------------------------------------------------------------------------------------------------------------
Industry The Portfolio may not Same. No change.
Concentration 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. (F)
------------------------------------------------------------------------------------------------------------------------------------
Real Estate The Portfolio may not Same. No change.
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 the Portfolio from
investing in securities or
other instruments backed by
real estate or in securities
of companies engaged in the
real estate business. (F)
------------------------------------------------------------------------------------------------------------------------------------
Commodities The Portfolio may not Same. No change.
purchase or sell commodities
regulated by the Commodity
Futures Trading Commission
under the Commodity Exchange
Act or commodities contracts
except for futures contracts
and options on futures
contracts. (F)
------------------------------------------------------------------------------------------------------------------------------------
APPENDIX B
PORTFOLIO PERFORMANCE
The charts below show the percentage gain or loss in each calendar year for
the ten-year period ended December 31, 2007, for Class A shares of High Yield,
Class A shares of Global Bond, Class A shares of AGI, Class A shares of Global
Dollar and Class A shares of High Grade.
They should give you a general idea of how each Portfolio's return has
varied from year to year. The charts include the effects of Portfolio expenses
but do not reflect charges associated with the Variable Products or
contractholders' accounts. The calculations of annual total return assume the
reinvestment of all dividends and capital gain distributions on the reinvestment
date. Performance results included the effect of expense reduction arrangements,
if any. If these arrangements had not been in place, the performance results
would have been lower. As with all mutual funds, past performance is not an
indication of future results. No assurance can be given that High Grade will
achieve any particular level of performance after the Acquisitions. Additional
discussion of the manner of calculation of total return is contained in the
Prospectuses of each Portfolio.
Calendar Year Total Returns
High Yield
----------
The annual returns in the bar chart are for the Portfolio's Class A shares.
[The following table was depicted as a bar chart in the printed material.]
-3.7 -2.6 -5.2 3.0 -3.0 22.4 8.0 1.8 9.1 0.89
--------------------------------------------------------------------------------
98 99 00 01 02 03 04 05 06 07
Calendar Year End
You should consider an investment in the Portfolio as a long-term investment.
The Portfolio's returns will fluctuate over long and short periods. For example,
during the period shown in the bar chart, the Portfolio's:
Best quarter was up 7.04% in the 2nd quarter, 2003; and worst quarter was down
-11.29% in the 3rd quarter, 1998.
Global Bond
-----------
The annual returns in the bar chart are for the Portfolio's Class A shares.
[The following table was depicted as a bar chart in the printed material.]
14.1 -6.1 1.2 -0.3 17.0 13.3 9.6 -7.7 4.8 10.35
--------------------------------------------------------------------------------
98 99 00 01 02 03 04 05 06 07
Calendar Year End
You should consider an investment in the Portfolio as a long-term investment.
The Portfolio's returns will fluctuate over long and short periods. For example,
during the period shown in the bar chart, the Portfolio's:
Best quarter was up 10.25% in the 2nd quarter, 2002; and worst quarter was down
-4.27% in the 1st quarter, 1999.
AGI
---
The annual returns in the bar chart are for the Portfolio's Class A shares.
[The following table was depicted as a bar chart in the printed material.]
4.1 8.9 12.4 3.6 11.0 7.4 4.9 8.7 3.3 8.38
--------------------------------------------------------------------------------
98 99 00 01 02 03 04 05 06 07
Calendar Year End
You should consider an investment in the Portfolio as a long-term investment.
The Portfolio's returns will fluctuate over long and short periods. For example,
during the period shown in the bar chart, the Portfolio's:
Best quarter was up 6.58% in the 2nd quarter, 2003; and worst quarter was down
-5.14% in the 2nd quarter, 2004.
Global Dollar
-------------
The annual returns in the bar chart are for the Portfolio's Class A shares.
[The following table was depicted as a bar chart in the printed material.]
-21.7 26.1 14.1 9.4 16.1 33.4 10.1 9.6 10.0 4.53
--------------------------------------------------------------------------------
98 99 00 01 02 03 04 05 06 07
Calendar Year End
You should consider an investment in the Portfolio as a long-term investment.
The Portfolio's returns will fluctuate over long and short periods. For example,
during the period shown in the bar chart, the Portfolio's:
Best quarter was up 16.02% in the 4th quarter, 1999; and worst quarter was down
-27.11% in the 3rd quarter, 1998.
High Grade
----------
The annual returns in the bar chart are for the Portfolio's Class A shares.
[The following table was depicted as a bar chart in the printed material.]
8.2 -2.5 11.1 7.9 7.8 3.9 3.8 2.0 3.9 4.85
--------------------------------------------------------------------------------
98 99 00 01 02 03 04 05 06 07
Calendar Year End
You should consider an investment in the Portfolio as a long-term investment.
The Portfolio's returns will fluctuate over long and short periods. For example,
during the period shown in the bar chart, the Portfolio's:
Best quarter was up 4.62% in the 3rd quarter, 2001; and worst quarter was down
-2.45% in the 2nd quarter, 2004.
The following tables list the average annual total returns for the
one-year, five-year, ten-year, and since inception periods ending December 31,
2007 for each Portfolio. These tables are intended to provide you with some
indication of the risks of investing in the Portfolios. At the bottom of each
table, you can compare the Portfolios' performance with the performance of
several broad-based market indices.
Average Annual Total Returns
High Yield (Class A)
--------------------
PERFORMANCE TABLE
Average Annual Total Returns
(For the periods ended December 31, 2007)
<table>
1 Year 5 Years 10 Years
------ ------- --------
Class A 0.89% 8.16% 2.79%
Lehman Brothers U.S. High Yield -2% Issuer Cap Index 2.27% 10.74% 5.59%
-----------------------------------------------
* Since inception return information is from October 27, 1997.
</table>
High Yield (Class B)
--------------------
PERFORMANCE TABLE
Average Annual Total Returns
(For the periods ended December 31, 2007)
<table>
Since
1 Year 5 Years Inception*
------ ------- ----------
Class B 0.62% 7.89% 8.39%
Lehman Brothers U.S. High Yield -2% Issuer Cap Index 2.27% 10.74% 10.72%
-----------------------------------------------
* Since inception return information is from July 22, 2002.
</table>
Global Bond (Class A)
---------------------
PERFORMANCE TABLE
Average Annual Total Returns
(For the periods ended December 31, 2007)
<table>
1 Year 5 Years 10 Years
------ ------- --------
Class A 10.35% 5.84% 5.32%
S&P/Citigroup World Government Bond Index (unhedged) 10.95% 6.81% 6.31%
</table>
Global Bond (Class B)
---------------------
PERFORMANCE TABLE
Average Annual Total Returns
(For the periods ended December 31, 2007)
<table>
Since
1 Year 5 Years Inception*
------ ------- ----------
Class B 10.15% 5.60% 5.48%
S&P/Citigroup World Government Bond Index (unhedged) 10.95% 6.81% 6.37%**
-----------------------------------------------
* Since inception return information is from July 15, 1999. ** Since inception
return information is from July 31, 1999.
</table>
AGI (Class A)
-------------
PERFORMANCE TABLE
Average Annual Total Returns
(For the periods ended December 31, 2007)
<table>
1 Year 5 Years 10 Years
------ ------- --------
Class A 8.38% 6.50% 7.21%
Lehman Brothers U.S. Aggregate Index 6.97% 4.42% 5.97%
Lehman Brothers Intermediate-Term Government Index 8.47% 3.69% 5.55%
</table>
AGI (Class B)
-------------
PERFORMANCE TABLE
Average Annual Total Returns
(For the periods ended December 31, 2007)
<table>
Since
1 Year 5 Years Inception*
------ ------- ----------
Class A 8.10% 6.24% 6.71%
Lehman Brothers U.S. Aggregate Index 6.97% 4.42% 4.93%
Lehman Brothers Intermediate-Term Government Index 8.47% 3.69% 4.16%
-----------------------------------------------
* Since inception return information is from July 22, 2002.
</table>
Global Dollar (Class A)
-----------------------
PERFORMANCE TABLE
Average Annual Total Returns
(For the periods ended December 31, 2007)
<table>
1 Year 5 Years 10 Years
------ ------- --------
Class A 4.53% 13.11% 10.23%
JPM EMBI+ Index 6.45% 13.63% 10.36%
JPM EMBI Global Index 6.28% 12.67% 10.09%
</table>
Global Dollar (Class B)
-----------------------
PERFORMANCE TABLE
Average Annual Total Returns
(For the periods ended December 31, 2007)
<table>
Since
1 Year 5 Years Inception*
------ ------- ----------
Class A 4.27% 12.88% 14.11%
JPM EMBI+ Index 6.45% 13.63% 14.90%
JPM EMBI Global Index 6.28% 12.67% 13.79%
-----------------------------------------------
* Since inception return information is from July 22, 2002.
</table>
High Grade (Class A)
--------------------
PERFORMANCE TABLE
Average Annual Total Returns
(For the periods ended December 31, 2007)
<table>
1 Year 5 Years 10 Years
------ ------- --------
Class A 4.85% 3.68% 5.03%
Lehman Brothers U.S. Aggregate Index 6.97% 4.42% 5.97%
</table>
High Grade (Class B)
--------------------
PERFORMANCE TABLE
Average Annual Total Returns
(For the periods ended December 31, 2007)
<table>
Since
1 Year 5 Years Inception*
------ ------- ----------
Class B 4.60% 3.41% 5.01%
Lehman Brothers U.S. Aggregate Index 6.97% 4.42% 5.97%
-----------------------------------------------
* Since inception return information is from June 2, 1999.
</table>
APPENDIX C
DESCRIPTION OF PRINCIPAL RISKS OF THE PORTFOLIOS
Among the principal risks of investing in a Portfolio are market risk,
interest rate risk, credit risk, inflation rate risk, non-U.S. (foreign) risk,
emerging market risk, and currency risk. Each of these risks is more fully
described below. Each Portfolio could become subject to additional risks as
described below or because the types of investments made by each Portfolio can
change over time.
Market Risk This is the risk that the value of a Portfolio's
investments will fluctuate as the stock or bond markets
fluctuate and that prices overall will decline over shorter-
or longer-term periods.
Interest Rate Risk Changes in interest rates will affect the value of
a Portfolio's investments in fixed-income securities. When
interest rates rise, the value of a Portfolio's investments
tends to fall and this decrease in value may not be offset
by higher interest income from new investments. Interest
rate risk is generally greater for those Portfolios that
invest in fixed-income securities with longer maturities or
durations.
Credit Risk This is the risk that the issuer or the guarantor of a
fixed-income security, or the counterparty to a derivatives
or other contract, will be unable or unwilling to make
timely payments of interest or principal, or to otherwise
honor its obligations. The issuer or guarantor may default
causing a loss of the full principal amount of a security.
The degree of risk for a particular security may be
reflected in its credit rating. Investments in fixed-income
securities with lower ratings tend to have a higher
probability that an issuer will default or fail to meet its
payment obligations.
Inflation Risk This is the risk that the value of assets or income
from investments will be less in the future as inflation
decreases the value of money. As inflation increases, the
value of each Portfolio's assets can decline as can the
value of the Portfolio's distributions. This risk is
significantly greater for those Portfolios that invest a
significant portion of their assets in fixed-income
securities with longer maturities.
Foreign
(Non-U.S.)
Risk A Portfolio's investments in non-U.S. (foreign) securities
may experience more rapid and extreme changes in value than
investments in securities of U.S. companies. The securities
markets of many foreign countries are relatively small, with
a limited number of companies representing a small number of
securities. Non-U.S. issuers usually are not subject to the
same degree of regulation as U.S. issuers. Reporting,
accounting, and auditing standards of foreign countries
differ, in some cases significantly, from U.S. standards.
Nationalization, expropriation or confiscatory taxation,
currency blockage, political changes, or diplomatic
development could adversely affect a Portfolio's investments
in a country other than the United States. These risks are
heightened for emerging market countries because there may
be more economic, political and social instability, and
investments in companies in emerging markets may have more
risk because these securities may be more volatile and less
liquid. To the extent a Portfolio invests in a particular
country or geographic region, the Portfolio may have more
significant risk due to market changes or other factors
affecting that country or region, including political
instability and unpredictable economic conditions.
Currency Risk This is the risk that changes in foreign (non-U.S.) currency
exchange rates may negatively affect the value of a
Portfolio's investments or reduce the returns of a
Portfolio. For example, the value of a Portfolio's
investments in foreign stocks or currencies may decrease if
the U.S. Dollar is strong (i.e., gaining value relative to
other currencies) and other currencies are weak (i.e.,
losing value relative to the U.S. Dollar). Currency markets
generally are not as regulated as securities markets.
Emerging Market
Risk Foreign investment risk may be particularly high to the
extent a Portfolio invests in emerging market securities of
issuers based in countries with developing economies. These
securities may present market, credit, currency, liquidity,
legal, political and other risks different from, or greater
than, the risk of investing in developed foreign (non-U.S.)
countries.
Prepayment Risk The value of mortgage-related or asset-backed securities may
be particularly sensitive to changes in prevailing interest
rates. Early prepayments of principal on some
mortgage-related securities may occur during periods of
falling mortgage interest rates and expose a Portfolio to a
lower rate of return upon reinvestment of principal. 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. 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, a Portfolio may not be
able to realize the rate of return it expected.
Diversification A Portfolio may have more risk if it is "non-diversified",
meaning that it can invest more or its Risk assets in a
smaller number of companies than many other funds.
Derivatives Risk The Portfolios may use derivatives transactions. These
investment strategies may be riskier than other investment
strategies and may result in greater volatility for a
Portfolio, particularly during periods of market decline.
Leverage Risk When a Portfolio borrows money or otherwise leverages its
portfolio, it may be more volatile because leverage tends to
exaggerate the effect of any increase or decrease in the
value of a Portfolio's investments. A Portfolio may create
leverage through the use of reverse repurchase arrangements,
forward contracts or dollar rolls or by borrowing money.
Liquidity Risk Liquidity risk exists when particular investments are
difficult to purchase or sell, possibly preventing a
Portfolio from selling out of these illiquid securities at
an advantageous time or price. Derivatives and securities
involving substantial market and credit risk tend to involve
greater liquidity risk.
Management Risk Each Portfolio is subject to management risk because it is
an actively managed investment portfolio. The Adviser will
apply its investment techniques and risk analyses in making
investment decisions for the Portfolios, but there can be no
guarantee that its decisions will produce the desired
results.
APPENDIX D
CERTAIN INFORMATION APPLICABLE TO
CLASS A AND CLASS B SHARES OF HIGH GRADE
How to Buy and Sell Shares
The Portfolio offers its shares through the separate accounts of life
insurance companies (the "Insurers"). You may only purchase and sell shares
through these separate accounts. See the prospectus of the separate account of
the participating insurance company for information on the purchase and sale of
the Portfolio's shares. AllianceBernstein Investments, Inc. ("ABI") may from
time to time receive payments from Insurers in connection with the sale of the
Portfolio's shares through the Insurer's separate accounts.
The Insurers maintain omnibus account arrangements with the Portfolio in
respect of the Portfolio and place aggregate purchase, redemption and exchange
orders for shares of the Portfolio corresponding to orders placed by the
contractholders who have purchased contracts from the Insurers, in each case, in
accordance with the terms and conditions of the relevant contract. Omnibus
account arrangements maintained by the Insurers are discussed below under
"Limitations on Ability to Detect and Curtail Excessive Trading Practices." ABI
may refuse any order to purchase shares. The Portfolio reserves the right to
suspend the sale of its shares to the public in response to conditions in the
securities markets or for other reasons.
Payments to Financial Intermediaries
Financial intermediaries, such as the Insurers, market and sell shares of
the Portfolio and typically receive compensation for selling shares of the
Portfolio. This compensation is paid from various sources. Insurers or your
financial intermediary receive compensation from ABI and/or the Adviser in
several ways from various sources, which include some or all of the following:
o defrayal of costs for educational seminars and training;
o additional distribution support; and
o payments related to providing contractholder recordkeeping and/or
administrative services.
ABI and/or the Adviser may pay Insurers or other financial intermediaries
to perform record-keeping and administrative services in connection with the
Portfolio. Such payments will generally not exceed 0.35% of the average daily
net assets of the Portfolio attributable to the Insurer.
Other Payments for Distribution Services and Educational Support
In addition to the fees described above, ABI, at its expense, currently
provides additional payments to the Insurers that sell shares of the Portfolio.
These sums include payments to reimburse directly or indirectly the costs
incurred by the Insurers and their employees in connection with educational
seminars and training efforts about the Portfolio for the Insurers' employees
and/or their clients and potential clients. The costs and expenses associated
with these efforts may include travel, lodging, entertainment and meals.
For 2008, ABI's additional payments to these firms for educational support
and distribution assistance related to the AVP Portfolios is expected to be
approximately $1.5 million. In 2007, ABI paid additional payments of
approximately $1.2 million for the AVP Portfolios.
If one mutual fund sponsor that offers shares to separate accounts of an
Insurer makes greater distribution assistance payments than another, the Insurer
may have an incentive to recommend or offer the shares of funds of one fund
sponsor over another.
Please speak with your financial intermediary to learn more about the total
amounts paid to your financial intermediary by the Adviser, ABI and by other
mutual fund sponsors that offer shares to Insurers that may be recommended to
you. You should also consult disclosures made by your financial intermediary at
the time of purchase.
ABI anticipates that the Insurers or their affiliates that will receive
additional payments for educational support include:
AIG SunAmerica
Ameriprise Financial
AXA Advisors
AXA Distributors
Genworth Financial
Great West Life & Annuity Co.
Hartford Life Insurance
ING Reliastar Life
ING USA Annuity and Life Insurance Co.
Lincoln Financial Distributors
Mass Mutual
Merrill Lynch
Pacific Life Insurance Co.
Phoenix Annuity
Principal Financial Group
Prudential Financial
Reliastar Life Insurance Co.
RiverSource Distributors, Inc.
Transamerica Capital, Inc.
Although the Portfolio may use brokers and dealers who sell shares of the
Portfolio to effect Portfolio transactions, the Portfolio does not consider the
sale of AllianceBernstein Mutual Fund shares as a factor when selecting brokers
or dealers to effect Portfolio transactions.
Frequent Purchases and Redemptions of Portfolio Shares
AVP's Board of Directors has adopted policies and procedures designed to
detect and deter frequent purchases and redemptions of Portfolio shares or
excessive or short-term trading that may disadvantage long-term contractholders.
These policies are described below. The Portfolio reserves the right to
restrict, reject or cancel, without any prior notice, any purchase or exchange
order for any reason, including any purchase or exchange order accepted by any
Insurer or a contractholder's financial intermediary.
Risks Associated With Excessive Or Short-term Trading Generally
----------------------------------------------------------------
While the Portfolio will try to prevent market timing by utilizing the
procedures described below, these procedures may not be successful in
identifying or stopping excessive or short-term trading in all circumstances. By
realizing profits through short-term trading, contractholders that engage in
rapid purchases and sales or exchanges of the Portfolio's shares dilute the
value of shares held by long-term contractholders. Volatility resulting from
excessive purchases and sales or exchanges of Portfolio shares, especially
involving large dollar amounts, may disrupt efficient portfolio management. In
particular, the Portfolio may have difficulty implementing its long-term
investment strategies if it is forced to maintain a higher level of its assets
in cash to accommodate significant short-term trading activity. Excessive
purchases and sales or exchanges of the Portfolio's shares may force the
Portfolio to sell portfolio securities at inopportune times to raise cash to
accommodate short-term trading activity. In addition, the Portfolio may incur
increased expenses if one or more contractholders engage in excessive or
short-term trading. For example, a Portfolio may be forced to liquidate
investments as a result of short-term trading and incur increased brokerage
costs and realization of taxable capital gains without attaining any investment
advantage. Similarly, the Portfolio may bear increased administrative costs due
to asset level and investment volatility that accompanies patterns of short-term
trading activity. All of these factors may adversely affect Portfolio
performance.
Investments in foreign securities may be particularly susceptible to
short-term trading strategies. This is because foreign securities are typically
traded on markets that close well before the time a Portfolio calculates its NAV
at 4:00 p.m., Eastern time, which gives rise to the possibility that
developments may have occurred in the interim that would affect the value of
these securities. The time zone differences among international stock markets
can allow a contractholder engaging in a short-term trading strategy to exploit
differences in Portfolio share prices that are based on closing prices of
foreign securities established some time before the Portfolio calculates its own
share price (referred to as "time zone arbitrage"). The Portfolio has
procedures, referred to as fair value pricing, designed to adjust closing market
prices of foreign securities to reflect what is believed to be the fair value of
those securities at the time the Portfolio calculates its NAV. While there is no
assurance, the Portfolio expects that the use of fair value pricing, in addition
to the short-term trading policies discussed below, will significantly reduce a
contractholder's ability to engage in time zone arbitrage to the detriment of
other contractholders.
Contractholders engaging in a short-term trading strategy may also target a
Portfolio that does not invest primarily in foreign securities. If the Portfolio
invests in securities that are, among other things, thinly traded, traded
infrequently, or relatively illiquid, it has the risk that the current market
price for the securities may not accurately reflect current market values.
Contractholders may seek to engage in short-term trading to take advantage of
these pricing differences (referred to as "price arbitrage"). The Portfolio may
be adversely affected by price arbitrage, in particular, to the extent that it
significantly invests in small-cap securities or specific industry sector
securities.
Policy Regarding Short-term Trading
------------------------------------
Purchases and exchanges of shares of the Portfolio should be made for
investment purposes only. The Portfolio seeks to prevent patterns of excessive
purchases and sales or exchanges of Portfolio shares. The Portfolio will seek to
prevent such practices to the extent they are detected by the procedures
described below. The Portfolio reserves the right to modify this policy,
including any surveillance or account blocking procedures established from time
to time to effectuate this policy, at any time without notice.
Transaction Surveillance Procedures. The Portfolio, through its agents, ABI
and ABIS, maintains surveillance procedures to detect excessive or short-term
trading in Portfolio shares. This surveillance process involves several factors,
which include scrutinizing individual Insurer's omnibus transaction activity in
Portfolio shares in order to ascertain whether any such activity attributable to
one or more contractholders might constitute excessive or short-term trading.
Insurers' omnibus transaction activity identified by these surveillance
procedures, or as a result of any other information actually available at the
time, will be evaluated to determine whether such activity might indicate
excessive or short-term trading activity attributable to one or more
contractholders. These surveillance procedures may be modified from time to
time, as necessary or appropriate to improve the detection of excessive or
short-term trading or to address specific circumstances.
Account Blocking Procedures. If the Portfolio determines, in its sole
discretion, that a particular transaction or pattern of transactions identified
by the transaction surveillance procedures described above is excessive or
short-term trading in nature, the relevant Insurer's omnibus account(s) will be
immediately "blocked" and no future purchase or exchange activity will be
permitted, except to the extent the Portfolio, ABI or ABIS has been informed in
writing that the terms and conditions of a particular contract may limit the
Portfolio's ability to apply its short-term trading policy to contractholder
activity as discussed below. As a result, any contractholder seeking to engage
through an Insurer in purchase or exchange activity in shares of the Portfolio
under a particular contract will be prevented from doing so. However, sales of
Portfolio shares back to the Portfolio or redemptions will continue to be
permitted in accordance with the terms of the Portfolio's current Prospectus. In
the event an account is blocked, certain account-related privileges, such as the
ability to place purchase, sale and exchange orders over the internet or by
phone, may also be suspended. An Insurer's omnibus account that is blocked will
generally remain blocked unless and until the Insurer provides evidence or
assurance acceptable to the Portfolio one or more contractholders did not or
will not in the future engage in excessive or short-term trading.
Applications of Surveillance Procedures and Restrictions to Omnibus
Accounts. The Portfolio applies its surveillance procedures to Insurers. As
required by SEC rules, the Portfolio has entered into agreements with all of its
financial intermediaries, including Insurers, that require the financial
intermediaries to provide the Portfolio, upon the request of the Portfolio or
its agents, with individual account level information about their transactions.
If the Portfolio detects excessive trading through its monitoring of omnibus
accounts, including trading at the individual account level, an Insurer will
also execute instructions from the Portfolio to take actions to curtail the
activity, which may include applying blocks to accounts to prohibit future
purchases and exchanges of Portfolio shares.
Risks to Contractholders Resulting From Imposition of Account Blocks in Response
to Excessive Short-term Trading Activity
------------------------------------------
A contractholder identified as having engaged in excessive or short-term
trading activity whose account is "blocked" and who may not otherwise wish to
redeem his or her shares effectively may be "locked" into an investment in
shares of the Portfolio that the contractholder did not intend to hold on a
long-term basis or that may not be appropriate for the contractholder's risk
profile. To rectify this situation, a contractholder with a "blocked" account
may be forced to redeem Portfolio shares, which could be costly if, for example,
these shares have declined in value. To avoid this risk, a contractholder should
carefully monitor the purchases, sales, and exchanges of Portfolio shares and
avoid frequent trading in Portfolio shares.
Limitations on Ability to Detect and Curtail Excessive Trading Practices
-------------------------------------------------------------------------
Insurers utilizing omnibus account arrangements may not identify to the
Portfolio, ABI or ABIS contractholders' transaction activity relating to shares
of the Portfolio on an individual basis. Consequently, the Portfolio, ABI and
ABIS may not be able to detect excessive or short-term trading in shares of the
Portfolio attributable to a particular contractholder who effects purchase and
redemption and/or exchange activity in shares of the Portfolio through an
Insurer acting in an omnibus capacity. In seeking to prevent excessive or
short-term trading in shares of the Portfolio, including the maintenance of any
transaction surveillance or account blocking procedures, the Portfolio, ABI and
ABIS consider the information actually available to them at the time.
How the Portfolio Values Its Shares
The Portfolio's NAV is calculated at the close of regular trading on the
Exchange (ordinarily, 4:00 p.m., Eastern time), only on days when the Exchange
is open for business. To calculate NAV, the Portfolio's assets are valued and
totaled, liabilities are subtracted, and the balance, called net assets, is
divided by the number of shares outstanding. If the Portfolio invests in
securities that are primarily traded on foreign exchanges that trade on weekends
or other days when the Portfolio does not price its shares, the NAV of the
Portfolio's shares may change on days when contractholders will not be able to
purchase or redeem their shares in the Portfolio.
The Portfolio values its securities at their current market value
determined on the basis of market quotations or, if market quotations are not
readily available or are unreliable, at "fair value" as determined in accordance
with procedures established by and under the general supervision of the
Directors. When the Portfolio uses fair value pricing, it may take into account
any factor it deems appropriate. The Portfolio may determine fair value based
upon developments related to a specific security, current valuations of non-U.S.
(foreign) stock indices (as reflected in U.S. futures markets) and/or U.S.
sector or broader stock market indices. The prices of securities used by the
Portfolio to calculate its NAV may differ from quoted or published prices for
the same securities. Fair value pricing involves subjective judgments and it is
possible that the fair value determined for a security is materially different
than the value that could be realized upon the sale of that security.
The Portfolio expects to use fair value pricing for securities primarily
traded on U.S. exchanges only under very limited circumstances, such as the
early closing of the exchange on which a security is traded or suspension of
trading in the security. The Portfolio may use fair value pricing more
frequently for securities primarily traded in non-U.S. (foreign) markets
because, among other things, most non-U.S. (foreign) markets close well before
the Portfolio values its securities at 4:00 p.m., Eastern time. The earlier
close of these non-U.S. (foreign) markets gives rise to the possibility that
significant events, including broad market moves, may have occurred in the
interim. For example, the Portfolio believes that non-U.S. (foreign) security
values may be affected by events that occur after the close of non-U.S.
(foreign) securities markets. To account for this, the Portfolio may frequently
value many of its non-U.S. (foreign) equity securities using fair value prices
based on third party vendor modeling tools to the extent available.
Subject to the Directors' oversight, the Directors have delegated
responsibility for valuing the Portfolio's assets to the Adviser. The Adviser
has established a Valuation Committee, which operates under the policies and
procedures approved by the Directors, to value the Portfolio's assets on behalf
of the Portfolio. The Valuation Committee values Portfolio assets as described
above.
Your order for purchase, sale, or exchange of shares is priced at the
next-determined NAV after your order is received in proper form by the
Portfolio.
APPENDIX E
OTHER INFORMATION
The following information provides only a summary of the key features of
the organizational structure and governing documents of the Portfolios. Each
Portfolio is organized as a series of the same Maryland corporation. The Charter
and Bylaw provisions that govern AVP apply to High Yield, Global Bond, AGI,
Global Dollar and High Grade. Accordingly, there are no differences among the
Portfolios in terms of their corporate organizational structures.
General
Each Portfolio has procedures available to its respective shareholders for
calling shareholders' meetings and for the removal of directors. Under Maryland
law, unless the charter provides otherwise (which AVP's does not), a director
may be removed, either with or without cause, at a meeting duly called and at
which a quorum is present by the affirmative vote of the holders of a majority
of the votes entitled to be cast for the election of directors. Under the
Bylaws, shareholder-requested special meetings of shareholders for any other
purpose shall be called by AVP's Secretary only upon the written request of
shareholders entitled to cast not less than a majority of all the votes entitled
to be cast at the meeting.
For each Portfolio, the presence in person or by proxy of the holders of
one-third of the shares entitled to be cast constitutes a quorum at any meeting
of shareholders of the Portfolio. When a quorum is present at any meeting, the
affirmative vote of a majority of the votes (or with respect to the election of
directors, a plurality of votes) cast shall decide any question brought before
such meeting, except as otherwise required by law.
Shares of Common Stock of the Portfolios
The Portfolios' shares have no preemptive rights. Each share has equal
voting, dividend, distribution and liquidation rights. Shareholders are entitled
to one vote per share. All voting rights for the election of directors are
non-cumulative, which means that the holders of more than 50% of the shares of
common stock of AVP can elect 100% of the directors then nominated for election
if they choose to do so and, in such event, the holders of the remaining shares
of common stock will not be able to elect any directors. The Portfolios are
organized as series of the same Maryland corporation and thus their shareholders
have the same rights due to them under state law. The Portfolios are not
required to, and do not, hold annual meetings of shareholders and have no
current intention to hold such meetings, except as required by the 1940 Act.
Under the 1940 Act, the Portfolios are required to hold a shareholder meeting
if, among other reasons, the number of Directors elected by shareholders is less
than a majority of the total number of Directors, or if a Portfolio seeks to
change its fundamental investment policies.
Dividends and Distributions
The Portfolios have the same dividends and distributions policies. The
Portfolios declare dividends on their shares at least annually. The income and
capital gains distribution is made in shares of each Portfolio.
Indemnification and Liability of Directors and Officers
The charter of AVP generally provides for the indemnification of officers
and directors, as applicable, to the full extent permitted by Maryland law. This
indemnification does not protect any such person against any liability to a
Portfolio or any shareholder thereof to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the satisfaction of such person's
office.
Maryland law permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its shareholders for money damages except for liability
resulting from (a) actual receipt of an improper benefit or profit in money,
property or services or (b) active and deliberate dishonesty established by a
final judgment as being material to the cause of action. AVP's charter contains
such a provision that eliminates directors' and officers' liability to the
maximum extent permitted by Maryland law. This exculpation does not protect any
such person against any liability to a Portfolio or any shareholder thereof to
which such person would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
satisfaction of such person's office.
APPENDIX F
FORM OF PLAN OF ACQUISITION AND LIQUIDATION
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC.
WITH RESPECT TO ITS SERIES
ALLIANCEBERNSTEIN [______________________] PORTFOLIO AND
ALLIANCEBERNSTEIN U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
As of
[____________], 2008
This Plan of Acquisition and Liquidation (the "Plan") has been adopted by
the Board of Directors of AllianceBernstein Variable Products Series Fund, Inc.,
a Maryland corporation (the "Corporation"), as of this [_____] day of
[____________], 2008, to provide for the reorganization of AllianceBernstein
[______________________] Portfolio (the "Acquired Portfolio") into
AllianceBernstein U.S. Government/High Grade Securities Portfolio (the
"Acquiring Portfolio"). The Acquired Portfolio and the Acquiring Portfolio
(together, the "Portfolios") are each separate series of the Corporation, an
open-end management investment company registered with the Securities and
Exchange Commission (the "SEC") under the Investment Company Act of 1940, as
amended (the "1940 Act").
The Board of Directors (the "Board") has determined that it is in the best
interest of the Acquiring Portfolio and the Acquired Portfolio that the Acquired
Portfolio transfer all of the assets attributable to its Class A shares held by
its stockholders ("Stockholders") in exchange for Class A shares of equal net
asset value of the Acquiring Portfolio ("Class A Acquisition Shares"), transfer
all of the assets attributable to its Class B shares held by its Stockholders in
exchange for Class B shares of equal net asset value of the Acquiring Portfolio
("Class B Acquisition Shares" and together with Class A Acquisition Shares, the
"Acquisition Shares") and distribute Class A Acquisition Shares and Class B
Acquisition Shares, respectively, of the Acquired Portfolio and that the
Corporation redeem the outstanding shares (the "Acquired Portfolio Shares") of
the Acquired Portfolio, all as provided for below (the "Acquisition").
In this Plan of Acquisition, any references to a Portfolio taking action
shall mean and include all necessary actions of the Corporation on behalf of a
Portfolio, unless the context of this Plan of Acquisition or the 1940 Act
requires otherwise.
The Corporation intends that the Acquisition qualify as a "reorganization"
within the meaning of Section 368(a) of the United States Internal Revenue Code
of 1986, as amended (the "Code"), and any successor provisions, and that with
respect to the Acquisition, the Acquiring Portfolio and the Acquired Portfolio
will each be a "party to a reorganization" within the meaning of Section 368(b)
of the Code.
1. Definitions
In addition to the terms elsewhere defined herein, each of the following
terms shall have the meaning indicated for that term as follows:
1933 Act Securities Act of 1933, as amended.
Assets All assets of any kind and all interests, rights, privileges
and powers of or attributable to the Acquired Portfolio or
its shares, as appropriate, whether or not determinable at
the Effective Time (as defined herein) and wherever located,
including, without limitation, all cash, cash equivalents,
securities, claims (whether absolute or contingent, known or
unknown, accrued or unaccrued or conditional or unmatured),
contract rights and receivables (including dividend and
interest receivables) owned by the Acquired Portfolio or
attributable to its shares and any deferred or prepaid
expense, other than unamortized organizational expenses,
shown as an asset on the Acquired Portfolio's books.
Closing Date Such date as the officers of the Corporation shall
designate.
Effective Time 5:00 p.m., Eastern Time, on the Closing Date, or such other
time as the officers of the Corporation shall designate.
Financial
Statements The audited financial statements of the relevant Portfolio
for its most recently completed fiscal year and, if
applicable, the unaudited financial statements of that
Portfolio for its most recently completed semi-annual
period.
Liabilities All liabilities, expenses and obligations of any kind
whatsoever of the Acquired Portfolio, whether known or
unknown, accrued or unaccrued, absolute or contingent or
conditional or unmatured.
N-14 Registration
Statement The Registration Statement of the Acquiring Portfolio on
Form N-14 under the 1940 Act that will register the
Acquisition Shares to be issued in the Acquisition.
Valuation Time The close of regular session trading on the New York
Stock Exchange ("NYSE") on the Closing Date, when for
purposes of the Plan, the Corporation determines the net
asset value per Acquisition Share of the Acquiring Portfolio
and the net value of the assets of the Acquired Portfolio.
NAV A Portfolio's net asset value is calculated by valuing and
totaling assets and then subtracting liabilities and then
dividing the balance by the number of shares that are
outstanding.
2. Regulatory Filings
The Acquiring Portfolio shall promptly prepare and file the N-14
Registration Statement with the SEC, and the Acquiring Portfolio and the
Acquired Portfolio also shall make any other required or appropriate filings
with respect to the actions contemplated hereby.
3. Transfer of the Acquired Portfolio's Assets
The Acquiring Portfolio and the Acquired Portfolio shall take the following
steps with respect to the Acquisition, as applicable:
(a) On or prior to the Closing Date, the Acquired Portfolio shall pay or
provide for the payment of all of the Liabilities, expenses, costs and
charges of or attributable to the Acquired Portfolio that are known to
the Acquired Portfolio and that are due and payable prior to or as of
the Closing Date.
(b) Prior to the Effective Time, except to the extent prohibited by Rule
19b-1 under the 1940 Act, the Acquired Portfolio will declare to
Acquired Portfolio Stockholders of record a dividend or dividends
which, together with all previous such dividends, shall have the
effect of distributing (a) all the excess of (i) the Acquired
Portfolio's investment income excludable from gross income under
Section 103(a) of the Code over (ii) the Acquired Portfolio's
deductions disallowed under Sections 265 and 171(a)(2) of the Code,
(b) all of the Acquired Portfolio's investment company taxable income
(as defined in Code Section 852), (computed in each case without
regard to any deduction for dividends paid), and (c) all of the
Acquired Portfolio's net realized capital gain (as defined in Code
Section 1222), if any (after reduction for any capital loss
carryover), for the taxable year ending on December 31, 2007 and for
the short taxable year beginning on January 1, 2008, and ending on the
Closing Date. Such dividends will be declared and paid to ensure
continued qualification of the Acquired Portfolio as a "regulated
investment company" for tax purposes and to eliminate fund-level tax.
(c) At the Effective Time, the Acquired Portfolio shall assign, transfer,
deliver and convey the Assets to the Acquiring Portfolio, subject to
the Liabilities, and the Acquiring Portfolio shall then accept the
Assets and assume the Liabilities such that at and after the Effective
Time (i) the Assets at and after the Effective Time shall become and
be assets of the Acquiring Portfolio, and (ii) the Liabilities at the
Effective Time shall attach to the Acquiring Portfolio, and shall be
enforceable against the Acquiring Portfolio to the same extent as if
initially incurred by the Acquiring Portfolio. The Corporation shall
redeem the outstanding shares of the Acquired Portfolio by issuance of
shares of Acquiring Portfolio as described more fully below.
(d) Within a reasonable time prior to the Closing Date, the Acquired
Portfolio shall provide, if requested, a list of the Assets to the
Acquiring Portfolio. The Acquired Portfolio may sell any asset on such
list prior to the Effective Time. After the Acquired Portfolio
provides such list, the Acquired Portfolio will not acquire any
additional securities or permit to exist any encumbrances, rights,
restrictions or claims not reflected on such list, without the
approval of the Acquiring Portfolio. Within a reasonable time after
receipt of the list and prior to the Closing Date, the Acquiring
Portfolio will advise the Acquired Portfolio in writing of any
investments shown on the list that the Acquiring Portfolio has
determined to be inconsistent with its investment objective, policies
and restrictions. The Acquired Portfolio will dispose of any such
securities prior to the Closing Date to the extent practicable and
consistent with applicable legal requirements, including the Acquired
Portfolio's investment objectives, policies and restrictions. In
addition, if the Acquiring Portfolio determines that, as a result of
the Acquisition, the Acquiring Portfolio would own an aggregate amount
of an investment that would exceed a percentage limitation applicable
to the Acquiring Portfolio, the Acquiring Portfolio will advise the
Acquired Portfolio in writing of any such limitation and the Acquired
Portfolio shall dispose of a sufficient amount of such investment as
may be necessary to avoid the limitation as of the Effective Time, to
the extent practicable and consistent with applicable legal
requirements, including the Acquired Portfolio's investment
objectives, policies and restrictions.
(e) The Acquired Portfolio shall assign, transfer, deliver and convey the
Assets to the Acquiring Portfolio at the Effective Time on the
following basis:
(1) The value of the Assets less the Liabilities of the Acquired
Portfolio attributable to shares of Class A held by Stockholders
and shares of Class B held by Stockholders, determined as of the
Valuation Time, shall be divided by the then NAV of one Class A
and Class B Acquisition Share, as applicable, and, in exchange
for the transfer of the Assets, the Acquiring Portfolio shall
simultaneously issue and deliver to the Acquired Portfolio the
number of Class A and Class B Acquisition Shares (including
fractional shares) so determined, rounded to the second decimal
place or such other decimal place as the officers of the
Corporation shall designate;
(2) The NAV of Class A and Class B Acquisition Shares to be delivered
to the Acquired Portfolio shall be determined as of the Valuation
Time in accordance with the Acquiring Portfolio's then applicable
valuation procedures, and the net value of the Assets to be
conveyed to the Acquiring Portfolio shall be determined as of the
Valuation Time in accordance with the then applicable valuation
procedures of the Acquired Portfolio; and
(3) The portfolio securities of the Acquired Portfolio shall be made
available by the Acquired Portfolio to The Bank of New York, as
custodian for the Acquiring Portfolio (the "Custodian"), for
examination no later than five business days preceding the
Valuation Time. On the Closing Date, such portfolio securities
and all the Acquired Portfolio's cash shall be delivered by the
Acquired Portfolio to the Custodian for the account of the
Acquiring Portfolio, such portfolio securities to be duly
endorsed in proper form for transfer in such manner and condition
as to constitute good delivery thereof in accordance with the
custom of brokers or, in the case of portfolio securities held in
the U.S. Treasury Department's book-entry system or by The
Depository Trust Company, Participants Trust Company or other
third party depositories, by transfer to the account of the
Custodian in accordance with Rule 17f-4, Rule 17f-5 or Rule
17f-7, as the case may be, under the 1940 Act and accompanied by
all necessary federal and state stock transfer stamps or a check
for the appropriate purchase price thereof. The cash delivered
shall be in the form of currency or certified or official bank
checks, payable to the order of the Custodian, or shall be wired
to an account pursuant to instructions provided by the Acquiring
Portfolio.
(f) Promptly after the Closing Date, the Acquired Portfolio will
deliver to the Acquiring Portfolio a Statement of Assets and
Liabilities of the Acquired Portfolio as of the Closing Date.
4. Termination of the Acquired Portfolio, Registration of Acquisition Shares
and Access to Records
The Acquired Portfolio and the Acquiring Portfolio also shall take the
following steps, as applicable:
(a) At or as soon as reasonably practical after the Effective Time, the
Acquired Portfolio shall terminate by transferring pro rata to its
Class A Stockholders of record Class A Acquisition Shares received by
the Acquired Portfolio pursuant to Section 3(e)(1) of this Plan and to
its Class B Stockholders of record Class B Acquisition Shares received
by the Acquired Portfolio pursuant to Section 3(e)(1) of this Plan.
The Acquiring Portfolio shall establish accounts on its share records
and note on such accounts the names of the former Acquired Portfolio
Stockholders and the types and amounts of the Acquisition Shares that
former Acquired Portfolio Stockholders are due based on their
respective holdings of the Acquired Portfolio Shares as of the close
of business on the Closing Date. Fractional Acquisition Shares shall
be carried to the second decimal place. The Acquiring Portfolio shall
not issue certificates representing the Acquisition Shares in
connection with such exchange. All issued and outstanding Acquired
Portfolio Shares will be simultaneously redeemed and cancelled on the
books of the Acquired Portfolio. Ownership of the Acquisition Shares
will be shown on the books of the Acquiring Portfolio's transfer
agent.
Following distribution by the Acquired Portfolio to its Stockholders
of all Acquisition Shares delivered to the Acquired Portfolio, the
Acquired Portfolio shall wind up its affairs and shall take all steps
as are necessary and proper to terminate as soon as is reasonably
possible after the Effective Time.
(b) At and after the Closing Date, the Acquired Portfolio shall provide
the Acquiring Portfolio and its transfer agent with immediate access
to: (i) all records containing the names, addresses and taxpayer
identification numbers of all of the Acquired Portfolio's Stockholders
and the number and percentage ownership of the outstanding shares of
the Acquired Portfolio owned by Stockholders as of the Effective Time,
and (ii) all original documentation (including all applicable Internal
Revenue Service forms, certificates, certifications and
correspondence) relating to the Acquired Portfolio Stockholders'
taxpayer identification numbers and their liability for or exemption
from back-up withholding. The Acquired Portfolio shall preserve and
maintain, or shall direct its service providers to preserve and
maintain, records with respect to the Acquired Portfolio as required
by Section 31 of, and Rules 31a-1 and 31a-2 under, the 1940 Act.
5. Conditions to Consummation of the Acquisition
The consummation of the Acquisition shall be subject to the following
conditions precedent:
(a) There shall have been no material adverse change in the financial
condition, results of operations, business, properties or assets of
the Acquiring Portfolio or the Acquired Portfolio since the date of
the most recent Financial Statements. Negative investment performance
shall not be considered a material adverse change.
(b) The Corporation shall have received an opinion of Seward & Kissel LLP,
substantially to the effect that for federal income tax purposes:
(1) The Acquisition will constitute a "reorganization" within the
meaning of Section 368(a) of the Code and that the Acquiring
Portfolio and the Acquired Portfolio will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code;
(2) A Stockholder of the Acquired Portfolio will recognize no gain or
loss on the exchange of the Stockholder's shares of the Acquired
Portfolio solely for Acquisition Shares;
(3) Neither the Acquired Portfolio nor the Acquiring Portfolio will
recognize any gain or loss upon the transfer of all of the Assets
to the Acquiring Portfolio in exchange for Acquisition Shares and
the assumption by the Acquiring Portfolio of the Liabilities
pursuant to this Plan or upon the distribution of Acquisition
Shares to Stockholders of the Acquired Portfolio in exchange for
their respective shares of the Acquired Portfolio;
(4) The holding period and tax basis of the Assets acquired by the
Acquiring Portfolio will be the same as the holding period and
tax basis that the Acquired Portfolio had in such Assets
immediately prior to the Acquisition;
(5) The aggregate tax basis of Acquisition Shares received in
connection with the Acquisition by each Stockholder of the
Acquired Portfolio (including any fractional share to which the
Stockholder may be entitled) will be the same as the aggregate
tax basis of the shares of the Acquired Portfolio surrendered in
exchange therefor, and increased by any gain recognized on the
exchange;
(6) The holding period of Acquisition Shares received in connection
with the Acquisition by each Stockholder of the Acquired
Portfolio (including any fractional share to which the
stockholder may be entitled) will include the holding period of
the shares of the Acquired Portfolio surrendered in exchange
therefor, provided that such Acquired Portfolio shares constitute
capital assets in the hands of the Stockholder as of the Closing
Date; and
(7) The Acquiring Portfolio will succeed to the capital loss
carryovers of the Acquired Portfolio but the use of the Acquiring
Portfolio's existing capital loss carryovers (as well as the
carryovers of the Acquired Portfolio) may be subject to
limitation under Section 383 of the Code after the Acquisition.
The opinion will be based on certain factual certifications made by
officers of the Portfolios and will also be based on customary
assumptions and subject to certain qualifications. The opinion is not
a guarantee that the tax consequences of the Acquisition will be as
described above.
Notwithstanding this subparagraph (b), Seward & Kissel LLP will
express no view with respect to the effect of the Acquisition on any
transferred asset as to which any unrealized gain or loss is required
to be recognized at the end of a taxable year (or on the termination
or transfer thereof) under federal income tax principles. Each
Portfolio shall provide additional factual representations to Seward &
Kissel LLP with respect to the Portfolios that are reasonably
necessary to enable Seward & Kissel LLP to deliver the tax opinion.
Notwithstanding anything in this Plan to the contrary, neither
Portfolio may waive in any material respect the conditions set forth
under this subparagraph (b).
(c) The N-14 Registration Statement shall have become effective under the
1933 Act as to the Acquisition Shares, and the SEC shall not have
instituted and, to the knowledge of the Acquiring Portfolio, is not
contemplating instituting any stop order suspending the effectiveness
of the N-14 Registration Statement.
(d) No action, suit or other proceeding shall be threatened or pending
before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection
with the Acquisition.
(e) The SEC shall not have issued any unfavorable advisory report under
Section 25(b) of the 1940 Act nor instituted any proceeding seeking to
enjoin consummation of the Acquisition under Section 25(c) of the 1940
Act.
(f) The Acquired Portfolio shall have received a letter from
AllianceBernstein L.P. (the "Adviser") with respect to insurance
matters in form and substance satisfactory to the Acquired Portfolio.
(g) The Acquiring Portfolio shall have received a letter from the Adviser
agreeing to indemnify the Acquiring Portfolio in respect of certain
liabilities of the Acquired Portfolio in form and substance
satisfactory to the Acquiring Portfolio.
6. Closing
(a) The Closing shall be held at the offices of the Corporation, 1345
Avenue of the Americas, New York, New York 10105, or at such other
place as the officers of the Corporation may designate.
(b) In the event that at the Valuation Time (i) the NYSE shall be closed
to trading or trading thereon shall be restricted, or (ii) trading or
the reporting of trading on said Exchange or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of
the Acquired Portfolio or the Acquiring Portfolio is impracticable,
the Closing Date shall be postponed until the first business day after
the day when trading shall have been fully resumed and reporting shall
have been restored; provided that if trading shall not be fully
resumed and reporting restored within three business days of the
Valuation Time, this Plan may be terminated by the Board.
(c) The Acquiring Portfolio will provide to the Acquired Portfolio
evidence satisfactory to the Acquired Portfolio that Acquisition
Shares issuable pursuant to the Acquisition have been credited to the
Acquired Portfolio's account on the books of the Acquiring Portfolio.
After the Closing Date, the Acquiring Portfolio will provide to the
Acquired Portfolio evidence satisfactory to the Acquired Portfolio
that such Shares have been credited pro rata to open accounts in the
names of the Acquired Portfolio Stockholders.
(d) At the Closing, each party shall deliver to the other such bills of
sale, instruments of assumption of liabilities, checks, assignments,
stock certificates, receipts or other documents as such other party or
its counsel may reasonably request in connection with the transfer of
assets, assumption of liabilities and liquidation contemplated by this
Plan.
7. Termination of Plan
A majority of the Corporation's Board may terminate this Plan before the
applicable Effective Time if: (i) any of the conditions precedent set forth
herein are not satisfied; or (ii) the Board determines that the consummation of
the Acquisition is not in the best interests of either Portfolio or its
Stockholders.
8. Termination of the Acquired Portfolio
If the Acquisition is consummated, the Acquired Portfolio shall terminate
its registration under the 1940 Act and the 1933 Act and will terminate.
9. Expenses
The Acquisition expenses shall be borne proportionately by the Acquired
Portfolio and other portfolios of the Corporation expected to be acquired by the
Acquiring Portfolio concurrently with the Acquired Portfolio based on its net
assets.
APPENDIX G
CAPITALIZATION
The following table shows on an unaudited basis the capitalization of each
of High Yield, Global Bond, AGI, Global Dollar and High Grade as of September
30, 2007 and on a pro forma combined basis, giving effect to the acquisitions of
the assets and liabilities of High Yield, Global Bond, AGI and Global Dollar by
High Grade at net asset value as of September 30, 2007.
<table>
<caption>
Pro Forma High Grade
High Yield Global Bond AGI Global Dollar High Grade Adjustments (pro forma)(a)
---------- ----------- ------- ------------- --------- ----------- --------------
Class A Class A Class A Class A Class A Class A
------- ------- ------- ------- ------- -------
Net Asset Value $26,254,269 $27,807,775 $31,738,114 $20,902,760 $69,267,676 230,497(b) $175,970,594
Shares outstanding 3,743,544 2,318,618 2,625,472 1,585,450 5,977,348 (1,085,303) 15,165,129
Net asset value
per share $7.01 $11.99 $12.09 $13.18 $11.59 $11.60
Class B Class B Class B Class B Class B Class B
------- ------- ------- ------- ------- -------
Net Asset Value $ 9,610,035 $11,497,959 $6,245,408 $5,284,499 $20,585,476 70,503(b) $53,223,377
Shares outstanding 1,372,624 967,535 516,531 402,392 1,791,143 (424,417) 4,625,809
Net asset value
per share $7.00 $11.88 12.09 13.13 $11.49 $11.51
-----------------------------------------
(a) Assumes the Acquisitions were consummated on January 25, 2008 and is for
information purposes only. No assurance can be given as to how many shares
of High Grade will be received by the shareholders of High Yield, Global
Bond, AGI and Global Dollar on the date the Acquisitions take place, and
the foregoing should not be relied upon to reflect the number of shares of
High Grade that actually will be received on or after such date.
(b) Includes adjustments for estimated proxy costs.
</table>
APPENDIX H
LEGAL PROCEEDINGS
On October 2, 2003, a purported class action complaint entitled Hindo, et
al. v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint") was
filed against the Adviser, AllianceBernstein Holding L.P. ("Holding"),
AllianceBernstein Corporation, AXA Financial, Inc., the AllianceBernstein Funds,
certain officers of the Adviser ("AllianceBernstein defendants"), and certain
other unaffiliated defendants, as well as unnamed Doe defendants. The Hindo
Complaint was filed in the United States District Court for the Southern
District of New York by alleged shareholders of two of the AllianceBernstein
Mutual Funds. The Hindo Complaint alleges that certain of the AllianceBernstein
defendants failed to disclose that they improperly allowed certain hedge funds
and other unidentified parties to engage in "late trading" and "market timing"
of AllianceBernstein Mutual Fund securities, violating Sections 11 and 15 of the
Securities Act of 1933, as amended, Sections 10(b) and 20(a) of the Securities
and Exchange Act of 1934, as amended, and Sections 206 and 215 of the Investment
Advisers Act of 1940, as amended. Plaintiffs seek an unspecified amount of
compensatory damages and rescission of their contracts with the Adviser,
including recovery of all fees paid to the Adviser pursuant to such contracts.
Following October 2, 2003, additional lawsuits making factual allegations
generally similar to those in the Hindo Complaint were filed in various federal
and state courts against the Adviser and certain other defendants. All state
court actions against the Adviser either were voluntarily dismissed or removed
to federal court. On February 20, 2004, the Judicial Panel on Multidistrict
Litigation transferred all federal actions to the United States District Court
for the District of Maryland (the "Mutual Fund MDL").
On September 29, 2004, plaintiffs filed consolidated amended complaints
with respect to four claim types: mutual fund shareholder claims; mutual fund
derivative claims; derivative claims brought on behalf of Holding; and claims
brought under ERISA by participants in the Profit Sharing Plan for Employees of
the Adviser. All four complaints include substantially identical factual
allegations, which appear to be based in large part on the Order of the SEC
dated December 18, 2003 as amended and restated January 15, 2004 (the "SEC
Order") and the New York State Attorney General Assurance of Discontinuance
dated September 1, 2004 (the "NYAG Order").
On April 21, 2006, the Adviser and attorneys for the plaintiffs in the
mutual fund shareholder claims, mutual fund derivative claims, and ERISA claims
entered into a confidential memorandum of understanding ("MOU") containing their
agreement to settle these claims. The agreement will be documented by a
stipulation of settlement and will be submitted for court approval at a later
date. The settlement amount ($30 million), which we previously accrued and
disclosed, has been disbursed. The derivative claims brought on behalf of
Holding, in which plaintiffs seek an unspecified amount of damages, remain
pending.
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the AllianceBernstein
Mutual Funds' shares or other adverse consequences to the AllianceBernstein
Mutual Funds. This may require the AllianceBernstein Mutual Funds to sell
investments held by those funds to provide for sufficient liquidity and could
also have an adverse effect on the investment performance of the
AllianceBernstein Mutual Funds. However, the Adviser believes that these matters
are not likely to have a material adverse effect on its ability to perform
advisory services relating to the AllianceBernstein Mutual Funds.
APPENDIX I
SHARE OWNERSHIP INFORMATION
Shares Outstanding
As of January 11, 2008, each Portfolio had the following number of shares
of common stock outstanding.
Number of Outstanding
Shares of
Portfolio Class Common Stock
--------- ----- ------------
High Yield A 3,451,047.6100
B 1,289,827.8580
Global Bond A 2,292,708.7170
B 989,484.6900
AGI A 2,527,405.3550
B 490,488.8400
Global Dollar A 1,455,017.5620
B 381,515.8400
High Grade A 5,622,479.6130
B 1,742,356.0110
Ownership of Shares
As of January 11, 2008, the Directors and officers of each Portfolio as a
group beneficially owned less than 1% of the outstanding shares of common stock
of that Portfolio. To the knowledge of each Portfolio, the following table shows
the persons owning, as of January 11, 2008, either of record or beneficially, 5%
or more of the outstanding shares of the Portfolio and the percentage of the
combined Portfolio's shares to be owned by the persons if the Acquisition had
been consummated as of that date.
<table>
<caption>
Percentage of
Outstanding Shares
Number of Percentage of of Combined
Name and Address of Outstanding Shares Outstanding Shares Portfolio Class
Portfolio and Class Shareholder of Class Owned of Class Owned Owned
------------------- ----------- -------------- -------------- -----
High Yield
American International Life 325,141.789 9.43% 2.14%
Class A Insurance Co of NY
Attn: Ed Bacon
600 N. King Street
Wilmington, DE 19801-3708
AIG Life Insurance Company 3,019,876.465 87.56% 19.89%
Attn: Ed Bacon
2727A Allen Parkway #4D1
Houston, TX 77019-2107
Anchor National Life Ins Co 1,285,198.944 99.72% 27.75%
Class B Attn: Variable Annuity Accounting
21650 Oxnard St MSC 6-7
Woodland Hills, CA 91367-4901
Global Bond
Sun Life Assurance Company of 586,802.449 25.59% 3.87%
Class A Canada (US)
Attn: James Joseph
P.O. Box 9133
Wellesley Hills, MA 02481-9131
AIG Life Insurance Company 1,224,052.081 53.38% 8.06%
Attn: Ed Bacon
2727A Allen Parkway #4D1
Houston, TX 77019-2107
American Int'l Group GVUL PS 119,005.198 5.19% 0.78%
Attn: Ed Bacom
2727A Allen Parkway #4D1
Houston, TX 77019-2107
Hartford Life Separate Account 202,883.157 20.48% 4.38%
Class B 200 Hopmeadow Street
P.O. Box 2999
Hartford, CT 06104-2999
Sun Life Assurance Company 226,158.404 22.83% 4.88%
of Canada (US)
Attn: James Joseph
P.O. Box 9133
Wellesley Hills, MA 02481-9133
Anchor National Life Ins Co. 518,089.400 52.31% 11.19%
Attn: Variable Annuity Accounting
21650 Oxnard Street MSC 6-7
Woodland Hills, CA 91367-4901
AGI
American International Life Insurance 265,817.922 10.53% 1.75%
Class A Company of NY
Attn: Ed Bacon
600 N. King Street
Wilmington, DE 19801-3708
AIG Life Insurance Company 2,221,766.543 88.04% 14.63%
Attn: Ed Bacon
2727A Allen Parkway #4D1
Houston, TX 77019-2107
Anchor National Life Ins Co 487,552.553 99.41% 10.53%
Class B Attn: Variable Annuity Accounting
21650 Oxnard St MSC 6-7
Woodland Hills, CA 91367-4901
Global Dollar
American International Life 143,542.365 9.88% 0.95%
Class A Insurance Company of NY
Attn: Ed Bacon
2727 A-Allen Parkway
Houston, TX 77019-2115
AIG Life Insurance Company 1,282,201.138 88.25% 8.45%
Attn: Ed Bacon
2727A Allen Parkway #4D1
Houston, TX 77019-2107
Anchor National Life Ins Co 375,895.742 98.21% 8.12%
Class B Attn: Variable Annuity Accounting
21650 Oxnard St MSC 6-7
Woodland Hills, CA 91367-4901
High Grade
American International Life Insurance 561,037.506 9.97% 3.00%
Class A Company of NY
Attn: Ed Bacon
2727 A-Allen Parkway
Houston, TX 77019-2115
AIG Life Insurance Company 4,857,090.155 86.33% 28.19%
Attn: Ed Bacon
2727A Allen Parkway #4D1
Houston, TX 77019-2115
AIG Life Insurance Company 139,066.052 7.99% 3.00%
Class B Attn: Ed Bacon
2727A Allen Parkway #4D1
Houston, TX 77019-2107
Anchor National Life Insurance Co. 1,305,606.575 75.03% 28.19%
Attn: Variable Annuity Accounting
21650 Oxnard Street MSC 6-7
Woodland Hills, CA 91367-4901
American Enterprise Life Insurance 281,613.482 16.18% 6.08%
Company
1438 - AXP
Minneapolis, MN 55474-0001
</table>
APPENDIX J
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
Portfolio's financial performance for the past 5 years (or, if shorter, the
period of the Portfolio's operations). Certain information reflects financial
results for a single share of each Portfolio. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Portfolio (assuming reinvestment of all dividends and distributions).
Except as otherwise indicated, this information has been audited by Ernst &
Young LLP, the independent registered public accounting firm for the Portfolios
as of the end of the Portfolios' last fiscal year, whose reports, along with
each Portfolio's financial statements, are included in the Portfolios' annual
report and available upon request.
High Yield
----------
Class A
Year Ended December 31,
-------------------------------------------------------
2007 2006 2005 2004 2003
--------- --------- --------- --------- ---------
Net asset value, beginning of period $7.40 $7.43 $7.97 $7.91 $6.83
--------- --------- --------- --------- ---------
Income From Investment Operations
Net investment income (a) .48 .51 .58 .60(b) .55
Net realized and unrealized gain (loss) on
investment and foreign currency transactions (.40) .12 (.45) (.01) .95
--------- --------- --------- --------- ---------
Net increase (decrease) in net asset value from
operations .08 .63 .13 .59 1.50
--------- --------- --------- --------- ---------
Less: Dividends
Dividends from net investment income (.58) (.66) (.67) (.53) (.42)
Net asset value, end of period $6.90 $7.40 $7.43 $7.97 $7.91
========= ========= ========= ========= =========
Total Return
Total investment return based on net asset value (c) .89% 9.05% 1.78% 7.98% 22.44%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $24,082 $31,701 $34,968 $42,842 $48,076
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.29% 1.20%(d) 1.09% 1.04% 1.46%
Expenses, before waivers and reimbursements 1.29% 1.20%(d) 1.09% 1.21% 1.46%
Net investment income 6.61% 6.98%(d) 7.58% 7.74%(b) 7.48%
Portfolio turnover rate 39% 57% 54% 80% 105%
-----------------------------------------------------------------------------------------------------------------------------------
See footnotes on pages 76-77.
High Yield
----------
Class B
Year Ended December 31,
--------------------------------------------------------------
2007 2006 2005 2004 2003
----------- --------- --------- --------- -------
Net asset value, beginning of period $7.38 $7.41 $7.95 $7.91 $6.84
----------- --------- --------- --------- -------
Income From Investment Operations
Net investment income (a) .46 .49 .56 .58(b) .52
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions (.40) .12 (.45) (.02) .97
----------- --------- --------- --------- -------
Net increase in net asset value from
operations .06 .61 .11 .56 1.49
----------- --------- --------- --------- -------
Less: Dividends
Dividends from net investment income (.56) (.64) (.65) (.52) (.42)
Net asset value, end of period $6.88 $7.38 $7.41 $7.95 $7.91
=========== ========= ========= ========= =======
Total Return
Total investment return based on net asset
value (c) .62% 8.76% 1.54% 7.62% 22.24%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $8,964 $10,823 $11,085 $12,558 $7,962
Ratio to average net assets of:
Expenses, net of waivers and
reimbursements 1.54% 1.45%(d) 1.34% 1.30% 1.70%
Expenses, before waivers and
reimbursements 1.54% 1.45%(d) 1.34% 1.47% 1.70%
Net investment income 6.36% 6.72%(d) 7.33% 7.51%(b) 7.19%
Portfolio turnover rate 39% 57% 54% 80% 105%
-----------------------------------------------------------------------------------------------------------------------------------
Global Bond
-----------
Class A
Year Ended December 31,
-------------------------------------------------------
2007 2006 2005 2004 2003
--------- --------- -------- --------- ---------
Net asset value, beginning of period $11.59 $11.32 $13.63 $13.50 $12.63
--------- --------- -------- --------- ---------
Income From Investment Operations
Net investment income (a) .31 .29 .28 .25(b) .25
Net realized and unrealized gain (loss) on investment
and foreign currency transactions .85 .26 (1.26) .93 1.40
--------- --------- -------- --------- ---------
Net increase (decrease) in net asset value from
operations 1.16 .55 (.98) 1.18 1.65
--------- --------- -------- --------- ---------
Less Dividends and Distributions
Dividends from net investment income (.38) (.18) (1.18) (.78) (.78)
Distributions from net realized gain on investment
and foreign currency transactions -0- (.10) (.15) (.27) -0-
--------- --------- -------- --------- ---------
Total dividends and distributions (.38) (.28) (1.33) (1.05) (.78)
--------- --------- -------- --------- ---------
Net asset value, end of period $12.37 $11.59 $11.32 $13.63 $13.50
========= ========= ======== ========= =========
Total Return
Total investment return based on net asset value (c) 10.35% 4.97% (7.65)% 9.63% 13.26%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $27,930 $29,755 $47,443 $56,043 $58,658
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.23% 1.03%(d) .87% .88% 1.15%
Expenses, before waivers and reimbursements 1.23% 1.03%(d) .87% 1.02% 1.15%
Net investment income 2.67% 2.53%(d) 2.30% 1.93%(b) 1.93%
Portfolio turnover rate 193% 156% 148% 107% 197%
-----------------------------------------------------------------------------------------------------------------------------------
See footnotes on pages 76-77.
Global Bond
Class B
Year Ended December 31,
-------------------------------------------------------
2007 2006 2005 2004 2003
--------- --------- --------- --------- ---------
Net asset value, beginning of period $11.47 $11.21 $13.51 $13.40 $12.54
--------- --------- --------- --------- ---------
Income From Investment Operations
Net investment income (a) .28 .26 .25 .22(b) .21
Net realized and unrealized gain (loss) on investment
and foreign currency transactions .85 .25 (1.25) .91 1.41
--------- --------- --------- --------- ---------
Net increase (decrease) in net asset value from
operations 1.13 .51 (1.00) 1.13 1.62
--------- --------- --------- --------- ---------
Less: Dividends and Distributions
Dividends from net investment income (.35) (.15) (1.15) (.75) (.76)
Distributions from net realized gain on investment and
foreign currency transactions -0- (.10) (.15) (.27) -0-
--------- --------- --------- --------- ---------
Total dividends and distributions (.35) (.25) (1.30) (1.02) (.76)
--------- --------- --------- --------- ---------
Net asset value, end of period $12.25 $11.47 $11.21 $13.51 $13.40
========= ========= ========= ========= =========
Total Return
Total investment return based on net asset value (c) 10.15% 4.64% (7.87)% 9.33% 13.08%
Ratios/Supplemental Data
Net assets, end of period, (000's omitted) $11,957 $12,566 $12,986 $13,997 $11,399
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.47% 1.30%(d) 1.12% 1.13% 1.40%
Expenses, before waivers and reimbursements 1.47% 1.30%(d) 1.12% 1.27% 1.40%
Net investment income 2.42% 2.30%(d) 2.05% 1.72%(b) 1.66%
Portfolio turnover rate 193% 156% 148% 107% 197%
-----------------------------------------------------------------------------------------------------------------------------------
See footnotes on pages 76-77.
AGI
---
Class A
Year Ended December 31,
--------------------------------------------------------------------
2007 2006 2005 2004 2003
------------ ----------- ---------- --------- ----------
Net asset value, beginning of period $12.49 $13.06 $12.91 $13.01 $12.65
------------ ----------- ---------- --------- ----------
Income From Investment Operations
Net investment income (a) .58 .59 .70 .65(b) .61
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions .39 (.22) .38 (.06) .34
------------ ----------- ---------- --------- ----------
Net increase (decrease) in net asset
value from operations .97 .37 1.08 .59 .95
------------ ----------- ---------- --------- ----------
Less: Dividends and Distributions
Dividends from net investment income (.77) (.90) (.93) (.69) (.59)
Distributions from net realized gain on
investment and foreign currency
transactions (.11) (.04) -0- -0- -0-
------------ ----------- ---------- --------- ----------
Total dividends and distributions (.88) (.94) (.93) (.69) (.59)
------------ ----------- ---------- --------- ----------
Net asset value, end of period $12.58 $12.49 $13.06 $12.91 $13.01
============ =========== ========== ========= ==========
Total Return
Total investment return based on net
asset value (c) 8.38% 3.31% 8.67% 4.89% 7.35%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $31,802 $35,767 $45,730 $47,776 $60,550
Ratio to average net assets of:
Expenses, net of waivers and (d)
reimbursements 2.28% 1.50% 1.28% 1.00% 1.04%
Expenses, before waivers and (d)
reimbursements 2.28% 1.50% 1.28% 1.11% 1.04%
Expenses, before waivers and (d)
reimbursements, excluding interest
expense 1.20% 1.08% 1.02% .98% 1.04%
Net investment income 4.69% 4.74%(d) 5.42% 5.07%(b) 4.75%
Portfolio turnover rate 8% 43% 75% 69% 73%
-----------------------------------------------------------------------------------------------------------------------------------
See footnotes on pages 76-77.
AGI
---
Class B
Year Ended December 31,
-----------------------------------------------------------------
2007 2006 2005 2004 2003
------------ ----------- ---------- --------- ----------
Net asset value, beginning of period $12.47 $13.03 $12.90 $13.01 $12.67
----------- -------- ------------------- -------
Income From Investment Operations
Net investment income (a) .54 .55 .66 .62(b) .57
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions .40 (.21) .38 (.06) .36
----------- -------- ------------------- -------
Net increase (decrease) in net asset value
from operations .94 .34 1.04 .56 .93
----------- -------- ------------------- -------
Less: Dividends and Distributions
Dividends from net investment income (.73) (.86) (.91) (.67) (.59)
Distributions from net realized gain on
investment and foreign currency
transactions (.11) (.04) -0- -0- -0-
----------- -------- ------------------- -------
Total dividends and distributions (.84) (.90) (.91) (.67) (.59)
----------- -------- ------------------- -------
Net asset value, end of period $12.57 $12.47 $13.03 $12.90 $13.01
=========== ======== =================== =======
Total Return
Total investment return based on net asset
value (c) 8.10% 3.01% 8.33% 4.67% 7.18%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $6,147 $7,129 $13,310 $9,393 $5,698
Ratio to average net assets of:
Expenses, net of waivers and (d)
reimbursements 2.55% 1.69% 1.53% 1.27% 1.30%
Expenses, before waivers and (d)
reimbursements 2.55% 1.69% 1.53% 1.37% 1.30%
Expenses, before waivers and (d)
reimbursements, excluding interest
expense 1.45% 1.31% 1.27% 1.24% 1.30%
Net investment income 4.44% 4.50%(d) 5.17% 4.88%(b) 4.42%
Portfolio turnover rate 8% 43% 75% 69% 73%
-----------------------------------------------------------------------------------------------------------------------------------
Global Dollar
-------------
Class A
Year Ended December 31,
-------------------------------------------------------
2007 2006 2005 2004(e) 2003
--------- --------- --------- --------- ---------
Net asset value, beginning of period $14.22 $14.42 $14.79 $14.53 $11.43
--------- --------- --------- --------- ---------
Income From Investment Operations
Net investment income (a) .72 .76 .84 .86(b) .95
Net realized and unrealized gain (loss) on
investment transactions (.11) .53 .46 .45 2.83
--------- --------- --------- --------- ---------
Net increase in net asset value from operations .61 1.29 1.30 1.31 3.78
--------- --------- --------- --------- ---------
Less: Dividends and Distributions
Dividends from net investment income (.85) (.83) (.95) (1.05) (.68)
Distributions from net realized gain on investment
transactions (.55) (.66) (.72) -0- -0-
--------- --------- --------- --------- ---------
Total dividends and distributions (1.40) (1.49) (1.67) (1.05) (.68)
--------- --------- --------- --------- ---------
Net asset value, end of period $13.43 $14.22 $14.42 $14.79 $14.53
========= ========= ========= ========= =========
Total Return
Total investment return based on net asset value (c) 4.53% 10.01% 9.62% 10.12% 33.41%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $19,664 $23,279 $23,073 $22,932 $26,433
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.56% 1.76%(d) 1.69% 1.76% 1.90%
Expenses, before waivers and reimbursements 1.56% 1.76%(d) 1.69% 1.93% 1.90%
Expenses, before waivers and reimbursements (d)
excluding interest expense 1.52% 1.69% 1.68% 1.92% 1.88%
Net investment income 5.23% 5.41%(d) 5.83% 6.07%(b) 7.20%
Portfolio turnover rate 40% 50% 91% 188% 150%
-----------------------------------------------------------------------------------------------------------------------------------
Global Dollar
-------------
Class B
Year Ended December 31,
------------------------------------------------------------
2007 2006 2005 2004(e) 2003
------------- ------- -------- ------- -------
Net asset value, beginning of period $14.16 $14.36 $14.74 $14.51 $11.42
------------- ------- -------- ------- -------
Income From Investment Operations
Net investment income (a) .68 .72 .80 .82(b) .88
Net realized and unrealized gain (loss)
on investment transactions (.11) .54 .46 .45 2.89
------------- ------- -------- ------- -------
Net increase in net asset value from
operations .57 1.26 1.26 1.27 3.77
------------- ------- -------- ------- -------
Less: Dividends and Distributions
Dividends from net investment income (.81) (.80) (.92) (1.04) (.68)
Distributions from net realized gain on
investment transactions (.55) (.66) (.72) -0- -0-
------------- ------- -------- ------- -------
Total dividends and distributions (1.36) (1.46) (1.64) (1.04) (.68)
------------- ------- -------- ------- -------
Net asset value, end of period $13.37 $14.16 $14.36 $14.74 $14.51
============= ======= ======== ======= =======
Total Return
Total investment return based on net
asset value (c) 4.27% 9.77% 9.35% 9.81% 33.34%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $5,114 $5,756 $5,382 $4,979 $3,162
Ratio to average net assets of:
Expenses, net of waivers and (d)
reimbursements 1.80% 2.01% 1.93% 2.07% 2.14%
Expenses, before waivers and (d)
reimbursements 1.80% 2.01% 1.93% 2.24% 2.14%
Expenses, before waivers and (d)
reimbursements excluding interest
expense 1.77% 1.94% 1.93% 2.23% 2.12%
Net investment income 4.98% 5.16%(d) 5.60% 5.74%(b) 6.67%
Portfolio turnover rate 40% 50% 91% 188% 150%
-----------------------------------------------------------------------------------------------------------------------------------
High Grade
----------
Class A
Year Ended December 31,
-------------------------------------------------------
2007 2006 2005 2004 2003
--------- --------- --------- ---------- ----------
Net asset value, beginning of period $11.78 $11.82 $12.28 $12.56 $12.54
Income From Investment Operations
Net investment income (a) .54 .50 .41 .32(b) .26
Net realized and unrealized gain (loss) on
investment transactions .01 (.06) (.17) .12 .23
--------- --------- --------- ---------- ----------
Net increase in net asset value from operations .55 .44 .24 .44 .49
--------- --------- --------- ---------- ----------
Less: Dividends and Distributions
Dividends from net investment income (.55) (.48) (.36) (.36) (.37)
Distributions from net realized gain on investment
transactions -0- -0- (.34) (.36) (.10)
--------- --------- --------- ---------- ----------
Total dividends and distributions (.55) (.48) (.70) (.72) (.47)
--------- --------- --------- ---------- ----------
Net asset value, end of period $11.78 $11.78 $11.82 $12.28 $12.56
========= ========= ========= ========== ==========
Total Return
Total investment return based on net
asset value (c) 4.85% 3.93% 1.98% 3.77% 3.88%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $66,305 $71,655 $83,329 $102,543 $129,194
Ratio to average net assets of:
Expenses, net of waivers and reimbursements .78% .77%(d) .71% .68% .77%
Expenses, before waivers and reimbursements .78% .77%(d) .71% .78% .77%
Net investment income 4.58% 4.25%(d) 3.37% 2.46%(b) 2.10%
Portfolio turnover rate 90% 327% 529% 662% 748%
-----------------------------------------------------------------------------------------------------------------------------------
See footnotes on pages 76-77.
High Grade
----------
Class B
Year Ended December 31,
-------------------------------------------------------
2007 2006 2005 2004 2003
--------- --------- --------- --------- ---------
Net asset value, beginning of period $11.67 $11.72 $12.18 $12.47 $12.47
--------- --------- --------- --------- ---------
Income From Investment Operations
Net investment income (a) .50 .46 .38 .28(b) .24
Net realized and unrealized gain (loss) on investment
transactions .02 (.06) (.17) .13 .21
--------- --------- --------- --------- ---------
Net increase in net asset value from operations .52 .40 .21 .41 .45
--------- --------- --------- --------- ---------
Less: Dividends and Distributions
Dividends from net investment income (.52) (.45) (.33) (.34) (.35)
Distributions from net realized gain on investment
transactions -0- -0- (.34) (.36) (.10)
--------- --------- --------- --------- ---------
Total dividends and distributions (.52) (.45) (.67) (.70) (.45)
--------- --------- --------- --------- ---------
Net asset value, end of period $11.67 $11.67 $11.72 $12.18 $12.47
========= ========= ========= ========= =========
Total Return
Total investment return based on net asset value (c) 4.60% 3.59% 1.75% 3.52% 3.61%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $20,289 $22,340 $24,716 $25,744 $21,982
Ratio to average net assets of:
Expenses, net of waivers and reimbursements 1.03% 1.02%(d) .96% .93% 1.03%
Expenses, before waivers and reimbursements 1.03% 1.02%(d) .96% 1.03% 1.03%
Net investment income 4.32% 4.01%(d) 3.14% 2.19%(b) 1.89%
Portfolio turnover rate 90% 327% 529% 662% 748%
-----------------------------------------------------------------------------------------------------------------------------------
(a) Based on average shares outstanding.
(b) Net of expenses waived or reimbursed by the Adviser.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Total return does not reflect the
deduction of taxes that a shareholder would pay on Portfolio distributions
or the redemption of Portfolio shares. Total investment return calculated
for a period of less than one year is not annualized.
(d) The ratio includes expenses attributable to costs of proxy solicitation.
(e) As of January 1, 2004, the Portfolio has adopted the method of accounting
for interim payments on swap contracts in accordance with Financial
Accounting Standards Board Statement No. 133. These interim payments are
reflected within net realized and unrealized gain (loss) on swap contracts,
however, prior to January 1, 2004, these interim payments were reflected
within interest income/expense on the statement of operations. The effect
of this change for the year ended December 31, 2004, was to decrease net
investment income per share by $.02 and increase net realized and
unrealized gain (loss) on investment transactions per share by $.02 for
Class A and B. Consequently, the ratios of net investment income to average
net assets were decreased by .17% for Class A and B respectively.
(1) Policies with the notation "F" are fundamental policies.
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC.
--------------------------------------------------------------------------------
- ALLIANCEBERNSTEIN U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
--------------------------------------------------------------------------------
1345 Avenue of the Americas
--------------------------------------------------------------------------------
New York, New York
Toll Free (800) 221-5672
STATEMENT OF ADDITIONAL INFORMATION
February [__], 2008
This Statement of Additional Information (the "SAI") relates to the
acquisitions (the "Acquisitions") of all of the assets and liabilities of
AllianceBernstein High Yield Portfolio ("High Yield"), AllianceBernstein Global
Bond Portfolio ("Global Bond"), AllianceBernstein Americas Government Income
Portfolio ("AGI") and AllianceBernstein Global Dollar Government Portfolio
"(Global Dollar"), each a series of AllianceBernstein Variable Products Series
Fund, Inc., by AllianceBernstein U.S. Government/High Grade Securities Portfolio
("High Grade"), another series of AllianceBernstein Variable Products Series
Fund, Inc. (High Yield, Global Bond, AGI and Global Dollar are each an "Acquired
Portfolio" and collectively, the "Acquired Portfolios." High Grade and the
Acquired Portfolios are each a "Portfolio" and collectively, the "Portfolios.")
This SAI contains information which may be of interest to shareholders
but which is not included in the Prospectus dated February [__], 2008 (the
"Prospectus") of High Grade which relates to the Acquisitions. As described in
the Prospectus, the Acquisitions would involve the transfer of all the assets of
the Acquired Portfolios in exchange for shares of High Grade and the assumption
by High Grade of all the liabilities of the Acquired Portfolios. The Acquired
Portfolios would distribute the High Grade shares they receive to their
shareholders in complete liquidation of the Acquired Portfolios. High Grade will
be the survivor for accounting purposes.
This SAI is not a prospectus and should be read in conjunction with the
Prospectus. The Prospectus has been filed with the Securities and Exchange
Commission (the "SEC") and is available upon request and without charge by
writing to an Acquired Portfolio at 1345 Avenue of the Americas, New York, New
York 10105, or by calling 1-800-221-5672.
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS
FINANCIAL STATEMENTS
Additional Information about the Portfolios
Further information about the Portfolios is contained in their
Statements of Additional Information each dated May 1, 2007, which are
incorporated herein by reference and available upon request and without charge
by writing to a Portfolio at 1345 Avenue of the Americas, New York, New York
10105, or by calling 1-800-221-5672.
Financial Statements
The financial statements and Report of Independent Registered Public
Accounting Firm contained in the Annual Report for the twelve months ended
December 31, 2007, of each of the Portfolios, which report contains historical
financial information regarding the Portfolio, has been filed with the SEC and
is incorporated herein by reference.
The following represents the pro forma financial information. The pro
forma financial statements give effect to the Acquisitions of the assets and
liabilities of the Acquired Portfolios by High Grade in exchange for shares of
High Grade pursuant to the Plans of Acquisition and Liquidation. High Grade's
unaudited pro forma Portfolio of Investments, Statement of Assets and
Liabilities and Statement of Operations are prepared as though the Acquisitions
were effective for the period October 1, 2006 - September 30, 2007.
PRO FORMA
ALLIANCEBERNSTEIN
VARIABLE PRODUCTS SERIES FUND, INC.
FINANCIAL STATEMENTS
ALLIANCEBERNSTEIN U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
ALLIANCEBERNSTEIN HIGH YIELD PORTFOLIO
ALLIANCEBERNSTEIN GLOBAL BOND PORTFOLIO
ALLIANCEBERNSTEIN AMERICAS GOVERNMENT INCOME PORTFOLIO
ALLIANCEBERNSTEIN GLOBAL DOLLAR GOVERNMENT PORTFOLIO
September 30, 2007
(unaudited)
PRO FORMA PORTFOLIO OF INVESTMENTS
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND
U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
September 30, 2007 (unaudited)
AllianceBernstein Variable Products Series Fund U.S. Government/High Grade Securities Portfolio
AllianceBernstein Variable Products Series Fund Global Dollar Government Portfolio
AllianceBernstein Variable Products Series Fund High Yield Portfolio
AllianceBernstein Variable Products Series Fund Americas Government Income Portfolio
AllianceBernstein Variable Products Series Fund Global Bond Portfolio
AllianceBernstein
AllianceBernstein Variable
Variable Products AllianceBernstein Products
Series Fund U.S. Variable Products Series Fund AllianceBernstein
Government/High Series Fund Global Dollar Variable Products
Grade Securities U.S. Government/High Government Series Fund
Portfolio Grade Securities Portfolio Global Dollar
Principal Portfolio Principal Government Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
MORTGAGE PASS-THRU'S - 17.5%
FIXED RATE 30-YEAR - 12.9%
Federal Gold Loan Mortgage Corp.
Series 2005
4.50%, 8/01/35 - 11/01/35 US$ 1,339 $ 1,244,039 US$ -0- $ -0-
Series 2007
6.00%, 8/01/37 1,583 1,584,984 -0- -0-
7.00%, 2/01/37 1,077 1,111,629 -0- -0-
Federal National Mortgage Association
4.50%, 9/01/37 745 693,083 -0- -0-
Series 2002
7.00%, 3/01/32 (a) -0- -0- -0- -0-
Series 2003
5.50%, 3/01/33 - 7/01/33 3,574 3,510,922 -0- -0-
Series 2004
5.50%, 4/01/34 - 11/01/34 1,148 1,127,414 -0- -0-
6.00%, 9/01/34 718 720,573 -0- -0-
Series 2005
4.50%, 8/01/35 1,030 956,470 -0- -0-
5.50%, 2/01/35 - 7/01/35 2,728 2,678,280 -0- -0-
Series 2006
5.00%, 2/01/36 2,430 2,321,981 -0- -0-
5.50%, 1/01/36 - 11/01/36 5,277 5,174,549 -0- -0-
6.50%, 9/01/36 813 828,148 -0- -0-
Series 2007
4.50%, 8/01/37 459 426,205 -0- -0-
5.50%, 5/01/36 1,098 1,076,440 -0- -0-
6.00%, 7/01/37 - 8/01/37 504 504,359 -0- -0-
6.50%, 6/01/37 839 854,065 -0- -0-
Government National Mortgage Association
Series 1994
9.00%, 9/15/24 (a) -0- -0- -0- -0-
Series 2006
6.00%, 7/15/36 (a) -0- -0- -0- -0-
------------- -------------
24,813,141 -0-
------------- -------------
FIXED RATE 15-YEAR - 1.7%
Federal Gold Loan Mortgage Corp.
Series 2006
5.00%, 4/01/21 997 977,853 -0- -0-
Federal National Mortgage Association
Series 2005
5.00%, 4/01/19 1,666 1,638,842 -0- -0-
Series 2006
5.00%, 4/01/21 1,383 1,355,723 -0- -0-
------------- -------------
3,972,418 -0-
------------- -------------
AGENCY ARMS - 1.6%
Federal Home Loan Mortgage Corp.
Series 2007
6.05%, 4/01/37 (b) 443 447,718 -0- -0-
6.102%, 1/01/37 (b) 270 274,343 -0- -0-
Federal National Mortgage Association
6.034%, 11/01/36 (b) 157 158,602 -0- -0-
6.107%, 3/01/37 (b) 445 452,758 -0- -0-
Series 2005
4.382%, 9/01/35 (b) 323 324,976 -0- -0-
Series 2006
5.807%, 3/01/36 (b) 468 473,567 -0- -0-
5.852%, 11/01/36 (b) 712 721,033 -0- -0-
Series 2007
5.775%, 1/01/37 (b) 508 513,820 -0- -0-
6.051%, 2/01/37 (b) 435 440,770 -0- -0-
------------- -------------
3,807,587 -0-
------------- -------------
NON-AGENCY ARMS - 1.3%
Banc of America Funding Corp.
Series 2007-C, Class 1A3
5.761%, 5/20/36 (b) 417 415,103 -0- -0-
Bear Stearns Alt-A Trust
Series 2006-3, Class 22A1
6.222%, 5/25/36 (c) 185 186,343 -0- -0-
Series 2007-1, Class 21A1
5.733%, 1/25/47 (c) 261 260,949 -0- -0-
Citigroup Mortgage Loan Trust, Inc.
Series 2005-2, Class 1A4
5.105%, 5/25/35 (c) 477 468,140 -0- -0-
Series 2006-AR1, Class 3A1
5.50%, 3/25/36 (b) 569 563,565 -0- -0-
Indymac Index Mortgage Loan Trust
Series 2006-AR7, Class 4A1
6.234%, 5/25/36 (c) 247 248,531 -0- -0-
JPMorgan Alternative Loan Trust
Series 2006-A3, Class 2A1
6.066%, 7/25/36 (c) 495 496,948 -0- -0-
Residential Funding Mortgage Securities, Inc.
Series 2005-SA3, Class 3A
5.237%, 8/25/35 (c) 316 309,099 -0- -0-
------------- -------------
2,948,678 -0-
------------- -------------
TOTAL MORTGAGE PASS-THRU'S
(cost $40,376,461) 35,541,824 -0-
------------- -------------
GOVERNMENT-RELATED - NON-U.S. ISSUERS - 14.6%
SOVEREIGNS - 14.6%
ARGENTINA-0.4%
Republic of Argentina
5.389%, 8/03/12 (b) -0- -0- 547 490,863
8.28%, 12/31/33 -0- -0- 431 390,864
Series V
7.00%, 3/28/11 -0- -0- 95 89,350
------------- -------------
-0- 971,077
------------- -------------
BRAZIL-1.8%
Republic of Brazil
6.00%, 1/17/17 -0- -0- 729 734,468
7.125%, 1/20/37 -0- -0- 1,152 1,287,360
8.25%, 1/20/34 -0- -0- 591 744,364
8.875%, 10/14/19-4/15/24 -0- -0- 832 1,048,380
11.00%, 8/17/40 -0- -0- 141 188,587
------------- -------------
-0- 4,003,159
------------- -------------
BULGARIA-0.0%
Republic of Bulgaria
Series REGS
8.25%, 1/15/15 (d) -0- -0- 94 109,745
------------- -------------
CANADA-0.7%
Government of Canada
Series VW17
8.00%, 6/01/27 (a) CAD -0- -0- CAD -0- -0-
------------- -------------
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund Series Fund
High Yield Series Fund Americas Government Americas
Portfolio High Yield Income Portfolio Government
Principal Portfolio Principal Income Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
MORTGAGE PASS-THRU'S - 17.5%
FIXED RATE 30-YEAR - 12.9%
Federal Gold Loan Mortgage Corp.
Series 2005
4.50%, 8/01/35 - 11/01/35 US$ -0- $ -0- US$ -0- $ -0-
Series 2007
6.00%, 8/01/37 -0- -0- -0- -0-
7.00%, 2/01/37 -0- -0- -0- -0-
Federal National Mortgage Association
4.50%, 9/01/37 -0- -0- -0- -0-
Series 2002
7.00%, 3/01/32 (a) -0- -0- 54 55,933
Series 2003
5.50%, 3/01/33 - 7/01/33 -0- -0- -0- -0-
Series 2004
5.50%, 4/01/34 - 11/01/34 -0- -0- -0- -0-
6.00%, 9/01/34 -0- -0- -0- -0-
Series 2005
4.50%, 8/01/35 -0- -0- -0- -0-
5.50%, 2/01/35 - 7/01/35 -0- -0- -0- -0-
Series 2006
5.00%, 2/01/36 -0- -0- -0- -0-
5.50%, 1/01/36 - 11/01/36 -0- -0- -0- -0-
6.50%, 9/01/36 -0- -0- -0- -0-
Series 2007
4.50%, 8/01/37 -0- -0- -0- -0-
5.50%, 5/01/36 -0- -0- -0- -0-
6.00%, 7/01/37 - 8/01/37 -0- -0- -0- -0-
6.50%, 6/01/37 -0- -0- -0- -0-
Government National Mortgage Association
Series 1994
9.00%, 9/15/24 (a) -0- -0- 7 7,664
Series 2006
6.00%, 7/15/36 (a) -0- -0- 4,591 4,620,747
------------- -------------
-0- 4,684,344
------------- -------------
FIXED RATE 15-YEAR - 1.7%
Federal Gold Loan Mortgage Corp.
Series 2006
5.00%, 4/01/21 -0- -0- -0- -0-
Federal National Mortgage Association
Series 2005
5.00%, 4/01/19 -0- -0- -0- -0-
Series 2006
5.00%, 4/01/21 -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
AGENCY ARMS - 1.6%
Federal Home Loan Mortgage Corp.
Series 2007
6.05%, 4/01/37 (b) -0- -0- -0- -0-
6.102%, 1/01/37 (b) -0- -0- -0- -0-
Federal National Mortgage Association
6.034%, 11/01/36 (b) -0- -0- -0- -0-
6.107%, 3/01/37 (b) -0- -0- -0- -0-
Series 2005
4.382%, 9/01/35 (b) -0- -0- -0- -0-
Series 2006
5.807%, 3/01/36 (b) -0- -0- -0- -0-
5.852%, 11/01/36 (b) -0- -0- -0- -0-
Series 2007
5.775%, 1/01/37 (b) -0- -0- -0- -0-
6.051%, 2/01/37 (b) -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
NON-AGENCY ARMS - 1.3%
Banc of America Funding Corp.
Series 2007-C, Class 1A3
5.761%, 5/20/36 (b) -0- -0- -0- -0-
Bear Stearns Alt-A Trust
Series 2006-3, Class 22A1
6.222%, 5/25/36 (c) -0- -0- -0- -0-
Series 2007-1, Class 21A1
5.733%, 1/25/47 (c) -0- -0- -0- -0-
Citigroup Mortgage Loan Trust, Inc.
Series 2005-2, Class 1A4
5.105%, 5/25/35 (c) -0- -0- -0- -0-
Series 2006-AR1, Class 3A1
5.50%, 3/25/36 (b) -0- -0- -0- -0-
Indymac Index Mortgage Loan Trust
Series 2006-AR7, Class 4A1
6.234%, 5/25/36 (c) -0- -0- -0- -0-
JPMorgan Alternative Loan Trust
Series 2006-A3, Class 2A1
6.066%, 7/25/36 (c) -0- -0- -0- -0-
Residential Funding Mortgage Securities, Inc.
Series 2005-SA3, Class 3A
5.237%, 8/25/35 (c) -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
TOTAL MORTGAGE PASS-THRU'S
(cost $40,376,461) -0- 4,684,344
------------- -------------
GOVERNMENT-RELATED - NON-U.S. ISSUERS - 14.6%
SOVEREIGNS - 14.6%
ARGENTINA-0.4%
Republic of Argentina
5.389%, 8/03/12 (b) -0- -0- -0- -0-
8.28%, 12/31/33 -0- -0- -0- -0-
Series V
7.00%, 3/28/11 -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
BRAZIL-1.8%
Republic of Brazil
6.00%, 1/17/17 -0- -0- -0- -0-
7.125%, 1/20/37 -0- -0- -0- -0-
8.25%, 1/20/34 -0- -0- -0- -0-
8.875%, 10/14/19-4/15/24 -0- -0- -0- -0-
11.00%, 8/17/40 -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
BULGARIA-0.0%
Republic of Bulgaria
Series REGS
8.25%, 1/15/15 (d) -0- -0- -0- -0-
------------- -------------
CANADA-0.7%
Government of Canada
Series VW17
8.00%, 6/01/27 (a) CAD -0- -0- CAD 1,132 1,657,911
------------- -------------
Pro Forma Pro Forma
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund U.S. Series Fund U.S.
Global Bond Series Fund Government/High Government/High
Portfolio Global Bond Grade Securities Grade Securities
Principal Portfolio Portfolio Principal Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
MORTGAGE PASS-THRU'S - 17.5%
FIXED RATE 30-YEAR - 12.9%
Federal Gold Loan Mortgage Corp.
Series 2005
4.50%, 8/01/35 - 11/01/35 US$ -0- $ -0- US$ 1,339 $ 1,244,039
Series 2007
6.00%, 8/01/37 -0- -0- 1,583 1,584,984
7.00%, 2/01/37 -0- -0- 1,077 1,111,629
Federal National Mortgage Association
4.50%, 9/01/37 -0- -0- 745 693,083
Series 2002
7.00%, 3/01/32 (a) -0- -0- 54 55,933
Series 2003
5.50%, 3/01/33 - 7/01/33 -0- -0- 3,574 3,510,922
Series 2004
5.50%, 4/01/34 - 11/01/34 -0- -0- 1,148 1,127,414
6.00%, 9/01/34 -0- -0- 718 720,573
Series 2005
4.50%, 8/01/35 -0- -0- 1,030 956,470
5.50%, 2/01/35 - 7/01/35 -0- -0- 2,728 2,678,280
Series 2006
5.00%, 2/01/36 -0- -0- 2,430 2,321,981
5.50%, 1/01/36 - 11/01/36 -0- -0- 5,277 5,174,549
6.50%, 9/01/36 -0- -0- 813 828,148
Series 2007
4.50%, 8/01/37 -0- -0- 459 426,205
5.50%, 5/01/36 -0- -0- 1,098 1,076,440
6.00%, 7/01/37 - 8/01/37 -0- -0- 504 504,359
6.50%, 6/01/37 -0- -0- 839 854,065
Government National Mortgage Association
Series 1994
9.00%, 9/15/24 (a) -0- -0- 7 7,664
Series 2006
6.00%, 7/15/36 (a) -0- -0- 4,591 4,620,747
------------- -------------
-0- 29,497,485
------------- -------------
FIXED RATE 15-YEAR - 1.7%
Federal Gold Loan Mortgage Corp.
Series 2006
5.00%, 4/01/21 -0- -0- 997 977,853
Federal National Mortgage Association
Series 2005
5.00%, 4/01/19 -0- -0- 1,666 1,638,842
Series 2006
5.00%, 4/01/21 -0- -0- 1,383 1,355,723
------------- -------------
-0- 3,972,418
------------- -------------
AGENCY ARMS - 1.6%
Federal Home Loan Mortgage Corp.
Series 2007
6.05%, 4/01/37 (b) -0- -0- 443 447,718
6.102%, 1/01/37 (b) -0- -0- 270 274,343
Federal National Mortgage Association
6.034%, 11/01/36 (b) -0- -0- 157 158,602
6.107%, 3/01/37 (b) -0- -0- 445 452,758
Series 2005
4.382%, 9/01/35 (b) -0- -0- 323 324,976
Series 2006
5.807%, 3/01/36 (b) -0- -0- 468 473,567
5.852%, 11/01/36 (b) -0- -0- 712 721,033
Series 2007
5.775%, 1/01/37 (b) -0- -0- 508 513,820
6.051%, 2/01/37 (b) -0- -0- 435 440,770
------------- -------------
-0- 3,807,587
------------- -------------
NON-AGENCY ARMS - 1.3%
Banc of America Funding Corp.
Series 2007-C, Class 1A3
5.761%, 5/20/36 (b) -0- -0- 417 415,103
Bear Stearns Alt-A Trust
Series 2006-3, Class 22A1
6.222%, 5/25/36 (c) -0- -0- 185 186,343
Series 2007-1, Class 21A1
5.733%, 1/25/47 (c) -0- -0- 261 260,949
Citigroup Mortgage Loan Trust, Inc.
Series 2005-2, Class 1A4
5.105%, 5/25/35 (c) -0- -0- 477 468,140
Series 2006-AR1, Class 3A1
5.50%, 3/25/36 (b) -0- -0- 569 563,565
Indymac Index Mortgage Loan Trust
Series 2006-AR7, Class 4A1
6.234%, 5/25/36 (c) -0- -0- 247 248,531
JPMorgan Alternative Loan Trust
Series 2006-A3, Class 2A1
6.066%, 7/25/36 (c) -0- -0- 495 496,948
Residential Funding Mortgage Securities, Inc.
Series 2005-SA3, Class 3A
5.237%, 8/25/35 (c) -0- -0- 316 309,099
------------- -------------
-0- 2,948,678
------------- -------------
TOTAL MORTGAGE PASS-THRU'S
(cost $40,376,461) -0- 40,226,168
------------- -------------
GOVERNMENT-RELATED - NON-U.S. ISSUERS - 14.6%
SOVEREIGNS - 14.6%
ARGENTINA-0.4%
Republic of Argentina
5.389%, 8/03/12 (b) -0- -0- 547 490,863
8.28%, 12/31/33 -0- -0- 431 390,864
Series V
7.00%, 3/28/11 -0- -0- 95 89,350
------------- -------------
-0- 971,077
------------- -------------
BRAZIL-1.8%
Republic of Brazil
6.00%, 1/17/17 -0- -0- 729 734,468
7.125%, 1/20/37 -0- -0- 1,152 1,287,360
8.25%, 1/20/34 -0- -0- 591 744,364
8.875%, 10/14/19-4/15/24 -0- -0- 832 1,048,380
11.00%, 8/17/40 -0- -0- 141 188,587
------------- -------------
-0- 4,003,159
------------- -------------
BULGARIA-0.0%
Republic of Bulgaria
Series REGS
8.25%, 1/15/15 (d) -0- -0- 94 109,745
------------- -------------
CANADA-0.7%
Government of Canada
Series VW17
8.00%, 6/01/27 (a) CAD -0- -0- CAD 1,132 1,657,911
------------- -------------
AllianceBernstein
AllianceBernstein Variable
Variable Products AllianceBernstein Products
Series Fund U.S. Variable Products Series Fund AllianceBernstein
Government/High Series Fund Global Dollar Variable Products
Grade Securities U.S. Government/High Government Series Fund
Portfolio Grade Securities Portfolio Global Dollar
Principal Portfolio Principal Government Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
COLOMBIA-0.2%
Republic of Colombia
7.375%, 9/18/37 US$ -0- $ -0- US$ 245 $ 269,132
10.75%, 1/15/13 -0- -0- 88 107,360
11.75%, 2/25/20 -0- -0- 94 137,710
------------- -------------
-0- 514,202
------------- -------------
COSTA RICA-0.1%
Republic of Costa Rica
8.05%, 1/31/13 (d) -0- -0- 53 57,770
Series REGS
8.11%, 2/01/12 (d) -0- -0- 51 55,335
------------- -------------
0 113,105
------------- -------------
DOMINICAN REPUBLIC-0.1%
Dominican Republic
8.625%, 4/20/27 (d) -0- -0- 100 112,500
------------- -------------
ECUADOR-0.1%
Republic of Ecuador
10.00%, 8/15/30 (d)(e) -0- -0- 272 251,600
------------- -------------
EL SALVADOR-0.1%
Republic of El Salvador
7.625%, 9/21/34 (d) -0- -0- 72 81,360
7.65%, 6/15/35 (d) -0- -0- 112 125,440
8.50%, 7/25/11 (d) -0- -0- 100 109,400
------------- -------------
-0- 316,200
------------- -------------
INDONESIA-0.3%
Republic of Indonesia
6.625%, 2/17/37 (d) -0- -0- 100 95,625
6.75%, 3/10/14 (d) -0- -0- 260 268,190
7.25%, 4/20/15 (d) -0- -0- 59 62,540
7.50%, 1/15/16 (d) -0- -0- 100 107,650
8.50%, 10/12/35 (d) -0- -0- 222 261,960
------------- -------------
-0- 795,965
------------- -------------
JAMAICA-0.1%
Government of Jamaica
10.625%, 6/20/17 -0- -0- 95 113,192
------------- -------------
LEBANON-0.1%
Lebanese Republic
11.625%, 5/11/16 (d) -0- -0- 33 36,630
Series REGS
7.875%, 5/20/11 (d) -0- -0- 75 71,625
10.125%, 8/06/08 (d) -0- -0- 207 208,035
------------- -------------
-0- 316,290
------------- -------------
MALAYSIA-0.3%
Malaysia
7.50%, 7/15/11 -0- -0- 303 328,383
8.75%, 6/01/09 -0- -0- 230 243,559
------------- -------------
-0- 571,942
------------- -------------
MEXICO-4.4%
Mexican Bonos
Series M 20
8.00%, 12/07/23 (a) MXN -0- -0- MXN -0- -0-
10.00%, 12/05/24 (a) -0- -0- -0- -0-
Series M7
8.00%, 12/24/08 (a) -0- -0- -0- -0-
United Mexican States
5.625%, 1/15/17 US$ 1,490 1,485,530 US$ -0- -0-
7.50%, 1/14/12 425 464,525 -0- -0-
8.125%, 12/30/19 -0- -0- 375 456,188
11.375%, 9/15/16 -0- -0- 364 514,150
Series A
8.00%, 9/24/22 -0- -0- 833 1,011,262
------------- -------------
1,950,055 1,981,600
------------- -------------
PAKISTAN-0.1%
Republic of Pakistan
6.875%, 6/01/17 (d) -0- 146 128,480
------------- -------------
PANAMA-0.5%
Republic of Panama
6.70%, 1/26/36 -0- -0- 299 306,924
7.125%, 1/29/26 -0- -0- 173 186,840
8.875%, 9/30/27 -0- -0- 97 123,675
9.375%, 7/23/12-4/01/29 -0- -0- 473 606,593
------------- -------------
-0- 1,224,032
------------- -------------
PERU-0.5%
Republic of Peru
7.35%, 7/21/25 -0- -0- 317 362,173
8.375%, 5/03/16 -0- -0- 284 332,990
8.75%, 11/21/33 -0- -0- 393 516,402
------------- -------------
-0- 1,211,565
------------- -------------
PHILIPPINES-0.9%
Republic of Philippines
7.50%, 9/25/24 -0- -0- 105 115,369
7.75%, 1/14/31 -0- -0- 162 179,415
8.25%, 1/15/14 -0- -0- 426 476,055
8.875%, 3/17/15 -0- -0- 246 285,975
9.00%, 2/15/13 -0- -0- 177 201,780
9.50%, 2/02/30 -0- -0- 137 178,785
9.875%, 1/15/19 -0- -0- 237 301,582
10.625%, 3/16/25 -0- -0- 280 392,700
------------- -------------
-0- 2,131,661
------------- -------------
RUSSIA-2.0%
Russian Federation
7.50%, 3/31/30 (d)(e) 1,292 1,443,754 1,168 1,305,463
Series REGS
11.00%, 7/24/18 (d) -0- -0- 240 337,560
Russian Ministry of Finance
Series V
3.00%, 5/14/08 -0- -0- 1,405 1,378,727
Series VII
3.00%, 5/14/11 -0- -0- 160 146,000
------------- -------------
1,443,754 3,167,750
------------- -------------
SOUTH AFRICA-0.3%
Republic of South Africa
5.875%, 5/30/22 455 447,606 100 98,375
7.375%, 4/25/12 -0- -0- 142 153,360
------------- -------------
447,606 251,735
------------- -------------
TURKEY-0.6%
Republic of Turkey
6.875%, 3/17/36 -0- -0- 577 551,035
7.00%, 6/05/20 -0- -0- 450 452,273
7.375%, 2/05/25 -0- -0- 256 265,280
8.00%, 2/14/34 -0- -0- 30 32,512
------------- -------------
-0- 1,301,100
------------- -------------
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund Series Fund
High Yield Series Fund Americas Government Americas
Portfolio High Yield Income Portfolio Government
Principal Portfolio Principal Income Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
COLOMBIA-0.2%
Republic of Colombia
7.375%, 9/18/37 US$ -0- $ -0- US$ -0- $ -0-
10.75%, 1/15/13 -0- -0- -0- -0-
11.75%, 2/25/20 -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
COSTA RICA-0.1%
Republic of Costa Rica
8.05%, 1/31/13 (d) -0- -0- -0- -0-
Series REGS
8.11%, 2/01/12 (d) -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
DOMINICAN REPUBLIC-0.1%
Dominican Republic
8.625%, 4/20/27 (d) -0- -0- -0- -0-
------------- -------------
ECUADOR-0.1%
Republic of Ecuador
10.00%, 8/15/30 (d)(e) -0- -0- -0- -0-
------------- -------------
EL SALVADOR-0.1%
Republic of El Salvador
7.625%, 9/21/34 (d) -0- -0- -0- -0-
7.65%, 6/15/35 (d) -0- -0- -0- -0-
8.50%, 7/25/11 (d) -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
INDONESIA-0.3%
Republic of Indonesia
6.625%, 2/17/37 (d) -0- -0- -0- -0-
6.75%, 3/10/14 (d) -0- -0- -0- -0-
7.25%, 4/20/15 (d) -0- -0- -0- -0-
7.50%, 1/15/16 (d) -0- -0- -0- -0-
8.50%, 10/12/35 (d) -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
JAMAICA-0.1%
Government of Jamaica
10.625%, 6/20/17 -0- -0- -0- -0-
------------- -------------
LEBANON-0.1%
Lebanese Republic
11.625%, 5/11/16 (d) -0- -0- -0- -0-
Series REGS
7.875%, 5/20/11 (d) -0- -0- -0- -0-
10.125%, 8/06/08 (d) -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
MALAYSIA-0.3%
Malaysia
7.50%, 7/15/11 -0- -0- -0- -0-
8.75%, 6/01/09 -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
MEXICO-4.4%
Mexican Bonos
Series M 20
8.00%, 12/07/23 (a) MXN -0- -0- MXN 15,500 1,425,658
10.00%, 12/05/24 (a) -0- -0- 16,205 1,769,856
Series M7
8.00%, 12/24/08 (a) -0- -0- 31,257 2,870,520
United Mexican States
5.625%, 1/15/17 US$ -0- -0- US$ -0- -0-
7.50%, 1/14/12 -0- -0- -0- -0-
8.125%, 12/30/19 -0- -0- -0- -0-
11.375%, 9/15/16 -0- -0- -0- -0-
Series A
8.00%, 9/24/22 -0- -0- -0- -0-
------------- -------------
-0- 6,066,034
------------- -------------
PAKISTAN-0.1%
Republic of Pakistan
6.875%, 6/01/17 (d) -0- -0- -0- -0-
------------- -------------
PANAMA-0.5%
Republic of Panama
6.70%, 1/26/36 -0- -0- -0- -0-
7.125%, 1/29/26 -0- -0- -0- -0-
8.875%, 9/30/27 -0- -0- -0- -0-
9.375%, 7/23/12-4/01/29 -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
PERU-0.5%
Republic of Peru
7.35%, 7/21/25 -0- -0- -0- -0-
8.375%, 5/03/16 -0- -0- -0- -0-
8.75%, 11/21/33 -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
PHILIPPINES-0.9%
Republic of Philippines
7.50%, 9/25/24 -0- -0- -0- -0-
7.75%, 1/14/31 -0- -0- -0- -0-
8.25%, 1/15/14 -0- -0- -0- -0-
8.875%, 3/17/15 -0- -0- -0- -0-
9.00%, 2/15/13 -0- -0- -0- -0-
9.50%, 2/02/30 -0- -0- -0- -0-
9.875%, 1/15/19 -0- -0- -0- -0-
10.625%, 3/16/25 -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
RUSSIA-2.0%
Russian Federation
7.50%, 3/31/30 (d)(e) -0- -0- -0- -0-
Series REGS
11.00%, 7/24/18 (d) -0- -0- -0- -0-
Russian Ministry of Finance
Series V
3.00%, 5/14/08 -0- -0- -0- -0-
Series VII
3.00%, 5/14/11 -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
SOUTH AFRICA-0.3%
Republic of South Africa
5.875%, 5/30/22 -0- -0- -0- -0-
7.375%, 4/25/12 -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
TURKEY-0.6%
Republic of Turkey
6.875%, 3/17/36 -0- -0- -0- -0-
7.00%, 6/05/20 -0- -0- -0- -0-
7.375%, 2/05/25 -0- -0- -0- -0-
8.00%, 2/14/34 -0- -0- -0- -0-
------------- -------------
-0- -0-
------------- -------------
Pro Forma Pro Forma
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund U.S. Series Fund U.S.
Global Bond Series Fund Government/High Government/High
Portfolio Global Bond Grade Securities Grade Securities
Principal Portfolio Portfolio Principal Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
COLOMBIA-0.2%
Republic of Colombia
7.375%, 9/18/37 US$ -0- $ -0- US$ 245 $ 269,132
10.75%, 1/15/13 -0- -0- 88 107,360
11.75%, 2/25/20 -0- -0- 94 137,710
------------- -------------
-0- 514,202
------------- -------------
COSTA RICA-0.1%
Republic of Costa Rica
8.05%, 1/31/13 (d) -0- -0- 53 57,770
Series REGS
8.11%, 2/01/12 (d) -0- -0- 51 55,335
------------- -------------
-0- 113,105
------------- -------------
DOMINICAN REPUBLIC-0.1%
Dominican Republic
8.625%, 4/20/27 (d) -0- -0- 100 112,500
------------- -------------
ECUADOR-0.1%
Republic of Ecuador
10.00%, 8/15/30 (d)(e) -0- -0- 272 251,600
------------- -------------
EL SALVADOR-0.1%
Republic of El Salvador
7.625%, 9/21/34 (d) -0- -0- 72 81,360
7.65%, 6/15/35 (d) -0- -0- 112 125,440
8.50%, 7/25/11 (d) -0- -0- 100 109,400
------------- -------------
-0- 316,200
------------- -------------
INDONESIA-0.3%
Republic of Indonesia
6.625%, 2/17/37 (d) -0- -0- 100 95,625
6.75%, 3/10/14 (d) -0- -0- 260 268,190
7.25%, 4/20/15 (d) -0- -0- 59 62,540
7.50%, 1/15/16 (d) -0- -0- 100 107,650
8.50%, 10/12/35 (d) -0- -0- 222 261,960
------------- -------------
-0- 795,965
------------- -------------
JAMAICA-0.1%
Government of Jamaica
10.625%, 6/20/17 -0- -0- 95 113,192
------------- -------------
LEBANON-0.1%
Lebanese Republic
11.625%, 5/11/16 (d) -0- -0- 33 36,630
Series REGS
7.875%, 5/20/11 (d) -0- -0- 75 71,625
10.125%, 8/06/08 (d) -0- -0- 207 208,035
------------- -------------
-0- 316,290
------------- -------------
MALAYSIA-0.3%
Malaysia
7.50%, 7/15/11 -0- -0- 303 328,383
8.75%, 6/01/09 -0- -0- 230 243,559
------------- -------------
-0- 571,942
------------- -------------
MEXICO-4.4%
Mexican Bonos
Series M 20
8.00%, 12/07/23 (a) MXN -0- -0- MXN 15,500 1,425,658
10.00%, 12/05/24 (a) -0- -0- 16,205 1,769,856
Series M7
8.00%, 12/24/08 (a) -0- -0- 31,257 2,870,520
United Mexican States
5.625%, 1/15/17 US$ -0- -0- US$ 1,490 1,485,530
7.50%, 1/14/12 -0- -0- 425 464,525
8.125%, 12/30/19 -0- -0- 375 456,188
11.375%, 9/15/16 -0- -0- 364 514,150
Series A
8.00%, 9/24/22 -0- -0- 833 1,011,262
------------- -------------
-0- 9,997,689
------------- -------------
PAKISTAN-0.1%
Republic of Pakistan
6.875%, 6/01/17 (d) -0- -0- 146 128,480
------------- -------------
PANAMA-0.5%
Republic of Panama
6.70%, 1/26/36 -0- -0- 299 306,924
7.125%, 1/29/26 -0- -0- 173 186,840
8.875%, 9/30/27 -0- -0- 97 123,675
9.375%, 7/23/12-4/01/29 -0- -0- 473 606,593
------------- -------------
-0- 1,224,032
------------- -------------
PERU-0.5%
Republic of Peru
7.35%, 7/21/25 -0- -0- 317 362,173
8.375%, 5/03/16 -0- -0- 284 332,990
8.75%, 11/21/33 -0- -0- 393 516,402
------------- -------------
-0- 1,211,565
------------- -------------
PHILIPPINES-0.9%
Republic of Philippines
7.50%, 9/25/24 -0- -0- 105 115,369
7.75%, 1/14/31 -0- -0- 162 179,415
8.25%, 1/15/14 -0- -0- 426 476,055
8.875%, 3/17/15 -0- -0- 246 285,975
9.00%, 2/15/13 -0- -0- 177 201,780
9.50%, 2/02/30 -0- -0- 137 178,785
9.875%, 1/15/19 -0- -0- 237 301,582
10.625%, 3/16/25 -0- -0- 280 392,700
------------- -------------
-0- 2,131,661
------------- -------------
RUSSIA-2.0%
Russian Federation
7.50%, 3/31/30 (d)(e) -0- -0- 2,460 2,749,217
Series REGS
11.00%, 7/24/18 (d) -0- -0- 240 337,560
Russian Ministry of Finance
Series V
3.00%, 5/14/08 -0- -0- 1,405 1,378,727
Series VII
3.00%, 5/14/11 -0- -0- 160 146,000
------------- -------------
-0- 4,611,504
------------- -------------
SOUTH AFRICA-0.3%
Republic of South Africa
5.875%, 5/30/22 -0- -0- 555 545,981
7.375%, 4/25/12 -0- -0- 142 153,360
------------- -------------
-0- 699,341
------------- -------------
TURKEY-0.6%
Republic of Turkey
6.875%, 3/17/36 -0- -0- 577 551,035
7.00%, 6/05/20 -0- -0- 450 452,273
7.375%, 2/05/25 -0- -0- 256 265,280
8.00%, 2/14/34 -0- -0- 30 32,512
------------- -------------
-0- 1,301,100
------------- -------------
<caption>
AllianceBernstein
AllianceBernstein Variable
Variable Products AllianceBernstein Products
Series Fund U.S. Variable Products Series Fund AllianceBernstein
Government/High Series Fund Global Dollar Variable Products
Grade Securities U.S. Government/High Government Series Fund
Portfolio Grade Securities Portfolio Global Dollar
Principal Portfolio Principal Government Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
UKRAINE-0.1%
Government of Ukraine
6.58%, 11/21/16 (d) US$ -0- $ -0- US$ 144 $ 146,016
7.65%, 6/11/13 (d) -0- -0- 80 84,800
--------------- --------------
-0- 230,816
--------------- --------------
URUGUAY-0.3%
Republic of Uruguay
7.875%, 1/15/33 (f) -0- -0- 138 153,194
8.00%, 11/18/22 -0- -0- 354 392,055
9.25%, 5/17/17 -0- -0- 200 236,800
--------------- --------------
-0- 782,049
--------------- --------------
VENEZUELA-0.6%
Republic of Venezuela
5.75%, 2/26/16 -0- -0- 253 213,785
6.00%, 12/09/20 -0- -0- 45 35,600
7.65%, 4/21/25 -0- -0- 204 183,600
8.50%, 10/08/14 -0- -0- 92 92,230
9.25%, 9/15/27 -0- -0- 89 92,560
9.375%, 1/13/34 -0- -0- 85 88,825
13.625%, 8/15/18 -0- -0- 120 158,400
Series REGS
7.00%, 12/01/18 (d) -0- -0- 481 428,090
--------------- --------------
-0- 1,293,090
--------------- --------------
TOTAL GOVERNMENT RELATED - NON-U.S. ISSUERS
(cost $30,776,994) 3,841,415 21,892,855
--------------- --------------
CORPORATES - NON-INVESTMENT GRADES - 14.5%
INDUSTRIAL - 10.8%
BASIC - 1.2%
Arch Western Finance LLC
6.75%, 7/01/13 -0- -0- -0- -0-
Basell AF SCA
8.375%, 8/15/15 (d) -0- -0- -0- -0-
Citigroup (JSC Severstal)
Series REGS
9.25%, 4/19/14 (d) -0- -0- -0- -0-
Equistar Chemicals Funding LP
10.125%, 9/01/08 -0- -0- -0- -0-
10.625%, 5/01/11 -0- -0- -0- -0-
Evraz Group, SA
8.25%, 11/10/15 (d) -0- -0- -0- -0-
Freeport-McMoRan Copper & Gold, Inc.
8.375%, 4/01/17 -0- -0- -0- -0-
Georgia-Pacific Corp.
7.00%, 1/15/15 (d) -0- -0- -0- -0-
7.125%, 1/15/17 (d) -0- -0- -0- -0-
Hexion US Finance Corp./Hexion Nova Scotia Finance LLC
10.058%, 11/15/14 (b) -0- -0- -0- -0-
Huntsman International LLC
7.875%, 11/15/14 -0- -0- -0- -0-
Huntsman LLC
11.50%, 7/15/12 -0- -0- -0- -0-
Ineos Group Holdings PLC
8.50%, 2/15/16 (d) -0- -0- -0- -0-
Lyondell Chemical Co.
8.00%, 9/15/14 -0- -0- -0- -0-
8.25%, 9/15/16 -0- -0- -0- -0-
The Mosaic Co.
7.625%, 12/01/16 (d)(e) -0- -0- -0- -0-
NewPage Corp.
10.00%, 5/01/12 -0- -0- -0- -0-
Packaging Corp. of America
5.75%, 8/01/13 155 153,461 -0- -0-
Peabody Energy Corp.
Series B
6.875%, 3/15/13 -0- -0- -0- -0-
--------------- --------------
153,461 -0-
--------------- --------------
CAPITAL GOODS - 1.2%
Allied Waste North America, Inc.
6.375%, 4/15/11 -0- -0- -0- -0-
6.875%, 6/01/17 -0- -0- -0- -0-
Series B
7.125%, 5/15/16 -0- -0- -0- -0-
7.375%, 4/15/14 -0- -0- -0- -0-
Associated Materials, Inc.
11.25%, 3/01/14 (g) -0- -0- -0- -0-
Berry Plastics Holding Corp.
8.875%, 9/15/14 -0- -0- -0- -0-
10.25%, 3/01/16 -0- -0- -0- -0-
Bombardier, Inc.
6.30%, 5/01/14 (d) -0- -0- -0- -0-
8.00%, 11/15/14 (d) -0- -0- -0- -0-
Case Corp.
7.25%, 1/15/16 -0- -0- -0- -0-
Case New Holland, Inc.
7.125%, 3/01/14 -0- -0- -0- -0-
Crown Americas
7.625%, 11/15/13 -0- -0- -0- -0-
Goodman Global Holdings, Inc.
7.875%, 12/15/12 -0- -0- -0- -0-
L-3 Communications Corp.
5.875%, 1/15/15 -0- -0- -0- -0-
Owens Brockway Glass Container, Inc.
8.875%, 2/15/09 -0- -0- -0- -0-
Series $
6.75%, 12/01/14 -0- -0- -0- -0-
Russell-Stanley Holdings, Inc.
9.00%, 11/30/08 (h)(i)(j) -0- -0- -0- -0-
Trinity Industries, Inc.
6.50%, 3/15/14 -0- -0- -0- -0-
United Rentals North America, Inc.
7.75%, 11/15/13 -0- -0- -0- -0-
--------------- --------------
-0- -0-
--------------- --------------
COMMUNICATIONS - MEDIA - 1.9%
Albritton Communications Co.
7.75%, 12/15/12 -0- -0- -0- -0-
Cablevision Systems Corp.
Series B
8.00%, 4/15/12 -0- -0- -0- -0-
CCH I Holdings LLC
11.75%, 5/15/14 -0- -0- -0- -0-
Clear Channel Communications, Inc.
5.50%, 9/15/14 -0- -0- -0- -0-
5.75%, 1/15/13 -0- -0- -0- -0-
CSC Holdings, Inc.
7.625%, 7/15/18 -0- -0- -0- -0-
7.875%, 2/15/18 -0- -0- -0- -0-
Series WI
6.75%, 4/15/12 -0- -0- -0- -0-
</table>
<table>
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund Series Fund
High Yield Series Fund Americas Government Americas
Portfolio High Yield Income Portfolio Government
Principal Portfolio Principal Income Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
UKRAINE-0.1%
Government of Ukraine
6.58%, 11/21/16 (d) US$ -0- $ -0- US$ -0- $ -0-
7.65%, 6/11/13 (d) -0- -0- -0- -0-
--------------- --------------
-0- -0-
--------------- --------------
URUGUAY-0.3%
Republic of Uruguay
7.875%, 1/15/33 (f) -0- -0- -0- -0-
8.00%, 11/18/22 -0- -0- -0- -0-
9.25%, 5/17/17 -0- -0- -0- -0-
--------------- --------------
-0- -0-
--------------- --------------
VENEZUELA-0.6%
Republic of Venezuela
5.75%, 2/26/16 -0- -0- -0- -0-
6.00%, 12/09/20 -0- -0- -0- -0-
7.65%, 4/21/25 -0- -0- -0- -0-
8.50%, 10/08/14 -0- -0- -0- -0-
9.25%, 9/15/27 -0- -0- -0- -0-
9.375%, 1/13/34 -0- -0- -0- -0-
13.625%, 8/15/18 -0- -0- -0- -0-
Series REGS
7.00%, 12/01/18 (d) -0- -0- -0- -0-
--------------- --------------
-0- -0-
--------------- --------------
TOTAL GOVERNMENT RELATED - NON-U.S. ISSUERS
(cost $30,776,994) -0- 7,723,945
--------------- --------------
CORPORATES - NON-INVESTMENT GRADES - 14.5%
INDUSTRIAL - 10.8%
BASIC - 1.2%
Arch Western Finance LLC
6.75%, 7/01/13 90 88,200 -0- -0-
Basell AF SCA
8.375%, 8/15/15 (d) 110 100,375 -0- -0-
Citigroup (JSC Severstal)
Series REGS
9.25%, 4/19/14 (d) 220 236,408 -0- -0-
Equistar Chemicals Funding LP
10.125%, 9/01/08 47 48,527 -0- -0-
10.625%, 5/01/11 65 67,925 -0- -0-
Evraz Group, SA
8.25%, 11/10/15 (d) 123 123,480 -0- -0-
Freeport-McMoRan Copper & Gold, Inc.
8.375%, 4/01/17 275 300,437 -0- -0-
Georgia-Pacific Corp.
7.00%, 1/15/15 (d) 85 82,875 -0- -0-
7.125%, 1/15/17 (d) 95 91,912 -0- -0-
Hexion US Finance Corp./Hexion Nova Scotia Finance LLC
10.058%, 11/15/14 (b) 60 61,800 -0- -0-
Huntsman International LLC
7.875%, 11/15/14 105 111,825 -0- -0-
Huntsman LLC
11.50%, 7/15/12 143 155,513 -0- -0-
Ineos Group Holdings PLC
8.50%, 2/15/16 (d) 179 171,393 -0- -0-
Lyondell Chemical Co.
8.00%, 9/15/14 80 88,000 -0- -0-
8.25%, 9/15/16 110 124,025 -0- -0-
The Mosaic Co.
7.625%, 12/01/16 (d)(e) 290 309,212 -0- -0-
NewPage Corp.
10.00%, 5/01/12 100 105,250 -0- -0-
Packaging Corp. of America
5.75%, 8/01/13 -0- -0- -0- -0-
Peabody Energy Corp.
Series B
6.875%, 3/15/13 190 191,900 -0- -0-
--------------- --------------
2,459,057 -0-
--------------- --------------
CAPITAL GOODS - 1.2%
Allied Waste North America, Inc.
6.375%, 4/15/11 174 174,435 -0- -0-
6.875%, 6/01/17 85 85,425 -0- -0-
Series B
7.125%, 5/15/16 80 81,800 -0- -0-
7.375%, 4/15/14 90 90,450 -0- -0-
Associated Materials, Inc.
11.25%, 3/01/14 (g) 235 148,050 -0- -0-
Berry Plastics Holding Corp.
8.875%, 9/15/14 105 107,363 -0- -0-
10.25%, 3/01/16 35 34,300 -0- -0-
Bombardier, Inc.
6.30%, 5/01/14 (d) 270 264,600 -0- -0-
8.00%, 11/15/14 (d) 225 231,750 -0- -0-
Case Corp.
7.25%, 1/15/16 170 175,950 -0- -0-
Case New Holland, Inc.
7.125%, 3/01/14 245 251,125 -0- -0-
Crown Americas
7.625%, 11/15/13 155 159,069 -0- -0-
Goodman Global Holdings, Inc.
7.875%, 12/15/12 110 108,075 -0- -0-
L-3 Communications Corp.
5.875%, 1/15/15 130 124,800 -0- -0-
Owens Brockway Glass Container, Inc.
8.875%, 2/15/09 176 178,640 -0- -0-
Series $
6.75%, 12/01/14 205 202,181 -0- -0-
Russell-Stanley Holdings, Inc.
9.00%, 11/30/08 (h)(i)(j) 36 4,566 -0- -0-
Trinity Industries, Inc.
6.50%, 3/15/14 180 172,800 -0- -0-
United Rentals North America, Inc.
7.75%, 11/15/13 220 226,600 -0- -0-
--------------- --------------
2,821,979 -0-
--------------- --------------
COMMUNICATIONS - MEDIA - 1.9%
Albritton Communications Co.
7.75%, 12/15/12 165 166,650 -0- -0-
Cablevision Systems Corp.
Series B
8.00%, 4/15/12 120 116,400 -0- -0-
CCH I Holdings LLC
11.75%, 5/15/14 580 536,500 -0- -0-
Clear Channel Communications, Inc.
5.50%, 9/15/14 238 186,869 -0- -0-
5.75%, 1/15/13 157 131,406 -0- -0-
CSC Holdings, Inc.
7.625%, 7/15/18 125 119,375 -0- -0-
7.875%, 2/15/18 45 43,650 -0- -0-
Series WI
6.75%, 4/15/12 190 182,875 -0- -0-
</table>
<table>
Pro Forma Pro Forma
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund U.S. Series Fund U.S.
Global Bond Series Fund Government/High Government/High
Portfolio Global Bond Grade Securities Grade Securities
Principal Portfolio Portfolio Principal Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
UKRAINE-0.1%
Government of Ukraine
6.58%, 11/21/16 (d) US$ -0- $ -0- US$ 144 $ 146,016
7.65%, 6/11/13 (d) -0- -0- 80 84,800
--------------- --------------
-0- 230,816
--------------- --------------
URUGUAY-0.3%
Republic of Uruguay
7.875%, 1/15/33 (f) -0- -0- 138 153,194
8.00%, 11/18/22 -0- -0- 354 392,055
9.25%, 5/17/17 -0- -0- 200 236,800
--------------- --------------
-0- 782,049
--------------- --------------
VENEZUELA-0.6%
Republic of Venezuela
5.75%, 2/26/16 -0- -0- 253 213,785
6.00%, 12/09/20 -0- -0- 45 35,600
7.65%, 4/21/25 -0- -0- 204 183,600
8.50%, 10/08/14 -0- -0- 92 92,230
9.25%, 9/15/27 -0- -0- 89 92,560
9.375%, 1/13/34 -0- -0- 85 88,825
13.625%, 8/15/18 -0- -0- 120 158,400
Series REGS
7.00%, 12/01/18 (d) -0- -0- 481 428,090
--------------- --------------
-0- 1,293,090
--------------- --------------
TOTAL GOVERNMENT RELATED - NON-U.S. ISSUERS
(cost $30,776,994) -0- 33,458,215
--------------- --------------
CORPORATES - NON-INVESTMENT GRADES - 14.5%
INDUSTRIAL - 10.8%
BASIC - 1.2%
Arch Western Finance LLC
6.75%, 7/01/13 -0- -0- 90 88,200
Basell AF SCA
8.375%, 8/15/15 (d) -0- -0- 110 100,375
Citigroup (JSC Severstal)
Series REGS
9.25%, 4/19/14 (d) -0- -0- 220 236,408
Equistar Chemicals Funding LP
10.125%, 9/01/08 -0- -0- 47 48,527
10.625%, 5/01/11 -0- -0- 65 67,925
Evraz Group, SA
8.25%, 11/10/15 (d) -0- -0- 123 123,480
Freeport-McMoRan Copper & Gold, Inc.
8.375%, 4/01/17 -0- -0- 275 300,437
Georgia-Pacific Corp.
7.00%, 1/15/15 (d) -0- -0- 85 82,875
7.125%, 1/15/17 (d) -0- -0- 95 91,912
Hexion US Finance Corp./Hexion Nova Scotia Finance LLC
10.058%, 11/15/14 (b) -0- -0- 60 61,800
Huntsman International LLC
7.875%, 11/15/14 -0- -0- 105 111,825
Huntsman LLC
11.50%, 7/15/12 -0- -0- 143 155,513
Ineos Group Holdings PLC
8.50%, 2/15/16 (d) -0- -0- 179 171,393
Lyondell Chemical Co.
8.00%, 9/15/14 -0- -0- 80 88,000
8.25%, 9/15/16 -0- -0- 110 124,025
The Mosaic Co.
7.625%, 12/01/16 (d)(e) -0- -0- 290 309,212
NewPage Corp.
10.00%, 5/01/12 -0- -0- 100 105,250
Packaging Corp. of America
5.75%, 8/01/13 -0- -0- 155 153,461
Peabody Energy Corp.
Series B
6.875%, 3/15/13 -0- -0- 190 191,900
--------------- --------------
-0- 2,612,518
--------------- --------------
CAPITAL GOODS - 1.2%
Allied Waste North America, Inc.
6.375%, 4/15/11 -0- -0- 174 174,435
6.875%, 6/01/17 -0- -0- 85 85,425
Series B
7.125%, 5/15/16 -0- -0- 80 81,800
7.375%, 4/15/14 -0- -0- 90 90,450
Associated Materials, Inc.
11.25%, 3/01/14 (g) -0- -0- 235 148,050
Berry Plastics Holding Corp.
8.875%, 9/15/14 -0- -0- 105 107,363
10.25%, 3/01/16 -0- -0- 35 34,300
Bombardier, Inc.
6.30%, 5/01/14 (d) -0- -0- 270 264,600
8.00%, 11/15/14 (d) -0- -0- 225 231,750
Case Corp.
7.25%, 1/15/16 -0- -0- 170 175,950
Case New Holland, Inc.
7.125%, 3/01/14 -0- -0- 245 251,125
Crown Americas
7.625%, 11/15/13 -0- -0- 155 159,069
Goodman Global Holdings, Inc.
7.875%, 12/15/12 -0- -0- 110 108,075
L-3 Communications Corp.
5.875%, 1/15/15 -0- -0- 130 124,800
Owens Brockway Glass Container, Inc.
8.875%, 2/15/09 -0- -0- 176 178,640
Series $
6.75%, 12/01/14 -0- -0- 205 202,181
Russell-Stanley Holdings, Inc.
9.00%, 11/30/08 (h)(i)(j) -0- -0- 36 4,566
Trinity Industries, Inc.
6.50%, 3/15/14 -0- -0- 180 172,800
United Rentals North America, Inc.
7.75%, 11/15/13 -0- -0- 220 226,600
--------------- --------------
-0- 2,821,979
--------------- --------------
COMMUNICATIONS - MEDIA - 1.9%
Albritton Communications Co.
7.75%, 12/15/12 -0- -0- 165 166,650
Cablevision Systems Corp.
Series B
8.00%, 4/15/12 -0- -0- 120 116,400
CCH I Holdings LLC
11.75%, 5/15/14 -0- -0- 580 536,500
Clear Channel Communications, Inc.
5.50%, 9/15/14 -0- -0- 238 186,869
5.75%, 1/15/13 -0- -0- 157 131,406
CSC Holdings, Inc.
7.625%, 7/15/18 -0- -0- 125 119,375
7.875%, 2/15/18 -0- -0- 45 43,650
Series WI
6.75%, 4/15/12 -0- -0- 190 182,875
</table>
AllianceBernstein AllianceBernstein
Variable Products Variable Products
Series Fund AllianceBernstein Series Fund AllianceBernstein
U.S. Government/High Variable Products Global Dollar Variable Products
Grade Securities Portfolio Series Fund Government Portfolio Series Fund
Principal U.S. Government/High Principal Global Dollar
Amount Grade Securities Portfolio Amount Government Portfolio
(000) (U.S. $ Value) (000) (U.S. $ Value)
------------------------ ------------------------- --------------------- -------------------
Dex Media West LLC
Series B
8.50%, 8/15/10 US$ -0- $ -0- US$ -0- $ -0-
DirecTV Holdings LLC
6.375%, 6/15/15 -0- -0- -0- -0-
EchoStar DBS Corp.
6.375%, 10/01/11 -0- -0- -0- -0-
6.625%, 10/01/14 -0- -0- -0- -0-
7.125%, 2/01/16 -0- -0- -0- -0-
Idearc, Inc.
8.00%, 11/15/16 -0- -0- -0- -0-
Insight Communications Co., Inc.
12.25%, 2/15/11 -0- -0- -0- -0-
Insight Midwest LP
9.75%, 10/01/09 -0- -0- -0- -0-
Intelsat Bermuda Ltd.
11.25%, 6/15/16 -0- -0- -0- -0-
Intelsat Subsidiary Holding Co. Ltd.
8.625%, 1/15/15 -0- -0- -0- -0-
Liberty Media Corp.
5.70%, 5/15/13 -0- -0- -0- -0-
7.875%, 7/15/09 -0- -0- -0- -0-
8.25%, 2/01/30 -0- -0- -0- -0-
Quebecor Media, Inc.
7.75%, 3/15/16 -0- -0- -0- -0-
Rainbow National Services LLC
8.75%, 9/01/12 (d) -0- -0- -0- -0-
10.375%, 9/01/14 (d) -0- -0- -0- -0-
RH Donnelley Corp.
Series A-2
6.875%, 1/15/13 -0- -0- -0- -0-
Sirius Satellite Radio, Inc.
9.625%, 8/01/13 -0- -0- -0- -0-
Univision Communications, Inc.
7.85%, 7/15/11 -0- -0- -0- -0-
WDAC Subsidiary Corp.
8.375%, 12/01/14 (d) -0- -0- -0- -0-
WMG Holdings Corp.
9.50%, 12/15/14 (g) -0- -0- -0- -0-
XM Satellite Radio, Inc.
9.75%, 5/01/14 -0- -0- -0- -0-
-------------------------- -----------------------
-0- -0-
-------------------------- -----------------------
COMMUNICATIONS - TELECOMMUNICATIONS - 1.0%
Alltel Corp.
7.875%, 7/01/32 -0- -0- -0- -0-
American Tower Corp.
7.00%, 10/15/17 (d) -0- -0- -0- -0-
Citizens Communications Co.
6.25%, 1/15/13 -0- -0- -0- -0-
Cricket Communications, Inc.
9.375%, 11/01/14 -0- -0- -0- -0-
Digicel Ltd.
9.25%, 9/01/12 (d) -0- -0- -0- -0-
Dobson Cellular Systems, Inc.
Series B
8.375%, 11/01/11 -0- -0- -0- -0-
Dobson Communications Corp.
8.875%, 10/01/13 -0- -0- -0- -0-
Inmarsat Finance PLC
7.625%, 6/30/12 -0- -0- -0- -0-
10.375%, 11/15/12 (g) -0- -0- -0- -0-
Level 3 Financing, Inc.
9.25%, 11/01/14 -0- -0- -0- -0-
Mobile Telesystems Finance SA
8.00%, 1/28/12 (d) -0- -0- -0- -0-
PanAmSat Corp.
9.00%, 8/15/14 -0- -0- -0- -0-
Qwest Capital Funding, Inc.
7.25%, 2/15/11 -0- -0- -0- -0-
Time Warner Telecom Holdings, Inc.
9.25%, 2/15/14 -0- -0- -0- -0-
Windstream Corp.
8.125%, 8/01/13 -0- -0- -0- -0-
8.625%, 8/01/16 -0- -0- -0- -0-
-------------------------- -----------------------
-0- -0-
-------------------------- -----------------------
CONSUMER CYCLICAL - AUTOMOTIVE - 1.1%
Affinia Group, Inc.
9.00%, 11/30/14 -0- -0- -0- -0-
Ford Motor Credit Co.
7.00%, 10/01/13 -0- -0- -0- -0-
7.45%, 7/16/31 -0- -0- -0- -0-
8.11%, 1/13/12 (b) -0- -0- -0- -0-
General Motors Acceptance Corp.
6.75%, 12/01/14 -0- -0- -0- -0-
6.875%, 9/15/11 -0- -0- -0- -0-
8.00%, 11/01/31 -0- -0- -0- -0-
General Motors Corp.
8.25%, 7/15/23 -0- -0- -0- -0-
8.375%, 7/15/33 -0- -0- -0- -0-
The Goodyear Tire & Rubber Co.
9.00%, 7/01/15 -0- -0- -0- -0-
Keystone Automotive Operations, Inc.
9.75%, 11/01/13 -0- -0- -0- -0-
Lear Corp.
Series B
5.75%, 8/01/14 -0- -0- -0- -0-
8.50%, 12/01/13 -0- -0- -0- -0-
8.75%, 12/01/16 -0- -0- -0- -0-
Visteon Corp.
7.00%, 3/10/14 -0- -0- -0- -0-
-------------------------- -----------------------
-0- -0-
-------------------------- -----------------------
CONSUMER CYCLICAL - OTHER - 1.4%
Broder Brothers Co.
Series B
11.25%, 10/15/10 -0- -0- -0- -0-
Greektown Holdings LLC
10.75%, 12/01/13 (d) -0- -0- -0- -0-
Harrah's Operating Co., Inc
5.625%, 6/01/15 -0- -0- -0- -0-
5.75%, 10/01/17 -0- -0- -0- -0-
6.50%, 6/01/16 -0- -0- -0- -0-
Host Hotels & Resorts LP
6.875%, 11/01/14 -0- -0- -0- -0-
Host Marriott LP
Series Q
6.75%, 6/01/16 -0- -0- -0- -0-
KB Home
7.75%, 2/01/10 -0- -0- -0- -0-
Levi Strauss & Co.
8.875%, 4/01/16 -0- -0- -0- -0-
AllianceBernstein AllianceBernstein
Variable Products Variable Products
Series Fund AllianceBernstein Series Fund AllianceBernstein
High Yield Variable Products Americas Government Variable Products
Portfolio Series Fund Income Portfolio Series Fund
Principal High Yield Principal Americas Government
Amount Portfolio Amount Income Portfolio
(000) (U.S. $ Value) (000) (U.S. $ Value)
------------------ ---------------- ----------------- ------------------
Dex Media West LLC
Series B
8.50%, 8/15/10 US$ 60 $ 61,650 US$ -0- $ -0-
DirecTV Holdings LLC
6.375%, 6/15/15 291 276,086 -0- -0-
EchoStar DBS Corp.
6.375%, 10/01/11 89 89,445 -0- -0-
6.625%, 10/01/14 305 306,525 -0- -0-
7.125%, 2/01/16 85 87,338 -0- -0-
Idearc, Inc.
8.00%, 11/15/16 185 184,538 -0- -0-
Insight Communications Co., Inc.
12.25%, 2/15/11 181 186,883 -0- -0-
Insight Midwest LP
9.75%, 10/01/09 81 81,101 -0- -0-
Intelsat Bermuda Ltd.
11.25%, 6/15/16 274 293,523 -0- -0-
Intelsat Subsidiary Holding Co. Ltd.
8.625%, 1/15/15 135 137,700 -0- -0-
Liberty Media Corp.
5.70%, 5/15/13 50 46,711 -0- -0-
7.875%, 7/15/09 58 59,693 -0- -0-
8.25%, 2/01/30 50 49,000 -0- -0-
Quebecor Media, Inc.
7.75%, 3/15/16 230 219,362 -0- -0-
Rainbow National Services LLC
8.75%, 9/01/12 (d) 55 57,062 -0- -0-
10.375%, 9/01/14 (d) 30 32,925 -0- -0-
RH Donnelley Corp.
Series A-2
6.875%, 1/15/13 128 120,960 -0- -0-
Sirius Satellite Radio, Inc.
9.625%, 8/01/13 70 69,475 -0- -0-
Univision Communications, Inc.
7.85%, 7/15/11 115 115,000 -0- -0-
WDAC Subsidiary Corp.
8.375%, 12/01/14 (d) 70 70,000 -0- -0-
WMG Holdings Corp.
9.50%, 12/15/14 (g) 333 233,100 -0- -0-
XM Satellite Radio, Inc.
9.75%, 5/01/14 60 60,150 -0- -0-
--------------------------- -------------------
4,321,952 -0-
--------------------------- -------------------
COMMUNICATIONS - TELECOMMUNICATIONS - 1.0%
Alltel Corp.
7.875%, 7/01/32 170 137,740 -0- -0-
American Tower Corp.
7.00%, 10/15/17 (d) 20 20,125 -0- -0-
Citizens Communications Co.
6.25%, 1/15/13 210 204,750 -0- -0-
Cricket Communications, Inc.
9.375%, 11/01/14 215 218,225 -0- -0-
Digicel Ltd.
9.25%, 9/01/12 (d) 161 165,428 -0- -0-
Dobson Cellular Systems, Inc.
Series B
8.375%, 11/01/11 76 80,655 -0- -0-
Dobson Communications Corp.
8.875%, 10/01/13 75 79,875 -0- -0-
Inmarsat Finance PLC
7.625%, 6/30/12 145 149,350 -0- -0-
10.375%, 11/15/12 (g) 155 148,413 -0- -0-
Level 3 Financing, Inc.
9.25%, 11/01/14 195 192,075 -0- -0-
Mobile Telesystems Finance SA
8.00%, 1/28/12 (d) 231 236,636 -0- -0-
PanAmSat Corp.
9.00%, 8/15/14 143 147,290 -0- -0-
Qwest Capital Funding, Inc.
7.25%, 2/15/11 300 301,500 -0- -0-
Time Warner Telecom Holdings, Inc.
9.25%, 2/15/14 50 51,875 -0- -0-
Windstream Corp.
8.125%, 8/01/13 88 92,620 -0- -0-
8.625%, 8/01/16 77 82,101 -0- -0-
--------------------------- -------------------
2,308,658 -0-
--------------------------- -------------------
CONSUMER CYCLICAL - AUTOMOTIVE - 1.1%
Affinia Group, Inc.
9.00%, 11/30/14 85 79,900 -0- -0-
Ford Motor Credit Co.
7.00%, 10/01/13 204 184,355 -0- -0-
7.45%, 7/16/31 364 285,740 -0- -0-
8.11%, 1/13/12 (b) 240 226,778 -0- -0-
General Motors Acceptance Corp.
6.75%, 12/01/14 135 122,361 -0- -0-
6.875%, 9/15/11 321 305,484 -0- -0-
8.00%, 11/01/31 135 132,446 -0- -0-
General Motors Corp.
8.25%, 7/15/23 350 306,250 -0- -0-
8.375%, 7/15/33 305 267,256 -0- -0-
The Goodyear Tire & Rubber Co.
9.00%, 7/01/15 130 138,775 -0- -0-
Keystone Automotive Operations, Inc.
9.75%, 11/01/13 108 88,020 -0- -0-
Lear Corp.
Series B
5.75%, 8/01/14 70 58,800 -0- -0-
8.50%, 12/01/13 45 43,088 -0- -0-
8.75%, 12/01/16 245 230,300 -0- -0-
Visteon Corp.
7.00%, 3/10/14 165 128,288 -0- -0-
--------------------------- -------------------
2,597,841 -0-
--------------------------- -------------------
CONSUMER CYCLICAL - OTHER - 1.4%
Broder Brothers Co.
Series B
11.25%, 10/15/10 77 66,990 -0- -0-
Greektown Holdings LLC
10.75%, 12/01/13 (d) 90 89,100 -0- -0-
Harrah's Operating Co., Inc
5.625%, 6/01/15 422 335,490 -0- -0-
5.75%, 10/01/17 16 12,240 -0- -0-
6.50%, 6/01/16 237 193,155 -0- -0-
Host Hotels & Resorts LP
6.875%, 11/01/14 45 44,888 -0- -0-
Host Marriott LP
Series Q
6.75%, 6/01/16 300 297,000 -0- -0-
KB Home
7.75%, 2/01/10 125 118,437 -0- -0-
Levi Strauss & Co.
8.875%, 4/01/16 63 64,890 -0- -0-
Pro Forma
AllianceBernstein AllianceBernstein Pro Forma
Variable Products Variable Products AllianceBernstein
Series Fund AllianceBernstein Series Fund Variable Products
Global Bond Variable Products U.S. Government/High Series Fund
Portfolio Series Fund Grade Securities Portfolio U.S. Government/High
Principal Global Bond Principal Grade Securities
Amount Portfolio Amount Portfolio
(000) (U.S. $ Value) (000) (U.S. $ Value)
------------------- ----------------- ----------------------- ----------------------
Dex Media West LLC
Series B
8.50%, 8/15/10 US$ -0- $ -0- US$ 60 $ 61,650
DirecTV Holdings LLC
6.375%, 6/15/15 -0- -0- 291 276,086
EchoStar DBS Corp.
6.375%, 10/01/11 -0- -0- 89 89,445
6.625%, 10/01/14 -0- -0- 305 306,525
7.125%, 2/01/16 -0- -0- 85 87,338
Idearc, Inc.
8.00%, 11/15/16 -0- -0- 185 184,538
Insight Communications Co., Inc.
12.25%, 2/15/11 -0- -0- 181 186,883
Insight Midwest LP
9.75%, 10/01/09 -0- -0- 81 81,101
Intelsat Bermuda Ltd.
11.25%, 6/15/16 -0- -0- 274 293,523
Intelsat Subsidiary Holding Co. Ltd.
8.625%, 1/15/15 -0- -0- 135 137,700
Liberty Media Corp.
5.70%, 5/15/13 -0- -0- 50 46,711
7.875%, 7/15/09 -0- -0- 58 59,693
8.25%, 2/01/30 -0- -0- 50 49,000
Quebecor Media, Inc.
7.75%, 3/15/16 -0- -0- 230 219,362
Rainbow National Services LLC
8.75%, 9/01/12 (d) -0- -0- 55 57,062
10.375%, 9/01/14 (d) -0- -0- 30 32,925
RH Donnelley Corp.
Series A-2
6.875%, 1/15/13 -0- -0- 128 120,960
Sirius Satellite Radio, Inc.
9.625%, 8/01/13 -0- -0- 70 69,475
Univision Communications, Inc.
7.85%, 7/15/11 -0- -0- 115 115,000
WDAC Subsidiary Corp.
8.375%, 12/01/14 (d) -0- -0- 70 70,000
WMG Holdings Corp.
9.50%, 12/15/14 (g) -0- -0- 333 233,100
XM Satellite Radio, Inc.
9.75%, 5/01/14 -0- -0- 60 60,150
-------------------------- -----------------------
-0- 4,321,952
-------------------------- -----------------------
COMMUNICATIONS - TELECOMMUNICATIONS -- 1.0%
Alltel Corp.
7.875%, 7/01/32 -0- -0- 170 137,740
American Tower Corp.
7.00%, 10/15/17 (d) -0- -0- 20 20,125
Citizens Communications Co.
6.25%, 1/15/13 -0- -0- 210 204,750
Cricket Communications, Inc.
9.375%, 11/01/14 -0- -0- 215 218,225
Digicel Ltd.
9.25%, 9/01/12 (d) -0- -0- 161 165,428
Dobson Cellular Systems, Inc.
Series B
8.375%, 11/01/11 -0- -0- 76 80,655
Dobson Communications Corp.
8.875%, 10/01/13 -0- -0- 75 79,875
Inmarsat Finance PLC
7.625%, 6/30/12 -0- -0- 145 149,350
10.375%, 11/15/12 (g) -0- -0- 155 148,413
Level 3 Financing, Inc.
9.25%, 11/01/14 -0- -0- 195 192,075
Mobile Telesystems Finance SA
8.00%, 1/28/12 (d) -0- -0- 231 236,636
PanAmSat Corp.
9.00%, 8/15/14 -0- -0- 143 147,290
Qwest Capital Funding, Inc.
7.25%, 2/15/11 -0- -0- 300 301,500
Time Warner Telecom Holdings, Inc.
9.25%, 2/15/14 -0- -0- 50 51,875
Windstream Corp.
8.125%, 8/01/13 -0- -0- 88 92,620
8.625%, 8/01/16 -0- -0- 77 82,101
-------------------------- -----------------------
-0- 2,308,658
-------------------------- -----------------------
CONSUMER CYCLICAL - AUTOMOTIVE - 1.1%
Affinia Group, Inc.
9.00%, 11/30/14 -0- -0- 85 79,900
Ford Motor Credit Co.
7.00%, 10/01/13 -0- -0- 204 184,355
7.45%, 7/16/31 -0- -0- 364 285,740
8.11%, 1/13/12 (b) -0- -0- 240 226,778
General Motors Acceptance Corp.
6.75%, 12/01/14 -0- -0- 135 122,361
6.875%, 9/15/11 -0- -0- 321 305,484
8.00%, 11/01/31 -0- -0- 135 132,446
General Motors Corp.
8.25%, 7/15/23 -0- -0- 350 306,250
8.375%, 7/15/33 -0- -0- 305 267,256
The Goodyear Tire & Rubber Co.
9.00%, 7/01/15 -0- -0- 130 138,775
Keystone Automotive Operations, Inc.
9.75%, 11/01/13 -0- -0- 108 88,020
Lear Corp.
Series B
5.75%, 8/01/14 -0- -0- 70 58,800
8.50%, 12/01/13 -0- -0- 45 43,088
8.75%, 12/01/16 -0- -0- 245 230,300
Visteon Corp.
7.00%, 3/10/14 -0- -0- 165 128,288
-------------------------- -----------------------
-0- 2,597,841
-------------------------- -----------------------
CONSUMER CYCLICAL - OTHER - 1.4%
Broder Brothers Co.
Series B
11.25%, 10/15/10 -0- -0- 77 66,990
Greektown Holdings LLC
10.75%, 12/01/13 (d) -0- -0- 90 89,100
Harrah's Operating Co., Inc
5.625%, 6/01/15 -0- -0- 422 335,490
5.75%, 10/01/17 -0- -0- 16 12,240
6.50%, 6/01/16 -0- -0- 237 193,155
Host Hotels & Resorts LP
6.875%, 11/01/14 -0- -0- 45 44,888
Host Marriott LP
Series Q
6.75%, 6/01/16 -0- -0- 300 297,000
KB Home
7.75%, 2/01/10 -0- -0- 125 118,437
Levi Strauss & Co.
8.875%, 4/01/16 -0- -0- 63 64,890
AllianceBernstein
AllianceBernstein Variable
Variable Products AllianceBernstein Products
Series Fund U.S. Variable Products Series Fund AllianceBernstein
Government/High Series Fund Global Dollar Variable Products
Grade Securities U.S. Government/High Government Series Fund
Portfolio Grade Securities Portfolio Global Dollar
Principal Portfolio Principal Government Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
----------------- -------------------- --------------- ----------------------
MGM Mirage
6.625%, 7/15/15 US$ -0- $ -0- US$ -0- $ -0-
7.625%, 1/15/17 -0- -0- -0- -0-
8.375%, 2/01/11 -0- -0- -0- -0-
Mohegan Tribal Gaming Auth
7.125%, 8/15/14 -0- -0- -0- -0-
NCL Corp.
10.625%, 7/15/14 -0- -0- -0- -0-
Penn National Gaming, Inc.
6.875%, 12/01/11 -0- -0- -0- -0-
Six Flags, Inc.
9.625%, 6/01/14 -0- -0- -0- -0-
Station Casinos, Inc.
6.625%, 3/15/18 -0- -0- -0- -0-
Turning Stone Resort Casino Enterprise
9.125%, 12/15/10 (d) -0- -0- -0- -0-
Universal City Development Partners
11.75%, 4/01/10 -0- -0- -0- -0-
Universal City Florida Holding Co.
8.375%, 5/01/10 -0- -0- -0- -0-
William Lyon Homes, Inc.
10.75%, 4/01/13 -0- -0- -0- -0-
Wynn Las Vegas LLC/Corp.
6.625%, 12/01/14 -0- -0- -0- -0-
---------------------- ----------------
-0- -0-
---------------------- ----------------
CONSUMER CYCLICAL - RETAILERS - 0.3%
The Bon-Ton Dept Stores, Inc.
10.25%, 3/15/14 -0- -0- -0- -0-
Burlington Coat Factory Warehouse Corp.
11.125%, 4/15/14 -0- -0- -0- -0-
Couche-Tard, Inc.
7.50%, 12/15/13 -0- -0- -0- -0-
GSC Holdings Corp.
8.00%, 10/01/12 -0- -0- -0- -0-
Rite Aid Corp.
6.875%, 8/15/13 -0- -0- -0- -0-
9.25%, 6/01/13 -0- -0- -0- -0-
9.375%, 12/15/15 (d) -0- -0- -0- -0-
9.50%, 6/15/17 (d) -0- -0- -0- -0-
---------------------- ----------------
-0- -0-
---------------------- ----------------
CONSUMER NON-CYCLICAL - 1.1%
Albertson's, Inc.
7.45%, 8/01/29 -0- -0- -0- -0-
Aramark Corp.
8.50%, 2/01/15 -0- -0- -0- -0-
Community Health Systems, Inc.
8.875%, 7/15/15 (d) -0- -0- -0- -0-
DaVita, Inc.
7.25%, 3/15/15 -0- -0- -0- -0-
Dole Food Company, Inc.
8.625%, 5/01/09 -0- -0- -0- -0-
8.875%, 3/15/11 -0- -0- -0- -0-
Elan Finance PLC/Elan Finance Corp.
7.75%, 11/15/11 -0- -0- -0- -0-
Hanger Orthopedic Group, Inc.
10.25%, 6/01/14 -0- -0- -0- -0-
HCA, Inc.
6.375%, 1/15/15 -0- -0- -0- -0-
6.50%, 2/15/16 -0- -0- -0- -0-
6.75%, 7/15/13 -0- -0- -0- -0-
9.625%, 11/15/16 (d)(f) -0- -0- -0- -0-
IASIS Healthcare Corp.
8.75%, 6/15/14 -0- -0- -0- -0-
Select Medical Corp.
7.625%, 2/01/15 -0- -0- -0- -0-
Spectrum Brands, Inc.
7.375%, 2/01/15 -0- -0- -0- -0-
Stater Brothers Holdings
8.125%, 6/15/12 -0- -0- -0- -0-
Tenet Healthcare Corp.
7.375%, 2/01/13 -0- -0- -0- -0-
9.875%, 7/01/14 -0- -0- -0- -0-
Ventas Realty LP/CAP CRP
6.75%, 4/01/17 -0- -0- -0- -0-
Viant Holdings, Inc.
10.125%, 7/15/17 (d) -0- -0- -0- -0-
Visant Corp.
7.625%, 10/01/12 -0- -0- -0- -0-
---------------------- ----------------
-0- -0-
---------------------- ----------------
ENERGY - 0.4%
Chesapeake Energy Corp.
7.50%, 9/15/13 -0- -0- -0- -0-
7.75%, 1/15/15 -0- -0- -0- -0-
CIE Gener De Geophysique
7.50%, 5/15/15 -0- -0- -0- -0-
7.75%, 5/15/17 -0- -0- -0- -0-
Hilcorp Energy I LP/Hilcorp Finance Co.
7.75%, 11/01/15 (d) -0- -0- -0- -0-
PetroHawk Energy Corp.
Series WI
9.125%, 7/15/13 -0- -0- -0- -0-
Range Resources Corp.
7.50%, 5/15/16 -0- -0- -0- -0-
Tesoro Corp.
6.25%, 11/01/12 -0- -0- -0- -0-
6.50%, 6/01/17 (d) -0- -0- -0- -0-
---------------------- ----------------
-0- -0-
---------------------- ----------------
OTHER INDUSTRIAL - 0.1%
RBS Global, Inc. and Rexnord Corp.
9.50%, 8/01/14 -0- -0- -0- -0-
11.75%, 8/01/16 -0- -0- -0- -0-
Sensus Metering Systems, Inc.
8.625%, 12/15/13 -0- -0- -0- -0-
---------------------- ----------------
-0- -0-
---------------------- ----------------
SERVICES - 0.1%
Realogy Corp.
10.50%, 4/15/14 (d) -0- -0- -0- -0-
West Corp.
9.50%, 10/15/14 -0- -0- -0- -0-
---------------------- ----------------
-0- -0-
---------------------- ----------------
TECHNOLOGY - 0.7%
Amkor Technology, Inc.
9.25%, 6/01/16 -0- -0- -0- -0-
Avago Technologies Finance
10.125%, 12/01/13 -0- -0- -0- -0-
CA, Inc.
4.75%, 12/01/09 (d) -0- -0- -0- -0-
Flextronics International Ltd.
6.50%, 5/15/13 -0- -0- -0- -0-
Freescale Semiconductor, Inc.
8.875%, 12/15/14 -0- -0- -0- -0-
10.125%, 12/15/16 -0- -0- -0- -0-
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund Series Fund
High Yield Series Fund Americas Government Americas
Portfolio High Yield Income Portfolio Government
Principal Portfolio Principal Income Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
MGM Mirage
6.625%, 7/15/15 US$ 302 $ 286,522 US$ -0- $ -0-
7.625%, 1/15/17 55 54,450 -0- -0-
8.375%, 2/01/11 280 291,900 -0- -0-
Mohegan Tribal Gaming Auth
7.125%, 8/15/14 135 135,337 -0- -0-
NCL Corp.
10.625%, 7/15/14 65 65,488 -0- -0-
Penn National Gaming, Inc.
6.875%, 12/01/11 110 111,375 -0- -0-
Six Flags, Inc.
9.625%, 6/01/14 115 95,019 -0- -0-
Station Casinos, Inc.
6.625%, 3/15/18 270 226,125 -0- -0-
Turning Stone Resort Casino Enterprise
9.125%, 12/15/10 (d) 140 142,800 -0- -0-
Universal City Development Partners
11.75%, 4/01/10 120 125,400 -0- -0-
Universal City Florida Holding Co.
8.375%, 5/01/10 60 60,450 -0- -0-
William Lyon Homes, Inc.
10.75%, 4/01/13 112 82,880 -0- -0-
Wynn Las Vegas LLC/Corp.
6.625%, 12/01/14 260 254,800 -0- -0-
-------------------- ----------------
3,154,736 -0-
-------------------- ----------------
CONSUMER CYCLICAL - RETAILERS - 0.3%
The Bon-Ton Dept Stores, Inc.
10.25%, 3/15/14 125 116,875 -0- -0-
Burlington Coat Factory Warehouse Corp.
11.125%, 4/15/14 55 51,425 -0- -0-
Couche-Tard, Inc.
7.50%, 12/15/13 144 146,520 -0- -0-
GSC Holdings Corp.
8.00%, 10/01/12 215 223,600 -0- -0-
Rite Aid Corp.
6.875%, 8/15/13 160 132,000 -0- -0-
9.25%, 6/01/13 85 80,750 -0- -0-
9.375%, 12/15/15 (d) 10 9,300 -0- -0-
9.50%, 6/15/17 (d) 15 14,025 -0- -0-
-------------------- ----------------
774,495 -0-
-------------------- ----------------
CONSUMER NON-CYCLICAL - 1.1%
Albertson's, Inc.
7.45%, 8/01/29 285 274,342 -0- -0-
Aramark Corp.
8.50%, 2/01/15 105 107,100 -0- -0-
Community Health Systems, Inc.
8.875%, 7/15/15 (d) 191 196,252 -0- -0-
DaVita, Inc.
7.25%, 3/15/15 75 75,187 -0- -0-
Dole Food Company, Inc.
8.625%, 5/01/09 60 60,150 -0- -0-
8.875%, 3/15/11 38 37,050 -0- -0-
Elan Finance PLC/Elan Finance Corp.
7.75%, 11/15/11 265 259,700 -0- -0-
Hanger Orthopedic Group, Inc.
10.25%, 6/01/14 80 82,000 -0- -0-
HCA, Inc.
6.375%, 1/15/15 215 183,288 -0- -0-
6.50%, 2/15/16 155 131,750 -0- -0-
6.75%, 7/15/13 170 153,000 -0- -0-
9.625%, 11/15/16 (d)(f) 175 186,813 -0- -0-
IASIS Healthcare Corp.
8.75%, 6/15/14 145 146,813 -0- -0-
Select Medical Corp.
7.625%, 2/01/15 117 104,715 -0- -0-
Spectrum Brands, Inc.
7.375%, 2/01/15 70 53,900 -0- -0-
Stater Brothers Holdings
8.125%, 6/15/12 65 66,219 -0- -0-
Tenet Healthcare Corp.
7.375%, 2/01/13 115 97,462 -0- -0-
9.875%, 7/01/14 80 73,200 -0- -0-
Ventas Realty LP/CAP CRP
6.75%, 4/01/17 84 83,790 -0- -0-
Viant Holdings, Inc.
10.125%, 7/15/17 (d) 85 79,050 -0- -0-
Visant Corp.
7.625%, 10/01/12 80 81,400 -0- -0-
-------------------- ----------------
2,533,181 -0-
-------------------- ----------------
ENERGY - 0.4%
Chesapeake Energy Corp.
7.50%, 9/15/13 75 77,062 -0- -0-
7.75%, 1/15/15 210 216,037 -0- -0-
CIE Gener De Geophysique
7.50%, 5/15/15 85 87,550 -0- -0-
7.75%, 5/15/17 15 15,450 -0- -0-
Hilcorp Energy I LP/Hilcorp Finance Co.
7.75%, 11/01/15 (d) 55 53,763 -0- -0-
PetroHawk Energy Corp.
Series WI
9.125%, 7/15/13 107 112,885 -0- -0-
Range Resources Corp.
7.50%, 5/15/16 110 112,200 -0- -0-
Tesoro Corp.
6.25%, 11/01/12 140 140,350 -0- -0-
6.50%, 6/01/17 (d) 100 99,250 -0- -0-
-------------------- ----------------
914,547 -0-
-------------------- ----------------
OTHER INDUSTRIAL - 0.1%
RBS Global, Inc. and Rexnord Corp.
9.50%, 8/01/14 85 87,975 -0- -0-
11.75%, 8/01/16 60 63,900 -0- -0-
Sensus Metering Systems, Inc.
8.625%, 12/15/13 125 121,250 -0- -0-
-------------------- ----------------
273,125 -0-
-------------------- ----------------
SERVICES - 0.1%
Realogy Corp.
10.50%, 4/15/14 (d) 100 85,250 -0- -0-
West Corp.
9.50%, 10/15/14 40 41,300 -0- -0-
-------------------- ----------------
126,550 -0-
-------------------- ----------------
TECHNOLOGY - 0.7%
Amkor Technology, Inc.
9.25%, 6/01/16 180 181,800 -0- -0-
Avago Technologies Finance
10.125%, 12/01/13 110 118,250 -0- -0-
CA, Inc.
4.75%, 12/01/09 (d) 110 109,752 -0- -0-
Flextronics International Ltd.
6.50%, 5/15/13 175 167,125 -0- -0-
Freescale Semiconductor, Inc.
8.875%, 12/15/14 290 279,850 -0- -0-
10.125%, 12/15/16 80 74,400 -0- -0-
Pro Forma Pro Forma
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund U.S. Series Fund U.S.
Global Bond Series Fund Government/High Government/High
Portfolio Global Bond Grade Securities Grade Securities
Principal Portfolio Portfolio Principal Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
------------------ ------------------- -------------------- -----------------
MGM Mirage
6.625%, 7/15/15 US$ -0- $ -0- US$ 302 $ 286,522
7.625%, 1/15/17 -0- -0- 55 54,450
8.375%, 2/01/11 -0- -0- 280 291,900
Mohegan Tribal Gaming Auth
7.125%, 8/15/14 -0- -0- 135 135,337
NCL Corp.
10.625%, 7/15/14 -0- -0- 65 65,488
Penn National Gaming, Inc.
6.875%, 12/01/11 -0- -0- 110 111,375
Six Flags, Inc.
9.625%, 6/01/14 -0- -0- 115 95,019
Station Casinos, Inc.
6.625%, 3/15/18 -0- -0- 270 226,125
Turning Stone Resort Casino Enterprise
9.125%, 12/15/10 (d) -0- -0- 140 142,800
Universal City Development Partners
11.75%, 4/01/10 -0- -0- 120 125,400
Universal City Florida Holding Co.
8.375%, 5/01/10 -0- -0- 60 60,450
William Lyon Homes, Inc.
10.75%, 4/01/13 -0- -0- 112 82,880
Wynn Las Vegas LLC/Corp.
6.625%, 12/01/14 -0- -0- 260 254,800
----------------- ----------------
-0- 3,154,736
----------------- ----------------
CONSUMER CYCLICAL - RETAILERS - 0.3%
The Bon-Ton Dept Stores, Inc.
10.25%, 3/15/14 -0- -0- 125 116,875
Burlington Coat Factory Warehouse Corp.
11.125%, 4/15/14 -0- -0- 55 51,425
Couche-Tard, Inc.
7.50%, 12/15/13 -0- -0- 144 146,520
GSC Holdings Corp.
8.00%, 10/01/12 -0- -0- 215 223,600
Rite Aid Corp.
6.875%, 8/15/13 -0- -0- 160 132,000
9.25%, 6/01/13 -0- -0- 85 80,750
9.375%, 12/15/15 (d) -0- -0- 10 9,300
9.50%, 6/15/17 (d) -0- -0- 15 14,025
----------------- ----------------
-0- 774,495
----------------- ----------------
CONSUMER NON-CYCLICAL - 1.1%
Albertson's, Inc.
7.45%, 8/01/29 -0- -0- 285 274,342
Aramark Corp.
8.50%, 2/01/15 -0- -0- 105 107,100
Community Health Systems, Inc.
8.875%, 7/15/15 (d) -0- -0- 191 196,252
DaVita, Inc.
7.25%, 3/15/15 -0- -0- 75 75,187
Dole Food Company, Inc.
8.625%, 5/01/09 -0- -0- 60 60,150
8.875%, 3/15/11 -0- -0- 38 37,050
Elan Finance PLC/Elan Finance Corp.
7.75%, 11/15/11 -0- -0- 265 259,700
Hanger Orthopedic Group, Inc.
10.25%, 6/01/14 -0- -0- 80 82,000
HCA, Inc.
6.375%, 1/15/15 -0- -0- 215 183,288
6.50%, 2/15/16 -0- -0- 155 131,750
6.75%, 7/15/13 -0- -0- 170 153,000
9.625%, 11/15/16 (d)(f) -0- -0- 175 186,813
IASIS Healthcare Corp.
8.75%, 6/15/14 -0- -0- 145 146,813
Select Medical Corp.
7.625%, 2/01/15 -0- -0- 117 104,715
Spectrum Brands, Inc.
7.375%, 2/01/15 -0- -0- 70 53,900
Stater Brothers Holdings
8.125%, 6/15/12 -0- -0- 65 66,219
Tenet Healthcare Corp.
7.375%, 2/01/13 -0- -0- 115 97,462
9.875%, 7/01/14 -0- -0- 80 73,200
Ventas Realty LP/CAP CRP
6.75%, 4/01/17 -0- -0- 84 83,790
Viant Holdings, Inc.
10.125%, 7/15/17 (d) -0- -0- 85 79,050
Visant Corp.
7.625%, 10/01/12 -0- -0- 80 81,400
----------------- ----------------
-0- 2,533,181
----------------- ----------------
ENERGY - 0.4%
Chesapeake Energy Corp.
7.50%, 9/15/13 -0- -0- 75 77,062
7.75%, 1/15/15 -0- -0- 210 216,037
CIE Gener De Geophysique
7.50%, 5/15/15 -0- -0- 85 87,550
7.75%, 5/15/17 -0- -0- 15 15,450
Hilcorp Energy I LP/Hilcorp Finance Co.
7.75%, 11/01/15 (d) -0- -0- 55 53,763
PetroHawk Energy Corp.
Series WI
9.125%, 7/15/13 -0- -0- 107 112,885
Range Resources Corp.
7.50%, 5/15/16 -0- -0- 110 112,200
Tesoro Corp.
6.25%, 11/01/12 -0- -0- 140 140,350
6.50%, 6/01/17 (d) -0- -0- 100 99,250
----------------- ----------------
-0- 914,547
----------------- ----------------
OTHER INDUSTRIAL - 0.1%
RBS Global, Inc. and Rexnord Corp.
9.50%, 8/01/14 -0- -0- 85 87,975
11.75%, 8/01/16 -0- -0- 60 63,900
Sensus Metering Systems, Inc.
8.625%, 12/15/13 -0- -0- 125 121,250
----------------- ----------------
-0- 273,125
----------------- ----------------
SERVICES - 0.1%
Realogy Corp.
10.50%, 4/15/14 (d) -0- -0- 100 85,250
West Corp.
9.50%, 10/15/14 -0- -0- 40 41,300
----------------- ----------------
-0- 126,550
----------------- ----------------
TECHNOLOGY - 0.7%
Amkor Technology, Inc.
9.25%, 6/01/16 -0- -0- 180 181,800
Avago Technologies Finance
10.125%, 12/01/13 -0- -0- 110 118,250
CA, Inc.
4.75%, 12/01/09 (d) -0- -0- 110 109,752
Flextronics International Ltd.
6.50%, 5/15/13 -0- -0- 175 167,125
Freescale Semiconductor, Inc.
8.875%, 12/15/14 -0- -0- 290 279,850
10.125%, 12/15/16 -0- -0- 80 74,400
<caption>
AllianceBernstein
AllianceBernstein Variable
Variable Products AllianceBernstein Products
Series Fund U.S. Variable Products Series Fund AllianceBernstein
Government/High Series Fund Global Dollar Variable Products
Grade Securities U.S. Government/High Government Series Fund
Portfolio Grade Securities Portfolio Global Dollar
Principal Portfolio Principal Government Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
Iron Mountain, Inc.
6.625%, 1/01/16 US$ -0- $ -0- US$ -0- $ -0-
Nortel Networks Ltd.
10.125%, 7/15/13 (d) -0- -0- -0- -0-
NXP BV / NXP Funding LLC
8.11%, 10/15/13 (b) -0- -0- -0- -0-
9.50%, 10/15/15 -0- -0- -0- -0-
Seagate Technology HDD Holding
6.375%, 10/01/11 -0- -0- -0- -0-
Sungard Data Systems, Inc.
9.125%, 8/15/13 -0- -0- -0- -0-
--------------- ------------
-0- -0-
--------------- ------------
TRANSPORTATION - AIRLINES - 0.1%
AMR Corp.
9.00%, 8/01/12 -0- -0- -0- -0-
Continental Airlines, Inc.
8.75%, 12/01/11 -0- -0- -0- -0-
Series RJO3
7.875%, 7/02/18 -0- -0- -0- -0-
--------------- ------------
-0- -0-
--------------- ------------
TRANSPORTATION - SERVICES - 0.2%
Avis Budget Car Rental
7.75%, 5/15/16 -0- -0- -0- -0-
Hertz Corp.
8.875%, 1/01/14 -0- -0- -0- -0-
10.50%, 1/01/16 -0- -0- -0- -0-
--------------- ------------
-0- -0-
--------------- ------------
153,461 -0-
--------------- ------------
UTILITY - 1.9%
ELECTRIC - 1.4%
The AES Corp.
7.75%, 3/01/14 -0- -0- -0- -0-
8.75%, 5/15/13 (d) -0- -0- -0- -0-
Allegheny Energy Supply
7.80%, 3/15/11 -0- -0- -0- -0-
8.25%, 4/15/12 (d) -0- -0- -0- -0-
Aramark Corp.
8.50%, 4/15/11 -0- -0- -0- -0-
Dynegy Holdings, Inc.
7.75%, 6/01/19 (d) -0- -0- -0- -0-
8.375%, 5/01/16 -0- -0- -0- -0-
Dynegy-Roseton Danskammer
Series B
7.67%, 11/08/16 -0- -0- -0- -0-
Edison Mission Energy
7.00%, 5/15/17 (d) -0- -0- -0- -0-
7.50%, 6/15/13 -0- -0- -0- -0-
7.75%, 6/15/16 -0- -0- -0- -0-
Mirant Americas Generation LLC
8.50%, 10/01/21 -0- -0- -0- -0-
NRG Energy, Inc.
7.25%, 2/01/14 -0- -0- -0- -0-
7.375%, 2/01/16 - 1/15/17 -0- -0- -0- -0-
Reliant Energy, Inc.
7.625%, 6/15/14 -0- -0- -0- -0-
7.875%, 6/15/17 -0- -0- -0- -0-
Sierra Pacific Resources
8.625%, 3/15/14 -0- -0- -0- -0-
TXU Corp.
Series P
5.55%, 11/15/14 -0- -0- -0- -0-
Series Q
6.50%, 11/15/24 -0- -0- -0- -0-
--------------- ------------
-0- -0-
--------------- ------------
NATURAL GAS - 0.5%
El Paso Corp.
7.375%, 12/15/12 -0- -0- -0- -0-
Enterprise Products Operating LP
8.375%, 8/01/66 (c) -0- -0- -0- -0-
Regency Energy Partners
8.375%, 12/15/13 -0- -0- -0- -0-
Williams Cos, Inc.
7.625%, 7/15/19 -0- -0- -0- -0-
7.875%, 9/01/21 -0- -0- -0- -0-
--------------- ------------
-0- -0-
--------------- ------------
-0- -0-
--------------- ------------
NON CORPORATE SECTORS - 1.6%
DERIVATIVES - RACERS - 0.8%
Racers SER 06-6-T
5.296%, 7/01/08 (b)(d) -0- -0- -0- -0-
--------------- ------------
Derivatives - Total Return Swaps - 0.8%
High Yield Total Return Trust 2007-1
5.30%, 7/01/08 (b)(d) -0- -0- -0- -0-
--------------- ------------
-0- -0-
--------------- ------------
FINANCIAL INSTITUTIONS - 0.2%
FINANCE - 0.1%
Residential Capital LLC
7.375%, 6/30/10 -0- -0- -0- -0-
7.875%, 6/30/15 -0- -0- -0- -0-
--------------- ------------
-0- -0-
--------------- ------------
INSURANCE - 0.1%
Crum & Forster Holdings Corp.
7.75%, 5/01/17 -0- -0- -0- -0-
Liberty Mutual Group, Inc.
7.80%, 3/15/37 (d) -0- -0- -0- -0-
--------------- ------------
-0- -0-
--------------- ------------
-0- -0-
--------------- ------------
TOTAL CORPORATES - NON-INVESTMENT GRADES
(cost $34,259,361) 153,461 -0-
--------------- ------------
CORPORATES - INVESTMENT GRADES - 11.2%
INDUSTRIAL - 6.0%
BASIC - 0.6%
The Dow Chemical Co.
7.375%, 11/01/29 20 21,885 -0- -0-
International Paper Co.
5.30%, 4/01/15 190 183,435 -0- -0-
Lubrizol Corp.
4.625%, 10/01/09 120 119,020 -0- -0-
Southern Copper Corp.
7.50%, 7/27/35 195 211,714 -0- -0-
United States Steel Corp.
6.65%, 6/01/37 239 220,491 -0- -0-
Westvaco Corp.
8.20%, 1/15/30 50 52,673 -0- -0-
Weyerhaeuser Co.
5.95%, 11/01/08 175 175,876 -0- -0-
7.375%, 3/15/32 230 230,774 -0- -0-
--------------- ------------
1,215,868 -0-
--------------- ------------
CAPITAL GOODS - 0.2%
Hutchison Whampoa International, Ltd.
7.45%, 11/24/33 (d) 185 208,000 -0- -0-
</table>
<table>
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund Series Fund
High Yield Series Fund Americas Government Americas
Portfolio High Yield Income Portfolio Government
Principal Portfolio Principal Income Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
Iron Mountain, Inc.
6.625%, 1/01/16 US$ 145 $ 135,575 US$ -0- $ -0-
Nortel Networks Ltd.
10.125%, 7/15/13 (d) 125 128,594 -0- -0-
NXP BV / NXP Funding LLC
8.11%, 10/15/13 (b) 90 83,587 -0- -0-
9.50%, 10/15/15 40 37,300 -0- -0-
Seagate Technology HDD Holding
6.375%, 10/01/11 119 116,918 -0- -0-
Sungard Data Systems, Inc.
9.125%, 8/15/13 210 218,400 -0- -0-
------------ -------------
1,651,551 -0-
------------ -------------
TRANSPORTATION - AIRLINES - 0.1%
AMR Corp.
9.00%, 8/01/12 131 132,965 -0- -0-
Continental Airlines, Inc.
8.75%, 12/01/11 145 139,200 -0- -0-
Series RJO3
7.875%, 7/02/18 44 43,233 -0- -0-
------------ -------------
315,398 -0-
------------ -------------
TRANSPORTATION - SERVICES - 0.2%
Avis Budget Car Rental
7.75%, 5/15/16 145 142,100 -0- -0-
Hertz Corp.
8.875%, 1/01/14 105 108,150 -0- -0-
10.50%, 1/01/16 100 108,000 -0- -0-
------------ -------------
358,250 -0-
------------ -------------
24,611,320 -0-
------------ -------------
UTILITY - 1.9%
ELECTRIC - 1.4%
The AES Corp.
7.75%, 3/01/14 250 253,750 -0- -0-
8.75%, 5/15/13 (d) 55 57,544 -0- -0-
Allegheny Energy Supply
7.80%, 3/15/11 140 147,000 -0- -0-
8.25%, 4/15/12 (d) 175 187,688 -0- -0-
Aramark Corp.
8.50%, 4/15/11 105 112,761 -0- -0-
Dynegy Holdings, Inc.
7.75%, 6/01/19 (d) 105 100,406 -0- -0-
8.375%, 5/01/16 205 206,025 -0- -0-
Dynegy-Roseton Danskammer
Series B
7.67%, 11/08/16 195 195,975 -0- -0-
Edison Mission Energy
7.00%, 5/15/17 (d) 255 251,175 -0- -0-
7.50%, 6/15/13 200 205,000 -0- -0-
7.75%, 6/15/16 80 82,800 -0- -0-
Mirant Americas Generation LLC
8.50%, 10/01/21 275 261,937 -0- -0-
NRG Energy, Inc.
7.25%, 2/01/14 45 45,112 -0- -0-
7.375%, 2/01/16 - 1/15/17 455 455,512 -0- -0-
Reliant Energy, Inc.
7.625%, 6/15/14 120 120,900 -0- -0-
7.875%, 6/15/17 155 155,969 -0- -0-
Sierra Pacific Resources
8.625%, 3/15/14 80 84,682 -0- -0-
TXU Corp.
Series P
5.55%, 11/15/14 185 149,204 -0- -0-
Series Q
6.50%, 11/15/24 234 187,551 -0- -0-
------------ -------------
3,260,991 -0-
------------ -------------
NATURAL GAS - 0.5%
El Paso Corp.
7.375%, 12/15/12 145 149,640 -0- -0-
Enterprise Products Operating LP
8.375%, 8/01/66 (c) 305 313,464 -0- -0-
Regency Energy Partners
8.375%, 12/15/13 50 52,375 -0- -0-
Williams Cos, Inc.
7.625%, 7/15/19 207 221,749 -0- -0-
7.875%, 9/01/21 255 277,313 -0- -0-
------------ -------------
1,014,541 -0-
------------ -------------
4,275,532 -0-
------------ -------------
NON CORPORATE SECTORS - 1.6%
DERIVATIVES - RACERS - 0.8%
Racers SER 06-6-T
5.296%, 7/01/08 (b)(d) 1,950 1,862,420 -0- -0-
------------ -------------
Derivatives - Total Return Swaps - 0.8%
High Yield Total Return Trust 2007-1
5.30%, 7/01/08 (b)(d) 1,950 1,895,716 -0- -0-
------------ -------------
3,758,136 -0-
------------ -------------
FINANCIAL INSTITUTIONS - 0.2%
FINANCE - 0.1%
Residential Capital LLC
7.375%, 6/30/10 175 145,250 -0- -0-
7.875%, 6/30/15 140 113,050 -0- -0-
------------ -------------
258,300 -0-
------------ -------------
INSURANCE - 0.1%
Crum & Forster Holdings Corp.
7.75%, 5/01/17 95 90,250 -0- -0-
Liberty Mutual Group, Inc.
7.80%, 3/15/37 (d) 80 74,235 -0- -0-
------------ -------------
164,485 -0-
------------ -------------
422,785 -0-
------------ -------------
TOTAL CORPORATES - NON-INVESTMENT GRADES
(cost $34,259,361) 33,067,773 -0-
------------ -------------
CORPORATES - INVESTMENT GRADES - 11.2%
INDUSTRIAL - 6.0%
BASIC - 0.6%
The Dow Chemical Co.
7.375%, 11/01/29 -0- -0- -0- -0-
International Paper Co.
5.30%, 4/01/15 -0- -0- -0- -0-
Lubrizol Corp.
4.625%, 10/01/09 -0- -0- -0- -0-
Southern Copper Corp.
7.50%, 7/27/35 -0- -0- -0- -0-
United States Steel Corp.
6.65%, 6/01/37 -0- -0- -0- -0-
Westvaco Corp.
8.20%, 1/15/30 -0- -0- -0- -0-
Weyerhaeuser Co.
5.95%, 11/01/08 -0- -0- -0- -0-
7.375%, 3/15/32 220 220,741 -0- -0-
------------ -------------
220,741 -0-
------------ -------------
CAPITAL GOODS - 0.2%
Hutchison Whampoa International, Ltd.
7.45%, 11/24/33 (d) -0- -0- -0- -0-
</table>
<table>
Pro Forma Pro Forma
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund U.S. Series Fund U.S.
Global Bond Series Fund Government/High Government/High
Portfolio Global Bond Grade Securities Grade Securities
Principal Portfolio Portfolio Principal Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
Iron Mountain, Inc.
6.625%, 1/01/16 US$ -0- $ -0- US$ 145 $ 135,575
Nortel Networks Ltd.
10.125%, 7/15/13 (d) -0- -0- 125 128,594
NXP BV / NXP Funding LLC
8.11%, 10/15/13 (b) -0- -0- 90 83,587
9.50%, 10/15/15 -0- -0- 40 37,300
Seagate Technology HDD Holding
6.375%, 10/01/11 -0- -0- 119 116,918
Sungard Data Systems, Inc.
9.125%, 8/15/13 -0- -0- 210 218,400
---------- -----------------
-0- 1,651,551
---------- -----------------
TRANSPORTATION - AIRLINES - 0.1%
AMR Corp.
9.00%, 8/01/12 -0- -0- 131 132,965
Continental Airlines, Inc.
8.75%, 12/01/11 -0- -0- 145 139,200
Series RJO3
7.875%, 7/02/18 -0- -0- 44 43,233
---------- -----------------
-0- 315,398
---------- -----------------
TRANSPORTATION - SERVICES - 0.2%
Avis Budget Car Rental
7.75%, 5/15/16 -0- -0- 145 142,100
Hertz Corp.
8.875%, 1/01/14 -0- -0- 105 108,150
10.50%, 1/01/16 -0- -0- 100 108,000
---------- -----------------
-0- 358,250
---------- -----------------
-0- 24,764,781
---------- -----------------
UTILITY - 1.9%
ELECTRIC - 1.4%
The AES Corp.
7.75%, 3/01/14 -0- -0- 250 253,750
8.75%, 5/15/13 (d) -0- -0- 55 57,544
Allegheny Energy Supply
7.80%, 3/15/11 -0- -0- 140 147,000
8.25%, 4/15/12 (d) -0- -0- 175 187,688
Aramark Corp.
8.50%, 4/15/11 -0- -0- 105 112,761
Dynegy Holdings, Inc.
7.75%, 6/01/19 (d) -0- -0- 105 100,406
8.375%, 5/01/16 -0- -0- 205 206,025
Dynegy-Roseton Danskammer
Series B
7.67%, 11/08/16 -0- -0- 195 195,975
Edison Mission Energy
7.00%, 5/15/17 (d) -0- -0- 255 251,175
7.50%, 6/15/13 -0- -0- 200 205,000
7.75%, 6/15/16 -0- -0- 80 82,800
Mirant Americas Generation LLC
8.50%, 10/01/21 -0- -0- 275 261,937
NRG Energy, Inc.
7.25%, 2/01/14 -0- -0- 45 45,112
7.375%, 2/01/16 - 1/15/17 -0- -0- 455 455,512
Reliant Energy, Inc.
7.625%, 6/15/14 -0- -0- 120 120,900
7.875%, 6/15/17 -0- -0- 155 155,969
Sierra Pacific Resources
8.625%, 3/15/14 -0- -0- 80 84,682
TXU Corp.
Series P
5.55%, 11/15/14 -0- -0- 185 149,204
Series Q
6.50%, 11/15/24 -0- -0- 234 187,551
---------- -----------------
-0- 3,260,991
---------- -----------------
NATURAL GAS - 0.5%
El Paso Corp.
7.375%, 12/15/12 -0- -0- 145 149,640
Enterprise Products Operating LP
8.375%, 8/01/66 (c) -0- -0- 305 313,464
Regency Energy Partners
8.375%, 12/15/13 -0- -0- 50 52,375
Williams Cos, Inc.
7.625%, 7/15/19 -0- -0- 207 221,749
7.875%, 9/01/21 -0- -0- 255 277,313
---------- -----------------
-0- 1,014,541
---------- -----------------
-0- 4,275,532
---------- -----------------
NON CORPORATE SECTORS - 1.6%
DERIVATIVES - RACERS - 0.8%
Racers SER 06-6-T
5.296%, 7/01/08 (b)(d) -0- -0- 1,950 1,862,420
---------- -----------------
Derivatives - Total Return Swaps - 0.8%
High Yield Total Return Trust 2007-1
5.30%, 7/01/08 (b)(d) -0- -0- 1,950 1,895,716
---------- -----------------
-0- 3,758,136
---------- -----------------
FINANCIAL INSTITUTIONS - 0.2%
FINANCE - 0.1%
Residential Capital LLC
7.375%, 6/30/10 -0- -0- 175 145,250
7.875%, 6/30/15 -0- -0- 140 113,050
---------- -----------------
-0- 258,300
---------- -----------------
INSURANCE - 0.1%
Crum & Forster Holdings Corp.
7.75%, 5/01/17 -0- -0- 95 90,250
Liberty Mutual Group, Inc.
7.80%, 3/15/37 (d) -0- -0- 80 74,235
---------- -----------------
-0- 164,485
---------- -----------------
-0- 422,785
---------- -----------------
TOTAL CORPORATES - NON-INVESTMENT GRADES
(cost $34,259,361) -0- 33,221,234
---------- -----------------
CORPORATES - INVESTMENT GRADES - 11.2%
INDUSTRIAL - 6.0%
BASIC - 0.6%
The Dow Chemical Co.
7.375%, 11/01/29 -0- -0- 20 21,885
International Paper Co.
5.30%, 4/01/15 -0- -0- 190 183,435
Lubrizol Corp.
4.625%, 10/01/09 -0- -0- 120 119,020
Southern Copper Corp.
7.50%, 7/27/35 -0- -0- 195 211,714
United States Steel Corp.
6.65%, 6/01/37 -0- -0- 239 220,491
Westvaco Corp.
8.20%, 1/15/30 -0- -0- 50 52,673
Weyerhaeuser Co.
5.95%, 11/01/08 -0- -0- 175 175,876
7.375%, 3/15/32 -0- -0- 450 451,515
---------- -----------------
-0- 1,436,609
---------- -----------------
CAPITAL GOODS - 0.2%
Hutchison Whampoa International, Ltd.
7.45%, 11/24/33 (d) -0- -0- 185 208,000
</table>
AllianceBernstein AllianceBernstein
Variable Products Variable Products
Series Fund AllianceBernstein Series Fund AllianceBernstein
U.S. Government/High Variable Products Global Dollar Variable Products
Grade Securities Portfolio Series Fund Government Portfolio Series Fund
Principal U.S. Government/High Principal Global Dollar
Amount Grade Securities Portfolio Amount Government Portfolio
(000) (U.S. $ Value) (000) (U.S. $ Value)
------------------------ --------------------------- ------------------- -------------------
Tyco International Group, SA
6.00%, 11/15/13 US$ 155 $ 156,460 US$ -0- $ -0-
Waste Management, Inc.
6.875%, 5/15/09 205 211,890 -0- -0-
------------------ --------------
576,350 -0-
------------------ --------------
COMMUNICATIONS - MEDIA - 0.9%
British Sky Broadcasting Group PLC
6.875%, 2/23/09 100 102,330 -0- -0-
BSKYB Finance UK PLC
5.625%, 10/15/15 (d) 170 163,582 -0- -0-
Comcast Cable Communications Holdings, Inc.
9.455%, 11/15/22 125 158,962 -0- -0-
Comcast Cable Communications LLC
6.875%, 6/15/09 250 256,867 -0- -0-
Comcast Corp.
5.30%, 1/15/14 155 150,485 -0- -0-
5.50%, 3/15/11 185 185,356 -0- -0-
News America, Inc.
6.55%, 3/15/33 100 98,590 -0- -0-
RR Donnelley & Sons Co.
4.95%, 4/01/14 65 61,304 -0- -0-
5.50%, 5/15/15 185 179,377 -0- -0-
TCI Communications, Inc.
7.875%, 2/15/26 210 231,343 -0- -0-
Time Warner Entertainment Co.
8.375%, 3/15/23 235 272,066 -0- -0-
WPP Finance Corp.
5.875%, 6/15/14 120 123,013 -0- -0-
------------------ --------------
1,983,275 -0-
------------------ --------------
COMMUNICATIONS - TELECOMMUNICATIONS - 2.0%
America Movil SAB de CV
5.75%, 1/15/15 230 228,776 -0- -0-
AT&T Corp.
8.00%, 11/15/31 20 24,334 -0- -0-
British Telecommunications PLC
8.625%, 12/15/10 310 341,293 -0- -0-
Embarq Corp.
6.738%, 6/01/13 20 20,795 -0- -0-
7.082%, 6/01/16 355 368,025 -0- -0-
New Cingular Wireless Services, Inc.
7.875%, 3/01/11 180 194,762 -0- -0-
8.75%, 3/01/31 105 132,935 -0- -0-
Pacific Bell
6.625%, 10/15/34 280 274,096 -0- -0-
Qwest Corp.
6.875%, 9/15/33 -0- -0- -0- -0-
7.50%, 10/01/14 225 234,000 -0- -0-
8.875%, 3/15/12 200 218,250 -0- -0-
Sprint Capital Corp.
6.875%, 11/15/28 235 226,798 -0- -0-
8.375%, 3/15/12 365 401,878 -0- -0-
Telecom Italia Capital SA
4.00%, 11/15/08 - 1/15/10 500 488,286 -0- -0-
6.375%, 11/15/33 40 38,604 -0- -0-
Telefonos De Mexico SA
5.50%, 1/27/15 235 230,153 -0- -0-
US Cellular Corp.
6.70%, 12/15/33 250 230,162 -0- -0-
Verizon Communications, Inc.
4.90%, 9/15/15 115 109,543 -0- -0-
Verizon New Jersey, Inc.
Series A
5.875%, 1/17/12 170 172,928 -0- -0-
Vodafone Group PLC
5.50%, 6/15/11 200 200,532 -0- -0-
------------------ --------------
4,136,150 -0-
------------------ --------------
CONSUMER CYCLICAL - AUTOMOTIVE - 0.0%
DaimlerChrysler North America
4.875%, 6/15/10 110 108,752 -0- -0-
------------------ --------------
CONSUMER CYCLICAL - OTHER - 0.3%
Starwood Hotels & Resorts Worldwide, Inc.
7.375%, 11/15/15 (a) 179 185,219 -0- -0-
7.875%, 5/01/12 187 199,557 -0- -0-
Toll Brothers Finance Corp.
5.15%, 5/15/15 40 34,258 -0- -0-
6.875%, 11/15/12 95 91,971 -0- -0-
------------------ --------------
511,005 -0-
------------------ --------------
CONSUMER CYCLICAL - RETAILERS - 0.2%
Ltd. Brands, Inc.
7.60%, 7/15/37 230 231,591 -0- -0-
Wal-Mart Stores, Inc.
4.55%, 5/01/13 (a) -0- -0- -0- -0-
------------------ --------------
231,591 -0-
------------------ --------------
CONSUMER NON-CYCLICAL - 1.3%
Altria Group, Inc.
7.75%, 1/15/27 155 190,429 -0- -0-
Bunge Ltd Finance Corp.
5.10%, 7/15/15 71 66,125 -0- -0-
Cadbury Schweppes US Finance LLC
5.125%, 10/01/13 (d) 245 234,089 -0- -0-
ConAgra Foods, Inc.
7.875%, 9/15/10 102 109,821 -0- -0-
Fisher Scientific International, Inc.
6.125%, 7/01/15 230 225,804 -0- -0-
6.75%, 8/15/14 45 45,313 -0- -0-
Fortune Brands, Inc.
5.125%, 1/15/11 115 114,010 -0- -0-
Kraft Foods, Inc.
4.125%, 11/12/09 415 407,821 -0- -0-
5.25%, 10/01/13 220 215,894 -0- -0-
The Kroger Co.
6.80%, 12/15/18 75 78,401 -0- -0-
Pfizer, Inc.
Series INTL
1.80%, 2/22/16 (a) JPY -0- -0- JPY -0- -0-
Reynolds American, Inc.
7.25%, 6/01/13 US$ -0- -0- US$ -0- -0-
7.625%, 6/01/16 210 223,588 -0- -0-
Safeway, Inc.
4.125%, 11/01/08 73 72,441 -0- -0-
Tyson Foods, Inc.
6.85%, 4/01/16 220 226,714 -0- -0-
Wyeth
5.50%, 2/01/14 141 140,211 -0- -0-
------------------ --------------
2,350,661 -0-
------------------ --------------
ENERGY - 0.2%
Amerada Hess Corp.
7.875%, 10/01/29 165 189,654 -0- -0-
Valero Energy Corp.
6.875%, 4/15/12 180 189,674 -0- -0-
------------------ --------------
379,328 -0-
------------------ --------------
AllianceBernstein AllianceBernstein
Variable Products Variable Products
Series Fund AllianceBernstein Series Fund AllianceBernstein
High Yield Variable Products Americas Government Variable Products
Portfolio Series Fund Income Portfolio Series Fund
Principal High Yield Principal Americas Government
Amount Portfolio Amount Income Portfolio
(000) (U.S. $ Value) (000) (U.S. $ Value)
----------------- ----------------- -------------------- ------------------
Tyco International Group, SA
6.00%, 11/15/13 US$ -0- $ -0- US$ -0- $ -0-
Waste Management, Inc.
6.875%, 5/15/09 -0- -0- -0- -0-
--------------- --------------
-0- -0-
--------------- --------------
COMMUNICATIONS - MEDIA - 0.9%
British Sky Broadcasting Group PLC
6.875%, 2/23/09 -0- -0- -0- -0-
BSKYB Finance UK PLC
5.625%, 10/15/15 (d) -0- -0- -0- -0-
Comcast Cable Communications Holdings, Inc.
9.455%, 11/15/22 -0- -0- -0- -0-
Comcast Cable Communications LLC
6.875%, 6/15/09 -0- -0- -0- -0-
Comcast Corp.
5.30%, 1/15/14 -0- -0- -0- -0-
5.50%, 3/15/11 -0- -0- -0- -0-
News America, Inc.
6.55%, 3/15/33 -0- -0- -0- -0-
RR Donnelley & Sons Co.
4.95%, 4/01/14 -0- -0- -0- -0-
5.50%, 5/15/15 -0- -0- -0- -0-
TCI Communications, Inc.
7.875%, 2/15/26 -0- -0- -0- -0-
Time Warner Entertainment Co.
8.375%, 3/15/23 -0- -0- -0- -0-
WPP Finance Corp.
5.875%, 6/15/14 -0- -0- -0- -0-
--------------- --------------
-0- -0-
--------------- --------------
COMMUNICATIONS - TELECOMMUNICATIONS - 2.0%
America Movil SAB de CV
5.75%, 1/15/15 -0- -0- -0- -0-
AT&T Corp.
8.00%, 11/15/31 -0- -0- -0- -0-
British Telecommunications PLC
8.625%, 12/15/10 -0- -0- -0- -0-
Embarq Corp.
6.738%, 6/01/13 -0- -0- -0- -0-
7.082%, 6/01/16 -0- -0- -0- -0-
New Cingular Wireless Services, Inc.
7.875%, 3/01/11 -0- -0- -0- -0-
8.75%, 3/01/31 -0- -0- -0- -0-
Pacific Bell
6.625%, 10/15/34 -0- -0- -0- -0-
Qwest Corp.
6.875%, 9/15/33 190 177,650 -0- -0-
7.50%, 10/01/14 -0- -0- -0- -0-
8.875%, 3/15/12 165 180,056 -0- -0-
Sprint Capital Corp.
6.875%, 11/15/28 150 144,765 -0- -0-
8.375%, 3/15/12 -0- -0- -0- -0-
Telecom Italia Capital SA
4.00%, 11/15/08 - 1/15/10 -0- -0- -0- -0-
6.375%, 11/15/33 -0- -0- -0- -0-
Telefonos De Mexico SA
5.50%, 1/27/15 -0- -0- -0- -0-
US Cellular Corp.
6.70%, 12/15/33 -0- -0- -0- -0-
Verizon Communications, Inc.
4.90%, 9/15/15 -0- -0- -0- -0-
Verizon New Jersey, Inc.
Series A
5.875%, 1/17/12 -0- -0- -0- -0-
Vodafone Group PLC
5.50%, 6/15/11 -0- -0- -0- -0-
--------------- --------------
502,471 -0-
--------------- --------------
CONSUMER CYCLICAL - AUTOMOTIVE - 0.0%
DaimlerChrysler North America
4.875%, 6/15/10 -0- -0- -0- -0-
--------------- --------------
CONSUMER CYCLICAL - OTHER - 0.3%
Starwood Hotels & Resorts Worldwide, Inc.
7.375%, 11/15/15 (a) -0- -0- -0- -0-
7.875%, 5/01/12 -0- -0- -0- -0-
Toll Brothers Finance Corp.
5.15%, 5/15/15 -0- -0- -0- -0-
6.875%, 11/15/12 -0- -0- -0- -0-
--------------- --------------
-0- -0-
--------------- --------------
CONSUMER CYCLICAL - RETAILERS - 0.2%
Ltd. Brands, Inc.
7.60%, 7/15/37 -0- -0- -0- -0-
Wal-Mart Stores, Inc.
4.55%, 5/01/13 (a) -0- -0- -0- -0-
--------------- --------------
-0- -0-
--------------- --------------
CONSUMER NON-CYCLICAL - 1.3%
Altria Group, Inc.
7.75%, 1/15/27 -0- -0- -0- -0-
Bunge Ltd Finance Corp.
5.10%, 7/15/15 -0- -0- -0- -0-
Cadbury Schweppes US Finance LLC
5.125%, 10/01/13 (d) 105 100,324 -0- -0-
ConAgra Foods, Inc.
7.875%, 9/15/10 -0- -0- -0- -0-
Fisher Scientific International, Inc.
6.125%, 7/01/15 -0- -0- -0- -0-
6.75%, 8/15/14 -0- -0- -0- -0-
Fortune Brands, Inc.
5.125%, 1/15/11 -0- -0- -0- -0-
Kraft Foods, Inc.
4.125%, 11/12/09 -0- -0- -0- -0-
5.25%, 10/01/13 -0- -0- -0- -0-
The Kroger Co.
6.80%, 12/15/18 -0- -0- -0- -0-
Pfizer, Inc.
Series INTL
1.80%, 2/22/16 (a) JPY -0- -0- JPY -0- -0-
Reynolds American, Inc.
7.25%, 6/01/13 US$ 105 110,849 US$ -0- -0-
7.625%, 6/01/16 185 196,970 -0- -0-
Safeway, Inc.
4.125%, 11/01/08 -0- -0- -0- -0-
Tyson Foods, Inc.
6.85%, 4/01/16 -0- -0- -0- -0-
Wyeth
5.50%, 2/01/14 -0- -0- -0- -0-
--------------- --------------
408,143 -0-
--------------- --------------
ENERGY - 0.2%
Amerada Hess Corp.
7.875%, 10/01/29 -0- -0- -0- -0-
Valero Energy Corp.
6.875%, 4/15/12 -0- -0- -0- -0-
--------------- --------------
-0- -0-
--------------- --------------
Pro Forma
AllianceBernstein AllianceBernstein Pro Forma
Variable Products Variable Products AllianceBernstein
Series Fund AllianceBernstein Series Fund Variable Products
Global Bond Variable Products U.S. Government/High Series Fund
Portfolio Series Fund Grade Securities U.S. Government/High
Principal Global Bond Portfolio Principal Grade Securities
Amount Portfolio Amount Portfolio
(000) (U.S. $ Value) (000) (U.S. $ Value)
------------------- ------------------- ----------------------- ---------------------
8.50%, 8/15/10 US$ -0- $ -0- US$ 60 $ 61,650
Tyco International Group, SA
6.00%, 11/15/13 US$ -0- $ -0- US$ 155 $ 156,460
Waste Management, Inc.
6.875%, 5/15/09 -0- -0- 205 211,890
------------ ------------------
-0- 576,350
------------ ------------------
COMMUNICATIONS - MEDIA - 0.9%
British Sky Broadcasting Group PLC
6.875%, 2/23/09 -0- -0- 100 102,330
BSKYB Finance UK PLC
5.625%, 10/15/15 (d) -0- -0- 170 163,582
Comcast Cable Communications Holdings, Inc.
9.455%, 11/15/22 -0- -0- 125 158,962
Comcast Cable Communications LLC
6.875%, 6/15/09 -0- -0- 250 256,867
Comcast Corp.
5.30%, 1/15/14 -0- -0- 155 150,485
5.50%, 3/15/11 -0- -0- 185 185,356
News America, Inc.
6.55%, 3/15/33 -0- -0- 100 98,590
RR Donnelley & Sons Co.
4.95%, 4/01/14 -0- -0- 65 61,304
5.50%, 5/15/15 -0- -0- 185 179,377
TCI Communications, Inc.
7.875%, 2/15/26 -0- -0- 210 231,343
Time Warner Entertainment Co.
8.375%, 3/15/23 -0- -0- 235 272,066
WPP Finance Corp.
5.875%, 6/15/14 -0- -0- 120 123,013
------------ ------------------
-0- 1,983,275
------------ ------------------
COMMUNICATIONS - TELECOMMUNICATIONS - 2.0%
America Movil SAB de CV
5.75%, 1/15/15 -0- -0- 230 228,776
AT&T Corp.
8.00%, 11/15/31 -0- -0- 20 24,334
British Telecommunications PLC
8.625%, 12/15/10 -0- -0- 310 341,293
Embarq Corp.
6.738%, 6/01/13 -0- -0- 20 20,795
7.082%, 6/01/16 -0- -0- 355 368,025
New Cingular Wireless Services, Inc.
7.875%, 3/01/11 -0- -0- 180 194,762
8.75%, 3/01/31 -0- -0- 105 132,935
Pacific Bell
6.625%, 10/15/34 -0- -0- 280 274,096
Qwest Corp.
6.875%, 9/15/33 -0- -0- 190 177,650
7.50%, 10/01/14 -0- -0- 225 234,000
8.875%, 3/15/12 -0- -0- 365 398,306
Sprint Capital Corp.
6.875%, 11/15/28 -0- -0- 385 371,563
8.375%, 3/15/12 -0- -0- 365 401,878
Telecom Italia Capital SA
4.00%, 11/15/08 - 1/15/10 -0- -0- 500 488,286
6.375%, 11/15/33 -0- -0- 40 38,604
Telefonos De Mexico SA
5.50%, 1/27/15 -0- -0- 235 230,153
US Cellular Corp.
6.70%, 12/15/33 -0- -0- 250 230,162
Verizon Communications, Inc.
4.90%, 9/15/15 -0- -0- 115 109,543
Verizon New Jersey, Inc.
Series A
5.875%, 1/17/12 -0- -0- 170 172,928
Vodafone Group PLC
5.50%, 6/15/11 -0- -0- 200 200,532
------------ ------------------
-0- 4,638,621
------------ ------------------
CONSUMER CYCLICAL - AUTOMOTIVE - 0.0%
DaimlerChrysler North America
4.875%, 6/15/10 -0- -0- 110 108,752
------------ ------------------
CONSUMER CYCLICAL - OTHER - 0.3%
Starwood Hotels & Resorts Worldwide, Inc.
7.375%, 11/15/15 (a) 200 206,948 379 392,167
7.875%, 5/01/12 -0- -0- 187 199,557
Toll Brothers Finance Corp.
5.15%, 5/15/15 -0- -0- 40 34,258
6.875%, 11/15/12 -0- -0- 95 91,971
------------ ------------------
206,948 717,953
------------ ------------------
CONSUMER CYCLICAL - RETAILERS - 0.2%
Ltd. Brands, Inc.
7.60%, 7/15/37 -0- -0- 230 231,591
Wal-Mart Stores, Inc.
4.55%, 5/01/13 (a) 150 144,563 150 144,563
------------ ------------------
144,563 376,154
------------ ------------------
CONSUMER NON-CYCLICAL - 1.3%
Altria Group, Inc.
7.75%, 1/15/27 -0- -0- 155 190,429
Bunge Ltd Finance Corp.
5.10%, 7/15/15 -0- -0- 71 66,125
Cadbury Schweppes US Finance LLC
5.125%, 10/01/13 (d) -0- -0- 350 334,413
ConAgra Foods, Inc.
7.875%, 9/15/10 -0- -0- 102 109,821
Fisher Scientific International, Inc.
6.125%, 7/01/15 -0- -0- 230 225,804
6.75%, 8/15/14 -0- -0- 45 45,313
Fortune Brands, Inc.
5.125%, 1/15/11 -0- -0- 115 114,010
Kraft Foods, Inc.
4.125%, 11/12/09 -0- -0- 415 407,821
5.25%, 10/01/13 -0- -0- 220 215,894
The Kroger Co.
6.80%, 12/15/18 -0- -0- 75 78,401
Pfizer, Inc.
Series INTL
1.80%, 2/22/16 (a) JPY 20,000 172,992 JPY 20,000 172,992
Reynolds American, Inc.
7.25%, 6/01/13 US$ -0- -0- US$ 105 110,849
7.625%, 6/01/16 -0- -0- 395 420,558
Safeway, Inc.
4.125%, 11/01/08 -0- -0- 73 72,441
Tyson Foods, Inc.
6.85%, 4/01/16 -0- -0- 220 226,714
Wyeth
5.50%, 2/01/14 -0- -0- 141 140,211
------------ ------------------
172,992 2,931,796
------------ ------------------
ENERGY - 0.2%
Amerada Hess Corp.
7.875%, 10/01/29 -0- -0- 165 189,654
Valero Energy Corp.
6.875%, 4/15/12 -0- -0- 180 189,674
------------ ------------------
-0- 379,328
------------ ------------------
AllianceBernstein
AllianceBernstein Variable
Variable Products AllianceBernstein Products
Series Fund U.S. Variable Products Series Fund AllianceBernstein
Government/High Series Fund Global Dollar Variable Products
Grade Securities U.S. Government/High Government Series Fund
Portfolio Grade Securities Portfolio Global Dollar
Principal Portfolio Principal Government Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
TECHNOLOGY - 0.3%
Electronic Data Systems Corp.
7.45%, 10/15/29 US$ 90 $ 91,069 US$ -0- $ -0-
Series B
6.50%, 8/01/13 281 283,509 -0- -0-
International Business Machines Corp.
4.375%, 6/01/09 90 89,888 -0- -0-
Motorola, Inc.
6.50%, 9/01/25 125 121,040 -0- -0-
7.50%, 5/15/25 25 25,948 -0- -0-
7.625%, 11/15/10 22 23,360 -0- -0-
Xerox Corp.
7.625%, 6/15/13 40 41,562 -0- -0-
--------------- ------------
676,376 -0-
--------------- ------------
12,169,356 -0-
--------------- ------------
FINANCIAL INSTITUTIONS - 3.9%
BANKING - 1.3%
Barclays Bank PLC
5.75%, 9/14/26 (a) GBP -0- -0- GBP -0- -0-
8.55%, 6/15/11 (c)(d) 365 394,666 US$ -0- -0-
Citigroup, Inc. US$
4.625%, 8/03/10 (a) -0- -0- -0- -0-
Huntington National Bank
4.375%, 1/15/10 250 244,860 -0- -0-
JPMorgan Chase & Co.
6.75%, 2/01/11 285 299,426 -0- -0-
MUFG Capital Finance 1 Ltd.
6.346%, 7/25/16 (c) 105 99,810 -0- -0-
National Westminster Bank
6.50%, 9/07/21 (a) GBP -0- -0- GBP -0- -0-
RBS Capital Trust III
5.512%, 9/30/14 (c) US$ 335 313,439 US$ -0- -0-
Resona Preferred Global Securities
7.191%, 7/30/15 (c)(d) 135 135,475 -0- -0-
Royal Bank of Scotland Group PLC
7.648%, 9/30/31 (c) 115 120,321 -0- -0-
Suntrust Bank
Series CD
5.70%, 6/02/09 (a)(b) -0- -0- -0- -0-
UBS Preferred Funding Trust I
8.622%, 10/01/10 (c) 180 195,621 -0- -0-
UFJ Finance Aruba AEC
6.75%, 7/15/13 240 248,402 -0- -0-
Wachovia Capital Trust III
5.80%, 3/15/11 (c) 180 178,792 -0- -0-
Zions Bancorporation
5.50%, 11/16/15 105 100,832 -0- -0-
--------------- ------------
2,331,644 -0-
--------------- ------------
BROKERAGE - 0.5%
The Bear Stearns Cos, Inc.
5.30%, 10/30/15 100 93,547 -0- -0-
5.55%, 1/22/17 -0- -0- -0- -0-
Goldman Sachs Group, Inc.
4.75%, 7/15/13 125 119,308 -0- -0-
5.125%, 1/15/15 105 100,817 -0- -0-
Lehman Brothers Holdings, Inc.
5.75%, 1/03/17 -0- -0- -0- -0-
6.00%, 5/03/32 (c) 225 205,932 -0- -0-
6.50%, 7/19/17 75 76,008 -0- -0-
Merrill Lynch & Co. Inc
6.11%, 1/29/37 250 235,302 -0- -0-
--------------- ------------
830,914 -0-
--------------- ------------
FINANCE - 1.3%
Capital One Bank
4.25%, 12/01/08 100 98,851 -0- -0-
6.50%, 6/13/13 140 141,898 -0- -0-
Capital One Financial Corp.
5.50%, 6/01/15 42 40,017 -0- -0-
CIT Group, Inc.
5.65%, 2/13/17 240 222,980 -0- -0-
Countrywide Financial Corp.
6.25%, 5/15/16 115 104,071 -0- -0-
Series MTN
5.80%, 6/07/12 261 244,631 -0- -0-
Countrywide Home Loans, Inc.
4.00%, 3/22/11 111 99,387 -0- -0-
4.25%, 12/19/07 265 261,933 -0- -0-
General Electric Capital Corp.
4.375%, 11/21/11 35 33,980 -0- -0-
6.75%, 3/15/32 20 22,019 -0- -0-
HSBC Finance Corp.
7.00%, 5/15/12 115 120,908 -0- -0-
iStar Financial, Inc.
5.15%, 3/01/12 145 134,169 -0- -0-
Series B
5.95%, 10/15/13 230 215,856 -0- -0-
International Lease Finance Corp.
3.50%, 4/01/09 (a) -0- -0- -0- -0-
Pershing Road Development Co. LLC
6.021%, 9/01/26 (a)(b)(d) -0- -0- -0- -0-
SLM Corp.
4.50%, 7/26/10 -0- -0- -0- -0-
5.125%, 8/27/12 -0- -0- -0- -0-
--------------- ------------
1,740,700 -0-
--------------- ------------
INSURANCE - 0.7%
The Allstate Corp.
6.125%, 5/15/37 (c) 215 210,799 -0- -0-
Assurant, Inc.
5.625%, 2/15/14 70 68,377 -0- -0-
Genworth Financial, Inc.
1.60%, 6/20/11 (a) JPY -0- -0- JPY -0- -0-
Hartford Financial Services Group, Inc.
6.10%, 10/01/41 US$ 205 196,518 US$ -0- -0-
Humana, Inc.
6.30%, 8/01/18 215 214,976 -0- -0-
Liberty Mutual Group, Inc.
5.75%, 3/15/14 (d) 145 141,823 -0- -0-
WellPoint, Inc.
4.25%, 12/15/09 320 315,215 -0- -0-
XL Capital Ltd.
5.25%, 9/15/14 235 225,011 -0- -0-
6.25%, 5/15/27 200 187,749 -0- -0-
--------------- ------------
1,560,468 -0-
--------------- ------------
REITS - 0.1%
Simon Property Group LP
6.375%, 11/15/07 145 145,061 -0- -0-
--------------- ------------
6,608,787 -0-
--------------- ------------
UTILITY - 1.1%
ELECTRIC - 0.7%
Carolina Power & Light Co.
6.50%, 7/15/12 215 225,504 -0- -0-
<table>
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund Series Fund
High Yield Series Fund Americas Government Americas
Portfolio High Yield Income Portfolio Government
Principal Portfolio Principal Income Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
TECHNOLOGY - 0.3%
Electronic Data Systems Corp.
7.45%, 10/15/29 US$ -0- $ -0- US$ -0- $ -0-
Series B
6.50%, 8/01/13 -0- -0- -0- -0-
International Business Machines Corp.
4.375%, 6/01/09 -0- -0- -0- -0-
Motorola, Inc.
6.50%, 9/01/25 -0- -0- -0- -0-
7.50%, 5/15/25 -0- -0- -0- -0-
7.625%, 11/15/10 -0- -0- -0- -0-
Xerox Corp.
7.625%, 6/15/13 -0- -0- -0- -0-
------------ -------------
-0- -0-
------------ -------------
1,131,355 -0-
------------ -------------
FINANCIAL INSTITUTIONS - 3.9%
BANKING - 1.3%
Barclays Bank PLC
5.75%, 9/14/26 (a) GBP -0- -0- GBP -0- -0-
8.55%, 6/15/11 (c)(d) US$ -0- -0- US$ -0- -0-
Citigroup, Inc.
4.625%, 8/03/10 (a) -0- -0- -0- -0-
Huntington National Bank
4.375%, 1/15/10 -0- -0- -0- -0-
JPMorgan Chase & Co.
6.75%, 2/01/11 -0- -0- -0- -0-
MUFG Capital Finance 1 Ltd.
6.346%, 7/25/16 (c) -0- -0- -0- -0-
National Westminster Bank
6.50%, 9/07/21 (a) GBP -0- -0- GBP -0- -0-
RBS Capital Trust III
5.512%, 9/30/14 (c) US$ -0- -0- US$ -0- -0-
Resona Preferred Global Securities
7.191%, 7/30/15 (c)(d) -0- -0- -0- -0-
Royal Bank of Scotland Group PLC
7.648%, 9/30/31 (c) -0- -0- -0- -0-
Suntrust Bank
Series CD
5.70%, 6/02/09 (a)(b) -0- -0- -0- -0-
UBS Preferred Funding Trust I
8.622%, 10/01/10 (c) -0- -0- -0- -0-
UFJ Finance Aruba AEC
6.75%, 7/15/13 -0- -0- -0- -0-
Wachovia Capital Trust III
5.80%, 3/15/11 (c) -0- -0- -0- -0-
Zions Bancorporation
5.50%, 11/16/15 -0- -0- -0- -0-
------------ -------------
-0- -0-
------------ -------------
BROKERAGE - 0.5%
The Bear Stearns Cos, Inc.
5.30%, 10/30/15 -0- -0- -0- -0-
5.55%, 1/22/17 165 155,755 -0- -0-
Goldman Sachs Group, Inc.
4.75%, 7/15/13 -0- -0- -0- -0-
5.125%, 1/15/15 -0- -0- -0- -0-
Lehman Brothers Holdings, Inc.
5.75%, 1/03/17 155 148,962 -0- -0-
6.00%, 5/03/32 (c) -0- -0- -0- -0-
6.50%, 7/19/17 -0- -0- -0- -0-
Merrill Lynch & Co. Inc
6.11%, 1/29/37 -0- -0- -0- -0-
------------ -------------
304,717 -0-
------------ -------------
FINANCE - 1.3%
Capital One Bank
4.25%, 12/01/08 -0- -0- -0- -0-
6.50%, 6/13/13 -0- -0- -0- -0-
Capital One Financial Corp.
5.50%, 6/01/15 -0- -0- -0- -0-
CIT Group, Inc.
5.65%, 2/13/17 -0- -0- -0- -0-
Countrywide Financial Corp.
6.25%, 5/15/16 74 66,967 -0- -0-
Series MTN
5.80%, 6/07/12 38 35,617 -0- -0-
Countrywide Home Loans, Inc.
4.00%, 3/22/11 4 3,581 -0- -0-
4.25%, 12/19/07 -0- -0- -0- -0-
General Electric Capital Corp.
4.375%, 11/21/11 -0- -0- -0- -0-
6.75%, 3/15/32 -0- -0- -0- -0-
HSBC Finance Corp.
7.00%, 5/15/12 -0- -0- -0- -0-
iStar Financial, Inc.
5.15%, 3/01/12 -0- -0- -0- -0-
Series B
5.95%, 10/15/13 -0- -0- -0- -0-
International Lease Finance Corp.
3.50%, 4/01/09 (a) -0- -0- -0- -0-
Pershing Road Development Co. LLC
6.021%, 9/01/26 (a)(b)(d) -0- -0- -0- -0-
SLM Corp.
4.50%, 7/26/10 90 84,252 -0- -0-
5.125%, 8/27/12 90 81,475 -0- -0-
------------ -------------
271,892 -0-
------------ -------------
INSURANCE - 0.7%
The Allstate Corp.
6.125%, 5/15/37 (c) -0- -0- -0- -0-
Assurant, Inc.
5.625%, 2/15/14 -0- -0- -0- -0-
Genworth Financial, Inc.
1.60%, 6/20/11 (a) JPY -0- -0- JPY -0- -0-
Hartford Financial Services Group, Inc.
6.10%, 10/01/41 US$ -0- -0- US$ -0- -0-
Humana, Inc.
6.30%, 8/01/18 -0- -0- -0- -0-
Liberty Mutual Group, Inc.
5.75%, 3/15/14 (d) -0- -0- -0- -0-
WellPoint, Inc.
4.25%, 12/15/09 -0- -0- -0- -0-
XL Capital Ltd.
5.25%, 9/15/14 -0- -0- -0- -0-
6.25%, 5/15/27 -0- -0- -0- -0-
------------ -------------
-0- -0-
------------ -------------
REITS - 0.1%
Simon Property Group LP
6.375%, 11/15/07 -0- -0- -0- -0-
------------ -------------
576,609 -0-
------------ -------------
UTILITY - 1.1%
ELECTRIC - 0.7%
Carolina Power & Light Co.
6.50%, 7/15/12 -0- -0- -0- -0-
Pro Forma Pro Forma
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund U.S. Series Fund U.S.
Global Bond Series Fund Government/High Government/High
Portfolio Global Bond Grade Securities Grade Securities
Principal Portfolio Portfolio Principal Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
TECHNOLOGY - 0.3%
Electronic Data Systems Corp.
7.45%, 10/15/29 US$ -0- $ -0- US$ 90 $ 91,069
Series B
6.50%, 8/01/13 -0- -0- 281 283,509
International Business Machines Corp.
4.375%, 6/01/09 -0- -0- 90 89,888
Motorola, Inc.
6.50%, 9/01/25 -0- -0- 125 121,040
7.50%, 5/15/25 -0- -0- 25 25,948
7.625%, 11/15/10 -0- -0- 22 23,360
Xerox Corp.
7.625%, 6/15/13 -0- -0- 40 41,562
---------- ---------------
-0- 676,376
---------- ---------------
524,503 13,825,214
---------- ---------------
FINANCIAL INSTITUTIONS - 3.9%
BANKING - 1.3%
Barclays Bank PLC
5.75%, 9/14/26 (a) GBP 75 146,355 GBP 75 146,355
8.55%, 6/15/11 (c)(d) US$ -0- -0- US$ 365 394,666
Citigroup, Inc.
4.625%, 8/03/10 (a) 107 106,141 107 106,141
Huntington National Bank
4.375%, 1/15/10 -0- -0- 250 244,860
JPMorgan Chase & Co.
6.75%, 2/01/11 -0- -0- 285 299,426
MUFG Capital Finance 1 Ltd.
6.346%, 7/25/16 (c) -0- -0- 105 99,810
National Westminster Bank
6.50%, 9/07/21 (a) GBP 50 104,436 GBP 50 104,436
RBS Capital Trust III
5.512%, 9/30/14 (c) US$ -0- -0- US$ 335 313,439
Resona Preferred Global Securities
7.191%, 7/30/15 (c)(d) -0- -0- 135 135,475
Royal Bank of Scotland Group PLC
7.648%, 9/30/31 (c) -0- -0- 115 120,321
Suntrust Bank
Series CD
5.70%, 6/02/09 (a)(b) 250 249,595 250 249,595
UBS Preferred Funding Trust I
8.622%, 10/01/10 (c) -0- -0- 180 195,621
UFJ Finance Aruba AEC
6.75%, 7/15/13 -0- -0- 240 248,402
Wachovia Capital Trust III
5.80%, 3/15/11 (c) -0- -0- 180 178,792
Zions Bancorporation
5.50%, 11/16/15 -0- -0- 105 100,832
---------- ---------------
606,527 2,938,171
---------- ---------------
BROKERAGE - 0.5%
The Bear Stearns Cos, Inc.
5.30%, 10/30/15 -0- -0- 100 93,547
5.55%, 1/22/17 -0- -0- 165 155,755
Goldman Sachs Group, Inc.
4.75%, 7/15/13 -0- -0- 125 119,308
5.125%, 1/15/15 -0- -0- 105 100,817
Lehman Brothers Holdings, Inc.
5.75%, 1/03/17 -0- -0- 155 148,962
6.00%, 5/03/32 (c) -0- -0- 225 205,932
6.50%, 7/19/17 -0- -0- 75 76,008
Merrill Lynch & Co. Inc
6.11%, 1/29/37 -0- -0- 250 235,302
---------- ---------------
-0- 1,135,631
---------- ---------------
FINANCE - 1.3%
Capital One Bank
4.25%, 12/01/08 -0- -0- 100 98,851
6.50%, 6/13/13 -0- -0- 140 141,898
Capital One Financial Corp.
5.50%, 6/01/15 -0- -0- 42 40,017
CIT Group, Inc.
5.65%, 2/13/17 -0- -0- 240 222,980
Countrywide Financial Corp.
6.25%, 5/15/16 -0- -0- 189 171,038
Series MTN
5.80%, 6/07/12 -0- -0- 299 280,248
Countrywide Home Loans, Inc.
4.00%, 3/22/11 -0- -0- 115 102,968
4.25%, 12/19/07 -0- -0- 265 261,933
General Electric Capital Corp.
4.375%, 11/21/11 -0- -0- 35 33,980
6.75%, 3/15/32 -0- -0- 20 22,019
HSBC Finance Corp.
7.00%, 5/15/12 -0- -0- 115 120,908
iStar Financial, Inc.
5.15%, 3/01/12 -0- -0- 145 134,169
Series B
5.95%, 10/15/13 -0- -0- 230 215,856
International Lease Finance Corp.
3.50%, 4/01/09 (a) 350 342,777 350 342,777
Pershing Road Development Co. LLC
6.021%, 9/01/26 (a)(b)(d) 651 650,953 651 650,953
SLM Corp.
4.50%, 7/26/10 -0- -0- 90 84,252
5.125%, 8/27/12 -0- -0- 90 81,475
---------- ---------------
993,730 3,006,322
---------- ---------------
INSURANCE - 0.7%
The Allstate Corp.
6.125%, 5/15/37 (c) -0- -0- 215 210,799
Assurant, Inc.
5.625%, 2/15/14 -0- -0- 70 68,377
Genworth Financial, Inc.
1.60%, 6/20/11 (a) JPY 15,000 130,151 JPY 15,000 130,151
Hartford Financial Services Group, Inc.
6.10%, 10/01/41 US$ -0- -0- US$ 205 196,518
Humana, Inc.
6.30%, 8/01/18 -0- -0- 215 214,976
Liberty Mutual Group, Inc.
5.75%, 3/15/14 (d) -0- -0- 145 141,823
WellPoint, Inc.
4.25%, 12/15/09 -0- -0- 320 315,215
XL Capital Ltd.
5.25%, 9/15/14 -0- -0- 235 225,011
6.25%, 5/15/27 -0- -0- 200 187,749
---------- ---------------
130,151 1,690,619
---------- ---------------
REITS - 0.1%
Simon Property Group LP
6.375%, 11/15/07 -0- -0- 145 145,061
---------- ---------------
1,730,408 8,915,804
---------- ---------------
UTILITY - 1.1%
ELECTRIC - 0.7%
Carolina Power & Light Co.
6.50%, 7/15/12 -0- -0- 215 225,504
AllianceBernstein
AllianceBernstein Variable
Variable Products AllianceBernstein Products
Series Fund U.S. Variable Products Series Fund AllianceBernstein
Government/High Series Fund Global Dollar Variable Products
Grade Securities U.S. Government/High Government Series Fund
Portfolio Grade Securities Portfolio Global Dollar
Principal Portfolio Principal Government Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
Consumers Energy Co.
Series C
4.25%, 4/15/08 US$ 130 $ 129,081 US$ -0- $ -0-
Exelon Corp.
6.75%, 5/01/11 95 98,829 -0- -0-
FirstEnergy Corp.
Series B
6.45%, 11/15/11 95 98,217 -0- -0-
Series C
7.375%, 11/15/31 105 114,905 -0- -0-
MidAmerican Energy Holdings Co.
5.875%, 10/01/12 135 137,084 -0- -0-
Nisource Finance Corp.
7.875%, 11/15/10 110 117,742 -0- -0-
Pacific Gas & Electric Co.
4.80%, 3/01/14 215 204,952 -0- -0-
Progress Energy, Inc.
7.10%, 3/01/11 73 76,775 -0- -0-
Public Service Company of Colorado
7.875%, 10/01/12 100 110,631 -0- -0-
TXU Australia Holdings Pty Ltd.
6.15%, 11/15/13 (d) 235 239,421 -0- -0-
Wisconsin Energy Corp.
6.25%, 5/15/67 (c) 204 192,327 -0- -0-
------------- ------------
1,745,468 -0-
------------- ------------
NATURAL GAS - 0.4%
Duke Energy Field Services Corp.
7.875%, 8/16/10 70 74,660 -0- -0-
Energy Transfer Partners
6.125%, 2/15/17 230 221,969 -0- -0-
6.625%, 10/15/36 245 231,048 -0- -0-
Enterprise Products Operating LP
Series B
5.60%, 10/15/14 95 93,056 -0- -0-
TransCanada Pipelines Ltd.
6.35%, 5/15/67 (c) 235 225,540 -0- -0-
------------- ------------
846,273 -0-
------------- ------------
2,591,741 -0-
------------- ------------
NON CORPORATE SECTORS - 0.2%
AGENCIES - NOT GOVERNMENT GUARANTEED - 0.2%
Gaz Capital For Gazprom
6.212%, 11/22/16 (d) 460 453,238 -0- -0-
------------- ------------
TOTAL CORPORATES - INVESTMENT GRADES
(cost $25,611,400) 21,823,122 -0-
------------- ------------
U.S. TREASURIES - 10.6%
U.S. TREASURY STRIPS - 3.3%
Zero Coupon, 2/15/16 (a) -0- -0- -0- -0-
Zero Coupon, 11/15/21 (a) -0- -0- -0- -0-
------------- ------------
-0- -0-
------------- ------------
U.S. TREASURY BONDS - 7.3%
4.50%, 2/15/36 3,545 3,360,827 -0- -0-
4.75%, 2/15/37 (a) -0- -0- -0- -0-
6.25%, 5/15/30 (k) -0- -0- -0- -0-
8.75%, 5/15/17 400 526,812 -0- -0-
U.S. TREASURY NOTES
4.125%, 8/15/10 (a) -0- -0- -0- -0-
4.625%, 11/15/16 (a) -0- -0- -0- -0-
4.875%, 5/31/11 1,935 1,985,794 -0- -0-
------------- ------------
5,873,433 -0-
------------- ------------
TOTAL U.S. TREASURIES
(cost $23,535,749) 5,873,433 -0-
------------- ------------
GOVERNMENT-RELATED-SOVEREIGNS-7.5%
Bundesrepublik Deutschland
Series 03
4.75%, 7/04/34 (a) EUR -0- -0- EUR -0- -0-
France Government Bond OAT
3.75%, 4/25/21 (a) -0- -0- -0- -0-
Germany (Federal Republic of)
Series 97
6.50%, 7/04/27 (a) -0- -0- -0- -0-
Government of Australia
Series 909
7.50%, 9/15/09 (a) AUD -0- -0- AUD -0- -0-
Government of Japan
Series 48
2.50%, 12/21/20 (a) JPY -0- -0- JPY -0- -0-
Government of Japan Ten Year Bond
Series 252
1.00%, 6/20/13 (a) -0- -0- -0- -0-
Series 268
1.50%, 3/20/15 (a) -0- -0- -0- -0-
Government of Japan Twenty Year Bond
Series 41
1.50%, 3/20/19 (a) -0- -0- -0- -0-
Government of Sweden
Series 1043
5.00%, 1/28/09 (a) SEK -0- -0- SEK -0- -0-
Japan Government Ten Year Bond
Series 217
1.80%, 12/21/09 (a) JPY -0- -0- JPY -0- -0-
Kingdom of Belgium
Series 31
5.50%, 3/28/28 (a) EUR -0- -0- EUR -0- -0-
Mexican Bonos
Series MI10
8.00%, 12/19/13 (a) MXN -0- -0- MXN -0- -0-
Netherlands Government Bond
3.75%, 1/15/23 (a) EUR -0- -0- EUR -0- -0-
4.00%, 7/15/16 -0- -0- -0- -0-
New Zealand Government Bond
Series 708
6.00%, 7/15/08 (a) NZD -0- -0- NZD -0- -0-
Singapore Government Bond
3.75%, 9/01/16 (a) SGD -0- -0- SGD -0- -0-
Sweden Government Bond
Series 1051
3.75%, 8/12/17 SEK -0- -0- SEK -0- -0-
United Kingdom Gilt
4.00%, 3/07/09 (a) GBP -0- -0- GBP -0- -0-
7.25%, 12/07/07 (a) -0- -0- -0- -0-
------------- ------------
TOTAL GOVERNMENT-RELATED-SOVEREIGNS
(cost $16,613,959) -0- -0-
------------- ------------
COMMERCIAL MORTGAGE-BACKED SECURITIES - 5.6%
NON-AGENCY FIXED RATE CMBS - 5.5%
Banc of America Commercial Mortgage, Inc.
Series 2001-PB1, Class A2
5.787%, 5/11/35 US$ 330 334,713 US$ -0- -0-
Series 2004-4, Class A3
4.128%, 7/10/42 410 401,873 -0- -0-
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund Series Fund
High Yield Series Fund Americas Government Americas
Portfolio High Yield Income Portfolio Government
Principal Portfolio Principal Income Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
Consumers Energy Co.
Series C
4.25%, 4/15/08 US$ -0- $ -0- US$ -0- $ -0-
Exelon Corp.
6.75%, 5/01/11 -0- -0- -0- -0-
FirstEnergy Corp.
Series B
6.45%, 11/15/11 -0- -0- -0- -0-
Series C
7.375%, 11/15/31 -0- -0- -0- -0-
MidAmerican Energy Holdings Co.
5.875%, 10/01/12 -0- -0- -0- -0-
Nisource Finance Corp.
7.875%, 11/15/10 -0- -0- -0- -0-
Pacific Gas & Electric Co.
4.80%, 3/01/14 -0- -0- -0- -0-
Progress Energy, Inc.
7.10%, 3/01/11 -0- -0- -0- -0-
Public Service Company of Colorado
7.875%, 10/01/12 -0- -0- -0- -0-
TXU Australia Holdings Pty Ltd.
6.15%, 11/15/13 (d) -0- -0- -0- -0-
Wisconsin Energy Corp.
6.25%, 5/15/67 (c) -0- -0- -0- -0-
------------- ------------
-0- -0-
------------- ------------
NATURAL GAS - 0.4%
Duke Energy Field Services Corp.
7.875%, 8/16/10 -0- -0- -0- -0-
Energy Transfer Partners
6.125%, 2/15/17 -0- -0- -0- -0-
6.625%, 10/15/36 -0- -0- -0- -0-
Enterprise Products Operating LP
Series B
5.60%, 10/15/14 -0- -0- -0- -0-
TransCanada Pipelines Ltd.
6.35%, 5/15/67 (c) -0- -0- -0- -0-
------------- ------------
-0- -0-
------------- ------------
-0- -0-
------------- ------------
NON CORPORATE SECTORS - 0.2%
AGENCIES - NOT GOVERNMENT GUARANTEED - 0.2%
Gaz Capital For Gazprom
6.212%, 11/22/16 (d) -0- -0- -0- -0-
------------- ------------
TOTAL CORPORATES - INVESTMENT GRADES
(cost $25,611,400) 1,707,964 -0-
------------- ------------
U.S. TREASURIES - 10.6%
U.S. TREASURY STRIPS - 3.3%
Zero Coupon, 2/15/16 (a) -0- -0- 2,400 1,638,679
Zero Coupon, 11/15/21 (a) -0- -0- 11,700 5,792,998
------------- ------------
-0- 7,431,677
------------- ------------
U.S. TREASURY BONDS - 7.3%
4.50%, 2/15/36 -0- -0- -0- -0-
4.75%, 2/15/37 (a) -0- -0- -0- -0-
6.25%, 5/15/30 (k) -0- -0- 4,850 5,765,437
8.75%, 5/15/17 -0- -0- -0- -0-
U.S. TREASURY NOTES
4.125%, 8/15/10 (a) -0- -0- -0- -0-
4.625%, 11/15/16 (a) -0- -0- -0- -0-
4.875%, 5/31/11 -0- -0- -0- -0-
------------- ------------
-0- 5,765,437
------------- ------------
TOTAL U.S. TREASURIES
(cost $23,535,749) -0- 13,197,114
------------- ------------
GOVERNMENT-RELATED-SOVEREIGNS-7.5%
Bundesrepublik Deutschland
Series 03
4.75%, 7/04/34 (a) EUR -0- -0- EUR -0- -0-
France Government Bond OAT
3.75%, 4/25/21 (a) -0- -0- -0- -0-
Germany (Federal Republic of)
Series 97
6.50%, 7/04/27 (a) -0- -0- -0- -0-
Government of Australia
Series 909
7.50%, 9/15/09 (a) AUD -0- -0- AUD -0- -0-
Government of Japan
Series 48
2.50%, 12/21/20 (a) JPY -0- -0- JPY -0- -0-
Government of Japan Ten Year Bond
Series 252
1.00%, 6/20/13 (a) -0- -0- -0- -0-
Series 268
1.50%, 3/20/15 (a) -0- -0- -0- -0-
Government of Japan Twenty Year Bond
Series 41
1.50%, 3/20/19 (a) -0- -0- -0- -0-
Government of Sweden
Series 1043
5.00%, 1/28/09 (a) SEK -0- -0- SEK -0- -0-
Japan Government Ten Year Bond
Series 217
1.80%, 12/21/09 (a) JPY -0- -0- JPY -0- -0-
Kingdom of Belgium
Series 31
5.50%, 3/28/28 (a) EUR -0- -0- EUR -0- -0-
Mexican Bonos
Series MI10
8.00%, 12/19/13 (a) MXN -0- -0- MXN -0- -0-
Netherlands Government Bond
3.75%, 1/15/23 (a) EUR -0- -0- EUR -0- -0-
4.00%, 7/15/16 -0- -0- -0- -0-
New Zealand Government Bond
Series 708
6.00%, 7/15/08 (a) NZD -0- -0- NZD -0- -0-
Singapore Government Bond
3.75%, 9/01/16 (a) SGD -0- -0- SGD -0- -0-
Sweden Government Bond
Series 1051
3.75%, 8/12/17 SEK -0- -0- SEK -0- -0-
United Kingdom Gilt
4.00%, 3/07/09 (a) GBP -0- -0- GBP -0- -0-
7.25%, 12/07/07 (a) -0- -0- -0- -0-
------------- ------------
TOTAL GOVERNMENT-RELATED-SOVEREIGNS
(cost $16,613,959) -0- -0-
------------- ------------
COMMERCIAL MORTGAGE-BACKED SECURITIES - 5.6%
NON-AGENCY FIXED RATE CMBS - 5.5%
Banc of America Commercial Mortgage, Inc.
Series 2001-PB1, Class A2
5.787%, 5/11/35 US$ -0- -0- US$ -0- -0-
Series 2004-4, Class A3
4.128%, 7/10/42 -0- -0- -0- -0-
Pro Forma Pro Forma
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund U.S. Series Fund U.S.
Global Bond Series Fund Government/High Government/High
Portfolio Global Bond Grade Securities Grade Securities
Principal Portfolio Portfolio Principal Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
Consumers Energy Co.
Series C
4.25%, 4/15/08 US$ -0- $ -0- US$ 130 $ 129,081
Exelon Corp.
6.75%, 5/01/11 -0- -0- 95 98,829
FirstEnergy Corp.
Series B
6.45%, 11/15/11 -0- -0- 95 98,217
Series C
7.375%, 11/15/31 -0- -0- 105 114,905
MidAmerican Energy Holdings Co.
5.875%, 10/01/12 -0- -0- 135 137,084
Nisource Finance Corp.
7.875%, 11/15/10 -0- -0- 110 117,742
Pacific Gas & Electric Co.
4.80%, 3/01/14 -0- -0- 215 204,952
Progress Energy, Inc.
7.10%, 3/01/11 -0- -0- 73 76,775
Public Service Company of Colorado
7.875%, 10/01/12 -0- -0- 100 110,631
TXU Australia Holdings Pty Ltd.
6.15%, 11/15/13 (d) -0- -0- 235 239,421
Wisconsin Energy Corp.
6.25%, 5/15/67 (c) -0- -0- 204 192,327
------------- ------------
-0- 1,745,468
------------- ------------
NATURAL GAS - 0.4%
Duke Energy Field Services Corp.
7.875%, 8/16/10 -0- -0- 70 74,660
Energy Transfer Partners
6.125%, 2/15/17 -0- -0- 230 221,969
6.625%, 10/15/36 -0- -0- 245 231,048
Enterprise Products Operating LP
Series B
5.60%, 10/15/14 -0- -0- 95 93,056
TransCanada Pipelines Ltd.
6.35%, 5/15/67 (c) -0- -0- 235 225,540
------------- ------------
-0- 846,273
------------- ------------
-0- 2,591,741
------------- ------------
NON CORPORATE SECTORS - 0.2%
AGENCIES - NOT GOVERNMENT GUARANTEED - 0.2%
Gaz Capital For Gazprom
6.212%, 11/22/16 (d) -0- -0- 460 453,238
------------- ------------
TOTAL CORPORATES - INVESTMENT GRADES
(cost $25,611,400) 2,254,911 25,785,997
------------- ------------
U.S. TREASURIES - 10.6%
U.S. TREASURY STRIPS - 3.3%
Zero Coupon, 2/15/16 (a) -0- -0- 2,400 1,638,679
Zero Coupon, 11/15/21 (a) -0- -0- 11,700 5,792,998
------------- ------------
-0- 7,431,677
------------- ------------
U.S. TREASURY BONDS - 7.3%
4.50%, 2/15/36 -0- -0- 3,545 3,360,827
4.75%, 2/15/37 (a) 1,896 1,869,782 1,896 1,869,782
6.25%, 5/15/30 (k) -0- -0- 4,850 5,765,437
8.75%, 5/15/17 -0- -0- 400 526,812
U.S. TREASURY NOTES
4.125%, 8/15/10 (a) 1,483 1,487,866 1,483 1,487,866
4.625%, 11/15/16 (a) 1,822 1,830,968 1,822 1,830,968
4.875%, 5/31/11 -0- -0- 1,935 1,985,794
------------- ------------
5,188,616 16,827,486
------------- ------------
TOTAL U.S. TREASURIES
(cost $23,535,749) 5,188,616 24,259,163
------------- ------------
GOVERNMENT-RELATED-SOVEREIGNS-7.5%
Bundesrepublik Deutschland
Series 03
4.75%, 7/04/34 (a) EUR 240 349,554 EUR 240 349,554
France Government Bond OAT
3.75%, 4/25/21 (a) 345 452,865 345 452,865
Germany (Federal Republic of)
Series 97
6.50%, 7/04/27 (a) 489 866,769 489 866,769
Government of Australia
Series 909
7.50%, 9/15/09 (a) AUD 1,150 1,040,170 AUD 1,150 1,040,170
Government of Japan
Series 48
2.50%, 12/21/20 (a) JPY 80,000 746,325 JPY 80,000 746,325
Government of Japan Ten Year Bond
Series 252
1.00%, 6/20/13 (a) 68,550 588,022 68,550 588,022
Series 268
1.50%, 3/20/15 (a) 98,000 857,261 98,000 857,261
Government of Japan Twenty Year Bond
Series 41
1.50%, 3/20/19 (a) 190,000 1,603,783 190,000 1,603,783
Government of Sweden
Series 1043
5.00%, 1/28/09 (a) SEK 4,200 660,232 SEK 4,200 660,232
Japan Government Ten Year Bond
Series 217
1.80%, 12/21/09 (a) JPY 120,000 1,065,205 JPY 120,000 1,065,205
Kingdom of Belgium
Series 31
5.50%, 3/28/28 (a) EUR 700 1,104,095 EUR 700 1,104,095
Mexican Bonos
Series MI10
8.00%, 12/19/13 (a) MXN 6,000 553,040 MXN 6,000 553,040
Netherlands Government Bond
3.75%, 1/15/23 (a) EUR 1,055 1,369,684 EUR 1,055 1,369,684
4.00%, 7/15/16 1,875 2,600,493 1,875 2,600,493
New Zealand Government Bond
Series 708
6.00%, 7/15/08 (a) NZD 651 489,210 NZD 651 489,210
Singapore Government Bond
3.75%, 9/01/16 (a) SGD 1,379 1,004,892 SGD 1,379 1,004,892
Sweden Government Bond
Series 1051
3.75%, 8/12/17 SEK 2,700 400,552 SEK 2,700 400,552
United Kingdom Gilt
4.00%, 3/07/09 (a) GBP 233 469,904 GBP 233 469,904
7.25%, 12/07/07 (a) 528 1,083,148 528 1,083,148
------------- ------------
TOTAL GOVERNMENT-RELATED-SOVEREIGNS
(cost $16,613,959) 17,305,204 17,305,204
------------- ------------
COMMERCIAL MORTGAGE-BACKED SECURITIES - 5.6%
NON-AGENCY FIXED RATE CMBS - 5.5%
Banc of America Commercial Mortgage, Inc.
Series 2001-PB1, Class A2
5.787%, 5/11/35 US$ -0- -0- US$ 330 334,713
Series 2004-4, Class A3
4.128%, 7/10/42 -0- -0- 410 401,873
AllianceBernstein
AllianceBernstein Variable
Variable Products AllianceBernstein Products
Series Fund U.S. Variable Products Series Fund AllianceBernstein
Government/High Series Fund Global Dollar Variable Products
Grade Securities U.S. Government/High Government Series Fund
Portfolio Grade Securities Portfolio Global Dollar
Principal Portfolio Principal Government Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
------------------------------------ ----------------------------------------
Series 2004-6, Class A2
4.161%, 12/10/42 US$ 525 $ 513,866 US$ -0- $ -0-
Series 2005-6, Class A4
5.353%, 9/10/47 (c) 680 662,663 -0- -0-
Bear Stearns Commercial Mortgage Securities, Inc.
Series 2005-PWR7, Class A3
5.116%, 2/11/41 (c) 505 493,465 -0- -0-
Series 2005-T18, Class A4
4.933%, 2/13/42 (c) 530 511,437 -0- -0-
Credit Suisse First Boston Mortgage Securities Corp.
Series 2003-CK2, Class A2
3.861%, 3/15/36 326 322,740 -0- -0-
Series 2005-C1, Class A4
5.014%, 2/15/38 (c) 450 428,842 -0- -0-
GE Capital Commercial Mortgage Corp.
Series 2005-C3, Class A3FX
4.863%, 7/10/45 455 449,331 -0- -0-
Greenwich Capital Commercial Funding Corp.
Series 2003-C1, Class A4
4.111%, 7/05/35 450 425,084 -0- -0-
Series 2005-GG3, Class A2
4.305%, 8/10/42 530 522,239 -0- -0-
GS Mortgage Securities Corp. II
Series 2004-GG2, Class A6
5.396%, 8/10/38 (c) 300 297,321 -0- -0-
JPMorgan Chase Commercial Mortgage Securities Corp.
Series 2004-C1, Class A2
4.302%, 1/15/38 95 91,816 -0- -0-
Series 2005-LDP1, Class A4
5.038%, 3/15/46 (c) 550 532,945 -0- -0-
Series 2005-LDP3, Class A2
4.851%, 8/15/42 405 399,263 -0- -0-
Series 2005-LDP4, Class A2
4.79%, 10/15/42 465 457,843 -0- -0-
Series 2005-LDP5, Class A2
5.198%, 12/15/44 360 357,705 -0- -0-
Series 2006-CB14, Class A4
5.481%, 12/12/44 (c) 195 192,640 -0- -0-
Series 2006-CB15, Class A4
5.814%, 6/12/43 (c) 290 292,483 -0- -0-
LB-UBS Commercial Mortgage Trust
Series 2003-C3, Class A4
4.166%, 5/15/32 430 403,727 -0- -0-
Series 2004-C4, Class A4
5.295%, 6/15/29 (c) 830 827,177 -0- -0-
Series 2004-C8, Class A2
4.201%, 12/15/29 420 411,145 -0- -0-
Series 2005-C1, Class A4
4.742%, 2/15/30 365 345,320 -0- -0-
Series 2005-C7, Class A4
5.197%, 11/15/30 (c) 340 329,479 -0- -0-
Series 2006-C1, Class A4
5.156%, 2/15/31 485 475,086 -0- -0-
Series 2006-C6, Class A4
5.372%, 9/15/39 530 518,470 -0- -0-
Merrill Lynch Mortgage Trust
Series 2005-CKI1, Class A6
5.244%, 11/12/37 (c) 280 273,535 -0- -0-
Series 2005-MKB2, Class A2
4.806%, 9/12/42 655 648,289 -0- -0-
Merrill Lynch/Countrywide Commercial Mortgage Trust
Series 2006-2, Class A4
5.91%, 6/12/46 (c) 145 147,925 -0- -0-
Morgan Stanley Capital I
Series 2005-T17, Class A5
4.78%, 12/13/41 655 626,172 -0- -0-
------------- ------------
12,694,594 -0-
------------- ------------
NON-AGENCY ADJUSTABLE RATE CMBS - 0.1%
GS Mortgage Securities Corp. II
Series 2007-EOP, Class E
6.238%, 3/06/20 (b)(d) 115 112,125 -0- -0-
------------- ------------
TOTAL COMMERCIAL-MORTGAGE BACKED SECURITIES
(cost $13,034,556) 12,806,719 -0-
------------- ------------
AGENCY DEBENTURES-3.2%
Federal National Mortgage Association - 3.1%
Series 2001
5.375%, 11/15/11 (a) -0- -0- -0- -0-
Series 2004
4.125%, 4/15/14 (a) -0- -0- -0- -0-
------------- ------------
-0- -0-
------------- ------------
MEXICO-0.1%
Pemex Project Funding Master Trust
8.00%, 11/15/11 -0- -0- 250 273,125
------------- ------------
TOTAL AGENCY DEBENTURES
(cost $7,063,578) -0- 273,125
------------- ------------
INFLATION-LINKED SECURITIES - 2.3%
U.S. TREASURY NOTES - 2.0%
1.625%, 1/15/15 (TIPS) (k) -0- -0- -0- -0-
2.00%, 1/15/16 (TIPS) (a) -0- -0- -0- -0-
2.375%, 4/15/11 (TIPS) 1,837 1,848,463 -0- -0-
------------- ------------
1,848,463 -0-
------------- ------------
CANADA - 0.3%
Government of Canada
3.00%, 12/01/36 (a) CAD -0- -0- CAD -0- -0-
Province of Ontario
2.00%, 12/01/36 (a) -0- -0- -0- -0-
------------- ------------
-0- -0-
------------- ------------
TOTAL INFLATION-LINKED SECURITIES
(cost $5,247,718) 1,848,463 -0-
------------- ------------
GOVERNMENT-RELATED-AGENCIES-1.9%
Development Bank of Japan
2.30%, 3/19/26 (a) JPY -0- -0- JPY -0- -0-
Japan Fin Corp. Muni Ent
Series INTL
1.35%, 11/26/13 (a) -0- -0- -0- -0-
Landwirtschaftliche Rentenbank
1.375%, 4/25/13 (a) -0- -0- -0- -0-
------------- ------------
TOTAL GOVERNMENT-RELATED - AGENCIES
(cost $4,322,629) -0- -0-
------------- ------------
ASSET-BACKED SECURITIES - 1.8%
HOME EQUITY LOANS - FLOATING RATE - 1.2%
Asset Backed Funding Certificates
Series 2003-WF1, Class A2
5.881%, 12/25/32 (b) US$ 136 136,133 US$ -0- -0-
Bear Stearns Asset Backed Securities, Inc.
Series 2005-SD1, Class 1A1
5.281%, 4/25/22 (b) 24 22,471 -0- -0-
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund Series Fund
High Yield Series Fund Americas Government Americas
Portfolio High Yield Income Portfolio Government
Principal Portfolio Principal Income Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
------------------------------------- ----------------------------------------
Series 2004-6, Class A2
4.161%, 12/10/42 US$ -0- $ -0- US$ -0- $ -0-
Series 2005-6, Class A4
5.353%, 9/10/47 (c) -0- -0- -0- -0-
Bear Stearns Commercial Mortgage Securities, Inc.
Series 2005-PWR7, Class A3
5.116%, 2/11/41 (c) -0- -0- -0- -0-
Series 2005-T18, Class A4
4.933%, 2/13/42 (c) -0- -0- -0- -0-
Credit Suisse First Boston Mortgage Securities Corp.
Series 2003-CK2, Class A2
3.861%, 3/15/36 -0- -0- -0- -0-
Series 2005-C1, Class A4
5.014%, 2/15/38 (c) -0- -0- -0- -0-
GE Capital Commercial Mortgage Corp.
Series 2005-C3, Class A3FX
4.863%, 7/10/45 -0- -0- -0- -0-
Greenwich Capital Commercial Funding Corp.
Series 2003-C1, Class A4
4.111%, 7/05/35 -0- -0- -0- -0-
Series 2005-GG3, Class A2
4.305%, 8/10/42 -0- -0- -0- -0-
GS Mortgage Securities Corp. II
Series 2004-GG2, Class A6
5.396%, 8/10/38 (c) -0- -0- -0- -0-
JPMorgan Chase Commercial Mortgage Securities Corp.
Series 2004-C1, Class A2
4.302%, 1/15/38 -0- -0- -0- -0-
Series 2005-LDP1, Class A4
5.038%, 3/15/46 (c) -0- -0- -0- -0-
Series 2005-LDP3, Class A2
4.851%, 8/15/42 -0- -0- -0- -0-
Series 2005-LDP4, Class A2
4.79%, 10/15/42 -0- -0- -0- -0-
Series 2005-LDP5, Class A2
5.198%, 12/15/44 -0- -0- -0- -0-
Series 2006-CB14, Class A4
5.481%, 12/12/44 (c) -0- -0- -0- -0-
Series 2006-CB15, Class A4
5.814%, 6/12/43 (c) -0- -0- -0- -0-
LB-UBS Commercial Mortgage Trust
Series 2003-C3, Class A4
4.166%, 5/15/32 -0- -0- -0- -0-
Series 2004-C4, Class A4
5.295%, 6/15/29 (c) -0- -0- -0- -0-
Series 2004-C8, Class A2
4.201%, 12/15/29 -0- -0- -0- -0-
Series 2005-C1, Class A4
4.742%, 2/15/30 -0- -0- -0- -0-
Series 2005-C7, Class A4
5.197%, 11/15/30 (c) -0- -0- -0- -0-
Series 2006-C1, Class A4
5.156%, 2/15/31 -0- -0- -0- -0-
Series 2006-C6, Class A4
5.372%, 9/15/39 -0- -0- -0- -0-
Merrill Lynch Mortgage Trust
Series 2005-CKI1, Class A6
5.244%, 11/12/37 (c) -0- -0- -0- -0-
Series 2005-MKB2, Class A2
4.806%, 9/12/42 -0- -0- -0- -0-
Merrill Lynch/Countrywide Commercial Mortgage Trust
Series 2006-2, Class A4
5.91%, 6/12/46 (c) -0- -0- -0- -0-
Morgan Stanley Capital I
Series 2005-T17, Class A5
4.78%, 12/13/41 -0- -0- -0- -0-
------------- ------------
-0- -0-
------------- ------------
NON-AGENCY ADJUSTABLE RATE CMBS - 0.1%
GS Mortgage Securities Corp. II
Series 2007-EOP, Class E
6.238%, 3/06/20 (b)(d) -0- -0- -0- -0-
------------- ------------
TOTAL COMMERCIAL-MORTGAGE BACKED SECURITIES
(cost $13,034,556) -0- -0-
------------- ------------
AGENCY DEBENTURES-3.2%
Federal National Mortgage Association - 3.1%
Series 2001
5.375%, 11/15/11 (a) -0- -0- 5,000 5,153,585
Series 2004
4.125%, 4/15/14 (a) -0- -0- 2,000 1,926,736
------------- ------------
-0- 7,080,321
------------- ------------
MEXICO-0.1%
Pemex Project Funding Master Trust
8.00%, 11/15/11 -0- -0- -0- -0-
------------- ------------
TOTAL AGENCY DEBENTURES
(cost $7,063,578) -0- 7,080,321
------------- ------------
INFLATION-LINKED SECURITIES - 2.3%
U.S. TREASURY NOTES - 2.0%
1.625%, 1/15/15 (TIPS) (k) -0- -0- 1,567 1,498,745
2.00%, 1/15/16 (TIPS) (a) -0- -0- 787 769,422
2.375%, 4/15/11 (TIPS) -0- -0- -0- -0-
------------- ------------
-0- 2,268,167
------------- ------------
CANADA - 0.3%
Government of Canada
3.00%, 12/01/36 (a) CAD -0- -0- CAD 66 80,224
Province of Ontario
2.00%, 12/01/36 (a) -0- -0- 601 547,684
------------- ------------
-0- 627,908
------------- ------------
TOTAL INFLATION-LINKED SECURITIES
(cost $5,247,718) -0- 2,896,075
------------- ------------
GOVERNMENT-RELATED-AGENCIES-1.9%
Development Bank of Japan
2.30%, 3/19/26 (a) JPY -0- -0- JPY -0- -0-
Japan Fin Corp. Muni Ent
Series INTL
1.35%, 11/26/13 (a) -0- -0- -0- -0-
Landwirtschaftliche Rentenbank
1.375%, 4/25/13 (a) -0- -0- -0- -0-
------------- ------------
TOTAL GOVERNMENT-RELATED - AGENCIES
(cost $4,322,629) -0- -0-
------------- ------------
ASSET-BACKED SECURITIES - 1.8%
HOME EQUITY LOANS - FLOATING RATE - 1.2%
Asset Backed Funding Certificates
Series 2003-WF1, Class A2
5.881%, 12/25/32 (b) US$ -0- -0- US$ -0- -0-
Bear Stearns Asset Backed Securities, Inc.
Series 2005-SD1, Class 1A1
5.281%, 4/25/22 (b) -0- -0- -0- -0-
Pro Forma Pro Forma
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund U.S. Series Fund U.S.
Global Bond Series Fund Government/High Government/High
Portfolio Global Bond Grade Securities Grade Securities
Principal Portfolio Portfolio Principal Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
-------------------------------------- --------------------------------------
Series 2004-6, Class A2
4.161%, 12/10/42 US$ -0- $ -0- US$ 525 $ 513,866
Series 2005-6, Class A4
5.353%, 9/10/47 (c) -0- -0- 680 662,663
Bear Stearns Commercial Mortgage Securities, Inc.
Series 2005-PWR7, Class A3
5.116%, 2/11/41 (c) -0- -0- 505 493,465
Series 2005-T18, Class A4
4.933%, 2/13/42 (c) -0- -0- 530 511,437
Credit Suisse First Boston Mortgage Securities Corp.
Series 2003-CK2, Class A2
3.861%, 3/15/36 -0- -0- 326 322,740
Series 2005-C1, Class A4
5.014%, 2/15/38 (c) -0- -0- 450 428,842
GE Capital Commercial Mortgage Corp.
Series 2005-C3, Class A3FX
4.863%, 7/10/45 -0- -0- 455 449,331
Greenwich Capital Commercial Funding Corp.
Series 2003-C1, Class A4
4.111%, 7/05/35 -0- -0- 450 425,084
Series 2005-GG3, Class A2
4.305%, 8/10/42 -0- -0- 530 522,239
GS Mortgage Securities Corp. II
Series 2004-GG2, Class A6
5.396%, 8/10/38 (c) -0- -0- 300 297,321
JPMorgan Chase Commercial Mortgage Securities Corp.
Series 2004-C1, Class A2
4.302%, 1/15/38 -0- -0- 95 91,816
Series 2005-LDP1, Class A4
5.038%, 3/15/46 (c) -0- -0- 550 532,945
Series 2005-LDP3, Class A2
4.851%, 8/15/42 -0- -0- 405 399,263
Series 2005-LDP4, Class A2
4.79%, 10/15/42 -0- -0- 465 457,843
Series 2005-LDP5, Class A2
5.198%, 12/15/44 -0- -0- 360 357,705
Series 2006-CB14, Class A4
5.481%, 12/12/44 (c) -0- -0- 195 192,640
Series 2006-CB15, Class A4
5.814%, 6/12/43 (c) -0- -0- 290 292,483
LB-UBS Commercial Mortgage Trust
Series 2003-C3, Class A4
4.166%, 5/15/32 -0- -0- 430 403,727
Series 2004-C4, Class A4
5.295%, 6/15/29 (c) -0- -0- 830 827,177
Series 2004-C8, Class A2
4.201%, 12/15/29 -0- -0- 420 411,145
Series 2005-C1, Class A4
4.742%, 2/15/30 -0- -0- 365 345,320
Series 2005-C7, Class A4
5.197%, 11/15/30 (c) -0- -0- 340 329,479
Series 2006-C1, Class A4
5.156%, 2/15/31 -0- -0- 485 475,086
Series 2006-C6, Class A4
5.372%, 9/15/39 -0- -0- 530 518,470
Merrill Lynch Mortgage Trust
Series 2005-CKI1, Class A6
5.244%, 11/12/37 (c) -0- -0- 280 273,535
Series 2005-MKB2, Class A2
4.806%, 9/12/42 -0- -0- 655 648,289
Merrill Lynch/Countrywide Commercial Mortgage Trust
Series 2006-2, Class A4
5.91%, 6/12/46 (c) -0- -0- 145 147,925
Morgan Stanley Capital I
Series 2005-T17, Class A5
4.78%, 12/13/41 -0- -0- 655 626,172
------------- ------------
-0- 12,694,594
------------- ------------
NON-AGENCY ADJUSTABLE RATE CMBS - 0.1%
GS Mortgage Securities Corp. II
Series 2007-EOP, Class E
6.238%, 3/06/20 (b)(d) -0- -0- 115 112,125
------------- ------------
TOTAL COMMERCIAL-MORTGAGE BACKED SECURITIES
(cost $13,034,556) -0- 12,806,719
------------- ------------
AGENCY DEBENTURES-3.2%
Federal National Mortgage Association - 3.1%
Series 2001
5.375%, 11/15/11 (a) -0- -0- 5,000 5,153,585
Series 2004
4.125%, 4/15/14 (a) -0- -0- 2,000 1,926,736
------------- ------------
-0- 7,080,321
------------- ------------
MEXICO-0.1%
Pemex Project Funding Master Trust
8.00%, 11/15/11 -0- -0- 250 273,125
------------- ------------
TOTAL AGENCY DEBENTURES
(cost $7,063,578) -0- 7,353,446
------------- ------------
INFLATION-LINKED SECURITIES - 2.3%
U.S. TREASURY NOTES - 2.0%
1.625%, 1/15/15 (TIPS) (k) -0- -0- 1,567 1,498,745
2.00%, 1/15/16 (TIPS) (a) 586 572,450 1,373 1,341,872
2.375%, 4/15/11 (TIPS) -0- -0- 1,837 1,848,463
------------- ------------
572,450 4,689,080
------------- ------------
CANADA - 0.3%
Government of Canada
3.00%, 12/01/36 (a) CAD -0- -0- CAD 66 80,224
Province of Ontario
2.00%, 12/01/36 (a) -0- -0- 601 547,684
------------- ------------
-0- 627,908
------------- ------------
TOTAL INFLATION-LINKED SECURITIES
(cost $5,247,718) 572,450 5,316,988
------------- ------------
GOVERNMENT-RELATED-AGENCIES-1.9%
Development Bank of Japan
2.30%, 3/19/26 (a) JPY 120,000 1,058,721 JPY 120,000 1,058,721
Japan Fin Corp. Muni Ent
Series INTL
1.35%, 11/26/13 (a) 147,000 1,278,372 147,000 1,278,372
Landwirtschaftliche Rentenbank
1.375%, 4/25/13 (a) 229,000 1,992,040 229,000 1,992,040
------------- ------------
TOTAL GOVERNMENT-RELATED - AGENCIES
(cost $4,322,629) 4,329,133 4,329,133
------------- ------------
ASSET-BACKED SECURITIES - 1.8%
HOME EQUITY LOANS - FLOATING RATE - 1.2%
Asset Backed Funding Certificates
Series 2003-WF1, Class A2
5.881%, 12/25/32 (b) US$ -0- -0- US$ 136 136,133
Bear Stearns Asset Backed Securities, Inc.
Series 2005-SD1, Class 1A1
5.281%, 4/25/22 (b) -0- -0- 24 22,471
AllianceBernstein
AllianceBernstein Variable
Variable Products AllianceBernstein Products
Series Fund U.S. Variable Products Series Fund AllianceBernstein
Government/High Series Fund Global Dollar Variable Products
Grade Securities U.S. Government/High Government Series Fund
Portfolio Grade Securities Portfolio Global Dollar
Principal Portfolio Principal Government Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
Credit-Based Asset Servicing & Securities, Inc.
Series 2005-CB7, Class AF2
5.147%, 11/25/35 (e) US$ 218 $ 216,333 US$ -0- $ -0-
GE-WMC Mortgage Securities LLC
Series 2005-2, Class A2B
5.301%, 12/25/35 (b) 285 281,751 -0- -0-
HFC Home Equity Loan Asset Backed Certificates
Series 2005-3, Class A1
5.798%, 1/20/35 (b) 178 174,333 -0- -0-
Home Equity Asset Trust
Series 2007-2, Class M1
5.935%, 7/25/37 (b) 475 436,805 -0- -0-
Indymac Residential Asset Backed Trust
Series 2006-D, Class 2A2
5.241%, 11/25/36 (b) 490 484,717 -0- -0-
Option One Mortgage Loan Trust
Series 2007-2, Class M1
5.491%, 3/25/37 (b) 160 146,853 -0- -0-
RAAC Series
Series 2006-SP3, Class A1
5.211%, 8/25/36 (b) 119 118,481 -0- -0-
Residential Asset Mortgage Products, Inc.
Series 2005-RS3, Class AIA2
5.301%, 3/25/35 (b) 108 107,220 -0- -0-
Series 2005-RZ1, Class A2
5.331%, 4/25/35 (b) 221 218,818 -0- -0-
Saxon Asset Securities Trust
Series 2005-4, Class A2B
5.311%, 11/25/37 (b) 171 171,156 -0- -0-
Specialty Underwriting & Residential Finance
Series 2006-BC1, Class A2A
5.211%, 12/25/36 (b) 96 95,319 -0- -0-
Structured Asset Investment Loan Trust
Series 2006-1, Class A1
5.211%, 1/25/36 (b) 45 44,446 -0- -0-
--------------------- ------------------
2,654,836 -0-
--------------------- ------------------
HOME EQUITY LOANS - FIXED RATE - 0.5%
Citifinancial Mortgage Securities, Inc.
Series 2003-1, Class AFPT
3.36%, 1/25/33 (e) 116 103,472 -0- -0-
Countrywide Asset-Backed Certificates
Series 2007-S1, Class A3
5.81%, 11/25/36 (c) 475 435,285 -0- -0-
Credit-Based Asset Servicing & Securities, Inc.
Series 2003-CB1, Class AF
3.45%, 1/25/33 (e) 252 238,930 -0- -0-
Home Equity Mortgage Trust
Series 2005-4, Class A3
4.742%, 1/25/36 (e) 157 155,748 -0- -0-
Series 2006-1, Class A2
5.30%, 5/25/36 (e) 120 102,151 -0- -0-
Residential Funding Mortgage Securities, Inc.
Series 2005-HI2, Class A3
4.46%, 5/25/35 157 155,885 -0- -0-
--------------------- ------------------
1,191,471 -0-
--------------------- ------------------
AUTOS - FIXED RATE - 0.1%
Capital One Prime Auto Receivables Trust
Series 2005-1, Class A3
4.32%, 8/15/09 234 232,927 -0- -0-
--------------------- ------------------
OTHER - FIXED RATE - 0.0%
DUNKN
Series 2006-1, Class A2
5.779%, 6/20/31 (d) 100 99,949 -0- -0-
--------------------- ------------------
TOTAL ASSET-BACKED SECURITIES
(cost $4,329,824) 4,179,183 -0-
--------------------- ------------------
CORPORATES-1.6%
BRAZIL-0.2%
Banco Bmg SA
9.15%, 1/15/16 (d) -0- -0- 100 106,000
Republic of Brazil
8.75%, 2/04/25 -0- -0- 126 161,280
Vale Overseas Ltd.
6.875%, 11/21/36 -0- -0- 134 138,056
--------------------- ------------------
-0- 405,336
--------------------- ------------------
EL SALVADOR-0.0%
MMG Fiduciary (AES El Salvador)
6.75%, 2/01/16 (d) -0- -0- 100 98,251
--------------------- ------------------
HONG KONG-0.1%
Chaoda Modern Agriculture
7.75%, 2/08/10 (d) -0- -0- 115 111,837
Noble Group Ltd.
6.625%, 3/17/15 (d) -0- -0- 100 93,025
--------------------- ------------------
-0- 204,862
--------------------- ------------------
JAMAICA-0.1%
Digicel Ltd.
9.25%, 9/01/12 (d) -0- -0- 100 102,750
--------------------- ------------------
KAZAKHSTAN-0.1%
ALB Finance BV
9.25%, 9/25/13 (d) -0- -0- 100 89,657
Kazkommerts International BV
8.50%, 4/16/13 (d) -0- -0- 100 94,590
Tengizchevroil Finance Co.
6.124%, 11/15/14 (d) -0- -0- 100 98,490
--------------------- ------------------
-0- 282,737
--------------------- ------------------
MALAYSIA-0.2%
Petronas Capital Ltd.
7.00%, 5/22/12 (d) -0- -0- 426 455,735
--------------------- ------------------
PERU-0.1%
Southern Copper Corp.
7.50%, 7/27/35 -0- -0- 100 108,571
--------------------- ------------------
RUSSIA-0.8%
Alfa Bond Issuance PLC
8.625%, 12/09/15 (c) -0- -0- 100 96,400
Citigroup (JSC Severstal)
Series REGS
9.25%, 4/19/14 (d) -0- -0- 68 73,071
Evraz Group SA
8.25%, 11/10/15 (d) -0- -0- 100 100,250
Gallery Capital SA
10.125%, 5/15/13 (d) -0- -0- 100 94,850
Gazprom
6.51%, 3/07/22 (d) -0- -0- 300 296,970
Gazprom OAO
9.625%, 3/01/13 (d) -0- -0- 560 648,536
Gazstream SA
5.625%, 7/22/13 (d) -0- -0- 115 113,842
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund Series Fund
High Yield Series Fund Americas Government Americas
Portfolio High Yield Income Portfolio Government
Principal Portfolio Principal Income Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
Credit-Based Asset Servicing & Securities, Inc.
Series 2005-CB7, Class AF2
5.147%, 11/25/35 (e) US$ -0- $ -0- US$ -0- $ -0-
GE-WMC Mortgage Securities LLC
Series 2005-2, Class A2B
5.301%, 12/25/35 (b) -0- -0- -0- -0-
HFC Home Equity Loan Asset Backed Certificates
Series 2005-3, Class A1
5.798%, 1/20/35 (b) -0- -0- -0- -0-
Home Equity Asset Trust
Series 2007-2, Class M1
5.935%, 7/25/37 (b) -0- -0- -0- -0-
Indymac Residential Asset Backed Trust
Series 2006-D, Class 2A2
5.241%, 11/25/36 (b) -0- -0- -0- -0-
Option One Mortgage Loan Trust
Series 2007-2, Class M1
5.491%, 3/25/37 (b) -0- -0- -0- -0-
RAAC Series
Series 2006-SP3, Class A1
5.211%, 8/25/36 (b) -0- -0- -0- -0-
Residential Asset Mortgage Products, Inc.
Series 2005-RS3, Class AIA2
5.301%, 3/25/35 (b) -0- -0- -0- -0-
Series 2005-RZ1, Class A2
5.331%, 4/25/35 (b) -0- -0- -0- -0-
Saxon Asset Securities Trust
Series 2005-4, Class A2B
5.311%, 11/25/37 (b) -0- -0- -0- -0-
Specialty Underwriting & Residential Finance
Series 2006-BC1, Class A2A
5.211%, 12/25/36 (b) -0- -0- -0- -0-
Structured Asset Investment Loan Trust
Series 2006-1, Class A1
5.211%, 1/25/36 (b) -0- -0- -0- -0-
---------------------- -------------------
-0- -0-
---------------------- -------------------
HOME EQUITY LOANS - FIXED RATE - 0.5%
Citifinancial Mortgage Securities, Inc.
Series 2003-1, Class AFPT
3.36%, 1/25/33 (e) -0- -0- -0- -0-
Countrywide Asset-Backed Certificates
Series 2007-S1, Class A3
5.81%, 11/25/36 (c) -0- -0- -0- -0-
Credit-Based Asset Servicing & Securities, Inc.
Series 2003-CB1, Class AF
3.45%, 1/25/33 (e) -0- -0- -0- -0-
Home Equity Mortgage Trust
Series 2005-4, Class A3
4.742%, 1/25/36 (e) -0- -0- -0- -0-
Series 2006-1, Class A2
5.30%, 5/25/36 (e) -0- -0- -0- -0-
Residential Funding Mortgage Securities, Inc.
Series 2005-HI2, Class A3
4.46%, 5/25/35 -0- -0- -0- -0-
---------------------- -------------------
-0- -0-
---------------------- -------------------
AUTOS - FIXED RATE - 0.1%
Capital One Prime Auto Receivables Trust
Series 2005-1, Class A3
4.32%, 8/15/09 -0- -0- -0- -0-
---------------------- -------------------
OTHER - FIXED RATE - 0.0%
DUNKN
Series 2006-1, Class A2
5.779%, 6/20/31 (d) -0- -0- -0- -0-
---------------------- -------------------
TOTAL ASSET-BACKED SECURITIES
(cost $4,329,824) -0- -0-
---------------------- -------------------
CORPORATES-1.6%
BRAZIL-0.2%
Banco Bmg SA
9.15%, 1/15/16 (d) -0- -0- -0- -0-
Republic of Brazil
8.75%, 2/04/25 -0- -0- -0- -0-
Vale Overseas Ltd.
6.875%, 11/21/36 -0- -0- -0- -0-
---------------------- -------------------
-0- -0-
---------------------- -------------------
EL SALVADOR-0.0%
MMG Fiduciary (AES El Salvador)
6.75%, 2/01/16 (d) -0- -0- -0- -0-
---------------------- -------------------
HONG KONG-0.1%
Chaoda Modern Agriculture
7.75%, 2/08/10 (d) -0- -0- -0- -0-
Noble Group Ltd.
6.625%, 3/17/15 (d) -0- -0- -0- -0-
---------------------- -------------------
-0- -0-
---------------------- -------------------
JAMAICA-0.1%
Digicel Ltd.
9.25%, 9/01/12 (d) -0- -0- -0- -0-
---------------------- -------------------
KAZAKHSTAN-0.1%
ALB Finance BV
9.25%, 9/25/13 (d) -0- -0- -0- -0-
Kazkommerts International BV
8.50%, 4/16/13 (d) -0- -0- -0- -0-
Tengizchevroil Finance Co.
6.124%, 11/15/14 (d) -0- -0- -0- -0-
---------------------- -------------------
-0- -0-
---------------------- -------------------
MALAYSIA-0.2%
Petronas Capital Ltd.
7.00%, 5/22/12 (d) -0- -0- -0- -0-
---------------------- -------------------
PERU-0.1%
Southern Copper Corp.
7.50%, 7/27/35 -0- -0- -0- -0-
---------------------- -------------------
RUSSIA-0.8%
Alfa Bond Issuance PLC
8.625%, 12/09/15 (c) -0- -0- -0- -0-
Citigroup (JSC Severstal)
Series REGS
9.25%, 4/19/14 (d) -0- -0- -0- -0-
Evraz Group SA
8.25%, 11/10/15 (d) -0- -0- -0- -0-
Gallery Capital SA
10.125%, 5/15/13 (d) -0- -0- -0- -0-
Gazprom
6.51%, 3/07/22 (d) -0- -0- -0- -0-
Gazprom OAO
9.625%, 3/01/13 (d) -0- -0- -0- -0-
Gazstream SA
5.625%, 7/22/13 (d) -0- -0- -0- -0-
Pro Forma Pro Forma
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund U.S. Series Fund U.S.
Global Bond Series Fund Government/High Government/High
Portfolio Global Bond Grade Securities Grade Securities
Principal Portfolio Portfolio Principal Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
Credit-Based Asset Servicing & Securities, Inc.
Series 2005-CB7, Class AF2
5.147%, 11/25/35 (e) US$ -0- $ -0- US$ 218 $ 216,333
GE-WMC Mortgage Securities LLC
Series 2005-2, Class A2B
5.301%, 12/25/35 (b) -0- -0- 285 281,751
HFC Home Equity Loan Asset Backed Certificates
Series 2005-3, Class A1
5.798%, 1/20/35 (b) -0- -0- 178 174,333
Home Equity Asset Trust
Series 2007-2, Class M1
5.935%, 7/25/37 (b) -0- -0- 475 436,805
Indymac Residential Asset Backed Trust
Series 2006-D, Class 2A2
5.241%, 11/25/36 (b) -0- -0- 490 484,717
Option One Mortgage Loan Trust
Series 2007-2, Class M1
5.491%, 3/25/37 (b) -0- -0- 160 146,853
RAAC Series
Series 2006-SP3, Class A1
5.211%, 8/25/36 (b) -0- -0- 119 118,481
Residential Asset Mortgage Products, Inc.
Series 2005-RS3, Class AIA2
5.301%, 3/25/35 (b) -0- -0- 108 107,220
Series 2005-RZ1, Class A2
5.331%, 4/25/35 (b) -0- -0- 221 218,818
Saxon Asset Securities Trust
Series 2005-4, Class A2B
5.311%, 11/25/37 (b) -0- -0- 171 171,156
Specialty Underwriting & Residential Finance
Series 2006-BC1, Class A2A
5.211%, 12/25/36 (b) -0- -0- 96 95,319
Structured Asset Investment Loan Trust
Series 2006-1, Class A1
5.211%, 1/25/36 (b) -0- -0- 45 44,446
--------------------- -------------------
-0- 2,654,836
--------------------- -------------------
HOME EQUITY LOANS - FIXED RATE - 0.5%
Citifinancial Mortgage Securities, Inc.
Series 2003-1, Class AFPT
3.36%, 1/25/33 (e) -0- -0- 116 103,472
Countrywide Asset-Backed Certificates
Series 2007-S1, Class A3
5.81%, 11/25/36 (c) -0- -0- 475 435,285
Credit-Based Asset Servicing & Securities, Inc.
Series 2003-CB1, Class AF
3.45%, 1/25/33 (e) -0- -0- 252 238,930
Home Equity Mortgage Trust
Series 2005-4, Class A3
4.742%, 1/25/36 (e) -0- -0- 157 155,748
Series 2006-1, Class A2
5.30%, 5/25/36 (e) -0- -0- 120 102,151
Residential Funding Mortgage Securities, Inc.
Series 2005-HI2, Class A3
4.46%, 5/25/35 -0- -0- 157 155,885
--------------------- -------------------
-0- 1,191,471
--------------------- -------------------
AUTOS - FIXED RATE - 0.1%
Capital One Prime Auto Receivables Trust
Series 2005-1, Class A3
4.32%, 8/15/09 -0- -0- 234 232,927
--------------------- -------------------
OTHER - FIXED RATE - 0.0%
DUNKN
Series 2006-1, Class A2
5.779%, 6/20/31 (d) -0- -0- 100 99,949
--------------------- -------------------
TOTAL ASSET-BACKED SECURITIES
(cost $4,329,824) -0- 4,179,183
--------------------- -------------------
CORPORATES-1.6%
BRAZIL-0.2%
Banco Bmg SA
9.15%, 1/15/16 (d) -0- -0- 100 106,000
Republic of Brazil
8.75%, 2/04/25 -0- -0- 126 161,280
Vale Overseas Ltd.
6.875%, 11/21/36 -0- -0- 134 138,056
--------------------- -------------------
-0- 405,336
--------------------- -------------------
EL SALVADOR-0.0%
MMG Fiduciary (AES El Salvador)
6.75%, 2/01/16 (d) -0- -0- 100 98,251
--------------------- -------------------
HONG KONG-0.1%
Chaoda Modern Agriculture
7.75%, 2/08/10 (d) -0- -0- 115 111,837
Noble Group Ltd.
6.625%, 3/17/15 (d) -0- -0- 100 93,025
--------------------- -------------------
-0- 204,862
--------------------- -------------------
JAMAICA-0.1%
Digicel Ltd.
9.25%, 9/01/12 (d) -0- -0- 100 102,750
--------------------- -------------------
KAZAKHSTAN-0.1%
ALB Finance BV
9.25%, 9/25/13 (d) -0- -0- 100 89,657
Kazkommerts International BV
8.50%, 4/16/13 (d) -0- -0- 100 94,590
Tengizchevroil Finance Co.
6.124%, 11/15/14 (d) -0- -0- 100 98,490
--------------------- -------------------
-0- 282,737
--------------------- -------------------
MALAYSIA-0.2%
Petronas Capital Ltd.
7.00%, 5/22/12 (d) -0- -0- 426 455,735
--------------------- -------------------
PERU-0.1%
Southern Copper Corp.
7.50%, 7/27/35 -0- -0- 100 108,571
--------------------- -------------------
RUSSIA-0.8%
Alfa Bond Issuance PLC
8.625%, 12/09/15 (c) -0- -0- 100 96,400
Citigroup (JSC Severstal)
Series REGS
9.25%, 4/19/14 (d) -0- -0- 68 73,071
Evraz Group SA
8.25%, 11/10/15 (d) -0- -0- 100 100,250
Gallery Capital SA
10.125%, 5/15/13 (d) -0- -0- 100 94,850
Gazprom
6.51%, 3/07/22 (d) -0- -0- 300 296,970
Gazprom OAO
9.625%, 3/01/13 (d) -0- -0- 560 648,536
Gazstream SA
5.625%, 7/22/13 (d) -0- -0- 115 113,842
AllianceBernstein
AllianceBernstein Variable
Variable Products AllianceBernstein Products
Series Fund U.S. Variable Products Series Fund AllianceBernstein
Government/High Series Fund Global Dollar Variable Products
Grade Securities U.S. Government/High Government Series Fund
Portfolio Grade Securities Portfolio Global Dollar
Principal Portfolio Principal Government Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
Mobile Telesystems Finance
9.75%, 1/30/08 (d) US$ -0- $ -0- US$ 100 $ 100,890
Series REGS
9.75%, 1/30/08 (d) -0- -0- 25 25,138
Russia Agriculture Bank Rshb C
6.299%, 5/15/17 (d) -0- -0- 147 138,386
Russian Standard Finance
7.50%, 10/07/10 (d) -0- -0- 100 87,740
TNK-BP Finance SA
7.50%, 7/18/16 (d) -0- -0- 100 99,310
Tyumen Oil Co.
11.00%, 11/06/07 (d) -0- -0- 55 55,165
------------- ------------
-0- 1,930,548
------------- ------------
TOTAL CORPORATES
(cost $3,642,281) -0- 3,588,790
------------- ------------
MORTGAGE CMO'S - 0.9%
NON-AGENCY ADJUSTABLE RATE - 0.5%
Countrywide Alternative Loan Trust
Series 2005-62, Class 2A1
5.988%, 12/25/35 (b) 168 163,111 -0- -0-
Series 2007-OA3, Class M1
5.441%, 4/25/47 (b) 145 118,217 -0- -0-
Washington Mutual Mortgage Pass Through
Series 2005-AR2, Class 2A22
5.351%, 1/25/45 (b) 6 5,536 -0- -0-
Series 2007-OA1, Class A1A
5.683%, 2/25/47 (b) 389 374,955 -0- -0-
Series 2007-OA3, Class B1
5.581%, 4/25/47 (b) 449 402,464 -0- -0-
------------- ------------
1,064,283 -0-
------------- ------------
NON-AGENCY FIXED RATE - 0.4%
Morgan Stanley Mortgage Loan Trust
Series 2006-11, Class 1A2
6.354%, 8/25/36 (c) 290 291,098 -0- -0-
Residential Accredit Loans, Inc.
Series 2007-QS1, Class 1A1
6.00%, 1/25/37 308 312,239 -0- -0-
Wells Fargo Mortgage Backed Securities Trust
Series 2006-AR11, Class A4
5.525%, 8/25/36 (c) 397 394,899 -0- -0-
------------- ------------
998,236 -0-
------------- ------------
AGENCY ADJUSTABLE RATE - 0.0%
Fannie Mae Grantor Trust
Series 2004-T5, Class AB4
5.582%, 5/28/35 (b) 50 48,059 -0- -0-
------------- ------------
TOTAL MORTGAGE CMO'S
(cost $2,200,577) 2,110,578 -0-
------------- ------------
AGENCIES - 0.9%
CANADA - 0.9%
Canada Housing Trust No 1
3.55%, 9/15/10 (a)
(cost $1,745,461) -0- -0- -0- -0-
------------- ------------
GOVERNMENT-RELATED-U.S. AGENCIES-0.8%
AGENCY DEBENTURES-0.8%
Federal Home Loan Mortgage Corp.
4.75%, 1/19/16 (a)
(cost $1,782,649) -0- -0- -0- -0-
------------- ------------
GOVERNMENT-RELATED - PROVINCIALS - 0.7%
CANADA - 0.7%
Province of Ontario
5.60%, 6/02/35 (a) -0- -0- -0- -0-
Province of Quebec
5.50%, 12/01/14 (a) -0- -0- -0- -0-
6.00%, 10/01/12 -0- -0- -0- -0-
------------- ------------
TOTAL GOVERNMENT-RELATED - PROVINCIALS
(cost $1,416,213) -0- -0-
------------- ------------
TREASURY BILLS-0.3%
TREASURY BILLS-0.3%
Canada Treasury Bills
Zero Coupon, 10/18/07 (a)
(cost $644,125) CAD -0- -0- CAD -0- -0-
------------- ------------
EMERGING MARKETS - NON-INVESTMENT GRADES - 0.1%
INDUSTRIAL - 0.1%
CONSUMER CYCLICAL - OTHER - 0.1%
Royal Caribbean Cruises Ltd.
8.75%, 2/02/11
(cost $133,252) US$ -0- -0- US$ -0- -0-
------------- ------------
NON-CONVERTIBLE - PREFERRED STOCKS - 0.1%
FINANCIAL INSTITUTIONS - 0.1%
REITS - 0.1%
Sovereign REIT
12.00% (d)
(cost $87,659) -0- -0- -0- -0-
------------- ------------
SHORT-TERM INVESTMENTS-4.0%
TIME DEPOSIT-4.0%
The Bank of New York
3.75%, 10/01/07 US$ 836 836,000 US$ 128 128,000
Societe Generale
4.95%, 10/01/07 -0- -0- -0- -0-
------------- ------------
(cost $9,186,000) 836,000 128,000
------------- ------------
TOTAL INVESTMENTS-100.1%
(cost $226,010,446) 89,014,198 25,882,770
OTHER ASSETS LESS LIABILITIES-(0.1%) 838,954 304,489
------------- ------------
NET ASSETS-100.0% $ 89,853,152 $ 26,187,259
------------- ------------
AllianceBernstein AllianceBernstein
Variable Products Variable Products AllianceBernstein
Series Fund AllianceBernstein Series Fund Variable Products
High Yield Variable Products Americas Government Series Fund
Portfolio Series Fund Income Portfolio Americas
Shares of High Yield Shares of Government
Principal Portfolio Principal Income Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
Mobile Telesystems Finance
9.75%, 1/30/08 (d) US$ -0- $ -0- US$ -0- $ -0-
Series REGS
9.75%, 1/30/08 (d) -0- -0- -0- -0-
Russia Agriculture Bank Rshb C
6.299%, 5/15/17 (d) -0- -0- -0- -0-
Russian Standard Finance
7.50%, 10/07/10 (d) -0- -0- -0- -0-
TNK-BP Finance SA
7.50%, 7/18/16 (d) -0- -0- -0- -0-
Tyumen Oil Co.
11.00%, 11/06/07 (d) -0- -0- -0- -0-
------------- ------------
-0- -0-
------------- ------------
TOTAL CORPORATES
(cost $3,642,281) -0- -0-
------------- ------------
MORTGAGE CMO'S - 0.9%
NON-AGENCY ADJUSTABLE RATE - 0.5%
Countrywide Alternative Loan Trust
Series 2005-62, Class 2A1
5.988%, 12/25/35 (b) -0- -0- -0- -0-
Series 2007-OA3, Class M1
5.441%, 4/25/47 (b) -0- -0- -0- -0-
Washington Mutual Mortgage Pass Through
Series 2005-AR2, Class 2A22
5.351%, 1/25/45 (b) -0- -0- -0- -0-
Series 2007-OA1, Class A1A
5.683%, 2/25/47 (b) -0- -0- -0- -0-
Series 2007-OA3, Class B1
5.581%, 4/25/47 (b) -0- -0- -0- -0-
------------- ------------
-0- -0-
------------- ------------
NON-AGENCY FIXED RATE - 0.4%
Morgan Stanley Mortgage Loan Trust
Series 2006-11, Class 1A2
6.354%, 8/25/36 (c) -0- -0- -0- -0-
Residential Accredit Loans, Inc.
Series 2007-QS1, Class 1A1
6.00%, 1/25/37 -0- -0- -0- -0-
Wells Fargo Mortgage Backed Securities Trust
Series 2006-AR11, Class A4
5.525%, 8/25/36 (c) -0- -0- -0- -0-
------------- ------------
-0- -0-
------------- ------------
AGENCY ADJUSTABLE RATE - 0.0%
Fannie Mae Grantor Trust
Series 2004-T5, Class AB4
5.582%, 5/28/35 (b) -0- -0- -0- -0-
------------- ------------
TOTAL MORTGAGE CMO'S
(cost $2,200,577) -0- -0-
------------- ------------
AGENCIES - 0.9%
CANADA - 0.9%
Canada Housing Trust No 1
3.55%, 9/15/10 (a)
(cost $1,745,461) -0- -0- 2,000 1,966,380
------------- ------------
GOVERNMENT-RELATED-U.S. AGENCIES-0.8%
AGENCY DEBENTURES-0.8%
Federal Home Loan Mortgage Corp.
4.75%, 1/19/16 (a)
(cost $1,782,649) -0- -0- -0- -0-
------------- ------------
GOVERNMENT-RELATED - PROVINCIALS - 0.7%
CANADA - 0.7%
Province of Ontario
5.60%, 6/02/35 (a) -0- -0- 300 331,374
Province of Quebec
5.50%, 12/01/14 (a) -0- -0- 600 633,883
6.00%, 10/01/12 -0- -0- 648 693,917
------------- ------------
TOTAL GOVERNMENT-RELATED - PROVINCIALS
(cost $1,416,213) -0- 1,659,174
------------- ------------
TREASURY BILLS-0.3%
TREASURY BILLS-0.3%
Canada Treasury Bills
Zero Coupon, 10/18/07 (a)
(cost $644,125) CAD -0- -0- CAD -0- -0-
------------- ------------
EMERGING MARKETS - NON-INVESTMENT GRADES - 0.1%
INDUSTRIAL - 0.1%
CONSUMER CYCLICAL - OTHER - 0.1%
Royal Caribbean Cruises Ltd.
8.75%, 2/02/11
(cost $133,252) US$ 140 149,294 US$ -0- -0-
------------- ------------
NON-CONVERTIBLE - PREFERRED STOCKS - 0.1%
FINANCIAL INSTITUTIONS - 0.1%
REITS - 0.1%
Sovereign REIT
12.00% (d)
(cost $87,659) 93 134,472 -0- -0-
------------- ------------
SHORT-TERM INVESTMENTS-4.0%
TIME DEPOSIT-4.0%
The Bank of New York
3.75%, 10/01/07 US$ 363 363,000 US$ 877 877,000
Societe Generale
4.95%, 10/01/07 -0- -0- -0- -0-
------------- ------------
(cost $9,186,000) 363,000 877,000
------------- ------------
TOTAL INVESTMENTS-100.1%
(cost $226,010,446) 35,422,503 40,084,353
OTHER ASSETS LESS LIABILITIES-(0.1%) 441,801 (2,100,831)
------------- ------------
NET ASSETS-100.0% $ 35,864,304 $ 37,983,522
------------- ------------
Pro Forma Pro Forma
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products AllianceBernstein Variable Products Variable Products
Series Fund Variable Products Series Fund U.S. Series Fund U.S.
Global Bond Series Fund Government/High Government/High
Portfolio Global Bond Grade Securities Grade Securities
Principal Portfolio Portfolio Principal Portfolio
Amount (000) (U.S. $ Value) Amount (000) (U.S. $ Value)
---------------------------------------- ----------------------------------------
Mobile Telesystems Finance
9.75%, 1/30/08 (d) US$ -0- $ -0- US$ 100 $ 100,890
Series REGS
9.75%, 1/30/08 (d) -0- -0- 25 25,138
Russia Agriculture Bank Rshb C
6.299%, 5/15/17 (d) -0- -0- 147 138,386
Russian Standard Finance
7.50%, 10/07/10 (d) -0- -0- 100 87,740
TNK-BP Finance SA
7.50%, 7/18/16 (d) -0- -0- 100 99,310
Tyumen Oil Co.
11.00%, 11/06/07 (d) -0- -0- 55 55,165
------------- ------------
-0- 1,930,548
------------- ------------
TOTAL CORPORATES
(cost $3,642,281) -0- 3,588,790
------------- ------------
MORTGAGE CMO'S - 0.9%
NON-AGENCY ADJUSTABLE RATE - 0.5%
Countrywide Alternative Loan Trust
Series 2005-62, Class 2A1
5.988%, 12/25/35 (b) -0- -0- 168 163,111
Series 2007-OA3, Class M1
5.441%, 4/25/47 (b) -0- -0- 145 118,217
Washington Mutual Mortgage Pass Through
Series 2005-AR2, Class 2A22
5.351%, 1/25/45 (b) -0- -0- 6 5,536
Series 2007-OA1, Class A1A
5.683%, 2/25/47 (b) -0- -0- 389 374,955
Series 2007-OA3, Class B1
5.581%, 4/25/47 (b) -0- -0- 449 402,464
------------- ------------
-0- 1,064,283
------------- ------------
NON-AGENCY FIXED RATE - 0.4%
Morgan Stanley Mortgage Loan Trust
Series 2006-11, Class 1A2
6.354%, 8/25/36 (c) -0- -0- 290 291,098
Residential Accredit Loans, Inc.
Series 2007-QS1, Class 1A1
6.00%, 1/25/37 -0- -0- 308 312,239
Wells Fargo Mortgage Backed Securities Trust
Series 2006-AR11, Class A4
5.525%, 8/25/36 (c) -0- -0- 397 394,899
------------- ------------
-0- 998,236
------------- ------------
AGENCY ADJUSTABLE RATE - 0.0%
Fannie Mae Grantor Trust
Series 2004-T5, Class AB4
5.582%, 5/28/35 (b) -0- -0- 50 48,059
------------- ------------
TOTAL MORTGAGE CMO'S
(cost $2,200,577) -0- 2,110,578
------------- ------------
AGENCIES - 0.9%
CANADA - 0.9%
Canada Housing Trust No 1
3.55%, 9/15/10 (a)
(cost $1,745,461) -0- -0- 2,000 1,966,380
------------- ------------
GOVERNMENT-RELATED-U.S. AGENCIES-0.8%
AGENCY DEBENTURES-0.8%
Federal Home Loan Mortgage Corp.
4.75%, 1/19/16 (a)
(cost $1,782,649) 1,810 1,791,341 1,810 1,791,341
------------- ------------
GOVERNMENT-RELATED - PROVINCIALS - 0.7%
CANADA - 0.7%
Province of Ontario
5.60%, 6/02/35 (a) -0- -0- 300 331,374
Province of Quebec
5.50%, 12/01/14 (a) -0- -0- 600 633,883
6.00%, 10/01/12 -0- -0- 648 693,917
------------- ------------
TOTAL GOVERNMENT-RELATED - PROVINCIALS
(cost $1,416,213) -0- 1,659,174
------------- ------------
TREASURY BILLS-0.3%
TREASURY BILLS-0.3%
Canada Treasury Bills
Zero Coupon, 10/18/07 (a)
(cost $644,125) CAD 665 667,126 CAD 665 667,126
------------- ------------
EMERGING MARKETS - NON-INVESTMENT GRADES - 0.1%
INDUSTRIAL - 0.1%
CONSUMER CYCLICAL - OTHER - 0.1%
Royal Caribbean Cruises Ltd.
8.75%, 2/02/11
(cost $133,252) US$ -0- -0- US$ 140 149,294
------------- ------------
NON-CONVERTIBLE - PREFERRED STOCKS - 0.1%
FINANCIAL INSTITUTIONS - 0.1%
REITS - 0.1%
Sovereign REIT
12.00% (d)
(cost $87,659) -0- -0- 93 134,472
------------- ------------
SHORT-TERM INVESTMENTS-4.0%
TIME DEPOSIT-4.0%
The Bank of New York
3.75%, 10/01/07 US$ 482 482,000 US$ 2,686 2,686,000
Societe Generale
4.95%, 10/01/07 6,500 6,500,000 6,500 6,500,000
------------- ------------
(cost $9,186,000) 6,982,000 9,186,000
------------- ------------
TOTAL INVESTMENTS-100.1%
(cost $226,010,446) 39,090,781 229,494,605
OTHER ASSETS LESS LIABILITIES-(0.1%) 214,953 (300,634)
------------- ------------
NET ASSETS-100.0% $ 39,305,734 $ 229,193,971
------------- ------------
FORWARD CURRENCY EXCHANGE CONTRACTS
Unrealized
Contract Value on U.S. $ Value at Appreciation/
Amount (000) Origination Date September 30, 2007 (Depreciation)
------------ ---------------- ------------------ --------------
Buy Contracts:
Australian Dollar
settling 11/29/07 82 $70,281 $72,161 $1,880
Canadian Dollar
settling 11/16/07 779 777,907 783,463 5,556
Canadian Dollar
settling 11/16/07 2,381 2,374,801 2,394,867 20,066
Danish Krone
settling 10/23/07 1,916 347,658 366,621 18,963
Euro
settling 10/30/07 7,749 10,588,716 11,058,464 469,748
Euro
settling 10/30/07 122 172,177 173,812 1,635
Great British Pound
settling 11/28/07 924 1,846,256 1,888,613 42,357
Japanese Yen
settling 10/16/07 48,711 427,521 424,820 (2,701)
Japanese Yen
settling 10/16/07 81,900 719,869 714,266 (5,603)
Japanese Yen
settling 11/28/07 242,508 2,106,949 2,126,164 19,215
Mexican Nuevo Peso
settling 10/04/07 218 19,802 19,922 120
Mexican Nuevo Peso
settling 10/04/07 5,038 462,947 460,579 (2,368)
Mexican Nuevo Peso
settling 10/04/07 8,605 784,531 786,610 2,079
New Zealand Dollar
settling 11/19/07 565 402,452 425,921 23,469
Norwegian Krone
settling 11/13/07 8,364 1,499,599 1,550,880 51,281
Swiss Franc
settling 10/15/07 265 222,538 228,002 5,464
Sale Contracts:
Canadian Dollar
settling 11/16/07 57 54,657 57,719 (3,062)
Canadian Dollar
settling 11/16/07 3,691 3,514,271 3,712,829 (198,558)
Euro
settling 10/30/07 117 160,208 167,163 (6,955)
Euro
settling 10/30/07 330 456,939 470,526 (13,587)
Euro
settling 10/30/07 1,002 1,399,910 1,429,212 (29,302)
Euro
settling 10/30/07 20 28,106 28,379 (273)
Japanese Yen
settling 10/16/07 99,946 854,708 871,655 (16,947)
Japanese Yen
settling 10/16/07 123,201 1,063,326 1,074,469 (11,143)
Mexican Nuevo Peso
settling 10/04/07 36 3,313 3,296 17
Mexican Nuevo Peso
settling 10/04/07 6,078 544,998 555,652 (10,654)
Mexican Nuevo Peso
settling 10/04/07 74,403 6,760,602 6,801,662 (41,060)
New Zealand Dollar
settling 11/19/07 824 586,762 621,822 (35,060)
Norwegian Krone
settling 11/13/07 7,623 1,323,645 1,413,450 (89,805)
Singapore Dollar
settling 10/29/07 1,283 845,752 865,118 (19,366)
Swedish Krona
settling 12/11/07 4,946 759,167 769,121 (9,954)
CREDIT DEFAULT SWAP CONTRACTS
Notional Unrealized
Amount Interest Termination Appreciation/
Swap Counterparty & Referenced Obligation (000) Rate Date (Depreciation)
-----------------------------------------------------------------------------------------------------------------------------------
Sale Contracts:
Citigroup Global Markets, Inc. (Federal Republic of Brazil 12.25% 3/6/30) $600 3.09% 8/20/10 $43,316
Citigroup Global Markets, Inc. (Republic of Philippines 10.625% 3/16/25) 130 4.95 3/20/09 8,396
JPMorgan Chase (OAO Gazprom 10.50% 10/21/09) 360 1.04 10/20/10 3,192
Lehman Brothers (Republic of Venezuela 9.25% 9/15/27) 280 0.69 4/20/08 (1,351)
INTEREST RATE SWAP TRANSACTIONS
Rate Type
-----------------------------
Notional Payments Payments Unrealized
Amount Termination made by received by Appreciation/
Swap Counterparty (000) Date the Portfolio the Portfolio (Depreciation)
--------------------------------------------------------------------------------------------------------------------------
Lehman Brothers $3,505 11/2/07 3 month LIBOR+ 4.814% $35,935
Lehman Brothers 1,500 12/4/11 3 month LIBOR+ 4.8504% 19,038
Lehman Brothers 1,000 3/2/16 3 month LIBOR+ 5.0625% (5,002)
<table>
REVERSE REPURCHASE AGREEMENTS
<caption>
Broker Interest Rate Maturity Amount
--------------------------------------------------------------------------------------------
Greenwich Capital 4.65% 10/3/07 $ 5,866,981
Greenwich Capital 4.65 10/3/07 1,501,783
------------
$ 7,368,764
</table>
----------
(a) Position, or a portion thereof, has been segregated to collateralize
forward currency exchange contracts. The aggregate market value of these
securities amounted to $58,236,581.
(b) Floating Rate Security. Stated interest rate was in effect at September 30,
2007.
(c) Variable rate coupon, rate shown as of September 30, 2007.
(d) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities are considered liquid and may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At September 30, 2007, the aggregate market value of these
securities amounted to $19,859,482 or 8.7% of net assets.
(e) Coupon rate adjusts periodically based upon a predetermined schedule.
Stated interest rate in effect at September 30, 2007.
(f) Pay-In-Kind Payments (PIK).
(g) Indicates a security that has a zero coupon that remains in effect until a
predetermined date at which time the stated coupon rate becomes effective
until final maturity.
(h) Illiquid security, valued at fair value.
(i) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security, which represents 0.002% of net assets as of
September 30, 2007, is considered illiquid and restricted.
Acquisition Acquisition Market Percentage of
Restricted Securities Date Cost Value Net Assets
-------------------------------------------------------------------------------------------------------------------
Russell-Stanley Holdings, Inc. 11/09/01-6/06/05 $463,798 $4,566 0.002%
9.00%, 11/30/08
(j) Security is in default and is non-income producing.
(k) Position, or a portion thereof, has been segregated to collateralize
reverse repurchase agreements. The aggregate market value of these
securities amounted to $7,384,074.
Currency Abbreviations:
AUD - Australian Dollar
CAD - Canadian Dollar
EUR - Euro Dollar
GBP - Great British Pound
JPY - Japanese Yen
MXN - Mexican Peso
NZD - New Zealand Dollar
SEK - Swedish Krona
SGD - Singapore Dollar
Glossary:
LIBOR - London Interbank Offered Rates
TIPS - Treasury Inflation Protected Security
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES
ALLIANCEBERNSTEIN VARIABLE PRODUCTS
SERIES FUND U.S. GOVERNMENT/HIGH
GRADE SECURITIES PORTFOLIO
AllianceBernstein Variable Products Series Fund U.S. Government/High Grade Securities Portfolio
AllianceBernstein Variable Products Series Fund Global Dollar Government Portfolio
AllianceBernstein Variable Products Series Fund High Yield Portfolio
AllianceBernstein Variable Products Series Fund Americas Government Income Portfolio
September 30, 2007 (unaudited AllianceBernstein Variable Products Series Fund Global Bond Portfolio
------------------------------------------------------------------------------------------------------------------------------------
AllianceBernstein AllianceBernstein
Variable Products Variable Products AllianceBernstein
Series Fund Series Fund Variable Products
U.S. Government/High Global Dollar Series Fund
Grade Securities Government High Yield
Portfolio Portfolio Portfolio
--------------------- ---------------- -----------------
ASSETS
Investments in securities, at value (cost $226,010,446).................. $ 89,014,198 $ 25,882,770 $ 35,422,503
Cash..................................................................... 160,435 14,313 24
Foreign cash, at value (cost $118,879)................................... -0- -0- -0-
Unrealized appreciation of interest rate swap contracts.................. 54,973 -0- -0-
Unrealized appreciation of credit default swap contracts................. -0- 54,904 -0-
Unrealized appreciation of forward currency exchange contracts........... -0- -0- -0-
Receivable for investment securities sold and foreign currency
contracts................................................................ 1,797,580 9,316 -0-
Dividends and interest receivable........................................ 800,160 435,202 720,922
Receivable for capital stock sold........................................ 8,296 1,449 14,503
--------------- -------------- --------------
Total assets............................................................. 91,835,642 26,397,954 36,157,952
--------------- -------------- --------------
LIABILITIES
Due to custodian......................................................... -0- -0- -0-
Unrealized depreciation of interest rate swap contracts.................. 5,002 -0- -0-
Unrealized depreciation of credit default swap contracts................. -0- 1,351 -0-
Unrealized depreciation of forward currency exchange contracts........... -0- -0- -0-
Payable for investment securities purchased and foreign currency
contracts................................................................ 1,600,560 13,130 20,000
Payable for capital stock redeemed....................................... 191,440 47,144 127,376
Custodian fee payable.................................................... 43,098 49,281 37,086
Printing fee payable..................................................... 39,379 22,615 20,983
Audit and legal fees payable............................................. 35,960 41,787 48,334
Advisory fee payable..................................................... 32,944 10,716 14,603
Administrative fee payable............................................... 21,373 21,335 21,373
Distribution fee payable................................................. 4,080 1,081 1,956
Transfer Agent fee payable............................................... 58 58 58
Reverse repurchase agreements............................................ -0- -0- -0-
Accrued expenses......................................................... 8,596 2,197 1,879
--------------- -------------- --------------
Total liabilities........................................................ 1,982,490 210,695 293,648
--------------- -------------- --------------
NET ASSETS............................................................... $ 89,853,152 $ 26,187,259 $ 35,864,304
--------------- -------------- --------------
COMPOSITION OF NET ASSETS
Capital stock, at par.................................................... $ 7,768 $ 1,988 $ 5,116
Additional paid-in capital............................................... 87,821,776 23,499,727 49,735,251
Undistributed net investment income/distributions in excess of net
investment income........................................................ 3,321,620 973,928 1,886,142
Accumulated net realized gain (loss) on investment and foreign
currency transactions......................................... (1,138,881) 347,655 (14,835,294)
Net unrealized appreciation (depreciation) of investments
and foreign currency denominated assets and liabilities.................. (159,131) 1,363,961 (926,911)
--------------- -------------- --------------
$ 89,853,152 $ 26,187,259 $ 35,864,304
--------------- -------------- --------------
CLASS A SHARES
Net Assets............................................................... $ 69,267,676 $ 20,902,760 $ 26,254,269
Shares of capital stock outstanding...................................... 5,977,348 1,585,450 3,743,544
--------------- -------------- --------------
Net asset value per share................................................ $ 11.59 $ 13.18 $ 7.01
--------------- -------------- --------------
CLASS B SHARES
Net Assets............................................................... $ 20,585,476 $ 5,284,499 $ 9,610,035
Shares of capital stock outstanding...................................... 1,791,143 402,392 1,372,624
--------------- -------------- --------------
Net asset value per share................................................ $ 11.49 $ 13.13 $ 7.00
--------------- -------------- --------------
Pro Forma
AllianceBernstein
AllianceBernstein AllianceBernstein Variable Products
Variable Products Variable Products Series Fund U.S.
Series Fund Series Fund Government/High
Americas Government Global Bond Grade Securites
Income Portfolio Portfolio Adjustments Portfolio
---------------- ----------- ----------- ---------------
ASSETS
Investments in securities, at value (cost $226,010,446).......... $ 40,084,353 $ 39,090,781 $ -0- $ 229,494,605
Cash............................................................. 363 -0- -0- 175,135
Foreign cash, at value (cost $118,879)........................... 35,691 85,470 -0- 121,161
Unrealized appreciation of interest rate swap contracts.......... -0- -0- -0- 54,973
Unrealized appreciation of credit default swap contracts......... -0- -0- -0- 54,904
Unrealized appreciation of forward currency exchange contracts... 22,145 639,705 -0- 661,850
Receivable for investment securities sold and foreign currency
contracts........................................................ 7,515,529 157,818 -0- 9,480,243
Dividends and interest receivable................................ 489,376 312,084 -0- 2,757,744
Receivable for capital stock sold................................ 436 30 -0- 24,714
------------- -------------- ------------ --------------
Total assets..................................................... 48,147,893 40,285,888 -0- 242,825,329
------------- -------------- ------------ --------------
LIABILITIES
Due to custodian................................................. -0- 438,404 -0- 438,404
Unrealized depreciation of interest rate swap contracts.......... -0- -0- -0- 5,002
Unrealized depreciation of credit default swap contracts......... -0- -0- -0- 1,351
Unrealized depreciation of forward currency exchange contracts... 241,986 254,412 -0- 496,398
Payable for investment securities purchased and foreign currency
contracts........................................................ 2,393,663 -0- -0- 4,027,353
Payable for capital stock redeemed............................... 31,884 133,434 -0- 531,278
Custodian fee payable............................................ 33,457 36,218 -0- 199,140
Printing fee payable............................................. 17,998 33,073 -0- 134,048
Audit and legal fees payable..................................... 34,666 45,885 -0- 206,632
Advisory fee payable............................................. 15,616 14,443 -0- 88,322
Administrative fee payable....................................... 21,335 21,335 -0- 106,751
Distribution fee payable......................................... 1,287 2,351 -0- 10,755
Transfer Agent fee payable....................................... 58 58 -0- 290
Reverse repurchase agreements.................................... 7,368,764 -0- -0- 7,368,764
Accrued expenses................................................. 3,657 541 -0- 16,870
------------- -------------- ------------ --------------
Total liabilities................................................ 10,164,371 980,154 -0- 13,631,358
------------- -------------- ------------ --------------
NET ASSETS....................................................... $ 37,983,522 $ 39,305,734 $ -0- $ 229,193,971
------------- -------------- ------------ --------------
COMPOSITION OF NET ASSETS
Capital stock, at par............................................ $ 3,142 $ 3,286 $ -0- $ 21,300
Additional paid-in capital....................................... 35,884,063 38,651,026 -0- 235,591,843
Undistributed net investment income/distributions in excess
of net investment income......................................... (2,561,261) 6,721,461 -0- 10,341,890
Accumulated net realized gain (loss) on investment and foreign
currency transactions............................................ 2,457,269 (7,362,663) -0- (20,531,914)
Net unrealized appreciation (depreciation) of investments and
foreign currency denominated assets and liabilities.............. 2,200,309 1,292,624 -0- 3,770,852
------------- -------------- ------------ --------------
$ 37,983,522 $ 39,305,734 $ -0- $ 229,193,971
------------- -------------- ------------ --------------
CLASS A SHARES
Net Assets....................................................... $ 31,738,114 $ 27,807,775 $ 175,970,594
Shares of capital stock outstanding.............................. 2,625,472 2,318,618 (1,068,540)* 15,181,892
------------- -------------- ------------ --------------
Net asset value per share........................................ $ 12.09 $ 11.99 $ 11.59
------------- -------------- --------------
CLASS B SHARES
Net Assets....................................................... $ 6,245,408 $ 11,497,959 $ 53,223,377
Shares of capital stock outstanding.............................. 516,531 967,535 (419,139)* 4,631,086
------------- -------------- ------------ --------------
Net asset value per share........................................ $ 12.09 $ 11.88 $ 11.49
------------- -------------- --------------
See Notes to Pro Forma AllianceBernstein Variable Products Series Fund U.S. Government/High Grade Securities Portfolio Financial
Statements.
* The pro forma net asset value per share for the combined Portfolio assumes the issuance of High Grade shares to the Acquired
Portfolio shareholders in connection with the Acquisitions. The number of High Grade shares assumed to be issued is equal to the net
asset value of the Acquired Portfolios divided by the net asset value per share of High Grade as of September 30, 2007.
<table>
PRO FORMA STATEMENT OF OPERATIONS
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
AllianceBernstein Variable Products Series Fund U.S. Government/High Grade Securities Portfolio
AllianceBernstein Variable Products Series Fund Global Dollar Government Portfolio
AllianceBernstein Variable Products Series Fund High Yield Portfolio
AllianceBernstein Variable Products Series Fund Americas Government Income Portfolio
AllianceBernstein Variable Products Series Fund Global Bond Portfolio
Twelve Months Ended September 30, 2007 (unaudited)
-----------------------------------------------------------------------------------------------------------------------------------
<caption>
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products Variable Products Variable Products
Series Fund Series Fund Series Fund
U.S. Government/High Global Dollar High Yield
Grade Securities Portfolio Government Portfolio Portfolio
-------------------------- -------------------- ---------
INVESTMENT INCOME
Interest (net of foreign taxes
withheld of $0, $500, $0, $4,841
and $0, respectively).................... $ 4,844,937 $ 1,915,141 $ 3,133,129
Dividends................................ -0- -0- 23,880
----------------- -------------------- -----------------
4,844,937 1,915,141 3,157,009
----------------- -------------------- -----------------
EXPENSES
Advisory fee (see Note C)................ 416,784 139,842 200,852
Distribution fee - Class B............... 53,720 13,901 26,105
Transfer agency.......................... 4,481 3,605 3,323
Custodian................................ 134,165 116,343 137,187
Administrative........................... 98,533 98,495 98,533
Audit and legal.......................... 50,459 59,580 60,246
Printing................................. 14,174 19,756 24,337
Directors' fees.......................... 2,102 2,132 2,132
Miscellaneous............................ 2,683 6,151 4,582
----------------- -------------------- -----------------
Total expenses before interest expense... 777,101 459,805 557,297
Interest expense......................... -0- 23,713 -0-
----------------- -------------------- -----------------
Total expenses........................... 777,101 483,518 557,297
----------------- -------------------- -----------------
Net investment income.................... 4,067,836 1,431,623 2,599,712
----------------- -------------------- -----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain (loss) on:
Investment transactions................ 226,101 508,563 695,020
Swap contracts......................... (51,330) 119,748 -0-
Foreign currency transactions.......... -0- -0- 9,232
Net change in unrealized
appreciation/depreciation of:
Investments............................ (349,124) (101,474) (766,120)
Swap contracts......................... 42,149 (82,840) -0-
Foreign currency denominated assets
and liabilities........................ -0- -0- (197)
----------------- -------------------- -----------------
Net gain (loss) on investment and
foreign currency transactions............ (132,204) 443,997 (62,065)
----------------- -------------------- -----------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS............................... $ 3,935,632 $ 1,875,620 $ 2,537,647
----------------- -------------------- -----------------
-----------------------------------------------------------------------------------------------------------------------------------
</table>
<table>
<caption>
Pro Forma
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products Variable Products Variable Products
Series Fund Series Fund Series Fund
Americas Government Global Bond U.S. Government/High
Income Portfolio Portfolio Adjustments Grade Securities Portfolio
---------------- --------- ----------- --------------------------
INVESTMENT INCOME
Interest (net of foreign taxes
withheld of $0, $500, $0, $4,841
and $0, respectively).................... $ 2,858,622 $ 1,591,071 $ -0- $ 14,342,900
Dividends................................ -0- -0- -0- 23,880
----------------- ----------------- --------------- -----------------
2,858,622 1,591,071 -0- 14,366,780
----------------- ----------------- --------------- -----------------
EXPENSES
Advisory fee (see Note C)................ 203,553 183,029 (70,572) 1,073,488 (a)
Distribution fee - Class B............... 17,187 30,076 336,992 477,981 (b)
Transfer agency.......................... 3,250 4,386 (14,962) 4,083 (c)
Custodian................................ 111,523 136,522 (459,840) 175,900 (c)
Administrative........................... 98,495 98,495 (398,551) 94,000 (c)
Audit and legal.......................... 49,283 64,693 (227,261) 57,000 (c)
Printing................................. -0- 34,214 (52,481) 40,000 (c)
Directors' fees.......................... 2,134 2,252 (8,430) 2,322 (c)
Miscellaneous............................ 10,513 1,670 (17,599) 8,000 (c)
----------------- ----------------- --------------- -----------------
Total expenses before interest expense... 495,938 555,337 (912,704) 1,932,774
Interest expense......................... 488,921 -0- -0- 512,634
----------------- ----------------- --------------- -----------------
Total expenses........................... 984,859 555,337 (912,704) 2,445,408
----------------- ----------------- --------------- -----------------
Net investment income.................... 1,873,763 1,035,734 912,704 11,921,372
----------------- ----------------- --------------- -----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain (loss) on:
Investment transactions................ 196,050 18,064 -0- 1,643,798
Swap contracts......................... -0- -0- -0- 68,418
Foreign currency transactions.......... 266,582 1,047,992 -0- 1,323,806
Net change in unrealized
appreciation/depreciation of:
Investments............................ (201,572) 837,306 -0- (580,984)
Swap contracts......................... -0- -0- -0- (40,691)
Foreign currency denominated assets (193,711) 425,988 -0- 232,080
and liabilities........................----------------- ----------------- --------------- -----------------
Net gain (loss) on investment and 67,349 2,329,350 -0- 2,646,427
foreign currency transactions............----------------- ----------------- --------------- -----------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS............................... $ 1,941,112 $ 3,365,084 $ 912,704 $ 14,567,799
----------------- ----------------- --------------- -----------------
------------------------------------------------------------------------------------------------------------------------------
(a) Advisory fee based on an annual rate of .45% of the first $2.5 billion, .40% of the next $2.5 billion and .35% in excess of
$5 billion, of the Portfolio's average daily net assets.
(b) Distribution fee based on an annual rate of .25% of the Portfolio's average daily net assets attributable to Class B shares.
(c) Expenses are based on one fund.
See Notes to Pro Forma AllianceBernstein Variable Products Series Fund U.S. Government/High Grade Securities Portfolio Financial
Statements.
</table>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND
U.S. GOVERNMENT/HIGH GRADE SECURITIES PORTFOLIO
September 30, 2007 (unaudited)
NOTE A: General
The pro forma High Grade financial statements give effect to the proposed
acquisitions (the "Acquisitions") of the assets and liabilities of each of
Global Dollar, High Yield, AGI and Global Bond (collectively, the "Acquired
Portfolios") by High Grade pursuant to Plans of Acquisition and Liquidation. The
Acquisitions would be accomplished by a tax-free exchange of the assets and
liabilities of each Global Dollar, High Yield, AGI and Global Bond for shares of
High Grade.
The AllianceBernstein Variable Products Series Fund (the "Fund") was
incorporated under the laws in the state of Maryland on November 17, 1987. High
Grade's unaudited pro forma Portfolio of Investments, Statement of Assets and
Liabilities and Statement of Operations are prepared as though the Acquisitions
were effective for the period October 1, 2006 - September 30, 2007. You should
review these pro forma financial statements in conjunction with High Grade's
historical financial statements, which are included in High Grade's Statement of
Additional Information. High Grade's pro forma Statement of Operations reflects
the assumption that certain expenses would be lower for the combined Portfolio
as a result of the Acquisitions. Each Portfolio will bear the expenses of the
Acquisitions on a relative net asset basis, including the cost of proxy
solicitation, except that each will bear its own costs associated with the
disposition of any assets or liabilities not being transferred to High Grade in
connection with the Acquisitions.
NOTE B: Significant Accounting Policies
High Grade's pro forma financial statements have been prepared in conformity
with U.S. generally accepted accounting principles, which require management to
make certain estimates and assumptions that affect the reported amounts of
assets and liabilities in the financial statements and amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
1. Security Valuation
Portfolio securities are valued at their current market value determined on the
basis of market quotations or, if market quotations are not readily available or
are deemed unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors.
In general, the market value of securities which are readily available and
deemed reliable are determined as follows. Securities listed on a national
securities exchange (other than securities listed on The NASDAQ Stock Market,
Inc. ("NASDAQ")) or on a foreign securities exchange are valued at the last sale
price at the close of the exchange or foreign securities exchange. If there has
been no sale on such day, the securities are valued at the mean of the closing
bid and asked prices on such day. Securities listed on more than one exchange
are valued by reference to the principal exchange on which the securities are
traded; securities listed only on NASDAQ are valued in accordance with the
NASDAQ Official Closing Price; listed put or call options are valued at the last
sale price. If there has been no sale on that day, such securities will be
valued at the closing bid prices on that day; open futures contracts and options
thereon are valued using the closing settlement price or, in the absence of such
a price, the most recent quoted bid price. If there are no quotations available
for the day of valuation, the last available closing settlement price is used;
securities traded in the over-the-counter market, ("OTC") are valued at the mean
of the current bid and asked prices as reported by the National Quotation Bureau
or other comparable sources; U.S. Government securities and other debt
instruments having 60 days or less remaining until maturity are valued at
amortized cost if their original maturity was 60 days or less; or by amortizing
their fair value as of the 61st day prior to maturity if their original term to
maturity exceeded 60 days; fixed-income securities, including mortgage backed
and asset backed securities, may be valued on the basis of prices provided by a
pricing service or at a price obtained from one or more of the major
broker/dealers. In cases where broker/dealer quotes are obtained,
AllianceBernstein L.P. (the "Adviser") may establish procedures whereby changes
in market yields or spreads are used to adjust, on a daily basis, a recently
obtained quoted price on a security; and OTC and other derivatives are valued on
the basis of a quoted bid price or spread from a major broker/dealer in such
security.
Securities for which market quotations are not readily available (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not limited
to, information obtained by contacting the issuer, analysts, analysis of the
issuer's financial statements or other available documents. In addition, the
Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because, most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities.
2. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward currency exchange contracts are translated into U.S. Dollars at the mean
of the quoted bid and asked prices of such currencies against the U.S. Dollar.
Purchases and sales of portfolio securities are translated into U.S. Dollars at
the rates of exchange prevailing when such securities were acquired or sold.
Income and expenses are translated into U.S. Dollars at rates of exchange
prevailing when accrued.
Net realized gain or loss on foreign currency transactions represents foreign
exchange gains and losses from sales and maturities of foreign fixed income
investments, foreign currency exchange contracts, holding of foreign currencies,
currency gains or losses realized between the trade and settlement dates on
foreign investment transactions, and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on High Grade's books
and the U.S. Dollar equivalent amounts actually received or paid. Net unrealized
currency gains and losses from valuing foreign currency denominated assets and
liabilities at period end exchange rates are reflected as a component of net
unrealized appreciation or depreciation of investments and foreign currency
denominated assets and liabilities.
3. Taxes
It is the policy of High Grade to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required. High Grade may be subject to taxes imposed by countries in which it
invests. Such taxes are generally based on income and/or capital gains earned or
repatriated. Taxes are accrued and applied to net investment income, net
realized gains and net unrealized appreciation/depreciation as such income
and/or gains are earned.
4. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as High Grade is
informed of the dividend. Interest income is accrued daily. Investment
transactions are accounted for on the trade date securities are purchased or
sold. Investment gains and losses are determined on the identified cost basis.
High Grade amortizes premiums and accretes discounts as adjustments to interest
income.
5. Class Allocations
All income earned and expenses incurred by High Grade are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in High Grade represented by the net assets of such class, except for class
specific expenses which are allocated to the respective class. Realized and
unrealized gains and losses are allocated among the various share classes based
on their respective net assets.
6. Dividends and Distributions
High Grade declares and distributes dividends and distributions from net
investment income and net realized gains, respectively, if any, at least
annually. Income dividends and capital gains distributions to shareholders are
recorded on the ex-dividend date.
Income dividends and capital gains distributions are determined in accordance
with federal tax regulations and may differ from those determined in accordance
with U.S. generally accepted accounting principles. To the extent these
differences are permanent, such amounts are reclassified within the capital
accounts based on their federal tax basis treatment; temporary differences do
not require such reclassification.
NOTE C: Advisory Fee and Other Transactions with Affiliates
Under the terms of the investment advisory agreement, High Grade pays the
Adviser an advisory fee at an annual rate of .45% of the first $2.5 billion,
..40% of the next $2.5 billion and .35% in excess $5 billion, of High Grade's
average daily net assets. The fee is accrued daily and paid monthly.
Pursuant to the advisory agreement, High Grade paid $94,000 to the Adviser
representing the cost of certain legal and accounting services provided to the
Portfolio by the Adviser for the twelve months ended September 30, 2007.
High Grade compensates AllianceBernstein Investor Services, Inc., a wholly-owned
subsidiary of the Adviser, under a Transfer Agency Agreement for providing
personnel and facilities to perform transfer agency services for High Grade.
NOTE D: Distribution Plan
High Grade has adopted a Distribution Plan (the "Plan") for Class B shares
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Plan,
High Grade pays distribution and servicing fees to AllianceBernstein
Investments, Inc. (the "Distributor"), a wholly owned subsidiary of the Adviser,
at an annual rate of up to .50% of High Grade's average daily net assets
attributable to Class B shares. The fees are accrued daily and paid monthly. The
Board of Directors currently limits payments under the Plan to .25% of High
Grade's average daily net assets attributable to Class B shares. The Plan
provides that the Distributor will use such payments in their entirety for
distribution assistance and promotional activities.
NOTE E: Capital Stock
The pro forma net asset value per share assumes the issuance of High Grade
shares to Acquired Portfolio shareholders in connection with the Acquisitions.
The number of shares assumed to be issued is equal to the net asset value of the
Acquired Portfolio divided by the net asset value per share of High Grade as of
September 30, 2007. The pro forma number of shares outstanding, by class for the
combined entity consists of the following at September 30, 2007.
Additional Shares
Shares of Assumed Issued Total Shares
High Grade with the Outstanding
Class of Shares Pre-Combination Acquisitions Post-Acquisitions
--------------- ------------------- ------------------ -----------------
Class A 5,977,348 9,204,544 15,181,892
Class B 1,791,143 2,839,943 4,631,086
SK 00250 0456 853881v1
PART C
OTHER INFORMATION
Item 15. Indemnification
It is the Registrant's policy to indemnify its directors and officers,
employees and other agents to the maximum extent permitted by Section 2-418 of
the General Corporation Law of the State of Maryland, which is incorporated by
reference herein and as set forth in Article EIGHTH of Registrant's Charter,
filed as Exhibit (a), Article IX of the Registrant's Amended and Restated
By-Laws filed as Exhibit (b) and Section 9 of the Distribution Services
Agreement filed as Exhibit (e)(1) and Class B Distribution Services Agreement
filed as Exhibit (e)(2) in response to Item 23 of the Registrant's Registration
Statement filed on Form N-1A (filed Nos. 33-18647 and 811-5398), as set forth
below. The Adviser's liability for any loss suffered by the Registrant or its
shareholders is set forth in Section 4 of the Advisory Agreement filed as
Exhibit (d)(1) in response to Item 23 of the Registrant's Registration Statement
filed on Form N-1A (filed Nos. 33-18647 and 811-5398), as set forth below.
Article EIGHTH of the Registrant's Charter reads as follows:
EIGHTH: (1) To the maximum extent that Maryland law in effect
from time to time permits limitation of the liability of
directors and officers of a corporation, no present or former
director or officer of the Corporation shall be liable to the
Corporation or its stockholders for money damages.
(2) The Corporation shall have the power, to the maximum extent
permitted by Maryland law in effect from time to time, to
obligate itself to indemnify, and to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to, (a)
any individual who is a present or former director or officer of
the Corporation or (b) any individual who, while a director or
officer of the Corporation and at the request of the Corporation,
serves or has served as a director, officer, partner or trustee
of another corporation, real estate investment trust,
partnership, joint venture, trust, employee benefit plan or any
other enterprise from and against any claim or liability to which
such person may become subject or which such person may incur by
reason of his status as a present or former director or officer
of the Corporation. The Corporation shall have the power, with
the approval of the Board of Directors, to provide such
indemnification and advancement of expenses to a person who
served a predecessor of the Corporation in any of the capacities
described in (a) or (b) above and to any employee or agent of the
Corporation or a predecessor of the Corporation.
(3) The provisions of this Article EIGHTH shall be subject to the
limitations of the Investment Company Act.
(4) Neither the amendment nor repeal of this Article EIGHTH, nor
the adoption or amendment of any other provision of the Charter
or Bylaws inconsistent with this Article EIGHTH, shall apply to
or affect in any respect the applicability of the preceding
sections of this Article EIGHTH with respect to any act or
failure to act which occurred prior to such amendment, repeal or
adoption.
The Advisory Agreement between the Registrant and
AllianceBernstein L.P. provides that AllianceBernstein L.P. will
not be liable under such agreements for any mistake of judgment
or in any event whatsoever except for lack of good faith and that
nothing therein shall be deemed to protect, or purport to
protect, AllianceBernstein L.P. against any liability to
Registrant or its security holders to which it would otherwise be
subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties thereunder, or by
reason of reckless disregard of its obligations or duties
thereunder.
The Distribution Services Agreement between the Registrant and
AllianceBernstein Investments, Inc. ("ABI") provides that the
Registrant will indemnify, defend and hold ABI, and any person
who controls it within the meaning of Section 15 of the
Securities Act of 1933, as amended (the "Securities Act"), free
and harmless from and against any and all claims, demands,
liabilities and expenses which ABI or any controlling person may
incur arising out of or based upon any alleged untrue statement
of a material fact contained in Registrant's Registration
Statement or Prospectus or Statement of Additional Information or
arising out of, or based upon any alleged omission to state a
material fact required to be stated in either thereof or
necessary to make the statements in any thereof not misleading,
provided that nothing therein shall be so construed as to protect
ABI against any liability to Registrant or its security holders
to which it would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
its duties, or be reason of reckless disregard of its obligations
or duties thereunder. The foregoing summaries are qualified by
the entire text of Registrant's Articles of Incorporation, the
Advisory Agreement between the Registrant and AllianceBernstein
L.P. and the Distribution Services Agreement between the
Registrant and ABI.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that,
in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
In accordance with Release No. IC-11330 (September 2, 1980), the
Registrant will indemnify its directors, officers, investment
manager and principal underwriters only if (1) a final decision
on the merits was issued by the court or other body before whom
the proceeding was brought that the person to be indemnified (the
indemnitee) was not liable by reason or willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office (disabling conduct) or (2)
a reasonable determination is made, based upon a review of the
facts, that the indemnitee was not liable by reason of disabling
conduct, by (a) the vote of a majority of a quorum of the
directors who are neither interested persons of the Registrant as
defined in section 2(a)(19) of the Investment Company Act of 1940
nor parties to the proceeding (disinterested, non-party
directors), or (b) an independent legal counsel in a written
opinion. The Registrant will advance attorneys fees or other
expenses incurred by its directors, officers, investment adviser
or principal underwriters in defending a proceeding, upon the
undertaking by or on behalf of the indemnitee to repay the
advance unless it is ultimately determined that he is entitled to
indemnification and, as a condition to the advance, (1) the
indemnitee shall provide a security for his undertaking, (2) the
Registrant shall be insured against losses arising by reason of
any lawful advances, or (3) a majority of a quorum of
disinterested, non-party directors of the Registrant, or an
independent legal counsel in a written opinion, shall determine,
based on a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that
the indemnitee ultimately will be found entitled to
indemnification.
ARTICLE IX of the Registrant's Amended and Restated By-laws reads
as follows:
ARTICLE IX. Indemnification.
To the maximum extent permitted by Maryland law in effect from
time to time, the Corporation shall indemnify and, without
requiring a preliminary determination of the ultimate entitlement
to indemnification, shall pay or reimburse reasonable expenses in
advance of final disposition of a proceeding to (a) any
individual who is a present or former director or officer of the
Corporation and who is made or threatened to be made a party to
the proceeding by reason of his or her service in any such
capacity or (b) any individual who, while a director or officer
of the Corporation and at the request of the Corporation, serves
or has served as a director, officer, partner or trustee of
another corporation, real estate investment trust, partnership,
joint venture, trust, employee benefit plan or other enterprise
and who is made or threatened to be made a party to the
proceeding by reason of his or her service in any such capacity.
The Corporation may, with the approval of its Board of Directors
or any duly authorized committee thereof, provide such
indemnification and advance for expenses to a person who served a
predecessor of the Corporation in any of the capacities described
in (a) or (b) above and to any employee or agent of the
Corporation or a predecessor of the Corporation. The termination
of any claim, action, suit or other proceeding involving any
person, by judgment, settlement (whether with or without court
approval) or conviction or upon a plea of guilty or nolo
contendere, or its equivalent, shall not create a presumption
that such person did not meet the standards of conduct required
for indemnification or payment of expenses to be required or
permitted under Maryland law, these Bylaws or the Charter. Any
indemnification or advance of expenses made pursuant to this
Article shall be subject to applicable requirements of the 1940
Act. The indemnification and payment of expenses provided in
these Bylaws shall not be deemed exclusive of or limit in any way
other rights to which any person seeking indemnification or
payment of expenses may be or may become entitled under any
bylaw, regulation, insurance, agreement or otherwise.
Neither the amendment nor repeal of this Article, nor the
adoption or amendment of any other provision of the Bylaws or
Charter inconsistent with this Article, shall apply to or affect
in any respect the applicability of the preceding paragraph with
respect to any act or failure to act which occurred prior to such
amendment, repeal or adoption.
The Registrant participates in a joint directors and officers
liability insurance policy issued by the ICI Mutual Insurance
Company. Coverage under this policy has been extended to
directors, trustees and officers of the investment companies
managed by AllianceBernstein L.P. Under this policy, outside
trustees and directors are covered up to the limits specified for
any claim against them for acts committed in their capacities as
trustee or director. A pro rata share of the premium for this
coverage is charged to each investment company and to the
Adviser.
ITEM 16. EXHIBITS:
(1) Articles of Amendment and Restatement of the Registrant dated
February 1, 2006 - Incorporated by reference to Exhibit (a)(2) to
Post-Effective Amendment No. 41 of Registrant's Registration
Statement on Form N-1A (File Nos. 33-18647 and 811-5398) filed
with the Securities and Exchange Commission on March 1, 2006.
(2) Amended and Restated By-Laws of the Registrant - Incorporated by
reference to Exhibit 99.77Q1 - Other Exhibits to Form NSAR-A for
the Registrant filed with the Securities and Exchange Commission
on August 29, 2006.
(3) Not applicable.
(4) Form of Plan of Acquisition and Liquidation between
AllianceBernstein U.S Government/High Grade Securities Portfolio
and AllianceBernstein High Yield Portfolio, AllianceBernstein
Global Bond Portfolio, AllianceBernstein Americas Government
Income Portfolio and AllianceBernstein Global Dollar Government
Portfolio, each a series of AllianceBernstein Variable Products
Series Fund, Inc. - Constitutes Appendix F to Part A hereof.
(5) Not applicable.
(6) (a) Form of Investment Advisory Agreement between Registrant and
AllianceBernstein L.P. - Incorporated by reference to
Exhibit (d)(1) to Post-Effective Amendment No. 40 of
Registrant's Registration Statement on Form N-1A (File Nos.
33-18647 and 811-5398) filed with the Securities and
Exchange Commission on April 27, 2005.
(b) Sub-Advisory Agreement between AllianceBernstein L.P. and
Law, Dempsey & Company Limited, relating to the Global Bond
Portfolio - Incorporated by reference to Exhibit (5)(b) to
Post-Effective Amendment No. 22 of Registrant's Registration
Statement on Form N-1A (File Nos. 33-18647 and 811-5398)
filed with the Securities and Exchange Commission on April
29, 1998.
(7) (a) Distribution Services Agreement between the Registrant and
AllianceBernstein Investments, Inc. - Incorporated by
reference to Exhibit (6) to Post-Effective Amendment No. 22
of Registrant's Registration Statement on Form N-1A (File
Nos. 33-18647 and 811-5398) filed with the Securities and
Exchange Commission on April 29, 1998.
(b) Class B Distribution Services Agreement between the
Registrant and AllianceBernstein Investments, Inc. -
Incorporated by reference to Exhibit (c)(2) to
Post-Effective Amendment No. 27 of Registrant's Registration
Statement on Form N-1A (File Nos. 33-18647 and 811-5398)
filed with the Securities and Exchange Commission on May 3,
1999.
(8) Not applicable.
(9) Custody Agreement between the Registrant and The Bank of New York
- Incorporated by reference to Exhibit (g)(1) to Post-Effective
Amendment No. 42 of Registrant's Registration Statement on Form
N-1A (File Nos. 33-18647 and 811-5398) filed with the Securities
and Exchange Commission on April 28, 2006.
10) (a) Rule 12b-1 Class B Distribution Plan - Incorporated by
reference to Exhibit (m) to Post-Effective Amendment No. 27
of Registrant's Registration Statement on Form N-1A (File
Nos. 33-18647 and 811-5398) filed with the Securities and
Exchange Commission on May 3, 1999.
(b) Amended and Restated Rule 18f-3 Plan - Incorporated by
reference to Exhibit (n) to Post-Effective Amendment No. 36
of the Registrant's Registration Statement on Form N-1A
(File Nos. 33-18647 and 811-5398) filed with the Securities
and Exchange Commission on February 11, 2004.
(11) Form of Opinion and Consent of Seward & Kissel LLP regarding the
legality of securities being registered - Filed herewith.
(12) Form of Opinion and Consent of Seward & Kissel LLP as to Tax
matters - To be filed by amendment.
13) (a) Transfer Agency Agreement between the Registrant and
AllianceBernstein Investor Services, Inc. - Incorporated by
reference to Exhibit (9) to Post-Effective Amendment No. 22
of Registrant's Registration Statement on Form N-1A (File
Nos. 33-18647 and 811-5398) filed with the Securities and
Exchange Commission on April 29, 1998.
(b) Expense Limitation Undertaking by AllianceBernstein L.P. -
Incorporated by reference to Exhibit (h)(2) to
Post-Effective Amendment No. 40 of Registrant's Registration
Statement on Form N-1A (File Nos. 33-18647 and 811-5398)
filed with the Securities and Exchange Commission on April
27, 2005.
(c) Form of Expense Limitation Undertaking by AllianceBernstein
L.P. - Incorporated by reference to Post-Effective Amendment
No. 41 of Registrant's Registration Statement on Form N-1A
(File Nos. 33-18647 and 811-5398) filed with the Securities
and Exchange Commission on March 1, 2006.
(d) Code of Ethics for the Fund - Incorporated by reference to
Exhibit (p)(1) to Post-Effective Amendment No. 31 of
Registrant's Registration Statement on Form N-1A (File Nos.
33-18647 and 811-5398) filed with the Securities and
Exchange Commission on April 26, 2001.
(e) Code of Ethics for the AllianceBernstein L.P. and
AllianceBernstein Investments, Inc. - Incorporated by
reference to Exhibit (p)(2) to Post-Effective Amendment No.
4 of the Registration Statement on Form N-1A of The
AllianceBernstein Pooling Portfolios (File Nos. 333-120487
and 811-21673) filed with the Securities and Exchange
Commission on December 29, 2006.
(14) Consent of Independent Registered Public Accounting Firm - Filed
herewith.
(15) Not applicable.
(16) Powers of Attorney for: David H. Dievler, John H. Dobkin, Michael
J. Downey, William H. Foulk, Jr., D. James Guzy, Nancy P.
Jacklin, Marc O. Mayer, Marshall C. Turner, Jr. and Earl D.
Weiner - Filed herewith.
(17) Not applicable.
ITEM 17. Undertakings
(1) The undersigned registrant agrees that prior to any public
reoffering of the securities registered through the use of a
prospectus which is a part of this registration statement by any
person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act 17 CFR 230.145(c),
the reoffering prospectus will contain the information called for
by the applicable registration form for reofferings by persons
who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an
amendment to the registration statement and will not be used
until the amendment is effective, and that, in determining any
liability under the 1933 Act, each post-effective amendment shall
be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering of them.
(3) The undersigned registrant undertakes to file a post-effective
amendment to this registration statement upon the closing of the
Acquisition described in this registration statement that
contains an opinion of counsel supporting the tax matters
discussed in this registration statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as the
Registrant has duly caused this Registration Statement on Form N-14 to be signed
on its behalf by the undersigned, duly authorized, in the City of New York and
State of New York, on the 15th day of February, 2008.
ALLIANCEBERNSTEIN VARIABLE
PRODUCTS SERIES FUND, INC.
By: Marc O. Mayer*
--------------
Marc O. Mayer
President
Pursuant to the requirements of the Securities Act of 1933, as amended
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated:
SIGNATURE TITLE DATE
--------- ----- ----
1. Principal Executive Officer
Marc O. Mayer* President and Chief
Executive Officer February 15, 2008
2. Principal Financial and
Accounting Officer
/s/ Joseph J. Mantineo Treasurer and
-------------------------
Joseph J. Mantineo Chief Financial
Officer February 15, 2008
3. Majority of the Directors:
David H. Dievler*
John H. Dobkin*
William H. Foulk, Jr.*
Michael Downey*
D. James Guzy*
Nancy P. Jacklin*
Marc O. Mayer*
Marshall C. Turner, Jr.*
Earl D. Weiner*
*By: /s/ Andrew L. Gangolf February 15, 2008
-----------------------
Andrew L. Gangolf
(Attorney-in-fact)
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits
(11) Form of Opinion and Consent of Seward & Kissel LLP
(14) Consent of Independent Registered Public Accounting Firm
(16) Powers of Attorney
SK 00250 0455 854666