As filed with the Securities and Exchange
Commission on June 26, 2008
Registration No :
Investment Company Act Registration No. 811-5398
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No.
--------------------------------------------
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (800) 221-5672
---------------------------------------------------------------
EMILIE D. WRAPP
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York l0105
(Name and address of agent for service)
Copies of communications to:
Kathleen K. Clarke
Seward & Kissel LLP
1200 G Street, Nw
Suite 350
Washington, DC 20005
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement becomes effective.
It is proposed that this filing will become effective on July 28, 2008 pursuant
to Rule 488 under the Securities Act of 1933.
No filing fee is required because an indefinite number of shares has previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended.
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC.
CONTENTS OF FORM N-14 REGISTRATION STATEMENT
This Registration Statement contains the following papers and documents:
o Cover Sheet
o Contents of Registration Statement
o Form N-14 Cross Reference Sheet
o Letter to Shareholders
o Notice of Special Meetings of Shareholders
o Part A - Proxy Statement/Prospectus
o Part B - Statement of Additional Information
o Part C - Other Information
o Signatures
o Exhibits
CROSS REFERENCE SHEET
ITEM NO. PROXY/PROSPECTUS
Part A
1. Beginning of Registration Statement
and Outside Front Cover Page of
Prospectus Cover Page/Questions & Answers
2. Beginning of Outside Back Cover Page
of Prospectus Questions & Answers
3. Fee Table, Synopsis Information and
Risk Factors Summary, Appendix A
4. Information about the Transaction Letter to Stockholders, Questions
and Answers, Summary, Information
About the Proposed Transaction
5. Information about the Registrant Letters to Stockholders, Questions
and Answers, Summary, Information
About the Funds
6. Information about the Company Being Letters to Stockholders, Questions
Acquired and Answers, Summary, Information
About the Funds
7. Voting Information Voting Information
8. Interest of Certain Persons and Experts Experts
9. Additional Information Required for
Reoffering by Persons Deemed to be Not Applicable
Underwriters
Part B
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. Additional Information About the SAI
Registrant
13. Additional Information about the SAI
Company being Acquired
14. Financial Statements Incorporated by Reference to the
SAI
15-17. Information required to be included
in Part C is set forth under the
appropriate item, so numbered, in
Part C of this Registration
Statement.
AB
AllianceBernstein
investments
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. --
ALLIANCEBERNSTEIN BALANCED SHARES PORTFOLIO
1345 Avenue of the Americas
New York, New York 10105
June 26, 2008
INFORMATION ABOUT THE ACQUISITION
Dear Variable Annuity Contractholder:
We are sending this information to you because you hold an interest in a
separate account offered by an insurance company that funds a variable insurance
product. Certain of the purchase payments made under your contract by you as a
contractholder have been allocated to AllianceBernstein Balanced Shares
Portfolio ("Balanced Shares"), a series of AllianceBernstein Variable Products
Series Fund, Inc. ("AVP").
The Board of Directors (the "Directors") of AVP is pleased to announce the
acquisition of the assets and liabilities of Balanced Shares by
AllianceBernstein Balanced Wealth Strategy Portfolio ("Balanced Wealth"),
another series of AVP. We sometimes refer to each of Balanced Wealth and
Balanced Shares as a "Portfolio" and together, the "Portfolios". The
acquisition, which is expected to become effective late in the third quarter of
this year, is described in more detail in the attached Prospectus. You should
review the Prospectus carefully and retain it for future reference.
Balanced Shares and Balanced Wealth have virtually identical investment
objectives, follow similar investment strategies and their investment portfolios
overlap to a significant extent. We anticipate that the acquisition will result
in benefits to the shareholders of Balanced Shares as discussed more fully in
the Prospectus. As a general matter, we believe that the acquisition will
provide a very similar investment opportunity with a lower expense ratio for
Balanced Shares shareholders.
In approving the acquisition, the Directors have considered, among other
things, the investment objectives and investment policies of the Portfolios, the
changes in the marketplace for variable annuity contracts since Balanced Shares
commenced operations and its prospects for future sales, expense ratio
reductions expected to result from the acquisition, continuity of portfolio
management, the comparison of fees for the Portfolios and the pro forma combined
Portfolio, the overlap of the securities held by the Portfolios, the costs of
the acquisition and the allocation thereof, and the tax-free nature of the
acquisition and have concluded that the acquisition is in the best interests of
the Portfolios.
Upon the acquisition of Balanced Shares by Balanced Wealth, insurance
company shareholders of Balanced Shares will receive shares of Balanced Wealth
of the same class of shares as the shares they currently own, which have an
aggregate net asset value ("NAV") equal to the aggregate NAV of the
shareholder's shares in Balanced Shares. Balanced Shares would then terminate.
The contractholders of Balanced Shares will not be assessed any sales charges or
other shareholder fees in connection with the acquisition.
Sincerely,
Marc O. Mayer
President
PROSPECTUS
Acquisition of the Assets and Assumption of the Liabilities of
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. --
ALLIANCEBERNSTEIN BALANCED SHARES PORTFOLIO
By, and in Exchange for Shares of,
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. --
ALLIANCEBERNSTEIN BALANCED WEALTH STRATEGY PORTFOLIO
July 28, 2008
TABLE OF CONTENTS
Questions and Answers 6
Summary 9
Comparison of Fees 9
Comparison of Investment Advisory Fees 11
Comparison of Investment Objectives and Policies 11
Principal Risks 12
Federal Income Tax Consequences 13
Comparison of Distribution and Purchase Procedures 13
Service Providers 14
Comparison of Business Structures 14
Information about the Transaction 15
Description of the Plan 15
Reasons for the Acquisition 15
Description of Securities to be Issued 17
Dividends and Other Distributions 17
Federal Income Tax Consequences 18
Capitalization Information 19
Information about the Portfolios 20
Management of the Portfolios 20
Advisory Agreement and Fees 20
Distributor 21
Other Service Providers 21
Legal Matters 21
Experts 21
Financial Highlights 22
Appendix A -- Comparison of Investment Objectives and Policies 23
Appendix B -- Portfolio Performance 29
Appendix C -- Description of Principal Risks of the Portfolios 32
Appendix D -- Certain Information Applicable to Class A and Class B
Shares of Balanced Wealth 34
Appendix E -- Other Information 39
Appendix F -- Form of Plan of Acquisition and Liquidation 41
Appendix G -- Capitalization 48
Appendix H -- Legal Proceedings 49
Appendix I -- Share Ownership Information 50
Appendix J -- Financial Highlights 53
QUESTIONS AND ANSWERS
The following questions and answers provide an overview of key features of the
acquisition and of the information contained in this Prospectus.
1. What is this document and why did we send this document to you?
This is a Prospectus that provides you with information about the acquisition
(the "Acquisition") of the assets and liabilities of AllianceBernstein Balanced
Shares Portfolio ("Balanced Shares"), a series of AllianceBernstein Variable
Products Series Fund, Inc. ("AVP"), by AllianceBernstein Balanced Wealth
Strategy Portfolio ("Balanced Wealth"), another series of AVP. (Balanced Wealth
and Balanced Shares are each a "Portfolio" and, collectively, the "Portfolios.")
On June 11, 2008, the Board of Directors (the "Directors") of AVP approved and
declared advisable the Acquisition of Balanced Shares by Balanced Wealth. The
Acquisition does not require approval by Balanced Shares shareholders.
Shares of the Portfolios are not sold directly to individuals. The Portfolios
only offer their shares through the separate accounts of life insurance
companies ("Insurers"). As a contractholder, you hold a contract with an Insurer
that offers the Portfolios as an investment option. The Insurers are the
shareholders of record but the contractholders have a beneficial interest in the
Portfolios. References to "you" or "shareholders" in this prospectus include the
Insurers, as the shareholders of record, and contractholders.
Shareholders may contact a Portfolio at 1-800-221-5672 or write to a Portfolio
at 1345 Avenue of the Americas, New York, NY 10105.
2. How will the Acquisition work?
The Plan of Acquisition and Liquidation dated as of June 11, 2008 (the "Plan")
provides for (i) the transfer of all the assets of Balanced Shares to Balanced
Wealth, (ii) the assumption by Balanced Wealth of all the liabilities of
Balanced Shares, (iii) the issuance to Balanced Shares shareholders of the
equivalent class of shares of Balanced Wealth, equal in aggregate net asset
value ("NAV") to the NAV of their former Balanced Shares shares in redemption of
their Balanced Shares shares, and (iv) the termination of Balanced Shares.
The shareholders of Balanced Shares are insurance company separate accounts
("Separate Accounts") used to fund variable life and annuity products ("Variable
Products"). As a Variable Product owner, you have a beneficial interest in the
insurance company's shares of Balanced Shares. The insurance companies will
receive shares of a class of Balanced Wealth corresponding to the class of
shares of Balanced Shares they now own. The Balanced Wealth shares that
shareholders of Balanced Shares receive will have the same aggregate NAV as the
shares of Balanced Shares held before the Acquisition. Shareholders of Balanced
Shares will not be assessed any sales charges or other shareholder fees in
connection with the Acquisition. Class B shares of both Balanced Shares and
Balanced Wealth are subject to distribution fees.
3. Why is the Acquisition taking place?
After considering the recommendation of AllianceBernstein L.P. (the "Adviser"),
the Directors concluded that participation by Balanced Shares in the Acquisition
is in the best interests of Balanced Shares. The Directors also concluded that
the Acquisition would benefit Balanced Shares shareholders by resulting in,
among other things, a reduction in expenses, and would not dilute shareholders'
interests. In reaching this conclusion, the Directors considered, among other
things, the investment objectives and investment policies of the Portfolios, the
changes in the marketplace for Variable Products since Balanced Shares commenced
operations and its prospects for future sales, the expense ratio reductions
expected to result from the Acquisition, continuity of portfolio management, the
comparison of fees for the Portfolios and the pro forma combined Portfolio, the
overlap of securities held by the Portfolios, the costs of the Acquisition and
the allocation thereof, and the tax-free nature of the Acquisition.
4. When will the Acquisition take place?
The Acquisition is expected to take place late in the third quarter of this
year.
5. Who will bear the expenses of the Acquisition?
The expenses of the Acquisition will be borne by the Portfolios, which will be
apportioned on the basis of each Portfolio's projected expense ratio reductions
relative to the other's, in the amounts of approximately $109,500 and $89,500
for Balanced Shares and Balanced Wealth, respectively.
6. Where may I find additional information regarding the Portfolios?
Additional information about the Portfolios is available in the Statement of
Additional Information ("SAI") dated May 1, 2008 that has been filed with the
Securities and Exchange Commission ("SEC") in connection with this Prospectus.
The SAI and each Portfolio's Annual Report to Shareholders, which contains
audited financial statements for the Portfolios' fiscal year, are incorporated
by reference into this Prospectus. In addition, the Prospectus and SAI for each
Portfolio dated May 1, 2008 (the "Prospectuses") and each Portfolio's Annual
Report dated December 31, 2007 are also incorporated by reference into this
Prospectus.
Additional copies of the Annual and Semi-Annual Reports and the Prospectus for
each Portfolio are available at www.AllianceBernstein.com and are also
available, along with this Prospectus and SAI, upon request, without charge, by
writing to the address or calling the telephone number listed below.
By mail: AllianceBernstein Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
By phone: For Information: 1-800-221-5672
For Literature: 1-800-227-4618
All of this additional information is also available in documents filed with the
SEC. You may view or obtain these documents from the SEC:
In person: at the SEC's Public Reference Room in Washington, DC
By phone: 1-202-551-8090 (for information on the operations of the Public
Reference Room only)
By mail: Public Reference Section, Securities and Exchange Commission,
Washington, DC 20549-0102 (duplicating fee required)
By electronic mail: publicinfo@sec.gov (duplicating fee required)
On the Internet: www.sec.gov
Other Important Things to Note:
o You may lose money by investing in the Portfolios.
o The SEC has not approved or disapproved these securities or passed
upon the adequacy of this Prospectus. Any representation to the
contrary is a criminal offense.
SUMMARY
The following summary highlights differences between Balanced Wealth and
Balanced Shares. This summary is not complete; for more complete information,
please read this entire document. Note that certain information is presented as
of March 31, 2008. At the June 11, 2008 Special Board Meeting (the "Board
Meeting"), the Portfolios' Adviser, AllianceBernstein L.P., represented to the
Directors that, if the information were updated, it would not differ in any
material respect.
Balanced Shares is a diversified open-end fund, with assets, as of March
31, 2008, of approximately $145 million, that is an actively-managed balanced
fund, targeting a mix of 60% equity and 40% fixed-income securities. Balanced
Wealth is a diversified open-end fund, with assets, as of March 31, 2008, of
approximately $220 million, that is also a balanced fund, which targets a
weighting of 60% equity securities and 40% debt securities with a goal of
providing moderate upside potential without excessive volatility.
While Balanced Shares has a longer performance history, Balanced Wealth has
outperformed Balanced Shares over comparable periods since Balanced Wealth's
inception in 2004. The average annual total returns for Class A shares of
Balanced Wealth, as of December 31, 2007, was 5.55% for one year, 7.59% for
three years and 9.62% since inception, and for Balanced Shares' Class A shares
3.05% for one year, 2.84% for three years, 9.22% for five years, and 7.14% for
ten years. These performance numbers do not reflect charges associated with the
Variable Products or contractholders' accounts.
Comparison of Fees
The expense ratios of the Balanced Wealth Class A and Class B shares,
before waiver, are the same as the expense ratios of the Balanced Shares Class A
and Class B shares and slightly lower after waiver. The Acquisition would result
in a significant reduction in expense ratios for shareholders of Balanced Shares
as well as for Balanced Wealth shareholders. The following table shows the
Portfolios' expense ratios and pro forma expense ratio of the combined Portfolio
for Class A and Class B shares as of March 31, 2008.
Class A Class B
Total Annual Total Annual
Expense Ratio Expense Ratio
------------------------------
Balanced Shares 0.77% 1.02%
Balanced Wealth (before waiver) 0.77% 1.02%
Balanced Wealth (after waiver)* 0.75% 1.00%
Combined Fund (pro forma) 0.69% 0.94%
- ----------
* Reflects the Adviser's contractual waiver of a portion of its advisory fee
and/or reimbursement of a portion of the Portfolio's operating expenses so
that expenses do not exceed 0.75% for Class A shares and 1.00% for Class B
shares. The waiver continues through the end of the Portfolio's current
fiscal year and may be extended by the Adviser for additional one-year
terms.
As the table indicates, the expense per share would be reduced for Balanced
Shares' Class A and Class B shares by 0.08% after the Acquisition. The
Acquisition would also result in a reduction in the expense ratios, after
waiver, for Balanced Wealth Class A and B shares of 0.06%. This expense
information does not include any fees and expenses that may be applied at the
separate account level or contract level for any charges that may be incurred
under a contract. Inclusion of these charges would increase the expenses
reflected above.
The purpose of the table below is to assist an investor in understanding
the various costs and expenses that a shareholder bears directly and indirectly
from an investment in the Portfolios. The table allows you to compare the
expenses of each Portfolio and estimates for the pro forma combined Portfolio in
its first year following the Acquisition.
Fee Table
---------
Shareholder Fees (fees paid directly from your investment)
N/A
Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio
assets)
The operating expenses information below is designed to assist
contractholders of variable products that invest in the Portfolios in
understanding the fees and expenses that they may pay as an investor. Because
the information does not reflect deductions at the separate account level or
contract level for any charges that may be incurred under a contract,
contractholders that invest in a Portfolio should refer to the variable contract
prospectus for a description of fees and expenses that apply to contractholders.
Inclusion of these charges would increase the fees and expenses provided below.
Balanced
Balanced Balanced Wealth
Shares Wealth (pro forma)
Class A Class A Class A
---------------------------------
Management Fees .55% .55% .55%
Other Expenses .22% .22% .14%
------ ------ ------
Total Portfolio Operating Expenses .77% .77% .69%
====== ====== ======
Waiver and/or Expense Reimbursement None .02)%(a) None
Net Expenses .77% .75% .69%
====== ====== ======
Balanced
Balanced Balanced Wealth
Shares Wealth (pro forma)
Class B Class B Class B
---------------------------------
Management Fees .55% .55% .55%
Distribution and/or Service (12b-1) Fees .25% .25% .25%
Other Expenses .22% .22% .14%
------ ------ ------
Total Portfolio Operating Expenses 1.02% 1.02% .94%
====== ====== ======
Waiver and/or Expense Reimbursement None (.02)%(a) None
Net Expenses 1.02% 1.00% .94%
====== ====== ======
- ----------
(a) Reflects the Adviser's contractual waiver of a portion of its advisory fee
and/or reimbursement of a portion of the Fund's operating expenses. This waiver
extends through the Fund's current fiscal year and may be extended by the
Adviser for additional one-year terms.
Examples
The Examples are to help you compare the cost of investing in each
Portfolio with the cost of investing in the combined Portfolio on a pro forma
combined basis. The Examples do not give effect to any separate account or
contract level fees that might be paid by a contractholder. They assume that you
invest $10,000 in a Portfolio for the time periods indicated and then redeem all
of your shares at the end of those periods. They also assume that your
investment has a 5% return each year, that a Portfolio's operating expenses stay
the same and that all dividends and distributions are reinvested.
Balanced Wealth
Balanced Shares Balanced Wealth (pro forma)
Class A Class A Class A
--------------------------------------------------
After 1 Year $79 $77 $70
After 3 Years $246 $244 $221
After 5 Years $428 $426 $384
After 10 Years $954 $952 $859
Balanced Wealth
Balanced Shares Balanced Wealth (pro forma)
Class B Class B Class B
--------------------------------------------------
After 1 Year $104 $102 $96
After 3 Years $325 $323 $300
After 5 Years $563 $561 $520
After 10 Years $1,248 $1,246 $1,155
The projected post-Acquisition pro forma Annual Portfolio Operating
Expenses and Examples presented above are based upon numerous material
assumptions. Although these projections represent good faith estimates, there
can be no assurance that any particular level of expenses or expense reductions
will be achieved, because expenses depend on a variety of factors, including the
future level of fund assets, many of which are beyond the control of Balanced
Wealth and the Adviser.
Comparison of Investment Advisory Fees
Balanced Shares and Balanced Wealth pay advisory fees to the Adviser at the
same annual rate of .55% of each Portfolio's average daily net assets.
Comparison of Investment Objectives and Policies
The investment objectives of the Portfolios are virtually identical and
their investment strategies are similar as shown in the following table.
Balanced Shares Balanced Wealth
-------------------------------------------------------------
Investment Balanced Shares' investment Balanced Wealth's investment
Objective objective is total return objective is to maximize total
consistent with reasonable return consistent with the
risk, through a combination Adviser's determination of
of income and long-term reasonable risk.
growth of capital.
Principal The Portfolio invests in a The Portfolio targets a
Investment diversified portfolio of weighting of 60% equity
Strategies equity and fixed-income securities and 40% debt
securities. The percentage securities with a goal of
of the Portfolio's assets providing moderate upside
invested in each type of potential without excessive
security will vary. volatility.
Normally, the Portfolio's
investments will consist of The Portfolio's equity
about 60% in stocks, but component is diversified
stocks may comprise up to between growth and value
75% of its investments. equity investment styles, and
between U.S. and non-U.S.
markets.
The Portfolio will not
purchase a security if as a
result less than 25% of its
net assets will be in
fixed-income securities.
The Portfolio's portfolio
normally will include
approximately 60 to 90
companies.
As the table above shows, each Portfolio pursues virtually identical investment
objectives and similar investment strategies, targeting the same 60/40
equity/fixed-income blend. However, their investment strategies and approaches
differ. Balanced Shares takes a more opportunistic approach to multiple class
investing, varying the percentages of its assets committed to different asset
classes from time to time in response to changing market conditions. In
contrast, Balanced Wealth attempts a more level approach by maintaining a
disciplined blend of assets classes with low correlation to each other. Each
asset class--domestic growth equities, domestic value equities, international
growth equities, international value equities, global real estate investment
trusts and core intermediate bonds--is allocated a portion of the Portfolio's
assets. In addition, Balanced Shares is a more concentrated fund than Balanced
Wealth, currently holding approximately 285 securities compared to Balanced
Wealth's approximately 750. The equity component of Balances Shares, with
approximately 75 issuers, is significantly more concentrated than the equity
component of Balanced Wealth, which includes approximately 425 issuers. A more
detailed comparison of the investment strategies and policies of the Portfolios
is provided in Appendix A and the historical performance of the Portfolios is
provided in Appendix B.
As a result of their different investment strategies and approaches, there
is currently approximately a 51% overlap of securities between the two
Portfolios. The Adviser expects that Balanced Wealth will retain all of Balanced
Shares' fixed-income securities and some of its domestic equity securities. The
combined Fund will therefore acquire approximately $71 million of securities
free of transaction costs, which are estimated to be approximately $80,000. The
Adviser anticipates that the remainder of Balanced Shares' equity positions will
be repositioned shortly after the Acquisition. The transaction costs associated
with selling these securities are expected to total approximately $43,000 or
approximately 1.16 basis points ("bps") of the combined Fund's pro forma net
assets. The combined Fund will then invest the cash in equity securities,
incurring transaction costs estimated to be no greater than $120,000 or 3.3 bps
of the combined Fund's pro forma net assets. The Adviser believes that it is
appropriate for the combined Fund to bear the repositioning costs because both
Portfolios will benefit from the Acquisition, and the cost savings of receiving
the majority of Balanced Shares' positions in kind will outweigh the costs of
liquidating Balanced Shares' unwanted equity positions.
Principal Risks
Each Portfolio is subject to principal risks of market risk, interest rate
risk, credit risk, allocation risk, non-U.S. (foreign) risk, currency risk and
liquidity risk. A description of each of these and other risks is provided in
Appendix C.
Federal Income Tax Consequences
As long as the contracts funded through the separate accounts of the
insurance company shareholders qualify as annuity contracts under section 72 of
the Internal Revenue Code of 1986, as amended (the "Code"), the Acquisition will
not create any tax liability for contractholders.
No gain or loss will be recognized by Balanced Shares or its shareholders
as a result of the Acquisition. The aggregate tax basis of the shares of
Balanced Wealth received by a shareholder of Balanced Shares (including any
fractional shares to which the shareholder may be entitled) will be the same as
the aggregate tax basis of the shareholder's shares of Balanced Shares. The
holding period of the shares of Balanced Wealth received by a shareholder of
Balanced Shares (including any fractional share to which the shareholder may be
entitled) will include the holding period of the shares of Balanced Shares held
by the shareholder, provided that such shares are held as capital assets by the
shareholder of Balanced Shares at the time of the Acquisition. The holding
period and tax basis of each asset of Balanced Shares in the hands of Balanced
Wealth as a result of the Acquisition will be the same as the holding period and
tax basis of each such asset in the hands of Balanced Shares prior to the
Acquisition. Provided that Balanced Shares shares surrendered constitute capital
assets in the hands of the shareholder, such gain or loss realized by the
shareholder will be capital gain or loss upon disposition of the shares. This
tax information is based on the advice of Seward & Kissel LLP, counsel to each
of the Portfolios. It is a condition to the closing of the Acquisition that such
advice be confirmed in a written opinion of counsel. An opinion of counsel is
not binding on the Internal Revenue Service ("IRS").
Neither Portfolio has any capital loss carryforward positions. No
distribution of capital gains to Balanced Shares shareholders prior to the
closing of the Acquisition is anticipated. Prior to the closing of the
Acquisition, AVP, if necessary, will declare a distribution to the Balanced
Shares shareholders which, together with all previous distributions, will have
the effect of distributing to the Balanced Shares shareholders all of Balanced
Shares' investment company taxable income (computed without regard to the
deduction for dividends paid) and net realized capital gains, if any, through
the closing.
A portion of the assets of Balanced Shares may be sold in connection with
the Acquisition. The actual tax impact of such sales will depend on the
difference between the price at which such portfolio assets are sold and
Balanced Shares' basis in such assets. Any capital gains recognized in these
sales will be distributed to Balanced Shares' shareholders (but not
contractholders) as capital gain dividends (to the extent of the excess of net
realized long-term capital gains over net realized short-term capital losses)
and ordinary dividends (to the extent of net realized short-term capital gains)
during or with respect to the year of sale, and such distributions will be
taxable to shareholders (but not to the contractholders).
Additional tax considerations are discussed under the section on "Federal
Income Tax Consequences" in "Information about the Transaction".
Comparison of Distribution and Purchase Procedures
The purchase procedures for the Portfolios are the same. The Portfolios
offer their shares through the separate accounts of life insurance companies
(the "Insurers"). You may only purchase and sell shares through these separate
accounts. See the prospectus of the separate account of the participating
insurance company for information on the purchase and sale of the Portfolios'
shares. AllianceBernstein Investments, Inc. ("ABI") may from time to time
receive payments from Insurers in connection with the sale of the Portfolios'
shares through the Insurer's separate accounts. More information on distribution
and purchase procedures of Balanced Wealth is provided in Appendix D.
Service Providers
The Portfolios have the same service providers, which will continue in
their capacity after the Acquisition.
Comparison of Business Structures
Each Portfolio is a series of AVP, which is organized as a Maryland
corporation and is governed by its Charter, Bylaws and Maryland law. For more
information on the organizational structure and governance of the Portfolios,
see Appendix E.
INFORMATION ABOUT THE TRANSACTION
Description of the Plan
As provided in the Plan, Balanced Wealth will acquire all the assets and
assume all the liabilities, expenses and obligations of Balanced Shares at the
effective time of the Acquisition (the "Effective Time"). In return, Balanced
Wealth will issue, and Balanced Shares will distribute to its shareholders, a
number of full and fractional shares of Balanced Wealth, determined by dividing
the net value of all the assets of Balanced Shares by the NAV of one share of
Balanced Wealth. For this purpose, the Plan provides the times for and methods
of determining the net value of the assets of each Portfolio. The Plan provides
that shareholders of Balanced Shares will be credited with shares of Balanced
Wealth corresponding to the aggregate NAV of Balanced Shares shares that the
shareholder holds of record at the Effective Time.
Following the distribution of Balanced Wealth shares in full liquidation of
Balanced Shares, Balanced Shares will wind up its affairs and terminate as soon
as is reasonably possible after the Acquisition.
The projected expenses of the Acquisition, largely those for legal,
accounting, printing and proxy solicitation expenses, are estimated to total
approximately $199,000. The projected expenses will be shared by the Portfolios
on the basis of the benefit that they will receive relative to their respective
total expense ratios ("TERs"). Based on March 31, 2008 expense numbers, Balanced
Shares would have an 0.08% reduction in expenses, representing a 10% TER
reduction and Balanced Wealth would have a 0.06% reduction in expenses,
representing an 8% TER reduction. Based on these relative benefits, the
projected Acquisition expenses would be apportioned 55% to Balanced Shares or
$109,500, which represents 7.4 bps of Balanced Shares' net assets as of March
31, 2008, and 45% to Balanced Wealth, or $89,500, which represents 3.5 bps of
Balanced Wealth's net assets at March 31, 2008.
The Acquisition is expected to occur in the third quarter of this year.
Under applicable legal and regulatory requirements, none of Balanced Shares'
shareholders will be entitled to exercise objecting shareholders' appraisal
rights, i.e., to demand the fair value of their shares in connection with the
Acquisition. Therefore, shareholders will be bound by the terms of the
Acquisition under the Plan. However, any shareholder of Balanced Shares may
redeem shares of common stock prior to the Acquisition.
Completion of the Acquisition is subject to certain conditions set forth in
the Plan. The Directors may terminate the Plan under certain circumstances.
Among other circumstances, the Directors may terminate the Plan upon a
determination that proceeding with the Plan is not in the best interests of a
Portfolio or of its shareholders.
A copy of a form of the Plan for the Acquisition is attached as Appendix F.
Reasons for the Acquisition
At the Board Meeting, the Adviser recommended that the Directors approve
the proposed Plan and Acquisition. The Directors considered the factors
discussed below from the point of view of the interests of Balanced Shares and
its shareholders. After careful consideration, the Directors (including all
Directors who are not "interested persons" of the Portfolio, the Adviser or its
affiliates) determined that the Acquisition would be in the best interests of
Balanced Shares and that the interests of existing shareholders of the
Portfolios would not be diluted as a result of the Acquisition. The Directors
have unanimously approved the Plan and Acquisition.
The Adviser presented the following reasons in favor of the Acquisition:
o The Adviser discussed with the Directors that there has been a shift
away from a multiple series fund, such as AVP as the preferred funding
vehicle for Variable Products, to a customized "private-label"
platform of investment options subadvised by a number of different
investment advisers. While AVP's key style-pure and blended equity
Portfolios remain desirable for some insurance companies, the Adviser
believes that combining its Portfolios, where possible, into larger
offerings will satisfy the existing insurance company shareholders'
needs and may attract new issuers of Variable Products. The Adviser
believes that a single, less expensive balanced portfolio will be more
attractive to insurance companies and to the underlying
contractholders since the combination will allow them to benefit from
a lower expense ratio.
o The Adviser also discussed with the Directors that it believes that
the Acquisition would benefit Balanced Shares and its shareholders by
resulting in lower expenses.
At the Board Meeting, the Directors (with the advice and assistance of
independent counsel) also considered, among other things:
o potential shareholder benefits, including the fact that, based on
March 31, 2008 expense numbers, the pro forma total expenses of each
class of shares of the combined Portfolio are expected to be lower
than the current expenses of the corresponding classes of shares of
Balanced Shares, even without taking account of the expense cap in
place for Balanced Wealth;
o the Adviser's plans with respect to the portfolio securities of
Balanced Shares and Balanced Wealth, including that (i) there is
currently a 51% overlap between the portfolio holdings of the two
Portfolios, (ii) the Adviser expects that the combined Fund will
retain approximately 50% of Balanced Shares' portfolio, primarily
fixed-income securities, and (iii) that the balance of Balanced
Shares' portfolio will be repositioned shortly after the Acquisition;
o the current asset level of Balanced Shares and the combined pro forma
asset level of the combined Portfolio;
o the historical performance of the Portfolios;
o the investment objectives and principal investments of the Portfolios,
which are similar in that both are balanced funds, which target 60%
equity and 40% fixed-income securities, although the Portfolios have
different investment strategies and approaches; and
o that the portfolio manager teams and the individuals on the teams with
the most direct day-to-day management responsibilities are different
and that the portfolio management team and the individuals with the
most direct day-to-day management responsibilities for Balanced Wealth
will continue to have responsibility for management of the combined
Fund.
The Directors also considered, among other things:
o the fact that, because the Separate Accounts are not subject to
federal income tax on a current basis, there is no need to consider
the impact of the Acquisition on any capital loss carryforwards;
o the form of the Plan and the terms and conditions of the Acquisition;
o the fact that the Portfolios have the same advisory contract terms and
pay the same advisory fee rates;
o whether the Acquisition would result in the dilution of shareholders'
interests;
o the fact that no changes in service providers would result from the
Acquisition;
o the benefits of the Acquisition to the Adviser, which will benefit
from the elimination of separate monitoring and administration of
Balanced Shares;
o the fact that Balanced Wealth will assume all the liabilities,
expenses and obligations of Balanced Shares;
o the expected federal income tax consequences of the Acquisition;
o the expenses of the Acquisition, and the fact that these would be
borne by both Portfolios and apportioned on the basis of the projected
relative expense ratio reductions for each Portfolio as a result of
the Acquisition; and
o the fact that the Adviser has agreed to indemnify Balanced Wealth for
a three-year period against any undisclosed or other liabilities not
disclosed or not reflected in the NAV of Balanced Shares at the time
of the Acquisition, to reimburse Balanced Wealth for any costs in
connection with investigating any such liability, and to continue
certain insurance coverage for a six-year period.
Also at the Board Meeting, the Directors approved the Plan on behalf of
Balanced Wealth.
Description of Securities to be Issued
Under the Plan, Balanced Wealth will issue additional shares of its Class A
and Class B common stock for distribution to corresponding classes of shares of
Balanced Shares. Under AVP's Charter, Balanced Wealth may issue up to
500,000,000 shares of common stock, par value $.001 per share, for each of these
Classes.
When the acquisition of Balanced Shares by Balanced Wealth is consummated,
Class A and Class B shareholders of Balanced Shares will receive shares of a
corresponding class of Balanced Wealth having an aggregate NAV equal to the
aggregate NAV of the shareholder's shares in Balanced Shares.
Each share of Balanced Wealth represents an equal proportionate interest
with other shares of Balanced Wealth. Each share has equal earnings, assets, and
voting privileges, and is entitled to dividends and other distributions out of
the income earned and gain realized on the assets belonging to Balanced Wealth
as authorized by the Directors. Shares of Balanced Wealth entitle their holders
to one vote per full share and fractional votes for fractional shares held.
Shares of Balanced Wealth received by Balanced Shares in the Acquisition will be
issued at NAV, without a sales charge, and will be fully paid and
non-assessable.
Dividends and Other Distributions
On or before the Closing Date, as defined in the Plan, Balanced Shares
will, if necessary, declare and pay as a distribution substantially all its
undistributed net investment income, net short-term capital gain, net long-term
capital gain and net gains from foreign currency transactions as applicable to
maintain its treatment as a regulated investment company.
Federal Income Tax Consequences
As long as the variable contracts funded through the separate accounts of
the insurance company shareholders qualify as annuity contracts under section 72
of the Code, the Acquisition will not create any tax liability for
contractholders.
Subject to certain stated assumptions contained therein, Balanced Shares
will receive an opinion of Seward & Kissel LLP, its counsel, substantially to
the following effect: (i) the Acquisition will constitute a "reorganization"
within the meaning of Section 368(a) of the Code and that Balanced Shares and
Balanced Wealth will each be "a party to a reorganization" within the meaning of
Section 368(b) of the Code; (ii) a shareholder of Balanced Shares will recognize
no gain or loss on the exchange of the shareholder's shares of Balanced Shares
solely for shares of Balanced Wealth; (iii) neither Balanced Shares nor Balanced
Wealth will recognize any gain or loss upon the transfer of all of the assets of
Balanced Shares to Balanced Wealth in exchange for shares of Balanced Wealth and
the assumption by Balanced Wealth of the liabilities of Balanced Shares pursuant
to the Plan or upon the distribution of shares of Balanced Wealth to
shareholders of Balanced Shares in exchange for their respective shares of
Balanced Shares; (iv) the holding period and tax basis of the assets of Balanced
Shares acquired by Balanced Wealth will be the same as the holding period and
tax basis that Balanced Shares had in such assets immediately prior to the
Acquisition; (v) the aggregate tax basis of shares of Balanced Wealth received
in connection with the Acquisition by each shareholder of Balanced Shares
(including any fractional share to which the shareholder may be entitled) will
be the same as the aggregate tax basis of the shares of Balanced Shares
surrendered in exchange therefor; (vi) the holding period of shares of Balanced
Wealth received in connection with the Acquisition by each shareholder of
Balanced Shares (including any fractional share to which the shareholder may be
entitled) will include the holding period of the shares of Balanced Shares
surrendered in exchange therefore, provided that such Balanced Shares shares
constitute capital assets in the hands of the shareholder as of the Closing
Date; and (vii) Balanced Wealth will succeed to the capital loss carryovers of
Balanced Shares but the use of Balanced Wealth's existing capital loss
carryovers (as well as the carryovers of Balanced Shares) may be subject to
limitation under Section 383 of the Code after the Acquisition. This opinion of
counsel will not be binding on the IRS or a court and there is no assurance that
the IRS or a court will not take a view contrary to those expressed in the
opinion.
A portion of the assets of Balanced Shares may be sold in connection with
the Acquisition. The actual tax impact of such sales will depend on the
difference between the price at which such portfolio assets are sold and
Balanced Shares' basis in such assets. Any capital gains recognized in these
sales will be distributed to Balanced Shares' shareholders (but not to the
contractholders) as capital gain dividends (to the extent of the excess of net
realized long-term capital gains over net realized short-term capital losses)
and ordinary dividends (to the extent of net realized short-term capital gains)
during or with respect to the year of sale, and such distributions will be
taxable to shareholders (but not to the contractholders).
Neither Portfolio has any capital loss carryforwards. No distribution of
capital gains to Balanced Shares's shareholders prior to the closing of the
Acquisition is anticipated. Prior to the closing of the Acquisition, AVP, if
necessary, will declare a distribution to the Balanced Shares shareholders
which, together with all previous distributions, will have the effect of
distributing to the Balanced Shares shareholders all of Balanced Shares'
investment company taxable income (computed without regard to the deduction for
dividends paid) and net realized capital gains, if any, through the closing.
Shareholders of Balanced Shares are encouraged to consult their tax
advisers regarding the effect, if any, of the Acquisition in light of their
individual circumstances. Because the foregoing discussion only relates to the
federal income tax consequences of the Acquisition, those shareholders also
should consult their tax advisers as to state and local tax consequences, if
any, of the Acquisition.
Capitalization Information
For information on the existing capitalization of the Portfolios and the
pro forma capitalization of Balanced Wealth, see Appendix G.
INFORMATION ABOUT THE PORTFOLIOS
Balanced Shares and Balanced Wealth are each a series of AVP, an open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act") and organized as a Maryland corporation in
1987 under the name Alliance Variable Products Series Fund, Inc. The company's
name became AllianceBernstein Variable Products Series Fund, Inc. on April 30,
2003.
Management of the Portfolios
The Directors of AVP direct the management of the business and affairs of
the Portfolios. The Directors approve all significant agreements between the
respective Portfolio and persons or companies furnishing services to it,
including a Portfolio's agreements with the Adviser and the Portfolio's
custodian, transfer and dividend disbursing agent. The day-to-day operations of
a Portfolio are delegated to its officers and the Portfolio's Adviser, subject
to the Portfolio's investment objective and policies and to general supervision
by the Directors.
The management and investment decisions of Balanced Shares are made by the
Adviser's Balanced Shares Investment Team, made up of members of the Relative
Value Investment Team on the equity side and the U.S. Core Investment Grade
Fixed-Income Team on the fixed-income side. The Portfolio's management team
relies heavily on the Adviser's large internal research staff. The individuals
on the team with the most direct day-to-day management responsibilities are
Frank Caruso and Aryeh Glatter on the equity side and Alison M. Martier, Greg J.
Wilensky, Shawn E. Keegan, Joran Laird, Jeffrey S. Phlegar and Douglas J.
Peebles on the fixed-income side. Messrs. Caruso and Glatter are Senior Vice
Presidents of the Adviser. They have both been members of the Relative Value
Investment Team since prior to 2003 and have collaborated with other members of
the Relative Value Investment Team on the Portfolio's investments since prior to
2003. Messrs. Keegan and Laird are Vice Presidents of the Adviser, with which
they have been associated in a substantially similar capacity to their current
positions since prior to 2003. Ms. Martier and Mr. Wilensky are Senior Vice
Presidents of the Adviser, with which they have been associated in a
substantially similar capacity to their current positions since prior to 2003.
Ms. Martier is also Director of the Fixed-Income Senior Portfolio Management
Team. Messrs. Phlegar and Peebles are Executive Vice Presidents of the Adviser,
with which they have been associated in a substantially similar capacity to
their current positions since prior to 2003, and are Chief Investment Officers
and Co-Heads of Fixed-Income.
Daniel T. Grasman, Mark A. Hamilton, Joshua Lisser, Seth J. Masters and
Christopher H. Nikolich, members of the Adviser's Blend Investment Policy Team,
are the individuals primarily responsible for the day-to-day management of
Balanced Wealth. Mr. Grasman has been a Vice President of the Adviser since
2004. Prior thereto, he was co-founder and CCO of Xelector since prior to 2003.
Messrs. Hamilton, Lisser, and Nikolich are Senior Vice Presidents of the
Adviser, with which they have been associated in a substantially similar
capacity to their current positions since prior to 2003. Mr. Lisser is also
Chief Investment Officer of Structured Equities, and a member of the Blend
Strategies team. Mr. Masters is an Executive Vice President of the Adviser, with
which he has been associated in a substantially similar capacity to his current
position since prior to 2003, and Chief Investment Officer of Blend Strategies.
Effective July 1, 1008, Messrs. Hamilton and Nikolich will no longer be members
of the Team. Marc O. Mayer and Dokyoung Lee will join Messrs. Masters, Grasman
and Lisser as the team members with the most significant responsibility for the
day-to-day management of Balanced Wealth. Mr. Mayer is an Executive Vice
President and has been associated with the Adviser in a substantially similar
capacity to his current position since prior to 2003. In May 2008, Mr. Mayer
because Chief Investment Officer of Blend Solutions for the Adviser, taking over
this role from Mr. Masters, who became Chief Investment Officer of Defined
Contribution. Mr. Lee is a Senior Vice President and Director of Research -
Blend Solutions of the Adviser and has been associated with the Adviser in a
substantially similar capacity to his current position since prior to 2003.
Advisory Agreement and Fees
Each Portfolio's investment adviser is AllianceBernstein L.P., 1345 Avenue
of the Americas, New York, New York 10105. The Adviser is a leading
international investment adviser managing client accounts with assets as of
March 31, 2008 totaling over $735 billion (of which approximately $98 billion
represented the assets of investment companies). As of March 31, 2008, the
Adviser managed retirement assets for many of the largest public and private
employee benefit plans (including 53 of the nation's FORTUNE 100 companies), for
public employee retirement funds in 37 states, for investment companies, and for
foundations, endowments, banks and insurance companies worldwide. Currently,
there are 38 registered investment companies managed by the Adviser, comprising
116 separate investment portfolios, with approximately 4.1 million retail
accounts. The Adviser also serves as administrator for each Portfolio.
Under AVP's advisory agreement with the Adviser with respect to the
Portfolios (the "Advisory Agreement"), the Adviser provides investment advisory
services and order placement facilities for the Portfolios and pays all
compensation of directors and officers of the Portfolios who are affiliated
persons of the Adviser. Under the Advisory Agreement, each Portfolio pays the
Adviser an advisory fee at an annual rate of .55% of its average daily net
assets.
The Advisory Agreement, by its terms, continues in effect from year to year
if such continuance is specifically approved, at least annually, by a majority
vote of the Directors of AVP who neither are interested persons of the Portfolio
nor have any direct or indirect financial interest in the Advisory Agreement,
cast in person at a meeting called for the purpose of voting on such approval. A
discussion regarding the basis for the Directors' approval of the Advisory
Agreement is available in the Annual Report to Shareholders for the fiscal year
ended December 31, 2007 (in the case of Balanced Wealth) and in the semi-annual
report for the period ended June 30, 2007 (in the case of Balanced Shares).
The Adviser is the subject of certain legal proceedings and a discussion of
those proceedings is presented in Appendix H.
Distributor
AllianceBernstein Investments, Inc. ("ABI" or the "Distributor"), a
wholly-owned subsidiary of the Adviser, serves as the distributor of Balanced
Shares' and Balanced Wealth's shares. Under a Distribution Services Agreement,
adopted under each Portfolio's Rule 12b-1 plan, Balanced Shares and Balanced
Wealth pay distribution and service fees to the Distributor at an annual rate of
up to .25% of each Portfolio's average daily net assets attributable to their
Class B shares. The Distribution Agreement provides that the Distributor will
use such payments in their entirety for distribution assistance and promotional
activities.
Other Service Providers
The Portfolios will have the same service providers after the Acquisition.
AllianceBernstein Investor Services, Inc. ("ABIS"), an affiliate of the Adviser,
provides shareholder services for the Portfolios. The Portfolios compensate ABIS
for these services. The Bank of New York, 1 Wall Street, New York, New York
10286, serves as custodian for the Portfolios. ABIS, P.O. Box 786003, San
Antonio, TX 78278-6003, serves as transfer agent for the Portfolios. After the
Acquisition, The Bank of New York and ABIS will serve, respectively, as
custodian and transfer agent for the combined Portfolio. Ernst & Young LLP
serves as the independent registered public accounting firm for the Portfolios
and will continue to serve in that capacity for the combined Portfolio after the
Acquisition.
LEGAL MATTERS
The validity of the shares of Balanced Wealth offered hereby will be passed
upon for Balanced Shares by Seward & Kissel LLP.
EXPERTS
The audited financial statements and financial highlights in the Prospectus
and the SAI have been included in reliance on the report of Ernst & Young LLP, 5
Times Square, New York, New York, 10036, the independent registered public
accounting firm for each of the Portfolios, given on its authority as experts in
auditing and accounting.
FINANCIAL HIGHLIGHTS
Financial highlights information for the Portfolios is available at
Appendix J.
APPENDIX A
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
Balanced Shares Balanced Wealth Differences
---------------------------------------------------------------------------------
Investment The Portfolio's The Portfolio's These objectives are
Objective investment objective is investment objective is virtually identical.
total return consistent to maximize total return
with reasonable risk, consistent with the
through a combination of Adviser's determination
income and long-term of reasonable risk.
growth of capital.
Investment Policies(1)
---------------------------------------------------------------------------------
Status The Portfolio is Same. These policies are
diversified. (F) identical.
Principal The Portfolio invests in The Portfolio targets a While both Portfolios
Strategies a diversified portfolio weighting of 60% equity target a 60/40
of equity and securities and 40% debt equity/fixed-income
fixed-income securities. securities with a goal of allocation, Balanced
The percentage of the providing moderate upside Shares will not go above
Portfolio's assets potential without a 75/25
invested in each type of excessive volatility. equity/fixed-income
security will vary. allocation.
Normally, the Portfolio's The Portfolio's equity
investments will consist component is diversified
of about 60% in stocks, between growth and value
but stocks may comprise equity investment styles,
up to 75% of its and between U.S. and
investments. non-U.S. markets.
The Portfolio will not
purchase a security if as
a result less than 25% of
its net assets will be in
fixed-income securities.
The Portfolio's portfolio
normally will include
approximately 60 to 90
companies.
Credit Quality The Portfolio invests in The Portfolio's debt Balanced Wealth's
short- and long-term debt securities will primarily securities will be
securities in such be investment grade debt primarily investment
proportions and of such securities (including grade, but may include
type as the Adviser deems cash and money market preferred stock and
best adapted to the instruments), but may lower-rated securities.
current economic and also include preferred
market outlooks. stock and, when the
Adviser believes that
The Portfolio may invest conditions favoring them
up to 20% of its assets are compelling,
in high yield securities lower-rated securities.
(securities rated below
BBB- by S&P, Moody's or The Portfolio will not
Fitch). As an operating invest more than 5% of
policy, the Portfolio its net assets in
will invest no more than securities rated at the
25% of its investments in time of purchase below
high yield debt investment grade.
securities rated CCC- or
below.
- ----------
(1) Policies with the Notation "F" are fundamental policies.
Balanced Shares Balanced Wealth Differences
---------------------------------------------------------------------------------
Foreign The Portfolio may invest The Portfolio may invest These policies are
Securities in equity and in non-U.S. companies. identical.
fixed-income securities
of non-U.S. issuers
located in emerging or
developed countries.
Real Estate None. The Portfolio may invest Balanced Wealth may
Investment Trusts in REITs. invest in REITs.
(REITs)
Asset-Backed The Portfolio may invest Same. These policies are
Securities in mortgage-related and identical.
other asset-backed
securities.
Derivatives The Portfolio may, but is Same. These policies are
not required to, use identical.
derivatives for risk
management purposes or as
part of its investment
strategies. The Portfolio
may use forward
contracts, forward
currency exchange
contracts, futures
contracts and options on
futures contracts,
options, options on
foreign currencies,
options on securities,
options on securities
indices, swap
transactions, currency
swaps and synthetic
foreign equity securities.
Credit Default The Portfolio will not Same. These policies are
Swaps enter into a credit identical.
default swap if the swap
provides for settlement
by physical delivery and
such delivery would
result in the Portfolio
investing in securities
rated below BBB- or Baa3
or not maintaining an
average aggregate credit
rating of at least A-.
Inflation- The Portfolio may invest Same. These policies are
Protected in inflation-protected identical.
Securities securities.
Loan The Portfolio may invest Not specifically Balanced Shares may
Participations in loan participations. identified, but the specifically invest in
Portfolio has the loan participations.
flexibility to invest in
a broad range of
fixed-income securities.
Structured The Portfolio may invest Not specifically Balanced Shares may
Securities in structured securities. identified, but the specifically invest in
Portfolio has the structured securities.
flexibility to invest in
a broad range of
fixed-income securities.
Variable and The Portfolio may invest Not specifically Balanced Shares may
Floating Rate in variable, floating, identified, but the specifically invest in
Securities and inverse floating rate Portfolio has the variable, floating, and
instruments. flexibility to invest in inverse floating rate
a broad range of instruments.
fixed-income securities.
Preferred Stock The Portfolio may invest Same. These policies are
in preferred stocks. identical.
Convertible The Portfolio may invest Same. These policies are
Securities in convertible securities. identical.
Depositary The Portfolio may invest Same. These policies are
Receipts in American Depositary identical.
Receipts ("ADRs"), European
Depositary Receipts
("EDRs"), Global Depositary
Receipts ("GDRs") or other
securities representing
securities of companies
based in countries other
than the United States.
Repurchase The Portfolio may enter The Portfolio may enter Balanced Wealth is not
Agreements into repurchase into repurchase subject to the
agreements pertaining to agreements in which the limitations of Balanced
the type of securities in Portfolio purchases a Shares' policy.
which it invests with security from a bank or
member banks of the broker-dealer.
Federal Reserve System.
Currently, the Fund
intends to enter into
repurchase agreements
only with its custodian
and such primary dealers.
Forward The Portfolio may invest Same. These policies are
Commitments in forward commitments. identical.
Rights and The Portfolio may invest Same. These policies are
Warrants in rights or warrants. identical.
Short Sales None. The Portfolio may make Balanced Wealth may make
short sales of short sales of securities.
securities or maintain a
short position, but only
if at all times when a
short position is open
not more than 33% of its
net assets is held as
collateral for such
short sales.
Illiquid The Portfolio will limit Same. These policies are
Securities its investment in illiquid identical.
securities to no more than
15% of net assets or such
other amount permitted by
guidance regarding the 1940
Act.
Other Investment The Portfolio may invest Same. These policies are
Companies in other investment identical.
companies, as permitted by
the 1940 Act or the rules
or regulations thereunder.
Securities Lending The Portfolio may lend Same. These policies are
portfolio securities to identical.
the extent permitted under
the 1940 Act or the rules
or regulations thereunder
(as such statute, rules or
regulations may be amended
from time to time) or by
guidance regarding,
interpretations of, or
exemptive orders under,
the 1940 Act.
Margin The Portfolio may not Same. These policies are
purchase securities on identical.
margin, except (i) as
otherwise provided under
rules adopted by the SEC
under the 1940 Act or by
guidance regarding the
1940 Act, or
interpretations thereof,
and (ii) that the
Portfolio may obtain such
short-term credits as are
necessary for the
clearance of portfolio
transactions, and the
Portfolio may make margin
payments in connection
with futures contracts,
options, forward
contracts, swaps, caps,
floors, collars and other
financial instruments.
Industry The Portfolio may not Same. These policies are
Concentration concentrate investments in identical.
an industry, as
concentration may be
defined under the 1940 Act
or the rules or
regulations thereunder (as
such statute, rules or
regulations may be amended
from time to time) or by
guidance regarding,
interpretations of, or
exemptive orders under,
the 1940 Act or the rules
or regulations thereunder
published by appropriate
regulatory authorities. (F)
Borrowing The Portfolio may not Same. These policies are
issue any senior security identical.
(as that term is defined
in the 1940 Act) or borrow
money, except to the
extent permitted by the
1940 Act or the rules or
regulations thereunder (as
such statute, rules or
regulations may be amended
from time to time) or by
guidance regarding, or
interpretations of, or
exemptive orders under,
the 1940 Act or the rules
or regulations thereunder
published by appropriate
regulatory authorities.
For the purposes of this
restriction, margin and
collateral arrangements,
including, for example,
with respect to permitted
borrowings, options,
futures contracts, options
on futures contracts and
other derivatives such as
swaps are not deemed to
involve the issuance of a
senior security. (F)
Lending The Portfolio may not make Same. These policies are
loans except through (i) identical.
the purchase of debt
obligations in accordance
with its investment
objective and policies;
(ii) the lending of
portfolio securities;
(iii) the use of
repurchase agreements; or
(iv) the making of loans
to affiliated funds as
permitted under the 1940
Act, the rules or
regulations thereunder (as
such statutes, rule or
regulations may be amended
from time to time), or by
guidance regarding, and
interpretations of, or
exemptive orders under,
the 1940 Act. (F)
Real Estate The Portfolio may not Same. These policies are
purchase or sell real identical.
estate except that it may
dispose of real estate
acquired as a result of
the ownership of
securities or other
instruments. This
restriction does not
prohibit the Portfolio
from investing in
securities or other
instruments backed by real
estate or in securities of
companies engaged in the
real estate business. (F)
Commodities The Portfolio may not Same. These policies are
purchase or sell identical.
commodities regulated by
the Commodity Futures
Trading Commission under
the Commodity Exchange Act
or commodities contracts
except for futures
contracts and options on
futures contracts. (F)
Underwriting The Portfolio may not act Same. These policies are
as an underwriter of identical.
securities, except that
the Portfolio may acquire
restricted securities
under circumstances in
which, if such securities
were sold, the Portfolio
might be deemed to be an
underwriter for purposes
of the Securities Act of
1933, as amended. (F)
- ----------
(1) Policies with the notation "F" are fundamental policies.
APPENDIX B
PORTFOLIO PERFORMANCE
The charts below show the percentage gain or loss in each calendar year for
the ten-year period ended December 31, 2007, for Class A shares of Balanced
Shares and the three-year period ended December 31, 2007 for Class A shares of
Balanced Wealth.
They should give you a general idea of how each Portfolio's return has
varied from year to year. The charts include the effects of Portfolio expenses
but do not reflect charges associated with the Variable Products or
contractholders' accounts. The calculations of annual total return assume the
reinvestment of all dividends and capital gain distributions on the reinvestment
date. Performance results included the effect of expense reduction arrangements,
if any. If these arrangements had not been in place, the performance results
would have been lower. As with all mutual funds, past performance is not an
indication of future results. No assurance can be given that Balanced Wealth
will achieve any particular level of performance after the Acquisition.
Additional discussion of the manner of calculation of total return is contained
in the Prospectuses of each Portfolio.
Calendar Year Total Returns
Balanced Shares
The annual returns in the bar chart are for the Portfolio's Class A shares.
[The following table was depicted as a bar chart in the printed material.]
17.0 6.5 12.5 2.3 -10.6 19.1 9.1 3.9 11.79 3.05
--------------------------------------------------------------------------
98 99 00 01 02 03 04 05 06 07
Calendar Year End
You should consider an investment in the Portfolio as a long-term investment.
The Portfolio's returns will fluctuate over long and short periods. For example,
during the period shown in the bar chart, the Portfolio's:
Best quarter was up 14.38% in the 4th quarter, 1998; and worst quarter was down
- -8.50% in the 2nd quarter, 2002.
Balanced Wealth
The annual returns in the bar chart are for the Portfolio's Class A shares.
[The following table was depicted as a bar chart in the printed material.]
N/A N/A N/A N/A N/A N/A N/A 7.3 13.9 5.55
--------------------------------------------------------------------------
98 99 00 01 02 03 04 05 06 07
Calendar Year End
You should consider an investment in the Portfolio as a long-term investment.
The Portfolio's returns will fluctuate over long and short periods. For example,
during the period shown in the bar chart, the Portfolio's:
Best quarter was up 6.19% in the 4th quarter, 2006; and worst quarter was down
- -2.90% in the 1st quarter, 2005.
The following tables list average annual total returns for the one-year,
five-years, and ten-years, for Balanced Shares and one-year and since inception
for Balanced Wealth, in each case for periods ended December 31, 2007. These
tables are intended to provide you with some indication of the risks of
investing in the Portfolios. At the bottom of each table, you can compare the
Portfolios' performance with the performance of several broad-based market
indices.
Average Annual Total Returns
Balanced Shares (Class A)
PERFORMANCE TABLE
Average Annual Total Returns
(For the periods ended December 31, 2007)
Class A
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
Portfolio 3.05% 9.22% 7.14%
- --------------------------------------------------------------------------------
Russell 1000 Value Index (0.17)% 14.63% 7.68%
- --------------------------------------------------------------------------------
Lehman Brothers
Aggregate Index 6.97% 4.42% 5.97%
- --------------------------------------------------------------------------------
60% Russell 1000 Value
Index/40% LB Aggregate Index 2.79% 10.57% 7.00%
- --------------------------------------------------------------------------------
Balanced Shares (Class B)
PERFORMANCE TABLE
Average Annual Total Returns
(For the periods ended December 31, 2007)
Class B
1 Year 5 Years Since
Inception*
- --------------------------------------------------------------------------------
Portfolio 2.75% 8.95% 5.30%
- --------------------------------------------------------------------------------
Russell 1000 Value Index (0.17)% 14.63% 9.43%
- --------------------------------------------------------------------------------
Lehman Brothers Aggregate Index 6.97% 4.42% 5.03%
- --------------------------------------------------------------------------------
60% Russell 1000 Value Index/40% LB
Aggregate Index 2.79% 10.57% 7.29%
- --------------------------------------------------------------------------------
* Since Inception return information is from October 26, 2001.
Balanced Wealth (Class A)
- -------------------------
PERFORMANCE TABLE
Average Annual Total Returns
(For the periods ended December 31, 2007)
Class A
1 Year Since Inception*
- --------------------------------------------------------------------------------
Portfolio 5.55% 9.62%
- --------------------------------------------------------------------------------
S&P 500 Stock Index 5.49% 11.33%
- --------------------------------------------------------------------------------
Lehman Brothers U.S. Aggregate Index 6.97% 4.98%
- --------------------------------------------------------------------------------
60% S&P 500 Stock Index/40% Lehman
Brothers U.S. Aggregate Index 6.08% 8.79%
- --------------------------------------------------------------------------------
* Since Inception return information is from July 1, 2004.
Balanced Wealth (Class B)
- -------------------------
PERFORMANCE TABLE
Average Annual Total Returns
(For the periods ended December 31, 2007)
Class B
Since
1 Year Inception*
- --------------------------------------------------------------------------------
Portfolio 5.26% 9.34%
- --------------------------------------------------------------------------------
S&P 500 Stock Index 5.49% 9.80%
- --------------------------------------------------------------------------------
Lehman Brothers U.S. Aggregate Index 6.97% 5.03%
- --------------------------------------------------------------------------------
60% S&P 500 Stock Index/40% Lehman Brothers
U.S. Aggregate Index 6.08% 8.08%
- --------------------------------------------------------------------------------
* Since Inception return information is from July 1, 2004.
APPENDIX C
DESCRIPTION OF PRINCIPAL RISKS OF THE PORTFOLIOS
Among the principal risks of investing in a Portfolio are market risk,
interest rate risk, credit risk, allocation risk, non-U.S. (foreign) risk,
emerging market risk, currency risk, liquidity risk, capitalization risk, and
management risk. Each of these risks is more fully described below. Each
Portfolio could become subject to additional risks because the types of
investments made by each Portfolio can change over time.
Market Risk This is the risk that the value of a Portfolio's investments
will fluctuate as the stock or bond markets fluctuate and that
prices overall will decline over shorter- or longer-term periods.
Interest Changes in interest rates will affect the yield and value of a
Rate Risk Portfolio's investments in fixed-income securities. When interest
rates rise, the value of a Portfolio's investments tends to fall
and this decrease in value may not be offset by higher interest
income from new investments. Interest rate risk is generally
greater for Portfolios that invest in fixed-income securities with
longer maturities or durations.
Credit Risk This is the risk that the issuer or the guarantor of a
fixed-income security, or the counterparty to a derivatives or
other contract, will be unable or unwilling to make timely
payments of interest or principal, or to otherwise honor its
obligations. The issuer or guarantor may default causing a loss of
the full principal amount of a security and any accrued interest.
The degree of risk for a particular security may be reflected in
its credit rating. There is the possibility that the credit rating
of a fixed-income security or its guarantor may be downgraded
after purchase of the security, which may affect the value of the
security. Investments in fixed-income securities with lower
ratings tend to have a higher probability that an issuer will
default or fail to meet its payment obligations.
Allocation If a Portfolio pursues the objective of a portfolio balanced
Risk between equity and debt securities, it has the risk that the
allocation of these investments may have a more significant effect
on the Portfolio's NAV when one of these asset classes is
performing more poorly than the other.
Non-U.S. A Portfolio's investments in non-U.S. (foreign) securities may
(Foreign) experience more rapid and extreme changes in value than
Risk investments in securities of U.S. companies. The securities
markets of many non-U.S. countries are relatively small, with a
limited number of companies representing a small number of
securities. Non-U.S. companies usually are not subject to the same
degree of regulation as U.S. issuers. Reporting, accounting, and
auditing standards of non-U.S. countries differ, in some cases
significantly, from U.S. standards. Nationalization, expropriation
or confiscatory taxation, currency blockage, political changes, or
diplomatic development could adversely affect a Portfolio's
investments in a non-U.S. country. These risks are heightened for
emerging market countries because there may be more economic,
political and social instability, and investments in companies in
emerging markets may have more risk because these securities may
be more volatile and less liquid. To the extent a Portfolio
invests in a particular country or geographic region, the
Portfolio may have more significant risk due to market changes or
other factors affecting that country or region, including
political instability and unpredictable economic conditions.
Emerging Non-U.S. investment risk may be particularly high to the extent
Market Risk a Portfolio invests in emerging market securities of issuers based
in countries with developing economies. These securities may
present market, credit, currency, liquidity, legal, political and
other risks different from, or greater than, the risk of investing
in developed non-U.S. (foreign) countries.
Currency This is the risk that fluctuations in the exchange rates between
Risk the U.S. Dollar and non-U.S. (foreign) currencies may negatively
affect the value of a Portfolio's investments or reduce the
returns of a Portfolio.
Liquidity Liquidity risk exists when particular investments are difficult to
Risk purchase or sell, possibly preventing a Portfolio from selling out
of these illiquid securities at an advantageous time or price.
Derivatives and securities involving substantial market and credit
risk tend to involve greater liquidity risk.
Management Each Portfolio is subject to management risk because it is an
Risk actively managed investment portfolio. The Adviser will apply its
investment techniques and risk analyses in making investment
decisions for each Portfolio, but there can be no guarantee that
its decisions will produce the desired results.
APPENDIX D
CERTAIN INFORMATION APPLICABLE TO
CLASS A AND CLASS B SHARES OF BALANCED WEALTH
How to Buy and Sell Shares
The Portfolio offers its shares through the separate accounts of life
insurance companies (the "Insurers"). You may only purchase and sell shares
through these separate accounts. See the prospectus of the separate account of
the participating insurance company for information on the purchase and sale of
the Portfolio's shares. AllianceBernstein Investments, Inc. ("ABI") may from
time to time receive payments from Insurers in connection with the sale of the
Portfolio's shares through the Insurer's separate accounts.
The Insurers maintain omnibus account arrangements with the Portfolio in
respect of the Portfolio and place aggregate purchase, redemption and exchange
orders for shares of the Portfolio corresponding to orders placed by the
contractholders who have purchased contracts from the Insurers, in each case, in
accordance with the terms and conditions of the relevant contract. Omnibus
account arrangements maintained by the Insurers are discussed below under
"Limitations on Ability to Detect and Curtail Excessive Trading Practices."
ABI may refuse any order to purchase shares. The Portfolio reserves the
right to suspend the sale of its shares to the public in response to conditions
in the securities markets or for other reasons.
Payments to Financial Intermediaries
Financial intermediaries, such as the Insurers, market and sell shares of
the Portfolio and typically receive compensation for selling shares of the
Portfolio. This compensation is paid from various sources. Insurers or your
financial intermediary receive compensation from ABI and/or the Adviser in
several ways from various sources, which include some or all of the following:
o defrayal of costs for educational seminars and training;
o additional distribution support; and
o payments related to providing contractholder recordkeeping and/or
administrative services.
ABI and/or the Adviser may pay Insurers or other financial intermediaries
to perform record-keeping and administrative services in connection with the
Portfolio. Such payments will generally not exceed 0.35% of the average daily
net assets of the Portfolio attributable to the Insurer.
Other Payments for Distribution Services and Educational Support
In addition to the fees described above, ABI, at its expense, currently
provides additional payments to the Insurers that sell shares of the Portfolio.
These sums include payments to reimburse directly or indirectly the costs
incurred by the Insurers and their employees in connection with educational
seminars and training efforts about the Portfolio for the Insurers' employees
and/or their clients and potential clients. The costs and expenses associated
with these efforts may include travel, lodging, entertainment and meals.
For 2008, ABI's additional payments to these firms for educational support
and distribution assistance related to the AVP Portfolios is expected to be
approximately $1.5 million. In 2007, ABI paid additional payments of
approximately $1.2 million for the AVP Portfolios.
If one mutual fund sponsor that offers shares to separate accounts of an
Insurer makes greater distribution assistance payments than another, the Insurer
may have an incentive to recommend or offer the shares of funds of one fund
sponsor over another.
Please speak with your financial intermediary to learn more about the total
amounts paid to your financial intermediary by the Adviser, ABI and by other
mutual fund sponsors that offer shares to Insurers that may be recommended to
you. You should also consult disclosures made by your financial intermediary at
the time of purchase.
ABI anticipates that the Insurers or their affiliates that will receive
additional payments for educational support include:
AIG SunAmerica
Ameriprise Financial
Genworth Financial
Grant West Life Annuity Co.
Hartford Life Insurance
ING Reliastar Life
ING USA Annuity and Life Insurance Co.
Lincoln Financial Distributors
Merrill Lynch
Prudential Financial
ReliaStar Life Insurance Co.
RiverSource Distributors, Inc.
Transamerica Capital, Inc.
Although the Portfolio may use brokers and dealers who sell shares of the
Portfolio to effect Portfolio transactions, the Portfolio does not consider the
sale of AllianceBernstein Mutual Fund shares as a factor when selecting brokers
or dealers to effect Portfolio transactions.
Frequent Purchases and Redemptions of Portfolio Shares
The Portfolio's Board of Directors has adopted policies and procedures
designed to detect and deter frequent purchases and redemptions of Portfolio
shares or excessive or short-term trading that may disadvantage long-term
contractholders. These policies are described below. The Portfolio reserves the
right to restrict, reject or cancel, without any prior notice, any purchase or
exchange order for any reason, including any purchase or exchange order accepted
by any Insurer or a contractholder's financial intermediary.
Risks Associated With Excessive Or Short-Term Trading Generally
- ---------------------------------------------------------------
While the Portfolio will try to prevent market timing by utilizing the
procedures described below, these procedures may not be successful in
identifying or stopping excessive or short-term trading in all circumstances. By
realizing profits through short-term trading, contractholders that engage in
rapid purchases and sales or exchanges of the Portfolio's shares dilute the
value of shares held by long-term contractholders. Volatility resulting from
excessive purchases and sales or exchanges of Portfolio shares, especially
involving large dollar amounts, may disrupt efficient portfolio management. In
particular, the Portfolio may have difficulty implementing its long-term
investment strategies if it is forced to maintain a higher level of its assets
in cash to accommodate significant short-term trading activity. Excessive
purchases and sales or exchanges of the Portfolio's shares may force the
Portfolio to sell portfolio securities at inopportune times to raise cash to
accommodate short-term trading activity. In addition, the Portfolio may incur
increased expenses if one or more contractholders engage in excessive or
short-term trading. For example, a Portfolio may be forced to liquidate
investments as a result of short-term trading and incur increased brokerage
costs and realization of taxable capital gains without attaining any investment
advantage. Similarly, the Portfolio may bear increased administrative costs due
to asset level and investment volatility that accompanies patterns of short-term
trading activity. All of these factors may adversely affect Portfolio
performance.
Investments in foreign securities may be particularly susceptible to
short-term trading strategies. This is because foreign securities are typically
traded on markets that close well before the time a Portfolio calculates its NAV
at 4:00 p.m., Eastern Time, which gives rise to the possibility that
developments may have occurred in the interim that would affect the value of
these securities. The time zone differences among international stock markets
can allow a contractholder engaging in a short-term trading strategy to exploit
differences in Portfolio share prices that are based on closing prices of
foreign securities established some time before the Portfolio calculates its own
share price (referred to as "time zone arbitrage"). The Portfolio has
procedures, referred to as fair value pricing, designed to adjust closing market
prices of foreign securities to reflect what is believed to be the fair value of
those securities at the time the Portfolio calculates its NAV. While there is no
assurance, the Portfolio expects that the use of fair value pricing, in addition
to the short-term trading policies discussed below, will significantly reduce a
contractholder's ability to engage in time zone arbitrage to the detriment of
other contractholders.
Contractholders engaging in a short-term trading strategy may also target a
Portfolio that does not invest primarily in foreign securities. If the Portfolio
invests in securities that are, among other things, thinly traded, traded
infrequently, or relatively illiquid, it has the risk that the current market
price for the securities may not accurately reflect current market values.
Contractholders may seek to engage in short-term trading to take advantage of
these pricing differences (referred to as "price arbitrage"). The Portfolio may
be adversely affected by price arbitrage, in particular, to the extent that it
significantly invests in small-cap securities or specific industry sector
securities.
Policy Regarding Short-Term Trading
- -----------------------------------
Purchases and exchanges of shares of the Portfolio should be made for
investment purposes only. The Portfolio seeks to prevent patterns of excessive
purchases and sales or exchanges of Portfolio shares. The Portfolio will seek to
prevent such practices to the extent they are detected by the procedures
described below. The Portfolio reserves the right to modify this policy,
including any surveillance or account blocking procedures established from time
to time to effectuate this policy, at any time without notice.
Transaction Surveillance Procedures. The Portfolio, through its agents, ABI
and ABIS, maintains surveillance procedures to detect excessive or short-term
trading in Portfolio shares. This surveillance process involves several factors,
which include scrutinizing individual Insurers' omnibus transaction activity in
Portfolio shares in order to ascertain whether any such activity attributable to
one or more contractholders might constitute excessive or short-term trading.
Insurers' omnibus transaction activity identified by these surveillance
procedures, or as a result of any other information actually available at the
time, will be evaluated to determine whether such activity might indicate
excessive or short-term trading activity attributable to one or more
contractholders. These surveillance procedures may be modified from time to
time, as necessary or appropriate to improve the detection of excessive or
short-term trading or to address specific circumstances.
Account Blocking Procedures. If the Portfolio determines, in its sole
discretion, that a particular transaction or pattern of transactions identified
by the transaction surveillance procedures described above is excessive or
short-term trading in nature, the relevant Insurer's omnibus account(s) will be
immediately "blocked" and no future purchase or exchange activity will be
permitted, except to the extent the Portfolio, ABI or ABIS has been informed in
writing that the terms and conditions of a particular contract may limit the
Portfolio's ability to apply its short-term trading policy to contractholder
activity as discussed below. As a result, any contractholder seeking to engage
through an Insurer in purchase or exchange activity in shares of the Portfolio
under a particular contract will be prevented from doing so. However, sales of
Portfolio shares back to the Portfolio or redemptions will continue to be
permitted in accordance with the terms of the Portfolio's current Prospectus. In
the event an account is blocked, certain account-related privileges, such as the
ability to place purchase, sale and exchange orders over the internet or by
phone, may also be suspended. An Insurer's omnibus account that is blocked will
generally remain blocked unless and until the Insurer provides evidence or
assurance acceptable to the Portfolio one or more contractholders did not or
will not in the future engage in excessive or short-term trading.
Applications of Surveillance Procedures and Restrictions to Omnibus
Accounts. The Portfolio applies its surveillance procedures to Insurers. As
required by SEC rules, the Portfolio has entered into agreements with all of its
financial intermediaries, including Insurers, that require the financial
intermediaries to provide the Portfolio, upon the request of the Portfolio or
its agents, with individual account level information about their transactions.
If the Portfolio detects excessive trading through its monitoring of omnibus
accounts, including trading at the individual account level, an Insurer will
also execute instructions from the Portfolio to take actions to curtail the
activity, which may include applying blocks to accounts to prohibit future
purchases and exchanges of Portfolio shares.
Risks to Contractholders Resulting From Imposition of Account Blocks in Response
to Excessive Short-Term Trading Activity
- --------------------------------------------------------------------------------
A contractholder identified as having engaged in excessive or short-term
trading activity whose account is "blocked" and who may not otherwise wish to
redeem his or her shares effectively may be "locked" into an investment in
shares of the Portfolio that the contractholder did not intend to hold on a
long-term basis or that may not be appropriate for the contractholder's risk
profile. To rectify this situation, a contractholder with a "blocked" account
may be forced to redeem Portfolio shares, which could be costly if, for example,
these shares have declined in value. To avoid this risk, a contractholder should
carefully monitor the purchases, sales, and exchanges of Portfolio shares and
avoid frequent trading in Portfolio shares.
Limitations on Ability to Detect and Curtail Excessive Trading Practices
- ------------------------------------------------------------------------
Insurers utilizing omnibus account arrangements may not identify to the
Portfolio, ABI or ABIS contractholders' transaction activity relating to shares
of the Portfolio on an individual basis. Consequently, the Portfolio, ABI and
ABIS may not be able to detect excessive or short-term trading in shares of the
Portfolio attributable to a particular contractholder who effects purchase and
redemption and/or exchange activity in shares of the Portfolio through an
Insurer acting in an omnibus capacity. In seeking to prevent excessive or
short-term trading in shares of the Portfolio, including the maintenance of any
transaction surveillance or account blocking procedures, the Portfolio, ABI and
ABIS consider the information actually available to them at the time.
How the Portfolio Values Its Shares
The Portfolio's NAV is calculated at the close of regular trading on the
Exchange (ordinarily, 4:00 p.m., Eastern Time), only on days when the Exchange
is open for business. To calculate NAV, the Portfolio's assets are valued and
totaled, liabilities are subtracted, and the balance, called net assets, is
divided by the number of shares outstanding. If the Portfolio invests in
securities that are primarily traded on foreign exchanges that trade on weekends
or other days when the Portfolio does not price its shares, the NAV of the
Portfolio's shares may change on days when contractholders will not be able to
purchase or redeem their shares in the Portfolio.
The Portfolio values its securities at their current market value
determined on the basis of market quotations or, if market quotations are not
readily available or are unreliable, at "fair value" as determined in accordance
with procedures established by and under the general supervision of the
Directors. When the Portfolio uses fair value pricing, it may take into account
any factors it deems appropriate. The Portfolio may determine fair value based
upon developments related to a specific security, current valuations of non-U.S.
(foreign) stock indices (as reflected in U.S. futures markets) and/or U.S.
sector or broader stock market indices. The prices of securities used by the
Portfolio to calculate its NAV may differ from quoted or published prices for
the same securities. Fair value pricing involves subjective judgments and it is
possible that the fair value determined for a security is materially different
than the value that could be realized upon the sale of that security.
The Portfolio expects to use fair value pricing for securities primarily
traded on U.S. exchanges only under very limited circumstances, such as the
early closing of the exchange on which a security is traded or suspension of
trading in the security. The Portfolio may use fair value pricing more
frequently for securities primarily traded in non-U.S. (foreign) markets
because, among other things, most non-U.S. (foreign) markets close well before
the Portfolio values its securities at 4:00 p.m., Eastern Time. The earlier
close of these non-U.S. (foreign) markets gives rise to the possibility that
significant events, including broad market moves, may have occurred in the
interim. For example, the Portfolio believes that non-U.S. (foreign) security
values may be affected by events that occur after the close of non-U.S.
(foreign) securities markets. To account for this, the Portfolio may frequently
value many of its non-U.S. (foreign) equity securities using fair value prices
based on third party vendor modeling tools to the extent available.
Subject to the Directors' oversight, the Directors has delegated
responsibility for valuing the Portfolio's assets to the Adviser. The Adviser
has established a Valuation Committee, which operates under the policies and
procedures approved by the Directors, to value the Portfolio's assets on behalf
of the Portfolio. The Valuation Committee values Portfolio assets as described
above.
Your order for purchase, sale, or exchange of shares is priced at the
next-determined NAV after your order is received in proper form by the
Portfolio.
APPENDIX E
OTHER INFORMATION
The following information provides only a summary of the key features of
the organizational structure and governing documents of the Portfolios. Each
Portfolio is organized as a series of the same Maryland corporation. The Charter
and Bylaw provisions that govern AVP apply to Balanced Wealth and Balanced
Shares. Accordingly, there are no differences between Balanced Shares and
Balanced Wealth in terms of their corporate organizational structures.
General
Each Portfolio has procedures available to its respective shareholders for
calling shareholders' meetings and for the removal of directors. Under Maryland
law, unless the charter provides otherwise (which AVP's does not), a director
may be removed, either with or without cause, at a meeting duly called and at
which a quorum is present by the affirmative vote of the holders of a majority
of the votes entitled to be cast for the election of directors. Under the
Bylaws, shareholder-requested special meetings of shareholders for any other
purpose shall be called by AVP's Secretary only upon the written request of
shareholders entitled to cast not less than a majority of all the votes entitled
to be cast at the meeting.
For each Portfolio, the presence in person or by proxy of the holders of
one-third of the shares entitled to be cast constitutes a quorum at any meeting
of shareholders of the Portfolio. When a quorum is present at any meeting, the
affirmative vote of a majority of the votes (or with respect to the election of
directors, a plurality of votes) cast shall decide any question brought before
such meeting, except as otherwise required by law.
Shares of Common Stock of the Portfolios
The Portfolios' shares have no preemptive rights. Each share has equal
voting, dividend, distribution and liquidation rights. Shareholders are entitled
to one vote per share. All voting rights for the election of directors are
non-cumulative, which means that the holders of more than 50% of the shares of
common stock of AVP can elect 100% of the directors then nominated for election
if they choose to do so and, in such event, the holders of the remaining shares
of common stock will not be able to elect any directors. The Portfolios are
organized as series of the same Maryland corporation and thus their shareholders
have the same rights due to them under state law. The Portfolios are not
required to, and do not, hold annual meetings of shareholders and have no
current intention to hold such meetings, except as required by the 1940 Act.
Under the 1940 Act, Balanced Shares and Balanced Wealth are required to hold a
shareholder meeting if, among other reasons, the number of Directors elected by
shareholders is less than a majority of the total number of Directors, or if a
Portfolio seeks to change its fundamental investment policies.
Dividends and Distributions
Balanced Shares and Balanced Wealth have the same dividends and
distributions policies. Both Balanced Shares and Balanced Wealth declare
dividends on their shares at least annually. The income and capital gains
distribution is made in shares of each Portfolio.
Indemnification and Liability of Directors and Officers
The charter of AVP generally provides for the indemnification of officers
and directors, as applicable, to the full extent permitted by Maryland law. This
indemnification does not protect any such person against any liability to a
Portfolio or any shareholder thereof to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the satisfaction of such person's
office.
Maryland law permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its shareholders for money damages except for liability
resulting from (a) actual receipt of an improper benefit or profit in money,
property or services or (b) active and deliberate dishonesty established by a
final judgment as being material to the cause of action. AVP's charter contains
such a provision that eliminates directors' and officers' liability to the
maximum extent permitted by Maryland law. This exculpation does not protect any
such person against any liability to a Portfolio or any shareholder thereof to
which such person would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
satisfaction of such person's office.
APPENDIX F
FORM OF PLAN OF ACQUISITION AND LIQUIDATION
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC.
WITH RESPECT TO ITS SERIES
ALLIANCEBERNSTEIN BALANCED SHARES PORTFOLIO
AND
ALLIANCEBERNSTEIN BALANCED WEALTH STRATEGY PORTFOLIO
As of
June 11, 2008
This Plan of Acquisition and Liquidation (the "Plan") has been adopted by
the Board of Directors of AllianceBernstein Variable Products Series Fund, Inc.,
a Maryland corporation (the "Corporation"), as of this 11th day of June, 2008,
to provide for the reorganization of AllianceBernstein Balanced Shares Portfolio
(the "Acquired Portfolio") into AllianceBernstein Balanced Wealth Strategy
Portfolio (the "Acquiring Portfolio"). The Acquired Portfolio and the Acquiring
Portfolio (together, the "Portfolios") are each separate series of the
Corporation, an open-end management investment company registered with the
Securities and Exchange Commission (the "SEC") under the Investment Company Act
of 1940, as amended (the "1940 Act").
The Board of Directors (the "Board") has determined that it is in the best
interest of the stockholders of the Acquiring Portfolio and the Acquired
Portfolio that the Acquired Portfolio transfer all of the assets attributable to
its Class A shares held by its stockholders ("Stockholders") in exchange for
Class A shares of equal net asset value of the Acquiring Portfolio ("Class A
Acquisition Shares"), transfer all of the assets attributable to its Class B
shares held by its Stockholders in exchange for Class B shares of equal net
asset value of the Acquiring Portfolio ("Class B Acquisition Shares" and
together with Class A Acquisition Shares, the "Acquisition Shares") and
distribute Class A Acquisition Shares and Class B Acquisition Shares,
respectively, of the Acquired Portfolio and that the Corporation redeem the
outstanding shares (the "Acquired Portfolio Shares") of the Acquired Portfolio,
all as provided for below (the "Acquisition").
In this Plan of Acquisition, any references to a Portfolio taking action
shall mean and include all necessary actions of the Corporation on behalf of a
Portfolio, unless the context of this Plan of Acquisition or the 1940 Act
requires otherwise.
The Corporation intends that the Acquisition qualify as a "reorganization"
within the meaning of Section 368(a) of the United States Internal Revenue Code
of 1986, as amended (the "Code"), and any successor provisions, and that with
respect to the Acquisition, the Acquiring Portfolio and the Acquired Portfolio
will each be a "party to a reorganization" within the meaning of Section 368(b)
of the Code.
1. Definitions
In addition to the terms elsewhere defined herein, each of the following
terms shall have the meaning indicated for that term as follows:
1933 Act Securities Act of 1933, as amended.
Assets All assets of any kind and all interests, rights, privileges
and powers of or attributable to the Acquired Portfolio or its
shares, as appropriate, whether or not determinable at the
Effective Time (as defined herein) and wherever located,
including, without limitation, all cash, cash equivalents,
securities, claims (whether absolute or contingent, known or
unknown, accrued or unaccrued or conditional or unmatured),
contract rights and receivables (including dividend and
interest receivables) owned by the Acquired Portfolio or
attributable to its shares and any deferred or prepaid expense,
other than unamortized organizational expenses, shown as an
asset on the Acquired Portfolio's books.
Closing Date Such date as the officers of the Corporation shall designate.
Effective Time 5:00 p.m., Eastern Time, on the Closing Date, or such other
time as the officers of the Corporation shall designate.
Financial The audited financial statements of the relevant Portfolio for
Statements its most recently completed fiscal year and, if applicable, the
unaudited financial statements of that Portfolio for its most
recently completed semi-annual period.
Liabilities All liabilities, expenses and obligations of any kind
whatsoever of the Acquired Portfolio, whether known or unknown,
accrued or unaccrued, absolute or contingent or conditional or
unmatured.
N-14 The Registration Statement of the Acquiring Portfolio on Form
Registration N-14 under the 1940 Act that will register the Acquisition
Statement Shares to be issued in the Acquisition.
Valuation Time The close of regular session trading on the New York Stock
Exchange ("NYSE") on the Closing Date, when for purposes of the
Plan, the Corporation determines the net asset value per
Acquisition Share of the Acquiring Portfolio and the net value
of the assets of the Acquired Portfolio.
NAV A Portfolio's net asset value is calculated by valuing and
totaling assets and then subtracting liabilities and then
dividing the balance by the number of shares that are
outstanding.
2. Regulatory Filings
The Acquiring Portfolio shall promptly prepare and file the N-14
Registration Statement with the SEC, and the Acquiring Portfolio and the
Acquired Portfolio also shall make any other required or appropriate filings
with respect to the actions contemplated hereby.
3. Transfer of the Acquired Portfolio's Assets
The Acquiring Portfolio and the Acquired Portfolio shall take the following
steps with respect to the Acquisition, as applicable:
(a) On or prior to the Closing Date, the Acquired Portfolio shall pay or
provide for the payment of all of the Liabilities, expenses, costs and
charges of or attributable to the Acquired Portfolio that are known to
the Acquired Portfolio and that are due and payable prior to or as of
the Closing Date.
(b) Prior to the Effective Time, except to the extent prohibited by Rule
19b-1 under the 1940 Act, the Acquired Portfolio will declare to
Acquired Portfolio Stockholders of record a dividend or dividends
which, together with all previous such dividends, shall have the
effect of distributing (a) all the excess of (i) the Acquired
Portfolio's investment income excludable from gross income under
Section 103(a) of the Code over (ii) the Acquired Portfolio's
deductions disallowed under Sections 265 and 171(a)(2) of the Code,
(b) all of the Acquired Portfolio's investment company taxable income
(as defined in Code Section 852), (computed in each case without
regard to any deduction for dividends paid), and (c) all of the
Acquired Portfolio's net realized capital gain (as defined in Code
Section 1222), if any (after reduction for any capital loss
carryover), for the taxable year ending on December 31, 2007 and for
the short taxable year beginning on January 1, 2008, and ending on the
Closing Date. Such dividends will be declared and paid to ensure
continued qualification of the Acquired Portfolio as a "regulated
investment company" for tax purposes and to eliminate fund-level tax.
(c) At the Effective Time, the Acquired Portfolio shall assign, transfer,
deliver and convey the Assets to the Acquiring Portfolio, subject to
the Liabilities, and the Acquiring Portfolio shall then accept the
Assets and assume the Liabilities such that at and after the Effective
Time (i) the Assets at and after the Effective Time shall become and
be assets of the Acquiring Portfolio, and (ii) the Liabilities at the
Effective Time shall attach to the Acquiring Portfolio, and shall be
enforceable against the Acquiring Portfolio to the same extent as if
initially incurred by the Acquiring Portfolio. The Corporation shall
redeem the outstanding shares of the Acquired Portfolio by issuance of
shares of Acquiring Portfolio as described more fully below.
(d) Within a reasonable time prior to the Closing Date, the Acquired
Portfolio shall provide, if requested, a list of the Assets to the
Acquiring Portfolio. The Acquired Portfolio may sell any asset on such
list prior to the Effective Time. After the Acquired Portfolio
provides such list, the Acquired Portfolio will not acquire any
additional securities or permit to exist any encumbrances, rights,
restrictions or claims not reflected on such list, without the
approval of the Acquiring Portfolio. Within a reasonable time after
receipt of the list and prior to the Closing Date, the Acquiring
Portfolio will advise the Acquired Portfolio in writing of any
investments shown on the list that the Acquiring Portfolio has
determined to be inconsistent with its investment objective, policies
and restrictions. The Acquired Portfolio will dispose of any such
securities prior to the Closing Date to the extent practicable and
consistent with applicable legal requirements, including the Acquired
Portfolio's investment objectives, policies and restrictions. In
addition, if the Acquiring Portfolio determines that, as a result of
the Acquisition, the Acquiring Portfolio would own an aggregate amount
of an investment that would exceed a percentage limitation applicable
to the Acquiring Portfolio, the Acquiring Portfolio will advise the
Acquired Portfolio in writing of any such limitation and the Acquired
Portfolio shall dispose of a sufficient amount of such investment as
may be necessary to avoid the limitation as of the Effective Time, to
the extent practicable and consistent with applicable legal
requirements, including the Acquired Portfolio's investment
objectives, policies and restrictions.
(e) The Acquired Portfolio shall assign, transfer, deliver and convey the
Assets to the Acquiring Portfolio at the Effective Time on the
following basis:
(1) The value of the Assets less the Liabilities of the Acquired
Portfolio attributable to shares of Class A held by Stockholders
and shares of Class B held by Stockholders, determined as of the
Valuation Time, shall be divided by the then NAV of one Class A
and Class B Acquisition Share, as applicable, and, in exchange
for the transfer of the Assets, the Acquiring Portfolio shall
simultaneously issue and deliver to the Acquired Portfolio the
number of Class A and Class B Acquisition Shares (including
fractional shares) so determined, rounded to the second decimal
place or such other decimal place as the officers of the
Corporation shall designate;
(2) The NAV of Class A and Class B Acquisition Shares to be delivered
to the Acquired Portfolio shall be determined as of the Valuation
Time in accordance with the Acquiring Portfolio's then applicable
valuation procedures, and the net value of the Assets to be
conveyed to the Acquiring Portfolio shall be determined as of the
Valuation Time in accordance with the then applicable valuation
procedures of the Acquired Portfolio; and
(3) The portfolio securities of the Acquired Portfolio shall be made
available by the Acquired Portfolio to The Bank of New York, as
custodian for the Acquiring Portfolio (the "Custodian"), for
examination no later than five business days preceding the
Valuation Time. On the Closing Date, such portfolio securities
and all the Acquired Portfolio's cash shall be delivered by the
Acquired Portfolio to the Custodian for the account of the
Acquiring Portfolio, such portfolio securities to be duly
endorsed in proper form for transfer in such manner and condition
as to constitute good delivery thereof in accordance with the
custom of brokers or, in the case of portfolio securities held in
the U.S. Treasury Department's book-entry system or by The
Depository Trust Company, Participants Trust Company or other
third party depositories, by transfer to the account of the
Custodian in accordance with Rule 17f-4, Rule 17f-5 or Rule
17f-7, as the case may be, under the 1940 Act and accompanied by
all necessary federal and state stock transfer stamps or a check
for the appropriate purchase price thereof. The cash delivered
shall be in the form of currency or certified or official bank
checks, payable to the order of the Custodian, or shall be wired
to an account pursuant to instructions provided by the Acquiring
Portfolio.
(f) Promptly after the Closing Date, the Acquired Portfolio will deliver
to the Acquiring Portfolio a Statement of Assets and Liabilities of
the Acquired Portfolio as of the Closing Date.
4. Termination of the Acquired Portfolio, Registration of Acquisition Shares
and Access to Records
The Acquired Portfolio and the Acquiring Portfolio also shall take the
following steps, as applicable:
(a) At or as soon as reasonably practical after the Effective Time, the
Acquired Portfolio shall terminate by transferring pro rata to its
Class A Stockholders of record Class A Acquisition Shares received by
the Acquired Portfolio pursuant to Section 3(e)(1) of this Plan and to
its Class B Stockholders of record Class B Acquisition Shares received
by the Acquired Portfolio pursuant to Section 3(e)(1) of this Plan.
The Acquiring Portfolio shall establish accounts on its share records
and note on such accounts the names of the former Acquired Portfolio
Stockholders and the types and amounts of the Acquisition Shares that
former Acquired Portfolio Stockholders are due based on their
respective holdings of the Acquired Portfolio Shares as of the close
of business on the Closing Date. Fractional Acquisition Shares shall
be carried to the second decimal place. The Acquiring Portfolio shall
not issue certificates representing the Acquisition Shares in
connection with such exchange. All issued and outstanding Acquired
Portfolio Shares will be simultaneously redeemed and cancelled on the
books of the Acquired Portfolio. Ownership of the Acquisition Shares
will be shown on the books of the Acquiring Portfolio's transfer
agent.
Following distribution by the Acquired Portfolio to its Stockholders
of all Acquisition Shares delivered to the Acquired Portfolio, the
Acquired Portfolio shall wind up its affairs and shall take all steps
as are necessary and proper to terminate as soon as is reasonably
possible after the Effective Time.
(b) At and after the Closing Date, the Acquired Portfolio shall provide
the Acquiring Portfolio and its transfer agent with immediate access
to: (i) all records containing the names, addresses and taxpayer
identification numbers of all of the Acquired Portfolio's Stockholders
and the number and percentage ownership of the outstanding shares of
the Acquired Portfolio owned by Stockholders as of the Effective Time,
and (ii) all original documentation (including all applicable Internal
Revenue Service forms, certificates, certifications and
correspondence) relating to the Acquired Portfolio Stockholders'
taxpayer identification numbers and their liability for or exemption
from back-up withholding. The Acquired Portfolio shall preserve and
maintain, or shall direct its service providers to preserve and
maintain, records with respect to the Acquired Portfolio as required
by Section 31 of, and Rules 31a-1 and 31a-2 under, the 1940 Act.
5. Conditions to Consummation of the Acquisition
The consummation of the Acquisition shall be subject to the following
conditions precedent:
(a) There shall have been no material adverse change in the financial
condition, results of operations, business, properties or assets of
the Acquiring Portfolio or the Acquired Portfolio since the date of
the most recent Financial Statements. Negative investment performance
shall not be considered a material adverse change.
(b) The Corporation shall have received an opinion of Seward & Kissel LLP,
substantially to the effect that for federal income tax purposes:
(1) The Acquisition will constitute a "reorganization" within the
meaning of Section 368(a) of the Code and that the Acquiring
Portfolio and the Acquired Portfolio will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code;
(2) A Stockholder of the Acquired Portfolio will recognize no gain or
loss on the exchange of the Stockholder's shares of the Acquired
Portfolio solely for Acquisition Shares;
(3) Neither the Acquired Portfolio nor the Acquiring Portfolio will
recognize any gain or loss upon the transfer of all of the Assets
to the Acquiring Portfolio in exchange for Acquisition Shares and
the assumption by the Acquiring Portfolio of the Liabilities
pursuant to this Plan or upon the distribution of Acquisition
Shares to Stockholders of the Acquired Portfolio in exchange for
their respective shares of the Acquired Portfolio;
(4) The holding period and tax basis of the Assets acquired by the
Acquiring Portfolio will be the same as the holding period and
tax basis that the Acquired Portfolio had in such Assets
immediately prior to the Acquisition;
(5) The aggregate tax basis of Acquisition Shares received in
connection with the Acquisition by each Stockholder of the
Acquired Portfolio (including any fractional share to which the
Stockholder may be entitled) will be the same as the aggregate
tax basis of the shares of the Acquired Portfolio surrendered in
exchange therefor, and increased by any gain recognized on the
exchange;
(6) The holding period of Acquisition Shares received in connection
with the Acquisition by each Stockholder of the Acquired
Portfolio (including any fractional share to which the
stockholder may be entitled) will include the holding period of
the shares of the Acquired Portfolio surrendered in exchange
therefor, provided that such Acquired Portfolio shares constitute
capital assets in the hands of the Stockholder as of the Closing
Date; and
(7) The Acquiring Portfolio will succeed to the capital loss
carryovers of the Acquired Portfolio but the use of the Acquiring
Portfolio's existing capital loss carryovers (as well as the
carryovers of the Acquired Portfolio) may be subject to
limitation under Section 383 of the Code after the Acquisition.
The opinion will be based on certain factual certifications made by
officers of the Portfolios and will also be based on customary
assumptions and subject to certain qualifications. The opinion is not
a guarantee that the tax consequences of the Acquisition will be as
described above.
Notwithstanding this subparagraph (b), Seward & Kissel LLP will
express no view with respect to the effect of the Acquisition on any
transferred asset as to which any unrealized gain or loss is required
to be recognized at the end of a taxable year (or on the termination
or transfer thereof) under federal income tax principles. Each
Portfolio shall provide additional factual representations to Seward &
Kissel LLP with respect to the Portfolios that are reasonably
necessary to enable Seward & Kissel LLP to deliver the tax opinion.
Notwithstanding anything in this Plan to the contrary, neither
Portfolio may waive in any material respect the conditions set forth
under this subparagraph (b).
(c) The N-14 Registration Statement shall have become effective under the
1933 Act as to the Acquisition Shares, and the SEC shall not have
instituted and, to the knowledge of the Acquiring Portfolio, is not
contemplating instituting any stop order suspending the effectiveness
of the N-14 Registration Statement.
(d) No action, suit or other proceeding shall be threatened or pending
before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection
with the Acquisition.
(e) The SEC shall not have issued any unfavorable advisory report under
Section 25(b) of the 1940 Act nor instituted any proceeding seeking to
enjoin consummation of the Acquisition under Section 25(c) of the 1940
Act.
(f) The Acquired Portfolio shall have received a letter from
AllianceBernstein L.P. (the "Adviser") with respect to insurance
matters in form and substance satisfactory to the Acquired Portfolio.
(g) The Acquiring Portfolio shall have received a letter from the Adviser
agreeing to indemnify the Acquiring Portfolio in respect of certain
liabilities of the Acquired Portfolio in form and substance
satisfactory to the Acquiring Portfolio.
6. Closing
(a) The Closing shall be held at the offices of the Corporation, 1345
Avenue of the Americas, New York, New York 10105, or at such other
place as the officers of the Corporation may designate.
(b) In the event that at the Valuation Time (i) the NYSE shall be closed
to trading or trading thereon shall be restricted, or (ii) trading or
the reporting of trading on said Exchange or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of
the Acquired Portfolio or the Acquiring Portfolio is impracticable,
the Closing Date shall be postponed until the first business day after
the day when trading shall have been fully resumed and reporting shall
have been restored; provided that if trading shall not be fully
resumed and reporting restored within three business days of the
Valuation Time, this Plan may be terminated by the Board.
(c) The Acquiring Portfolio will provide to the Acquired Portfolio
evidence satisfactory to the Acquired Portfolio that Acquisition
Shares issuable pursuant to the Acquisition have been credited to the
Acquired Portfolio's account on the books of the Acquiring Portfolio.
After the Closing Date, the Acquiring Portfolio will provide to the
Acquired Portfolio evidence satisfactory to the Acquired Portfolio
that such Shares have been credited pro rata to open accounts in the
names of the Acquired Portfolio Stockholders.
(d) At the Closing, each party shall deliver to the other such bills of
sale, instruments of assumption of liabilities, checks, assignments,
stock certificates, receipts or other documents as such other party or
its counsel may reasonably request in connection with the transfer of
assets, assumption of liabilities and liquidation contemplated by this
Plan.
7. Termination of Plan
A majority of the Corporation's Board may terminate this Plan before the
applicable Effective Time if: (i) any of the conditions precedent set forth
herein are not satisfied; or (ii) the Board determines that the consummation of
the Acquisition is not in the best interests of either Portfolio or its
Stockholders.
8. Termination of the Acquired Portfolio
If the Acquisition is consummated, the Acquired Portfolio shall terminate
its registration under the 1940 Act and the 1933 Act and will terminate.
9. Expenses
The Acquisition expenses shall be borne by both Portfolios and apportioned
on the basis of each Portfolio's relative expense ratio reductions.
APPENDIX G
CAPITALIZATION
The following table shows on an unaudited basis the capitalization of each
of Balanced Shares and Balanced Wealth as of March 31, 2008 and on a pro forma
combined basis, giving effect to the acquisition of the assets and liabilities
of Balanced Shares by Balanced Wealth at net asset value as of March 31, 2008.
Balanced Wealth
Balanced Shares Balanced Wealth Pro Forma Class A
Class A Class A Adjustments (pro forma)(a)
------------ ------------ -------------- --------------
Net Asset Value $111,525,704 $9,356 (68,609)(b) $111,466,451
Shares
outstanding 6,196,226 765 2,923,322 9,120,313
Net asset value
per share $18.00 $12.23 $12.22
Balanced Wealth
Balanced Shares Balanced Wealth Pro Forma Class B
Class B Class B Adjustments (pro forma)(a)
------------ ------------ -------------- --------------
Net Asset Value $33,866,833 $220,045,214 (130,391)(b) $253,781,656
Shares
outstanding 1,895,712 18,124,741 893,202 20,913,655
Net asset value
per share $17.86 $12.14 $12.13
- ----------
(a) Assumes the Acquisition was consummated on March 31, 2008 and is for
information purposes only. No assurance can be given as to how many shares
of Balanced Wealth will be received by the shareholders of Balanced Shares
on the date the Acquisition takes place, and the foregoing should not be
relied upon to reflect the number of shares of Balanced Wealth that
actually will be received on or after such date.
(b) Includes adjustments for estimated proxy costs.
APPENDIX H
LEGAL PROCEEDINGS
On October 2, 2003, a purported class action complaint entitled Hindo, et
al. v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint") was
filed against the Adviser, AllianceBernstein Holding L.P. ("Holding"),
AllianceBernstein Corporation, AXA Financial, Inc., the AllianceBernstein Funds,
certain officers of the Adviser ("AllianceBernstein defendants"), and certain
other unaffiliated defendants, as well as unnamed Doe defendants. The Hindo
Complaint was filed in the United States District Court for the Southern
District of New York by alleged shareholders of two of the AllianceBernstein
Mutual Funds. The Hindo Complaint alleges that certain of the AllianceBernstein
defendants failed to disclose that they improperly allowed certain hedge funds
and other unidentified parties to engage in "late trading" and "market timing"
of AllianceBernstein Mutual Fund securities, violating Sections 11 and 15 of the
Securities Act of 1933, as amended, Sections 10(b) and 20(a) of the Securities
and Exchange Act of 1934, as amended, and Sections 206 and 215 of the Investment
Advisers Act of 1940, as amended. Plaintiffs seek an unspecified amount of
compensatory damages and rescission of their contracts with the Adviser,
including recovery of all fees paid to the Adviser pursuant to such contracts.
Following October 2, 2003, additional lawsuits making factual allegations
generally similar to those in the Hindo Complaint were filed in various federal
and state courts against the Adviser and certain other defendants. All state
court actions against the Adviser either were voluntarily dismissed or removed
to federal court. On February 20, 2004, the Judicial Panel on Multidistrict
Litigation transferred all federal actions to the United States District Court
for the District of Maryland (the "Mutual Fund MDL"). On September 29, 2004,
plaintiffs filed consolidated amended complaints with respect to four claim
types: mutual fund shareholder claims; mutual fund derivative claims; derivative
claims brought on behalf of Holding; and claims brought under ERISA by
participants in the Profit Sharing Plan for Employees of the Adviser. All four
complaints include substantially identical factual allegations, which appear to
be based in large part on the Order of the SEC dated December 18, 2003 as
amended and restated January 15, 2004 (the "SEC Order") and the New York State
Attorney General Assurance of Discontinuance dated September 1, 2004 (the "NYAG
Order").
On April 21, 2006, the Adviser and attorneys for the plaintiffs in the
mutual fund shareholder claims, mutual fund derivative claims, and ERISA claims
entered into a confidential memorandum of understanding ("MOU") containing their
agreement to settle these claims. The agreement will be documented by a
stipulation of settlement and will be submitted for court approval at a later
date. The settlement amount ($30 million), which we previously accrued and
disclosed, has been disbursed. The derivative claims brought on behalf of
Holding, in which plaintiffs seek an unspecified amount of damages, remain
pending.
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the affected fund's
shares or other adverse consequences to those funds. This may require those
funds to sell investments held by those funds to provide for sufficient
liquidity and could also have an adverse effect on the investment performance of
the Portfolio. However, the Adviser believes that these matters are not likely
to have a material adverse effect on its ability to perform advisory services
relating to those funds or the portfolio.
APPENDIX I
SHARE OWNERSHIP INFORMATION
Shares Outstanding
As of June 16, 2008, each Portfolio had the following number of shares of
common stock outstanding.
Number of Outstanding
Shares of
Portfolio Class Common Stock
- ----------------------------------------- ----- ---------------------------
Balanced Shares A 6,780,749
B 2,111,377
Balanced Wealth A 765
B 21,707,110
Ownership of Shares
As of June 16, 2008, the Directors and officers of each Portfolio as a
group beneficially owned less than 1% of the outstanding shares of common stock
of that Portfolio. To the knowledge of each Portfolio, the following table shows
the persons owning, as of June 16, 2008, either of record or beneficially, 5% or
more of the outstanding shares of the Portfolio and the percentage of the
combined Portfolio's shares to be owned by the persons if the Acquisition had
been consummated as of that date.
Percentage of
Outstanding Shares
Number of Percentage of of Combined
Name and Address of Outstanding Shares Outstanding Shares Portfolio Class
Portfolio and Class Shareholder of Class Owned of Class Owned Owned
- ------------------- ---------------------- ------------------ ------------------- -------------------
Balanced Shares
Class A American International Life 356,043 5.26% 3.90%
Insurance Company of New York
Attn: Ed Bacon
2727 A Allen Parkway
Mail Stop 4D-1
Houston, TX 77019-2116
AIG Life Insurance Company 6,102,762 90.13% 66.91%
Attn: Ed Bacon
2727 A Allen Parkway
Mail Stop 4D-1
Houston, TX 77019-2107
Class B Anchor National Life Insurance Company 1,914,576 90.68% 9.15%
Attn: Variable Annuity Accounting
21650 Oxnard Street
Woodland Hills, CA 91367-4901
American Enterprise Life 137,072 6.49% 0.66%
Insurance Company
1497 AXP Financial Center
Minneapolis, MN 55474-0001
Balanced Wealth
Alliance Capital Management L.P. 765 100% 0.01%
Class A Attn: Raymond Cardosi - Seed Account
1 N. Lexington Avenue
White Plains, NY 10601-1712
Class B Hartford Life and Annuity 10,722,413 49.11% 51.27%
Separate Account
200 Hopwood Meadow Street
P.O. Box 2999
Hartford, CT 06104-2999
Hartford Life Separate Account 1A 4,361,900 19.98% 20.86%
200 Hopwood Meadow Street
P.O. Box 2999
Hartford, CT 06104-2999
GE Life and Annuity Insurance Company 1,444,477 6.62% 6.91%
6610 Broad Street
Building 3, 5th Floor
Attn: Variable Accounting
Richmond, VA 23230-1702
Anchor National Life Insurance Company 3,424,733 15.68% 16.38%
Attn: Variable Annuity Accounting
21650 Oxnard Street
Woodland Hills, CA 91367-4901
[THIS PAGE INTENTIONALLY LEFT BLANK]
APPENDIX J
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
Portfolio's financial performance for the past 5 years (or, if shorter, the
period of the Portfolio's operations). Certain information reflects financial
results for a single share of each Portfolio. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Portfolio (assuming reinvestment of all dividends and distributions).
Except as otherwise indicated, this information has been audited by Ernst &
Young LLP, the independent registered public accounting firm for both Balanced
Wealth and Balanced Shares as of the end of the Portfolios' last fiscal year,
whose reports, along with each Portfolio's financial statements, are included in
the Portfolios' annual report and available upon request.
Balanced Shares
---------------
Less: Dividends and
Income from Investment Operations Distributions
-------------------------------------------- --------------------------
Net Realized
and
Unrealized Net Increase Dividends Distributions
Net Asset Net Gain (Loss) (Decrease) in from from Net
Value, Investment on Net Asset Net Realized Gain
Beginning Income Investment Contribution Value from Investment on Investment
Fiscal Year or Period of Period (Loss)(a) Transactions from Adviser Operations Income Transactions
- --------------------- --------- ---------- ------------ ------------ ------------- ---------- -------------
Balanced Shares
Class A
Year Ended 12/31/07 $20.31 $.51 $ .08 $.04 $ .63 $(.55) $(.46)
Year Ended 12/31/06 19.18 .49 1.66 0.00 2.15 (.49) (.53)
Year Ended 12/31/05 18.94 .43 .30 0.00 .73 (.49) 0.00
Year Ended 12/31/04 17.76 .46(e) 1.12 0.00 1.58 (.40) 0.00
Year Ended 12/31/03 15.30 .42 2.47 0.00 2.89 (.43) 0.00
Class B
Year Ended 12/31/07 $20.18 $.46 $ .07 $.04 $ .57 $(.50) $(.46)
Year Ended 12/31/06 19.05 .44 1.66 0.00 2.10 (.44) (.53)
Year Ended 12/31/05 18.83 .38 .29 0.00 .67 (.45) 0.00
Year Ended 12/31/04 17.69 .43(e) 1.10 0.00 1.53 (.39) 0.00
Year Ended 12/31/03 15.27 .36 2.48 0.00 2.84 (.42) 0.00
- ----------
See footnotes on page 56.
Less: Dividends and
Distributions Total Return Ratios/Supplemental Data
------------------------ ------------ ------------------------------------------------------------------
Ratio to Ratio to
Average Ratio to Average
Net Assets Average Net
Total Net Assets, of Net Assets Assets
Total Net Asset Investment End of Expenses, Net of Expenses, of Net
Dividends Value Return Based Period of Before Investment Portfolio
and End of on Net Asset (000's Waivers and Waivers and Income Turnover
Fiscal Year or Period Distributions Period Value(b) Omitted) Reimbursements Reimbursements (Loss) Rate
- --------------------- ------------- --------- ------------ ----------- -------------- -------------- ---------- ---------
Balanced Shares
Class A
Year Ended 12/31/07 $(1.01) $19.93 3.05%(c) $131,663 .73% .73% 2.51% 67%
Year Ended 12/31/06 (1.02) 20.31 11.79 163,608 .73(d) .73(d) 2.53(d) 40
Year Ended 12/31/05 (.49) 19.18 3.91 175,005 .71 .71 2.29 52
Year Ended 12/31/04 (.40) 18.94 9.07 193,600 .71 .76 2.57(e) 60
Year Ended 12/31/03 (.43) 17.76 19.05 197,334 .79 .79 2.60 81
Class B
Year Ended 12/31/07 $(.96) $19.79 2.75%(c) $38,804 .98% .98% 2.26% 67%
Year Ended 12/31/06 (.97) 20.18 11.56 44,609 .98(d) .98(d) 2.28(d) 40
Year Ended 12/31/05 (.45) 19.05 3.61 45,493 .96 .96 2.04 52
Year Ended 12/31/04 (.39) 18.83 8.79 45,047 .96 1.01 2.35(e) 60
Year Ended 12/31/03 (.42) 17.69 18.78 23,417 1.05 1.05 2.29 81
- ----------
See footnotes on page 56.
Balanced Wealth
---------------
Less: Dividends and
Income from Investment Operations Distributions
--------------------------------- -----------------------
Net Realized
and Distributions
Unrealized Net Increase Dividends from Net Realized
Net Asset Net Gain (Loss) (Decrease) in from Gain on Investment
Value, Investment on Net Asset Net and Foreign
Beginning Income Investment Value from Investment Currency
Fiscal Year or Period of Period (Loss)(a) Transactions Operations Income Transactions
- --------------------- --------- ---------- ------------ ------------- ---------- ------------------
Balanced Wealth
Class A
Year Ended 12/31/07 $12.87 $.31(e) $ .41 $ .72 $(.32) $(.22)
Year Ended 12/31/06 11.39 .25(e) 1.32 1.57 (.09) 0.00
Year Ended 12/31/05 10.69 .18(e) .60 .78 (.05) (.03)
6/01/04(f) to 12/31/04 10.00 .07(e) .62 .69 0.00 0.00
Class B
Year Ended 12/31/07 $12.81 $.27(e) $ .41 $ .68 $(.30) $(.22)
Year Ended 12/31/06 11.34 .22(e) 1.33 1.55 (.08) 0.00
Year Ended 12/31/05 10.67 .15(e) .60 .75 (.05) (.03)
6/01/04(f) to 12/31/04 10.00 .06(e) .61 .67 0.00 0.00
- ----------
See footnotes on page 56.
Less: Dividends and
Distributions Total Return Ratios/Supplemental Data
------------------------ ------------ ------------------------------------------------------------------
Ratio to Ratio to
Average Ratio to Average
Net Assets Average Net
Total Net Assets, of Net Assets Assets
Total Net Asset Investment End of Expenses, Net of Expenses, of Net
Dividends Value, Return Based Period of Before Investment Portfolio
and End of on Net Asset (000's Waivers and Waivers and Income Turnover
Fiscal Year or Period Distributions Period Value(b) Omitted) Reimbursements Reimbursements (Loss) Rate
- --------------------- ------------- --------- ------------ ----------- -------------- -------------- ---------- ---------
Balanced Wealth
Class A
Year Ended 12/31/07 $(.54) $13.05 5.55% $ 10 .76% .85% 2.33% 77%
Year Ended 12/31/06 (.09) 12.87 13.92 11,111 .99(d) 1.07(d) 2.08(d) 203
Year Ended 12/31/05 (.08) 11.39 7.30 9,746 1.20 1.54 1.64 139
6/01/04(f) to 12/31/04 0.00 10.69 6.90 9,089 1.20(g) 2.87(g) 1.36(g) 44
Class B
Year Ended 12/31/07 $(.52) $12.97 5.26% $211,440 1.01% 1.07% 2.11% 77%
Year Ended 12/31/06 (.08) 12.81 13.75 124,992 1.23(d) 1.31(d) 1.84(d) 203
Year Ended 12/31/05 (.08) 11.34 7.01 64,325 1.45 1.77 1.31 139
6/01/04(f) to 12/31/04 0.00 10.67 6.70 17,866 1.45(g) 3.34(g) 1.49(g) 44
- ----------
(a) Based on average shares outstanding.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at the net asset value during the period, and a
redemption on the last day of the period. Initial sales charge or
contingent deferred sales charge, if applicable, is not reflected in the
calculation of total investment return. Total investment return does not
reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. Total investment returns
calculated for periods of less than one year are not annualized.
(c) Includes the impact of proceeds received and credited to the Portfolio
resulting from class action settlements, which enhanced the performance of
Class A shares and Class B shares of AllianceBernstein Shares Portfolio for
the year ended December 31, 2007 by 0.16% for each Class of shares.
(d) The ratio includes expenses attributable to costs of proxy solicitation.
(e) Net of expenses reimbursed or waived by the Adviser.
(f) Commencement of operations.
(g) Annualized.
ALLIANCEBERNSTEIN VARIABLE PRODUCT SERIES FUND, INC.
- ALLIANCEBERNSTEIN BALANCED WEALTH STRATEGY PORTFOLIO
1345 Avenue of the Americas
New York, New York
Toll Free (800) 221-5672
STATEMENT OF ADDITIONAL INFORMATION
July 28, 2008
This Statement of Additional Information (the "SAI") relates to the
acquisition (the "Acquisition") of all of the assets and liabilities of
AllianceBernstein Balanced Shares Portfolio ("Balanced Shares"), a series of
AllianceBernstein Variable Product Series Fund, Inc., by AllianceBernstein
Balanced Wealth Strategy Portfolio ("Balanced Wealth").
This SAI contains information which may be of interest to shareholders but
which is not included in the Prospectus dated July 28, 2008 (the "Prospectus")
of Balanced Wealth which relates to the Acquisition. As described in the
Prospectus, the Acquisition would involve the transfer of all the assets of
Balanced Shares in exchange for shares of Balanced Wealth and the assumption by
Balanced Wealth of all the liabilities of Balanced Shares. Balanced Shares would
distribute the Balanced Wealth shares it receives to its shareholders in
complete liquidation of Balanced Shares. Balanced Wealth will be the survivor
for accounting purposes.
This SAI is not a prospectus and should be read in conjunction with the
Prospectus. The Prospectus has been filed with the Securities and Exchange
Commission and is available upon request and without charge by writing to
Balanced Shares at 1345 Avenue of the Americas, New York, New York 10105, or by
calling 1-800-221-5672.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ADDITIONAL INFORMATION ABOUT BALANCED WEALTH AND BALANCED SHARES 2
FINANCIAL STATEMENTS 3
Additional Information About Balanced Wealth and Balanced Shares
Further information about Balanced Wealth and Balanced Shares is contained
in their Statements of Additional Information each dated May 1, 2008, which are
available upon request and without charge by writing to Balanced Shares at 1345
Avenue of the Americas, New York, New York 10105, or by calling 1-800-221-5672.
Financial Statements
The financial statements and Report of Independent Registered Public
Accounting Firm contained in the Annual Report for the twelve months ended
December 31, 2007, of Balanced Wealth, which report contains historical
financial information regarding Balanced Wealth, has been filed with the
Securities and Exchange Commission and is incorporated herein by reference.
The financial statements and Report of Independent Registered Public
Accounting Firm contained in the Annual Report for the twelve months ended
December 31, 2007, of Balanced Shares, which report contains historical
financial information regarding Balanced Shares, has been filed with the
Securities and Exchange Commission and is incorporated herein by reference.
Pro Forma Financial Information:
The following represents the pro forma financial information:
PRO FORMA ALLIANCEBERNSTEIN
VARIABLE PRODUCT SERIES FUND,
FINANCIAL STATEMENTS
ALLIANCEBERNSTEIN BALANCED SHARES PORTFOLIO
ALLIANCEBERNSTEIN BALANCED WEALTH STRATEGY PORTFOLIO
July 28, 2008
PORTFOLIO OF INVESTMENTS
PRO FORMA ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND
BALANCED WEALTH PORTFOLIO
AllianceBernstein Variable Products Series Fund Balanced Wealth Portfolio
December 31, 2007 (unaudited) AllianceBernstein Variable Products Series Fund Balanced Shares Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 63.0%
FINANCIALS - 18.5%
BANKING - 3.9%
Bank of America Corp. $ 29,400 $ 1,213,044 45,800 $ 1,889,708 $ -0- 75,200 $ 3,102,752
Citigroup, Inc. 28,400 836,096 64,700 1,904,768 -0- 93,100 2,740,864
Comerica, Inc. 3,800 165,414 -0- -0- -0- 3,800 165,414
Federal Home Loan Mortgage
Corp. 4,600 156,722 -0- -0- -0- 4,600 156,722
Federal National Mortgage
Association 6,800 271,864 -0- -0- -0- 6,800 271,864
Fifth Third Bancorp 5,400 135,702 -0- -0- -0- 5,400 135,702
JPMorgan Chase & Co. 23,100 1,008,315 117,600 5,133,240 -0- 140,700 6,141,555
Keycorp 4,100 96,145 -0- -0- -0- 4,100 96,145
National City Corp. 2,200 36,212 -0- -0- -0- 2,200 36,212
SunTrust Banks, Inc. 2,150 134,354 -0- -0- -0- 2,150 134,354
U.S. Bancorp 8,200 260,268 -0- -0- -0- 8,200 260,268
Wachovia Corp. 4,500 171,135 -0- -0- -0- 4,500 171,135
Washington Mutual, Inc. 6,600 89,826 -0- -0- -0- 6,600 89,826
Wells Fargo & Co. 9,200 277,748 39,200 1,183,448 -0- 48,400 1,461,196
------------------ ------------- ------- -------------
4,852,845 10,111,164 -0- 14,964,009
------------------ ------------- ------- -------------
CAPITAL MARKETS - 2.6%
3i Group PLC 10,223 202,409 -0- -0- -0- 10,223 202,409
Bank of New York Mellon Corp. -0- -0- 16,320 795,763 -0- 16,320 795,763
The Blackstone Group LP 19,400 429,322 -0- -0- -0- 19,400 429,322
Credit Suisse Group 8,550 514,672 -0- -0- -0- 8,550 514,672
Deutsche Bank AG 2,500 326,730 -0- -0- -0- 2,500 326,730
Franklin Resources, Inc. 9,375 1,072,781 11,700 1,338,831 -0- 21,075 2,411,612
The Goldman Sachs Group, Inc. 2,065 444,078 1,600 344,080 -0- 3,665 788,158
Julius Baer Holding AG 5,574 457,376 -0- -0- -0- 5,574 457,376
Lehman Brothers Holdings, Inc. 3,800 248,672 9,900 647,856 -0- 13,700 896,528
Macquarie Group Ltd. 4,716 315,535 -0- -0- -0- 4,716 315,535
Man Group PLC 42,277 479,918 -0- -0- -0- 42,277 479,918
Northern Trust Corp. -0- -0- 29,300 2,243,794 -0- 29,300 2,243,794
------------------ ------------- ------- -------------
4,491,493 5,370,324 -0- 9,861,817
------------------ ------------- ------- -------------
COMMERCIAL BANKS - 1.0%
Banco Santander Central
Hispano SA 2,247 48,531 -0- -0- -0- 2,247 48,531
Bank Leumi Le-Israel (a) 14,400 69,842 -0- -0- -0- 14,400 69,842
Barclays PLC 33,800 341,357 -0- -0- -0- 33,800 341,357
BNP Paribas SA 3,100 336,350 -0- -0- -0- 3,100 336,350
China Construction Bank
Corp.-Class H 157,000 131,477 -0- -0- -0- 157,000 131,477
Credit Agricole SA 9,821 331,324 -0- -0- -0- 9,821 331,324
Hana Financial Group, Inc. (a) 1,100 59,060 -0- -0- -0- 1,100 59,060
HBOS PLC 29,920 435,068 -0- -0- -0- 29,920 435,068
Kookmin Bank (a) 1,200 88,457 -0- -0- -0- 1,200 88,457
Mitsubishi UFJ Financial
Group, Inc. 42,800 403,601 -0- -0- -0- 42,800 403,601
Royal Bank of Scotland Group PLC 47,331 417,908 -0- -0- -0- 47,331 417,908
Societe Generale 2,460 355,788 -0- -0- -0- 2,460 355,788
Standard Chartered PLC 9,114 332,631 -0- -0- -0- 9,114 332,631
Sumitomo Mitsui Financial
Group, Inc. 50 370,014 -0- -0- -0- 50 370,014
------------------ ------------- ------- -------------
3,721,408 -0- -0- 3,721,408
------------------ ------------- ------- -------------
CONSUMER FINANCE - 0.1%
American Express Co. 3,000 156,060 -0- -0- -0- 3,000 156,060
Discover Financial Services 5,400 81,432 -0- -0- -0- 5,400 81,432
ORIX Corp. 1,480 248,917 -0- -0- -0- 1,480 248,917
------------------ ------------- ------- -------------
486,409 -0- -0- 486,409
------------------ ------------- ------- -------------
DIVERSIFIED FINANCIAL
SERVICES - 0.7%
CME Group, Inc.-Class A 1,675 1,149,050 -0- -0- -0- 1,675 1,149,050
Deutsche Boerse AG 2,970 582,934 -0- -0- -0- 2,970 582,934
Fortis (Euronext Brussels) 9,666 253,044 -0- -0- -0- 9,666 253,044
ING Groep NV 9,300 362,378 -0- -0- -0- 9,300 362,378
Moody's Corp. 2,400 85,680 -0- -0- -0- 2,400 85,680
NYSE Euronext 3,700 324,749 -0- -0- -0- 3,700 324,749
------------------ ------------- ------- -------------
2,757,835 -0- -0- 2,757,835
------------------ ------------- ------- -------------
FINANCIAL SERVICES - 0.6%
Ameriprise Financial, Inc. 2,800 154,308 -0- -0- -0- 2,800 154,308
CIT Group, Inc. 5,700 136,971 -0- -0- -0- 5,700 136,971
Janus Capital Group, Inc. 1,300 42,705 -0- -0- -0- 1,300 42,705
MBIA, Inc. 2,400 44,712 -0- -0- -0- 2,400 44,712
Merrill Lynch & Co., Inc. 5,000 268,400 22,400 1,202,432 -0- 27,400 1,470,832
Morgan Stanley 8,900 472,679 -0- -0- -0- 8,900 472,679
------------------ ------------- ------- -------------
1,119,775 1,202,432 -0- 2,322,207
------------------ ------------- ------- -------------
INSURANCE - 4.3%
ACE Ltd. 4,600 284,188 55,900 3,453,502 -0- 60,500 3,737,690
Allianz SE 1,900 409,695 -0- -0- -0- 1,900 409,695
Allstate Corp. 6,600 344,718 -0- -0- -0- 6,600 344,718
AMBAC Financial Group, Inc. 2,700 69,579 -0- -0- -0- 2,700 69,579
American International
Group, Inc. 14,900 868,670 67,500 3,935,250 -0- 82,400 4,803,920
AON Corp. 2,900 138,301 -0- -0- -0- 2,900 138,301
Assicurazioni Generali SpA 2,765 125,161 -0- -0- -0- 2,765 125,161
Aviva PLC 15,154 201,964 -0- -0- -0- 15,154 201,964
Axis Capital Holdings Ltd. -0- -0- 52,700 2,053,719 -0- 52,700 2,053,719
Chubb Corp. 5,900 322,022 -0- -0- -0- 5,900 322,022
Everest Re Group Ltd. 1,900 190,760 -0- -0- -0- 1,900 190,760
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity National Financial,
Inc.- Class A $ 6,200 $ 90,582 -0- $ -0- $ -0- 6,200 $ 90,582
Fondiaria-Sai SpA (ordinary
shares) 2,300 94,349 -0- -0- -0- 2,300 94,349
Fondiaria-Sai SpA (saving
shares) 700 19,679 -0- -0- -0- 700 19,679
Genworth Financial, Inc.-
Class A 10,600 269,770 -0- -0- -0- 10,600 269,770
Hartford Financial Services
Group, Inc. 2,600 226,694 6,200 540,578 -0- 8,800 767,272
Marsh & McLennan Cos., Inc. 9,400 248,818 -0- -0- -0- 9,400 248,818
MetLife, Inc. 5,700 351,234 -0- -0- -0- 5,700 351,234
Muenchener Rueckversicherungs AG 1,700 329,931 -0- -0- -0- 1,700 329,931
Old Republic International Corp. 7,900 121,739 -0- -0- -0- 7,900 121,739
PartnerRe Ltd. 2,200 181,566 -0- -0- -0- 2,200 181,566
QBE Insurance Group Ltd. 12,595 365,668 -0- -0- -0- 12,595 365,668
Safeco Corp. 2,400 133,632 -0- -0- -0- 2,400 133,632
Torchmark Corp. 1,875 113,494 -0- -0- -0- 1,875 113,494
The Travelers Cos., Inc. 7,200 387,360 -0- -0- -0- 7,200 387,360
Unum Group 9,900 235,521 -0- -0- -0- 9,900 235,521
Willis Group Holdings Ltd. -0- -0- 5,900 224,023 -0- 5,900 224,023
------------------ ------------- ------- -------------
6,125,095 10,207,072 -0- 16,332,167
------------------ ------------- ------- -------------
PROPERTY - CASUALTY
INSURANCE - 0.1%
The Progressive Corp. 14,500 277,820 -0- -0- -0- 14,500 277,820
------------------ ------------- ------- -------------
REAL ESTATE INVESTMENT
TRUSTS (REITs) - 3.5%
Alexandria Real Estate
Equities, Inc. 1,825 185,548 -0- -0- -0- 1,825 185,548
Allied Properties Real Estate
Investment Trust 9,740 204,669 -0- -0- -0- 9,740 204,669
AMB Property Corp. 2,300 132,388 -0- -0- -0- 2,300 132,388
Apartment Investment &
Management Co.-Class A 4,600 159,758 -0- -0- -0- 4,600 159,758
Ascendas Real Estate Investment
Trust 84,000 142,205 -0- -0- -0- 84,000 142,205
Ashford Hospitality Trust, Inc. 9,300 66,867 -0- -0- -0- 9,300 66,867
AvalonBay Communities, Inc. 900 84,726 -0- -0- -0- 900 84,726
Boardwalk Real Estate Investment
Trust (a) 5,888 265,773 -0- -0- -0- 5,888 265,773
Boston Properties, Inc. 1,800 165,258 -0- -0- -0- 1,800 165,258
British Land Co. PLC 10,644 199,603 -0- -0- -0- 10,644 199,603
Canadian Real Estate Investment
Trust 8,434 247,723 -0- -0- -0- 8,434 247,723
CapitaMall Trust 146,600 347,602 -0- -0- -0- 146,600 347,602
Cominar Real Estate Investment
Trust (a) 6,582 136,049 -0- -0- -0- 6,582 136,049
DB RREEF Trust 267,963 467,771 -0- -0- -0- 267,963 467,771
Derwent Valley Holdings PLC 7,450 207,144 -0- -0- -0- 7,450 207,144
DiamondRock Hospitality Co. 5,500 82,390 -0- -0- -0- 5,500 82,390
Digital Realty Trust, Inc. 8,300 318,471 -0- -0- -0- 8,300 318,471
Dundee Real Estate Investment
Trust (a) 3,601 123,030 -0- -0- -0- 3,601 123,030
Entertainment Properties Trust 3,100 145,700 -0- -0- -0- 3,100 145,700
Equity Residential 5,500 200,585 -0- -0- -0- 5,500 200,585
Essex Property Trust, Inc. 425 41,433 -0- -0- -0- 425 41,433
FelCor Lodging Trust, Inc. 3,100 48,329 -0- -0- -0- 3,100 48,329
First Industrial Realty
Trust, Inc. 2,900 100,340 -0- -0- -0- 2,900 100,340
Fonciere des Murs 2,800 93,092 -0- -0- -0- 2,800 93,092
Fonciere Des Regions 475 60,227 -0- -0- -0- 475 60,227
General Growth Properties, Inc. 9,700 399,446 -0- -0- -0- 9,700 399,446
General Property Group 34,988 123,145 -0- -0- -0- 34,988 123,145
Great Portland Estates PLC 15,400 143,491 -0- -0- -0- 15,400 143,491
H&R Real Estate Investment 1 17 -0- -0- -0- 1 17
Hammerson PLC 8,750 178,325 -0- -0- -0- 8,750 178,325
HCP, Inc. 3,600 125,208 -0- -0- -0- 3,600 125,208
Health Care REIT, Inc. 3,900 174,291 -0- -0- -0- 3,900 174,291
Highwoods Properties, Inc. 4,400 129,272 -0- -0- -0- 4,400 129,272
Home Properties, Inc. 3,100 139,035 -0- -0- -0- 3,100 139,035
Host Hotels & Resorts, Inc. 11,829 201,566 -0- -0- -0- 11,829 201,566
ING Office Fund 131,600 185,886 -0- -0- -0- 131,600 185,886
Japan Real Estate Investment
Corp.-Class A 16 198,575 -0- -0- -0- 16 198,575
Kimco Realty Corp. 4,250 154,700 -0- -0- -0- 4,250 154,700
Klepierre 8,595 439,306 -0- -0- -0- 8,595 439,306
Land Securities Group PLC 5,842 175,070 -0- -0- -0- 5,842 175,070
LaSalle Hotel Properties 2,300 73,370 -0- -0- -0- 2,300 73,370
Liberty International PLC 10,400 222,203 -0- -0- -0- 10,400 222,203
Macerich Co. 2,300 163,438 -0- -0- -0- 2,300 163,438
Mid-America Apartment
Communities, Inc. 2,250 96,187 -0- -0- -0- 2,250 96,187
Mirvac Group 80,182 419,038 -0- -0- -0- 80,182 419,038
National Retail Properties 3,700 86,506 -0- -0- -0- 3,700 86,506
Nationwide Health Properties,
Inc. 6,700 210,179 -0- -0- -0- 6,700 210,179
Nippon Building Fund, Inc.-
Class A 21 293,261 -0- -0- -0- 21 293,261
Nomura Real Estate Office Fund,
Inc.-Class A 19 178,797 -0- -0- -0- 19 178,797
Omega Healthcare Investors, Inc. 5,500 88,275 -0- -0- -0- 5,500 88,275
Primaris Retail Real Estate
Investment Trust (a) 7,149 132,559 -0- -0- -0- 7,149 132,559
Prologis 6,775 429,399 -0- -0- -0- 6,775 429,399
Public Storage 2,050 150,490 -0- -0- -0- 2,050 150,490
Rayonier, Inc. 5,300 250,372 -0- -0- -0- 5,300 250,372
RioCan Real Estate Investment
Trust (a) 7,491 165,609 -0- -0- -0- 7,491 165,609
RioCan Real Estate Investment
Trust (a) 1,400 30,952 -0- -0- -0- 1,400 30,952
Segro PLC 8,769 81,581 -0- -0- -0- 8,769 81,581
Simon Property Group, Inc. 7,350 638,421 -0- -0- -0- 7,350 638,421
SL Green Realty Corp. 550 51,403 -0- -0- -0- 550 51,403
Stockland 19,479 142,973 -0- -0- -0- 19,479 142,973
Stockland-New 422 3,027 -0- -0- -0- 422 3,027
Strategic Hotels & Resorts, Inc. 4,400 73,612 -0- -0- -0- 4,400 73,612
Sunstone Hotel Investors, Inc. 3,600 65,844 -0- -0- -0- 3,600 65,844
Tanger Factory Outlet Centers 5,050 190,435 -0- -0- -0- 5,050 190,435
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
Taubman Centers, Inc. $ 4,900 $ 241,031 -0- $ -0- $ -0- 4,900 $ 241,031
UDR, Inc. 4,050 80,392 -0- -0- -0- 4,050 80,392
Unibail 2,525 553,306 -0- -0- -0- 2,525 553,306
Ventas, Inc. 6,950 314,487 -0- -0- -0- 6,950 314,487
Vornado Realty Trust 4,000 351,800 -0- -0- -0- 4,000 351,800
Westfield Group 33,589 614,092 -0- -0- -0- 33,589 614,092
------------------ ------------- ------- -------------
13,387,053 -0- -0- 13,387,053
------------------ ------------- ------- -------------
REAL ESTATE MANAGEMENT &
DEVELOPMENT -1.7%
Beni Stabili SpA 76,800 83,325 -0- -0- -0- 76,800 83,325
Brookfield Properties Corp. 2,225 42,831 -0- -0- -0- 2,225 42,831
Citycon Oyj 33,942 181,072 -0- -0- -0- 33,942 181,072
Forest City Enterprises,
Inc.-Class A 1,650 73,326 -0- -0- -0- 1,650 73,326
Hang Lung Properties Ltd. 141,000 629,996 -0- -0- -0- 141,000 629,996
Henderson Land Development
Co., Ltd. 18,000 167,168 -0- -0- -0- 18,000 167,168
IVG Immobilien AG 3,900 128,728 -0- -0- -0- 3,900 128,728
Keppel Land Ltd. 44,000 220,151 -0- -0- -0- 44,000 220,151
Kerry Properties Ltd. 86,131 684,864 -0- -0- -0- 86,131 684,864
Lend Lease Corp. Ltd. 32,000 483,197 -0- -0- -0- 32,000 483,197
Mitsubishi Estate Co., Ltd. 15,000 357,374 -0- -0- -0- 15,000 357,374
Mitsui Fudosan Co., Ltd. 13,100 282,521 -0- -0- -0- 13,100 282,521
New World Development Co., Ltd. 125,997 441,117 -0- -0- -0- 125,997 441,117
Norwegian Property ASA 20,500 249,072 -0- -0- -0- 20,500 249,072
NTT Urban Development Corp. (a) 390 624,363 -0- -0- -0- 390 624,363
Sino Land Co. 79,950 279,968 -0- -0- -0- 79,950 279,968
Sponda OYJ 10,300 122,463 -0- -0- -0- 10,300 122,463
Sumitomo Realty & Development 8,000 195,649 -0- -0- -0- 8,000 195,649
Sun Hung Kai Properties Ltd. 46,700 980,866 -0- -0- -0- 46,700 980,866
Tokyu Land Corp. 31,000 265,246 -0- -0- -0- 31,000 265,246
------------------ ------------- ------- -------------
6,493,297 -0- -0- 6,493,297
------------------ ------------- ------- -------------
43,713,030 26,890,992 -0- 70,604,022
------------------ ------------- ------- -------------
INFORMATION TECHNOLOGY - 7.7%
COMMUNICATIONS EQUIPMENT - 1.4%
Cisco Systems, Inc. (b) 60,450 1,636,381 51,000 1,380,570 -0- 111,450 3,016,951
Nokia OYJ (ADR) 19,700 756,283 -0- -0- -0- 19,700 756,283
Nokia OYJ 17,244 662,469 -0- -0- -0- 17,244 662,469
Research In Motion Ltd. (b) 9,075 1,029,105 -0- -0- -0- 9,075 1,029,105
------------------ ------------- ------- -------------
4,084,238 1,380,570 -0- 5,464,808
------------------ ------------- ------- -------------
COMPUTERS & PERIPHERALS - 2.0%
Apple, Inc. (b) 12,430 2,462,134 -0- -0- -0- 12,430 2,462,134
Asustek Computer, Inc. (a) 43,000 127,951 -0- -0- -0- 43,000 127,951
Compal Electronics, Inc. (a) 56,280 61,282 -0- -0- -0- 56,280 61,282
EMC Corp. (b) 15,500 287,215 -0- -0- -0- 15,500 287,215
Fujitsu Ltd. 38,000 254,200 -0- -0- -0- 38,000 254,200
Hewlett-Packard Co. 27,700 1,398,296 8,400 424,032 -0- 36,100 1,822,328
Sun Microsystems, Inc. (b) -0- -0- 141,325 2,562,223 -0- 141,325 2,562,223
Toshiba Corp. 26,000 191,879 -0- -0- -0- 26,000 191,879
------------------ ------------- ------- -------------
4,782,957 2,986,255 -0- 7,769,212
------------------ ------------- ------- -------------
ELECTRONIC EQUIPMENT &
INSTRUMENTS - 0.1%
AU Optronics Corp. (a) 86,692 167,186 -0- -0- -0- 86,692 167,186
HON HAI Precision Industry
Co. Ltd. (a) 8,200 50,541 -0- -0- -0- 8,200 50,541
Tyco Electronics Ltd. 1,250 46,412 -0- -0- -0- 1,250 46,412
------------------ ------------- ------- -------------
264,139 -0- -0- 264,139
------------------ ------------- ------- -------------
INTERNET SOFTWARE &
SERVICES - 0.7%
Google, Inc.-Class A (b) 3,900 2,696,772 -0- -0- -0- 3,900 2,696,772
------------------ ------------- ------- -------------
IT SERVICES - 0.6%
Accenture Ltd.-Class A -0- -0- 63,200 2,277,096 -0- 63,200 2,277,096
------------------ ------------- ------- -------------
OFFICE ELECTRONICS - 0.0%
Konica Minolta Holdings, Inc. 5,500 96,421 -0- -0- -0- 5,500 96,421
------------------ ------------- ------- -------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 1.7%
Applied Materials, Inc. -0- -0- 35,700 634,032 -0- 35,700 634,032
Broadcom Corp.-Class A (b) 25,000 653,500 2,400 62,736 -0- 27,400 716,236
Hynix Semiconductor, Inc. (a)(b) 5,900 161,598 -0- -0- -0- 5,900 161,598
Integrated Device
Technology, Inc. (b) -0- -0- 42,900 485,199 -0- 42,900 485,199
Intel Corp. 18,850 502,541 54,100 1,442,306 -0- 72,950 1,944,847
Nvidia Corp. (b) 24,425 830,938 35,700 1,214,514 -0- 60,125 2,045,452
Samsung Electronics Co. Ltd. (a) 140 82,390 -0- -0- -0- 140 82,390
United Microelectronics Corp. (a) 398,207 247,387 -0- -0- -0- 398,207 247,387
------------------ ------------- ------- -------------
2,478,354 3,838,787 -0- 6,317,141
------------------ ------------- ------- -------------
SOFTWARE - 1.2%
Adobe Systems, Inc. (b) 14,700 628,131 9,200 393,116 -0- 23,900 1,021,247
Microsoft Corp. 20,400 726,240 70,200 2,499,120 -0- 90,600 3,225,360
Nintendo Co. Ltd. 400 234,861 -0- -0- -0- 400 234,861
Oracle Corp. (b) 5,700 128,706 -0- -0- -0- 5,700 128,706
------------------ ------------- ------- -------------
1,717,938 2,892,236 -0- 4,610,174
------------------ ------------- ------- -------------
16,120,819 13,374,944 -0- 29,495,763
------------------ ------------- ------- -------------
ENERGY- 7.4%
ENERGY EQUIPMENT &
SERVICES - 1.3%
Baker Hughes, Inc. 13,950 1,131,345 11,310 917,241 -0- 25,260 2,048,586
Cameron International Corp. (b) 6,300 303,219 6,200 298,406 -0- 12,500 601,625
Nabors Industries Ltd. (b) -0- -0- 30,100 824,439 -0- 30,100 824,439
Schlumberger Ltd. 14,700 1,446,039 -0- -0- -0- 14,700 1,446,039
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
Technip SA $ 2,010 $ 159,878 -0- $ -0- $ -0- 2,010 $ 159,878
------------------ ------------- ------- -------------
3,040,481 2,040,086 -0- 5,080,567
------------------ ------------- ------- -------------
ENERGY SOURCES - 3.8%
Chevron Corp. 14,400 1,343,952 32,000 2,986,560 -0- 46,400 4,330,512
ConocoPhillips 11,300 997,790 9,100 803,530 -0- 20,400 1,801,320
Exxon Mobil Corp. 22,700 2,126,763 52,300 4,899,987 -0- 75,000 7,026,750
Marathon Oil Corp. 5,600 340,816 15,700 955,502 -0- 21,300 1,296,318
Occidental Petroleum Corp. 1,900 146,281 -0- -0- -0- 1,900 146,281
------------------ -------------- ------- -------------
4,955,602 9,645,579 -0- 14,601,181
------------------ -------------- ------- -------------
OIL, GAS & CONSUMABLE FUELS
- - 2.3%
China Petroleum & Chemical
Corp.-Class H 108,000 160,105 -0- -0- -0- 108,000 160,105
China Shenhua Energy Co.
Ltd.-Class H 42,000 247,413 -0- -0- -0- 42,000 247,413
ENI SpA 9,800 357,665 -0- -0- -0- 9,800 357,665
EOG Resources, Inc. 7,150 638,137 -0- -0- -0- 7,150 638,137
Gazprom OAO (Sponsored) (ADR) 4,476 253,789 -0- -0- -0- 4,476 253,789
LUKOIL (Sponsored) (ADR) 2,000 169,000 -0- -0- -0- 2,000 169,000
Noble Energy, Inc. -0- -0- 15,900 1,264,368 -0- 15,900 1,264,368
Petro-Canada (a) 1,200 64,745 -0- -0- -0- 1,200 64,745
Petroleo Brasileiro SA (ADR) 2,800 322,672 -0- -0- -0- 2,800 322,672
Petroleo Brasileiro SA
(Sponsored) (ADR) 1,900 182,818 -0- -0- -0- 1,900 182,818
Royal Dutch Shell PLC 12,600 531,172 -0- -0- -0- 12,600 531,172
Royal Dutch Shell PLC
(Euronext Amsterdam)-Class A 9,657 407,670 -0- -0- -0- 9,657 407,670
StatoilHydro ASA 8,900 274,572 -0- -0- -0- 8,900 274,572
Total SA 7,166 593,348 -0- -0- -0- 7,166 593,348
Total SA (ADR) -0- -0- 37,900 3,130,540 -0- 37,900 3,130,540
------------------ ------------- ------- ------------
4,203,106 4,394,908 -0- 8,598,014
------------------ ------------- ------- ------------
12,199,189 16,080,573 -0- 28,279,762
------------------ ------------- ------- ------------
INDUSTRIALS- 4.9%
AEROSPACE & DEFENSE - 1.6%
BAE Systems PLC 44,621 442,814 -0- - -0- 44,621 442,814
Boeing Co. 2,350 205,531 -0- - -0- 2,350 205,531
Honeywell International, Inc. 19,200 1,182,144 12,100 744,997 -0- 31,300 1,927,141
Spirit Aerosystems Holdings,
Inc.-Class A (b) 14,300 493,350 -0- - -0- 14,300 493,350
United Technologies Corp. 2,500 191,350 37,700 2,885,558 -0- 40,200 3,076,908
------------------ ------------- ------- -------------
2,515,189 3,630,555 -0- 6,145,744
------------------ ------------- ------- -------------
AIRLINES - 0.1%
Air France-KLM 3,200 111,835 -0- -0- -0- 3,200 111,835
Deutsche Lufthansa AG 4,600 122,418 -0- -0- -0- 4,600 122,418
------------------ ------------- ------- -------------
234,253 -0- -0- 234,253
------------------ ------------- ------- -------------
COMMERCIAL SERVICES &
SUPPLIES - 0.2%
Allied Waste Industries,
Inc. (b) 16,100 177,422 -0- -0- -0- 16,100 177,422
Capita Group PLC 5,713 79,202 -0- -0- -0- 5,713 79,202
Dun & Bradstreet Corp. -0- -0- 6,300 558,369 -0- 6,300 558,369
Pitney Bowes, Inc. 3,800 144,552 -0- -0- -0- 3,800 144,552
------------------ ------------- ------- -------------
401,176 558,369 -0- 959,545
------------------ ------------- ------- -------------
CONSTRUCTION &
ENGINEERING - 0.2%
Fluor Corp. 5,000 728,600 -0- -0- -0- 5,000 728,600
------------------ ------------- ------- -------------
ELECTRICAL EQUIPMENT - 1.6%
ABB Ltd. 19,079 550,082 -0- -0- -0- 19,079 550,082
ABB Ltd. (Sponsored) (ADR) 19,200 552,960 -0- -0- -0- 19,200 552,960
Emerson Electric Co. 7,350 416,451 77,400 4,385,484 -0- 84,750 4,801,935
Renewable Energy Corp. (b) 1,917 96,154 -0- -0- -0- 1,917 96,154
------------------ ------------- ------- -------------
1,615,647 4,385,484 -0- 6,001,131
------------------ ------------- ------- -------------
INDUSTRIAL CONGLOMERATES - 0.3%
3M Co. 1,800 151,776 -0- -0- -0- 1,800 151,776
Mcdermott Intl Inc. (b) 2,200 129,866 -0- -0- -0- 2,200 129,866
Siemens AG 3,108 492,182 -0- -0- -0- 3,108 492,182
Textron, Inc. 7,250 516,925 -0- -0- -0- 7,250 516,925
Tyco International Ltd. 1,250 49,563 -0- -0- -0- 1,250 49,563
------------------ ------------- ------- -------------
1,340,312 -0- -0- 1,340,312
------------------ ------------- ------- -------------
MACHINERY - 0.6%
Caterpillar, Inc. 2,900 210,424 -0- -0- -0- 2,900 210,424
Deere & Co. 10,950 1,019,664 -0- -0- -0- 10,950 1,019,664
Ingersoll-Rand Co. Ltd.-Class A 6,000 278,820 -0- -0- -0- 6,000 278,820
Komatsu Ltd. 5,700 152,869 -0- -0- -0- 5,700 152,869
NGK Insulators Ltd. 9,000 241,302 -0- -0- -0- 9,000 241,302
PACCAR, Inc. 3,600 196,128 -0- -0- -0- 3,600 196,128
Sumitomo Heavy Industries Ltd. 800 7,294 -0- -0- -0- 800 7,294
Terex Corp. (b) 2,100 137,697 -0- -0- -0- 2,100 137,697
------------------ ------------- ------- -------------
2,244,198 -0- -0- 2,244,198
------------------ ------------- ------- -------------
MARINE - 0.1%
Mitsui OSK Lines Ltd. 10,000 126,423 -0- -0- -0- 10,000 126,423
Nippon Yusen KK (a) 16,000 126,048 -0- -0- -0- 16,000 126,048
------------------ ------------- ------- -------------
252,471 -0- -0- 252,471
------------------ ------------- ------- -------------
ROAD & RAIL - 0.0%
Avis Budget Group, Inc. (b) 3,600 46,800 -0- -0- -0- 3,600 46,800
------------------ ------------- ------- -------------
TRADING COMPANIES &
DISTRIBUTORS - 0.2%
Mitsubishi Corp. 4,100 110,965 -0- -0- -0- 4,100 110,965
-------------
-------------
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
Mitsui & Co. Ltd. $ 26,000 $ 542,949 -0- $ -0- $ -0- 26,000 $ 542,949
------------------ ------------- ------- -------------
653,914 -0- -0- 653,914
------------------ ------------- ------- -------------
10,032,560 8,574,408 -0- 18,606,968
------------------ ------------- ------- -------------
HEALTH CARE - 6.1%
BIOTECHNOLOGY - 0.6%
Celgene Corp. (b) 12,450 575,314 -0- -0- -0- 12,450 575,314
CSL Ltd./Australia 3,038 96,243 -0- -0- -0- 3,038 96,243
Genentech, Inc. (b) 7,650 513,086 -0- -0- -0- 7,650 513,086
Gilead Sciences, Inc. (b) 26,850 1,235,369 -0- -0- -0- 26,850 1,235,369
------------------ ------------- ------- -------------
2,420,012 -0- -0- 2,420,012
------------------ ------------- ------- -------------
HEALTH CARE EQUIPMENT &
SUPPLIES - 0.8%
Alcon, Inc. 7,375 1,054,920 -0- -0- -0- 7,375 1,054,920
Becton Dickinson & Co. -0- -0- 13,100 1,094,898 -0- 13,100 1,094,898
Covidien Ltd. 1,250 55,363 -0- -0- -0- 1,250 55,363
Essilor International SA 3,934 250,941 -0- -0- -0- 3,934 250,941
Hologic, Inc. (b) 7,300 501,072 -0- -0- -0- 7,300 501,072
------------------ ------------- ------- -------------
1,862,296 1,094,898 -0- 2,957,194
------------------ ------------- ------- -------------
HEALTH CARE PROVIDERS &
SERVICES - 2.9%
Aetna, Inc. -0- -0- 27,400 1,581,802 -0- 27,400 1,581,802
Medco Health Solutions, Inc. (b) 6,750 684,450 -0- -0- -0- 6,750 684,450
UnitedHealth Group, Inc. -0- -0- 60,200 3,503,640 -0- 60,200 3,503,640
WellPoint, Inc. (b) 11,300 991,349 46,600 4,088,218 -0- 57,900 5,079,567
------------------ ------------- ------- -------------
1,675,799 9,173,660 -0- 10,849,459
------------------ ------------- ------- -------------
PHARMACEUTICALS - 1.8%
Abbott Laboratories 21,100 1,184,765 -0- -0- -0- 21,100 1,184,765
AstraZeneca PLC 1,900 81,782 -0- -0- -0- 1,900 81,782
Forest Laboratories, Inc. (b) -0- -0- 17,800 648,810 -0- 17,800 648,810
GlaxoSmithKline PLC 6,400 162,538 -0- -0- -0- 6,400 162,538
Merck & Co., Inc. 7,800 453,258 28,100 1,632,891 -0- 35,900 2,086,149
Roche Holding AG 1,152 199,141 -0- -0- -0- 1,152 199,141
Sanofi-Aventis SA 3,200 292,929 -0- -0- -0- 3,200 292,929
Schering-Plough Corp. -0- -0- 21,400 570,096 -0- 21,400 570,096
Teva Pharmaceutical
Industries Ltd.
(Sponsored) (ADR) 16,050 746,004 -0- -0- -0- 16,050 746,004
Wyeth -0- -0- 23,500 1,038,465 -0- 23,500 1,038,465
------------------ ------------- ------- -------------
3,120,417 3,890,262 -0- 7,010,679
------------------ ------------- ------- -------------
9,078,524 14,158,820 -0- 23,237,344
------------------ ------------- ------- -------------
MATERIALS - 2.2%
CHEMICALS - 1.1%
Air Products & Chemicals, Inc. 7,300 719,999 7,200 710,136 -0- 14,500 1,430,135
Ashland, Inc. 2,600 123,318 -0- -0- -0- 2,600 123,318
BASF SE 3,600 533,063 -0- -0- -0- 3,600 533,063
Bayer AG 5,987 546,114 -0- -0- -0- 5,987 546,114
Mitsubishi Chemical Holdings
Corp. 30,500 232,705 -0- -0- -0- 30,500 232,705
Mitsui Chemicals, Inc. (a) 12,400 80,499 -0- -0- -0- 12,400 80,499
Monsanto Co. 10,450 1,167,160 -0- -0- -0- 10,450 1,167,160
------------------ ------------- ------- -------------
3,402,858 710,136 -0- 4,112,994
------------------ ------------- ------- -------------
CONSTRUCTION MATERIALS - 0.0%
Buzzi Unicem SpA 3,000 82,909 -0- -0- -0- 3,000 82,909
------------------ ------------- ------- -------------
CONTAINERS & PACKAGING- 0.1%
Ball Corp. 4,000 180,000 -0- -0- -0- 4,000 180,000
Crown Holdings, Inc. (b) 4,600 117,990 -0- -0- -0- 4,600 117,990
------------------ ------------- ------- -------------
297,990 -0- -0- 297,990
------------------ ------------- ------- -------------
METALS & MINING - 1.0%
Alcoa, Inc. 10,600 387,430 -0- -0- -0- 10,600 387,430
Anglo American PLC 2,514 152,603 -0- -0- -0- 2,514 152,603
Antofagasta PLC 11,100 157,366 -0- -0- -0- 11,100 157,366
ArcelorMittal 4,068 327,120 -0- -0- -0- 4,068 327,120
BHP Billiton PLC 6,854 209,002 -0- -0- -0- 6,854 209,002
Cia Vale do Rio Doce (ADR) 9,000 294,030 -0- -0- -0- 9,000 294,030
Cia Vale do Rio Doce
(Sponsored) (ADR) 6,100 170,678 -0- -0- -0- 6,100 170,678
JFE Holdings, Inc. 8,900 446,283 -0- -0- -0- 8,900 446,283
Kazakhmys PLC 2,800 75,756 -0- -0- -0- 2,800 75,756
Nippon Steel Corp. 41,000 250,958 -0- -0- -0- 41,000 250,958
POSCO (a) 200 120,836 -0- -0- -0- 200 120,836
Rio Tinto PLC 5,848 615,458 -0- -0- -0- 5,848 615,458
Xstrata PLC 9,837 690,272 -0- -0- -0- 9,837 690,272
------------------ ------------- ------- -------------
3,897,792 -0- -0- 3,897,792
------------------ ------------- ------- -------------
PAPER & FOREST PRODUCTS - 0.0%
Stora Enso Oyj-Class R 11,300 168,685 -0- -0- -0- 11,300 168,685
------------------ ------------- ------- -------------
7,850,234 710,136 -0- 8,560,370
------------------ ------------- ------- -------------
CONSUMER STAPLES - 4.8%
BEVERAGES - 0.4%
The Coca-Cola Co. 3,300 202,521 -0- -0- -0- 3,300 202,521
PepsiCo, Inc. 8,500 645,150 8,100 614,790 -0- 16,600 1,259,940
------------------ ------------- ------- -------------
847,671 614,790 -0- 1,462,461
------------------ ------------- ------- -------------
BEVERAGES & TOBACCO - 1.6%
Altria Group, Inc. 7,700 581,966 64,400 4,867,352 -0- 72,100 5,449,318
Coca-Cola Enterprises, Inc. 8,300 216,049 -0- -0- -0- 8,300 216,049
Kraft Foods, Inc.-Class A 2,300 75,049 -0- -0- -0- 2,300 75,049
Molson Coors Brewing Co.-Class B 3,800 196,156 -0- -0- -0- 3,800 196,156
------------------ ------------- ------- -------------
1,069,220 4,867,352 -0- 5,936,572
------------------ ------------- ------- -------------
FOOD & HOUSEHOLD PRODUCTS - 0.2%
ConAgra Foods, Inc. 4,100 97,539 -0- -0- -0- 4,100 97,539
General Mills, Inc. 2,425 138,225 -0- -0- -0- 2,425 138,225
Kellogg Co. 3,100 162,533 -0- -0- -0- 3,100 162,533
Sara Lee Corp. 12,700 203,962 -0- -0- -0- 12,700 203,962
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
Supervalu, Inc. 7,000 $ 262,640 -0- $ -0- $ -0- 7,000 $ 262,640
------------------ ------------- ------- -------------
864,899 -0- -0- 864,899
------------------ ------------- ------- -------------
FOOD & STAPLES RETAILING - 0.1%
Koninklijke Ahold NV 17,860 247,340 -0- -0- -0- 17,860 247,340
Tesco PLC 20,213 192,277 -0- -0- -0- 20,213 192,277
------------------ ------------- ------- -------------
439,617 -0- -0- 439,617
------------------ ------------- ------- -------------
FOOD PRODUCTS- 0.8%
Associated British Foods PLC 9,400 167,680 -0- -0- -0- 9,400 167,680
HJ Heinz Co. -0- -0- 31,300 1,461,084 -0- 31,300 1,461,084
Nestle SA 1,291 592,815 -0- -0- -0- 1,291 592,815
Unilever PLC 9,595 359,859 -0- -0- -0- 9,595 359,859
WM Wrigley Jr Co. 9,800 573,790 -0- -0- -0- 9,800 573,790
------------------ ------------- ------- -------------
1,694,144 1,461,084 -0- 3,155,228
------------------ ------------- ------- -------------
HOUSEHOLD PRODUCTS - 1.1%
Colgate-Palmolive Co. 6,650 518,434 -0- -0- -0- 6,650 518,434
Procter & Gamble Co. 20,200 1,483,084 24,200 1,776,764 -0- 44,400 3,259,848
Reckitt Benckiser PLC 5,205 302,463 -0- -0- -0- 5,205 302,463
------------------ ------------- ------- -------------
2,303,981 1,776,764 -0- 4,080,745
------------------ ------------- ------- -------------
PERSONAL PRODUCTS - 0.1%
L'Oreal SA 1,645 235,560 -0- -0- -0- 1,645 235,560
------------------ ------------- ------- -------------
TOBACCO- 0.5%
British American Tobacco PLC 5,495 214,817 -0- -0- -0- 5,495 214,817
Loews Corp. - Carolina Group -0- -0- 20,600 1,757,180 -0- 20,600 1,757,180
------------------ ------------- ------- -------------
214,817 1,757,180 -0- 1,971,997
------------------ ------------- ------- -------------
7,669,909 10,477,170 -0- 18,147,079
------------------ ------------- ------- -------------
CONSUMER DISCRETIONARY - 2.2%
AUTO COMPONENTS - 0.1%
Compagnie Generale des
Etablissements
Michelin-Class B 1,700 194,359 -0- -0- -0- 1,700 194,359
Denso Corp. 4,100 166,846 -0- -0- -0- 4,100 166,846
Hyundai Mobis (a) 1,710 158,008 -0- -0- -0- 1,710 158,008
------------------ ------------- ------- -------------
519,213 -0- -0- 519,213
------------------ ------------- ------- -------------
AUTOMOBILES - 0.4%
Fiat SpA 8,775 225,825 -0- -0- -0- 8,775 225,825
General Motors Corp. 9,800 243,922 -0- -0- -0- 9,800 243,922
Nissan Motor Co. Ltd. 39,200 427,848 -0- -0- -0- 39,200 427,848
Renault SA 3,000 425,468 -0- -0- -0- 3,000 425,468
------------------ ------------- ------- -------------
1,323,063 -0- -0- 1,323,063
------------------ ------------- ------- -------------
HOTELS, RESTAURANTS &
LEISURE - 0.3%
Las Vegas Sands Corp. (b) 1,400 144,270 -0- -0- -0- 1,400 144,270
Marriott International,
Inc.-Class A 3,800 129,884 -0- -0- -0- 3,800 129,884
McDonald's Corp. 9,400 553,754 -0- -0- -0- 9,400 553,754
Starwood Hotels &
Resorts Worldwide, Inc. 625 27,519 -0- -0- -0- 625 27,519
Yum! Brands, Inc. 7,750 296,592 -0- -0- -0- 7,750 296,592
------------------ ------------- ------- -------------
1,152,019 -0- -0- 1,152,019
------------------ ------------- ------- -------------
HOUSEHOLD DURABLES - 0.1%
Centex Corp. 2,900 73,254 -0- -0- -0- 2,900 73,254
KB Home 2,800 60,480 -0- -0- -0- 2,800 60,480
Sharp Corp. 15,000 267,572 -0- -0- -0- 15,000 267,572
------------------ ------------- ------- -------------
401,306 -0- -0- 401,306
------------------ ------------- ------- -------------
LEISURE EQUIPMENT &
PRODUCTS - 0.0%
Brunswick Corp. 3,200 54,560 -0- -0- -0- 3,200 54,560
------------------ ------------- ------- -------------
MEDIA - 0.5%
Comcast Corp.-Class A (b) -0- -0- 14,070 256,918 -0- 14,070 256,918
Comcast Corp.-Special-
Class A (b) 7,950 144,054 -0- - -0- 7,950 144,054
Lagardere SCA 2,200 164,759 -0- - -0- 2,200 164,759
News Corp.-Class A -0- -0- 73,000 1,495,770 -0- 73,000 1,495,770
------------------ ------------- ------- -------------
308,813 1,752,688 -0- 2,061,501
------------------ ------------- ------- -------------
MULTILINE RETAIL - 0.6%
Dollar Tree Stores, Inc. (b) 900 23,328 -0- -0- -0- 900 23,328
Family Dollar Stores, Inc. 4,800 92,304 -0- -0- -0- 4,800 92,304
Kohl's Corp. (b) 7,125 326,325 28,000 1,282,400 -0- 35,125 1,608,725
Macy's, Inc. 7,500 194,025 -0- -0- -0- 7,500 194,025
New World Department Store
China Ltd. (b) 872 1,222 -0- -0- -0- 872 1,222
Target Corp. 6,200 310,000 -0- -0- -0- 6,200 310,000
------------------ ------------- ------- -------------
947,204 1,282,400 -0- 2,229,604
------------------ ------------- ------- -------------
SPECIALTY RETAIL - 0.2%
Esprit Holdings Ltd. 16,700 245,912 -0- -0- -0- 16,700 245,912
Home Depot, Inc. 10,100 272,094 -0- -0- -0- 10,100 272,094
Inditex SA 3,901 236,050 -0- -0- -0- 3,901 236,050
------------------ ------------- ------- -------------
754,056 -0- -0- 754,056
------------------ ------------- ------- -------------
5,460,234 3,035,088 -0- 8,495,322
------------------ ------------- ------- -------------
CAPITAL EQUIPMENT - 1.4%
AEROSPACE & DEFENSE - 0.3%
Lockheed Martin Corp. 1,000 105,260 8,200 863,132 -0- 9,200 968,392
Northrop Grumman Corp. 3,900 306,696 -0- -0- -0- 3,900 306,696
------------------ ------------- ------- -------------
411,956 863,132 -0- 1,275,088
------------------ ------------- ------- -------------
AUTOMOBILES - 0.1%
Autoliv, Inc. 2,300 121,233 -0- -0- -0- 2,300 121,233
BorgWarner, Inc. 2,750 133,128 -0- -0- -0- 2,750 133,128
Johnson Controls, Inc. 3,300 118,932 -0- -0- -0- 3,300 118,932
Lear Corp. (b) 3,100 85,746 -0- -0- -0- 3,100 85,746
------------------ ------------- ------- -------------
459,039 -0- -0- 459,039
------------------ ------------- ------- -------------
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL COMPONENTS - 0.1%
Eaton Corp. 2,900 $ 281,155 -0- $ -0- $ -0- 2,900 $ 281,155
------------------ -------------- ------ -------------
MACHINERY & ENGINEERING - 0.0%
Cummins, Inc. 1,400 178,318 -0- -0- -0- 1,400 178,318
------------------ -------------- ------ -------------
MULTI-INDUSTRY - 0.9%
General Electric Co. 49,500 1,834,965 35,640 1,321,175 -0- 85,140 3,156,140
SPX Corp. 1,425 146,561 -0- -0- -0- 1,425 146,561
------------------ -------------- ------ -------------
1,981,526 1,321,175 -0- 3,302,701
------------------ -------------- ------ -------------
3,311,994 2,184,307 -0- 5,496,301
------------------ -------------- ------ -------------
TELECOMMUNICATIONS - 1.6%
TELECOMMUNICATIONS - 1.6%
AT&T, Inc. 39,800 1,654,088 48,000 1,994,880 -0- 87,800 3,648,968
Sprint Nextel Corp. 30,700 403,091 -0- -0- -0- 30,700 403,091
Verizon Communications, Inc. 20,300 886,907 29,700 1,297,593 -0- 50,000 2,184,500
------------------ -------------- ------ -------------
2,944,086 3,292,473 -0- 6,236,559
------------------ -------------- ------ -------------
UTILITIES - 0.8%
ELECTRIC UTILITIES - 0.2%
E.ON AG 1,600 340,196 -0- -0- -0- 1,600 340,196
The Tokyo Electric Power Co. 9,900 256,274 -0- -0- -0- 9,900 256,274
------------------ -------------- ------ -------------
596,470 -0- -0- 596,470
------------------ -------------- ------ -------------
INDEPENDENT POWER
PRODUCERS & ENERGY
TRADERS - 0.1%
Iberdrola Renovables (b) 12,874 106,347 -0- -0- -0- 12,874 106,347
International Power PLC 20,376 183,675 -0- -0- -0- 20,376 183,675
------------------ -------------- ------ -------------
290,022 -0- -0- 290,022
------------------ -------------- ------ -------------
MULTI-UTILITIES - 0.3%
Ameren Corp. 4,100 222,261 -0- -0- -0- 4,100 222,261
CMS Energy Corp. 3,000 52,140 -0- -0- -0- 3,000 52,140
RWE AG 1,380 194,398 -0- -0- -0- 1,380 194,398
Suez SA 4,017 273,421 -0- -0- -0- 4,017 273,421
Veolia Environnement 2,851 259,694 -0- -0- -0- 2,851 259,694
------------------ -------------- ------ -------------
1,001,914 -0- -0- 1,001,914
------------------ -------------- ------ -------------
UTILITY (ELECTRIC &
GAS) - 0.2%
Allegheny Energy, Inc. 1,800 114,498 -0- -0- -0- 1,800 114,498
American Electric
Power Co., Inc. 5,300 246,768 -0- -0- -0- 5,300 246,768
Constellation Energy
Group, Inc. 2,200 225,566 -0- -0- -0- 2,200 225,566
Entergy Corp. 900 107,568 -0- -0- -0- 900 107,568
Pinnacle West Capital Corp. 3,600 152,676 -0- -0- -0- 3,600 152,676
Wisconsin Energy Corp. 2,350 114,468 -0- -0- -0- 2,350 114,468
------------------ -------------- ------ -------------
961,544 -0- -0- 961,544
------------------ -------------- ------ -------------
2,849,950 -0- -0- 2,849,950
------------------ -------------- ------ -------------
CONSUMER CYCLICAL - 1.9%
APPLIANCES & HOUSEHOLD
DURABLES - 0.0%
Black & Decker Corp. 1,400 97,510 -0- -0- -0- 1,400 97,510
Newell Rubbermaid, Inc. 1,900 49,172 -0- -0- -0- 1,900 49,172
------------------ -------------- ------ -------------
146,682 -0- -0- 146,682
------------------ -------------- ------ -------------
BROADCASTING &
PUBLISHING - 1.0%
CBS Corp.-Class B 7,800 212,550 -0- -0- -0- 7,800 212,550
Gannett Co., Inc. 6,500 253,500 -0- -0- -0- 6,500 253,500
Idearc, Inc. 5,800 101,848 -0- -0- -0- 5,800 101,848
Time Warner, Inc. 13,600 224,536 79,700 1,315,847 -0- 93,300 1,540,383
Viacom, Inc.-Class B (b) 4,700 206,424 23,800 1,045,296 -0- 28,500 1,251,720
The Walt Disney Co. 11,400 367,992 -0- -0- -0- 11,400 367,992
------------------ -------------- ------ -------------
1,366,850 2,361,143 -0- 3,727,993
------------------ -------------- ------ -------------
BUSINESS & PUBLIC
SERVICES - 0.0%
Interpublic Group
of Cos., Inc. (b) 5,500 44,605 -0- -0- -0- 5,500 44,605
------------------ -------------- ------ -------------
MERCHANDISING - 0.8%
The Gap, Inc. 8,400 178,752 -0- -0- -0- 8,400 178,752
The Kroger Co. 5,200 138,892 -0- -0- -0- 5,200 138,892
Lowe's Cos., Inc. 5,800 131,196 -0- -0- -0- 5,800 131,196
Office Depot, Inc. (b) 3,300 45,903 -0- -0- -0- 3,300 45,903
Safeway, Inc. 5,600 191,576 65,300 2,233,913 -0- 70,900 2,425,489
Wal-Mart Stores, Inc. 1,400 66,542 -0- -0- -0- 1,400 66,542
------------------ -------------- ------ -------------
752,861 2,233,913 -0- 2,986,774
------------------ -------------- ------ -------------
RECREATION & OTHER
CONSUMER - 0.0%
Mattel, Inc. 7,700 146,608 -0- -0- -0- 7,700 146,608
------------------ -------------- ------ -------------
TEXTILES & APPAREL - 0.1%
Jones Apparel Group, Inc. 9,600 153,504 -0- -0- -0- 9,600 153,504
------------------ -------------- ------ -------------
2,611,110 4,595,056 -0- 7,206,166
------------------ -------------- ------ -------------
TELECOMMUNICATION
SERVICES - 0.8%
DIVERSIFIED
TELECOMMUNICATION
SERVICES - 0.4%
CenturyTel, Inc. -0- -0- 17,400 721,404 -0- 17,400 721,404
China Netcom Group Corp. Ltd. 59,000 175,783 -0- -0- -0- 59,000 175,783
Nippon Telegraph &
Telephone Corp. (a) 31 154,099 -0- -0- -0- 31 154,099
Telefonica SA 15,993 518,435 -0- -0- -0- 15,993 518,435
TeliaSonera AB (a) 17,574 164,186 -0- -0- -0- 17,574 164,186
------------------ -------------- ------ -------------
1,012,503 721,404 -0- 1,733,907
------------------ -------------- ------ -------------
WIRELESS TELECOMMUNICATION
SERVICES - 0.4%
America Movil SAB de CV
Series L (ADR) 6,800 417,452 -0- -0- -0- 6,800 417,452
Vodafone Group PLC 251,545 944,280 -0- -0- -0- 251,545 944,280
------------------ -------------- ------ -------------
1,361,732 -0- -0- 1,361,732
------------------ -------------- ------- -------------
2,374,235 721,404 -0- 3,095,639
------------------ -------------- ------- -------------
Pro Forma
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
MEDICAL - 1.4%
HEALTH & PERSONAL CARE - 1.4%
AmerisourceBergen Corp.-Class A 5,000 $ 224,350 -0- $ -0- $ -0- 5,000 $ 224,350
Cardinal Health, Inc. 3,300 190,575 -0- -0- -0- 3,300 190,575
Eli Lilly & Co. 5,900 315,001 38,100 2,034,159 -0- 44,000 2,349,160
International Flavors &
Fragrances, Inc. 1,550 74,601 -0- -0- -0- 1,550 74,601
McKesson Corp. 3,200 209,632 -0- -0- -0- 3,200 209,632
Pfizer, Inc. 48,100 1,093,313 59,600 1,354,708 -0- 107,700 2,448,021
------------------ -------------- ------- -------------
2,107,472 3,388,867 -0- 5,496,339
------------------ -------------- ------- -------------
INDUSTRIAL COMMODITIES - 0.4%
CHEMICALS - 0.3%
Dow Chemical Co. 9,300 366,606 8,300 327,186 -0- 17,600 693,792
E.I. Du Pont de Nemours & Co. 8,700 383,583 -0- -0- -0- 8,700 383,583
Lubrizol Corp. 1,525 82,594 -0- -0- -0- 1,525 82,594
------------------ -------------- ------- -------------
832,783 327,186 -0- 1,159,969
------------------ -------------- ------- -------------
CONTAINERS & PACKAGING - 0.0%
Sonoco Products Co. 3,500 114,380 -0- -0- -0- 3,500 114,380
------------------ -------------- ------- -------------
FOREST & PAPER - 0.0%
Smurfit-Stone Container
Corp. (b) 7,000 73,920 -0- -0- -0- 7,000 73,920
------------------ -------------- ------- -------------
MISCELLANEOUS MATERIALS - 0.1%
Bemis, Inc. 2,700 73,926 -0- -0- -0- 2,700 73,926
Owens-Illinois, Inc. (b) 3,300 163,350 -0- -0- -0- 3,300 163,350
------------------ -------------- ------- -------------
237,276 -0- -0- 237,276
------------------ -------------- ------- -------------
1,258,359 327,186 -0- 1,585,545
------------------ -------------- ------- -------------
TECHNOLOGY/ELECTRONICS - 0.8%
DATA PROCESSING - 0.6%
Dell, Inc. (b) 6,600 161,766 -0- -0- -0- 6,600 161,766
Electronic Data Systems Corp. 3,200 66,336 -0- -0- -0- 3,200 66,336
International Business
Machines Corp. 3,000 324,300 15,200 1,643,120 -0- 18,200 1,967,420
Sanmina-SCI Corp. (ADR) (b) 9,400 17,108 -0- -0- -0- 9,400 17,108
------------------ -------------- ------- -------------
569,510 1,643,120 -0- 2,212,630
------------------ -------------- ------- -------------
ELECTRICAL & ELECTRONICS - 0.1%
Lexmark International, Inc.-
Class A (b) 4,100 142,926 -0- -0- -0- 4,100 142,926
Tech Data Corp. (b) 1,400 52,808 -0- -0- -0- 1,400 52,808
------------------ -------------- ------- -------------
195,734 -0- -0- 195,734
------------------ -------------- ------- -------------
ELECTRONIC COMPONENTS &
INSTRUMENTS - 0.1%
Arrow Electronics, Inc. (b) 4,400 172,832 -0- -0- -0- 4,400 172,832
Avnet, Inc. (b) 6,100 213,317 -0- -0- -0- 6,100 213,317
Flextronics
International Ltd. (b) 1,300 15,678 -0- -0- -0- 1,300 15,678
------------------ -------------- ------- -------------
401,827 -0- -0- 401,827
------------------ -------------- ------- -------------
1,167,071 1,643,120 -0- 2,810,191
------------------ -------------- ------- -------------
CONSUMER GROWTH - 0.1%
HOSPITAL SUPPLIES - 0.1%
Johnson & Johnson 5,200 346,840 -0- -0- -0- 5,200 346,840
------------------ -------------- ------- -------------
CONSUMER MANUFACTURING - 0.0%
AUTO & RELATED - 0.0%
AutoNation, Inc. (b) 7,500 117,450 -0- -0- -0- 7,500 117,450
------------------ -------------- ------- -------------
NON-FINANCIAL - 0.0%
HOME BUILDING - 0.0%
Pulte Homes, Inc. 7,200 75,888 -0- -0- -0- 7,200 75,888
------------------ -------------- ------- -------------
CONSTRUCTION & HOUSING - 0.0%
REAL ESTATE - 0.0%
Canadian Apartment Properties 1 16 -0- -0- -0- 1 16
------------------ -------------- ------- -------------
Total Common Stocks
(cost $119,710,792
and $90,864,744 131,288,970 109,454,544 -0- 240,743,514
------------------ -------------- ------- -------------
MORTGAGE PASS-THRU'S - 4.9%
FIXED RATE 30-YEAR - 3.5%
Federal Gold Loan Mortgage Corp.
Series 2005
4.50%, 8/01/35 239 225,592 $ -0- -0- $ -0- $ 239 225,592
Series 2006
7.00%, 8/01/36 -0- -0- 928 964,232 -0- 928 964,232
Series 2007
7.00%, 2/01/37 663 688,707 -0- -0- -0- 663 688,707
Federal Home Loan Mortgage Corp.
Series 2007
5.50%, 7/01/35 252 252,418 -0- -0- -0- 252 252,418
Federal National Mortgage
Association
Series 2003
5.00%, 11/01/33 687 671,437 -0- -0- -0- 687 671,437
Series 2004
5.50%, 11/01/34 498 497,878 -0- -0- -0- 498 497,878
6.00%, 9/01/34 582 591,609 -0- -0- -0- 582 591,609
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
Series 2005
4.50%, 8/01/35 $ 725 $ 686,249 $ -0- $ -0- $ -0- $ 725 $ 686,249
Series 2006
5.00%, 2/01/36 925 903,100 -0- -0- -0- 925 903,100
6.50%, 9/01/36 2,449 2,517,625 525 539,491 -0- 2,974 3,057,116
Series 2007
4.50%, 9/01/35 - 8/01/37 1,741 1,649,530 -0- -0- -0- 1,741 1,649,530
5.00%, 7/01/36 279 272,857 -0- -0- -0- 279 272,857
5.50%, 8/01/37 2,850 2,863,828 -0- -0- -0- 2,850 2,863,828
------------------ ------------- ------- -------------
11,820,830 1,503,723 -0- 13,324,553
------------------ ------------- ------- -------------
AGENCY ARMS - 1.1%
Federal Home Loan
Mortgage Corp.
Series 2006
5.829%, 12/01/36 (c) 1,202 1,221,655 -0- -0- -0- 1,202 1,221,655
6.029%, 9/01/36 (c) -0- -0- 514 522,667 -0- 514 522,667
Series 2007
6.05%, 4/01/37 (c) -0- -0- 332 337,144 -0- 332 337,144
6.037%, 10/01/37 (c) 312 317,213 -0- -0- -0- 312 317,213
Federal National Mortgage
Association
Series 2005
5.322%, 9/01/35 (c) 87 87,406 -0- -0- -0- 87 87,406
Series 2006
5.463%, 5/01/36 (c) 63 63,894 -0- -0- -0- 63 63,894
5.799%, 3/01/36 (c) 147 149,549 -0- -0- -0- 147 149,549
5.851%, 11/01/36 (c) 115 117,133 -0- -0- -0- 115 117,133
5.916%, 6/01/36 (c) 107 109,612 -0- -0- -0- 107 109,612
Series 2007
5.769%, 1/01/37 (c) 161 163,491 -0- -0- -0- 161 163,491
5.925%, 2/01/37 (c) -0- -0- 527 536,241 -0- 527 536,241
6.025%, 11/01/36 (c) 110 112,123 -0- -0- -0- 110 112,123
6.027%, 2/01/37 (c) -0- -0- 326 332,401 -0- 326 332,401
6.081%, 3/01/37 (c) 305 311,244 -0- -0- -0- 305 311,244
------------------ ------------- ------- -------------
2,653,320 1,728,453 -0- 4,381,773
------------------ ------------- ------- -------------
NON-AGENCY ARMS - 0.3%
Bear Stearns Alt-A Trust
Series 2006-1, Class 22A1
5.40%, 2/25/36 (d) 208 201,643 -0- -0- -0- 208 201,643
Series 2006-3, Class 22A1
6.218%, 5/25/36 (d) 64 62,260 230 224,826 -0- 294 287,086
Series 2007-1, Class 21A1
5.728%, 1/25/47 (d) 67 64,567 -0- -0- -0- 67 64,567
Citigroup Mortgage Loan
Trust, Inc.
Series 2005-2, Class 1A4
5.11%, 5/25/35 (d) 131 128,047 -0- -0- -0- 131 128,047
Series 2006-AR1, Class 3A1
5.50%, 3/25/36 (c) 143 142,861 -0- -0- -0- 143 142,861
Indymac Index Mortgage
Loan Trust
Series 2006-AR7, Class 4A1
6.228%, 5/25/36 (d) 88 87,521 -0- -0- -0- 88 87,521
Residential Funding Mortgage
Securities, Inc.
Series 2005-SA3, Class 3A
5.235%, 8/25/35 (d) 139 136,783 -0- -0- -0- 139 136,783
------------------ ------------- ------- -------------
823,682 224,826 -0- 1,048,508
------------------ ------------- ------- -------------
Total Mortgage Pass-Thru's 15,297,832 3,457,002 -0- 18,754,834
(cost $15,105,886
and $3,442,539)
------------------ ------------- ------- -------------
U.S. TREASURIES - 6.0%
U.S. Treasury Bonds
4.50%, 2/15/36 3,920 3,939,906 3,385 3,402,189 -0- 7,305 7,342,095
8.75%, 5/15/17 3 4,081 2,623 3,568,510 -0- 2,626 3,572,591
U.S. Treasury Notes
4.25%, 11/15/17 3,555 3,616,935 1,935 1,968,711 -0- 5,490 5,585,646
4.875%, 5/31/11 5,940 6,260,202 15 15,809 -0- 5,955 6,276,011
------------------ ------------- ------- -------------
Total U.S. Treasuries 13,821,124 8,955,219 -0- 22,776,343
(cost $13,369,047
and $8,723,761)
------------------ ------------- ------- -------------
CORPORATES - INVESTMENT
GRADES - 9.7%
FINANCIAL INSTITUTIONS - 4.2%
BANKING- 2.1%
Bank of America Corp.
3.375%, 2/17/09 70 69,094 -0- -0- -0- 70 69,094
4.50%, 8/01/10 100 100,049 -0- -0- -0- 100 100,049
Bank of Tokyo-Mitsubishi UFJ L
7.40%, 6/15/11 -0- -0- 200 216,309 -0- 200 216,309
Barclays Bank PLC
8.55%, 6/15/11 (d)(e) -0- -0- 50 52,665 -0- 50 52,665
BB&T Capital Trust IV
6.82%, 6/12/57 (d) -0- -0- 175 164,635 -0- 175 164,635
Chase Manhattan Corp.
6.00%, 2/15/09 170 171,487 155 156,355 -0- 325 327,842
The Chuo Mitsui Trust &
Banking Co., Ltd.
5.506%, 4/15/15 (d)(e) -0- -0- 300 275,847 -0- 300 275,847
Citicorp
Series MTNF
6.375%, 11/15/08 31 31,421 30 30,407 -0- 61 61,828
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
Citigroup, Inc.
3.625%, 2/09/09 $ 135 $ 133,190 $ 160 $ 157,855 $ -0- $ 295 $ 291,045
4.625%, 8/03/10 75 74,591 -0- -0- -0- 75 74,591
5.286%, 6/09/09 (c) 20 19,846 -0- -0- -0- 20 19,846
Dresdner Funding Trust I
8.151%, 6/30/31 (e) -0- -0- 295 300,879 -0- 295 300,879
Fuji JGB Investment
9.87%, 6/30/08 (d)(e) -0- -0- 240 242,192 -0- 240 242,192
HBOS PLC
5.375%, 11/01/13 (d)(e) -0- -0- 250 227,905 -0- 250 227,905
6.413%, 10/01/35 (d)(e) -0- -0- 400 325,462 -0- 400 325,462
HSBC Bank USA
5.875%, 11/01/34 -0- -0- 310 284,479 -0- 310 284,479
JPMorgan Chase & Co.
6.75%, 2/01/11 80 83,999 -0- -0- -0- 80 83,999
JPMorgan Chase Capital XXV
6.80%, 10/01/37 51 49,035 -0- -0- -0- 51 49,035
Morgan J P & Co., Inc.
6.25%, 1/15/09 157 158,896 139 140,678 -0- 296 299,574
MUFG Capital Finance 1 Ltd.
6.346%, 7/25/16 (d) -0- -0- 170 161,013 -0- 170 161,013
National City Bk Of Ohio
6.25%, 3/15/11 250 257,080 -0- -0- -0- 250 257,080
Popular North America, Inc.
4.25%, 4/01/08 -0- -0- 470 468,995 -0- 470 468,995
Rabobank Capital Funding II
5.26%, 12/31/13 (d)(e) -0- -0- 230 214,286 -0- 230 214,286
RBS Capital Trust III
5.512%, 9/30/14 (d) -0- -0- 495 455,053 -0- 495 455,053
Regions Financing Trust II
6.625%, 5/15/47 (d) -0- -0- 170 140,485 -0- 170 140,485
Resona Preferred Global
Securities
7.191%, 7/30/15 (d)(e) -0- -0- 413 409,794 -0- 413 409,794
Royal Bank Of Scotland
Group PLC
6.40%, 4/01/09 108 109,969 -0- -0- -0- 108 109,969
7.648%, 9/30/31 (d) -0- -0- 250 257,934 -0- 250 257,934
SouthTrust Corp.
5.80%, 6/15/14 175 180,713 -0- -0- -0- 175 180,713
Sumitomo Mitsui Banking Corp.
5.625%, 10/15/15 (d)(e) -0- -0- 135 126,055 -0- 135 126,055
UBS Preferred Funding Trust I
8.622%, 10/01/10 (d) 40 43,129 -0- -0- -0- 40 43,129
UBS Preferred Funding Trust II
7.247%, 6/26/11 (d) -0- -0- 250 262,454 -0- 250 262,454
UBS Preferred Funding Trust V
Series 1
6.243%, 5/15/16 (d) -0- -0- 465 447,729 -0- 465 447,729
UFJ Finance Aruba AEC
6.75%, 7/15/13 -0- -0- 335 363,934 -0- 335 363,934
Unicredito Italiano
Capital Trust II
9.20%, 10/05/10 (d)(e) -0- -0- 330 359,623 -0- 330 359,623
Union Bank Of California
5.95%, 5/11/16 250 239,977 -0- -0- -0- 250 239,977
Wachovia Capital Trust III
5.80%, 3/15/11 (d) -0- -0- 85 75,952 -0- 85 75,952
Wachovia Corp.
5.625%, 12/15/08 46 45,911 -0- -0- -0- 46 45,911
Washington Mutual, Inc.
4.20%, 1/15/10 14 12,507 13 11,614 -0- 27 24,121
Wells Fargo & Co.
4.20%, 1/15/10 35 34,779 -0- -0- -0- 35 34,779
Zions Bancorporation
5.50%, 11/16/15 35 32,823 -0- -0- -0- 35 32,823
------------------ ------------- ------- -------------
1,848,496 6,330,589 -0- 8,179,085
------------------ ------------- ------- -------------
BROKERAGE - 0.6%
The Bear Stearns Co., Inc.
5.55%, 1/22/17 165 147,875 -0- -0- -0- 165 147,875
5.70%, 11/15/14 145 137,503 -0- -0- -0- 145 137,503
7.625%, 12/07/09 98 100,742 -0- -0- -0- 98 100,742
The Goldman Sachs Group, Inc.
3.875%, 1/15/09 134 132,628 126 124,710 -0- 260 257,338
4.75%, 7/15/13 35 34,282 325 334,367 -0- 360 368,649
5.70%, 9/01/12 -0- -0- 34 35,536 -0- 34 35,536
7.35%, 10/01/09 36 37,626 -0- -0- -0- 36 37,626
Lehman Brothers Holdings, Inc.
5.00%, 1/14/11 60 59,118 -0- -0- -0- 60 59,118
6.20%, 9/26/14 33 33,610 -0- -0- -0- 33 33,610
6.50%, 7/19/17 54 54,640 -0- -0- -0- 54 54,640
7.875%, 11/01/09 75 78,169 -0- -0- -0- 75 78,169
7.875%, 8/15/10 -0- -0- 150 158,984 -0- 150 158,984
Series MTNG
4.80%, 3/13/14 42 39,089 -0- -0- -0- 42 39,089
Merrill Lynch & Co., Inc.
4.79%, 8/04/10 105 104,042 -0- -0- -0- 105 104,042
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
6.00%, 2/17/09 $ 47 $ 47,384 $ -0- $ -0- $ -0- $ 47 $ 47,384
6.05%, 5/16/16 145 142,473 -0- -0- -0- 145 142,473
Series MTNC
4.125%, 1/15/09 52 51,322 47 46,387 -0- 99 97,709
4.125%, 9/10/09 -0- -0- 160 157,434 -0- 160 157,434
------------------ ------------- ------- -------------
1,200,503 857,418 -0- 2,057,921
------------------ ------------- ------- -------------
FINANCE - 0.8%
Capital One Bank
4.25%, 12/01/08 160 156,569 -0- -0- -0- 160 156,569
6.50%, 6/13/13 -0- -0- 200 196,179 -0- 200 196,179
Capital One Financial Corp.
5.50%, 6/01/15 20 18,447 23 21,214 -0- 43 39,661
6.75%, 9/15/17 43 41,242 -0- -0- -0- 43 41,242
CIT Group, Inc.
3.375%, 4/01/09 -0- -0- 150 144,539 -0- 150 144,539
5.00%, 2/01/15 75 65,195 -0- -0- -0- 75 65,195
5.125%, 9/30/14 40 35,235 -0- -0- -0- 40 35,235
5.85%, 9/15/16 150 132,432 -0- -0- -0- 150 132,432
7.625%, 11/30/12 135 136,837 -0- -0- -0- 135 136,837
Countrywide Financial Corp.
6.25%, 5/15/16 58 33,383 297 170,944 -0- 355 204,327
Series MTN
5.80%, 6/07/12 75 54,787 86 62,823 -0- 161 117,610
Countrywide Home Loans, Inc.
Series MTNL
4.00%, 3/22/11 69 49,822 10 7,221 -0- 79 57,043
General Electric Capital Corp.
4.375%, 11/21/11 25 24,803 -0- -0- -0- 25 24,803
5.875%, 2/15/12 -0- -0- 285 296,943 -0- 285 296,943
6.75%, 3/15/32 135 153,277 -0- -0- -0- 135 153,277
Household Finance Corp.
4.125%, 12/15/08 90 89,176 -0- -0- -0- 90 89,176
HSBC Finance Corp.
6.50%, 11/15/08 80 80,878 -0- -0- -0- 80 80,878
7.00%, 5/15/12 85 89,060 -0- -0- -0- 85 89,060
International Lease
Finance Corp.
6.375%, 3/15/09 -0- -0- 150 151,696 -0- 150 151,696
iStar Financial, Inc.
5.15%, 3/01/12 50 43,211 30 25,926 -0- 80 69,137
5.65%, 9/15/11 95 84,894 -0- -0- -0- 95 84,894
6.00%, 12/15/10 -0- -0- 200 182,064 -0- 200 182,064
Series B
5.95%, 10/15/13 -0- -0- 65 56,640 -0- 65 56,640
SLM Corp.
4.50%, 7/26/10 55 50,446 -0- -0- -0- 55 50,446
5.375%, 1/15/13 - 5/15/14 375 334,306 190 169,964 -0- 565 504,270
------------------ ------------- ------- -------------
1,674,000 1,486,153 -0- 3,160,153
------------------ ------------- ------- -------------
INSURANCE - 0.7%
The Allstate Corp.
6.125%, 5/15/37 (d) -0- -0- 160 154,371 -0- 160 154,371
American RE Corp.
Series B
7.45%, 12/15/26 -0- -0- 140 144,875 -0- 140 144,875
Assurant, Inc.
5.625%, 2/15/14 35 34,250 -0- -0- -0- 35 34,250
Berkshire Hathaway
Finance Corp.
4.20%, 12/15/10 50 50,259 -0- -0- -0- 50 50,259
CNA Financial Corp.
5.85%, 12/15/14 -0- -0- 85 85,140 -0- 85 85,140
Hartford Financial
Services Group, Inc.
6.375%, 11/01/08 -0- -0- 125 126,364 -0- 125 126,364
ING Groep NV
5.775%, 12/08/15 (d) -0- -0- 470 433,523 -0- 470 433,523
Liberty Mutual Group, Inc.
5.75%, 3/15/14 (e) 35 35,644 200 203,683 -0- 235 239,327
Lincoln National Corp.
7.00%, 5/17/66 (d) -0- -0- 345 346,388 -0- 345 346,388
North Front Pass Through
Trust
5.81%, 12/15/24 (d)(e) -0- -0- 500 478,409 -0- 500 478,409
UnitedHealth Group, Inc.
4.125%, 8/15/09 67 66,603 -0- -0- -0- 67 66,603
5.25%, 3/15/11 165 166,846 110 111,231 -0- 275 278,077
WellPoint, Inc.
4.25%, 12/15/09 80 79,071 -0- -0- -0- 80 79,071
5.25%, 1/15/16 -0- -0- 75 72,613 -0- 75 72,613
------------------ ------------- ------- -------------
432,673 2,156,597 -0- 2,589,270
------------------ ------------- ------- -------------
5,155,672 10,830,757 -0- 15,986,429
------------------ ------------- ------- -------------
INDUSTRIAL - 4.7%
BASIC - 0.4%
The Dow Chemical Co.
7.375%, 11/01/29 10 10,999 15 16,499 -0- 25 27,498
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
Eastman Chemical Co.
7.25%, 1/15/24 $ -0- $ -0- $ 100 $ 108,861 $ -0- $ 100 $ 108,861
Inco Ltd.
7.75%, 5/15/12 -0- -0- 325 354,574 -0- 325 354,574
International Paper Co.
5.30%, 4/01/15 55 53,681 -0- -0- -0- 55 53,681
International Steel Group, Inc.
6.50%, 4/15/14 60 61,609 -0- -0- -0- 60 61,609
Lubrizol Corp.
4.625%, 10/01/09 20 20,085 -0- -0- -0- 20 20,085
5.50%, 10/01/14 -0- -0- 180 178,707 -0- 180 178,707
Noranda, Inc.
6.00%, 10/15/15 -0- -0- 205 207,850 -0- 205 207,850
Southern Copper Corp.
7.50%, 7/27/35 -0- -0- 195 206,526 -0- 195 206,526
Westvaco Corp.
8.20%, 1/15/30 15 16,038 -0- -0- -0- 15 16,038
Weyerhaeuser Co.
5.95%, 11/01/08 35 35,284 -0- -0- -0- 35 35,284
7.375%, 3/15/32 -0- -0- 170 170,603 -0- 170 170,603
------------------ ------------- ------- -------------
197,696 1,243,620 -0- 1,441,316
------------------ ------------- ------- -------------
CAPITAL GOODS - 0.3%
Boeing Capital Corp.
4.75%, 8/25/08 35 35,119 -0- -0- -0- 35 35,119
CRH America, Inc.
6.00%, 9/30/16 -0- -0- 90 88,019 -0- 90 88,019
Caterpillar Financial Services
4.50%, 6/15/09 46 46,017 -0- -0- -0- 46 46,017
Hanson Australia Funding Ltd.
5.25%, 3/15/13 -0- -0- 120 119,726 -0- 120 119,726
Hutchison Whampoa
International Ltd.
7.45%, 11/24/33 (e) -0- -0- 100 114,047 -0- 100 114,047
Masco Corp.
7.75%, 8/01/29 -0- -0- 165 178,625 -0- 165 178,625
Textron Financial Corp.
4.125%, 3/03/08 80 79,922 -0- -0- -0- 80 79,922
Tyco International Group SA
6.00%, 11/15/13 85 87,366 115 118,202 -0- 200 205,568
Waste Management, Inc.
6.375%, 11/15/12 -0- -0- 175 185,031 -0- 175 185,031
6.875%, 5/15/09 40 41,067 -0- -0- -0- 40 41,067
------------------ ------------- ------- -------------
289,491 803,650 -0- 1,093,141
------------------ ------------- ------- -------------
COMMUNICATIONS - MEDIA - 0.6%
BSKYB Finance UK PLC
5.625%, 10/15/15 (e) -0- -0- 85 83,633 -0- 85 83,633
British Sky Broadcasting PLC
8.20%, 7/15/09 20 20,924 -0- -0- -0- 20 20,924
Comcast Cable Communications
Holdings, Inc.
9.455%, 11/15/22 55 69,940 -0- -0- -0- 55 69,940
Comcast Cable Communications,
Inc.
6.20%, 11/15/08 66 66,537 -0- -0- -0- 66 66,537
6.875%, 6/15/09 50 51,429 -0- -0- -0- 50 51,429
Comcast Corp.
5.30%, 1/15/14 40 39,224 -0- -0- -0- 40 39,224
5.50%, 3/15/11 50 50,478 -0- -0- -0- 50 50,478
Cox Enterprises, Inc.
4.375%, 5/01/08 (e) 40 39,872 -0- -0- -0- 40 39,872
News America Holdings, Inc.
8.25%, 10/17/96 -0- -0- 60 69,688 -0- 60 69,688
9.25%, 2/01/13 -0- -0- 65 75,978 -0- 65 75,978
News America, Inc.
5.30%, 12/15/14 -0- -0- 190 189,022 -0- 190 189,022
6.55%, 3/15/33 45 44,950 -0- -0- -0- 45 44,950
RR Donnelley & Sons Co.
4.95%, 4/01/14 25 23,570 -0- -0- -0- 25 23,570
5.50%, 5/15/15 -0- -0- 185 178,004 -0- 185 178,004
The Thomson Corp.
5.75%, 2/01/08 -0- -0- 460 459,876 -0- 460 459,876
Time Warner Cos., Inc.
7.57%, 2/01/24 -0- -0- 70 75,918 -0- 70 75,918
Time Warner Entertainment Co.
8.375%, 3/15/23 130 153,126 250 294,474 -0- 380 447,600
Viacom, Inc.
7.875%, 7/30/30 -0- -0- 60 65,117 -0- 60 65,117
WPP Finance Corp.
5.875%, 6/15/14 25 26,606 125 133,030 -0- 150 159,636
------------------ ------------- ------- -------------
586,656 1,624,740 -0- 2,211,396
------------------ ------------- ------- -------------
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS -
TELECOMMUNICATIONS - 1.2%
AT&T Corp.
7.30%, 11/15/11 $ 40 $ 43,340 $ 250 $ 270,877 $ -0- $ 290 $ 314,217
8.00%, 11/15/31 15 18,421 -0- -0- -0- 15 18,421
Bellsouth Capital Funding Corp.
7.12%, 7/15/97 -0- -0- 360 376,225 -0- 360 376,225
BellSouth Corp.
5.20%, 9/15/14 -0- -0- 270 269,465 -0- 270 269,465
British Telecommunications PLC
8.625%, 12/15/10 100 109,735 -0- -0- -0- 100 109,735
Embarq Corp.
6.738%, 6/01/13 5 5,172 250 258,594 -0- 255 263,766
7.082%, 6/01/16 240 247,291 280 288,507 -0- 520 535,798
GTE Corp.
8.75%, 11/01/21 -0- -0- 270 330,870 -0- 270 330,870
New Cingular Wireless
Services, Inc.
7.875%, 3/01/11 95 102,882 -0- -0- -0- 95 102,882
8.75%, 3/01/31 50 64,799 155 200,877 -0- 205 265,676
Nextel Communications, Inc.
Series E
6.875%, 10/31/13 45 44,332 -0- -0- -0- 45 44,332
Series F
5.95%, 3/15/14 -0- -0- 165 155,095 -0- 165 155,095
Qwest Corp.
5.625%, 11/15/08 110 109,450 -0- -0- -0- 110 109,450
7.50%, 10/01/14 -0- -0- 165 167,475 -0- 165 167,475
7.875%, 9/01/11 150 156,000 115 119,600 -0- 265 275,600
8.875%, 3/15/12 110 117,700 -0- -0- -0- 110 117,700
Sprint Capital Corp.
8.375%, 3/15/12 120 129,963 -0- -0- -0- 120 129,963
Telecom Italia Capital SA
4.00%, 1/15/10 120 117,532 -0- -0- -0- 120 117,532
6.00%, 9/30/34 65 63,206 -0- -0- -0- 65 63,206
Telefonos de Mexico SAB de CV
4.50%, 11/19/08 157 156,231 139 138,319 -0- 296 294,550
Telus Corp.
8.00%, 6/01/11 -0- -0- 100 108,347 -0- 100 108,347
Verizon Communications, Inc.
4.90%, 9/15/15 35 34,049 -0- -0- -0- 35 34,049
Verizon New Jersey, Inc.
Series A
5.875%, 1/17/12 45 46,341 -0- -0- -0- 45 46,341
Verizon Virginia, Inc.
Series A
4.625%, 3/15/13 -0- -0- 365 352,558 -0- 365 352,558
Vodafone Group PLC
5.50%, 6/15/11 60 60,637 -0- -0- -0- 60 60,637
7.875%, 2/15/30 -0- -0- 155 182,617 -0- 155 182,617
------------------ ------------- ------- -------------
1,627,081 3,219,426 -0- 4,846,507
------------------ ------------- ------- -------------
CONSUMER CYCLICAL -
AUTOMOTIVE - 0.0%
DaimlerChrysler North America
4.875%, 6/15/10 25 24,889 70 69,689 -0- 95 94,578
------------------ ------------- ------- -------------
CONSUMER CYCLICAL -
OTHER - 0.2%
Centex Corp.
5.45%, 8/15/12 164 144,247 -0- -0- -0- 164 144,247
Starwood Hotels & Resorts
Worldwide, Inc.
7.375%, 11/15/15 81 83,622 141 145,564 -0- 222 229,186
7.875%, 5/01/12 84 89,259 98 104,135 -0- 182 193,394
Toll Brothers Finance Corp.
5.15%, 5/15/15 20 18,149 30 27,224 -0- 50 45,373
6.875%, 11/15/12 40 39,071 -0- -0- -0- 40 39,071
------------------ ------------- ------- -------------
374,348 276,923 -0- 651,271
------------------ ------------- ------- -------------
CONSUMER CYCLICAL -
RETAILERS - 0.1%
CVS Corp.
6.125%, 8/15/16 -0- -0- 150 153,973 -0- 150 153,973
Ltd. Brands, Inc.
6.90%, 7/15/17 25 24,155 -0- -0- -0- 25 24,155
------------------ ------------- ------- -------------
24,155 153,973 -0- 178,128
------------------ ------------- ------- -------------
CONSUMER NON-CYCLICAL - 1.0%
Altria Group, Inc.
7.75%, 1/15/27 85 109,513 145 186,817 -0- 230 296,330
Anheuser-Busch Cos., Inc.
6.50%, 2/01/43 -0- -0- 100 107,125 -0- 100 107,125
Bristol-Myers Squibb Co.
6.875%, 8/01/97 -0- -0- 425 448,722 -0- 425 448,722
Bunge Ltd Finance Corp.
5.10%, 7/15/15 69 65,352 -0- -0- -0- 69 65,352
Cadbury Schweppes US
Finance LLC
5.125%, 10/01/13 (e) 135 134,921 190 189,889 -0- 325 324,810
ConAgra Foods, Inc.
7.875%, 9/15/10 19 20,394 -0- -0- -0- 19 20,394
Fisher Scientific International,
Inc.
6.125%, 7/01/15 19 18,873 410 407,267 -0- 429 426,140
6.75%, 8/15/14 29 29,724 -0- -0- -0- 29 29,724
Pro Forma
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
Kraft Foods, Inc.
4.125%, 11/12/09 $ 115 $ 114,008 $ -0- $ -0- $ -0- $ 115 $ 114,008
5.25%, 10/01/13 -0- -0- 150 147,473 -0- 150 147,473
Reynolds American, Inc.
7.25%, 6/01/12 -0- -0- 160 168,906 -0- 160 168,906
7.25%, 6/01/13 150 158,660 -0- -0- -0- 150 158,660
7.625%, 6/01/16 145 154,134 160 170,079 -0- 305 324,213
Safeway, Inc.
4.125%, 11/01/08 18 17,806 -0- -0- -0- 18 17,806
4.95%, 8/16/10 -0- -0- 400 402,100 -0- 400 402,100
5.80%, 8/15/12 -0- -0- 155 160,374 -0- 155 160,374
6.50%, 3/01/11 15 15,693 -0- -0- -0- 15 15,693
Tyson Foods, Inc.
6.85%, 4/01/16 150 153,923 -0- -0- -0- 150 153,923
Wyeth
5.50%, 2/01/14 40 40,627 -0- -0- -0- 40 40,627
6.50%, 2/01/34 -0- -0- 285 302,477 -0- 285 302,477
------------------ ------------- ------- -------------
1,033,628 2,691,229 -0- 3,724,857
------------------ ------------- ------- -------------
ENERGY - 0.4%
Amerada Hess Corp.
7.30%, 8/15/31 -0- -0- 140 157,258 -0- 140 157,258
7.875%, 10/01/29 55 65,099 -0- -0- -0- 55 65,099
Gazprom
6.212%, 11/22/16 (e) 315 305,613 350 339,570 -0- 665 645,183
Norsk Hydro
6.36%, 1/15/09 -0- -0- 45 45,712 -0- 45 45,712
Transocean, Inc.
7.50%, 4/15/31 -0- -0- 155 170,273 -0- 155 170,273
Valero Energy Corp.
4.75%, 6/15/13 -0- -0- 125 121,198 -0- 125 121,198
6.875%, 4/15/12 45 48,017 -0- -0- -0- 45 48,017
XTO Energy, Inc.
7.50%, 4/15/12 -0- -0- 100 109,315 -0- 100 109,315
------------------ ------------- ------- -------------
418,729 943,326 -0- 1,362,055
------------------ ------------- ------- -------------
SERVICES - 0.1%
The Western Union Co.
5.93%, 10/01/16 -0- -0- 315 314,329 -0- 315 314,329
------------------ ------------- ------- -------------
TECHNOLOGY - 0.4%
Electronic Data Systems Corp.
Series B
6.50%, 8/01/13 145 146,617 310 313,458 -0- 455 460,075
Hewlett-Packard Co.
3.625%, 3/15/08 -0- -0- 475 473,895 -0- 475 473,895
International Business
Machines Corp.
4.375%, 6/01/09 20 20,183 -0- -0- -0- 20 20,183
Motorola, Inc.
6.50%, 9/01/25 70 67,977 105 101,966 -0- 175 169,943
7.50%, 5/15/25 15 15,961 20 21,281 -0- 35 37,242
7.625%, 11/15/10 5 5,356 64 68,552 -0- 69 73,908
Xerox Corp.
7.625%, 6/15/13 30 31,306 35 36,524 -0- 65 67,830
9.75%, 1/15/09 111 116,041 104 108,723 -0- 215 224,764
------------------ ------------- ------- -------------
403,441 1,124,399 -0- 1,527,840
------------------ ------------- ------- -------------
TRANSPORTATION - AIRLINES -
0.1%
Southwest Airlines Co.
5.25%, 10/01/14 -0- -0- 415 404,449 -0- 415 404,449
Transportation - Railroads -
0.1%
CSX Corp.
5.50%, 8/01/13 -0- -0- 50 49,835 -0- 50 49,835
Norfolk Southern Corp.
7.90%, 5/15/97 -0- -0- 45 52,103 -0- 45 52,103
------------------ ------------- ------- -------------
-0- 506,387 -0- 506,387
------------------ ------------- ------- -------------
4,980,114 12,971,691 -0- 17,951,805
------------------ ------------- ------- -------------
REITS - 0.1%
Regency Centers LP
5.25%, 8/01/15 -0- -0- 225 213,260 -0- 225 213,260
------------------ ------------- ------- -------------
UTILITY - 0.7%
ELECTRIC - 0.4%
Carolina Power & Light Co.
6.50%, 7/15/12 65 69,181 -0- -0- -0- 65 69,181
Consumers Energy Co.
Series C
4.25%, 4/15/08 25 24,916 -0- -0- -0- 25 24,916
Series D
5.375%, 4/15/13 -0- -0- 215 214,405 -0- 215 214,405
Dominion Resources, Inc./VA
7.50%, 6/30/66 (d) -0- -0- 305 301,543 -0- 305 301,543
Exelon Corp.
6.75%, 5/01/11 25 26,148 -0- -0- -0- 25 26,148
FPL Group Capital, Inc.
6.35%, 10/01/66 (d) -0- -0- 55 52,018 -0- 55 52,018
6.65%, 6/15/67 (d) -0- -0- 170 163,729 -0- 170 163,729
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
FirstEnergy Corp.
Series B
6.45%, 11/15/11 $ 65 $ 67,120 $ -0- $ -0- $ -0- $ 65 $ 67,120
Series C
7.375%, 11/15/31 85 93,265 -0- -0- -0- 85 93,265
MidAmerican Energy Holdings Co.
5.875%, 10/01/12 30 31,094 -0- -0- -0- 30 31,094
Nisource Finance Corp.
7.875%, 11/15/10 40 42,433 -0- -0- -0- 40 42,433
Pacific Gas & Electric Co.
4.80%, 3/01/14 65 63,194 -0- -0- -0- 65 63,194
Progress Energy, Inc.
7.10%, 3/01/11 19 20,220 -0- -0- -0- 19 20,220
Public Service Company of
Colorado
7.875%, 10/01/12 30 33,666 -0- -0- -0- 30 33,666
SPI Electricity & Gas
Australia Holdings Pty Ltd.
6.15%, 11/15/13 (e) 238 242,852 250 255,096 -0- 488 497,948
------------------ ------------- ------- -------------
714,089 986,791 -0- 1,700,880
------------------ ------------- ------- -------------
NATURAL GAS - 0.3%
CenterPoint Energy Resources
Corp.
Series B
7.875%, 4/01/13 -0- -0- 285 312,926 -0- 285 312,926
Duke Energy Field Services Corp.
7.875%, 8/16/10 15 16,091 -0- -0- -0- 15 16,091
Enterprise Products Operating LP
Series B
5.60%, 10/15/14 25 24,950 150 149,699 -0- 175 174,649
Texas Eastern Transmission Corp.
7.30%, 12/01/10 -0- -0- 350 375,188 -0- 350 375,188
TransCanada Pipelines Ltd.
6.35%, 5/15/67 (d) -0- -0- 180 168,710 -0- 180 168,710
Williams Cos., Inc.
7.875%, 9/01/21 40 44,350 -0- -0- -0- 40 44,350
------------------ ------------- ------- -------------
85,391 1,006,523 -0- 1,091,914
------------------ ------------- ------- -------------
799,480 1,993,314 -0- 2,792,794
------------------ ------------- ------- -------------
NON CORPORATE SECTORS - 0.0%
AGENCIES - NOT GOVERNMENT
GUARANTEED - 0.0%
Petronas Capital, Ltd.
7.00%, 5/22/12 (e) -0- -0- 150 163,316 -0- 150 163,316
------------------ ------------- ------- -------------
Total Corporates -
Investment Grades
(cost $11,025,886
and $26,585,983) 10,935,266 26,172,338 -0- 37,107,604
------------------ ------------- ------- -------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES - 3.2%
NON-AGENCY FIXED RATE CMBS - 3.2%
Banc of America
Commercial Mortgage, Inc.
Series 2001-PB1, Class A2
5.787%, 5/11/35 164 167,898 1,526 1,563,852 -0- 1,690 1,731,750
Series 2004-4, Class A3
4.128%, 7/10/42 200 197,530 -0- -0- -0- 200 197,530
Series 2004-6, Class A2
4.161%, 12/10/42 140 137,776 -0- -0- -0- 140 137,776
Series 2005-6, Class A4
5.181%, 9/10/47 315 310,604 -0- -0- -0- 315 310,604
Series 2006-5, Class A4
5.414%, 9/10/47 355 355,201 -0- -0- -0- 355 355,201
Bear Stearns Commercial
Mortgage Securities, Inc.
5.70%, 6/11/50 365 376,041 -0- -0- -0- 365 376,041
Series 2006-PW12, Class A4
5.711%, 9/11/38 100 102,615 -0- -0- -0- 100 102,615
Citigroup Commercial Mortgage
Trust
Series 2004-C1, Class A4
5.529%, 4/15/40 (d) 110 111,331 -0- -0- -0- 110 111,331
Credit Suisse First Boston
Mortgage Securities Corp.
Series 2003-CK2, Class A2
3.861%, 3/15/36 32 32,065 -0- -0- -0- 32 32,065
Series 2004-C1, Class A4
4.75%, 1/15/37 (d) 70 68,342 -0- -0- -0- 70 68,342
Credit Suisse Mortgage Capital
Certificates
Series 2006-C3, Class A3
5.827%, 6/15/38 (d) 90 92,952 -0- -0- -0- 90 92,952
Series 2006-C4, Class A3
5.467%, 9/15/39 235 235,629 -0- -0- -0- 235 235,629
GE Capital Commercial
Mortgage Corp.
Series 2005-C3, Class A3FX
4.863%, 7/10/45 360 358,003 -0- -0- -0- 360 358,003
Greenwich Capital Commercial
Funding Corp.
Series 2007-GG9, Class A4
5.444%, 3/10/39 215 216,269 -0- -0- -0- 215 216,269
GS Mortgage Securities Corp. II
Series 2001-ROCK, Class C
6.878%, 5/03/18 (e) 605 639,962 -0- -0- -0- 605 639,962
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
Series 2004-GG2, Class A6
5.396%, 8/10/38 $ 80 $ 80,544 $ 600 $ 604,080 $ -0- $ 680 $ 684,624
Series 2007-GG10, Class A2
5.778%, 8/10/45 490 499,415 -0- -0- -0- 490 499,415
JPMorgan Chase Commercial
Mortgage Securities Corp.
Series 2004-C1, Class A2
4.302%, 1/15/38 60 58,895 -0- -0- -0- 60 58,895
Series 2005-CB11, Class A4
5.335%, 8/12/37 170 170,349 -0- -0- -0- 170 170,349
Series 2005-LDP3, Class A2
4.851%, 8/15/42 100 99,324 -0- -0- -0- 100 99,324
Series 2005-LDP4, Class A2
4.79%, 10/15/42 210 208,337 -0- -0- -0- 210 208,337
Series 2005-LDP5, Class A2
5.198%, 12/15/44 60 60,043 -0- -0- -0- 60 60,043
Series 2006-CB14, Class A4
5.481%, 12/12/44 (d) 50 50,178 -0- -0- -0- 50 50,178
Series 2006-CB15, Class A4
5.814%, 6/12/43 (d) 110 112,971 -0- -0- -0- 110 112,971
Series 2006-CB16, Class A4
5.552%, 5/12/45 200 201,766 -0- -0- -0- 200 201,766
Series 2006-CB17, Class A4
5.429%, 12/12/43 350 351,943 -0- -0- -0- 350 351,943
LB-UBS Commercial Mortgage Trust
Series 2003-C3, Class A4
4.166%, 5/15/32 150 143,440 -0- -0- -0- 150 143,440
Series 2004-C4, Class A4
5.296%, 6/15/29 40 40,520 -0- -0- -0- 40 40,520
Series 2004-C8, Class A2
4.201%, 12/15/29 125 123,152 -0- -0- -0- 125 123,152
Series 2005-C1, Class A4
4.742%, 2/15/30 120 116,572 -0- -0- -0- 120 116,572
Series 2005-C7, Class A4
5.197%, 11/15/30 50 48,932 -0- -0- -0- 50 48,932
Series 2006-C3, Class A4
5.661%, 3/15/39 (d) 285 290,049 -0- -0- -0- 285 290,049
Series 2006-C4, Class A4
5.883%, 6/15/38 (d) 275 285,381 -0- -0- -0- 275 285,381
Series 2006-C6, Class A4
5.372%, 9/15/39 330 329,097 235 234,357 -0- 565 563,454
Series 2007-C6, Class A4
5.858%, 7/15/40 210 217,192 -0- -0- -0- 210 217,192
Series 2007-C7, Class A3
5.866%, 9/15/45 -0- -0- 620 641,337 -0- 620 641,337
Merrill Lynch Mortgage Trust
Series 2005-CKI1, Class A6
5.244%, 11/12/37 (d) 40 39,871 -0- -0- -0- 40 39,871
Series 2005-MKB2, Class A2
4.806%, 9/12/42 320 318,394 -0- -0- -0- 320 318,394
Merrill Lynch/Countrywide
Commercial Mortgage Trust
Series 2006-2, Class A4
6.105%, 6/12/46 (d) 110 114,209 -0- -0- -0- 110 114,209
Series 2006-3, Class A4
5.414%, 7/12/46 (d) 280 279,856 -0- -0- -0- 280 279,856
Morgan Stanley Capital I
Series 2004-HQ4, Class A5
4.59%, 4/14/40 190 187,626 -0- -0- -0- 190 187,626
Series 2005-HQ5, Class A4
5.168%, 1/14/42 -0- -0- 1,035 1,029,128 -0- 1,035 1,029,128
Series 2007-T27, Class A4
5.651%, 6/13/42 210 215,469 -0- -0- -0- 210 215,469
------------------ ------------- ------- -------------
8,045,743 4,072,754 -0- 12,118,497
------------------ ------------- ------- -------------
NON-AGENCY ADJUSTABLE
RATE CMBS - 0.0%
GS Mortgage Securities Corp. II
Series 2007-EOP, Class E
5.692%, 3/06/20 (c)(e) 75 72,281 -0- -0- -0- 75 72,281
------------------ ------------- ------- -------------
Total Commercial Mortgage-
Backed Securities
(cost $8,007,866
and $4,046,251) 8,118,024 4,072,754 -0- 12,190,778
------------------ ------------- ------- -------------
GOVERNMENT-RELATED -
U.S. AGENCIES - 2.0%
AGENCY DEBENTURES - 2.0%
Federal Home Loan Bank
4.625%, 10/10/12 470 483,739 -0- -0- -0- 470 483,739
5.00%, 11/17/17 3,120 3,234,931 655 679,128 -0- 3,775 3,914,059
Federal Home Loan Mortgage
Corp.
5.125%, 11/17/17 2,670 2,785,988 245 255,643 -0- 2,915 3,041,631
Federal National Mortgage
Association
Series 2005
3.875%, 2/15/10 200 201,339 -0- -0- -0- 200 201,339
------------------ ------------- ------- -------------
Total Government-Related -
U.S. Agencies
(cost $6,639,440
and $919,607) 6,705,997 934,771 -0- 7,640,768
------------------ ------------- ------- -------------
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT-RELATED - U.S.
OTHER ISSUERS - 0.1%
TEXAS - 0.1%
Dallas-Fort Worth Int'l
Arpt Fac Impr
Corp. MBIA FSA
7.07%, 11/01/24 $ -0- $ -0- $ 400 $ 413,528 $ -0- $ 400 $ 413,528
(cost $409,203) ------------------ ------------- ------- -------------
-0- 413,528 -0- 413,528
------------------ ------------- ------- -------------
GOVERNMENT-RELATED -
FOREIGN AGENCIES - 0.9%
Development Bank of Japan
1.75%, 6/21/10 JPY 200,000 1,830,694 JPY -0- -0- -0- JPY 200,000 1,830,694
Kreditanstalt fuer
Wiederaufbau
1.75%, 3/23/10 (a) 114,000 1,041,107 -0- -0- -0- 114,000 1,041,107
Series INTL
1.85%, 9/20/10 (a) 64,000 587,937 -0- -0- -0- 64,000 587,937
------------------ ------------- ------- -------------
Total Government-Related -
Foreign Agencies
(cost $3,315,964) 3,459,738 -0- -0- 3,459,738
------------------ ------------- ------- -------------
EMERGING MARKETS -
NON-INVESTMENT
GRADES - 1.1%
NON CORPORATE SECTORS - 1.1%
SOVEREIGN - 1.1%
Republic of Brazil
8.25%, 1/20/34 (a) $ 725 $ 917,125 $ 855 $ 1,081,575 $ -0- $ 1,580 $ 1,998,700
Republic of Panama
9.375%, 4/01/29 (a) 200 273,000 270 368,550 -0- 470 641,550
Republic of Peru
7.35%, 7/21/25 (a) 215 245,100 -0- -0- -0- 215 245,100
8.75%, 11/21/33 185 245,125 395 523,375 -0- 580 768,500
Republic of Philippines
8.25%, 1/15/14 261 292,320 231 258,720 -0- 492 551,040
8.875%, 3/17/15 46 54,119 44 51,766 -0- 90 105,885
------------------ ------------- ------- -------------
Total Emerging Markets -
Non-Investment Grades
(cost $1,913,602
and $2,286,763) 2,026,789 2,283,986 -0- 4,310,775
------------------ ------------- ------- -------------
GOVERNMENT-RELATED -
SOVEREIGNS - 0.5%
Government of Poland
Series 1110
6.00%, 11/24/10 (a) PLN 1,745 706,841 PLN -0- -0- PLN -0- PLN 1,745 706,841
Mexican Bonos
Series MI10
8.00%, 12/19/13 MXN 14,185 1,296,569 MXN -0- -0- MXN -0- MXN 14,185 1,296,569
------------------ ------------- ------- -------------
Total Government-Related -
Sovereigns
(cost $2,013,711) 2,003,410 -0- -0- 2,003,410
------------------ ------------- ------- -------------
ASSET-BACKED SECURITIES -
0.9% HOME EQUITY LOANS -
FLOATING RATE - 0.6% Bear
Stearns Asset Backed
Securities, Inc.
Series 2005-SD1, Class 1A1
5.015%, 4/25/22 (c) $ 2 $ 2,214 $ -0- $ -0- $ -0- $ 2 $ 2,214
Series 2007-HE3, Class M1
5.315%, 4/25/37 (c) 100 64,310 -0- -0- -0- 100 64,310
Credit-Based Asset Servicing
& Securities, Inc.
Series 2005-CB7, Class AF2
5.147%, 11/25/35 (f) 88 87,025 83 81,906 -0- 171 168,931
Home Equity Asset Trust
Series 2007-3, Class M1
5.215%, 8/25/37 (c) 275 189,522 -0- -0- -0- 275 189,522
Home Equity Mortgage Trust
Series 2006-1, Class A2
5.367%, 5/25/36 (f) 30 15,019 -0- -0- -0- 30 15,019
Household Home Equity
Loan trust
Series 2007-1, Class M1
5.329%, 3/20/36 (c) -0- -0- 365 255,500 -0- 365 255,500
HSI Asset Securitization Corp.
Trust
Series 2006-OPT2, Class 2A1
4.945%, 1/25/36 (c) 15 14,774 -0- -0- -0- 15 14,774
Indymac Residential Asset
Backed Trust
Series 2006-D, Class 2A2
4.975%, 11/25/36 (c) 295 277,991 -0- -0- -0- 295 277,991
IXIS Real Estate Capital Trust
Series 2006-HE3, Class A2
4.965%, 1/25/37 (c) 195 183,940 -0- -0- -0- 195 183,940
Lehman XS Trust
Series 2007-4N, Class M1
5.315%, 3/25/47 (c) 265 193,001 -0- -0- -0- 265 193,001
Newcastle Mortgage Securities
Trust
Series 2007-1, Class 2A1
4.919%, 4/25/37 (c) -0- -0- 301 287,611 -0- 301 287,611
Option One Mortgage Loan Trust
Series 2007-2, Class M1
5.225%, 3/25/37 (c) -0- -0- 125 77,575 -0- 125 77,575
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
RAAC Series
Series 2006-SP3, Class A1
4.945%, 8/25/36 (c) $ 128 $ 124,149 $ 61 $ 59,118 $ -0- $ 189 $ 183,267
Residential Asset Securities
Corp.
Series 2003-KS3, Class A2
5.465%, 5/25/33 (c) 2 2,214 -0- -0- -0- 2 2,214
Soundview Home Equity
Loan Trust
Series 2007-OPT2, Class 2A2
4.919%, 7/25/37 (c) -0- -0- 300 287,766 -0- 300 287,766
Specialty Underwriting &
Residential Finance
Series 2006-BC1, Class A2A
4.945%, 12/25/36 (c) 11 10,965 -0- -0- -0- 11 10,965
Structured Asset Investment
Loan Trust
Series 2006-1, Class A1
4.945%, 1/25/36 (c) 20 20,378 -0- -0- -0- 20 20,378
------------------ ------------- ------- -------------
1,185,502 1,049,476 -0- 2,234,978
------------------ ------------- ------- -------------
HOME EQUITY LOANS - FIXED
RATE - 0.2%
Countrywide Asset-Backed
Certificates
Series 2007-S1, Class A3
5.81%, 11/25/36 275 228,013 375 310,926 -0- 650 538,939
Credit-Based Asset Servicing &
Securities, Inc.
Series 2003-CB1, Class AF
3.45%, 1/25/33 (f) 35 35,034 184 181,502 -0- 219 216,536
Home Equity Mortgage Trust
Series 2005-4, Class A3
4.742%, 1/25/36 (f) 35 28,187 69 54,890 -0- 104 83,077
Residential Funding Mortgage
Securities II, Inc.
Series 2005-HI2, Class A3
4.46%, 5/25/35 71 70,101 -0- -0- -0- 71 70,101
------------------ ------------- ------- -------------
361,335 547,318 -0- 908,653
------------------ ------------- ------- -------------
CREDIT CARDS - FIXED
RATE - 0.0%
MBNA Credit Card Master
Note Trust
Series 2003-A6, Class A6
2.75%, 10/15/10 85 84,388 -0- -0- -0- 85 84,388
------------------ ------------- ------- -------------
AUTOS - FIXED RATE - 0.0%
Capital One Prime Auto
Receivables Trust
Series 2005-1, Class A3
4.32%, 8/15/09 26 25,701 89 88,710 -0- 115 114,411
------------------ ------------- ------- -------------
OTHER - FLOATING RATE - 0.0%
Libertas Preferred Funding
Ltd.
Series 2007-3A, Class 2
5.893%, 4/09/47 (c)(e)(g) -0- -0- 260 26,000 -0- 260 26,000
------------------ ------------- ------- -------------
Total Asset-Backed Securities
(cost $1,943,188
and $2,157,277) 1,656,926 1,711,504 -0- 3,368,430
------------------ ------------- ------- -------------
GOVERNMENT-RELATED -
NON-U.S. ISSUERS - 0.8%
SOVEREIGNS - 0.7%
Russian Federation
7.50%, 3/31/30 (a)(e)(f) 812 923,423 955 1,086,711 -0- 1,767 2,010,134
United Mexican States
5.625%, 1/15/17 -0- -0- 680 689,180 -0- 680 689,180
------------------ ------------- ------- -------------
923,423 1,775,891 -0- 2,699,314
------------------ ------------- ------- -------------
SUPRANATIONALS - 0.0%
European Investment Bank
5.125%, 5/30/17 175 182,568 -0- -0- -0- 175 182,568
------------------ ------------- ------- -------------
AGENCIES - 0.1%
Korea Development Bank
5.75%, 9/10/13 -0- -0- 200 206,662 -0- 200 206,662
------------------ ------------- ------- -------------
Total Government-Related -
Non-U.S. Issuers
(cost $1,077,608
and $1,973,671) 1,105,991 1,982,553 -0- 3,088,544
------------------ ------------- ------- -------------
CORPORATES - NON-INVESTMENT
GRADES - 0.8%
INDUSTRIAL - 0.6%
BASIC - 0.1%
Freeport-McMoRan
Copper & Gold, Inc.
8.25%, 4/01/15 -0- -0- 60 63,600 -0- 60 63,600
8.375%, 4/01/17 -0- -0- 60 64,350 -0- 60 64,350
Ineos Group Holdings PLC
8.50%, 2/15/16 (e) 75 66,750 -0- -0- -0- 75 66,750
Packaging Corp. of America
4.375%, 8/01/08 -0- -0- 200 198,162 -0- 200 198,162
5.75%, 8/01/13 30 30,660 -0- -0- -0- 30 30,660
------------------ ------------- ------- -------------
97,410 326,112 -0- 423,522
------------------ ------------- ------- -------------
CAPITAL GOODS - 0.0%
Bombardier, Inc.
6.75%, 5/01/12 (e) -0- -0- 100 101,250 -0- 100 101,250
------------------ ------------- ------- -------------
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS -
MEDIA - 0.2%
Cablevision Systems Corp.
Series B
8.00%, 4/15/12 $ 45 $ 43,650 $ -0- $ -0- $ -0- $ 45 $ 43,650
Clear Channel
Communications, Inc.
5.50%, 9/15/14 85 64,790 150 114,335 -0- 235 179,125
DirecTV Holdings LLC
6.375%, 6/15/15 40 38,400 -0- -0- -0- 40 38,400
Echostar DBS Corp.
6.625%, 10/01/14 17 16,915 18 17,910 -0- 35 34,825
7.125%, 2/01/16 48 48,960 47 47,940 -0- 95 96,900
RH Donnelley Corp.
Series A-3
8.875%, 1/15/16 -0- -0- 140 130,900 -0- 140 130,900
------------------ ------------- ------- -------------
212,715 311,085 -0- 523,800
------------------ ------------- ------- -------------
COMMUNICATIONS -
TELECOMMUNICATIONS
- - 0.1%
Mobile Telesystems Finance
9.75%, 1/30/08 (e) -0- -0- 230 230,000 -0- 230 230,000
Qwest Communications
International, Inc.
7.50%, 2/15/14 25 24,937 -0- -0- -0- 25 24,937
Series B
7.50%, 2/15/14 15 14,963 -0- -0- -0- 15 14,963
Windstream Corp.
8.125%, 8/01/13 -0- -0- 149 154,215 -0- 149 154,215
------------------ ------------- ------- -------------
39,900 384,215 -0- 424,115
------------------ ------------- ------- -------------
CONSUMER CYCLICAL -
AUTOMOTIVE - 0.1%
Ford Motor Credit Co.
4.95%, 1/15/08 -0- -0- 135 134,910 -0- 135 134,910
7.375%, 10/28/09 160 150,599 -0- -0- -0- 160 150,599
General Motors Corp.
8.25%, 7/15/23 70 55,650 -0- -0- -0- 70 55,650
------------------ ------------- ------- -------------
206,249 134,910 -0- 341,159
------------------ ------------- ------- -------------
CONSUMER CYCLICAL -
OTHER - 0.1%
DR Horton, Inc.
6.50%, 4/15/16 -0- -0- 80 69,410 -0- 80 69,410
Harrah's Operating
Co., Inc
5.625%, 6/01/15 30 21,900 116 84,680 -0- 146 106,580
5.75%, 10/01/17 11 7,453 10 6,775 -0- 21 14,228
6.50%, 6/01/16 39 29,055 39 29,055 -0- 78 58,110
MGM Mirage
6.75%, 9/01/12 60 58,425 -0- 60 58,425
8.375%, 2/01/11 40 40,900 -0- -0- -0- 40 40,900
Wynn Las Vegas LLC/Corp.
6.625%, 12/01/14 -0- -0- 45 44,212 -0- 45 44,212
------------------ ------------- ------- -------------
99,308 292,557 -0- 391,865
------------------ ------------- ------- -------------
TRANSPORTATION -
SERVICES - 0.0%
Hertz Corp.
8.875%, 1/01/14 35 35,481 -0- -0- -0- 35 35,481
------------------ ------------- ------- -------------
691,063 1,550,129 -0- 2,241,192
------------------ ------------- ------- -------------
UTILITY - 0.1%
ELECTRIC - 0.1%
Dynegy Holdings, Inc.
8.375%, 5/01/16 70 68,425 70 68,425 -0- 140 136,850
Edison Mission Energy
7.00%, 5/15/17 60 58,950 55 54,037 -0- 115 112,987
NRG Energy, Inc.
7.25%, 2/01/14 65 63,375 65 63,375 -0- 130 126,750
7.375%, 2/01/16 35 34,125 -0- -0- -0- 35 34,125
Reliant Energy, Inc.
7.625%, 6/15/14 -0- -0- 65 64,350 -0- 65 64,350
------------------ ------------- ------- -------------
224,875 250,187 -0- 475,062
------------------ ------------- ------- -------------
FINANCIAL
INSTITUTIONS - 0.1%
Banking - 0.1%
Northern Rock PLC
5.60%, 4/30/14 (d)(e) -0- -0- 445 275,900 -0- 445 275,900
------------------ ------------- ------- -------------
INSURANCE - 0.0%
Liberty Mutual
Group, Inc.
7.80%, 3/15/37 (e) -0- -0- 100 88,340 -0- 100 88,340
------------------ ------------- ------- -------------
REITS - 0.0%
American Real Estate
Partners LP
7.125%, 2/15/13 (e) 25 23,500 -0- -0- -0- 25 23,500
7.125%, 2/15/13 20 18,800 -0- -0- -0- 20 18,800
------------------ ------------- ------- -------------
42,300 -0- -0- 42,300
------------------ ------------- ------- -------------
Total Corporates -
Non-Investment Grades
(cost $1,009,151 and
$2,408,853) 958,238 2,164,556 -0- 3,122,794
------------------ ------------- ------- -------------
MORTGAGE CMO'S - 0.2%
NON-AGENCY FIXED
RATE - 0.1%
Deutsche Mortgage
Securities, Inc.
Series 2005-WF1,
Class 1A1
5.054%, 6/26/35 (e) 143 142,418 146 144,874 -0- 289 287,292
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Alliance- Alliance- Alliance-
Bernstein Bernstein Alliance- Bernstein Pro Forma
Variable Alliance- Variable Bernstein Variable Alliance-
Products Bernstein Products Variable Products Bernstein
Series Fund Variable Series Fund Products Series Fund Variable
Balanced Products Balanced Series Balanced Products
Wealth Series Fund Shares Fund Wealth Series Fund
Portfolio Balanced Portfolio Balanced Portfolio Balanced
Shares or Wealth Shares or Shares Shares or Wealth
Principal Portfolio Principal Portfolio Principal Portfolio
Amount (U.S. Amount (U.S. Amount (U.S.
Company (000) $ Value) (000) $ Value) Adjustments (000) $ Value)
- ------------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Mortgage
Investors, Inc.
Series 2005-A8, Class A1C1
5.25%, 8/25/36 (d) $ 106 $ 101,573 $ -0- $ -0- $ -0- $ 106 $ 101,573
Residential Accredit Loans, Inc.
Series 2007-QS1, Class 1A1
6.00%, 1/25/37 145 149,652 -0- -0- -0- 145 149,652
------------------ ------------- ------- -------------
393,643 144,874 -0- 538,517
------------------ ------------- ------- -------------
NON-AGENCY ADJUSTABLE
RATE - 0.1%
Countrywide Alternative
Loan Trust
Series 2005-62, Class 2A1
5.788%, 12/25/35 (c) 60 56,345 -0- -0- -0- 60 56,345
Series 2006-OA14, Class 3A1
5.638%, 11/25/46 (c) 189 178,319 -0- -0- -0- 189 178,319
Series 2007-OA3, Class M1
5.175%, 4/25/47 (c) 75 49,347 110 72,375 -0- 185 121,722
------------------ ------------- ------- -------------
284,011 72,375 -0- 356,386
------------------ ------------- ------- -------------
Total Mortgage CMO's
(cost $717,141 and $253,735) 677,654 217,249 -0- 894,903
------------------ ------------- ------- -------------
INFLATION-LINKED
SECURITIES - 0.4%
U.S. Treasury Notes 2.375%,
4/15/11 (TIPS)
(cost $1,419,144) -0- -0- 1,437 1,497,596 -0- 1,437 1,497,596
------------------ ------------- ------- -------------
PREFERRED STOCKS - 0.1%
CONSUMER DISCRETIONARY - 0.1%
AUTOMOBILES - 0.1%
Porsche AG
Zero Coupon
(cost $226,034) 120 241,495 -0- -0- -0- 120 241,495
------------------ ------------- ------- -------------
NON-CONVERTIBLE -
REFERRED STOCKS - 0.4%
UTILITY- 0.1%
ELECTRIC - 0.1%
DTE Energy Trust I
7.80% -0- -0- 20,000 499,000 -0- 20,000 499,000
------------------ ------------- ------- -------------
INDUSTRIAL - 0.1%
COMMUNICATIONS -
TELECOMMUNICATIONS -
0.1% Centaur Funding Corp.
9.08% (e) -0- -0- 200 232,125 -0- 200 232,125
------------------ ------------- ------- -------------
FINANCIAL INSTITUTIONS -
0.0%
BANKING - 0.0%
Royal Bank of Scotland
Group PLC
5.75% -0- -0- 10,000 179,500 -0- 10,000 179,500
------------------ ------------- ------- -------------
NON CORPORATE SECTORS -
0.3% AGENCIES -
GOVERNMENT SPONSORED -
0.3% Federal Home
Loan Mortgage Corp.
Zero Coupon -0- -0- 2,225 58,184 -0- 2,225 58,184
8.375% 2,525 66,029 -0- -0- -0- 2,525 66,029
Federal National
Mortgage Association
8.25% 3,075 79,181 2,675 68,881 -0- 5,750 148,062
------------------ ------------- ------- -------------
145,210 127,065 -0- 272,275
------------------ ------------- ------- -------------
INFORMATION TECHNOLOGY - 0.0%
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 0.0%
Samsung Electronics Co. Ltd. (a) 200 90,741 -0- -0- -0- 200 90,741
------------------ ------------- ------- -------------
Total Non-Convertible -
Preferred Stocks
(cost $232,993
and $1,105,116) 235,951 1,037,690 -0- 1,273,641
------------------ ------------- ------- -------------
SHORT-TERM INVESTMENTS - 3.0%
TIME DEPOSIT - 3.0%
The Bank of New York
3.25%, 1/02/08
(cost $9,830,000) 9,830 9,830,000 1,678 1,678,000 -0- 11,508 11,508,000
------------------ ------------- ------- -------------
TOTAL INVESTMENTS - 98.0%
(cost $195,898,770
and $148,274,64 208,363,405 166,033,290 -0- 374,396,695
Other assets less
liabilities - 2.0% 3,087,016 4,433,360 -0- 7,520,376
------------------ ------------- ------- -------------
NET ASSETS - 100.0% 211,450,421 170,466,650 -0- 381,917,071
------------------ ------------- ------- -------------
COMMON STOCKS - 62.2%
Financials - 20.4%
Banking - 2.3%
Bank of America Corp. 29,400 $ 1,213,044
Citigroup, Inc. 28,400 836,096
Comerica, Inc. 3,800 165,414
Federal Home Loan Mortgage Corp. 4,600 156,722
Federal National Mortgage Association 6,800 271,864
Fifth Third Bancorp 5,400 135,702
JPMorgan Chase & Co. 23,100 1,008,315
Keycorp 4,100 96,145
National City Corp. 2,200 36,212
SunTrust Banks, Inc. 2,150 134,354
U.S. Bancorp 8,200 260,268
Wachovia Corp. 4,500 171,135
Washington Mutual, Inc. 6,600 89,826
Wells Fargo & Co. 9,200 277,748
-----------
4,852,845
-----------
Capital Markets - 2.1%
3i Group PLC 10,223 202,409
Bank of New York Mellon Corp. 16,320 $ 795,763
The Blackstone Group LP 19,400 429,322
Credit Suisse Group 8,550 514,672
Deutsche Bank AG 2,500 326,730
Franklin Resources, Inc. 9,375 1,072,781
The Goldman Sachs Group, Inc. 2,065 444,078
Julius Baer Holding AG 5,574 457,376
Lehman Brothers Holdings, Inc. 3,800 248,672
Macquarie Group Ltd. 4,716 315,535
Man Group PLC 42,277 479,918
-----------
4,491,493
-----------
Commercial Banks - 1.8%
Banco Santander Central Hispano SA 2,247 48,531
Bank Leumi Le-Israel (a) 14,400 69,842
Barclays PLC 33,800 341,357
BNP Paribas SA 3,100 336,350
China Construction Bank Corp.-Class H 157,000 131,477
Credit Agricole SA 9,821 331,324
Hana Financial Group, Inc. (a) 1,100 59,060
HBOS PLC 29,920 435,068
Kookmin Bank (a)(b) 1,200 88,457
Mitsubishi UFJ Financial Group, Inc. 42,800 403,601
Royal Bank of Scotland Group PLC 47,331 417,908
Societe Generale 2,460 355,788
Standard Chartered PLC 9,114 332,631
Sumitomo Mitsui Financial Group, Inc. 50 370,014
-----------
3,721,408
-----------
Consumer Finance - 0.2%
American Express Co. 3,000 156,060
Discover Financial Services 5,400 81,432
ORIX Corp. 1,480 248,917
-----------
486,409
-----------
Diversified Financial Services - 1.3%
CME Group, Inc.-Class A 1,675 1,149,050
Deutsche Boerse AG 2,970 582,934
Fortis (Euronext Brussels) 9,666 253,044
ING Group NV 9,300 362,378
Moody's Corp. 2,400 85,680
NYSE Euronext 3,700 324,749
-----------
2,757,835
-----------
Financial Services - 0.5%
CIT Group, Inc. 5,700 136,971
Janus Capital Group, Inc. 1,300 42,705
MBIA, Inc. 2,400 44,712
Merrill Lynch & Co., Inc. 5,000 268,400
Morgan Stanley 8,900 472,679
-----------
965,467
-----------
Insurance - 2.8%
ACE Ltd. 4,600 284,188
Allianz SE 1,900 409,695
Allstate Corp. 6,600 344,718
AMBAC Financial Group, Inc. 2,700 69,579
American International Group, Inc. 14,900 868,670
AON Corp. 2,900 138,301
Assicurazioni Generali SpA 2,765 125,161
Aviva PLC 15,154 201,964
Chubb Corp. 5,900 322,022
Everest Re Group Ltd. 1,900 190,760
Fidelity National Financial, Inc.-Class A 6,200 90,582
Fondiaria-Sai SpA (ordinary shares) 2,300 94,349
Fondiaria-Sai SpA (saving shares) 700 19,679
Genworth Financial, Inc.-Class A 10,600 269,770
Hartford Financial Services Group, Inc. 2,600 226,694
Marsh & McLennan Cos, Inc. 9,400 248,818
MetLife, Inc. 5,700 351,234
Muenchener Rueckversicherungs AG 1,700 329,931
Old Republic International Corp. 7,900 121,739
PartnerRe Ltd. 2,200 181,566
QBE Insurance Group Ltd. 12,595 365,668
Torchmark Corp. 1,875 113,494
The Travelers Cos, Inc. 7,200 387,360
Unum Group 9,900 235,521
-----------
5,991,463
-----------
Real Estate Investment Trusts (REITs) - 6.3%
Alexandria Real Estate Equities, Inc. 1,825 185,548
Allied Properties Real Estate Investment
Trust 9,740 204,669
AMB Property Corp. 2,300 132,388
Apartment Investment & Management
Co.-Class A 4,600 159,758
Ascendas Real Estate Investment Trust 84,000 142,205
Ashford Hospitality Trust, Inc. 9,300 66,867
AvalonBay Communities, Inc. 900 84,726
Boardwalk Real Estate Investment Trust (a) 5,888 265,773
Boston Properties, Inc. 1,800 165,258
British Land Co. PLC 10,644 199,603
Canadian Real Estate Investment Trust 8,434 247,723
CapitaMall Trust 146,600 347,602
Cominar Real Estate Investment Trust (a) 6,582 136,049
DB RREEF Trust 267,963 467,771
Derwent Valley Holdings PLC 7,450 207,144
DiamondRock Hospitality Co. 5,500 82,390
Digital Realty Trust, Inc. 8,300 318,471
Dundee Real Estate Investment Trust (a) 3,601 123,030
Entertainment Properties Trust 3,100 145,700
Equity Residential 5,500 200,585
Essex Property Trust, Inc. 425 41,433
FelCor Lodging Trust, Inc. 3,100 48,329
First Industrial Realty Trust, Inc. 2,900 100,340
Fonciere des Murs 2,800 93,092
Fonciere Des Regions 475 60,227
General Growth Properties, Inc. 9,700 399,446
General Property Group 34,988 123,145
Great Portland Estates PLC 15,400 143,491
H&R Real Estate Investment 1 17
Hammerson PLC 8,750 178,325
HCP, Inc. 3,600 125,208
Health Care REIT, Inc. 3,900 174,291
Highwoods Properties, Inc. 4,400 129,272
Home Properties, Inc. 3,100 139,035
Host Hotels & Resorts, Inc. 11,829 201,566
ING Office Fund 131,600 185,886
Japan Real Estate Investment Corp.-Class A 16 198,575
Kimco Realty Corp. 4,250 154,700
Klepierre 8,595 439,306
Land Securities Group PLC 5,842 175,070
LaSalle Hotel Properties 2,300 73,370
Liberty International PLC 10,400 222,203
Macerich Co. 2,300 163,438
Mid-America Apartment Communities, Inc. 2,250 96,187
Mirvac Group 80,182 419,038
National Retail Properties 3,700 86,506
Nationwide Health Properties, Inc. 6,700 210,179
Nippon Building Fund, Inc.-Class A 21 293,261
Nomura Real Estate Office Fund, Inc.-Class A 19 178,797
Omega Healthcare Investors, Inc. 5,500 88,275
Primaris Retail Real Estate Investment Trust (a) 7,149 132,559
Prologis 6,775 429,399
Public Storage 2,050 150,490
Rayonier, Inc. 5,300 250,372
RioCan Real Estate Investment Trust 7,491 165,609
RioCan Real Estate Investment Trust (a) 1,400 30,952
Segro PLC 8,769 81,581
Simon Property Group, Inc. 7,350 638,421
SL Green Realty Corp. 550 51,403
Stockland 19,479 142,973
Stockland-New (b) 422 3,027
Strategic Hotels & Resorts, Inc. 4,400 73,612
Sunstone Hotel Investors, Inc. 3,600 65,844
Tanger Factory Outlet Centers 5,050 190,435
Taubman Centers, Inc. 4,900 241,031
UDR, Inc. 4,050 80,392
Unibail 2,525 553,306
Ventas, Inc. 6,950 314,487
Vornado Realty Trust 4,000 351,800
Westfield Group 33,589 614,092
-----------
13,387,053
-----------
Real Estate Management & Development - 3.1%
Beni Stabili SpA 76,800 83,325
Brookfield Properties Corp. 2,225 42,831
Citycon Oyj 33,942 181,072
Forest City Enterprises, Inc.-Class A 1,650 73,326
Hang Lung Properties Ltd. 141,000 629,996
Henderson Land Development Co., Ltd. 18,000 167,168
IVG Immobilien AG 3,900 128,728
Keppel Land Ltd. 44,000 220,151
Kerry Properties Ltd. 86,131 684,864
Lend Lease Corp. Ltd. 32,000 483,197
Mitsubishi Estate Co., Ltd. 15,000 357,374
Mitsui Fudosan Co., Ltd. 13,100 282,521
New World Development Co., Ltd. 125,997 441,117
Norwegian Property ASA 20,500 249,072
NTT Urban Development Corp. (a) 390 624,363
Sino Land Co. 79,950 279,968
Sponda OYJ 10,300 122,463
Sumitomo Realty & Development 8,000 195,649
Sun Hung Kai Properties Ltd. 46,700 980,866
Tokyu Land Corp. 31,000 265,246
-----------
6,493,297
-----------
43,147,270
-----------
Information Technology - 7.6%
Communications Equipment - 1.9%
Cisco Systems, Inc. (b) 60,450 1,636,381
Nokia OYJ (ADR) 19,700 756,283
Nokia OYJ 17,244 662,469
Research In Motion Ltd. (b) 9,075 1,029,105
-----------
4,084,238
-----------
Computers & Peripherals - 2.3%
Apple, Inc. (b) 12,430 2,462,134
Asustek Computer, Inc. (a) 43,000 127,951
Compal Electronics, Inc. (a) 56,280 61,282
EMC Corp. (b) 15,500 287,215
Fujitsu Ltd. 38,000 254,200
Hewlett-Packard Co. 27,700 1,398,296
Toshiba Corp. 26,000 191,879
-----------
4,782,957
-----------
Electronic Equipment & Instruments - 0.1%
AU Optronics Corp. (a) 86,692 167,186
HON HAI Precision Industry Co. Ltd. (a) 8,200 50,541
Tyco Electronics Ltd. 1,250 46,412
-----------
264,139
-----------
Internet Software & Services - 1.3%
Google, Inc.-Class A (b) 3,900 2,696,772
-----------
Office Electronics - 0.0%
Konica Minolta Holdings, Inc. 5,500 96,421
-----------
Semiconductors & Semiconductor Equipment - 1.2%
Broadcom Corp.-Class A (b) 25,000 653,500
Hynix Semiconductor, Inc. (a)(b) 5,900 161,598
Intel Corp. 18,850 502,541
Nvidia Corp. (b) 24,425 830,938
Samsung Electronics Co. Ltd. (a) 140 82,390
United Microelectronics Corp. (a) 398,207 247,387
-----------
2,478,354
-----------
Software - 0.8%
Adobe Systems, Inc. (b) 14,700 628,131
Microsoft Corp. 20,400 726,240
Nintendo Co. Ltd. 400 234,861
Oracle Corp. (b) 5,700 128,706
-----------
1,717,938
-----------
16,120,819
-----------
Energy - 5.8%
Energy Equipment & Services - 1.5%
Baker Hughes, Inc. 13,950 1,131,345
Cameron International Corp. (b) 6,300 303,219
Schlumberger Ltd. 14,700 1,446,039
Technip SA 2,010 159,878
-----------
3,040,481
-----------
Energy Sources - 2.5%
Chevron Corp. 14,400 1,343,952
ConocoPhillips 11,300 997,790
Exxon Mobil Corp. 22,700 2,126,763
Marathon Oil Corp. 5,600 340,816
Occidental Petroleum Corp. 1,900 146,281
Royal Dutch Shell PLC (Euronext
Amsterdam)-Class A 9,657 407,670
-----------
5,363,272
-----------
Oil, Gas & Consumable Fuels - 1.8%
China Petroleum & Chemical Corp.-Class H 108,000 160,105
China Shenhua Energy Co. Ltd.-Class H 42,000 247,413
ENI SpA 9,800 357,665
EOG Resources, Inc. 7,150 638,137
Gazprom OAO (Sponsored) (ADR) 4,476 253,789
LUKOIL (ADR) 2,000 169,000
Petro-Canada (a) 1,200 64,745
Petroleo Brasileiro SA (ADR) 2,800 322,672
Petroleo Brasileiro SA (Sponsored) (ADR) 1,900 182,818
Royal Dutch Shell PLC 12,600 531,172
StatoilHydro ASA 8,900 274,572
Total SA 7,166 593,348
-----------
3,795,436
-----------
12,199,189
-----------
Industrials - 4.7%
Aerospace & Defense - 1.2%
BAE Systems PLC 44,621 442,814
Boeing Co. 2,350 205,531
Honeywell International, Inc. 19,200 1,182,144
Spirit Aerosystems Holdings, Inc.-Class A (b) 14,300 493,350
United Technologies Corp. 2,500 191,350
-----------
2,515,189
-----------
Airlines - 0.1%
Air France-KLM 3,200 111,835
Deutsche Lufthansa AG 4,600 122,418
-----------
234,253
-----------
Commercial Services & Supplies - 0.2%
Allied Waste Industries, Inc. (b) 16,100 177,422
Capita Group PLC 5,713 79,202
Pitney Bowes, Inc. 3,800 144,552
-----------
401,176
-----------
Construction & Engineering - 0.3%
Fluor Corp. 5,000 728,600
-----------
Electrical Equipment - 0.8%
ABB Ltd. 19,079 550,082
ABB Ltd. (Sponsored) (ADR) 19,200 552,960
Emerson Electric Co. 7,350 416,451
Renewable Energy Corp. (b) 1,917 96,154
-----------
1,615,647
-----------
Industrial Conglomerates - 0.6%
3M Co. 1,800 151,776
Mcdermott Intl Inc. (b) 2,200 129,866
Siemens AG 3,108 492,182
Textron, Inc. 7,250 516,925
Tyco International Ltd. 1,250 49,563
-----------
1,340,312
-----------
Machinery - 1.1%
Caterpillar, Inc. 2,900 210,424
Deere & Co. 10,950 1,019,664
Ingersoll-Rand Co. Ltd.-Class A 6,000 278,820
Komatsu Ltd. 5,700 152,869
NGK Insulators Ltd. 9,000 241,302
PACCAR, Inc. 3,600 196,128
Sumitomo Heavy Industries Ltd. 800 7,294
Terex Corp. (b) 2,100 137,697
-----------
2,244,198
-----------
Marine - 0.1%
Mitsui OSK Lines Ltd. 10,000 126,423
Nippon Yusen KK (a) 16,000 126,048
-----------
252,471
-----------
Road & Rail - 0.0%
Avis Budget Group, Inc. (b) 3,600 46,800
-----------
Trading Companies & Distributors - 0.3%
Mitsubishi Corp. 4,100 110,965
Mitsui & Co. Ltd. 26,000 542,949
-----------
653,914
-----------
10,032,560
-----------
Health Care - 4.3%
Biotechnology - 1.1%
Celgene Corp. (b) 12,450 575,314
CSL Ltd./Australia 3,038 96,243
Genentech, Inc. (b) 7,650 513,086
Gilead Sciences, Inc. (b) 26,850 1,235,369
-----------
2,420,012
-----------
Health Care Equipment & Supplies - 0.9%
Alcon, Inc. 7,375 1,054,920
Covidien Ltd. 1,250 55,363
Essilor International SA 3,934 250,941
Hologic, Inc. (b) 7,300 501,072
-----------
1,862,296
-----------
Health Care Providers & Services - 0.8%
Medco Health Solutions, Inc. (b) 6,750 684,450
WellPoint, Inc. (b) 11,300 991,349
-----------
1,675,799
-----------
Pharmaceuticals - 1.5%
Abbott Laboratories 21,100 1,184,765
AstraZeneca PLC 1,900 81,782
GlaxoSmithKline PLC 6,400 162,538
Merck & Co., Inc. 7,800 453,258
Roche Holding AG 1,152 199,141
Sanofi-Aventis SA 3,200 292,929
Teva Pharmaceutical Industries Ltd. (ADR) 16,050 746,004
-----------
3,120,417
-----------
9,078,524
-----------
Materials - 3.7%
Chemicals - 1.6%
Air Products & Chemicals, Inc. 7,300 719,999
Ashland, Inc. 2,600 123,318
BASF AG 3,600 533,063
Bayer AG 5,987 546,114
Mitsubishi Chemical Holdings Corp. 30,500 232,705
Mitsui Chemicals, Inc. (a) 12,400 80,499
Monsanto Co. 10,450 1,167,160
-----------
3,402,858
-----------
Construction Materials - 0.0%
Buzzi Unicem SpA 3,000 82,909
-----------
Containers & Packaging - 0.1%
Ball Corp. 4,000 180,000
Crown Holdings, Inc. (b) 4,600 117,990
-----------
297,990
-----------
Metals & Mining - 1.9%
Alcoa, Inc. 10,600 387,430
Anglo American PLC 2,514 152,603
Antofagasta PLC 11,100 157,366
ArcelorMittal 4,068 327,120
BHP Billiton PLC 6,854 209,002
Cia Vale do Rio Doce (ADR) 9,000 294,030
Cia Vale do Rio Doce (Sponsored) (ADR) 6,100 170,678
JFE Holdings, Inc. 8,900 446,283
Kazakhmys PLC 2,800 75,756
Nippon Steel Corp. 41,000 250,958
POSCO (a) 200 120,836
Rio Tinto PLC 5,848 615,458
Xstrata PLC 9,837 690,272
-----------
3,897,792
-----------
Paper & Forest Products - 0.1%
Stora Enso Oyj-Class R 11,300 168,685
-----------
7,850,234
-----------
Consumer Staples - 3.6%
Beverages - 0.4%
The Coca-Cola Co. 3,300 202,521
PepsiCo, Inc. 8,500 645,150
-----------
847,671
-----------
Beverages & Tobacco - 0.5%
Altria Group, Inc. 7,700 581,966
Coca-Cola Enterprises, Inc. 8,300 216,049
Kraft Foods, Inc.-Class A 2,300 75,049
Molson Coors Brewing Co.-Class B 3,800 196,156
-----------
1,069,220
-----------
Food & Household Products - 0.4%
ConAgra Foods, Inc. 4,100 97,539
General Mills, Inc. 2,425 138,225
Kellogg Co. 3,100 162,533
Sara Lee Corp. 12,700 203,962
Supervalu, Inc. 7,000 262,640
-----------
864,899
-----------
Food & Staples Retailing - 0.2%
Koninklijke Ahold NV 17,860 247,340
Tesco PLC 20,213 192,277
-----------
439,617
-----------
Food Products - 0.8%
Associated British Foods PLC 9,400 167,680
Nestle SA 1,291 592,815
Unilever PLC 9,595 359,859
WM Wrigley Jr Co. 9,800 573,790
-----------
1,694,144
-----------
Household Products - 1.1%
Colgate-Palmolive Co. 6,650 518,434
Procter & Gamble Co. 20,200 1,483,084
Reckitt Benckiser PLC 5,205 302,463
-----------
2,303,981
-----------
Personal Products - 0.1%
L'Oreal SA 1,645 235,560
-----------
Tobacco - 0.1%
British American Tobacco PLC 5,495 214,817
-----------
7,669,909
-----------
Consumer Discretionary - 2.7%
Auto Components - 0.2%
Compagnie Generale des Etablissements
Michelin-Class B 1,700 194,358
Denso Corp. 4,100 166,846
Hyundai Mobis (a) 1,710 158,008
-----------
519,212
-----------
Automobiles - 0.7%
Fiat SpA 8,775 225,825
General Motors Corp. 9,800 243,922
Nissan Motor Co. Ltd. 39,200 427,848
Porsche AG 120 241,496
Renault SA 3,000 425,468
-----------
1,564,559
-----------
Hotels, Restaurants & Leisure - 0.5%
Las Vegas Sands Corp. (b) 1,400 144,270
Marriott International, Inc.-Class A 3,800 129,884
McDonald's Corp. 9,400 553,754
Starwood Hotels & Resorts Worldwide, Inc. 625 27,519
Yum! Brands, Inc. 7,750 296,592
-----------
1,152,019
-----------
Household Durables - 0.2%
Centex Corp. 2,900 73,254
KB Home 2,800 60,480
Sharp Corp. 15,000 267,572
-----------
401,306
-----------
Leisure Equipment & Products - 0.0%
Brunswick Corp. 3,200 54,560
-----------
Media - 0.2%
Comcast Corp.-Special-Class A (b) 7,950 144,054
Lagardere SCA 2,200 164,759
-----------
308,813
-----------
Multiline Retail - 0.5%
Dollar Tree Stores, Inc. (b) 900 23,328
Family Dollar Stores, Inc. 4,800 92,304
Kohl's Corp. (b) 7,125 326,325
Macy's, Inc. 7,500 194,025
New World Department Store China Ltd. (b) 872 1,222
Target Corp. 6,200 310,000
-----------
947,204
-----------
Specialty Retail - 0.4%
Esprit Holdings Ltd. 16,700 245,912
Home Depot, Inc. 10,100 272,094
Inditex SA 3,901 236,050
-----------
754,056
-----------
5,701,729
-----------
Capital Equipment - 1.6%
Aerospace & Defense - 0.2%
Lockheed Martin Corp. 1,000 105,260
Northrop Grumman Corp. 3,900 306,696
-----------
411,956
-----------
Automobiles - 0.2%
Autoliv, Inc. 2,300 121,233
BorgWarner, Inc. 2,750 133,128
Johnson Controls, Inc. 3,300 118,932
Lear Corp. (b) 3,100 85,746
-----------
459,039
-----------
Industrial Components - 0.1%
Eaton Corp. 2,900 281,155
-----------
Machinery & Engineering - 0.1%
Cummins, Inc. 1,400 178,318
-----------
Multi-Industry - 1.0%
General Electric Co. 49,500 1,834,965
SPX Corp. 1,425 146,561
-----------
1,981,526
-----------
3,311,994
-----------
Telecommunications - 1.4%
AT&T, Inc. 39,800 1,654,088
Sprint Nextel Corp. 30,700 403,091
Verizon Communications, Inc. 20,300 886,907
-----------
2,944,086
-----------
Utilities - 1.3%
Electric Utilities - 0.3%
E.ON AG 1,600 340,196
The Tokyo Electric Power Co. 9,900 256,274
-----------
596,470
-----------
Independent Power Producers & Energy Traders - 0.1%
Iberdrola Renovables (b) 12,874 106,347
International Power PLC 20,376 183,675
-----------
290,022
-----------
Multi-Utilities - 0.5%
Ameren Corp. 4,100 222,261
CMS Energy Corp. 3,000 52,140
RWE AG 1,380 194,398
Suez SA 4,017 273,421
Veolia Environnement 2,851 259,694
-----------
1,001,914
-----------
Utility (Electric & Gas) - 0.4%
Allegheny Energy, Inc. 1,800 114,498
American Electric Power Co., Inc. 5,300 246,768
Constellation Energy Group, Inc. 2,200 225,566
Entergy Corp. 900 107,568
Pinnacle West Capital Corp. 3,600 152,676
Wisconsin Energy Corp. 2,350 114,468
-----------
961,544
-----------
2,849,950
-----------
Consumer Cyclical - 1.2%
Appliances & Household Durables - 0.1%
Black & Decker Corp. 1,400 97,510
Newell Rubbermaid, Inc. 1,900 49,172
-----------
146,682
-----------
Broadcasting & Publishing - 0.6%
CBS Corp.-Class B 7,800 212,550
Gannett Co., Inc. 6,500 253,500
Idearc, Inc. 5,800 101,848
Time Warner, Inc. 13,600 224,536
Viacom, Inc.-Class B (b) 4,700 206,424
The Walt Disney Co. 11,400 367,992
-----------
1,366,850
-----------
Business & Public Services - 0.0%
Interpublic Group of Cos., Inc. (b) 5,500 44,605
-----------
Merchandising - 0.3%
The Gap, Inc. 8,400 178,752
The Kroger Co. 5,200 138,892
Lowe's Cos, Inc. 5,800 131,196
Office Depot, Inc. (b) 3,300 45,903
Safeway, Inc. 5,600 191,576
Wal-Mart Stores, Inc. 1,400 66,542
-----------
752,861
-----------
Recreation & Other Consumer - 0.1%
Mattel, Inc. 7,700 146,608
-----------
Textiles & Apparel - 0.1%
Jones Apparel Group, Inc. 9,600 153,504
-----------
2,611,110
-----------
Telecommunication Services - 1.1%
Diversified Telecommunication Services - 0.5%
China Netcom Group Corp. Ltd. 59,000 175,783
Nippon Telegraph & Telephone Corp. (a) 31 154,099
Telefonica SA 15,993 518,435
TeliaSonera AB (a) 17,574 164,186
-----------
1,012,503
-----------
Wireless Telecommunication Services - 0.6%
America Movil SAB de CV Series L (ADR) 6,800 417,452
Vodafone Group PLC 251,545 944,280
-----------
1,361,732
-----------
2,374,235
-----------
Medical - 1.0%
Health & Personal Care - 1.0%
AmerisourceBergen Corp.-Class A 5,000 224,350
Cardinal Health, Inc. 3,300 190,575
Eli Lilly & Co. 5,900 315,001
International Flavors & Fragrances, Inc. 1,550 74,602
McKesson Corp. 3,200 209,632
Pfizer, Inc. 48,100 1,093,313
-----------
2,107,473
-----------
Industrial Commodities - 0.6%
Chemicals - 0.4%
Dow Chemical Co. 9,300 366,606
E.I. Du Pont de Nemours & Co. 8,700 383,583
Lubrizol Corp. 1,525 82,594
-----------
832,783
-----------
Containers & Packaging - 0.1%
Sonoco Products Co. 3,500 114,380
-----------
Forest & Paper - 0.0%
Smurfit-Stone Container Corp. (b) 7,000 73,920
-----------
Miscellaneous Materials - 0.1%
Bemis, Inc. 2,700 73,926
Owens-Illinois, Inc. (b) 3,300 163,350
-----------
237,276
-----------
1,258,359
-----------
Technology/Electronics - 0.6%
Data Processing - 0.3%
Dell, Inc. (b) 6,600 161,766
Electronic Data Systems Corp. 3,200 66,336
International Business Machines Corp. 3,000 324,300
Sanmina-SCI Corp. (b) 9,400 17,108
-----------
569,510
-----------
Electrical & Electronics - 0.1%
Lexmark International, Inc.-Class A (b) 4,100 142,926
Tech Data Corp. (b) 1,400 52,808
-----------
195,734
-----------
Electronic Components & Instruments - 0.2%
Arrow Electronics, Inc. (b) 4,400 172,832
Avnet, Inc. (b) 6,100 213,317
Flextronics International Ltd. (b) 1,300 15,678
-----------
401,827
-----------
1,167,071
-----------
Finance - 0.2%
Insurance - 0.1%
Safeco Corp. 2,400 133,632
-----------
Property - Casualty Insurance - 0.1%
The Progressive Corp. 14,500 277,820
-----------
411,452
-----------
Consumer Growth - 0.2%
Hospital Supplies - 0.2%
Johnson & Johnson 5,200 346,840
-----------
Food & Drug Retailers - 0.1%
Financial Services - 0.1%
Ameriprise Financial, Inc. 2,800 154,308
-----------
Consumer Manufacturing - 0.1%
Auto & Related - 0.1%
AutoNation, Inc. (b) 7,500 117,450
-----------
Non-Financial - 0.0%
Home Building - 0.0%
Pulte Homes, Inc. 7,200 75,888
-----------
Construction & Housing - 0.0%
Real Estate - 0.0%
Canadian Apartment Properties 1 16
-----------
Total Common Stocks (cost $119,710,792) 131,530,466
-----------
Principal
Amount
(000)
----------
MORTGAGE PASS-THRU'S - 7.2%
Fixed Rate 30-Year - 5.6%
Federal Gold Loan Mortgage Corp.
Series 2005
4.50%, 8/01/35 $ 239 225,592
Series 2007
7.00%, 2/01/37 663 688,707
Federal Home Loan Mortgage Corp.
Series 2007
5.50%, 7/01/35 252 252,418
Federal National Mortgage Association
5.50%, 8/01/37 2,850 2,863,828
Series 2003
5.00%, 11/01/33 687 671,437
Series 2004
5.50%, 11/01/34 498 497,878
6.00%, 9/01/34 582 591,609
Series 2005
4.50%, 8/01/35 725 686,249
Series 2006
5.00%, 2/01/36 925 903,100
6.50%, 9/01/36 2,449 2,517,625
Series 2007
4.50%, 9/01/35 - 8/01/37 1,741 1,649,530
5.00%, 7/01/36 279 272,857
----------
11,820,830
----------
Agency ARMS - 1.2%
Federal Home Loan Mortgage Corp.
Series 2006
5.829%, 12/01/36 (c) 1,202 1,221,655
Series 2007
6.037%, 10/01/37 (c) 312 317,213
Federal National Mortgage Association
Series 2005
5.322%, 9/01/35 (c) 87 87,406
Series 2006
5.463%, 5/01/36 (c) 63 63,894
5.799%, 3/01/36 (c) 147 149,549
5.851%, 11/01/36 (c) 115 117,133
5.916%, 6/01/36 (c) 107 109,612
Series 2007
5.769%, 1/01/37 (c) 161 163,491
6.025%, 11/01/36 (c) 110 112,123
6.081%, 3/01/37 (c) 305 311,244
----------
2,653,320
----------
Non-Agency ARMS - 0.4%
Bear Stearns Alt-A Trust
Series 2006-1, Class 22A1
5.40%, 2/25/36 (d) 208 201,643
Series 2006-3, Class 22A1
6.218%, 5/25/36 (d) 64 62,260
Series 2007-1, Class 21A1
5.728%, 1/25/47 (d) 67 64,567
Citigroup Mortgage Loan Trust, Inc.
Series 2005-2, Class 1A4
5.11%, 5/25/35 (d) 131 128,047
Series 2006-AR1, Class 3A1
5.50%, 3/25/36 (c) 143 142,861
Indymac Index Mortgage Loan Trust
Series 2006-AR7, Class 4A1
6.228%, 5/25/36 (d) 88 87,521
Residential Funding Mortgage Securities,
Inc.
Series 2005-SA3, Class 3A
5.235%, 8/25/35 (d) 139 136,783
----------
823,682
----------
Total Mortgage Pass-Thru's (cost $15,105,886) 15,297,832
----------
U.S. TREASURIES - 6.5%
U.S. Treasury Bonds
4.50%, 2/15/36 3,920 3,939,906
8.75%, 5/15/17 3 4,081
U.S. Treasury Notes
4.25%, 11/15/17 3,555 3,616,935
4.875%, 5/31/11 5,940 6,260,202
----------
Total U.S. Treasuries (cost $13,369,047) 13,821,124
----------
CORPORATES - INVESTMENT GRADES - 5.2%
Financial Institutions - 2.4%
Banking - 0.9%
Bank of America Corp.
3.375%, 2/17/09 70 69,094
4.50%, 8/01/10 100 100,049
Chase Manhattan Corp.
6.00%, 2/15/09 170 171,487
Citicorp
Series MTNF
6.375%, 11/15/08 31 31,421
Citigroup, Inc.
3.625%, 2/09/09 135 133,190
4.625%, 8/03/10 75 74,591
5.286%, 6/09/09 (c) 20 19,846
JPMorgan Chase & Co.
6.75%, 2/01/11 80 83,999
JPMorgan Chase Capital XXV
6.80%, 10/01/37 51 49,035
Morgan J P & Co., Inc.
6.25%, 1/15/09 157 158,896
National City Bk Of Ohio
6.25%, 3/15/11 250 257,080
Royal Bank Of Scotland Group PLC
6.40%, 4/01/09 108 109,969
SouthTrust Corp.
5.80%, 6/15/14 175 180,713
UBS Preferred Funding Trust I
8.622%, 10/01/10 (d) 40 43,129
Union Bank Of California
5.95%, 5/11/16 250 239,977
Wachovia Corp.
5.625%, 12/15/08 46 45,911
Washington Mutual, Inc.
4.20%, 1/15/10 14 12,507
Wells Fargo & Co.
4.20%, 1/15/10 35 34,779
Zions Bancorporation
5.50%, 11/16/15 35 32,823
----------
1,848,496
----------
Brokerage - 0.5%
The Bear Stearns Co., Inc.
5.55%, 1/22/17 165 147,875
7.625%, 12/07/09 98 100,742
The Bear Stearns Cos, Inc.
5.70%, 11/15/14 145 137,503
The Goldman Sachs Group, Inc.
3.875%, 1/15/09 134 132,628
4.75%, 7/15/13 35 34,282
7.35%, 10/01/09 36 37,626
Lehman Brothers Holdings, Inc.
5.00%, 1/14/11 60 59,118
6.20%, 9/26/14 33 33,610
6.50%, 7/19/17 54 54,640
7.875%, 11/01/09 75 78,169
Series MTNG
4.80%, 3/13/14 42 39,089
Merrill Lynch & Co., Inc.
4.79%, 8/04/10 105 104,042
6.00%, 2/17/09 47 47,384
6.05%, 5/16/16 145 142,473
Series MTNC
4.125%, 1/15/09 52 51,322
----------
1,200,503
----------
Finance - 0.8%
Capital One Bank
4.25%, 12/01/08 160 156,569
Capital One Financial Corp.
5.50%, 6/01/15 20 18,447
6.75%, 9/15/17 43 41,242
CIT Group, Inc.
5.00%, 2/01/15 75 65,195
5.125%, 9/30/14 40 35,235
5.85%, 9/15/16 150 132,432
7.625%, 11/30/12 135 136,837
Countrywide Financial Corp.
6.25%, 5/15/16 58 33,383
Series MTN
5.80%, 6/07/12 75 54,787
Countrywide Home Loans, Inc.
Series MTNL
4.00%, 3/22/11 69 49,822
General Electric Capital Corp.
4.375%, 11/21/11 25 24,803
6.75%, 3/15/32 135 153,277
Household Finance Corp.
4.125%, 12/15/08 90 89,176
HSBC Finance Corp.
6.50%, 11/15/08 80 80,878
7.00%, 5/15/12 85 89,060
iStar Financial, Inc.
5.15%, 3/01/12 50 43,211
5.65%, 9/15/11 95 84,894
SLM Corp.
4.50%, 7/26/10 55 50,446
5.375%, 1/15/13 - 5/15/14 375 334,306
----------
1,674,000
----------
Insurance - 0.2%
Assurant, Inc.
5.625%, 2/15/14 35 34,250
Berkshire Hathaway Finance Corp.
4.20%, 12/15/10 50 50,259
Liberty Mutual Group, Inc.
5.75%, 3/15/14 (e) 35 35,644
UnitedHealth Group, Inc.
4.125%, 8/15/09 67 66,603
5.25%, 3/15/11 165 166,846
WellPoint, Inc.
4.25%, 12/15/09 80 79,071
----------
432,673
----------
5,155,672
----------
Industrial - 2.4%
Basic - 0.1%
The Dow Chemical Co.
7.375%, 11/01/29 10 10,999
International Paper Co.
5.30%, 4/01/15 55 53,681
International Steel Group, Inc.
6.50%, 4/15/14 60 61,609
Lubrizol Corp.
4.625%, 10/01/09 20 20,085
Westvaco Corp.
8.20%, 1/15/30 15 16,038
Weyerhaeuser Co.
5.95%, 11/01/08 35 35,284
----------
197,696
----------
Capital Goods - 0.1%
Boeing Capital Corp.
4.75%, 8/25/08 35 35,119
Caterpillar Financial Services
4.50%, 6/15/09 46 46,017
Textron Financial Corp.
4.125%, 3/03/08 80 79,922
Tyco International Group SA
6.00%, 11/15/13 85 87,366
Waste Management, Inc.
6.875%, 5/15/09 40 41,067
----------
289,491
----------
Communications - Media - 0.3%
British Sky Broadcasting PLC
8.20%, 7/15/09 20 20,924
Comcast Cable Communications Holdings,
Inc.
9.455%, 11/15/22 55 69,940
Comcast Cable Communications LLC
6.875%, 6/15/09 50 51,429
Comcast Cable Communications, Inc.
6.20%, 11/15/08 66 66,537
Comcast Corp.
5.30%, 1/15/14 40 39,224
5.50%, 3/15/11 50 50,478
Cox Enterprises, Inc.
4.375%, 5/01/08 (e) 40 39,872
News America, Inc.
6.55%, 3/15/33 45 44,950
RR Donnelley & Sons Co.
4.95%, 4/01/14 25 23,570
Time Warner Entertainment Co.
8.375%, 3/15/23 130 153,126
WPP Finance Corp.
5.875%, 6/15/14 25 26,606
----------
586,656
----------
Communications - Telecommunications - 0.8%
AT&T Corp.
7.30%, 11/15/11 40 43,340
8.00%, 11/15/31 15 18,421
British Telecommunications PLC
8.625%, 12/15/10 100 109,735
Embarq Corp.
6.738%, 6/01/13 5 5,172
7.082%, 6/01/16 240 247,291
New Cingular Wireless Services, Inc.
7.875%, 3/01/11 95 102,882
8.75%, 3/01/31 50 64,799
Nextel Communications, Inc.
Series E
6.875%, 10/31/13 45 44,331
Qwest Corp.
5.625%, 11/15/08 110 109,450
7.875%, 9/01/11 150 156,000
8.875%, 3/15/12 110 117,700
Sprint Capital Corp.
8.375%, 3/15/12 120 129,963
Telecom Italia Capital SA
4.00%, 1/15/10 120 117,532
6.00%, 9/30/34 65 63,206
Telefonos de Mexico SAB de CV
4.50%, 11/19/08 157 156,231
Verizon Communications, Inc.
4.90%, 9/15/15 35 34,049
Verizon New Jersey, Inc.
Series A
5.875%, 1/17/12 45 46,341
Vodafone Group PLC
5.50%, 6/15/11 60 60,637
----------
1,627,080
----------
Consumer Cyclical - Automotive - 0.0%
DaimlerChrysler North America
4.875%, 6/15/10 25 24,889
----------
Consumer Cyclical - Other - 0.2%
Centex Corp.
5.45%, 8/15/12 164 144,247
Starwood Hotels & Resorts Worldwide, Inc.
7.375%, 11/15/15 81 83,622
7.875%, 5/01/12 84 89,259
Toll Brothers Finance Corp.
5.15%, 5/15/15 20 18,149
6.875%, 11/15/12 40 39,071
----------
374,348
----------
Consumer Cyclical - Retailers - 0.0%
Ltd. Brands, Inc.
6.90%, 7/15/17 25 24,155
----------
Consumer Non-Cyclical - 0.5%
Altria Group, Inc.
7.75%, 1/15/27 85 109,513
Bunge Ltd Finance Corp.
5.10%, 7/15/15 69 65,352
Cadbury Schweppes US Finance LLC
5.125%, 10/01/13 (e) 135 134,921
ConAgra Foods, Inc.
7.875%, 9/15/10 19 20,394
Fisher Scientific International, Inc.
6.125%, 7/01/15 19 18,873
6.75%, 8/15/14 29 29,724
Kraft Foods, Inc.
4.125%, 11/12/09 115 114,008
Reynolds American, Inc.
7.25%, 6/01/13 150 158,660
7.625%, 6/01/16 145 154,134
Safeway, Inc.
4.125%, 11/01/08 18 17,806
6.50%, 3/01/11 15 15,693
Tyson Foods, Inc.
6.85%, 4/01/16 150 153,923
Wyeth
5.50%, 2/01/14 40 40,627
----------
1,033,628
----------
Energy - 0.2%
Amerada Hess Corp.
7.875%, 10/01/29 55 65,099
Gazprom
6.212%, 11/22/16 (e) 315 305,613
Valero Energy Corp.
6.875%, 4/15/12 45 48,017
----------
418,729
----------
Technology - 0.2%
Electronic Data Systems Corp.
Series B
6.50%, 8/01/13 145 146,617
International Business Machines Corp.
4.375%, 6/01/09 20 20,183
Motorola, Inc.
6.50%, 9/01/25 70 67,977
7.50%, 5/15/25 15 15,961
7.625%, 11/15/10 5 5,356
Xerox Corp.
7.625%, 6/15/13 30 31,306
9.75%, 1/15/09 111 116,041
----------
403,441
----------
4,980,113
----------
Utility - 0.4%
Electric - 0.3%
Carolina Power & Light Co.
6.50%, 7/15/12 65 69,181
Consumers Energy Co.
Series C
4.25%, 4/15/08 25 24,916
Exelon Corp.
6.75%, 5/01/11 25 26,148
FirstEnergy Corp.
Series B
6.45%, 11/15/11 65 67,120
Series C
7.375%, 11/15/31 85 93,265
MidAmerican Energy Holdings Co.
5.875%, 10/01/12 30 31,094
Nisource Finance Corp.
7.875%, 11/15/10 40 42,433
Pacific Gas & Electric Co.
4.80%, 3/01/14 65 63,194
Progress Energy, Inc.
7.10%, 3/01/11 19 20,220
Public Service Company of Colorado
7.875%, 10/01/12 30 33,666
SPI Electricity & Gas Australia Holdings
Pty Ltd.
6.15%, 11/15/13 (e) 238 242,852
----------
714,089
----------
Natural Gas - 0.1%
Duke Energy Field Services Corp.
7.875%, 8/16/10 15 16,091
Enterprise Products Operating LP
Series B
5.60%, 10/15/14 25 24,950
Williams Cos, Inc.
7.875%, 9/01/21 40 44,350
----------
85,391
----------
799,480
----------
Total Corporates - Investment Grades
(cost $11,025,886) 10,935,265
----------
COMMERCIAL MORTGAGE-BACKED SECURITIES - 3.8%
Non-Agency Fixed Rate CMBS - 3.8%
Banc of America Commercial Mortgage, Inc.
Series 2001-PB1, Class A2
5.787%, 5/11/35 164 167,898
Series 2004-4, Class A3
4.128%, 7/10/42 200 197,530
Series 2004-6, Class A2
4.161%, 12/10/42 140 137,776
Series 2005-6, Class A4
5.181%, 9/10/47 (d) 315 310,604
Series 2006-5, Class A4
5.414%, 9/10/47 355 355,201
Bear Stearns Commercial Mortgage
Securities, Inc.
5.70%, 6/11/50 365 376,041
Series 2006-PW12, Class A4
5.711%, 9/11/38 100 102,615
Citigroup Commercial Mortgage Trust
Series 2004-C1, Class A4
5.356%, 4/15/40 (d) 110 111,331
Credit Suisse First Boston Mortgage
Securities Corp.
Series 2003-CK2, Class A2
3.861%, 3/15/36 32 32,065
Series 2004-C1, Class A4
4.75%, 1/15/37 (d) 70 68,342
Credit Suisse Mortgage Capital Certificates
Series 2006-C3, Class A3
5.827%, 6/15/38 (d) 90 92,952
Series 2006-C4, Class A3
5.467%, 9/15/39 235 235,629
GE Capital Commercial Mortgage Corp.
Series 2005-C3, Class A3FX
4.863%, 7/10/45 360 358,003
Greenwich Capital Commercial Funding
Corp.
Series 2007-GG9, Class A4
5.444%, 3/10/39 215 216,269
GS Mortgage Securities Corp. II
Series 2001-ROCK, Class C
6.878%, 5/03/18 (e) 605 639,962
Series 2004-GG2, Class A6
5.396%, 8/10/38 (d) 80 80,544
Series 2007-GG10, Class A2
5.778%, 8/10/45 490 499,415
JPMorgan Chase Commercial Mortgage
Securities Corp.
Series 2004-C1, Class A2
4.302%, 1/15/38 60 58,895
Series 2005-CB11, Class A4
5.335%, 8/12/37 170 170,349
Series 2005-LDP3, Class A2
4.851%, 8/15/42 100 99,324
Series 2005-LDP4, Class A2
4.79%, 10/15/42 210 208,337
Series 2005-LDP5, Class A2
5.198%, 12/15/44 60 60,043
Series 2006-CB14, Class A4
5.481%, 12/12/44 (d) 50 50,178
Series 2006-CB15, Class A4
5.814%, 6/12/43 (d) 110 112,971
Series 2006-CB16, Class A4
5.552%, 5/12/45 200 201,766
Series 2006-CB17, Class A4
5.429%, 12/12/43 350 351,943
LB-UBS Commercial Mortgage Trust
Series 2003-C3, Class A4
4.166%, 5/15/32 150 143,440
Series 2004-C4, Class A4
5.126%, 6/15/29 (d) 40 40,520
Series 2004-C8, Class A2
4.201%, 12/15/29 125 123,152
Series 2005-C1, Class A4
4.742%, 2/15/30 120 116,572
Series 2005-C7, Class A4
5.197%, 11/15/30 (d) 50 48,932
Series 2006-C3, Class A4
5.661%, 3/15/39 (d) 285 290,049
Series 2006-C4, Class A4
5.883%, 6/15/38 (d) 275 285,381
Series 2006-C6, Class A4
5.372%, 9/15/39 330 329,097
Series 2007-C6, Class A4
5.858%, 7/15/40 210 217,192
Merrill Lynch Mortgage Trust
Series 2005-CKI1, Class A6
5.244%, 11/12/37 (d) 40 39,871
Series 2005-MKB2, Class A2
4.806%, 9/12/42 320 318,394
Merrill Lynch/Countrywide Commercial
Mortgage Trust
Series 2006-2, Class A4
5.909%, 6/12/46 (d) 110 114,209
Series 2006-3, Class A4
5.414%, 7/12/46 (d) 280 279,856
Morgan Stanley Capital I
Series 2004-HQ4, Class A5
4.59%, 4/14/40 190 187,626
Series 2007-T27, Class A4
5.651%, 6/13/42 210 215,469
----------
8,045,743
----------
Non-Agency Adjustable Rate CMBS - 0.0%
GS Mortgage Securities Corp. II
Series 2007-EOP, Class E
5.692%, 3/06/20 (c)(e) 75 72,281
----------
Total Commercial Mortgage-Backed Securities
(cost $8,007,866) 8,118,024
----------
GOVERNMENT-RELATED - U.S. AGENCIES - 3.2%
Agency Debentures - 3.2%
Federal Home Loan Bank
4.625%, 10/10/12 470 483,739
5.00%, 11/17/17 3,120 3,234,931
Federal Home Loan Mortgage Corp.
5.125%, 11/17/17 2,670 2,785,988
Federal National Mortgage Association
Series 2005
3.875%, 2/15/10 200 201,339
----------
Total Government-Related - U.S. Agencies
(cost $6,639,440) 6,705,997
----------
GOVERNMENT-RELATED - AGENCIES - 1.6%
Development Bank of Japan
1.75%, 6/21/10 JPY 200,000 1,830,694
Kreditanstalt fuer Wiederaufbau
1.75%, 3/23/10 (a) 114,000 1,041,107
Series INTL
1.85%, 9/20/10 (a) 64,000 587,937
----------
Total Government-Related - Agencies
(cost $3,315,964) 3,459,738
----------
EMERGING MARKETS - NON-INVESTMENT
GRADES - 1.0%
Non Corporate Sectors - 1.0%
Sovereign - 1.0%
Republic of Brazil
8.25%, 1/20/34 (a) $ 725 917,125
Republic of Panama
9.375%, 4/01/29 (a) 200 273,000
Republic of Peru
7.35%, 7/21/25 (a) 215 245,100
8.75%, 11/21/33 185 245,125
Republic of Philippines
8.25%, 1/15/14 261 292,320
8.875%, 3/17/15 46 54,119
----------
Total Emerging Markets - Non-Investment Grades
(cost $1,913,602) 2,026,789
----------
GOVERNMENT-RELATED - SOVEREIGNS - 0.9%
Government of Poland
Series 1110
6.00%, 11/24/10 (a) PLN 1,745 706,841
Mexican Bonos
Series MI10
8.00%, 12/19/13 MXN 14,185 1,296,569
----------
Total Government-Related - Sovereigns
(cost $2,013,711) 2,003,410
----------
ASSET-BACKED SECURITIES - 0.8%
Home Equity Loans - Floating Rate - 0.6%
Bear Stearns Asset Backed Securities, Inc.
Series 2005-SD1, Class 1A1
5.015%, 4/25/22 (c) $ 2 2,214
Series 2007-HE3, Class M1
5.315%, 4/25/37 (c) 100 64,310
Credit-Based Asset Servicing & Securities,
Inc.
Series 2005-CB7, Class AF2
5.147%, 11/25/35 (f) 88 87,025
Home Equity Asset Trust
Series 2007-3, Class M1
5.215%, 8/25/37 (c) 275 189,522
Home Equity Mortgage Trust
Series 2006-1, Class A2
5.367%, 5/25/36 (f) 30 15,019
HSI Asset Securitization Corp. Trust
Series 2006-OPT2, Class 2A1
4.945%, 1/25/36 (c) 15 14,774
Indymac Residential Asset Backed Trust
Series 2006-D, Class 2A2
4.975%, 11/25/36 (c) 295 277,991
IXIS Real Estate Capital Trust
Series 2006-HE3, Class A2
4.965%, 1/25/37 (c) 195 183,940
Lehman XS Trust
Series 2007-4N, Class M1
5.315%, 3/25/47 (c) 265 193,001
RAAC Series
Series 2006-SP3, Class A1
4.945%, 8/25/36 (c) 128 124,149
Residential Asset Securities Corp.
Series 2003-KS3, Class A2
5.465%, 5/25/33 (c) 2 2,214
Specialty Underwriting & Residential
Finance
Series 2006-BC1, Class A2A
4.945%, 12/25/36 (c) 11 10,965
Structured Asset Investment Loan Trust
Series 2006-1, Class A1
4.945%, 1/25/36 (c) 20 20,378
----------
1,185,502
----------
Home Equity Loans - Fixed Rate - 0.2%
Countrywide Asset-Backed Certificates
Series 2007-S1, Class A3
5.81%, 11/25/36 (d) 275 228,013
Credit-Based Asset Servicing & Securities,
Inc.
Series 2003-CB1, Class AF
3.45%, 1/25/33 (f) 35 35,034
Home Equity Mortgage Trust
Series 2005-4, Class A3
4.742%, 1/25/36 (f) 35 28,187
Residential Funding Mortgage Securities II,
Inc.
Series 2005-HI2, Class A3
4.46%, 5/25/35 71 70,101
----------
361,335
----------
Credit Cards - Fixed Rate - 0.0%
MBNA Credit Card Master Note Trust
Series 2003-A6, Class A6
2.75%, 10/15/10 85 84,388
----------
Autos - Fixed Rate - 0.0%
Capital One Prime Auto Receivables Trust
Series 2005-1, Class A3
4.32%, 8/15/09 26 25,701
----------
Total Asset-Backed Securities
(cost $1,943,188) 1,656,926
----------
GOVERNMENT-RELATED - NON-U.S. ISSUERS - 0.5%
Sovereigns - 0.4%
Russian Federation
7.50%, 3/31/30 (a)(e) 812 923,423
----------
Supranationals - 0.1%
European Investment Bank
5.125%, 5/30/17 175 182,568
----------
Total Government-Related - Non-U.S. Issuers
(cost $1,077,608) 1,105,991
----------
CORPORATES - NON-INVESTMENT GRADES - 0.5%
Industrial - 0.4%
Basic - 0.1%
Ineos Group Holdings PLC
8.50%, 2/15/16 (e) 75 66,750
Packaging Corp. of America
5.75%, 8/01/13 30 30,660
----------
97,410
----------
Communications - Media - 0.1%
Cablevision Systems Corp.
Series B
8.00%, 4/15/12 45 43,650
Clear Channel Communications, Inc.
5.50%, 9/15/14 85 64,790
DirecTV Holdings LLC
6.375%, 6/15/15 40 38,400
Echostar DBS Corp.
6.625%, 10/01/14 17 16,915
7.125%, 2/01/16 48 48,960
----------
212,715
----------
Communications - Telecommunications - 0.0%
Qwest Communications International, Inc.
7.50%, 2/15/14 25 24,937
Series B
7.50%, 2/15/14 15 14,963
----------
39,900
----------
Consumer Cyclical - Automotive - 0.1%
Ford Motor Credit Co.
7.375%, 10/28/09 160 150,599
General Motors Corp.
8.25%, 7/15/23 70 55,650
----------
206,249
----------
Consumer Cyclical - Other - 0.1%
Harrah's Operating Co., Inc
5.625%, 6/01/15 30 21,900
5.75%, 10/01/17 11 7,452
6.50%, 6/01/16 39 29,055
MGM Mirage
8.375%, 2/01/11 40 40,900
----------
99,307
----------
Transportation - Services - 0.0%
Hertz Corp.
8.875%, 1/01/14 35 35,481
----------
691,062
----------
Utility - 0.1%
Electric - 0.1%
Dynegy Holdings, Inc.
8.375%, 5/01/16 70 68,425
Edison Mission Energy
7.00%, 5/15/17 60 58,950
NRG Energy, Inc.
7.25%, 2/01/14 65 63,375
7.375%, 2/01/16 35 34,125
----------
224,875
----------
Financial Institutions - 0.0%
REITS - 0.0%
American Real Estate Partners LP
7.125%, 2/15/13 (e) 25 23,500
7.125%, 2/15/13 20 18,800
----------
42,300
----------
Total Corporates - Non-Investment Grades
(cost $1,009,151) 958,237
----------
MORTGAGE CMO'S - 0.3%
Non-Agency Fixed Rate - 0.2%
Deutsche Mortgage Securities, Inc.
Series 2005-WF1, Class 1A1
5.054%, 6/26/35 (e) 143 142,418
Merrill Lynch Mortgage Investors, Inc.
Series 2005-A8, Class A1C1
5.25%, 8/25/36 (d) 106 101,573
Residential Accredit Loans, Inc.
Series 2007-QS1, Class 1A1
6.00%, 1/25/37 145 149,652
----------
393,643
----------
Non-Agency Adjustable Rate - 0.1%
Countrywide Alternative Loan Trust
Series 2005-62, Class 2A1
5.788%, 12/25/35 (c) 60 56,345
Series 2006-OA14, Class 3A1
5.638%, 11/25/46 (c) 189 178,319
Series 2007-OA3, Class M1
5.175%, 4/25/47 (c) 75 49,347
----------
284,011
----------
Total Mortgage CMO's
(cost $717,141) 677,654
----------
Shares
------
NON-CONVERTIBLE - PREFERRED STOCKS - 0.1%
Non Corporate Sectors - 0.1%
Agencies - Government Sponsored - 0.1%
Federal Home Loan Mortgage Corp.
8.375% 2,525 66,029
Federal National Mortgage Association
8.25%A 3,075 79,181
-------
145,210
-------
Information Technology - 0.0%
Semiconductors & Semiconductor Equipment - 0.0%
Samsung Electronics Co. Ltd.
Zero Coupon (a) 200 90,740
-------
Total Non-Convertible - Preferred Stocks
(cost $232,993) 235,950
-------
Principal
Amount
(000)
---------
SHORT-TERM INVESTMENTS - 4.7%
Time Deposit - 4.7%
The Bank of New York Mellon Corp.
3.25%, 1/02/08
(cost $9,830,000) 9,830 9,830,000
-------------
Total Investments - 98.5%
(cost $195,912,275) 208,363,403
Other assets less liabilities - 1.5% 3,087,018
-------------
Net Assets - 100.0% $ 211,450,421
-------------
COMMON STOCKS - 64.2%
Financials - 15.8%
Capital Markets - 3.9%
Bank of New York Mellon Corp. 16,320 795,763
Franklin Resources, Inc. 11,700 1,338,831
The Goldman Sachs Group, Inc. 1,600 344,080
Lehman Brothers Holdings, Inc. 9,900 647,856
Merrill Lynch & Co., Inc. 22,400 1,202,432
Northern Trust Corp. 29,300 2,243,794
------------
6,572,756
------------
Commercial Banks - 0.7%
Wells Fargo & Co. 39,200 1,183,448
------------
Diversified Financial Services - 5.2%
Bank of America Corp. 45,800 1,889,708
Citigroup, Inc. 64,700 1,904,768
JPMorgan Chase & Co. 117,600 5,133,240
------------
8,927,716
------------
Insurance - 6.0%
ACE Ltd. 55,900 3,453,502
American International Group, Inc. 67,500 3,935,250
Axis Capital Holdings Ltd. 52,700 2,053,719
Hartford Financial Services Group, Inc. 6,200 540,578
Willis Group Holdings Ltd. 5,900 224,023
------------
10,207,072
------------
26,890,992
------------
Health Care - 10.3%
Health Care Equipment & Supplies - 0.6%
Becton Dickinson & Co. 13,100 1,094,898
------------
Health Care Providers & Services - 5.4%
Aetna, Inc. 27,400 1,581,802
UnitedHealth Group, Inc. 60,200 3,503,640
WellPoint, Inc. (a) 46,600 4,088,218
------------
9,173,660
------------
Pharmaceuticals - 4.3%
Eli Lilly & Co. 38,100 2,034,159
Forest Laboratories, Inc. (a) 17,800 648,810
Merck & Co., Inc. 28,100 1,632,891
Pfizer, Inc. 59,600 1,354,708
Schering-Plough Corp. 21,400 570,096
Wyeth 23,500 1,038,465
------------
7,279,129
------------
17,547,687
------------
Energy - 9.4%
Energy Equipment & Services - 1.2%
Baker Hughes, Inc. 11,310 917,241
Cameron International Corp. (a) 6,200 298,406
Nabors Industries Ltd. (a) 30,100 824,439
------------
2,040,086
------------
Oil, Gas & Consumable Fuels - 8.2%
Chevron Corp. 32,000 2,986,560
ConocoPhillips 9,100 803,530
Exxon Mobil Corp. 52,300 4,899,987
Marathon Oil Corp. 15,700 955,502
Noble Energy, Inc. 15,900 1,264,368
Total SA (ADR) 37,900 3,130,540
------------
14,040,487
------------
16,080,573
------------
Information Technology - 8.8%
Communications Equipment - 0.8%
Cisco Systems, Inc. (a) 51,000 1,380,570
------------
Computers & Peripherals - 2.7%
Hewlett-Packard Co. 8,400 424,032
International Business Machines Corp. 15,200 1,643,120
Sun Microsystems, Inc. (a) 141,325 2,562,223
------------
4,629,375
------------
IT Services - 1.3%
Accenture Ltd.-Class A 63,200 2,277,096
------------
Semiconductors & Semiconductor Equipment - 2.3%
Applied Materials, Inc. 35,700 634,032
Broadcom Corp.-Class A (a) 2,400 62,736
Integrated Device Technology, Inc. (a) 42,900 485,199
Intel Corp. 54,100 1,442,306
Nvidia Corp. (a) 35,700 1,214,514
------------
3,838,787
------------
Software - 1.7%
Adobe Systems, Inc. (a) 9,200 393,116
Microsoft Corp. 70,200 2,499,120
------------
2,892,236
------------
15,018,064
------------
Consumer Staples - 7.5%
Beverages - 0.4%
PepsiCo, Inc. 8,100 614,790
------------
Food & Staples Retailing - 1.3%
Safeway, Inc. 65,300 2,233,913
------------
Food Products - 0.9%
HJ Heinz Co. 31,300 1,461,084
------------
Household Products - 1.0%
Procter & Gamble Co. 24,200 1,776,764
------------
Tobacco - 3.9%
Altria Group, Inc. 64,400 4,867,352
Loews Corp. - Carolina Group 20,600 1,757,180
------------
6,624,532
------------
12,711,083
------------
Industrials - 6.3%
Aerospace & Defense - 2.6%
Honeywell International, Inc. 12,100 744,997
Lockheed Martin Corp. 8,200 863,132
United Technologies Corp. 37,700 2,885,558
------------
4,493,687
------------
Commercial Services & Supplies - 0.3%
Dun & Bradstreet Corp. 6,300 558,369
------------
Electrical Equipment - 2.6%
Emerson Electric Co. 77,400 4,385,484
------------
Industrial Conglomerates - 0.8%
General Electric Co. 35,640 1,321,175
------------
10,758,715
------------
Consumer Discretionary - 3.2%
Media - 2.4%
Comcast Corp.-Class A (a) 14,070 256,918
News Corp.-Class A 73,000 1,495,770
Time Warner, Inc. 79,700 1,315,847
Viacom, Inc.-Class B (a) 23,800 1,045,296
------------
4,113,831
------------
Multiline Retail - 0.8%
Kohl's Corp. (a) 28,000 1,282,400
------------
5,396,231
------------
Telecommunication Services - 2.3%
Diversified Telecommunication Services - 2.3%
AT&T, Inc. 48,000 1,994,880
CenturyTel, Inc. 17,400 721,404
Verizon Communications, Inc. 29,700 1,297,593
------------
4,013,877
------------
Materials - 0.6%
Chemicals - 0.6%
Air Products & Chemicals, Inc. 7,200 710,136
Dow Chemical Co. 8,300 327,186
------------
1,037,322
------------
Total Common Stocks
(cost $90,864,744) 109,454,544
------------
CORPORATES - INVESTMENT GRADES - 15.4%
Industrial - 7.6%
Basic - 0.7%
The Dow Chemical Co.
7.375%, 11/01/29 15 16,499
Eastman Chemical Co.
7.25%, 1/15/24 100 108,861
Inco Ltd.
7.75%, 5/15/12 325 354,574
Lubrizol Corp.
5.50%, 10/01/14 180 178,707
Noranda, Inc.
6.00%, 10/15/15 205 207,850
Southern Copper Corp.
7.50%, 7/27/35 195 206,526
Weyerhaeuser Co.
7.375%, 3/15/32 170 170,603
------------
1,243,620
------------
Capital Goods - 0.5%
CRH America, Inc.
6.00%, 9/30/16 90 88,019
Hanson Australia Funding Ltd.
5.25%, 3/15/13 120 119,726
Hutchison Whampoa International Ltd.
7.45%, 11/24/33 (b) 100 114,047
Masco Corp.
7.75%, 8/01/29 165 178,625
Tyco International Group SA
6.00%, 11/15/13 115 118,202
Waste Management, Inc.
6.375%, 11/15/12 175 185,031
------------
803,650
------------
Communications - Media - 0.9%
BSKYB Finance UK PLC
5.625%, 10/15/15 (b) 85 83,633
News America Holdings, Inc.
8.25%, 10/17/96 60 69,688
9.25%, 2/01/13 65 75,978
News America, Inc.
5.30%, 12/15/14 190 189,022
RR Donnelley & Sons Co.
5.50%, 5/15/15 185 178,004
The Thomson Corp.
5.75%, 2/01/08 460 459,876
Time Warner Cos, Inc.
7.57%, 2/01/24 70 75,918
Time Warner Entertainment Co.
8.375%, 3/15/23 250 294,474
Viacom, Inc.
7.875%, 7/30/30 60 65,117
WPP Finance Corp.
5.875%, 6/15/14 125 133,030
------------
1,624,740
------------
Communications - Telecommunications - 1.9%
AT&T Corp.
7.30%, 11/15/11 250 270,877
Bellsouth Capital Funding Corp.
7.12%, 7/15/97 360 376,225
BellSouth Corp.
5.20%, 9/15/14 270 269,465
Embarq Corp.
6.738%, 6/01/13 250 258,594
7.082%, 6/01/16 280 288,507
GTE Corp.
8.75%, 11/01/21 270 330,870
New Cingular Wireless Services, Inc.
8.75%, 3/01/31 155 200,877
Nextel Communications, Inc.
Series F
5.95%, 3/15/14 165 155,095
Qwest Corp.
7.50%, 10/01/14 165 167,475
7.875%, 9/01/11 115 119,600
Telefonos de Mexico SAB de CV
4.50%, 11/19/08 139 138,319
Telus Corp.
8.00%, 6/01/11 100 108,347
Verizon Virginia, Inc.
Series A
4.625%, 3/15/13 365 352,558
Vodafone Group PLC
7.875%, 2/15/30 155 182,617
------------
3,219,426
------------
Consumer Cyclical - Automotive - 0.0%
DaimlerChrysler North America
4.875%, 6/15/10 70 69,689
------------
Consumer Cyclical - Other - 0.2%
Starwood Hotels & Resorts Worldwide, Inc.
7.375%, 11/15/15 141 145,564
7.875%, 5/01/12 98 104,135
Toll Brothers Finance Corp.
5.15%, 5/15/15 30 27,224
------------
276,923
------------
Consumer Cyclical - Retailers - 0.1%
CVS Corp.
6.125%, 8/15/16 150 153,973
------------
Consumer Non-Cyclical - 1.6%
Altria Group, Inc.
7.75%, 1/15/27 145 186,817
Anheuser-Busch Cos, Inc.
6.50%, 2/01/43 100 107,125
Bristol-Myers Squibb Co.
6.875%, 8/01/97 425 448,722
Cadbury Schweppes US Finance LLC
5.125%, 10/01/13 (b) 190 189,889
Fisher Scientific International, Inc.
6.125%, 7/01/15 410 407,267
Kraft Foods, Inc.
5.25%, 10/01/13 150 147,473
Reynolds American, Inc.
7.25%, 6/01/12 160 168,906
7.625%, 6/01/16 160 170,079
Safeway, Inc.
4.95%, 8/16/10 400 402,100
5.80%, 8/15/12 155 160,374
Wyeth
6.50%, 2/01/34 285 302,477
------------
2,691,229
------------
Energy - 0.5%
Amerada Hess Corp.
7.30%, 8/15/31 140 157,258
Gazprom
6.212%, 11/22/16 (b) 350 339,570
Norsk Hydro
6.36%, 1/15/09 45 45,712
Transocean, Inc.
7.50%, 4/15/31 155 170,273
Valero Energy Corp.
4.75%, 6/15/13 125 121,198
XTO Energy, Inc.
7.50%, 4/15/12 100 109,315
------------
943,326
------------
Services - 0.2%
The Western Union Co.
5.93%, 10/01/16 315 314,329
------------
Technology - 0.7%
Electronic Data Systems Corp.
Series B
6.50%, 8/01/13 310 313,458
Hewlett-Packard Co.
3.625%, 3/15/08 475 473,895
Motorola, Inc.
6.50%, 9/01/25 105 101,966
7.50%, 5/15/25 20 21,281
7.625%, 11/15/10 64 68,552
Xerox Corp.
7.625%, 6/15/13 35 36,524
9.75%, 1/15/09 104 108,723
------------
1,124,399
------------
Transportation - Airlines - 0.2%
Southwest Airlines Co.
5.25%, 10/01/14 415 404,449
------------
Transportation - Railroads - 0.1%
CSX Corp.
5.50%, 8/01/13 50 49,835
Norfolk Southern Corp.
7.90%, 5/15/97 45 52,103
------------
101,938
------------
12,971,691
------------
Financial Institutions - 6.5%
Banking - 3.7%
Bank of Tokyo-Mitsubishi UFJ L
7.40%, 6/15/11 200 216,309
Barclays Bank PLC
8.55%, 6/15/11 (b)(c) 50 52,665
BB&T Capital Trust IV
6.82%, 6/12/57 (c) 175 164,635
Chase Manhattan Corp.
6.00%, 2/15/09 155 156,355
The Chuo Mitsui Trust & Banking Co., Ltd.
5.506%, 4/15/15 (b)(c) 300 275,847
Citicorp
Series MTNF
6.375%, 11/15/08 30 30,407
Citigroup, Inc.
3.625%, 2/09/09 160 157,855
Dresdner Funding Trust I
8.151%, 6/30/31 (b) 295 300,879
Fuji JGB Investment
9.87%, 6/30/08 (b)(c) 240 242,192
HBOS PLC
5.375%, 11/01/13 (b)(c) 250 227,905
6.413%, 10/01/35 (b)(c) 400 325,462
HSBC Bank USA
5.875%, 11/01/34 310 284,479
Morgan J P & Co., Inc.
6.25%, 1/15/09 139 140,678
MUFG Capital Finance 1 Ltd.
6.346%, 7/25/16 (c) 170 161,013
Popular North America, Inc.
4.25%, 4/01/08 470 468,995
Rabobank Capital Funding II
5.26%, 12/31/13 (b)(c) 230 214,286
RBS Capital Trust III
5.512%, 9/30/14 (c) 495 455,053
Regions Financing Trust II
6.625%, 5/15/47 (c) 170 140,485
Resona Preferred Global Securities
7.191%, 7/30/15 (b)(c) 413 409,794
Royal Bank of Scotland Group PLC
7.648%, 9/30/31 (c) 250 257,934
Sumitomo Mitsui Banking Corp.
5.625%, 10/15/15 (b)(c) 135 126,055
UBS Preferred Funding Trust II
7.247%, 6/26/11 (c) 250 262,454
UBS Preferred Funding Trust V
Series 1
6.243%, 5/15/16 (c) 465 447,729
UFJ Finance Aruba AEC
6.75%, 7/15/13 335 363,934
Unicredito Italiano Capital Trust II
9.20%, 10/05/10 (b)(c) 330 359,623
Wachovia Capital Trust III
5.80%, 3/15/11 (c) 85 75,952
Washington Mutual, Inc.
4.20%, 1/15/10 13 11,614
------------
6,330,589
------------
Brokerage - 0.5%
The Goldman Sachs Group, Inc.
3.875%, 1/15/09 126 124,710
5.70%, 9/01/12 325 334,367
7.35%, 10/01/09 34 35,536
Lehman Brothers Holdings, Inc.
7.875%, 8/15/10 150 158,984
Merrill Lynch & Co., Inc
Series MTNC
4.125%, 1/15/09 47 46,387
Merrill Lynch & Co., Inc.
Series MTNC
4.125%, 9/10/09 160 157,434
------------
857,418
------------
Finance - 0.9%
Capital One Bank
6.50%, 6/13/13 200 196,179
Capital One Financial Corp.
5.50%, 6/01/15 23 21,214
CIT Group, Inc.
3.375%, 4/01/09 150 144,539
Countrywide Financial Corp.
6.25%, 5/15/16 297 170,944
Series MTN
5.80%, 6/07/12 86 62,823
Countrywide Home Loans, Inc.
Series MTNL
4.00%, 3/22/11 10 7,221
General Electric Capital Corp.
5.875%, 2/15/12 285 296,943
International Lease Finance Corp.
6.375%, 3/15/09 150 151,696
iStar Financial, Inc.
5.15%, 3/01/12 30 25,926
6.00%, 12/15/10 200 182,064
Series B
5.95%, 10/15/13 65 56,640
SLM Corp.
5.375%, 1/15/13 190 169,964
------------
1,486,153
------------
Insurance - 1.3%
The Allstate Corp.
6.125%, 5/15/37 (c) 160 154,371
American RE Corp.
Series B
7.45%, 12/15/26 140 144,875
CNA Financial Corp.
5.85%, 12/15/14 85 85,140
Hartford Financial Services Group, Inc.
6.375%, 11/01/08 125 126,364
ING Groep NV
5.775%, 12/08/15 (c) 470 433,523
Liberty Mutual Group, Inc.
5.75%, 3/15/14 (b) 200 203,683
Lincoln National Corp.
7.00%, 5/17/66 (c) 345 346,388
North Front Pass Through Trust
5.81%, 12/15/24 (b)(c) 500 478,409
UnitedHealth Group, Inc.
5.25%, 3/15/11 110 111,231
WellPoint, Inc.
5.25%, 1/15/16 75 72,613
------------
2,156,597
------------
REITS - 0.1%
Regency Centers LP
5.25%, 8/01/15 225 213,260
------------
11,044,017
------------
Utility - 1.2%
Electric - 0.6%
Consumers Energy Co.
Series D
5.375%, 4/15/13 215 214,405
Dominion Resources, Inc./VA
7.50%, 6/30/66 (c) 305 301,543
FPL Group Capital, Inc.
6.35%, 10/01/66 (c) 55 52,018
6.65%, 6/15/67 (c) 170 163,729
SPI Electricity & Gas Australia Holdings
Pty Ltd.
6.15%, 11/15/13 (b) 250 255,096
------------
986,791
------------
Natural Gas - 0.6%
CenterPoint Energy Resources Corp.
Series B
7.875%, 4/01/13 285 312,926
Enterprise Products Operating LP
Series B
5.60%, 10/15/14 150 149,699
Texas Eastern Transmission Corp.
7.30%, 12/01/10 350 375,188
TransCanada Pipelines Ltd.
6.35%, 5/15/67 (c) 180 168,710
------------
1,006,523
------------
1,993,314
------------
Non Corporate Sectors - 0.1%
Agencies - Not Government Guaranteed - 0.1%
Petronas Capital, Ltd.
7.00%, 5/22/12 (b) 150 163,316
------------
Total Corporates - Investment Grades
(cost $26,585,983) 26,172,338
------------
U.S. TREASURIES - 5.3%
U.S. Treasury Bonds
4.50%, 2/15/36 3,385 3,402,189
8.75%, 5/15/17 2,623 3,568,510
U.S. Treasury Notes
4.25%, 11/15/17 1,935 1,968,711
4.875%, 5/31/11 15 15,809
------------
Total U.S. Treasuries
(cost $8,723,761) 8,955,219
------------
COMMERCIAL MORTGAGE-BACKED SECURITIES - 2.4%
Non-Agency Fixed Rate CMBS - 2.4%
Banc of America Commercial Mortgage, Inc.
Series 2001-PB1, Class A2
5.787%, 5/11/35 1,526 1,563,852
GS Mortgage Securities Corp. II
Series 2004-GG2, Class A6
5.396%, 8/10/38 600 604,080
LB-UBS Commercial Mortgage Trust
Series 2006-C6, Class A4
5.372%, 9/15/39 235 234,357
Series 2007-C7, Class A3
5.866%, 9/15/45 620 641,337
Morgan Stanley Capital I
Series 2005-HQ5, Class A4
5.168%, 1/14/42 1,035 1,029,128
------------
Total Commercial Mortgage-Backed Securities
(cost $4,046,251) 4,072,754
------------
MORTGAGE PASS-THRU'S - 2.0%
Agency ARMS - 1.0%
Federal Home Loan Mortgage Corp.
Series 2006
6.029%, 9/01/36 (d) 514 522,667
Series 2007
6.05%, 4/01/37 (d) 332 337,144
Federal National Mortgage Association
Series 2007
5.925%, 2/01/37 (d) 527 536,241
6.027%, 2/01/37 (d) 326 332,401
------------
1,728,453
------------
Fixed Rate 30-Year - 0.9%
Federal Gold Loan Mortgage Corp.
Series 2006
7.00%, 8/01/36 928 964,232
Federal National Mortgage Association
Series 2006
6.50%, 9/01/36 525 539,491
------------
1,503,723
------------
Non-Agency ARMS - 0.1%
Bear Stearns Alt-A Trust
Series 2006-3, Class 22A1
6.218%, 5/25/36 (c) 230 224,826
------------
Total Mortgage Pass-Thru's
(cost $3,442,539) 3,457,002
------------
EMERGING MARKETS - NON-INVESTMENT
GRADES - 1.3%
Non Corporate Sectors - 1.3%
Sovereign - 1.3%
Republic of Brazil
8.25%, 1/20/34 855 1,081,575
Republic of Panama
9.375%, 4/01/29 270 368,550
Republic of Peru
8.75%, 11/21/33 395 523,375
Republic of Philippines
8.25%, 1/15/14 231 258,720
8.875%, 3/17/15 44 51,766
------------
Total Emerging Markets - Non-Investment
Grades
(cost $2,286,763) 2,283,986
------------
CORPORATES - NON-INVESTMENT GRADES - 1.3%
Industrial - 0.9%
Basic - 0.2%
Freeport-McMoRan Copper & Gold, Inc.
8.25%, 4/01/15 60 63,600
8.375%, 4/01/17 60 64,350
Packaging Corp. of America
4.375%, 8/01/08 200 198,162
------------
326,112
------------
Capital Goods - 0.0%
Bombardier, Inc.
6.75%, 5/01/12 (b) 100 101,250
------------
Communications - Media - 0.2%
Clear Channel Communications, Inc.
5.50%, 9/15/14 150 114,335
Echostar DBS Corp.
6.625%, 10/01/14 18 17,910
7.125%, 2/01/16 47 47,940
RH Donnelley Corp.
Series A-3
8.875%, 1/15/16 140 130,900
------------
311,085
------------
Communications - Telecommunications - 0.2%
Mobile Telesystems Finance
9.75%, 1/30/08 (b) 230 230,000
Windstream Corp.
8.125%, 8/01/13 149 154,215
------------
384,215
------------
Consumer Cyclical - Automotive - 0.1%
Ford Motor Credit Co.
4.95%, 1/15/08 135 134,910
------------
Consumer Cyclical - Other - 0.2%
DR Horton, Inc.
6.50%, 4/15/16 80 69,410
Harrah's Operating Co., Inc
5.625%, 6/01/15 116 84,680
5.75%, 10/01/17 10 6,775
6.50%, 6/01/16 39 29,055
MGM Mirage
6.75%, 9/01/12 60 58,425
Wynn Las Vegas LLC/Corp.
6.625%, 12/01/14 45 44,212
------------
292,557
------------
1,550,129
------------
Financial Institutions - 0.2%
Banking - 0.2%
Northern Rock PLC
5.60%, 4/30/14 (b)(c) 445 275,900
------------
Insurance - 0.0%
Liberty Mutual Group, Inc.
7.80%, 3/15/37 (b) 100 88,340
------------
364,240
------------
Utility - 0.2%
Electric - 0.2%
Dynegy Holdings, Inc.
8.375%, 5/01/16 70 68,425
Edison Mission Energy
7.00%, 5/15/17 55 54,037
NRG Energy, Inc.
7.25%, 2/01/14 65 63,375
Reliant Energy, Inc.
7.625%, 6/15/14 65 64,350
------------
250,187
------------
Total Corporates - Non-Investment Grades
(cost $2,408,853) 2,164,556
------------
GOVERNMENT-RELATED - NON-U.S. ISSUERS - 1.2%
Sovereigns - 1.1%
Russian Federation
7.50%, 3/31/30 (b)(e) 955 1,086,711
United Mexican States
5.625%, 1/15/17 680 689,180
------------
1,775,891
------------
Agencies - 0.1%
Korea Development Bank
5.75%, 9/10/13 200 206,662
------------
Total Government-Related - Non-U.S. Issuers
(cost $1,973,671) 1,982,553
------------
ASSET-BACKED SECURITIES - 1.0%
Home Equity Loans - Floating Rate - 0.6%
Credit-Based Asset Servicing & Securities,
Inc.
Series 2005-CB7, Class AF2
5.147%, 11/25/35 (e) 83 81,906
Household Home Equity Loan trust
Series 2007-1, Class M1
5.329%, 3/20/36 (d) 365 255,500
Newcastle Mortgage Securities Trust
Series 2007-1, Class 2A1
4.919%, 4/25/37 (d) 301 287,611
Option One Mortgage Loan Trust
Series 2007-2, Class M1
5.225%, 3/25/37 (d) 125 77,575
RAAC Series
Series 2006-SP3, Class A1
4.945%, 8/25/36 (d) 61 59,118
Soundview Home Equity Loan Trust
Series 2007-OPT2, Class 2A2
4.919%, 7/25/37 (d) 300 287,766
------------
1,049,476
------------
Home Equity Loans - Fixed Rate - 0.3%
Countrywide Asset-Backed Certificates
Series 2007-S1, Class A3
5.81%, 11/25/36 375 310,926
Credit-Based Asset Servicing & Securities,
Inc.
Series 2003-CB1, Class AF
3.45%, 1/25/33 (e) 184 181,502
Home Equity Mortgage Trust
Series 2005-4, Class A3
4.742%, 1/25/36 (e) 69 54,890
------------
547,318
------------
Autos - Fixed Rate - 0.1%
Capital One Prime Auto Receivables Trust
Series 2005-1, Class A3
4.32%, 8/15/09 89 88,710
------------
Other - Floating Rate - 0.0%
Libertas Preferred Funding Ltd.
Series 2007-3A, Class 2
5.893%, 4/09/47 (b)(d)(f) 260 26,000
------------
Total Asset-Backed Securities
(cost $2,157,277) 1,711,504
------------
INFLATION-LINKED SECURITIES - 0.9%
U.S. Treasury Notes
2.375%, 4/15/11 (TIPS) 1,437 1,497,596
(cost $1,419,144) ------------
NON-CONVERTIBLE - PREFERRED STOCKS - 0.6%
Utility - 0.3%
Electric - 0.3%
Dte Energy Trust I
7.80%A 20,000 499,000
------------
Industrial - 0.1%
Communications - Telecommunications - 0.1%
Centaur Funding Corp.
Zero Coupon (b) 200 232,125
------------
Financial Institutions - 0.1%
Banking - 0.1%
Royal Bank of Scotland Group PLC
Zero Coupon 10,000 179,500
------------
Non Corporate Sectors - 0.1%
Agencies - Government Sponsored - 0.1%
Federal Home Loan Mortgage Corp.
Zero Coupon 2,225 58,184
Federal National Mortgage Association
8.25%A 2,675 68,881
------------
127,065
------------
Total Non-Convertible - Preferred Stocks
(cost $1,105,116) 1,037,690
------------
GOVERNMENT-RELATED - U.S. AGENCIES - 0.5%
Agency Debentures - 0.5%
Federal Home Loan Bank
5.00%, 11/17/17 $ 655 679,128
Federal Home Loan Mortgage Corp.
5.125%, 11/17/17 245 255,643
------------
Total Government-Related - U.S. Agencies
(cost $919,607) 934,771
------------
GOVERNMENT-RELATED - U.S. OTHER ISSUERS - 0.2%
Texas - 0.2%
Dallas-Fort Worth Int'l Arpt Fac Impr
Corp. MBIA FSA
7.07%, 11/01/24
(cost $409,203) 400 413,528
------------
MORTGAGE CMO'S - 0.1%
Non-Agency Fixed Rate - 0.1%
Deutsche Mortgage Securities, Inc.
Series 2005-WF1, Class 1A1
5.054%, 6/26/35 (b) 146 144,874
------------
Non-Agency Adjustable Rate - 0.0%
Countrywide Alternative Loan Trust
Series 2007-OA3, Class M1
5.175%, 4/25/47 (d) 110 72,375
------------
Total Mortgage CMO's
(cost $253,735) 217,249
------------
SHORT-TERM INVESTMENTS - 1.0%
Time Deposit - 1.0%
The Bank of New York Mellon Corp.
3.25%, 1/02/08
(cost $1,678,000) 1,678 1,678,000
------------
Total Investments - 97.4%
(cost $148,274,647) 166,033,290
Other assets less liabilities - 2.6% 4,433,360
------------
Net Assets - 100.0% 170,466,650
------------
(a) Non-income producing security.
(b) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities are considered liquid and may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At December 31, 2007, the aggregate market value of these
securities amounted to $6,547,551 or 3.8% of net assets.
(c) Variable rate coupon, rate shown as of December 31, 2007.
(d) Floating Rate Security. Stated interest rate was in effect at December 31,
2007.
(e) Coupon rate adjusts periodically based upon a predetermined schedule.
Stated interest rate in effect at December 31, 2007.
(f) Illiquid security, valued at fair value. (See note A)
Glossary:
ADR - American Depositary Receipt
FSA - Financial Security Assurance Inc.
MBIA - Municipal Bond Investors Assurance
TIPS - Treasury Inflation Protected Security
FINANCIAL FUTURES CONTRACTS (see Note D)
Value at Unrealized
Number of Expiration Original December 31, Appreciation/
Type Contracts Month Value 2007 (Depreciation)
- ---------------------------------------------------------------------------------------
Purchased Contracts
EURO
STOXX 50 March
Index 8 2008 $516,316 $518,736 $ 2,420
FORWARD CURRENCY EXCHANGE CONTRACTS (see Note D)
U.S. $
Contract Value on U.S. $ Value at Unrealized
Amount Origination December 31, Appreciation/
(000) Date 2007 (Depreciation)
- --------------------------------------------------------------------------------
Buy Contracts:
Swedish Krona
settling 1/17/08 3,715 $ 568,184 $ 574,897 $ 6,712
Sale Contracts:
Japanese Yen
settling 1/08/08 385,336 3,517,796 3,451,649 66,147
Mexican Nuevo Peso
settling 1/28/08 14,654 1,334,696 1,340,134 (5,439)
Polish Zloty
settling 3/06/08 1,747 698,461 709,282 (10,822)
Swedish Krona
settling 1/17/08 3,715 580,101 574,897 5,204
- ----------
(a) Position, or a portion thereof, has been segregated to collateralize
forward currency exchange contracts. The aggregate market value of these
securities amounted to $8,247,721.
(b) Non-income producing security.
(c) Floating Rate Security. Stated interest rate was in effect at December 31,
2007.
(d) Variable rate coupon, rate shown as of December 31, 2007.
(e) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities are considered liquid and may be resold in
transactions exempt from registration, normally to qualified institutional
buyers. At December 31, 2007, the aggregate market value of these
securities amounted to $2,627,236 or 1.2% of net assets.
(f) Coupon rate adjusts periodically based upon a predetermined schedule.
Stated interest rate in effect at December 31, 2007.
An amount equivalent to U.S. $14,474 has been segregated to collateralize
margin requirements for the open futures contracts at December 31, 2007.
Currency Abbreviations:
JPY - Japanese Yen
MXN - Mexican Peso
PLN - Polish Zloty
Glossary:
ADR - American Depositary Receipt
FSA - Financial Security Assurance, Inc.
MBIA - Municipal Bond Investors Assurance
TIPS - Treasury Inflation-Protected Security
See notes to financial statments.
STATEMENT OF OPERATIONS
PRO FORMA ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND BALANCED WEALTH STRATEGY PORTFOLIO
AllianceBernstein Variable Products Series Fund Balanced Wealth Strategy Portfolio
Twelve Months Ended December 31, 2007 (unaudited) AllianceBernstein Variable Products Series Fund Balanced Shares Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Pro Forma
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products Variable Products Variable Products
Series Fund Series Fund Series Fund
Balanced Wealth Balanced Shares Balanced Wealth
Strategy Portfolio Portfolio Adjustments Strategy Portfolio
-------------------- ------------------- ------------ -------------------
INVESTMENT INCOME
Interest (net of foreign taxes withheld
of $95 and $0, respectively) $ 3,178,652 $ 3,830,074 $ -0- $ 7,008,726
Dividends (net of foreign taxes withheld
of $96,899 and $3,185, respectively) 2,135,969 2,421,960 -0- 4,557,929
-------------------- ------------------- ------------ -------------------
5,314,621 6,252,034 -0- 11,566,655
-------------------- ------------------- ------------ -------------------
EXPENSES
Advisory fee (see Note C) 939,791 1,059,633 -0- 1,999,424
Distribution fee - Class B 409,112 105,170 -0- 514,282
Transfer agency 2,105 1,838 (1,762) 2,181
Custodian 266,655 147,974 (117,081) 297,548
Administrative 94,000 94,000 (94,000) 94,000
Audit & Legal 58,513 55,827 (54,340) 60,000
Printing 28,685 41,161 (19,846) 50,000
Directors' fees 1,550 1,550 (1,550) 1,550
Miscellaneous 17,242 5,674 (2,916) 20,000
-------------------- ------------------- ------------ -------------------
Total expenses 1,817,653 1,512,827 (291,495) 3,038,985
Less: expenses waived and reimbursed by
the Adviser (see Note C) (116,796) -0- 116,796 -0-
-------------------- ------------------- ------------ -------------------
Net expenses 1,700,857 1,512,827 (174,699) 3,038,985
-------------------- ------------------- ------------ -------------------
Net investment income 3,613,764 4,739,207 174,699 8,527,670
-------------------- ------------------- ------------ -------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain (loss) on:
Investment transactions 5,795,832 14,787,087 -0- 20,582,919
Futures 67,564 -0- -0- 67,564
Foreign currency transactions 146,216 -0- -0- 146,216
Net change in unrealized
appreciation/depreciation of:
Investments (2,158,259)(a) (13,736,973) -0- (15,895,232)
Futures (2,781) -0- -0- (2,781)
Foreign currency denominated assets and
liabilities 1,513 -0- -0- 1,513
-------------------- ------------------- ------------ -------------------
Net gain on investment and foreign
currency transactions 3,850,085 1,050,114 -0- 4,900,199
-------------------- ------------------- ------------ -------------------
Contribution from Adviser -0- 352,186 -0- 352,186
-------------------- ------------------- ------------ -------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 7,463,849 $ 6,141,507 $ 174,699 $ 13,780,055
==================== =================== ============ ===================
- --------------------------------------------------------------------------------
(a) Net of accrued foreign capital gain taxes of $1,104.
See Notes to Pro Forma AllianceBernstein Variable Products Series Fund
Balanced Wealth Strategy Portfolio.
STATEMENT OF ASSETS AND LIABILITIES
PRO FORMA ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND BALANCED WEALTH STRATEGY PORTFOLIO
AllianceBernstein Variable Products Series Fund Balanced Wealth Strategy Portfolio
December 31, 2007 (unaudited) AllianceBernstein Variable Products Series Fund Balanced Shares Portfolio
- --------------------------------------------------------------------------------------------------------------------------------
Pro Forma
AllianceBernstein AllianceBernstein AllianceBernstein
Variable Products Variable Products Variable Products
Series Fund Series Fund Series Fund
Balanced Wealth Balanced Shares Balanced Wealth
Strategy Portfolio Portfolio Adjustments Strategy Portfolio
------------------ ---------------- ---------------- -------------------
ASSETS
Investments in securities, at value
(cost $344,173,417) $ 208,363,405 $ 166,033,290 $ -0- $ 374,396,695
Cash 1,040 46 -0- 1,086
Foreign cash, at value (cost $665,922) 713,326(a) -0- -0- 713,326(a)
Unrealized appreciation of forward
currency exchange contracts 78,063 -0- -0- 78,063
Receivable for investment securities sold 3,032,531 3,984,426 -0- 7,016,957
Receivable for capital stock sold 997,136 6,374 -0- 1,003,510
Dividends and interest receivable 802,380 845,189 -0- 1,647,569
---------------- ---------------- ---------------- ----------------
Total assets 213,987,881 170,869,325 -0- 384,857,206
---------------- ---------------- ---------------- ----------------
LIABILITIES
Unrealized depreciation of forward
currency exchange contracts 16,261 -0- -0- 16,261
Payable for investment securities
purchased and foreign currency contracts 2,255,160 -0- -0- 2,255,160
Advisory fee payable 138,373 80,896 -0- 219,269
Custodian fee payable 57,387 50,426 -0- 107,813
Distribution fee payable 44,055 8,357 -0- 52,412
Payable for capital stock redeemed 13,637 179,228 -0- 192,865
Printing fee payable 5,172 53,466 -0- 58,638
Payable for variation margin on futures
contracts 1,052 -0- -0- 1,052
Transfer Agent fee payable 116 116 -0- 232
Administrative fee payable -0- 23,749 -0- 23,749
Accrued expenses 6,247 6,437 -0- 12,684
---------------- ---------------- ---------------- ----------------
Total liabilities 2,537,460 402,675 -0- 2,940,135
---------------- ---------------- ---------------- ----------------
NET ASSETS $ 211,450,421 $ 170,466,650 $ -0- $ 381,917,071
---------------- ---------------- ---------------- ----------------
COMPOSITION OF NET ASSETS
Capital stock, at par $ 16,309 $ 8,567 $ -0- $ 24,876
Additional paid-in capital 191,255,093 133,507,905 -0- 324,762,998
Undistributed net investment income
investment income 2,682,853 4,719,229 -0- 7,402,082
Accumulated net realized gain (loss) on
investment and foreign currency
transactions 4,957,255 14,472,306 -0- 19,429,561
Net unrealized appreciation (depreciation)
of investments and foreign currency
denominated assets and liabilities 12,538,911 17,758,643 -0- 30,297,554
---------------- ---------------- ---------------- ----------------
$ 211,450,421 $ 170,466,650 $ -0- $ 381,917,071
---------------- ---------------- ---------------- ----------------
CLASS A SHARES
Net Assets (b) $ 9,986 $ 131,662,500 (68,609) $ 131,603,877
Shares of capital stock outstanding 765 6,606,433 3,482,932 10,090,130
---------------- ---------------- ---------------- ----------------
Net asset value per share $ 13.05 $ 19.93 $ 13.04
---------------- ---------------- ----------------
CLASS B SHARES
Net Assets (b) $ 211,440,435 $ 38,804,150 (130,391) $ 250,114,194
Shares of capital stock outstanding 16,308,472 1,960,464 1,030,869 19,299,805
---------------- ---------------- ---------------- ----------------
Net asset value per share $ 12.97 $ 19.79 $ 12.96
---------------- ---------------- ----------------
- --------------------------------------------------------------------------------
See Notes to Pro Forma AllianceBernstein Variable Products Series Fund Balanced
Wealth Strategy Portfolio.
(a) An amount equivalent to U.S. $38,598 has been segregated to collateralize
margin requirements for the open futures contracts at December 31, 2007.
(b) Includes adjustment for estimated proxy costs.
NOTES TO FINANCIAL STATEMENTS
PRO FORMA ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND
BALANCED WEALTH STRATEGY PORTFOLIO
December 31, 2007 (unaudited)
NOTE A: General
The Pro Forma AllianceBernstein Variable Products Series Fund Balanced Wealth
Strategy Portfolio Financial Statements give effect to the proposed acquisition
(the "Acquisition") of the assets and liabilities of AllianceBernstein Variable
Products Series Fund Balanced Shares Portfolio (the "Acquired Portfolio") by
AllianceBernstein Variable Products Series Fund Balanced Wealth Strategy
Portfolio (the "Portfolio" or "Acquiring Portfolio") pursuant to the Agreement
and Plan of Reorganization. The Acquisition would be accomplished by a tax-free
exchange of the assets and liabilities of AllianceBernstein Variable Products
Series Fund Balanced Shares Portfolio for shares of the Portfolio.
The AllianceBernstein Variable Products Series Fund (the "Fund") was
incorporated under the laws of the state of Maryland on November 17, 1987. The
Portfolio's unaudited Pro Forma Portfolio of Investments, Statement of Assets
and Liabilities and Statement of Operations are prepared as though the
Acquisition was effective for the period January 1, 2007 - December 31, 2007.
You should read them in conjunction with the Portfolio's historical financial
statements, which are included in the Portfolio's Statement of Additional
Information. The Portfolio's Pro Forma Statement of Operations reflects the
assumption that certain expenses would be lower for the combined Portfolio as a
result of the Acquisition. Each Portfolio will bear the expenses of the
Acquisition on a relative net asset basis, including the cost of proxy
solicitation.
NOTE B: Significant Accounting Policies
The Portfolio's Pro Forma financial statements have been prepared in conformity
with U.S. generally accepted accounting principles, which require management to
make certain estimates and assumptions that affect the reported amounts of
assets and liabilities in the financial statements and amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
1. Security Valuation
Portfolio securities are valued at their current market value determined on the
basis of market quotations or, if market quotations are not readily available or
are deemed unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors.
In general, the market value of securities which are readily available and
deemed reliable are determined as follows. Securities listed on a national
securities exchange (other than securities listed on The NASDAQ Stock Market,
Inc. ("NASDAQ")) or on a foreign securities exchange are valued at the last sale
price at the close of the exchange or foreign securities exchange. If there has
been no sale on such day, the securities are valued at the mean of the closing
bid and asked prices on such day. Securities listed on more than one exchange
are valued by reference to the principal exchange on which the securities are
traded; securities listed only on NASDAQ are valued in accordance with the
NASDAQ Official Closing Price; listed put or call options are valued at the last
sale price. If there has been no sale on that day, such securities will be
valued at the closing bid prices on that day; open futures contracts and options
thereon are valued using the closing settlement price or, in the absence of such
a price, the most recent quoted bid price. If there are no quotations available
for the day of valuation, the last available closing settlement price is used;
securities traded in the over-the-counter market ("OTC") are valued at the mean
of the current bid and asked prices as reported by the National Quotation Bureau
or other comparable sources; U.S. Government securities and other debt
instruments having 60 days or less remaining until maturity are valued at
amortized cost if their original maturity was 60 days or less or by amortizing
their fair value as of the 61st day prior to maturity if their original term to
maturity exceeded 60 days; fixed-income securities, including mortgage backed
and asset backed securities, may be valued on the basis of prices provided by a
pricing service or at a price obtained from one or more of the major
broker/dealers. In cases where broker/dealer quotes are obtained,
AllianceBernstein L.P. (the "Adviser") may establish procedures whereby changes
in market yields or spreads are used to adjust, on a daily basis, a recently
obtained quoted price on a security; and OTC and other derivatives are valued on
the basis of a quoted bid price or spread from a major broker/dealer in such
security.
Securities for which market quotations are not readily available (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not limited
to, information obtained by contacting the issuer, analysts, analysis of the
issuer's financial statements or other available documents. In addition, the
Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities. To account for this, the Fund may frequently value
many of its foreign equity securities using fair value prices based on third
party vendor modeling tools to the extent available.
2. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward currency exchange contracts are translated into U.S. dollars at the mean
of the quoted bid and asked prices of such currencies against the U.S. dollar.
Purchases and sales of portfolio securities are translated into U.S. dollars at
the rates of exchange prevailing when such securities were acquired or sold.
Income and expenses are translated into U.S. dollars at rates of exchange
prevailing when accrued.
Net realized gain or loss on foreign currency transactions represents foreign
exchange gains and losses from sales and maturities of foreign fixed income
investments, foreign currency exchange contracts, holding of foreign currencies,
currency gains or losses realized between the trade and settlement dates on
foreign investment transactions, and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the Portfolio's
books and the U.S. dollar equivalent amounts actually received or paid. Net
unrealized currency gains and losses from valuing foreign currency denominated
assets and liabilities at period end exchange rates are reflected as a component
of net unrealized appreciation and depreciation of investments and foreign
currency denominated assets and liabilities.
3. Taxes
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required. The Portfolio may be subject to taxes imposed by countries in which it
invests. Such taxes are generally based on income and/or capital gains earned or
repatriated. Taxes are accrued and applied to net investment income, net
realized gains and net unrealized appreciation/depreciation as such income
and/or gains are earned.
4. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Portfolio
is informed of the dividend. Interest income is accrued daily. Investment
transactions are accounted for on the trade date securities are purchased or
sold. Investment gains and losses are determined on the identified cost basis.
The Portfolio amortizes premiums and accretes discounts as adjustments to
interest income.
5. Class Allocations
All income earned and expenses incurred by the Portfolio are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Portfolio represented by the net assets of such class, except for class
specific expenses which are allocated to the respective class. Realized and
unrealized gains and losses are allocated among the various share classes based
on their respective net assets.
6. Dividends and Distributions
The Portfolio declares and distributes dividends and distributions from net
investment income and net realized gains, respectively, if any, at least
annually. Income dividends and capital gains distributions to shareholders are
recorded on the ex-dividend date.
Income dividends and capital gains distributions are determined in accordance
with federal tax regulations and may differ from those determined in accordance
with U.S. generally accepted accounting principles. To the extent these
differences are permanent, such amounts are reclassified within the capital
accounts based on their federal tax basis treatment; temporary differences do
not require such reclassification.
Any income and/or capital gain distributions (if necessary) on the Acquired
Portfolio would be made to shareholders of the Portfolio prior to the merger
date.
7. Repurchase Agreements
It is the policy of the Portfolio that its custodian or designated sub-custodian
take control of securities as collateral under repurchase agreements and to
determine on a daily basis that the value of such securities are sufficient to
cover the value of the repurchase agreements. If the seller defaults and the
value of the collateral declines or if bankruptcy proceedings are commenced with
respect to the seller of the security, realization of collateral by the
Portfolio may be delayed or limited.
NOTE C: Advisory Fee and Other Transactions with Affiliates
Under the terms of the investment advisory agreement, the Portfolio pays the
Adviser an advisory fee at an annual rate of .55% of the first $2.5 billion,
..45% of the next $2.5 billion and .40% in excess $5 billion, of the Portfolio's
average daily net assets. The fee is accrued daily and paid monthly.
The Adviser has agreed to waive its fees and bear certain expenses to the extent
necessary to limit total operating expenses on an annual basis to .75% and 1.00%
of the daily average net assets for Class A and Class B shares, respectively.
Prior to February 12, 2007, the Portfolio's total operating expenses on an
annual basis were limited to 1.20% and 1.45% of the daily average net assets for
Class A and Class B shares, respectively. For the year ended December 31, 2007
the Adviser waived advisory fees in the amount of $22,796.
Pursuant to the advisory agreement, the Portfolio has agreed to reimburse the
Adviser for the cost of providing the Portfolio with certain legal and
accounting services. Due to the Adviser's agreement to limit total operating
expenses as described above, the Adviser waived reimbursement for such services
in the amount of $94,000 for the year ended December 31, 2007.
The Portfolio compensates AllianceBernstein Investor Services, Inc. ("ABIS"), a
wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for
providing personnel and facilities to perform transfer agency services for the
Portfolio.
NOTE D: Distribution Plan
The Portfolio has adopted a Distribution Plan (the "Plan") for Class B shares
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the Plan
the Portfolio pays distribution and servicing fees to AllianceBernstein
Investments, Inc. (the "Distributor"), a wholly owned subsidiary of the Adviser,
at an annual rate of up to .50% of the Portfolio's average daily net assets
attributable to Class B shares. The fees are accrued daily and paid monthly. The
Board of Directors currently limits payments under the Plan to .25% of the
Portfolio's average daily net assets attributable to Class B shares. The Plan
provides that the Distributor will use such payments in their entirety for
distribution assistance and promotional activities.
NOTE E: Capital Stock
The pro-forma combining net asset value per share assumes the issuance of
Acquiring Portfolio shares to Acquired Portfolio shareholders in connection with
the proposed merger. The number of shares assumed to be issued is equal to the
net asset value per share of the Acquired Portfolio divided by the net asset
value per share of the Acquiring Portfolio as of December 31, 2007. The
pro-forma number of shares outstanding, by class for the combined entity
consists of the following at December 31, 2007.
Shares of Additional Shares Total Shares
Acquiring Portfolio Assumed Issued Outstanding
Class of Shares Pre-Combination with Merger Post-Combination
- ---------------- ---------------------- ------------------ -----------------
Class A 765 10,089,365 10,090,130
Class B 16,308,472 2,991,333 19,299,805
PART C
OTHER INFORMATION
Item 15. Indemnification
It is the Registrant's policy to indemnify its directors and officers,
employees and other agents to the maximum extent permitted by Section 2-418 of
the General Corporation Law of the State of Maryland, which is incorporated by
reference herein and as set forth in Article EIGHTH of Registrant's Charter,
filed as Exhibit (a), Article IX of the Registrant's Amended and Restated
By-Laws filed as Exhibit (b) and Section 9 of the Distribution Services
Agreement filed as Exhibit (e)(1) and Class B Distribution Services Agreement
filed as Exhibit (e)(2) in response to Item 23 of the Registrant's Registration
Statement filed on Form N-1A (filed Nos. 33-18647 and 811-5398), as set forth
below. The Adviser's liability for any loss suffered by the Registrant or its
shareholders is set forth in Section 4 of the Advisory Agreement filed as
Exhibit (d)(1) in response to Item 23 of the Registrant's Registration Statement
filed on Form N-1A (filed Nos. 33-18647 and 811-5398), as set forth below.
Article EIGHTH of the Registrant's Charter reads as follows:
EIGHTH: (1) To the maximum extent that Maryland law in effect
from time to time permits limitation of the liability of
directors and officers of a corporation, no present or former
director or officer of the Corporation shall be liable to the
Corporation or its stockholders for money damages.
(2) The Corporation shall have the power, to the maximum extent
permitted by Maryland law in effect from time to time, to
obligate itself to indemnify, and to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to, (a)
any individual who is a present or former director or officer of
the Corporation or (b) any individual who, while a director or
officer of the Corporation and at the request of the Corporation,
serves or has served as a director, officer, partner or trustee
of another corporation, real estate investment trust,
partnership, joint venture, trust, employee benefit plan or any
other enterprise from and against any claim or liability to which
such person may become subject or which such person may incur by
reason of his status as a present or former director or officer
of the Corporation. The Corporation shall have the power, with
the approval of the Board of Directors, to provide such
indemnification and advancement of expenses to a person who
served a predecessor of the Corporation in any of the capacities
described in (a) or (b) above and to any employee or agent of the
Corporation or a predecessor of the Corporation.
(3) The provisions of this Article EIGHTH shall be subject to the
limitations of the Investment Company Act.
(4) Neither the amendment nor repeal of this Article EIGHTH, nor
the adoption or amendment of any other provision of the Charter
or Bylaws inconsistent with this Article EIGHTH, shall apply to
or affect in any respect the applicability of the preceding
sections of this Article EIGHTH with respect to any act or
failure to act which occurred prior to such amendment, repeal or
adoption.
The Advisory Agreement between the Registrant and
AllianceBernstein L.P. provides that AllianceBernstein L.P. will
not be liable under such agreements for any mistake of judgment
or in any event whatsoever except for lack of good faith and that
nothing therein shall be deemed to protect, or purport to
protect, AllianceBernstein L.P. against any liability to
Registrant or its security holders to which it would otherwise be
subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties thereunder, or by
reason of reckless disregard of its obligations or duties
thereunder.
The Distribution Services Agreement between the Registrant and
AllianceBernstein Investments, Inc. ("ABI") provides that the
Registrant will indemnify, defend and hold ABI, and any person
who controls it within the meaning of Section 15 of the
Securities Act of 1933, as amended (the "Securities Act"), free
and harmless from and against any and all claims, demands,
liabilities and expenses which ABI or any controlling person may
incur arising out of or based upon any alleged untrue statement
of a material fact contained in Registrant's Registration
Statement or Prospectus or Statement of Additional Information or
arising out of, or based upon any alleged omission to state a
material fact required to be stated in either thereof or
necessary to make the statements in any thereof not misleading,
provided that nothing therein shall be so construed as to protect
ABI against any liability to Registrant or its security holders
to which it would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
its duties, or be reason of reckless disregard of its obligations
or duties thereunder. The foregoing summaries are qualified by
the entire text of Registrant's Articles of Incorporation, the
Advisory Agreement between the Registrant and AllianceBernstein
L.P. and the Distribution Services Agreement between the
Registrant and ABI.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that,
in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
In accordance with Release No. IC-11330 (September 2, 1980), the
Registrant will indemnify its directors, officers, investment
manager and principal underwriters only if (1) a final decision
on the merits was issued by the court or other body before whom
the proceeding was brought that the person to be indemnified (the
indemnitee) was not liable by reason or willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office (disabling conduct) or (2)
a reasonable determination is made, based upon a review of the
facts, that the indemnitee was not liable by reason of disabling
conduct, by (a) the vote of a majority of a quorum of the
directors who are neither interested persons of the Registrant as
defined in section 2(a)(19) of the Investment Company Act of 1940
nor parties to the proceeding (disinterested, non-party
directors), or (b) an independent legal counsel in a written
opinion. The Registrant will advance attorneys fees or other
expenses incurred by its directors, officers, investment adviser
or principal underwriters in defending a proceeding, upon the
undertaking by or on behalf of the indemnitee to repay the
advance unless it is ultimately determined that he is entitled to
indemnification and, as a condition to the advance, (1) the
indemnitee shall provide a security for his undertaking, (2) the
Registrant shall be insured against losses arising by reason of
any lawful advances, or (3) a majority of a quorum of
disinterested, non-party directors of the Registrant, or an
independent legal counsel in a written opinion, shall determine,
based on a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that
the indemnitee ultimately will be found entitled to
indemnification.
ARTICLE IX of the Registrant's Amended and Restated By-laws reads
as follows:
ARTICLE IX. Indemnification.
To the maximum extent permitted by Maryland law in effect from
time to time, the Corporation shall indemnify and, without
requiring a preliminary determination of the ultimate entitlement
to indemnification, shall pay or reimburse reasonable expenses in
advance of final disposition of a proceeding to (a) any
individual who is a present or former director or officer of the
Corporation and who is made or threatened to be made a party to
the proceeding by reason of his or her service in any such
capacity or (b) any individual who, while a director or officer
of the Corporation and at the request of the Corporation, serves
or has served as a director, officer, partner or trustee of
another corporation, real estate investment trust, partnership,
joint venture, trust, employee benefit plan or other enterprise
and who is made or threatened to be made a party to the
proceeding by reason of his or her service in any such capacity.
The Corporation may, with the approval of its Board of Directors
or any duly authorized committee thereof, provide such
indemnification and advance for expenses to a person who served a
predecessor of the Corporation in any of the capacities described
in (a) or (b) above and to any employee or agent of the
Corporation or a predecessor of the Corporation. The termination
of any claim, action, suit or other proceeding involving any
person, by judgment, settlement (whether with or without court
approval) or conviction or upon a plea of guilty or nolo
contendere, or its equivalent, shall not create a presumption
that such person did not meet the standards of conduct required
for indemnification or payment of expenses to be required or
permitted under Maryland law, these Bylaws or the Charter. Any
indemnification or advance of expenses made pursuant to this
Article shall be subject to applicable requirements of the 1940
Act. The indemnification and payment of expenses provided in
these Bylaws shall not be deemed exclusive of or limit in any way
other rights to which any person seeking indemnification or
payment of expenses may be or may become entitled under any
bylaw, regulation, insurance, agreement or otherwise.
Neither the amendment nor repeal of this Article, nor the
adoption or amendment of any other provision of the Bylaws or
Charter inconsistent with this Article, shall apply to or affect
in any respect the applicability of the preceding paragraph with
respect to any act or failure to act which occurred prior to such
amendment, repeal or adoption.
The Registrant participates in a joint directors and officers
liability insurance policy issued by the ICI Mutual Insurance
Company. Coverage under this policy has been extended to
directors, trustees and officers of the investment companies
managed by AllianceBernstein L.P. Under this policy, outside
trustees and directors are covered up to the limits specified for
any claim against them for acts committed in their capacities as
trustee or director. A pro rata share of the premium for this
coverage is charged to each investment company and to the
Adviser.
ITEM 16. EXHIBITS:
(1) (a) Articles of Amendment and Restatement of the Registrant
dated February 1, 2006 - Incorporated by reference to
Exhibit (a)(2) to Post-Effective Amendment No. 41 of
Registrant's Registration Statement on Form N-1A (File Nos.
33-18647 and 811-5398) filed with the Securities and
Exchange Commission on March 1, 2006.
(b) Articles of Amendment of Articles of Incorporation of the
Registrant, dated January 9, 2008 and filed January 16, 2008
- Incorporated by reference to Exhibit (a)(2) to
Post-Effective Amendment No. 44 of Registrant's Registration
Statement on Form N-1A (File Nos. 33-18647 and 811-5398),
filed with the Securities and Exchange Commission on March
3, 2008.
(c) Articles of Amendment of Articles of Incorporation of the
Registrant, dated April 28, 2008 and filed April 28, 2008 -
Incorporated by reference to Exhibit (a)(3) to
Post-Effective Amendment No. 46 of Registrant's Registration
Statement on Form N-1A (File Nos. 33-18647 and 811-5398),
filed with the Securities and Exchange Commission on April
28, 2008.
(d) Articles of Amendment of Articles of Incorporation of the
Registrant, dated April 28, 2008 and filed April 28, 2008 -
Incorporated by reference to Exhibit (a)(4) to
Post-Effective Amendment No. 46 of Registrant's Registration
Statement on Form N-1A (File Nos. 33-18647 and 811-5398),
filed with the Securities and Exchange Commission on April
28, 2008.
(2) Amended and Restated By-Laws of the Registrant -
Incorporated by reference to Exhibit 99.77Q1 - Other
Exhibits to Form NSAR-A for the Registrant filed with the
Securities and Exchange Commission on August 29, 2006.
(3) Not applicable.
(4) Form of Plan of Acquisition and Liquidation between
AllianceBernstein Balanced Wealth Strategy Portfolio and
AllianceBernstein Balanced Shares Portfolio, each a series
of AllianceBernstein Variable Products Series Fund, Inc. -
Constitutes Appendix F to Part A hereof.
(5) Not applicable.
(6) (a) Form of Investment Advisory Agreement between Registrant and
AllianceBernstein L.P. - Incorporated by reference to
Exhibit (d)(1) to Post-Effective Amendment No. 40 of
Registrant's Registration Statement on Form N-1A (File Nos.
33-18647 and 811-5398) filed with the Securities and
Exchange Commission on April 27, 2005.
(b) Sub-Advisory Agreement between AllianceBernstein L.P. and
Law, Dempsey & Company Limited, relating to the Global Bond
Portfolio - Incorporated by reference to Exhibit (5)(b) to
Post-Effective Amendment No. 22 of Registrant's Registration
Statement on Form N-1A (File Nos. 33-18647 and 811-5398)
filed with the Securities and Exchange Commission on April
29, 1998.
(7) (a) Distribution Services Agreement between the Registrant and
AllianceBernstein Investments, Inc. - Incorporated by
reference to Exhibit (6) to Post-Effective Amendment No. 22
of Registrant's Registration Statement on Form N-1A (File
Nos. 33-18647 and 811-5398) filed with the Securities and
Exchange Commission on April 29, 1998.
(b) Class B Distribution Services Agreement between the
Registrant and AllianceBernstein Investments, Inc. -
Incorporated by reference to Exhibit (c)(2) to
Post-Effective Amendment No. 27 of Registrant's Registration
Statement on Form N-1A (File Nos. 33-18647 and 811-5398)
filed with the Securities and Exchange Commission on May 3,
1999.
(8) Not applicable.
(9) Custody Agreement between the Registrant and The Bank of New
York - Incorporated by reference to Exhibit (g)(1) to
Post-Effective Amendment No. 42 of Registrant's Registration
Statement on Form N-1A (File Nos. 33-18647 and 811-5398)
filed with the Securities and Exchange Commission on April
28, 2006.
(10) (a) Rule 12b-1 Class B Distribution Plan - Incorporated by
reference to Exhibit (m) to Post-Effective Amendment No. 27
of Registrant's Registration Statement on Form N-1A (File
Nos. 33-18647 and 811-5398) filed with the Securities and
Exchange Commission on May 3, 1999.
(b) Amended and Restated Rule 18f-3 Plan - Incorporated by
reference to Exhibit (n) to Post-Effective Amendment No. 36
of the Registrant's Registration Statement on Form N-1A
(File Nos. 33-18647 and 811-5398) filed with the Securities
and Exchange Commission on February 11, 2004.
(11) Form of Opinion and Consent of Seward & Kissel LLP regarding
the legality of securities being registered - Filed
herewith.
(12) Form of Opinion and Consent of Seward & Kissel LLP as to Tax
matters - To be filed by amendment.
(13) (a) Transfer Agency Agreement between the Registrant and
AllianceBernstein Investor Services, Inc. - Incorporated by
reference to Exhibit (9) to Post-Effective Amendment No. 22
of Registrant's Registration Statement on Form N-1A (File
Nos. 33-18647 and 811-5398) filed with the Securities and
Exchange Commission on April 29, 1998.
(b) Expense Limitation Undertaking by AllianceBernstein L.P. -
Incorporated by reference to Exhibit (h)(2) to
Post-Effective Amendment No. 40 of Registrant's Registration
Statement on Form N-1A (File Nos. 33-18647 and 811-5398)
filed with the Securities and Exchange Commission on April
27, 2005.
(c) Form of Expense Limitation Undertaking by AllianceBernstein
L.P. - Incorporated by reference to Post-Effective Amendment
No. 41 of Registrant's Registration Statement on Form N-1A
(File Nos. 33-18647 and 811-5398) filed with the Securities
and Exchange Commission on March 1, 2006.
(d) Code of Ethics for the Fund - Incorporated by reference to
Exhibit (p)(1) to Post-Effective Amendment No. 31 of
Registrant's Registration Statement on Form N-1A (File Nos.
33-18647 and 811-5398) filed with the Securities and
Exchange Commission on April 26, 2001.
(e) Code of Ethics for the AllianceBernstein L.P. and
AllianceBernstein Investments, Inc. - Incorporated by
reference to Exhibit (p)(2) to Post-Effective Amendment No.
4 of the Registration Statement on Form N-1A of The
AllianceBernstein Pooling Portfolios (File Nos. 333-120487
and 811-21673) filed with the Securities and Exchange
Commission on December 29, 2006.
(14) Consent of Independent Registered Public Accounting Firm -
Filed herewith.
(15) Not applicable.
(16) Powers of Attorney for: David H. Dievler, John H. Dobkin,
Michael J. Downey, William H. Foulk, Jr., D. James Guzy,
Nancy P. Jacklin, Marc O. Mayer, Marshall C. Turner, Jr. and
Earl D. Weiner - Incorporated by reference to Exhibit 16 of
Registrant's Registration on Form N-14 (File No.
333-149286), filed with the Securities and Exchange
Commission on February 15, 2008.
(17) Not applicable.
ITEM 17. Undertakings
(1) The undersigned registrant agrees that prior to any public
reoffering of the securities registered through the use of a
prospectus which is a part of this registration statement by
any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c) of the Securities Act 17
CFR 230.145(c), the reoffering prospectus will contain the
information called for by the applicable registration form
for reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other items
of the applicable form.
(2) The undersigned registrant agrees that every prospectus that
is filed under paragraph (1) above will be filed as a part
of an amendment to the registration statement and will not
be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each
post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein,
and the offering of the securities at that time shall be
deemed to be the initial bona fide offering of them.
(3) The undersigned registrant undertakes to file a
post-effective amendment to this registration statement upon
the closing of the Acquisition described in this
registration statement that contains an opinion of counsel
supporting the tax matters discussed in this registration
statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as the
Registrant has duly caused this Registration Statement on Form N-14 to be signed
on its behalf by the undersigned, duly authorized, in the City of New York and
State of New York, on the 26th day of June, 2008.
ALLIANCEBERNSTEIN VARIABLE
PRODUCTS SERIES FUND, INC.
By: Marc O. Mayer*
--------------
Marc O. Mayer
President
Pursuant to the requirements of the Securities Act of 1933, as amended
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated:
SIGNATURE TITLE DATE
--------- ----- ----
1. Principal Executive Officer
Marc O. Mayer* President and Chief
Executive Officer June 26, 2008
2. Principal Financial and
Accounting Officer
/s/ Joseph J. Mantineo Treasurer and
------------------------- Chief Financial
Joseph J. Mantineo Officer June 26, 2008
3. Majority of the Directors:
David H. Dievler*
John H. Dobkin*
William H. Foulk, Jr.*
Michael Downey*
D. James Guzy*
Nancy P. Jacklin*
Marc O. Mayer*
Marshall C. Turner, Jr.*
Earl D. Weiner*
*By: /s/ Andrew L. Gangolf June 26, 2008
-----------------------
Andrew L. Gangolf
(Attorney-in-fact)
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits
(11) Form of Opinion and Consent of Seward & Kissel LLP
(14) Consent of Independent Registered Public Accounting Firm
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