-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JOnivqgrLlIspfnwTPZbDhepmRbTxU26G6QGqNY4cBUDdsssztQh+0+AMUDatcma rnLyv7Ir8guU0ODOOCiqRQ== 0001379491-07-000080.txt : 20070509 0001379491-07-000080.hdr.sgml : 20070509 20070509102723 ACCESSION NUMBER: 0001379491-07-000080 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070228 FILED AS OF DATE: 20070509 DATE AS OF CHANGE: 20070509 EFFECTIVENESS DATE: 20070509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCEBERNSTEIN PORTFOLIOS CENTRAL INDEX KEY: 0000812015 IRS NUMBER: 000000000 FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-05088 FILM NUMBER: 07830733 BUSINESS ADDRESS: STREET 1: 500 PLAZA DRIVE STREET 2: C/O ALLIANCE CAPITAL MANAGEMENT LP CITY: SECAUCUS STATE: NJ ZIP: 07094 BUSINESS PHONE: 2013194105 MAIL ADDRESS: STREET 1: ALLIANCE CAPITAL MANAGEMENT LP STREET 2: 1345 AVENUE OF THE AMERICAS 31ST FL CITY: NEW YORK STATE: NY ZIP: 10105 FORMER COMPANY: FORMER CONFORMED NAME: ALLIANCE PORTFOLIOS DATE OF NAME CHANGE: 19930812 FORMER COMPANY: FORMER CONFORMED NAME: EQUITABLE FUNDS DATE OF NAME CHANGE: 19920703 0000812015 S000010510 AllianceBernstein Wealth Preservation Strategy C000029004 Class A ABPAX C000029005 Class B ABPBX C000029006 Class C ABPCX C000029007 Advisor Class ABPYX C000029008 Class R APPRX C000029009 Class K APPKX C000029010 Class I APPIX 0000812015 S000010511 AllianceBernstein Tax-Managed Wealth Preservation Strategy C000029011 Class A ACIAX C000029012 Class B ACIBX C000029013 Class C ACICX C000029014 Advisor Class ACIYX 0000812015 S000010512 AllianceBernstein Balanced Wealth Strategy C000029015 Class A ABWAX C000029016 Class B ABWBX C000029017 Class C ABWCX C000029018 Advisor Class ABWYX C000029019 Class R ABWRX C000029020 Class K ABWKX C000029021 Class I ABWIX 0000812015 S000010513 AllianceBernstein Tax-Managed Balanced Wealth Strategy C000029022 Class A AGIAX C000029023 Class B AGIBX C000029024 Class C AGICX C000029025 Advisor Class 0000812015 S000010514 AllianceBernstein Wealth Appreciation Strategy C000029026 Class A AWAAX C000029027 Class B AWABX C000029028 Class C AWACX C000029029 Advisor Class AWAYX C000029030 Class R AWARX C000029031 Class K AWAKX C000029032 Class I AWAIX 0000812015 S000010515 AllianceBernstein Tax-Managed Wealth Appreciation Strategy C000029033 Class A ATWAX C000029034 Class B ATWBX C000029035 Class C ATWCX C000029036 Advisor Class ATWYX N-CSRS 1 edg150856_sr.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-05088 THE ALLIANCEBERNSTEIN PORTFOLIOS (Exact name of registrant as specified in charter) 1345 Avenue of the Americas, New York, New York 10105 (Address of principal executive offices) (Zip code) Mark R. Manley AllianceBernstein L.P. 1345 Avenue of the Americas New York, New York 10105 (Name and address of agent for service) Registrant's telephone number, including area code: (800) 221-5672 Date of fiscal year end: August 31, 2007 Date of reporting period: February 28, 2007 ITEM 1. REPORTS TO STOCKHOLDERS. - ------------------------------------------------------------------------------- SEMI-ANNUAL REPORT - ------------------------------------------------------------------------------- AllianceBernstein Wealth Strategies Wealth Appreciation Strategy Balanced Wealth Strategy Wealth Preservation Strategy Semi-Annual Report February 28, 2007 [LOGO] ALLIANCEBERNSTEIN INVESTMENTS Investment Products Offered o Are Not FDIC Insured o May Lose Value o Are Not Bank Guaranteed The investment return and principal value of an investment in the Fund will fluctuate as the prices of the individual securities in which it invests fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund's prospectus, which contains this and other information, visit our web site at www.alliancebernstein.com or call your financial advisor or AllianceBernstein(R) at (800) 227-4618. Please read the prospectus carefully before you invest. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com. This shareholder report must be preceded or accompanied by the Fund's prospectus for individuals who are not current shareholders of the Fund. You may obtain a description of the Fund's proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AllianceBernstein's web site at www.alliancebernstein.com, or go to the Securities and Exchange Commission's (the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800) 227-4618. The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the Commission's Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. AllianceBernstein publishes full portfolio holdings for the Fund monthly at www.alliancebernstein.com. AllianceBernstein Investments, Inc. is an affiliate of AllianceBernstein L.P., the manager of the AllianceBernstein funds, and is a member of the NASD. AllianceBernstein(R) and the AB Logo are registered trademarks and service marks used by permission of the owner, AllianceBernstein L.P. April 17, 2007 Semi-Annual Report This report provides management's discussion of fund performance for the portfolios of AllianceBernstein Wealth Strategies (the "Strategies") for the semi-annual reporting period ended February 28, 2007. As of May 20, 2005, the Strategies invest in a combination of portfolios of the AllianceBernstein Pooling Portfolios ("Underlying Portfolios") representing a variety of asset classes and investment styles that are managed by AllianceBernstein L.P. (the "Adviser"). AllianceBernstein Wealth Appreciation Strategy Investment Objective and Policies AllianceBernstein Wealth Appreciation Strategy's investment objective is long-term growth of capital. The Strategy seeks to achieve its objective by investing in a combination of Underlying Portfolios representing a variety of asset classes and investment styles that are also managed by the Adviser. By allocating its assets among the Underlying Portfolios, the Strategy creates a portfolio that is designed as a solution for investors who seek equity returns without regard to taxes but also want broad diversification of the related risks across styles, capitalization ranges and geographic regions. Through investments in the Underlying Portfolios, the Adviser efficiently diversifies the Strategy between growth and value equity investment styles, and between U.S. and non-U.S. markets. Normally, the Strategy's targeted blend is an equal weighting of growth and value style Underlying Portfolios (50% each). Within each of the value and growth components, the Strategy's targeted blend is approximately 70% in Underlying Portfolios that invest in U.S. companies and the remaining 30% in non-U.S. companies. The Adviser will allow the relative weightings of the Strategy's investments in growth and value and U.S. and non-U.S. Underlying Portfolios to vary in response to markets, but ordinarily only by +/- 5% of the Strategy's net assets. Beyond those ranges, the Adviser will generally rebalance the portfolio toward the targeted blends. However, under extraordinary circumstances, such as when market conditions favoring one investment component are compelling, the range may expand to 10% of the Strategy's net assets. The Strategy's targeted blend may change from time to time without notice to shareholders based on the Adviser's assessment of market conditions. AllianceBernstein Balanced Wealth Strategy Investment Objective and Policies AllianceBernstein Balanced Wealth Strategy's investment objective is to achieve the highest total return consistent with the Adviser's determination of reasonable risk. The Strategy seeks to achieve its objective by investing in a combination of Underlying Portfolios representing a variety of asset classes and investment styles that are also managed by the Adviser. By allocating its assets among the Underlying Portfolios, the Strategy creates a portfolio that is designed as a solution for investors who seek a moderate tilt toward equity returns without regard to taxes but also want the risk diversification offered by debt securities and the broad diversification of their equity risk across styles, capitalization ranges and geographic regions. Through investments in the ALLIANCEBERNSTEIN WEALTH STRATEGIES o 1 Underlying Portfolios, the Adviser efficiently diversifies between the debt and equity components to produce the desired risk/return profile of the Strategy. The Strategy targets a weighting of 60% of Underlying Portfolios that invest primarily in equity securities and 40% of Underlying Portfolios that invest primarily in debt securities with a goal of providing moderate upside potential without excessive volatility. An investment in the Real Estate Underlying Portfolio is treated as 50% debt and 50% equity for the purpose of these allocations. Within the Strategy's equity component, the targeted blend is an equal weighting of Underlying Portfolios that invest primarily in growth and value style stocks (50% each), with approximately 70% of each equity style invested in Underlying Portfolios that invest in U.S. companies and the remaining 30% in Underlying Portfolios that invest in non-U.S. companies. The Adviser will allow the relative weightings of the Strategy's investments in equity and debt, growth and value, and in U.S. and non-U.S. company Underlying Portfolios to change in response to markets, only by +/- 5% of the Strategy's net assets. Beyond those ranges, the Adviser will rebalance the Strategy toward the targeted blend. However, under extraordinary circumstances, such as when market conditions favoring one investment style are compelling, the range may expand to 10% of the Strategy's net assets. The Strategy's targeted blend may change from time to time without notice to shareholders based on the Adviser's assessment of market conditions. The Underlying Portfolios' fixed-income securities will primarily be investment-grade debt securities, but is expected to include lower-rated securities ("junk bonds") and preferred stock. The Strategy will not invest more than 25% of its total assets in Underlying Portfolios investing in securities rated at the time of purchase below investment grade. AllianceBernstein Wealth Preservation Strategy Investment Objective and Policies AllianceBernstein Wealth Preservation Strategy's investment objective is to achieve a high total return without, in the opinion of the Adviser, undue risk to principal. The Strategy seeks to achieve its objective by investing in a combination of portfolios of the Underlying Portfolios representing a variety of asset classes and investment styles that are also managed by the Adviser. By allocating its assets among the Underlying Portfolios, the Strategy creates a portfolio that is designed as a solution for investors who seek some opportunities for equity returns without regard to taxes if the related risks are broadly diversified and overall portfolio volatility reflects a preponderance of debt securities. Through investments in the Underlying Portfolios, the Adviser efficiently diversifies between debt and equity components to produce the desired risk/return profile of the Strategy. The Strategy targets a weighting of 30% in Underlying Portfolios that invest primarily in equity securities and 70% in Underlying Portfolios that invest in debt securities with a goal of providing reduced volatility and modest upside potential. An investment in the Real Estate Underlying Portfolio is treated as 50% debt and 50% equity for the purpose of 2 o ALLIANCEBERNSTEIN WEALTH STRATEGIES these allocations. Within the Strategy's equity component, the targeted blend is an equal weighting of Underlying Portfolios that invest in growth and value style stocks (50% each), with approximately 70% of each equity style invested in Underlying Portfolios that invest in U.S. companies and the remaining 30% in Underlying Portfolios that invest in non-U.S. companies. The Adviser will allow the relative weightings of the Strategy's investments in equity and debt, growth and value, and in U.S. and non-U.S. company Underlying Portfolios to change in response to markets, but ordinarily only by +/-5% of the Strategy's net assets. Beyond those ranges, the Adviser will rebalance the Strategy toward the targeted blends. However, under extraordinary circumstances, such as when conditions favoring one investment style are compelling, the range may expand to 10% of the Strategy's net assets. The Strategy's targeted blend may change from time to time without notice to shareholders based on the Adviser's assessment of market conditions. All fixed-income securities of the Underlying Portfolios in which the Strategy invests will be of investment grade at the time of purchase. In the event that the rating of any security held by the Underlying Portfolios falls below investment grade, the Strategy will not be obligated to dispose of its investment in such Underlying Portfolio and may continue to hold such investment if, in the opinion of the Adviser, such investment is appropriate under the circumstances. Investment Results The tables on pages 7-9 show performance for each Strategy compared to their respective balanced benchmarks for the six- and 12-month periods ended February 28, 2007. Each Strategy's balanced benchmark is as follows: AllianceBernstein Wealth Appreciation Strategy, 70% Standard & Poor's (S&P) 500 Stock Index and 30% Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index; AllianceBernstein Balanced Wealth Strategy, 60% S&P 500 Stock Index and 40% Lehman Brothers (LB) U.S. Aggregate Index; and AllianceBernstein Wealth Preservation Strategy, 30% S&P 500 Stock Index and 70% LB U.S. Aggregate Index. Performance was solid for the Strategies for the six- and 12-month periods ended February 28, 2007. The Strategies all outperformed their respective balanced benchmarks for the six-month period ended February 28, 2007. AllianceBernstein Balanced Wealth Strategy and AllianceBernstein Wealth Preservation Strategy outperformed their respective balanced benchmarks for the 12-month period ended February 28, 2007, while AllianceBernstein Wealth Appreciation Strategy underperformed its balanced benchmark for the same time frame. The Strategies' approach of seeking return in not only the U.S. but also in the international equity markets contributed significantly to overall performance for the Strategies as international stocks outperformed U.S. stocks during the review period. International stocks, as represented by the MSCI EAFE Index, returned 12.17% and 21.07% for the six- and 12-month periods, respectively, while U.S. stocks, as represented by the S&P 500 Stock Index, returned 8.93% and 11.96% for ALLIANCEBERNSTEIN WEALTH STRATEGIES o 3 the same periods, respectively. However, in both U.S. and developed international markets, growth stocks underperformed value stocks by a significant margin and detracted from the Strategies' overall returns. The Strategies benefited from exposure to global REITs which returned 23.09% and 37.82% for the six- and 12-month periods, as measured by the FTSE EPRA/NAREIT Global Real Estate Index. The broad U.S. bond market performed in line with market yields. The LB U.S. Aggregate Index returned 3.66% and 5.54%, respectively, for the six- and 12-month periods, as bonds yields ended the reporting period roughly where they began. Market Review and Investment Strategy The six- and 12-month periods ended February 28, 2007 were strong for the global capital markets. Stocks and global REITs continued to produce sizable returns. Several factors provided fuel to the equity markets around the world, including solid economic growth, robust corporate earnings and booming merger and acquisition activity. As previously noted, international stocks outperformed U.S. stocks. As in the U.S. market, a strong fundamental picture provided support, aided by most major currencies strengthening against the dollar; therefore, non-U.S. stocks produced higher returns when translated into U.S. dollars. Emerging-market stocks, meanwhile, led both the U.S. and major developed markets thanks to robust country fundamentals. Global equity valuations between attractively priced and expensive stocks remain unusually compressed. With many companies posting strong earnings growth, investors have not felt the need to pay a premium for growth stocks. As value stocks continue to outperform, the value opportunity has declined and growth stocks have become more and more attractive. The Strategies' equity holdings remained positioned to take advantage of the opportunity presented in companies with strong growth prospects that are trading at unusually low premiums. While bonds posted moderate returns globally, high yield bonds and emerging market debt were exceptions. Both of these sectors benefited from continued strong demand for yield by investors. The high yield market was supported by strong corporate profitability, while emerging markets enjoyed continued strong country fundamentals. Overall, credit spreads remain historically low, and the Strategies' fixed-income positions are cautious in accordance with the diminished opportunity. The fixed-income positions continue to serve as portfolio stabilizers and complements to the Strategies' equity exposures. As always, the Strategies' Blend Investment Policy Team remains focused on its strategy of combining low correlation asset classes, blending growth and value investment styles, globalizing the Strategies' portfolios and ensuring each portfolio is aligned with its strategic asset allocation targets over time through a disciplined rebalancing process. 4 o ALLIANCEBERNSTEIN WEALTH STRATEGIES HISTORICAL PERFORMANCE An Important Note About the Value of Historical Performance The performance shown on the following pages represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com. The investment return and principal value of an investment in the Strategies will fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Strategies carefully before investing. For a free copy of the Strategies' prospectus, which contains this and other information, visit our website at www.alliancebernstein.com or call your financial advisor or AllianceBernstein Investments at 800.227.4618. You should read the prospectus carefully before you invest. All fees and expenses related to the operation of the Strategies have been deducted. NAV returns do not reflect sales charges; if sales charges were reflected, the Strategies' quoted performance would be lower. SEC returns reflect the applicable sales charges for each share class: a 4.25% maximum front-end sales charge for Class A shares; the applicable contingent deferred sales charge for Class B shares (4% year 1, 3% year 2, 2% year 3, 1% year 4); a 1% 1 year contingent deferred sales charge for Class C shares. Returns for the different share classes will vary due to different expenses associated with each class. Performance assumes reinvestment of distributions and does not account for taxes. Benchmark Disclosure The unmanaged Standard & Poor's (S&P) 500 Stock Index, the unmanaged Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index and the unmanaged Lehman Brothers (LB) U.S. Aggregate Index do not reflect fees and expenses associated with the active management of a mutual fund portfolio. The S&P 500 Stock Index includes 500 U.S. stocks and is a common measure of the performance of the overall U.S. stock market. The MSCI EAFE Index is a market capitalization-weighted index that measures stock performance in 21 countries in Europe, Australasia and the Far East. The LB U.S. Aggregate Index covers the U.S. investment-grade fixed-rate bond market, including government and credit securities, agency mortgage passthrough securities, asset-backed securities and commercial mortgage-backed securities. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Strategies. The MSCI EAFE Index values are calculated using net returns. Net returns approximate the minimum possible dividend reinvestment (the dividend is reinvested after deduction of withholding tax, applying the highest rate applicable to non-resident individuals (Luxembourg holding companies) who do not benefit from double taxation treaties). (Historical Performance continued on next page) ALLIANCEBERNSTEIN WEALTH STRATEGIES o 5 HISTORICAL PERFORMANCE (continued from previous page) A Word About Risk The Strategies allocate their investments among multiple asset classes which will include U.S. and foreign securities. AllianceBernstein Balanced Wealth Strategy and AllianceBernstein Wealth Preservation Strategy will include both equity and fixed-income securities. Price fluctuation in the underlying portfolio securities may be caused by changes in the general level of interest rates or changes in bond credit quality ratings. Please note, as interest rates rise, existing bond prices fall and can cause the value of your investment to decline. Changes in interest rates have a greater effect on bonds with longer maturities than on those with shorter maturities. Investments in the Strategies are not guaranteed because of fluctuation in the net asset value of the underlying fixed-income related investments. High yield bonds (i.e., "junk bonds"), involve a greater risk of default and price volatility than other bonds. Investing in non-investment grade securities presents special risks, including credit risk. Within each of these, the Strategies will also allocate their investments in different types of securities, such as growth and value stocks and real estate investment trusts. AllianceBernstein Balanced Wealth Strategy and AllianceBernstein Wealth Preservation Strategy will also allocate their investments to corporate and U.S. government bonds. International investing involves risks not associated with U.S. investments, including currency fluctuations and political and economic changes. Each of the Strategies can invest in small- to mid-capitalization companies. Investments in small- and mid-cap companies may be more volatile than investments in large-cap companies. Investments in small-cap companies tend to be more volatile than investments in mid- or large-cap companies. A Strategy's investments in smaller capitalization companies may have additional risks because these companies often have limited product lines, markets or financial resources. The Strategies may at times use certain types of investment derivatives such as options, futures, forwards and swaps. The use of derivatives involves specific risks and is not suitable for all investors. The Strategies systematically rebalance their allocations in these asset classes to maintain their target weightings. There can be no assurance that rebalancing will achieve its intended result, and the costs of rebalancing may be significant over time. The risks associated with an investment in the Strategies are more fully discussed in the prospectus. (Historical Performance continued on next page) 6 o ALLIANCEBERNSTEIN WEALTH STRATEGIES WEALTH APPRECIATION STRATEGY HISTORICAL PERFORMANCE (continued from previous page) Returns THE STRATEGY VS. ITS BENCHMARK --------------------------- PERIODS ENDED FEBRUARY 28, 2007 6 Months 12 Months - ------------------------------------------------------------------------------- AllianceBernstein Wealth Appreciation Strategy Class A 10.98% 12.86% Class B 10.58% 12.08% Class C 10.58% 12.08% Advisor Class* 11.12% 13.24% Class R* 10.78% 12.52% Class K* 10.88% 12.77% Class I* 11.07% 13.19% 70% S&P 500 Stock Index/30% MSCI EAFE Index 9.90% 14.69% S&P 500 Stock Index 8.93% 11.96% MSCI EAFE Index 12.17% 21.07% * Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. See Historical Performance and Benchmark disclosures on previous page. (Historical Performance continued on next page) ALLIANCEBERNSTEIN WEALTH STRATEGIES o 7 BALANCED WEALTH STRATEGY HISTORICAL PERFORMANCE (continued from previous page) Returns THE STRATEGY VS. ITS BENCHMARK --------------------------- PERIODS ENDED FEBRUARY 28, 2007 6 Months 12 Months - ------------------------------------------------------------------------------- AllianceBernstein Balanced Wealth Strategy Class A 8.90% 11.33% Class B 8.49% 10.56% Class C 8.49% 10.47% Advisor Class* 9.05% 11.62% Class R* 8.69% 10.93% Class K* 8.85% 11.18% Class I* 9.05% 11.62% 60% S&P 500 Stock Index/40% LB U.S. Aggregate Index 6.82% 9.39% S&P 500 Stock Index 8.93% 11.96% LB U.S. Aggregate Index 3.66% 5.54% * Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. See Historical Performance and Benchmark disclosures on pages 5-6. (Historical Performance continued on next page) 8 o ALLIANCEBERNSTEIN WEALTH STRATEGIES WEALTH PRESERVATION STRATEGY HISTORICAL PERFORMANCE (continued from previous page) Returns THE STRATEGY VS. ITS BENCHMARK --------------------------- PERIODS ENDED FEBRUARY 28, 2007 6 Months 12 Months - ------------------------------------------------------------------------------- AllianceBernstein Wealth Preservation Strategy Class A 6.12% 8.82% Class B 5.71% 8.07% Class C 5.71% 8.07% Advisor Class* 6.27% 9.22% Class R* 5.87% 8.50% Class K* 6.09% 8.85% Class I* 6.17% 9.10% 30% S&P 500 Stock Index/70% LB U.S. Aggregate Index 5.24% 7.47% S&P 500 Stock Index 8.93% 11.96% LB U.S. Aggregate Index 3.66% 5.54% * Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. See Historical Performance and Benchmark disclosures on pages 5-6. (Historical Performance continued on next page) ALLIANCEBERNSTEIN WEALTH STRATEGIES o 9 WEALTH APPRECIATION STRATEGY HISTORICAL PERFORMANCE (continued from previous page) AVERAGE ANNUAL RETURNS AS OF FEBRUARY 28, 2007 - ------------------------------------------------------------------------------- NAV Returns SEC Returns Class A Shares 1 Year 12.86% 8.05% Since Inception* 14.88% 13.47% Class B Shares 1 Year 12.08% 8.08% Since Inception* 14.05% 13.85% Class C Shares 1 Year 12.08% 11.08% Since Inception* 14.05% 14.05% Advisor Class Shares+ 1 Year 13.24% 13.24% Since Inception* 15.17% 15.17% Class R Shares+ 1 Year 12.52% 12.52% Since Inception* 12.26% 12.26% Class K Shares+ 1 Year 12.77% 12.77% Since Inception* 14.76% 14.76% Class I Shares+ 1 Year 13.19% 13.19% Since Inception* 15.11% 15.11% * Inception Dates: 9/2/03 for Class A, Class B, Class C and Advisor Class shares; 2/17/04 for Class R shares; 3/1/05 for Class K and Class I shares. + These share classes are offered at net asset value (NAV) to eligible investors and their SEC returns are the same as the NAV returns. Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for each class are listed above. See Historical Performance disclosures on pages 5-6. (Historical Performance continued on next page) 10 o ALLIANCEBERNSTEIN WEALTH STRATEGIES WEALTH APPRECIATION STRATEGY HISTORICAL PERFORMANCE (continued from previous page) SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007) - ------------------------------------------------------------------------------- SEC Returns Class A Shares 1 Year 7.66% Since Inception* 13.67% Class B Shares 1 Year 7.58% Since Inception* 14.02% Class C Shares 1 Year 10.66% Since Inception* 14.22% Advisor Class Shares+ 1 Year 12.73% Since Inception* 15.32% Class R Shares+ 1 Year 12.02% Since Inception* 12.50% Class K Shares+ 1 Year 12.33% Since Inception* 15.06% Class I Shares+ 1 Year 12.74% Since Inception* 15.44% * Inception Dates: 9/2/03 for Class A, Class B, Class C and Advisor Class shares; 2/17/04 for Class R shares; 3/1/05 for Class K and Class I shares. + Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for each class are listed above. See Historical Performance disclosures on pages 5-6. (Historical Performance continued on next page) ALLIANCEBERNSTEIN WEALTH STRATEGIES o 11 BALANCED WEALTH STRATEGY HISTORICAL PERFORMANCE (continued from previous page) AVERAGE ANNUAL RETURNS AS OF FEBRUARY 28, 2007 - ------------------------------------------------------------------------------- NAV Returns SEC Returns Class A Shares 1 Year 11.33% 6.63% Since Inception* 11.78% 10.41% Class B Shares 1 Year 10.56% 6.56% Since Inception* 10.98% 10.76% Class C Shares 1 Year 10.47% 9.47% Since Inception* 10.98% 10.98% Advisor Class Shares+ 1 Year 11.62% 11.62% Since Inception* 12.12% 12.12% Class R Shares+ 1 Year 10.93% 10.93% Since Inception* 9.70% 9.70% Class K Shares+ 1 Year 11.18% 11.18% Since Inception* 11.46% 11.46% Class I Shares+ 1 Year 11.62% 11.62% Since Inception* 11.85% 11.85% * Inception Dates: 9/2/03 for Class A, Class B, Class C and Advisor Class shares; 2/17/04 for Class R shares; 3/1/05 for Class K and Class I shares. + These share classes are offered at net asset value (NAV) to eligible investors and their SEC returns are the same as the NAV returns. Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for each class are listed above. See Historical Performance disclosures on pages 5-6. (Historical Performance continued on next page) 12 o ALLIANCEBERNSTEIN WEALTH STRATEGIES BALANCED WEALTH STRATEGY HISTORICAL PERFORMANCE (continued from previous page) SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007) - ------------------------------------------------------------------------------- SEC Returns Class A Shares 1 Year 6.51% Since Inception* 10.48% Class B Shares 1 Year 6.48% Since Inception* 10.81% Class C Shares 1 Year 9.39% Since Inception* 11.02% Advisor Class Shares+ 1 Year 11.56% Since Inception* 12.15% Class R Shares+ 1 Year 10.79% Since Inception* 9.78% Class K Shares+ 1 Year 11.18% Since Inception* 11.55% Class I Shares+ 1 Year 11.55% Since Inception* 11.92% * Inception Dates: 9/2/03 for Class A, Class B, Class C and Advisor Class shares; 2/17/04 for Class R shares; 3/1/05 for Class K and Class I shares. + Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for each class are listed above. See Historical Performance disclosures on pages 5-6. (Historical Performance continued on next page) ALLIANCEBERNSTEIN WEALTH STRATEGIES o 13 WEALTH PRESERVATION STRATEGY HISTORICAL PERFORMANCE (continued from previous page) AVERAGE ANNUAL RETURNS AS OF FEBRUARY 28, 2007 - ------------------------------------------------------------------------------- NAV Returns SEC Returns Class A Shares 1 Year 8.82% 4.20% Since Inception* 8.07% 6.75% Class B Shares 1 Year 8.07% 4.07% Since Inception* 7.31% 7.07% Class C Shares 1 Year 8.07% 7.07% Since Inception* 7.29% 7.29% Advisor Class Shares+ 1 Year 9.22% 9.22% Since Inception* 8.36% 8.36% Class R Shares+ 1 Year 8.50% 8.50% Since Inception* 6.66% 6.66% Class K Shares+ 1 Year 8.85% 8.85% Since Inception* 7.87% 7.87% Class I Shares+ 1 Year 9.10% 9.10% Since Inception* 8.15% 8.15% * Inception Dates: 9/2/03 for Class A, Class B, Class C and Advisor Class shares; 2/17/04 for Class R shares; 3/1/05 for Class K and Class I shares. + These share classes are offered at net asset value (NAV) to eligible investors and their SEC returns are the same as the NAV returns. Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for each class are listed above. See Historical Performance disclosures on pages 5-6. (Historical Performance continued on next page) 14 o ALLIANCEBERNSTEIN WEALTH STRATEGIES WEALTH PRESERVATION STRATEGY HISTORICAL PERFORMANCE (continued from previous page) SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007) - ------------------------------------------------------------------------------- SEC Returns Class A Shares 1 Year 4.44% Since Inception* 6.77% Class B Shares 1 Year 4.33% Since Inception* 7.08% Class C Shares 1 Year 7.24% Since Inception* 7.29% Advisor Class Shares+ 1 Year 9.48% Since Inception* 8.37% Class R Shares+ 1 Year 8.74% Since Inception* 6.70% Class K Shares+ 1 Year 9.00% Since Inception* 7.87% Class I Shares+ 1 Year 9.36% Since Inception* 8.18% * Inception Dates: 9/2/03 for Class A, Class B, Class C and Advisor Class shares; 2/17/04 for Class R shares; 3/1/05 for Class K and Class I shares. + Please note that these share classes are for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for each class are listed above. See Historical Performance disclosures on pages 5-6. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 15 FUND EXPENSES As a shareholder of the Strategy, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Strategy expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Strategy and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below. Actual Expenses The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Each Strategy will indirectly bear its pro rata share of the expenses incurred by the Underlying Portfolios in which the Strategies invest. These expenses are not included in the table below. Hypothetical Example for Comparison Purposes The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Strategy's actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Strategy's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Strategy and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Each Strategy will indirectly bear its pro rata share of the expenses incurred by the Underlying Portfolios in which the Strategies invest. These expenses are not included in the table below. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Wealth Appreciation Strategy
Beginning Ending Expenses Annualized Account Value Account Value Paid During Expense September 1, 2006 February 28, 2007 Period* Ratio* - --------------------------------------------------------------------------------------------- Class A Actual $ 1,000 $ 1,109.84 $ 5.65 1.08% Hypothetical** $ 1,000 $ 1,019.44 $ 5.41 1.08% Class B Actual $ 1,000 $ 1,105.82 $ 9.40 1.80% Hypothetical** $ 1,000 $ 1,015.87 $ 9.00 1.80% Class C Actual $ 1,000 $ 1,105.84 $ 9.29 1.78% Hypothetical** $ 1,000 $ 1,015.97 $ 8.90 1.78% Advisor Class Actual $ 1,000 $ 1,111.22 $ 4.08 0.78% Hypothetical** $ 1,000 $ 1,020.93 $ 3.91 0.78% Class R Actual $ 1,000 $ 1,107.84 $ 7.53 1.44% Hypothetical** $ 1,000 $ 1,017.65 $ 7.20 1.44% Class K Actual $ 1,000 $ 1,108.79 $ 5.96 1.14% Hypothetical** $ 1,000 $ 1,019.14 $ 5.71 1.14% Class I Actual $ 1,000 $ 1,110.68 $ 4.24 0.81% Hypothetical** $ 1,000 $ 1,020.78 $ 4.06 0.81%
16 o ALLIANCEBERNSTEIN WEALTH STRATEGIES FUND EXPENSES (continued from previous page) Balanced Wealth Strategy
Beginning Ending Expenses Annualized Account Value Account Value Paid During Expense September 1, 2006 February 28, 2007 Period* Ratio* - --------------------------------------------------------------------------------------------- Class A Actual $ 1,000 $ 1,089.03 $ 4.92 0.95% Hypothetical** $ 1,000 $ 1,020.08 $ 4.76 0.95% Class B Actual $ 1,000 $ 1,084.88 $ 8.63 1.67% Hypothetical** $ 1,000 $ 1,016.51 $ 8.35 1.67% Class C Actual $ 1,000 $ 1,084.87 $ 8.58 1.66% Hypothetical** $ 1,000 $ 1,016.56 $ 8.30 1.66% Advisor Class Actual $ 1,000 $ 1,090.48 $ 3.37 0.65% Hypothetical** $ 1,000 $ 1,021.57 $ 3.26 0.65% Class R Actual $ 1,000 $ 1,086.85 $ 6.83 1.32% Hypothetical** $ 1,000 $ 1,018.25 $ 6.61 1.32% Class K Actual $ 1,000 $ 1,088.50 $ 5.33 1.03% Hypothetical** $ 1,000 $ 1,019.69 $ 5.16 1.03% Class I Actual $ 1,000 $ 1,090.52 $ 3.63 0.70% Hypothetical** $ 1,000 $ 1,021.32 $ 3.51 0.70%
Wealth Perservation Strategy
Beginning Ending Expenses Annualized Account Value Account Value Paid During Expense September 1, 2006 February 28, 2007 Period* Ratio* - --------------------------------------------------------------------------------------------- Class A Actual $ 1,000 $ 1,061.18 $ 5.01 0.98% Hypothetical** $ 1,000 $ 1,019.93 $ 4.91 0.98% Class B Actual $ 1,000 $ 1,057.05 $ 8.67 1.70% Hypothetical** $ 1,000 $ 1,016.36 $ 8.50 1.70% Class C Actual $ 1,000 $ 1,057.10 $ 8.62 1.69% Hypothetical** $ 1,000 $ 1,016.41 $ 8.45 1.69% Advisor Class Actual $ 1,000 $ 1,062.73 $ 3.48 0.68% Hypothetical** $ 1,000 $ 1,021.42 $ 3.41 0.68% Class R Actual $ 1,000 $ 1,058.71 $ 6.94 1.36% Hypothetical** $ 1,000 $ 1,018.05 $ 6.80 1.36% Class K Actual $ 1,000 $ 1,060.86 $ 5.42 1.06% Hypothetical** $ 1,000 $ 1,019.54 $ 5.31 1.06% Class I Actual $ 1,000 $ 1,061.65 $ 3.73 0.73% Hypothetical** $ 1,000 $ 1,021.17 $ 3.66 0.73%
* Expenses are equal to each Class' annualized expense ratio, shown in the table below, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses of the underlying portfolios in which the Strategies invest are not included herein. ** Assumes 5% return before expenses. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 17 WEALTH APPRECIATION STRATEGY PORTFOLIO SUMMARY February 28, 2007 (unaudited) PORTFOLIO STATISTICS Net Assets ($mil): $1,865.3 HOLDINGS BREAKDOWN* [ ] 24.0% U.S. Value Portfolio [PIE CHART OMITTED] [ ] 24.0% U.S. Large Cap Growth Portfolio [ ] 13.5% International Growth Portfolio [ ] 13.5% International Value Portfolio [ ] 10.0% Global Real Estate Investment Portfolio [ ] 7.5% Small/Mid Cap Value Portfolio [ ] 7.5% Small/Mid Cap Growth Portfolio * All data are as of February 28, 2007. The Strategy's holdings breakdown is expressed as a percentage of total investments and may vary over time. The Strategy invests in the AllianceBernstein Pooling Portfolios. For more details regarding the Strategy's holdings, including specific breakdowns within the Underlying Portfolios, please refer to pages 67-143. 18 o ALLIANCEBERNSTEIN WEALTH STRATEGIES BALANCED WEALTH STRATEGY PORTFOLIO SUMMARY February 28, 2007 (unaudited) PORTFOLIO STATISTICS Net Assets ($mil): $2,533.5 HOLDINGS BREAKDOWN* [ ] 28.6% Intermediate Duration Bond Portfolio [PIE CHART OMITTED] [ ] 15.4% U.S. Large Cap Growth Portfolio [ ] 15.4% U.S. Value Portfolio [ ] 9.9% Global Real Estate Investment Portfolio [ ] 8.1% International Value Portfolio [ ] 8.1% International Growth Portfolio [ ] 7.1% High Yield Portfolio [ ] 3.7% Small/Mid Cap Value Portfolio [ ] 3.7% Small/Mid Cap Growth Portfolio * All data are as of February 28, 2007. The Strategy's holdings breakdown is expressed as a percentage of total investments and may vary over time. The Strategy invests in the AllianceBernstein Pooling Portfolios. For more details regarding the Strategy's holdings, including specific breakdowns within the Underlying Portfolios, please refer to pages 67-143. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 19 WEALTH PRESERVATION STRATEGY PORTFOLIO SUMMARY February 28, 2007 (unaudited) PORTFOLIO STATISTICS Net Assets ($mil): $685.8 HOLDINGS BREAKDOWN* [ ] 27.7% Intermediate Duration Bond Portfolio [PIE CHART OMITTED] [ ] 27.7% Short Duration Bond Portfolio [ ] 10.1% Inflation Protected Securities Portfolio [ ] 9.9% Global Real Estate Investment Portfolio [ ] 7.4% U.S Large Cap Growth Portfolio [ ] 7.4% U.S. Value Portfolio [ ] 3.7% International Growth Portfolio [ ] 3.7% International Value Portfolio [ ] 1.2% Small/Mid Cap Value Portfolio [ ] 1.2% Small/Mid Cap Growth Portfolio * All data are as of February 28, 2007. The Strategy's holdings breakdown is expressed as a percentage of total investments and may vary over time. The Strategy invests in the AllianceBernstein Pooling Portfolios. For more details regarding the Strategy's holdings, including specific breakdowns within the Underlying Portfolios, please refer to pages 67-143. 20 o ALLIANCEBERNSTEIN WEALTH STRATEGIES STATEMENT OF NET ASSETS February 28, 2007 (unaudited) Wealth Appreciation Strategy ----------------- Assets Investments in Underlying Portfolios, at value: AllianceBernstein U.S. Value (shares of 36,731,621) $ 447,391,145 AllianceBernstein U.S. Large Cap Growth (shares of 38,484,602) 446,421,389 AllianceBernstein International Growth (shares of 19,006,100) 250,310,337 AllianceBernstein International Value (shares of 17,590,326) 250,310,338 AllianceBernstein Global Real Estate Investment (shares of 12,318,747) 185,273,955 AllianceBernstein Small-Mid Cap Value (shares of 11,199,334) 139,655,690 AllianceBernstein Small-Mid Cap Growth (shares of 10,500,711) 138,819,402 Total investments (cost $1,596,294,715) 1,858,182,256 Receivable for shares of beneficial interest sold 16,328,380 Total assets 1,874,510,636 Liabilities Due to custodian 6,060 Payable for shares of beneficial interest redeemed 5,104,860 Payable for investments purchased 2,191,918 Advisory fee payable 932,710 Distribution fee payable 692,903 Transfer Agent fee payable 117,678 Accrued expenses 148,843 Total liabilities 9,194,972 Net Assets $ 1,865,315,664 Composition of Net Assets Shares of beneficial interest, at par $ 1,198 Additional paid-in capital 1,572,568,127 Distributions in excess of net investment income (19,150,255) Accumulated net realized gain on investment and foreign currency transactions 50,009,053 Net unrealized appreciation of investments 261,887,541 ----------------- $ 1,865,315,664 Net Asset Value Per Share--unlimited shares authorized, $.00001 par value Class Net Assets Shares Outstanding Net Asset Value - ---------------------------------------------------------------------- A $ 733,935,471 46,959,406 $ 15.63* B $ 324,110,786 20,964,653 $ 15.46 C $ 344,865,958 22,308,873 $ 15.46 Advisor $ 422,466,857 26,960,366 $ 15.67 R $ 8,774,579 566,927 $ 15.48 K $ 12,790,799 821,770 $ 15.56 I $ 18,371,214 1,175,098 $ 15.63 * The maximum offering price per share for Class A shares was $16.32 which reflects a sales charge of 4.25%. See notes to financial statements. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 21 STATEMENT OF NET ASSETS February 28, 2007 (unaudited) Balanced Wealth Strategy ----------------- Assets Investments in Underlying Portfolios, at value: AllianceBernstein Intermediate Duration Bond (shares of 72,452,023) $ 723,071,193 AllianceBernstein U.S. Large Cap Growth (shares of 33,532,368) 388,975,468 AllianceBernstein U.S. Value (shares of 31,878,235) 388,276,907 AllianceBernstein Global Real Estate Investment (shares of 16,584,304) 249,427,935 AllianceBernstein International Value (shares of 14,423,662) 205,248,717 AllianceBernstein International Growth (shares of 15,584,565) 205,248,716 AllianceBernstein High Yield (shares of 17,170,936) 178,749,443 AllianceBernstein Small-Mid Cap Value (shares of 7,469,826) 93,148,726 AllianceBernstein Small-Mid Cap Growth (shares of 6,987,871) 92,379,661 Total investments (cost $2,239,287,472) 2,524,526,766 Receivable for shares of beneficial interest sold 20,567,809 Total assets 2,545,094,575 Liabilities Payable for shares of beneficial interest redeemed 5,410,462 Payable for investments purchased 3,667,622 Distribution fee payable 1,164,225 Advisory fee payable 1,062,866 Transfer Agent fee payable 56,057 Accrued expenses 212,598 Total liabilities 11,573,830 Net Assets $ 2,533,520,745 Composition of Net Assets Shares of beneficial interest, at par $ 1,854 Additional paid-in capital 2,221,071,976 Distributions in excess of net investment income (15,253,519) Accumulated net realized gain on investment and foreign currency transactions 42,461,140 Net unrealized appreciation of investments 285,239,294 ----------------- $ 2,533,520,745 Net Asset Value Per Share--unlimited shares authorized, $.00001 par value Class Net Assets Shares Outstanding Net Asset Value - ---------------------------------------------------------------------- A $ 1,220,979,338 89,148,378 $ 13.70* B $ 567,424,580 41,642,856 $ 13.63 C $ 586,217,843 42,997,277 $ 13.63 Advisor $ 116,362,576 8,476,035 $ 13.73 R $ 6,514,245 476,241 $ 13.68 K $ 13,217,165 966,334 $ 13.68 I $ 22,804,998 1,665,053 $ 13.70 * The maximum offering price per share for Class A shares was $14.31 which reflects a sales charge of 4.25%. See notes to financial statements. 22 o ALLIANCEBERNSTEIN WEALTH STRATEGIES STATEMENT OF NET ASSETS February 28, 2007 (unaudited) Wealth Preservation Strategy ----------------- Assets Investments in Underlying Portfolios, at value: AllianceBernstein Intermediate Duration Bond (shares of 18,988,715) $ 189,507,379 AllianceBernstein Short Duration Bond (shares of 18,988,715) 189,317,492 AllianceBernstein Inflation Protected Securities (shares of 7,111,020) 68,905,787 AllianceBernstein Global Real Estate Investment (shares of 4,496,130) 67,621,801 AllianceBernstein U.S. Large Cap Growth (shares of 4,353,387) 50,499,284 AllianceBernstein U.S. Value (shares of 4,146,082) 50,499,284 AllianceBernstein International Growth (shares of 1,890,236) 24,894,414 AllianceBernstein International Value (shares of 1,749,432) 24,894,414 AllianceBernstein Small-Mid Cap Value (shares of 670,993) 8,367,284 AllianceBernstein Small-Mid Cap Growth (shares of 627,037) 8,289,429 Total investments (cost $630,321,760) 682,796,568 Receivable for shares of beneficial interest sold 5,730,797 Total assets 688,527,365 Liabilities Payable for shares of beneficial interest redeemed 1,051,017 Payable for investments purchased 947,420 Distribution fee payable 317,661 Advisory fee payable 284,654 Transfer Agent fee payable 17,762 Accrued expenses 61,594 Total liabilities 2,680,108 Net Assets $ 685,847,257 Composition of Net Assets Shares of beneficial interest, at par $ 570 Additional paid-in capital 627,688,434 Distributions in excess of net investment income (1,790,589) Accumulated net realized gain on investment and foreign currency transactions 7,474,034 Net unrealized appreciation of investments 52,474,808 ----------------- $ 685,847,257 Net Asset Value Per Share--unlimited shares authorized, $.00001 par value Class Net Assets Shares Outstanding Net Asset Value - ---------------------------------------------------------------------- A $ 327,596,636 27,149,483 $ 12.07* B $ 145,640,820 12,127,696 $ 12.01 C $ 174,176,183 14,513,211 $ 12.00 Advisor $ 28,724,596 2,378,394 $ 12.08 R $ 5,307,956 439,006 $ 12.09 K $ 1,448,853 120,160 $ 12.06 I $ 2,952,213 244,713 $ 12.06 * The maximum offering price per share for Class A shares was $12.61 which reflects a sales charge of 4.25%. See notes to financial statements. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 23 STATEMENT OF OPERATIONS Six Months Ended February 28, 2007 (unaudited)
Wealth Balanced Wealth Appreciation Wealth Preservation Strategy Strategy Strategy ----------------- ----------------- ----------------- Investment Income Income distributions from Underlying Portfolios $ 18,892,776 $ 38,996,528 $ 13,988,772 Expenses Advisory fee 5,182,278 6,035,638 1,681,461 Distribution fee--Class A 932,997 1,594,636 436,866 Distribution fee--Class B 1,471,195 2,536,236 666,100 Distribution fee--Class C 1,456,452 2,473,134 757,486 Distribution fee--Class R 18,186 11,524 12,544 Distribution fee--Class K 13,535 14,231 2,725 Transfer agency--Class A 288,494 414,024 115,406 Transfer agency--Class B 168,486 237,073 63,928 Transfer agency--Class C 145,540 202,685 63,366 Transfer agency--Advisor Class 163,097 36,072 10,151 Transfer agency--Class R 9,198 5,556 6,577 Transfer agency--Class K 11,046 11,373 2,214 Transfer agency--Class I 11,263 13,018 1,650 Printing 91,219 89,563 26,506 Registration 85,872 89,470 37,562 Legal 40,850 40,755 31,337 Custodian 33,707 33,666 33,627 Audit 20,130 21,145 17,764 Trustees' fees 16,728 16,936 16,806 Miscellaneous 14,925 20,912 6,714 Total expenses 10,175,198 13,897,647 3,990,790 Less: expenses waived and reimbursed by the Adviser (see Note B) -0- -0- (82) Less: expense offset arrangement (see Note B) (36,601) (36,146) (10,657) Net expenses 10,138,597 13,861,501 3,980,051 Net investment income 8,754,179 25,135,027 10,008,721 Realized and Unrealized Gain (Loss) on Investment and Foreign Currency Transactions Net realized gain (loss) on: Sale of Underlying Portfolio shares 4,138,608 869,798 992,523 Net realized gain distributions from Underlying Portfolios 46,496,564 42,068,036 6,591,474 Foreign currency transactions (40) (35) (5) Net change in unrealized appreciation/depreciation of investments 97,351,539 110,375,210 17,501,583 Net gain on investment and foreign currency transactions 147,986,671 153,313,009 25,085,575 Net Increase in Net Assets from Operations $ 156,740,850 $ 178,448,036 $ 35,094,296
See notes to financial statements. 24 o ALLIANCEBERNSTEIN WEALTH STRATEGIES STATEMENT OF CHANGES IN NET ASSETS Wealth Appreciation Strategy ----------------------------------- Six Months Ended Year Ended February 28, 2007 August 31, (unaudited) 2006 ----------------- ----------------- Increase in Net Assets from Operations Net investment income $ 8,754,179 $ 1,743,705 Net realized gain on investment and foreign currency transactions 4,138,568 1,310,605 Net realized gain distributions from Underlying Portfolios 46,496,564 4,292,484 Net change in unrealized appreciation/depreciation of investments 97,351,539 97,798,267 Net increase in net assets from operations 156,740,850 105,145,061 Dividends and Distributions to Shareholders from Net investment income Class A (12,404,360) (1,362,550) Class B (4,251,189) -0- Class C (4,249,662) -0- Advisor Class (7,245,182) (621,664) Class R (140,945) (1,455) Class K (236,786) (3,599) Class I (395,548) (11,992) Net realized gain on investment transactions Class A (1,534,994) (771,150) Class B (735,037) (413,358) Class C (734,750) (325,996) Advisor Class (802,642) (233,149) Class R (18,108) (727) Class K (28,262) (1,255) Class I (43,950) (3,953) Transactions in Shares of Beneficial Interest Net increase 377,243,191 623,315,906 Total increase 501,162,626 724,710,119 Net Assets Beginning of period 1,364,153,038 639,442,919 End of period (including undistributed/(distributions in excess of) net investment income of ($19,150,255) and $1,019,238, respectively) $ 1,865,315,664 $ 1,364,153,038 See notes to financial statements. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 25 Balanced Wealth Strategy ----------------------------------- Six Months Ended Year Ended February 28, 2007 August 31, (unaudited) 2006 ----------------- ----------------- Increase in Net Assets from Operations Net investment income $ 25,135,027 $ 23,634,916 Net realized gain on investment and foreign currency transactions 869,763 662,122 Net realized gain distributions from Underlying Portfolios 42,068,036 4,628,649 Net change in unrealized appreciation/depreciation of investments 110,375,210 99,432,091 Net increase in net assets from from operations 178,448,036 128,357,778 Dividends and Distributions to Shareholders from Net investment income Class A (21,979,838) (13,505,353) Class B (8,861,773) (4,443,452) Class C (8,626,278) (3,784,918) Advisor Class (1,867,436) (1,343,488) Class R (88,897) (16,912) Class K (238,829) (54,007) Class I (470,347) (132,390) Net realized gain on investment transactions Class A (1,450,878) (2,213,641) Class B (697,389) (1,128,534) Class C (686,158) (900,178) Advisor Class (111,072) (175,384) Class R (6,455) (1,468) Class K (17,040) (10,133) Class I (28,730) (1,216) Transactions in Shares of Beneficial Interest Net increase 475,313,976 767,719,388 Total increase 608,630,892 868,366,092 Net Assets Beginning of period 1,924,889,853 1,056,523,761 End of period (including undistributed/(distributions in excess of) net investment income ($15,253,519) and $1,744,852 respectively) $ 2,533,520,745 $ 1,924,889,853 See notes to financial statements. 26 o ALLIANCEBERNSTEIN WEALTH STRATEGIES Wealth Preservation Strategy ----------------------------------- Six Months Ended Year Ended February 28, 2007 August 31, (unaudited) 2006 ----------------- ----------------- Increase in Net Assets from Operations Net investment income $ 10,008,721 $ 9,560,998 Net realized gain on investment and foreign currency transactions 992,518 812,332 Net realized gain distributions from Underlying Portfolios 6,591,474 848,798 Net change in unrealized appreciation/depreciation of investments 17,501,583 17,933,637 Net increase in net assets from operations 35,094,296 29,155,765 Dividends and Distributions to Shareholders from Net investment income Class A (6,630,201) (4,526,799) Class B (2,620,718) (1,582,195) Class C (2,981,466) (1,632,745) Advisor Class (586,381) (511,700) Class R (108,427) (16,949) Class K (60,766) (2,650) Class I (63,990) (28,938) Net realized gain on investment transactions Class A (623,287) (104,748) Class B (285,684) (53,109) Class C (328,068) (53,411) Advisor Class (49,451) (9,786) Class R (10,576) (481) Class K (5,784) (63) Class I (5,578) (344) Transactions in Shares of Beneficial Interest Net increase 103,621,021 184,358,678 Total increase 124,354,940 204,990,525 Net Assets Beginning of period 561,492,317 356,501,792 End of period (including undistributed/(distributions in excess of) net investment income of ($1,790,589) and $1,252,639, respectively) $ 685,847,257 $ 561,492,317 See notes to financial statements. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 27 NOTES TO FINANCIAL STATEMENTS February 28, 2007 NOTE A Significant Accounting Policies The AllianceBernstein Portfolios (the "Trust") was organized as a Massachusetts Business Trust on March 26, 1987 and is registered under the Investment Company Act of 1940 as a diversified, open end management investment company. The Trust operates as a series company currently comprised of seven series: the AllianceBernstein Growth Fund, the Wealth Appreciation Strategy, the Balanced Wealth Strategy, the Wealth Preservation Strategy, the Tax-Managed Wealth Appreciation Strategy, the Tax-Managed Balanced Wealth Strategy and the Tax-Managed Wealth Preservation Strategy. Each series is considered to be a separate entity for financial reporting and tax purposes. This report relates only to the Wealth Appreciation Strategy, the Balanced Wealth Strategy and the Wealth Preservation Strategy (the "Strategies"). The Strategies offer Class A, Class B, Class C, Advisor Class, Class R, Class K and Class I shares. Class A shares are sold with a front-end sales charge of up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A shares redeemed within one year of purchase may be subject to a contingent deferred sales charge of 1%. Class B shares are currently sold with a contingent deferred sales charge which declines from 4% to zero depending on the period of time the shares are held. Class B shares held for a period ending eight years after the end of the calendar month of purchase will convert to Class A shares. Class C shares are subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase. Class R and Class K shares are sold without an initial or contingent deferred sales charge. Advisor Class and Class I shares are sold without an initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. All seven classes of shares have identical voting, dividend, liquidation and other rights, except that the classes bear different distribution and transfer agency expenses. Each class has exclusive voting rights with respect to its distribution plan. The Wealth Appreciation Strategy, Balanced Wealth Strategy and Wealth Preservation Strategy invest primarily in a combination of portfolios of the AllianceBernstein Pooling Portfolios (the "Underlying Portfolios") representing a variety of asset classes and investment styles that are managed by AllianceBernstein L.P. (the "Adviser"). On May 20, 2005, the Strategies acquired shares in the Underlying Portfolios through a tax-free exchange of Strategy investment securities at cost for shares of beneficial interest of the Underlying Portfolios. The transfer had no impact on the Strategies' net assets. The 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. The following is a summary of significant accounting policies followed by the Strategies. 28 o ALLIANCEBERNSTEIN WEALTH STRATEGIES 1. Security Valuation Net asset value per share is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Investments in the Underlying Portfolios are valued at their net asset value each business day. 2. Taxes It is each Strategy's policy 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. 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. 3. Investment Income and Investment Transactions Income and capital gain distributions from the Underlying Portfolios, if any, are recorded on the ex-dividend date. Transactions in shares of the Underlying Portfolios are accounted for on the trade date. Investment gains and losses are determined on the identified cost basis. 4. Class Allocations All income earned and expenses incurred by the Strategies are borne on a pro-rata basis by each outstanding class of shares, based on the proportionate interest in each Strategy represented by the net assets of such class, except for class specific expenses which are allocated to the respective class. Expenses of the Trust are charged to each Strategy in proportion to net assets. Expenses included in the accompanying statement of operations do not include any expenses of the Underlying Portfolios. Realized and unrealized gains and losses are allocated among the various share classes based on their relative net assets. 5. Dividends and Distributions Dividends and distributions to shareholders, if any, 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. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 29 NOTE B Advisory Fee and Other Transactions With Affiliates Under the terms of the investment advisory agreement, the Strategies pay the Adviser at the annual rates as follows:
Average Daily Net Assets ------------------------------------------------------------------ Strategy First $2.5 Billion Next $2.5 Billion In Excess of $5 Billion - ----------------------------------------------------------------------------------------- Wealth Appreciation .65% .55% .50% Balanced Wealth .55% .45% .40% Wealth Preservation .55% .45% .40%
Prior to September 7, 2004, the Strategies paid the Adviser an advisory fee at the annual rates as follows:
Average Daily Net Assets ----------------------------------------------------------- First $5 Next $2.5 Next $2.5 In Excess of Strategy Billion Billion Billion $10 Billion - ------------------------------------------------------------------------------------- Wealth Appreciation .95% .90% .85% .80% Balanced Wealth .75% .70% .65% .60% Wealth Preservation .75% .70% .65% .60%
Such fees are 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 as follows:
Advisor Strategy Class A Class B Class C Class Class R Class K Class I - --------------------------------------------------------------------------------------------- Wealth Appreciation 1.50% 2.20% 2.20% 1.20% 1.70% 1.45% 1.20% Balanced Wealth 1.20% 1.90% 1.90% .90% 1.40% 1.15% .90% Wealth Preservation 1.20% 1.90% 1.90% .90% 1.40% 1.15% .90%
For the six months ended February 28, 2007, such reimbursement amounted to $0, $0 and $82 for the Wealth Appreciation Strategy, Balanced Wealth Strategy and Wealth Preservation Strategy, respectively. The Strategies compensate 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 Strategies. ABIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. The compensation retained by ABIS amounted to $409,219, $440,604 and $106,715 for the Wealth Appreciation Strategy, Balanced Wealth Strategy and Wealth Preservation Strategy, respectively, for the six months ended February 28, 2007. 30 o ALLIANCEBERNSTEIN WEALTH STRATEGIES For the six months ended February 28, 2007, the Strategies' expenses were reduced by $36,601, $36,146 and $10,657 for the Wealth Appreciation Strategy, Balanced Wealth Strategy and Wealth Preservation Strategy, respectively, under an expense offset arrangement with ABIS. AllianceBernstein Investments, Inc. (the "Distributor"), a wholly-owned subsidiary of the Adviser, serves as the distributor of the Strategies' shares. The Distributor has advised the Strategies that it has retained front-end sales charges from the sales of Class A shares and received contingent deferred sales charges imposed upon redemptions by shareholders of Class A, Class B and Class C shares for each Strategy for the six months ended February 28, 2007 as follows: Front End Sales Charges Contingent Deferred Sales Charges --------------------------------------------------------- Strategy Class A Class A Class B Class C - ------------------------------------------------------------------------------- Wealth Appreciation $ 259,776 $ 4,610 $ 232,544 $ 33,624 Balanced Wealth 435,787 4,187 406,991 52,543 Wealth Preservation 124,806 1,375 134,169 17,815 NOTE C Distribution Plans The Strategies have adopted a Plan for each class of shares of the Strategies pursuant to Rule 12b-1 under the Investment Company Act of 1940 (each a "Plan" and collectively the "Plans"). Under the Plans, the Strategies pay distribution and servicing fees to the Distributor at an annual rate of up to .50 of 1% of each Strategy's average daily net assets attributable to the Class A shares, 1% of the average daily net assets attributable to both Class B and Class C shares, .50% of the average daily net assets attributable to Class R shares and ..25% of the average daily net assets attributable to Class K shares. There are no distribution and servicing fees on the Advisor Class and Class I shares. The fees are accrued daily and paid monthly. The Trustees currently limit payments under the Class A plan to .30 of 1% of each Strategy's average daily net assets attributable to Class A shares. The Plans provide that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Strategies are not obligated under the Plans to pay any distribution services fee in excess of the amounts set forth above. The purpose of the payments to the Distributor under the Plans is to compensate the Distributor for its distribution services with respect to the sale of each Strategy's shares. Since the Distributor's compensation is not directly tied to its expenses, the amount of compensation received by it under the Plan during any year may be more or less than its actual expenses. For this reason, the Plans are characterized by the staff of the Securities and Exchange Commission as being of the "compensation" variety. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 31 In the event that a Plan is terminated or not continued, no distribution service fees (other than current amounts accrued but not yet paid) would be owed by the Strategies to the Distributor with respect to the relevant class. The Plans also provide that the Adviser may use its own resources to finance the distribution of each Strategy's shares. NOTE D Investment Transactions Purchases and sales of investments in the Underlying Portfolios for the six months ended February 28, 2007, were as follows: Strategy Purchases Sales - ------------------------------------------------------------------------------- Wealth Appreciation $426,482,595 $31,787,894 Balanced Wealth 502,980,070 10,349,065 Wealth Preservation 114,684,512 9,107,541 The cost of investments for federal income tax purposes, gross unrealized appreciation and unrealized depreciation are as follows: Gross Gross Unrealized Unrealized Net Unrealized Strategy Appreciation Depreciation Appreciation - ------------------------------------------------------------------------------- Wealth Appreciation $ 261,887,541 $ 0 $ 261,887,541 Balanced Wealth 285,239,294 0 285,239,294 Wealth Preservation 53,866,678 (1,391,870) 52,474,808 NOTE E Shares of Beneficial Interest Transactions in shares of beneficial interest for each class were as follows: Wealth Appreciation Strategy - ------------------------------------------------------------------------------- Shares Amount - ------------------------------------------------------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended February 28, 2007 August 31, February 28, 2007 August 31, (unaudited) 2006 (unaudited) 2006 - ------------------------------------------------------------------------------- Class A Shares sold 12,673,234 22,827,714 $ 194,989,139 $ 316,683,240 Shares issued in reinvestment of dividends and distributions 849,788 148,436 13,112,233 2,021,699 Shares converted from Class B 385,768 224,689 5,976,351 3,163,157 Shares redeemed (3,543,380) (7,112,580) (54,435,946) (99,556,940) Net increase 10,365,410 16,088,259 $ 159,641,777 $ 222,311,156 32 o ALLIANCEBERNSTEIN WEALTH STRATEGIES Wealth Appreciation Strategy - ------------------------------------------------------------------------------- Shares Amount - ------------------------------------------------------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended February 28, 2007 August 31, February 28, 2007 August 31, (unaudited) 2006 (unaudited) 2006 - ------------------------------------------------------------------------------- Class B Shares sold 3,681,992 8,031,015 $ 55,825,197 $ 110,743,569 Shares issued in reinvestment of dividends and distributions 301,158 27,915 4,604,696 377,415 Shares converted to Class A (390,168) (227,338) (5,976,351) (3,163,157) Shares redeemed (1,042,308) (1,819,740) (15,766,378) (24,921,496) Net increase 2,550,674 6,011,852 $ 38,687,164 $ 83,036,331 Class C Shares sold 5,890,314 9,755,508 $ 89,553,465 $ 134,625,876 Shares issued in reinvestment of dividends and distributions 239,243 17,213 3,655,636 232,715 Shares redeemed (1,040,423) (1,634,914) (15,766,950) (22,392,905) Net increase 5,089,134 8,137,807 $ 77,442,151 $ 112,465,686 Advisor Class Shares sold 8,989,271 14,410,101 $139,455,627 $ 203,254,832 Shares issued in reinvestment of dividends and distributions 499,049 58,338 7,715,294 795,724 Shares redeemed (3,333,244) (2,042,154) (52,331,840) (28,210,270) Net increase 6,155,076 12,426,285 $ 94,839,081 $ 175,840,286 Class R Shares sold 158,544 478,931 $ 2,440,261 $ 6,530,739 Shares issued in reinvestment of dividends and distributions 10,402 161 159,051 2,182 Shares redeemed (35,362) (54,960) (545,806) (772,697) Net increase 133,584 424,132 $ 2,053,506 $ 5,760,224 ALLIANCEBERNSTEIN WEALTH STRATEGIES o 33 Wealth Appreciation Strategy - ------------------------------------------------------------------------------- Shares Amount - ------------------------------------------------------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended February 28, 2007 August 31, February 28, 2007 August 31, (unaudited) 2006 (unaudited) 2006 - ------------------------------------------------------------------------------- Class K Shares sold 278,364 547,998 $ 4,195,223 $ 7,705,123 Shares issued in reinvestment of dividends and distributions 17,244 350 265,045 4,759 Shares redeemed (20,860) (2,154) (322,833) (28,600) Net increase 274,748 546,194 $ 4,137,435 $ 7,681,282 Class I Shares sold 114,827 1,444,220 $ 1,722,329 $20,479,756 Shares issued in reinvestment of dividends and distributions 28,275 1,164 436,277 15,845 Shares redeemed (109,672) (304,536) (1,716,529) (4,274,660) Net increase 33,430 1,140,848 $ 442,077 $16,220,941 Balanced Wealth Strategy - ------------------------------------------------------------------------------- Shares Amount - ------------------------------------------------------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended February 28, 2007 August 31, February 28, 2007 August 31, (unaudited) 2006 (unaudited) 2006 - ------------------------------------------------------------------------------- Class A Shares sold 22,023,579 41,516,736 $ 296,148,434 $ 519,333,760 Shares issued in reinvestment of dividends and distributions 1,666,477 1,211,984 22,266,387 14,984,197 Shares converted from Class B 399,774 374,796 5,395,052 4,695,429 Shares redeemed (7,643,252) (14,131,494) (102,600,819) (177,289,885) Net increase 16,446,578 28,972,022 $ 221,209,054 $ 361,723,501 34 o ALLIANCEBERNSTEIN WEALTH STRATEGIES Balanced Wealth Strategy - ------------------------------------------------------------------------------- Shares Amount - ------------------------------------------------------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended February 28, 2007 August 31, February 28, 2007 August 31, (unaudited) 2006 (unaudited) 2006 - ------------------------------------------------------------------------------- Class B Shares sold 7,958,174 15,716,371 $ 106,574,814 $ 195,821,168 Shares issued in reinvestment of dividends and distributions 652,040 407,879 8,695,564 5,033,445 Shares converted to Class A (401,606) (376,312) (5,395,052) (4,695,429) Shares redeemed (2,134,101) (3,385,296) (28,472,225) (42,150,446) Net increase 6,074,507 12,362,642 $ 81,403,101 $ 154,008,738 Class C Shares sold 11,717,046 18,649,242 $ 157,123,292 $ 232,517,741 Shares issued in reinvestment of dividends and distributions 487,243 257,019 6,505,556 3,172,899 Shares redeemed (2,051,339) (3,128,454) (27,461,628) (38,982,793) Net increase 10,152,950 15,777,807 $ 136,167,220 $ 196,707,847 Advisor Class Shares sold 2,793,244 3,508,140 $ 38,045,217 $ 43,974,380 Shares issued in reinvestment of dividends and distributions 130,145 108,174 1,737,967 1,339,205 Shares redeemed (946,980) (1,598,062) (12,957,142) (19,783,521) Net increase 1,976,409 2,018,252 $ 26,826,042 $ 25,530,064 Class R Shares sold 198,967 834,968 $ 2,703,448 $ 10,487,792 Shares issued in reinvestment of dividends and distributions 7,131 1,487 95,352 18,379 Shares redeemed (13,995) (571,829) (188,878) (7,206,486) Net increase 192,103 264,626 $ 2,609,922 $ 3,299,685 ALLIANCEBERNSTEIN WEALTH STRATEGIES o 35 Balanced Wealth Strategy - ------------------------------------------------------------------------------- Shares Amount - ------------------------------------------------------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended February 28, 2007 August 31, February 28, 2007 August 31, (unaudited) 2006 (unaudited) 2006 - ------------------------------------------------------------------------------- Class K Shares sold 542,590 1,682,025 $ 7,161,334 $ 21,109,254 Shares issued in reinvestment of dividends and distributions 19,128 5,198 255,867 64,138 Shares redeemed (155,224) (1,135,990) (2,084,488) (14,326,370) Net increase 406,494 551,233 $ 5,332,713 $ 6,847,022 Class I Shares sold 167,519 1,691,282 $ 2,251,323 $ 21,593,528 Shares issued in reinvestment of dividends and distributions 36,897 10,920 491,941 133,461 Shares redeemed (72,911) (169,524) (977,340) (2,124,458) Net increase 131,505 1,532,678 $ 1,765,924 $ 19,602,531 Wealth Preservation Strategy - ------------------------------------------------------------------------------- Shares Amount - ------------------------------------------------------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended February 28, 2007 August 31, February 28, 2007 August 31, (unaudited) 2006 (unaudited) 2006 - ------------------------------------------------------------------------------- Class A Shares sold 6,589,825 13,950,933 $ 78,614,196 $ 158,469,367 Shares issued in reinvestment of dividends and distributions 578,449 387,096 6,847,004 4,366,920 Shares converted from Class B 45,953 112,078 550,585 1,263,617 Shares redeemed (3,083,468) (6,296,323) (36,665,273) (71,609,968) Net increase 4,130,759 8,153,784 $ 49,346,512 $ 92,489,936 36 o ALLIANCEBERNSTEIN WEALTH STRATEGIES Wealth Preservation Strategy - ------------------------------------------------------------------------------- Shares Amount - ------------------------------------------------------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended February 28, 2007 August 31, February 28, 2007 August 31, (unaudited) 2006 (unaudited) 2006 - ------------------------------------------------------------------------------- Class B Shares sold 1,976,608 4,457,146 $ 23,478,057 $ 50,368,922 Shares issued in reinvestment of dividends and distributions 225,429 132,925 2,661,132 1,495,595 Shares converted to Class A (46,159) (112,468) (550,585) (1,263,617) Shares redeemed (766,169) (1,646,939) (9,064,382) (18,661,134) Net increase 1,389,709 2,830,664 $ 16,524,222 $ 31,939,766 Class C Shares sold 3,912,301 6,189,060 $ 46,481,105 $ 69,939,620 Shares issued in reinvestment of dividends and distributions 227,681 121,070 2,685,755 1,361,635 Shares redeemed (1,302,788) (1,992,125) (15,478,594) (22,534,633) Net increase 2,837,194 4,318,005 $ 33,688,266 $ 48,766,622 Advisor Class Shares sold 688,081 914,228 $ 8,233,188 $ 10,414,540 Shares issued in reinvestment of dividends and distributions 49,904 43,363 590,482 489,283 Shares redeemed (463,435) (619,863) (5,582,090) (7,036,168) Net increase 274,550 337,728 $ 3,241,580 $ 3,867,655 Class R Shares sold 71,987 493,254 $ 864,743 $ 5,581,255 Shares issued in reinvestment of dividends and distributions 10,031 1,539 119,003 17,430 Shares redeemed (81,106) (136,119) (964,187) (1,566,715) Net increase 912 358,674 $ 19,559 $ 4,031,970 ALLIANCEBERNSTEIN WEALTH STRATEGIES o 37 Wealth Preservation Strategy - ------------------------------------------------------------------------------- Shares Amount - ------------------------------------------------------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended February 28, 2007 August 31, February 28, 2007 August 31, (unaudited) 2006 (unaudited) 2006 - ------------------------------------------------------------------------------- Class K Shares sold 160,171 79,007 $ 1,881,307 $ 896,074 Shares issued in reinvestment of dividends and distributions 5,626 241 66,548 2,711 Shares redeemed (131,431) (972) (1,567,399) (10,900) Net increase 34,366 78,276 $ 380,456 $ 887,885 Class I Shares sold 40,171 265,914 $ 478,322 $ 3,024,286 Shares issued in reinvestment of dividends and distributions 5,887 2,596 69,569 29,147 Shares redeemed (10,658) (60,108) (127,465) (678,589) Net increase 35,400 208,402 $ 420,426 $ 2,374,844 NOTE F Risks Involved in Investing in the Strategies Interest Rate Risk and Credit Risk--Interest rate risk is the risk that changes in interest rates will affect the value of an Underlying Portfolio's investments in fixed-income debt securities such as bonds or notes. Increases in interest rates may cause the value of the Underlying Portfolio's investments to decline. Credit risk is the risk that the issuer or guarantor of a debt security, or the counterparty to a derivative contract, will be unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The degree of risk for a particular security may be reflected in its credit risk rating. Credit risk is greater for medium quality and lower-rated securities. Lower-rated debt securities and similar unrated securities (commonly known as "junk bonds") have speculative elements or are predominantly speculative risks. Foreign Securities Risk--An Underlying Portfolio's investments in securities of foreign companies or foreign governments involves special risks which include changes in foreign currency exchange rates and the possibility of future political and economic developments which could adversely affect the value of such securities. Moreover, securities of many foreign companies or foreign governments and their markets may be less liquid and their prices more volatile than those of comparable United States companies or of the United States government. 38 o ALLIANCEBERNSTEIN WEALTH STRATEGIES IndemnificationRisk--In the ordinary course of business, the Strategies enter into contracts that contain a variety of indemnifications.The Strategies' maximum exposure under these arrangements is unknown. However, the Strategies have not had prior claims or losses pursuant to these indemnification provisions and expect the risk of loss thereunder to be remote. NOTE G Joint Credit Facility A number of open-end mutual funds managed by the Adviser, including the Strategies, participate in a $250 million revolving credit facility (the "Facility") intended to provide for short-term financing, if necessary, subject to certain restrictions in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Strategies did not utilize the Facility during the six months ended February 28, 2007. NOTE H Distributions to Shareholders The tax character of distributions to be paid for the year ending August 31, 2007 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal years ended August 31, 2006 and August 31, 2005 were as follows: August 31, August 31, 2006 2005 - ------------------------------------------------------------------------------- Wealth Appreciation Strategy Distributions paid from: Ordinary income $ 2,001,260 $ 1,625,937 Long-term capital gains 1,749,588 410,000 Total taxable distributions 3,750,848 2,035,937 Total distributions paid $ 3,750,848 $ 2,035,937 Balanced Wealth Strategy Distributions paid from: Ordinary income $ 23,280,520 $ 10,777,762 Long-term capital gains 4,430,554 588,472 Total taxable distributions 27,711,074 11,366,234 Total distributions paid $ 27,711,074 $ 11,366,234 Wealth Preservation Strategy Distributions paid from: Ordinary income $ 8,301,976 $ 5,140,130 Long-term capital gains 221,942 299,218 Total taxable distributions 8,523,918 5,439,348 Tax return of capital -0- 207,988 Total distributions paid $ 8,523,918 $ 5,647,336 ALLIANCEBERNSTEIN WEALTH STRATEGIES o 39 As of August 31, 2006, the components of accumulated earnings/(deficit) on a tax basis were as follows: Wealth Balanced Wealth Appreciation Wealth Preservation Strategy Strategy Strategy - ------------------------------------------------------------------------------- Undistributed Ordinary Income $ 1,690,943 $ 1,857,373 $ 1,651,391 Undistributed long-term capital gains 2,658,446 2,503,439 820,977 Unrealized appreciation(a) 164,477,515 174,769,187 34,951,965 Total accumulated earnings/(deficit) $ 168,826,904 $ 179,129,999 $ 37,424,333 (a) The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales. NOTE I Legal Proceedings As has been previously reported, the staff of the U.S. Securities and Exchange Commission ("SEC") and the Office of New York Attorney General ("NYAG") have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is memorialized in an Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds until December 31, 2008; and 40 o ALLIANCEBERNSTEIN WEALTH STRATEGIES (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order and the NYAG Order contemplate that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation of the NYAG Order and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. On September 7, 2004, the Fund's investment advisory agreement was amended to reflect the reduced advisory fee. For more information on this waiver and amendment to the Fund's investment advisory agreement, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, directed and oversaw an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Trustees of the Trust ("the Independent Trustees") have conducted an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. 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, Alliance Capital Management Holding L.P. ("Alliance Holding"), Alliance Capital Management Corporation, AXA Financial, Inc., the AllianceBernstein Funds, certain officers of the Adviser ("Alliance defendants"), and certain other defendants not affiliated with the Adviser, 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 Funds. The Hindo Complaint alleges that certain of the Alliance 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 Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act and Sections 206 and 215 of the Advisers Act. 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. Since October 2, 2003, 43 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. The plaintiffs in such lawsuits have asserted a variety of theories for recovery including, but not limited to, violations of the Securities Act, the Exchange Act, the Advisers Act, the Investment Company Act, the Employee Retirement Income Security Act of ALLIANCEBERNSTEIN WEALTH STRATEGIES o 41 1974, as amended ("ERISA"), certain state securities laws and common law. 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 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 Alliance 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 SEC Order and 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 derivative claims brought on behalf of Alliance Holding remain pending. On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the Office of the Attorney General of the State of West Virginia and (ii) a request for information from West Virginia's Office of the State Auditor, Securities Commission (the "West Virginia Securities Commissioner") (together, the "Information Requests"). Both Information Requests require the Adviser to produce documents concerning, among other things, any market timing or late trading in the Adviser's sponsored mutual funds. The Adviser responded to the Information Requests and has been cooperating fully with the investigation. On April 11, 2005, a complaint entitled The Attorney General of the State of West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed against the Adviser, Alliance Holding, and various other defendants not affiliated with the Adviser. The WVAG Complaint was filed in the Circuit Court of Marshall County, West Virginia by the Attorney General of the State of West Virginia. The WVAG Complaint makes factual allegations generally similar to those in the Hindo Complaint. On October 19, 2005, the WVAG Complaint was transferred to the Mutual Fund MDL. On August 30, 2005, the West Virginia Securities Commissioner signed a Summary Order to Cease and Desist, and Notice of Right to Hearing addressed to the Adviser and Alliance Holding. The Summary Order claims that the Adviser and Alliance Holding violated the West Virginia Uniform Securities Act, and makes factual allegations generally similar to those in the Commission Order and the NYAG Order. On January 26, 2006, the Adviser, Alliance Holding, and var 42 o ALLIANCEBERNSTEIN WEALTH STRATEGIES ious unaffiliated defendants filed a Petition for Writ of Prohibition and Order Suspending Proceedings in West Virginia state court seeking to vacate the Summary Order and for other relief. The court denied the writ and in September 2006 the Supreme Court of Appeals declined the defendants' petition for appeal. On September 22, 2006, Alliance and Alliance Holding filed an answer and motion to dismiss the Summary Order with the Securities Commissioner. On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v. Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against the Adviser, Alliance Holding, Alliance Capital Management Corporation, AXA Financial, Inc., AllianceBernstein Investment Research & Management, Inc., certain current and former directors of the AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin Complaint names certain of the AllianceBernstein mutual funds as nominal defendants. The Aucoin Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of an AllianceBernstein mutual fund. The Aucoin Complaint alleges, among other things, (i) that certain of the defendants improperly authorized the payment of excessive commissions and other fees from fund assets to broker-dealers in exchange for preferential marketing services, (ii) that certain of the defendants misrepresented and omitted from registration statements and other reports material facts concerning such payments, and (iii) that certain defendants caused such conduct as control persons of other defendants. The Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections 206 and 215 of the Advisers Act, breach of common law fiduciary duties, and aiding and abetting breaches of common law fiduciary duties. Plaintiffs seek an unspecified amount of compensatory damages and punitive damages, rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts, an accounting of all fund-related fees, commissions and soft dollar payments, and restitution of all unlawfully or discriminatorily obtained fees and expenses. Since June 22, 2004, nine additional lawsuits making factual allegations substantially similar to those in the Aucoin Complaint were filed against the Adviser and certain other defendants. All nine of the lawsuits (i) were brought as class actions filed in the United States District Court for the Southern District of New York, (ii) assert claims substantially identical to the Aucoin Complaint, and (iii) are brought on behalf of shareholders of the Funds. On February 2, 2005, plaintiffs filed a consolidated amended class action complaint ("Aucoin Consolidated Amended Complaint") that asserts claims substantially similar to the Aucoin Complaint and the nine additional lawsuits referenced above. On October 19, 2005, the District Court dismissed each of the claims set forth in the Aucoin Consolidated Amended Complaint, except for plaintiffs' claim under Section 36(b) of the Investment Company Act. On January 11, ALLIANCEBERNSTEIN WEALTH STRATEGIES o 43 2006, the District Court granted defendants' motion for reconsideration and dismissed the remaining Section 36(b) claim. On May 31, 2006 the District Court denied plaintiffs' motion for leave to file an amended complaint. On July 5, 2006, plaintiffs filed a notice of appeal. On October 4, 2006 the appeal was withdrawn by stipulation, with plaintiffs reserving the right to reinstate it at a later date. It is possible that these matters and/or other developments resulting from these matters could result in increased redemptions of the AllianceBernstein Mutual Funds' shares or other adverse consequences to the AllianceBernstein Mutual Funds. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. However, the Adviser believes that these matters are not likely to have a material adverse effect on its ability to perform advisory services relating to the AllianceBernstein Mutual Funds. NOTE J Recent Accounting Pronouncements On July 13, 2006, the Financial Accounting Standards Board ("FASB") released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing a fund's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded in the current period. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. On December 22, 2006, the Securities and Exchange Commission notified the industry that the implementation of FIN 48 by registered investment companies could be delayed until the last business day of the first required financial statement reporting period for fiscal years beginning after December 15, 2006. At this time, management is evaluating the implications of FIN 48 and its impact on the financial statements has not yet been determined. On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" ("FAS 157"). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 157 and its impact on the financial statements has not yet been determined. 44 o ALLIANCEBERNSTEIN WEALTH STRATEGIES FINANCIAL HIGHLIGHTS Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Appreciation Strategy ---------------------------------------------------------- Class A ---------------------------------------------------------- Six Months Ended September 2, February 28, 2003(a) to 2007 Year Ended August 31, August 31, (unaudited) 2006 2005 2004 -------------- ------------ ------------ -------------- Net asset value, beginning of period $14.39 $12.74 $10.91 $10.00 Income From Investment Operations Net investment income(b) .10 .06 .04(c) .03(c)(d) Net realized and unrealized gain on investment and foreign currency transactions 1.48 1.67 1.88 .91 Net increase in net asset value from operations 1.58 1.73 1.92 .94 Less: Dividends and Distributions Dividends from net investment income (.30) (.05) (.07) (.03) Distributions from net realized gain on investment transactions (.04) (.03) (.02) -0- Total dividends and distributions (.34) (.08) (.09) (.03) Net asset value, end of period $15.63 $14.39 $12.74 $10.91 Total Return Total investment return based on net asset value(e) 10.98% 13.64% 17.68% 9.36% Ratios/Supplemental Data Net assets, end of period (000's omitted) $733,935 $526,745 $261,218 $91,136 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.08%(f)(g) 1.13%(f)(h) 1.33%(f) 1.55%(g) Expenses, before waivers/reimbursements 1.08%(f)(g) 1.13%(f)(h) 1.33%(f) 2.03%(g) Net investment income 1.27%(g) .41%(h) .35%(c) .33%(c)(d)(g) Portfolio turnover rate 2% 1% 32% 28%
See footnote summary on page 65. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 45 Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Appreciation Strategy ----------------------------------------------------------- Class B ----------------------------------------------------------- Six Months Ended September 2, February 28, 2003(a) to 2007 Year Ended August 31, August 31, (unaudited) 2006 2005 2004 -------------- ----------- -------------- ------------- Net asset value, beginning of period $14.21 $12.62 $10.84 $10.00 Income From Investment Operations Net investment income (loss)(b) .04 (.04) (.04)(c) (.04)(c)(d) Net realized and unrealized gain on investment and foreign currency transactions 1.46 1.66 1.86 .90 Net increase in net asset value from operations 1.50 1.62 1.82 .86 Less: Dividends and Distributions Dividends from net investment income (.21) -0- (.02) (.02) Distributions from net realized gain on investment transactions (.04) (.03) (.02) -0- Total dividends and distributions (.25) (.03) (.04) (.02) Net asset value, end of period $15.46 $14.21 $12.62 $10.84 Total Return Total investment return based on net asset value(e) 10.58% 12.85% 16.82% 8.55% Ratios/Supplemental Data Net assets, end of period (000's omitted) $324,111 $261,738 $156,524 $72,092 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.80%(f)(g) 1.85%(f)(h) 2.04%(f) 2.24%(g) Expenses, before waivers/reimbursements 1.80%(f)(g) 1.85%(f)(h) 2.04%(f) 2.75%(g) Net investment income (loss) .59%(g) (.32)%(h) (.33)%(c) (.36)%(c)(d)(g) Portfolio turnover rate 2% 1% 32% 28%
See footnote summary on page 65. 46 o ALLIANCEBERNSTEIN WEALTH STRATEGIES Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Appreciation Strategy ----------------------------------------------------------- Class C ----------------------------------------------------------- Six Months Ended September 2, February 28, 2003(a) to 2007 Year Ended August 31, August 31, (unaudited) 2006 2005 2004 -------------- ----------- -------------- ------------- Net asset value, beginning of period $14.21 $12.62 $10.84 $10.00 Income From Investment Operations Net investment income (loss)(b) .04 (.04) (.04)(c) (.04)(c)(d) Net realized and unrealized gain on investment and foreign currency transactions 1.46 1.66 1.86 .90 Net increase in net asset value from operations 1.50 1.62 1.82 .86 Less: Dividends and Distributions Dividends from net investment income (.21) -0- (.02) (.02) Distributions from net realized gain on investment transactions (.04) (.03) (.02) -0- Total dividends and distributions (.25) (.03) (.04) (.02) Net asset value, end of period $15.46 $14.21 $12.62 $10.84 Total Return Total investment return based on net asset value(e) 10.58% 12.85% 16.82% 8.55% Ratios/Supplemental Data Net assets, end of period (000's omitted) $344,866 $244,732 $114,591 $50,779 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.78%(f)(g) 1.83%(f)(h) 2.03%(f) 2.25%(g) Expenses, before waivers/reimbursements 1.78%(f)(g) 1.83%(f)(h) 2.03%(f) 2.76%(g) Net investment income (loss) .57%(g) (.30)%(h) (.32)%(c) (.38)%(c)(d)(g) Portfolio turnover rate 2% 1% 32% 28%
See footnote summary on page 65. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 47 Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Appreciation Strategy ---------------------------------------------------- Advisor Class ------------------------------------------------------- Six Months Ended September 2, February 28, 2003(a) to 2007 Year Ended August 31, August 31, (unaudited) 2006 2005 2004 ------------- ----------- -------------- ------------- Net asset value, beginning of period $14.44 $12.77 $10.92 $10.00 Income From Investment Operations Net investment income(b) .12 .09 .08(c) .06(c)(d) Net realized and unrealized gain on investment and foreign currency transactions 1.48 1.69 1.88 .89 Net increase in net asset value from operations 1.60 1.78 1.96 .95 Less: Dividends and Distributions Dividends from net investment income (.33) (.08) (.09) (.03) Distributions from net realized gain on investment transactions (.04) (.03) (.02) -0- Total dividends and distributions (.37) (.11) (.11) (.03) Net asset value, end of period $15.67 $14.44 $12.77 $10.92 Total Return Total investment return based on net asset value(e) 11.12% 13.99% 18.04% 9.51% Ratios/Supplemental Data Net assets, end of period (000's omitted) $422,467 $300,451 $106,973 $37,645 Ratio to average net assets of: Expenses, net of waivers/reimbursements .78%(f)(g) .82%(f)(h) 1.02%(f) 1.28%(g) Expenses, before waivers/reimbursements .78%(f)(g) .82%(f)(h) 1.02%(f) 1.84%(g) Net investment income 1.63%(g) .67%(h) .66%(c) .58%(c)(d)(g) Portfolio turnover rate 2% 1% 32% 28%
See footnote summary on page 65. 48 o ALLIANCEBERNSTEIN WEALTH STRATEGIES Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Appreciation Strategy ---------------------------------------------------- Class R ---------------------------------------------------- Six Months Ended February 17, February 28, 2004(i) to 2007 Year Ended August 31, August 31, (unaudited) 2006 2005 2004 ----------- ----------- ----------- ----------- Net asset value, beginning of period $14.27 $12.69 $10.89 $11.29 Income From Investment Operations Net investment income (loss)(b) .07 (.04) (.02)(c) .02(c) Net realized and unrealized gain (loss) on investment and foreign currency transactions 1.47 1.71 1.91 (.42) Net increase (decrease) in net asset value from operations 1.54 1.67 1.89 (.40) Less: Dividends and Distributions Dividends from net investment income (.29) (.06) (.07) -0- Distributions from net realized gain on investment transactions (.04) (.03) (.02) -0- Total dividends and distributions (.33) (.09) (.09) -0- Net asset value, end of period $15.48 $14.27 $12.69 $10.89 Total Return Total investment return based on net asset value(e) 10.78% 13.20% 17.37% (3.54)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $8,775 $6,185 $117 $10 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.44%(f)(g) 1.46%(f)(h) 1.67%(f) 1.70%(g) Expenses, before waivers/reimbursements 1.44%(f)(g) 1.46%(f)(h) 1.67%(f) 2.18%(g) Net investment income (loss) .92%(g) (.33)%(h) (.17)%(c) .32%(c)(g) Portfolio turnover rate 2% 1% 32% 28%
See footnote summary on page 65. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 49 Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Appreciation Strategy ------------------------------------------- Class K ------------------------------------------- Six Months Ended March 1, February 28, Year Ended 2005(i) to 2007 August 31, August 31, (unaudited) 2006 2005 ----------- ----------- ----------- Net asset value, beginning of period $14.35 $12.74 $12.19 Income From Investment Operations Net investment income(b) .09 .05 .01 Net realized and unrealized gain on investment and foreign currency transactions 1.47 1.68 .54 Net increase in net asset value from operations 1.56 1.73 .55 Less: Dividends and Distributions Dividends from net investment income (.31) (.09) -0- Distributions from net realized gain on investment transactions (.04) (.03) -0- Total dividends and distributions (.35) (.12) -0- Net asset value, end of period $15.56 $14.35 $12.74 Total Return Total investment return based on net asset value(e) 10.88% 13.60% 4.51% Ratios/Supplemental Data Net assets, end of period (000's omitted) $12,791 $7,850 $10 Ratio to average net assets of: Expenses(f) 1.14%(g) 1.15%(h) 1.35%(g) Net investment income 1.18%(g) .38%(h) .24%(g) Portfolio turnover rate 2% 1% 32%
See footnote summary on page 65. 50 o ALLIANCEBERNSTEIN WEALTH STRATEGIES Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Appreciation Strategy ------------------------------------------- Class I ------------------------------------------- Six Months Ended March 1, February 28, Year Ended 2005(i) to 2007 August 31, August 31, (unaudited) 2006 2005 ----------- ----------- ----------- Net asset value, beginning of period $14.41 $12.75 $12.19 Income From Investment Operations Net investment income(b) .12 .13 .03 Net realized and unrealized gain on investment and foreign currency transactions 1.47 1.65 .53 Net increase in net asset value from operations 1.59 1.78 .56 Less: Dividends and Distributions Dividends from net investment income (.33) (.09) -0- Distributions from net realized gain on investment transactions (.04) (.03) -0- Total dividends and distributions (.37) (.12) -0- Net asset value, end of period $15.63 $14.41 $12.75 Total Return Total investment return based on net asset value(e) 11.07% 14.03% 4.59% Ratios/Supplemental Data Net assets, end of period (000's omitted) $18,371 $16,452 $10 Ratio to average net assets of: Expenses(f) .81%(g) .84%(h) 1.05%(g) Net investment income 1.59%(g) .98%(h) .54%(g) Portfolio turnover rate 2% 1% 32%
See footnote summary on page 65. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 51 Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Balanced Wealth Strategy --------------------------------------------------------------- Class A --------------------------------------------------------------- Six Months Ended September 2, February 28, 2003(a) to 2007 Year Ended August 31, August 31, (unaudited) 2006 2005 2004 ----------- ----------- ----------- ----------- Net asset value, beginning of period $12.86 $11.96 $10.78 $10.00 Income From Investment Operations Net investment income(b) .17 .24 .17(c) .15(c)(d) Net realized and unrealized gain on investment and foreign currency transactions .97 .93 1.24 .73 Net increase in net asset value from operations 1.14 1.17 1.41 .88 Less: Dividends and Distributions Dividends from net investment income (.28) (.23) (.22) (.10) Distributions from net realized gain on investment transactions (.02) (.04) (.01) -0- Total dividends and distributions (.30) (.27) (.23) (.10) Net asset value, end of period $13.70 $12.86 $11.96 $10.78 Total Return Total investment return based on net asset value(e) 8.90% 9.94% 13.22% 8.83% Ratios/Supplemental Data Net assets, end of period (000's omitted) $1,220,979 $934,926 $522,962 $185,724 Ratio to average net assets of: Expenses, net of waivers/reimbursements .95%(f)(g) .99%(f)(h) 1.13%(f) 1.25%(g) Expenses, before waivers/reimbursements .95%(f)(g) .99%(f)(h) 1.13%(f) 1.67%(g) Net investment income 2.60%(g) 1.91%(h) 1.45%(c) 1.57%(c)(d)(g) Portfolio turnover rate -0-%(j) 1% 59% 59%
See footnote summary on page 65. 52 o ALLIANCEBERNSTEIN WEALTH STRATEGIES Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Balanced Wealth Strategy --------------------------------------------------------------- Class B --------------------------------------------------------------- Six Months Ended September 2, February 28, 2003(a) to 2007 Year Ended August 31, August 31, (unaudited) 2006 2005 2004 ----------- ----------- ----------- ----------- Net asset value, beginning of period $12.80 $11.91 $10.74 $10.00 Income From Investment Operations Net investment income(b) .13 .15 .09(c) .09(c)(d) Net realized and unrealized gain on investment and foreign currency transactions .95 .93 1.24 .71 Net increase in net asset value from operations 1.08 1.08 1.33 .80 Less: Dividends and Distributions Dividends from net investment income (.23) (.15) (.15) (.06) Distributions from net realized gain on investment transactions (.02) (.04) (.01) -0- Total dividends and distributions (.25) (.19) (.16) (.06) Net asset value, end of period $13.63 $12.80 $11.91 $10.74 Total Return Total investment return based on net asset value(e) 8.49% 9.16% 12.46% 8.03% Ratios/Supplemental Data Net assets, end of period (000's omitted) $567,425 $455,131 $276,275 $123,265 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.67%(f)(g) 1.71%(f)(h) 1.84%(f) 1.95%(g) Expenses, before waivers/reimbursements 1.67%(f)(g) 1.71%(f)(h) 1.84%(f) 2.37%(g) Net investment income 1.90%(g) 1.20%(h) .75%(c) .88%(c)(d)(g) Portfolio turnover rate -0-%(j) 1% 59% 59%
See footnote summary on page 65. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 53 Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Balanced Wealth Strategy --------------------------------------------------------------- Class C --------------------------------------------------------------- Six Months Ended September 2, February 28, 2003(a) to 2007 Year Ended August 31, August 31, (unaudited) 2006 2005 2004 ----------- ----------- ----------- ----------- Net asset value, beginning of period $12.80 $11.91 $10.74 $10.00 Income From Investment Operations Net investment income(b) .12 .15 .09(c) .08(c)(d) Net realized and unrealized gain on investment and foreign currency transactions .96 .93 1.24 .72 Net increase in net asset value from operations 1.08 1.08 1.33 .80 Less: Dividends and Distributions Dividends from net investment income (.23) (.15) (.15) (.06) Distributions from net realized gain on investment transactions (.02) (.04) (.01) -0- Total dividends and distributions (.25) (.19) (.16) (.06) Net asset value, end of period $13.63 $12.80 $11.91 $10.74 Total Return Total investment return based on net asset value(e) 8.49% 9.16% 12.46% 8.03% Ratios/Supplemental Data Net assets, end of period (000's omitted) $586,218 $420,484 $203,262 $85,171 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.66%(f)(g) 1.70%(f)(h) 1.83%(f) 1.96%(g) Expenses, before waivers/reimbursements 1.66%(f)(g) 1.70%(f)(h) 1.83%(f) 2.38%(g) Net investment income 1.89%(g) 1.22%(h) .76%(c) .85%(c)(d)(g) Portfolio turnover rate -0-%(j) 1% 59% 59%
See footnote summary on page 65. 54 o ALLIANCEBERNSTEIN WEALTH STRATEGIES Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Balanced Wealth Strategy --------------------------------------------------------------- Advisor Class --------------------------------------------------------------- Six Months Ended September 2, February 28, 2003(a) to 2007 Year Ended August 31, August 31, (unaudited) 2006 2005 2004 ----------- ----------- ----------- ----------- Net asset value, beginning of period $12.89 $11.98 $10.79 $10.00 Income From Investment Operations Net investment income(b) .19 .27 .20(c) .19(c)(d) Net realized and unrealized gain on investment and foreign currency transactions .97 .95 1.25 .72 Net increase in net asset value from operations 1.16 1.22 1.45 .91 Less: Dividends and Distributions Dividends from net investment income (.30) (.27) (.25) (.12) Distributions from net realized gain on investment transactions (.02) (.04) (.01) -0- Total dividends and distributions (.32) (.31) (.26) (.12) Net asset value, end of period $13.73 $12.89 $11.98 $10.79 Total Return Total investment return based on net asset value(e) 9.05% 10.31% 13.60% 9.10% Ratios/Supplemental Data Net assets, end of period (000's omitted) $116,363 $83,781 $53,679 $15,790 Ratio to average net assets of: Expenses, net of waivers/reimbursements .65%(f)(g) .69%(f)(h) .84%(f) .98%(g) Expenses, before waivers/reimbursements .65%(f)(g) .69%(f)(h) .84%(f) 1.52%(g) Net investment income 2.92%(g) 2.17%(h) 1.69%(c) 1.80%(c)(d)(g) Portfolio turnover rate -0-%(j) 1% 59% 59%
See footnote summary on page 65. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 55 Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Balanced Wealth Strategy --------------------------------------------------------------- Class R --------------------------------------------------------------- Six Months Ended February 17, February 28, 2004(i) to 2007 Year Ended August 31, August 31, (unaudited) 2006 2005 2004 ----------- ----------- ----------- ----------- Net asset value, beginning of period $12.85 $11.95 $10.77 $10.99 Income From Investment Operations Net investment income(b) .14 .13(c) .18(c) .08(c) Net realized and unrealized gain (loss) on investment and foreign currency transactions .97 1.00 1.20 (.25) Net increase (decrease) in net asset value from operations 1.11 1.13 1.38 (.17) Less: Dividends and Distributions Dividends from net investment income (.26) (.19) (.19) (.05) Distributions from net realized gain on investment transactions (.02) (.04) (.01) -0- Total dividends and distributions (.28) (.23) (.20) (.05) Net asset value, end of period $13.68 $12.85 $11.95 $10.77 Total Return Total investment return based on net asset value(e) 8.69% 9.53% 12.95% (1.54)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $6,514 $3,651 $233 $10 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.32%(f)(g) 1.33%(f)(h) 1.40%(f) 1.40%(g) Expenses, before waivers/reimbursements 1.32%(f)(g) 1.35%(f)(h) 1.42%(f) 1.79%(g) Net investment income 2.20%(g) 1.07%(h) 1.57%(c) 1.48%(g) Portfolio turnover rate -0-%(j) 1% 59% 59%
See footnote summary on page 65. 56 o ALLIANCEBERNSTEIN WEALTH STRATEGIES Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Balanced Wealth Strategy --------------------------------------------- Class K --------------------------------------------- Six Months Ended March 1, February 28, Year Ended 2005(i) to 2007 August 31, August 31, (unaudited) 2006 2005 ----------- ----------- ----------- Net asset value, beginning of period $12.85 $11.96 $11.61 Income From Investment Operations Net investment income(b) .17 .19 .04(c) Net realized and unrealized gain on investment and foreign currency transactions .96 .97 .41 Net increase in net asset value from operations 1.13 1.16 .45 Less: Dividends and Distributions Dividends from net investment income (.28) (.23) (.10) Distributions from net realized gain on investment transactions (.02) (.04) -0- Total dividends and distributions (.30) (.27) (.10) Net asset value, end of period $13.68 $12.85 $11.96 Total Return Total investment return based on net asset value(e) 8.85% 9.85% 3.88% Ratios/Supplemental Data Net assets, end of period (000's omitted) $13,217 $7,194 $103 Ratio to average net assets of: Expenses, net of waivers/reimbursements(f) 1.03%(g) 1.05%(h) 1.15%(g) Expenses, before waivers/reimbursements(f) 1.03%(g) 1.05%(h) 1.37%(g) Net investment income 2.50%(g) 1.55%(h) .88%(c)(g) Portfolio turnover rate -0-%(j) 1% 59%
See footnote summary on page 65. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 57 Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Balanced Wealth Strategy --------------------------------------------- Class I --------------------------------------------- Six Months Ended March 1, February 28, Year Ended 2005(i) to 2007 August 31, August 31, (unaudited) 2006 2005 ----------- ----------- ----------- Net asset value, beginning of period $12.86 $11.96 $11.61 Income From Investment Operations Net investment income(b) .19 .29 .09 Net realized and unrealized gain on investment and foreign currency transactions .97 .92 .37 Net increase in net asset value from operations 1.16 1.21 .46 Less: Dividends and Distributions Dividends from net investment income (.30) (.27) (.11) Distributions from net realized gain on investment transactions (.02) (.04) -0- Total dividends and distributions (.32) (.31) (.11) Net asset value, end of period $13.70 $12.86 $11.96 Total Return Total investment return based on net asset value(e) 9.05% 10.26% 4.02% Ratios/Supplemental Data Net assets, end of period (000's omitted) $22,805 $19,723 $10 Ratio to average net assets of: Expenses(f) .70%(g) .71%(h) .88%(g) Net investment income 2.90%(g) 2.33%(h) 1.49%(g) Portfolio turnover rate -0-%(j) 1% 59%
See footnote summary on page 65. 58 o ALLIANCEBERNSTEIN WEALTH STRATEGIES Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Preservation Strategy --------------------------------------------------------------- Class A --------------------------------------------------------------- Six Months Ended September 2, February 28, 2003(a) to 2007 Year Ended August 31, August 31, (unaudited) 2006 2005 2004 ----------- ----------- ----------- ----------- Net asset value, beginning of period $11.66 $11.17 $10.62 $10.00 Income From Investment Operations Net investment income(b) .21 .27 .19(c) .18(c)(d) Net realized and unrealized gain on investment and foreign currency transactions .50 .47 .64 .55 Net increase in net asset value from operations .71 .74 .83 .73 Less: Dividends and Distributions Dividends from net investment income (.27) (.24) (.25) (.11) Distributions from net realized gain on investment transactions (.03) (.01) (.02) -0- Tax return of capital -0- -0- (.01) -0- Total dividends and distributions (.30) (.25) (.28) (.11) Net asset value, end of period $12.07 $11.66 $11.17 $10.62 Total Return Total investment return based on net asset value(e) 6.12% 6.71% 7.91% 7.31% Ratios/Supplemental Data Net assets, end of period (000's omitted) $327,597 $268,341 $166,006 $64,467 Ratio to average net assets of: Expenses, net of waivers/reimbursements .98%(f)(g) 1.02%(f)(h) 1.20%(f) 1.26%(g) Expenses, before waivers/reimbursements .98%(f)(g) 1.02%(f)(h) 1.21%(f) 1.91%(g) Net investment income 3.58%(g) 2.42%(h) 1.74%(c) 1.90%(c)(d)(g) Portfolio turnover rate 1% 2% 81% 126%
See footnote summary on page 65. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 59 Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Preservation Strategy --------------------------------------------------------------- Class B --------------------------------------------------------------- Six Months Ended September 2, February 28, 2003(a) to 2007 Year Ended August 31, August 31, (unaudited) 2006 2005 2004 ----------- ----------- ----------- ----------- Net asset value, beginning of period $11.61 $11.13 $10.59 $10.00 Income From Investment Operations Net investment income(b) .17 .19 .11(c) .12(c)(d) Net realized and unrealized gain on investment and foreign currency transactions .49 .47 .64 .54 Net increase in net asset value from operations .66 .66 .75 .66 Less: Dividends and Distributions Dividends from net investment income (.23) (.17) (.18) (.07) Distributions from net realized gain on investment transactions (.03) (.01) (.02) -0- Tax return of capital -0- -0- (.01) -0- Total dividends and distributions (.26) (.18) (.21) (.07) Net asset value, end of period $12.01 $11.61 $11.13 $10.59 Total Return Total investment return based on net asset value(e) 5.71% 5.94% 7.14% 6.62% Ratios/Supplemental Data Net assets, end of period (000's omitted) $145,641 $124,623 $87,971 $36,948 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.70%(f)(g) 1.73%(f)(h) 1.90%(f) 1.95%(g) Expenses, before waivers/reimbursements 1.70%(f)(g) 1.73%(f)(h) 1.93%(f) 2.64%(g) Net investment income 2.87%(g) 1.72%(h) 1.03%(c) 1.23%(c)(d)(g) Portfolio turnover rate 1% 2% 81% 126%
See footnote summary on page 65. 60 o ALLIANCEBERNSTEIN WEALTH STRATEGIES Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Preservation Strategy --------------------------------------------------------------- Class C --------------------------------------------------------------- Six Months Ended September 2, February 28, 2003(a) to 2007 Year Ended August 31, August 31, (unaudited) 2006 2005 2004 ----------- ----------- ----------- ----------- Net asset value, beginning of period $11.60 $11.12 $10.58 $10.00 Income From Investment Operations Net investment income(b) .17 .19 .11(c) .12(c)(d) Net realized and unrealized gain on investment and foreign currency transactions .49 .47 .64 .53 Net increase in net asset value from operations .66 .66 .75 .65 Less: Dividends and Distributions Dividends from net investment income (.23) (.17) (.18) (.07) Distributions from net realized gain on investment transactions (.03) (.01) (.02) -0- Tax return of capital -0- -0- (.01) -0- Total dividends and distributions (.26) (.18) (.21) (.07) Net asset value, end of period $12.00 $11.60 $11.12 $10.58 Total Return Total investment return based on net asset value(e) 5.71% 5.95% 7.15% 6.52% Ratios/Supplemental Data Net assets, end of period (000's omitted) $174,176 $135,419 $81,802 $38,857 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.69%(f)(g) 1.72%(f)(h) 1.90%(f) 1.95%(g) Expenses, before waivers/reimbursements 1.69%(f)(g) 1.72%(f)(h) 1.91%(f) 2.61%(g) Net investment income 2.90%(g) 1.72%(h) 1.05%(c) 1.23%(c)(d)(g) Portfolio turnover rate 1% 2% 81% 126%
See footnote summary on page 65. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 61 Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Preservation Strategy --------------------------------------------------------------- Advisor Class --------------------------------------------------------------- Six Months Ended September 2, February 28, 2003(a) to 2007 Year Ended August 31, August 31, (unaudited) 2006 2005 2004 ----------- ----------- ----------- ----------- Net asset value, beginning of period $11.67 $11.18 $10.63 $10.00 Income From Investment Operations Net investment income(b) .24 .31 .23(c) .21(c)(d) Net realized and unrealized gain on investment and foreign currency transactions .49 .47 .63 .55 Net increase in net asset value from operations .73 .78 .86 .76 Less: Dividends and Distributions Dividends from net investment income (.29) (.28) (.28) (.13) Distributions from net realized gain on investment transactions (.03) (.01) (.02) -0- Tax return of capital -0- -0- (.01) -0- Total dividends and distributions (.32) (.29) (.31) (.13) Net asset value, end of period $12.08 $11.67 $11.18 $10.63 Total Return Total investment return based on net asset value(e) 6.27% 7.01% 8.19% 7.59% Ratios/Supplemental Data Net assets, end of period (000's omitted) $28,724 $24,549 $19,741 $43,811 Ratio to average net assets of: Expenses, net of waivers/reimbursements .68%(f)(g) .72%(f)(h) .90%(f) .97%(g) Expenses, before waivers/reimbursements 68%(f)(g) .72%(f)(h) .90%(f) 1.70%(g) Net investment income 4.06%(g) 2.71%(h) 2.12%(c) 2.14%(c)(d)(g) Portfolio turnover rate 1% 2% 81% 126%
See footnote summary on page 65. 62 o ALLIANCEBERNSTEIN WEALTH STRATEGIES Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Preservation Strategy --------------------------------------------------------------- Class R --------------------------------------------------------------- Six Months Ended February 17, February 28, 2004(i) to 2007 Year Ended August 31, August 31, (unaudited) 2006 2005 2004 ----------- ----------- ----------- ----------- Net asset value, beginning of period $11.69 $11.18 $10.62 $10.66 Income From Investment Operations Net investment income(b)(c) .19 .16 .17 .11 Net realized and unrealized gain (loss) on investment and foreign currency transactions .50 .55 .64 (.09) Net increase in net asset value from operations .69 .71 .81 .02 Less: Dividends and Distributions Dividends from net investment income (.26) (.19) (.22) (.06) Distributions from net realized gain on investment transactions (.03) (.01) (.02) -0- Tax return of capital -0- -0- (.01) -0- Total dividends and distributions (.29) (.20) (.25) (.06) Net asset value, end of period $12.09 $11.69 $11.18 $10.62 Total Return Total investment return based on net asset value(e) 5.87% 6.41% 7.70% .21% Ratios/Supplemental Data Net assets, end of period (000's omitted) $5,308 $5,120 $888 $12 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.36%(f)(g) 1.34%(f)(h) 1.40%(f) 1.40%(g) Expenses, before waivers/reimbursements 1.36%(f)(g) 1.36%(f)(h) 1.54%(f) 2.10%(g) Net investment income(c) 3.17%(g) 1.53%(h) 1.46% 1.91%(g) Portfolio turnover rate 1% 2% 81% 126%
See footnote summary on page 65. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 63 Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Preservation Strategy --------------------------------------------- Class K --------------------------------------------- Six Months Ended March 1, February 28, Year Ended 2005(i) to 2007 August 31, August 31, (unaudited) 2006 2005 ----------- ----------- ----------- Net asset value, beginning of period $11.66 $11.17 $10.98 Income From Investment Operations Net investment income(b) .24 .18 .06(c) Net realized and unrealized gain on investment and foreign currency transactions .47 .56 .24 Net increase in net asset value from operations .71 .74 .30 Less: Dividends and Distributions Dividends from net investment income (.28) (.24) (.11) Distributions from net realized gain on investment transactions (.03) (.01) -0- Tax return of capital -0- -0- (.00)(k) Total dividends and distributions (.31) (.25) (.11) Net asset value, end of period $12.06 $11.66 $11.17 Total Return Total investment return based on net asset value(e) 6.09% 6.68% 2.80% Ratios/Supplemental Data Net assets, end of period (000's omitted) $1,449 $1,000 $84 Ratio to average net assets of: Expenses net of waivers/reimbursements(f) 1.06%(g) 1.04%(h) 1.15%(g) Expenses, before waivers/reimbursements(f) 1.06%(g) 1.04%(h) 1.39%(g) Net investment income 3.75%(g) 1.71%(h) 1.22%(c)(g) Portfolio turnover rate 1% 2% 81%
See footnote summary on page 65. 64 o ALLIANCEBERNSTEIN WEALTH STRATEGIES Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Preservation Strategy --------------------------------------------- Class I --------------------------------------------- Six Months Ended March 1, February 28, Year Ended 2005(i) to 2007 August 31, August 31, (unaudited) 2006 2005 ----------- ----------- ----------- Net asset value, beginning of period $11.66 $11.16 $10.98 Income From Investment Operations Net investment income(b) .22 .30 .10(c) Net realized and unrealized gain on investment and foreign currency transactions .50 .49 .21 Net increase in net asset value from operations .72 .79 .31 Less: Dividends and Distributions Dividends from net investment income (.29) (.28) (.12) Distributions from net realized gain on investment transactions (.03) (.01) -0- Tax return of capital -0- -0- (.01) Total dividends and distributions (.32) (.29) (.13) Net asset value, end of period $12.06 $11.66 $11.16 Total Return Total investment return based on net asset value(e) 6.17% 7.11% 2.84% Ratios/Supplemental Data Net assets, end of period (000's omitted) $2,952 $2,440 $10 Ratio to average net assets of: Expenses net of waivers/reimbursements(f) .73%(g) .75%(h) .90%(g) Expenses, before waivers/reimbursements(f) .73%(g) .75%(h) .95%(g) Net investment income 3.82%(g) 2.81%(h) 1.85%(c)(g) Portfolio turnover rate 1% 2% 81%
(a) Commencement of operations. (b) Based on average shares outstanding. (c) Net of expenses waived and reimbursed by the Adviser. (d) Net of expenses waived and reimbursed by the Transfer Agent. (e) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charges or contingent deferred sales charges are not reflected in the calculation of total investment return. Total return does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Total investment return calculated for a period of less than one year is not annualized. (f) Expense ratios do not include expenses of the Underlying Portfolios in which the Strategy invests. The estimated annualized blended expense ratio of the Underlying Portfolios was .04%, .04% and .04% and .07%, .07% and .06%, for the Wealth Appreciation Strategy, Balanced Wealth Strategy and Wealth Preservation Strategy, respectively, for the six months ended February 28, 2007 and the year ended August 31, 2006. (g) Annualized. (h) The ratio includes expenses attributable to costs of proxy solicitation. (i) Commencement of distribution. (j) Less than 1%. (k) Amount is less than $(.005). ALLIANCEBERNSTEIN WEALTH STRATEGIES o 65 TRUSTEES William H. Foulk, Jr.(1), Chairman Marc O. Mayer, President David H. Dievler(1) John H. Dobkin(1) Michael J. Downey(1) D. James Guzy(1) Nancy P. Jacklin(1) Marshall C. Turner, Jr.(1) Earl D. Weiner(1) OFFICERS Philip L. Kirstein, Senior Vice President and Independent Compliance Officer Thomas J. Fontaine(2), Vice President Mark A. Hamilton(2), Vice President Joshua Lisser(2), Vice President Seth J. Masters(2), Vice President Christopher Nikolich(2), Vice President Emilie D. Wrapp, Clerk Joseph J. Mantineo, Treasurer and Chief Financial Officer Vincent S. Noto, Controller and Chief Accounting Officer Custodian State Street Bank & Trust Company One Lincoln Street Boston, MA 02111 Principal Underwriter AllianceBernstein Investments, Inc. 1345 Avenue of the Americas New York, NY 10105 Legal Counsel Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 Transfer Agent AllianceBernstein Investor Services, Inc. P.O. Box 786003 San Antonio, TX 78278-6003 Toll-Free (800) 221-5672 Independent Registered Public Accounting Firm KPMG LLP 345 Park Avenue New York, NY 10154 (1) Member of the Audit Committee, the Governance and Nominating Committee and the Independent Directors Committee. (2) The day-to-day management of and investment decisions for each Strategy's portfolio are made by the Blend Investment Team. Messrs. Fontaine, Hamilton, Lisser, Masters and Nikolich are the investment professionals with the most significant responsibility for the day-to-day management of each Strategy's portfolio. 66 o ALLIANCEBERNSTEIN WEALTH STRATEGIES Pages 67-143 represent the holdings of the Underlying Portfolios in which the Strategies may invest, including specific breakdowns within Underlying Portfolios. This holdings information has been derived from each fund's February 28, 2007 financial statements. A copy of the Underlying Portfolios' unaudited semi-annual report is available upon request. PORTFOLIO SUMMARY February 28, 2007 (unaudited) U.S. VALUE PORTFOLIO SECTOR BREAKDOWN* [ ] 32.8% Financial [PIE CHART OMITTED] [ ] 11.4% Energy [ ] 11.3% Consumer Staples [ ] 9.4% Utilities [ ] 8.3% Consumer Growth [ ] 6.3% Capital Equipment [ ] 6.0% Consumer Cyclicals [ ] 4.9% Industrial Resources [ ] 4.8% Technology [ ] 0.4% Services [ ] 4.4% Short-Term U.S. LARGE CAP GROWTH PORTFOLIO SECTOR BREAKDOWN* [ ] 28.2% Technology [PIE CHART OMITTED] [ ] 19.8% Finance [ ] 15.7% Consumer Services [ ] 14.8% Health Care [ ] 5.5% Aerospace & Defense [ ] 5.2% Consumer Staples [ ] 4.1% Energy [ ] 2.4% Capital Goods [ ] 1.8% Basic Industry [ ] 0.3% Consumer Manufacturing [ ] 2.2% Short-Term * All data are as of February 28, 2007. The Portfolios' sector breakdowns are expressed as a percentage of total investments and may vary over time. Please note: The sector classifications presented herein are based on the sector categorization methodology of the Adviser. These sector classifications are broadly defined. The "Portfolio of Investments" section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Portfolio's prospectus. ALLIANCEBERNSTEIN POOLING PORTFOLIOS o 67 PORTFOLIO SUMMARY February 28, 2007 (unaudited) GLOBAL REAL ESTATE INVESTMENT PORTFOLIO INDUSTRY BREAKDOWN* [ ] 34.7% Diversified & Others [PIE CHART OMITTED] [ ] 15.2% Office [ ] 8.9% Apartments [ ] 8.3% Retail [ ] 5.8% Regional Malls [ ] 5.0% Other [ ] 5.0% Shopping Centers [ ] 3.6% Lodging [ ] 3.5% Health Care [ ] 3.0% Industrial [ ] 2.8% Warehouse & Industrial [ ] 2.1% Self Storage [ ] 0.7% Restaurants & Lodging [ ] 1.4% Short-Term COUNTRY BREAKDOWN* [ ] 38.7% United States [PIE CHART OMITTED] [ ] 13.2% Japan [ ] 8.6% Australia [ ] 8.6% Hong Kong [ ] 7.7% United Kingdom [ ] 7.0% France [ ] 6.0% Canada [ ] 2.7% Singapore [ ] 2.0% Netherlands [ ] 1.5% Germany [ ] 1.3% Finland [ ] 0.7% Italy [ ] 0.6% Norway [ ] 1.4% Short-Term * All data are as of February 28, 2007. The Portfolio's industry and country breakdowns are expressed as a percentage of total investments and may vary over time. Please note: The sector classifications presented herein are based on the sector categorization methodology of the Adviser. These sector classifications are broadly defined. The "Portfolio of Investments" section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Portfolio's prospectus. 68 o ALLIANCEBERNSTEIN POOLING PORTFOLIOS PORTFOLIO SUMMARY February 28, 2007 (unaudited) INTERNATIONAL VALUE PORTFOLIO SECTOR BREAKDOWN* [ ] 35.4% Financial [PIE CHART OMITTED] [ ] 13.3% Industrial Commodities [ ] 11.6% Capital Equipment [ ] 10.4% Energy [ ] 6.3% Technology/Electronics [ ] 4.1% Telecommunication [ ] 4.1% Consumer Staples [ ] 3.8% Transportation [ ] 3.6% Medical [ ] 3.4% Utilities [ ] 2.8% Construction & Housing [ ] 1.2% Short-Term COUNTRY BREAKDOWN* [ ] 20.1% United Kingdom [PIE CHART OMITTED] [ ] 18.6% Japan [ ] 15.5% France [ ] 13.0% Germany [ ] 7.1% Netherlands [ ] 4.6% South Korea [ ] 4.2% Italy [ ] 4.0% Taiwan [ ] 2.3% Switzerland [ ] 1.8% Brazil [ ] 1.6% China [ ] 1.5% Belgium [ ] 4.5% Other [ ] 1.2% Short-Term * All data are as of February 28, 2007. The Portfolio's sector and country breakdowns are expressed as a percentage of total investments and may vary over time. "Other" country weightings for International Value Portfolio represents less than 1.5% weightings in Hong Kong, Hungary, Israel, Spain and Sweden. Please note: The sector classifications presented herein are based on the sector categorization methodology of the Adviser. These sector classifications are broadly defined. The "Portfolio of Investments" section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Portfolio's prospectus. ALLIANCEBERNSTEIN POOLING PORTFOLIOS o 69 PORTFOLIO SUMMARY February 28, 2007 (unaudited) INTERNATIONAL GROWTH PORTFOLIO SECTOR BREAKDOWN* [ ] 32.9% Finance [PIE CHART OMITTED] [ ] 10.9% Consumer Manufacturing [ ] 10.0% Health Care [ ] 8.3% Basic Industry [ ] 8.3% Consumer Services [ ] 7.4% Capital Goods [ ] 7.1% Technology [ ] 6.3% Consumer Staples [ ] 2.7% Multi-Industry Companies [ ] 2.6% Energy [ ] 2.0% Utilities [ ] 1.5% Short-Term COUNTRY BREAKDOWN* [ ] 22.5% Japan [PIE CHART OMITTED] [ ] 20.4% Switzerland [ ] 12.9% United Kingdom [ ] 8.7% France [ ] 4.3% Italy [ ] 4.2% Ireland [ ] 4.1% Australia [ ] 4.1% Spain [ ] 2.9% Germany [ ] 2.8% Hong Kong [ ] 2.6% Mexico [ ] 2.1% Brazil [ ] 6.9% Other [ ] 1.5% Short-Term * All data are as of February 28, 2007. The Portfolio's sector and country breakdowns are expressed as a percentage of total investments and may vary over time. "Other" country weightings for International Growth Portfolio represents less than 2.1% weightings in China, Finland, India, Russia, Sweden and Taiwan. Please note: The sector classifications presented herein are based on the sector categorization methodology of the Adviser. These sector classifications are broadly defined. The "Portfolio of Investments" section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Portfolio's prospectus. 70 o ALLIANCEBERNSTEIN POOLING PORTFOLIOS PORTFOLIO SUMMARY February 28, 2007 (unaudited) SMALL-MID CAP VALUE PORTFOLIO SECTOR BREAKDOWN* [ ] 22.1% Financial [PIE CHART OMITTED] [ ] 11.9% Capital Equipment [ ] 11.7% Industrial Resources [ ] 10.1% Services [ ] 9.3% Consumer Staples [ ] 8.6% Technology [ ] 7.2% Consumer Cyclicals [ ] 6.4% Utilities [ ] 5.2% Consumer Growth [ ] 1.2% Energy [ ] 6.3% Short-Term SMALL-MID CAP GROWTH PORTFOLIO SECTOR BREAKDOWN* [ ] 24.4% Consumer Services [PIE CHART OMITTED] [ ] 24.0% Technology [ ] 17.9% Health Care [ ] 9.7% Capital Goods [ ] 9.4% Energy [ ] 6.0% Finance [ ] 3.4% Basic Industry [ ] 2.5% Transportation [ ] 1.5% Aerospace & Defense [ ] 1.2% Short-Term * All data are as of February 28, 2007. The Portfolios' sector breakdowns are expressed as a percentage of total investments and may vary over time. Please note: The security type classifications presented herein are based on the security type categorization methodology of the Adviser. These security type classifications are broadly defined. The "Portfolio of Investments" section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Portfolio's prospectus. ALLIANCEBERNSTEIN POOLING PORTFOLIOS o 71 PORTFOLIO SUMMARY February 28, 2007 (unaudited) SHORT DURATION BOND PORTFOLIO SECURITY TYPE BREAKDOWN* [ ] 20.7% Mortgage Pass-Thrus [PIE CHART OMITTED] [ ] 15.8% Government-Related -- US Agencies [ ] 14.3% Mortgage CMOS [ ] 13.7% U.S. Treasuries [ ] 10.8% Commercial Mortgage Backed Securities [ ] 7.5% Corporates -- Investment Grade [ ] 6.1% Asset-Backed Securities [ ] 11.1% Short-Term INTERMEDIATE DURATION BOND PORTFOLIO SECURITY TYPE BREAKDOWN* [ ] 40.9% Mortgage Pass-Thrus [PIE CHART OMITTED] [ ] 12.9% Corporates -- Investment Grade [ ] 10.8% Non-US Dollar [ ] 6.7% Commercial Mortgage Backed Securities [ ] 6.3% U.S. Treasuries [ ] 2.8% Asset Backed Securities [ ] 2.4% Government-Related -- Non US Issuers [ ] 2.2% Mortgage CMOS [ ] 0.1% Corporates -- Non-Investment Grade [ ] 14.9% Short Term * All data are as of February 28, 2007. The Portfolios' security type breakdowns are expressed as a percentage of total investments and may vary over time. 72 o ALLIANCEBERNSTEIN POOLING PORTFOLIOS PORTFOLIO SUMMARY February 28, 2007 (unaudited) INFLATION PROTECTED SECURITIES PORTFOLIO SECURITY TYPE BREAKDOWN* [ ] 97.9% U.S. Government & Government Sponsored Agency Obligations [PIE CHART OMITTED] [ ] 1.6% Non U.S. Dollar Sovereign Debt Obligations [ ] 0.5% Short-Term HIGH YIELD PORTFOLIO SECURITY TYPE BREAKDOWN* [ ] 92.7% Corporates -- Non-Investment Grade [PIE CHART OMITTED] [ ] 4.4% Corporates -- Investment Grade [ ] 0.9% Emerging Markets -- Non-Investment Grade [ ] 0.2% Preferred Stocks [ ] 0.0% Common Stocks [ ] 1.8% Short-Term * All data are as of February 28, 2007. The Portfolios' security type breakdowns are expressed as a percentage of total investments and may vary over time. Please note: The sector classifications presented herein are based on the sector categorization methodology of the Adviser. These sector classifications are broadly defined. The "Portfolio of Investments" section of the report reflects more specific industry information and is consistent with the investment restrictions discussed in the Portfolio's prospectus. ALLIANCEBERNSTEIN POOLING PORTFOLIOS o 73 U.S. VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS February 28, 2007 (unaudited) Company Shares U.S. $ Value - ------------------------------------------------------------------------------- COMMON STOCKS-95.4% Financial-32.7% Banks - NYC-7.0% CIT Group, Inc. 97,300 $ 5,494,531 Citigroup, Inc. 1,729,800 87,181,920 JPMorgan Chase & Co. 1,299,100 64,175,540 ------------- 156,851,991 Finance - Personal Loans-0.8% Countrywide Financial Corp. 432,400 16,552,272 Life Insurance-2.4% Genworth Financial, Inc.-Class A 449,200 15,888,204 MetLife, Inc. 316,300 19,974,345 Prudential Financial, Inc. 42,800 3,892,232 Torchmark Corp. 101,400 6,481,488 UnumProvident Corp. 342,700 7,337,207 ------------- 53,573,476 Major Regional Banks-8.1% Bank of America Corp. 1,327,994 67,555,055 BB&T Corp. 32,700 1,389,096 Comerica, Inc. 198,600 11,993,454 Fifth Third Bancorp 186,000 7,492,080 Keycorp 89,900 3,392,826 Mellon Financial Corp. 308,300 13,389,469 National City Corp. 442,800 16,759,980 SunTrust Banks, Inc. 149,800 12,629,638 U.S. Bancorp 336,000 11,981,760 Wachovia Corp. 335,400 18,571,098 Wells Fargo & Co. 449,200 15,587,240 ------------- 180,741,696 Miscellaneous Financial-3.8% Goldman Sachs Group, Inc. 25,000 5,040,000 Janus Capital Group, Inc. 373,650 7,940,063 MBIA, Inc. 201,400 13,387,058 Merrill Lynch & Co., Inc. 389,500 32,593,360 MGIC Investment Corp. 182,500 11,013,875 Morgan Stanley 161,100 12,069,612 Waddell & Reed Financial, Inc.-Class A 151,300 3,688,694 ------------- 85,732,662 Multi-Line Insurance-3.5% American International Group, Inc. 741,900 49,781,490 Fidelity National Financial, Inc.-Class A 522,500 12,540,000 Hartford Financial Services Group, Inc. 174,600 16,510,176 ------------- 78,831,666 74 o ALLIANCEBERNSTEIN U.S. VALUE PORTFOLIO Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Property - Casualty Insurance-3.6% ACE, Ltd. 145,900 $8,193,744 Allstate Corp. 97,050 5,828,823 Chubb Corp. 296,800 15,151,640 Old Republic International Corp. 496,200 11,075,184 PartnerRe, Ltd. 66,100 4,592,628 RenaissanceRe Holdings, Ltd. 128,700 6,599,736 The Travelers Cos, Inc. 397,186 20,161,161 XL Capital Ltd.-Class A 124,300 8,825,300 ------------- 80,428,216 Savings & Loan-3.5% Astoria Financial Corp. 235,300 6,651,931 Federal Home Loan Mortgage Corp. 330,500 21,211,490 Federal National Mortgage Association 500,500 28,393,365 Washington Mutual, Inc. 513,500 22,121,580 ------------- 78,378,366 ------------- 731,090,345 Energy-11.4% Gas Pipelines-0.0% El Paso Corp. 56,000 805,280 Oils - Integrated Domestic-2.7% ConocoPhillips 365,500 23,911,010 Marathon Oil Corp. 233,500 21,187,790 Occidental Petroleum Corp. 71,200 3,288,016 Total SA (ADR) 162,000 10,905,840 ------------- 59,292,656 Oils - Integrated International-8.7% BP PLC (ADR) 170,700 10,521,948 Chevron Corp. 838,300 57,515,763 Exxon Mobil Corp. 1,642,000 117,698,560 Royal Dutch Shell PLC (ADR) 133,400 8,672,334 ------------- 194,408,605 ------------- 254,506,541 Consumer Staples-11.3% Beverages - Soft, Lite & Hard-1.3% The Coca-Cola Co. 101,400 4,733,352 Coca-Cola Enterprises, Inc. 224,800 4,516,232 Molson Coors Brewing Co.-Class B 154,000 13,003,760 PepsiCo, Inc. 124,100 7,836,915 ------------- 30,090,259 ALLIANCEBERNSTEIN U.S. VALUE PORTFOLIO o 75 Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Foods-2.8% Bunge, Ltd. 53,800 $ 4,269,568 ConAgra Foods, Inc. 419,900 10,594,077 General Mills, Inc. 198,500 11,187,460 Kellogg Co. 210,100 10,488,192 Kimberly-Clark Corp. 200,000 13,622,000 Kraft Foods, Inc.-Class A 32,700 1,043,784 Sara Lee Corp. 654,400 10,771,424 ------------- 61,976,505 Restaurants-1.1% McDonald's Corp. 556,700 24,338,924 Retail Stores - Food-1.2% Kroger Co. 398,300 10,224,361 Safeway, Inc. 458,600 15,853,802 ------------- 26,078,163 Soaps-2.6% Clorox Co. 152,900 9,687,744 Colgate-Palmolive Co. 180,200 12,138,272 Procter & Gamble Co. 590,100 37,465,449 ------------- 59,291,465 Tobacco-2.3% Altria Group, Inc. 486,800 41,027,504 UST, Inc. 173,900 10,096,634 ------------- 51,124,138 ------------- 252,899,454 Utilities-9.4% Electric Companies-2.3% Allegheny Energy, Inc.(a) 235,800 11,139,192 Alliant Energy Corp. 17,600 736,032 Constellation Energy Group, Inc. 34,350 2,702,314 Entergy Corp. 143,700 14,183,190 Northeast Utilities 137,900 4,007,374 TXU Corp. 195,600 12,938,940 Wisconsin Energy Corp. 85,125 4,081,744 ------------- 49,788,786 Telephone-7.1% American Tower Corp.-Class A(a) 90,000 3,486,600 AT&T, Inc. 2,070,855 76,207,464 Crown Castle International Corp.(a) 287,600 9,421,776 Embarq Corp.-Class W 38,305 2,120,182 Idearc, Inc. 18,740 637,160 Sprint Nextel Corp. 1,215,600 23,436,768 Verizon Communications, Inc. 1,164,200 43,576,006 ------------- 158,885,956 ------------- 208,674,742 76 o ALLIANCEBERNSTEIN U.S. VALUE PORTFOLIO Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Consumer Growth-8.3% Advertising-0.3% Interpublic Group of Cos., Inc.(a) 611,100 $7,693,749 Drugs-4.1% Merck & Co. Inc. 690,200 30,479,232 Pfizer, Inc. 2,489,800 62,145,408 ------------- 92,624,640 Entertainment-2.5% CBS Corp.-Class B 540,000 16,389,000 Time Warner, Inc. 1,335,900 27,185,565 Viacom, Inc.-Class B(a) 128,000 4,997,120 The Walt Disney Co. 198,900 6,814,314 ------------- 55,385,999 Hospital Management-0.0% Tenet Healthcare Corp.(a) 157,800 1,077,774 Other Medical-0.4% AmerisourceBergen Corp.-Class A 156,700 8,253,389 Radio - TV Broadcasting-1.0% Comcast Corp.-Class A(a) 605,700 15,578,604 Comcast Corp.-Special-Class A(a) 223,425 5,686,166 ------------- 21,264,770 ------------- 186,300,321 Capital Equipment-6.2% Aerospace & Defense-0.5% Boeing Co. 126,400 11,030,928 Auto Trucks - Parts-0.8% Cummins, Inc. 85,100 11,461,268 Eaton Corp. 81,900 6,634,719 ------------- 18,095,987 Defense-1.1% Lockheed Martin Corp. 108,700 10,574,336 Northrop Grumman Corp. 200,900 14,434,665 ------------- 25,009,001 Electrical Equipment-3.1% Cooper Industries, Ltd.-Class A 54,800 5,027,352 General Electric Co. 1,853,700 64,731,204 ------------- 69,758,556 Miscellaneous Capital Goods-0.7% Ingersoll-Rand Co. Ltd.-Class A 144,000 6,236,640 SPX Corp. 132,300 9,247,770 ------------- 15,484,410 ------------- 139,378,882 ALLIANCEBERNSTEIN U.S. VALUE PORTFOLIO o 77 Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Consumer Cyclicals-6.0% Autos & Auto Parts OEMS-1.9% American Axle & Manufacturing Holdings, Inc. 11,000 $269,830 Autoliv, Inc. 162,800 9,287,740 BorgWarner, Inc. 121,100 8,917,804 DaimlerChrysler AG 159,000 10,823,130 Magna International, Inc.-Class A 109,000 8,022,400 Toyota Motor Corp. (ADR) 30,200 4,031,700 ------------- 41,352,604 Household - Appliances/Durables-0.5% Black & Decker Corp. 123,600 10,415,772 Miscellaneous Consumer Cyclicals-0.1% Newell Rubbermaid, Inc. 90,900 2,783,358 Retailers-2.1% Dollar Tree Stores, Inc.(a) 107,900 3,680,469 Federated Department Stores, Inc. 168,100 7,507,346 The Gap, Inc. 655,500 12,579,045 Limited Brands Inc. 282,000 7,805,760 Office Depot, Inc.(a) 309,400 10,321,584 Saks, Inc. 299,500 5,786,340 ------------- 47,680,544 Textiles/Shoes - Apparel Manufacturing-0.9% Jones Apparel Group, Inc. 256,400 8,440,688 VF Corp. 150,500 12,011,405 ------------- 20,452,093 Toys-0.5% Mattel, Inc. 455,500 11,847,555 ------------- 134,531,926 Industrial Resources-4.9% Chemicals-2.6% Avery Dennison Corp. 149,100 9,909,186 Dow Chemical Co. 449,200 19,674,960 E.I. Du Pont de Nemours & Co. 164,400 8,343,300 Hercules, Inc.(a) 63,825 1,286,712 Lubrizol Corp. 123,500 6,422,000 PPG Industries, Inc. 163,400 10,825,250 ------------- 56,461,408 Containers - Metal/Glass/Paper-1.0% Crown Holdings, Inc.(a) 374,900 8,562,716 Owens-Illinois, Inc.(a) 275,200 6,538,752 Sonoco Products Co. 210,400 7,789,008 ------------- 22,890,476 Paper-0.7% Smurfit-Stone Container Corp.(a) 439,600 5,424,664 Temple-Inland, Inc. 179,600 10,740,080 ------------- 16,164,744 78 o ALLIANCEBERNSTEIN U.S. VALUE PORTFOLIO Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Steel-0.6% Arcelor Mittal 250,200 $ 12,725,172 ------------- 108,241,800 Technology-4.8% Communication - Equipment Manufacturers-0.6% Cisco Systems, Inc.(a) 177,700 4,609,538 Nokia OYJ (ADR) 379,300 8,280,119 ------------- 12,889,657 Computer Services/Software-1.5% Accenture Ltd.-Class A 235,400 8,403,780 Ceridian Corp.(a) 204,800 6,680,576 Electronic Data Systems Corp. 321,700 9,014,034 Microsoft Corp. 336,800 9,487,656 ------------- 33,586,046 Computer/Instrumentation-0.8% Celestica, Inc.(a) 339,400 2,131,432 Flextronics International Ltd.(a) 924,900 10,109,157 Sanmina-SCI Corp.(a) 599,600 2,224,516 Solectron Corp.(a) 959,100 3,088,302 ------------- 17,553,407 Computers-1.1% Hewlett-Packard Co. 260,600 10,262,428 International Business Machines Corp. 149,800 13,932,898 ------------- 24,195,326 Miscellaneous Industrial Technology-0.3% Arrow Electronics, Inc.(a) 136,200 5,219,184 Tech Data Corp.(a) 42,875 1,598,380 ------------- 6,817,564 Office Automation-0.5% Lexmark International, Inc.-Class A(a) 182,600 11,058,256 ------------- 106,100,256 Services-0.4% Railroads-0.4% CSX Corp. 245,400 9,244,218 Total Common Stocks (cost $1,836,743,018) 2,130,968,485 SHORT-TERM INVESTMENTS-4.3% Investment Companies-4.3% AllianceBernstein Fixed-Income Shares, Inc.- Government STIF Portfolio(b) (cost $96,946,304) 96,946,304 96,946,304 ALLIANCEBERNSTEIN U.S. VALUE PORTFOLIO o 79 U.S. $ Value - ------------------------------------------------------------------------------- Total Investments-99.7% (cost $1,933,689,322) $2,227,914,789 Other assets less liabilities-0.3% 6,275,030 Net Assets-100.0% $2,234,189,819 (a) Non-income producing security. (b) Investment in affiliated money market mutual fund. Glossary: ADR - American Depositary Receipt 80 o ALLIANCEBERNSTEIN U.S. VALUE PORTFOLIO U.S. LARGE CAP GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS February 28, 2007 (unaudited) Company Shares U.S. $ Value - ------------------------------------------------------------------------------- COMMON STOCKS-99.2% Technology-28.6% Communication Equipment-4.1% Cisco Systems, Inc.(a) 2,942,500 $76,328,450 QUALCOMM, Inc. 354,900 14,295,372 ------------- 90,623,822 Communication Services-0.5% Monster Worldwide, Inc.(a) 206,000 10,271,160 Computer Hardware/Storage-8.6% Apple, Inc.(a) 1,303,550 110,293,366 Hewlett-Packard Co. 1,425,900 56,151,942 Sun Microsystems, Inc.(a) 3,607,400 22,113,362 ------------- 188,558,670 Computer Peripherals-1.7% Network Appliance, Inc.(a) 950,200 36,744,234 Computer Services-0.4% DST Systems, Inc.(a) 114,100 8,034,922 Internet Infrastructure-1.1% Akamai Technologies, Inc.(a) 482,900 24,903,153 Internet Media-5.5% Google, Inc.-Class A(a) 267,605 120,275,067 Semiconductor Components-3.7% Broadcom Corp.-Class A(a) 1,504,300 51,281,587 NVIDIA Corp.(a) 1,008,300 31,257,300 ------------- 82,538,887 Software-3.0% Adobe Systems, Inc.(a) 446,700 17,532,975 Microsoft Corp. 1,753,200 49,387,644 ------------- 66,920,619 ------------- 628,870,534 Finance-20.0% Banking - Money Center-4.0% Credit Suisse Group (New York Exchange) (ADR) 826,385 57,227,161 JPMorgan Chase & Co. 629,300 31,087,420 ------------- 88,314,581 ALLIANCEBERNSTEIN U.S. LARGE CAP GROWTH PORTFOLIO o 81 Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Brokerage & Money Management-11.3% The Charles Schwab Corp. 1,407,000 $26,001,360 Franklin Resources, Inc. 571,650 67,105,993 Goldman Sachs Group, Inc. 142,090 28,645,344 Janus Capital Group, Inc. 116,500 2,475,625 Lazard Ltd.-Class A 232,000 11,945,680 Legg Mason, Inc. 477,940 49,103,556 Lehman Brothers Holdings, Inc. 83,000 6,083,900 Merrill Lynch & Co., Inc. 677,400 56,684,832 ------------- 248,046,290 Financial Services-2.8% Chicago Mercantile Exchange Holdings, Inc.- Class A 64,800 34,935,624 NYSE Group, Inc.(a) 318,700 27,057,630 ------------- 61,993,254 Insurance-1.9% American International Group, Inc. 619,560 41,572,476 ------------- 439,926,601 Consumer Services-15.9% Apparel-0.6% Nike, Inc.-Class B 133,800 13,978,086 Broadcasting & Cable-3.8% Comcast Corp.-Special-Class A(a) 2,343,250 59,635,712 Time Warner, Inc. 1,171,700 23,844,095 ------------- 83,479,807 Cellular Communications-1.0% America Movil SAB de CV Series L (ADR) 341,200 14,944,560 Nii Holdings Inc-B(a) 112,800 7,990,752 ------------- 22,935,312 Gaming-0.3% Melco PBL Entertainment Macau Ltd. (ADR)(a) 340,597 5,653,910 Restaurants & Lodging-5.3% Hilton Hotels Corp. 603,300 21,296,490 Las Vegas Sands Corp.(a) 169,800 14,650,344 McDonald's Corp. 957,350 41,855,342 Starwood Hotels & Resorts Worldwide, Inc. 577,750 38,015,950 ------------- 115,818,126 Retail - General Merchandise-4.9% eBay, Inc.(a) 405,000 12,984,300 Kohl's Corp.(a) 701,200 48,375,788 Target Corp. 759,050 46,704,347 ------------- 108,064,435 ------------- 349,929,676 82 o ALLIANCEBERNSTEIN U.S. LARGE CAP GROWTH PORTFOLIO Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Health Care-15.0% Biotechnology-5.2% Genentech, Inc.(a) 504,900 $ 42,598,413 Gilead Sciences, Inc.(a) 992,000 70,987,520 ------------- 113,585,933 Medical Products-4.5% Abbott Laboratories 507,200 27,703,264 Alcon, Inc. 542,000 67,544,040 Medtronic, Inc. 86,800 4,371,248 ------------- 99,618,552 Medical Services-5.3% WellPoint, Inc.(a) 1,460,600 115,957,034 ------------- 329,161,519 Aerospace & Defense-5.6% Aerospace-5.6% Boeing Co. 1,016,800 88,736,136 Rockwell Collins, Inc. 287,550 18,828,774 Spirit Aerosystems Holdings, Inc.-Class A(a) 532,200 15,705,222 ------------- 123,270,132 Consumer Staples-5.3% Food-1.3% WM Wrigley Jr Co. 592,000 29,481,600 Household Products-4.0% Procter & Gamble Co. 1,372,300 87,127,327 ------------- 116,608,927 Energy-4.2% Oil Service-4.2% GlobalSantaFe Corp. 107,900 6,218,277 Halliburton Co. 1,872,500 57,822,800 Schlumberger, Ltd. 428,500 26,909,800 ------------- 90,950,877 Capital Goods-2.5% Engineering & Construction-1.0% Fluor Corp. 255,600 21,590,532 Miscellaneous-1.5% General Electric Co. 937,900 32,751,468 ------------- 54,342,000 Basic Industry-1.8% Chemicals-1.8% Monsanto Co. 752,400 39,643,956 Consumer Manufacturing-0.3% Auto & Related-0.3% Toyota Motor Corp. (ADR) 50,040 6,680,340 Total Common Stocks (cost $1,980,157,333) 2,179,384,562 ALLIANCEBERNSTEIN U.S. LARGE CAP GROWTH PORTFOLIO o 83 Company Shares U.S. $ Value - ------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS-2.2% Investment Companies-2.2% AllianceBernstein Fixed-Income Shares, Inc.- Government STIF Portfolio(b) (cost $48,020,987) 48,020,987 $ 48,020,987 Total Investments-101.4% (cost $2,028,178,320) 2,227,405,549 Other assets less liabilities-(1.4)% (31,115,944) Net Assets-100.0% $2,196,289,605 (a) Non-income producing security. (b) Investment in affiliated money market mutual fund. Glossary: ADR - American Depositary Receipt 84 o ALLIANCEBERNSTEIN U.S. LARGE CAP GROWTH PORTFOLIO GLOBAL REAL ESTATE INVESTMENT PORTFOLIO PORTFOLIO OF INVESTMENTS February 28, 2007 (unaudited) Company Shares U.S. $ Value - ------------------------------------------------------------------------------- COMMON STOCKS-97.5% Real Estate Investment Trusts-96.8% Apartments-8.8% Apartment Investment & Management Co.- Class A 154,800 $9,111,528 Archstone-Smith Trust 169,400 9,555,854 AvalonBay Communities, Inc. 85,200 11,720,112 Boardwalk Real Estate Investment Trust 190,400 8,123,256 Camden Property Trust 35,400 2,548,092 Canadian Apartment Properties REI 100,000 1,812,586 Deutsche Wohnen AG 60,000 3,656,112 Equity Residential 313,200 15,907,428 Essex Property Trust, Inc. 27,000 3,750,030 Mid-America Apartment Communities, Inc. 164,500 9,085,335 Mirvac Group 1,699,816 7,594,200 Stockland 444,084 3,031,833 United Dominion Realty Trust, Inc. 243,350 7,945,377 ------------- 93,841,743 Diversified & Others-34.3% Alexandria Real Estate Equities, Inc. 108,700 11,434,153 British Land Co. PLC 712,226 20,869,958 Canadian Real Estate Investment Trust 241,800 6,818,198 Cominar Real Estate Investment Trust 164,900 3,592,384 Digital Realty Trust, Inc. 333,400 13,215,976 Fonciere Des Regions 92,300 16,936,106 Forest City Enterprises, Inc.-Class A 208,013 12,851,043 General Property Group 3,347,500 13,315,045 H&R Real Estate Investment 137,100 3,018,404 Hang Lung Properties, Ltd. 5,210,000 13,690,750 Keppel Land Ltd 2,550,000 13,942,083 Kerry Properties Ltd. 4,664,832 23,139,367 Land Securities Group PLC 582,309 23,442,583 Mitsui Fudosan Co. Ltd. 1,309,000 36,213,356 Multiplex Group 1,939,400 6,758,868 New World Development Co., Ltd. 10,911,443 24,008,649 Sino Land Co. 5,648,601 13,007,820 Sumitomo Realty & Development 750,000 29,930,115 Sun Hung Kai Properties Ltd. 1,446,600 17,162,535 Unibail 150,918 43,561,334 Vornado Realty Trust 157,500 20,034,000 ------------- 366,942,727 Health Care-3.4% Health Care Property Investors, Inc. 382,500 14,064,525 Nationwide Health Properties, Inc. 140,000 4,631,200 Ventas, Inc. 389,500 17,850,785 ------------- 36,546,510 ALLIANCEBERNSTEIN GLOBAL REAL ESTATE INVESTMENT PORTFOLIO o 85 Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Industrial-3.0% Brixton PLC 293,500 $2,804,443 DB RREEF Trust 11,188,095 15,407,635 Macquarie Goodman Group 1,483,445 8,389,212 Slough Estates PLC 339,050 4,926,694 ------------- 31,527,984 Lodging-3.5% Equity Inns, Inc. 191,000 2,960,500 FelCor Lodging Trust, Inc. 325,300 7,670,574 Highland Hospitality Corp. 170,500 2,797,905 Host Hotels & Resorts, Inc. 528,857 13,898,362 LaSalle Hotel Properties 83,177 3,695,554 Strategic Hotels & Resorts, Inc. 324,800 6,830,544 ------------- 37,853,439 Office-15.1% Allied Properties Real Estate Investment Trust 147,300 3,022,572 Beni Stabili SpA 4,650,000 7,692,169 Boston Properties, Inc. 158,000 18,975,800 Brookfield Properties Corp. 307,800 13,697,100 Corporate Office Properties Trust SBI MD 89,025 4,542,055 Derwent Valley Holdings PLC 267,945 10,961,470 Dundee Real Estate Investment Trust 151,300 5,262,384 Eurocastle Investment Ltd. 275,000 15,375,673 Great Portland Estates PLC 610,000 8,979,352 ING Office Fund 8,019,300 9,912,692 IVG Immobilien AG 282,000 12,578,906 Japan Real Estate Investment-Class A 1,060 13,068,952 Maguire Properties, Inc. 219,500 8,573,670 Nippon Building Fund, Inc.-Class A 961 14,038,680 SL Green Realty Corp. 102,800 14,994,408 ------------- 161,675,883 Other-5.0% Mitsubishi Estate Co. Ltd. 610,000 19,048,363 Nomura Real Estate Office Fund, Inc.-Class A 1,830 21,805,625 Norwegian Property ASA(a) 585,000 6,677,973 NTT Urban Development Corp. 2,600 5,906,700 ------------- 53,438,661 Regional Malls-5.7% General Growth Properties, Inc. 259,200 16,441,056 Simon Property Group, Inc. 295,600 33,325,944 Taubman Centers, Inc. 194,400 11,560,968 ------------- 61,327,968 Retail-8.2% CapitaMall Trust 6,238,800 14,127,975 Centro Properties Group 439,127 3,134,652 Hammerson PLC 326,000 9,792,245 Klepierre 68,700 13,522,908 Primaris Retail Real Estate Investment Trust 177,020 3,313,066 86 o ALLIANCEBERNSTEIN GLOBAL REAL ESTATE INVESTMENT PORTFOLIO Company Shares U.S. $ Value - ------------------------------------------------------------------------------- RioCan Real Estate Investment Trust(a)(b) 132,100 $3,005,456 RioCan Real Estate Investment Trust 489,700 11,141,345 Rodamco Europe NV 41,550 5,715,628 Westfield Group 1,370,964 23,550,794 ------------- 87,304,069 Self Storage-2.1% Public Storage, Inc. 218,500 22,127,495 Shopping Centers-4.9% Citycon Oyj 1,810,000 13,572,440 Developers Diversified Realty Corp. 192,800 12,639,968 Federal Realty Investment Trust 47,000 4,253,030 Kimco Realty Corp. 322,200 16,193,772 Tanger Factory Outlet Centers 151,100 6,071,198 ------------- 52,730,408 Warehouse & Industrial-2.8% First Industrial Realty Trust, Inc. 46,000 2,136,700 ProLogis Trust 423,300 27,992,829 ------------- 30,129,529 ------------- 1,035,446,416 Consumer Services-0.7% Restaurants & Lodging-0.7% Starwood Hotels & Resorts Worldwide, Inc. 116,100 7,639,380 Total Common Stocks (cost $772,699,097) 1,043,085,796 SHORT-TERM INVESTMENTS-1.3% Investment Companies-1.3% AllianceBernstein Fixed-Income Shares, Inc.- Government STIF Portfolio(c) (cost $14,659,820) 14,659,820 14,659,820 Total Investments-98.8% (cost $787,359,917) 1,057,745,616 Other assets less liabilities-1.2% 12,305,986 Net Assets-100.0% $1,070,051,602 (a) Non-income producing security. (b) Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security is considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At February 28, 2007, the market value of this security amounted to $3,005,456 or 0.3% of net assets. (c) Investment in affiliated money market mutual fund. ALLIANCEBERNSTEIN GLOBAL REAL ESTATE INVESTMENT PORTFOLIO o 87 INTERNATIONAL VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS February 28, 2007 (unaudited) Company Shares U.S. $ Value - ------------------------------------------------------------------------------- COMMON STOCKS-97.5% Financial-34.9% Banking-20.1% Bank Hapoalim BM 1,664,800 $ 7,704,268 Bank Leumi Le-Israel 736,900 2,645,233 Barclays PLC 1,831,300 26,555,346 BNP Paribas SA 263,100 27,435,252 Credit Agricole SA 500,071 19,921,229 Credit Suisse Group 394,500 27,258,514 Fortis (Euronext Amsterdam) 5,900 253,504 Fortis (Euronext Brussels) 401,200 17,237,998 HBOS PLC 958,560 20,288,237 Kookmin Bank 164,700 14,792,837 Royal Bank of Scotland Group PLC 698,900 27,478,937 Societe Generale 131,381 22,094,577 Sumitomo Mitsui Financial Group, Inc. 2,809 27,327,490 ------------- 240,993,422 Financial Services-2.7% ORIX Corp. 119,670 32,966,335 Insurance-12.1% Allianz SE 151,100 32,509,743 Aviva PLC 1,273,223 20,387,188 Fondiaria-Sai SpA (ordinary shares) 207,700 9,465,936 Fondiaria-Sai SpA (saving shares) 19,000 666,689 Friends Provident PLC 2,652,020 10,689,986 ING Groep NV 922,011 39,332,837 Muenchener Rueckversicherungs AG 204,900 32,650,391 ------------- 145,702,770 ------------- 419,662,527 Industrial Commodities-13.1% Chemicals-3.2% BASF AG 265,700 27,024,596 Mitsui Chemicals, Inc. 1,280,000 11,127,545 ------------- 38,152,141 Forest & Paper-0.9% Svenska Cellulosa AB-Class B 214,400 11,085,281 Metal-Nonferrous-1.9% Xstrata PLC 475,240 22,248,177 Metal-Steel-7.1% JFE Holdings, Inc. 660,500 40,855,297 Mittal Steel Co. NV (Euronext Amsterdam) 165,500 8,390,493 Mittal Steel Co. NV (Euronext Paris) 294,332 14,870,158 POSCO 58,000 21,768,491 ------------- 85,884,439 ------------- 157,370,038 88 o ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Capital Equipment-11.4% Aerospace & Defense-2.9% BAE Systems PLC 1,488,100 $ 12,673,972 European Aeronautic Defence & Space Co., NV 638,320 21,816,611 ------------- 34,490,583 Automobiles-7.6% Compagnie Generale des Etablissements Michelin-Class B 190,900 19,830,790 Continental AG 48,300 6,024,001 Hyundai Mobis 133,410 11,129,835 Renault SA 277,300 32,925,355 Toyota Motor Corp. 319,600 21,466,262 ------------- 91,376,243 Machinery & Engineering-0.9% Sumitomo Heavy Industries Ltd. 1,093,000 11,260,480 ------------- 137,127,306 Energy-10.3% Energy Sources-10.3% BP PLC 806,100 8,263,785 China Petroleum & Chemical Corp.-Class H 17,332,500 13,822,359 ENI SpA 976,800 29,916,817 MOL Hungarian Oil and Gas NyRt 69,800 7,481,844 PetroChina Co., Ltd.-Class H 4,412,000 5,161,613 Petroleo Brasileiro SA (NY) (ADR) 257,300 20,990,534 Repsol YPF SA 343,200 10,862,608 Total SA 398,400 26,833,292 ------------- 123,332,852 Technology/Electronics-6.2% Electrical & Electronics-0.8% Compal Electronics, Inc. (GDR)(a) 2,168,609 9,325,019 Electronic Components & Instruments-5.4% AU Optronics Corp. 8,117,400 11,422,400 Samsung Electronics Co. Ltd. 12,150 7,338,298 Sharp Corp. 1,053,000 19,620,015 Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) 1,072,023 11,899,455 United Microelectronics Corp. 25,201,227 14,970,135 ------------- 65,250,303 ------------- 74,575,322 Telecommunications-4.1% China Netcom Group Corp Ltd. 5,620,000 13,268,789 Nippon Telegraph & Telephone Corp. 2,031 10,759,021 Vodafone Group PLC 9,082,937 25,162,929 ------------- 49,190,739 Consumer Staples-4.0% Beverages & Tobacco-1.9% Japan Tobacco, Inc. 5,069 23,182,072 ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO o 89 Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Food & Household Products-2.1% J Sainsbury PLC 2,501,900 $25,041,875 ------------- 48,223,947 Transportation-3.8% Transportation - Airlines-2.3% Air France-KLM 298,000 12,916,546 Deutsche Lufthansa AG 547,700 14,833,224 ------------- 27,749,770 Transportation - Shipping-1.5% Mitsui OSK Lines Ltd. 1,541,000 17,475,243 ------------- 45,225,013 Medical-3.5% Health & Personal Care-3.5% AstraZeneca PLC 258,000 14,467,872 GlaxoSmithKline PLC 246,300 6,910,726 Sanofi-Aventis 249,319 21,170,222 ------------- 42,548,820 Utilities-3.4% Utility (Electric & Gas)-3.4% E.ON AG 184,200 24,146,390 RWE AG 163,120 16,633,743 ------------- 40,780,133 Construction & Housing-2.8% Building Materials-0.8% Buzzi Unicem SpA 194,400 5,687,049 Italcementi SpA 119,400 3,578,723 ------------- 9,265,772 Construction & Housing-1.9% George Wimpey PLC 515,700 5,734,631 Leopalace21 Corp. 140,000 4,429,420 Persimmon PLC 158,400 4,329,517 Taylor Woodrow PLC 1,035,400 8,244,576 ------------- 22,738,144 Real Estate-0.1% Sino Land Co. 493,800 1,137,142 ------------- 33,141,058 Total Common Stocks (cost $897,504,629) 1,171,177,755 SHORT-TERM INVESTMENTS-1.2% Investment Companies-1.2% AllianceBernstein Fixed-Income Shares, Inc.- Government STIF Portfolio(b) (cost $13,929,321) 13,929,321 13,929,321 90 o ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO U.S. $ Value - ------------------------------------------------------------------------------- Total Investments-98.7% (cost $911,433,950) $1,185,107,076 Other assets less liabilities-1.3% 15,683,120 Net Assets-100.0% $1,200,790,196 FINANCIAL FUTURES CONTRACTS
Value at Unrealized Number of Expiration Original February 28, Appreciation/ Type Contracts Month Value 2007 (Depreciation) - -------------------------------------------------------------------------------------- Purchased Contracts EURO March STOXX 50 282 2007 $15,490,447 $15,278,181 $212,266
(a) 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 February 28, 2007, the aggregate market value of these securities amounted to $9,325,019 or 0.8% of net assets. (b) Investment in affiliated money market mutual fund. Glossary: ADR - American Depositary Receipt GDR - Global Depositary Receipt ALLIANCEBERNSTEIN INTERNATIONAL VALUE PORTFOLIO o 91 INTERNATIONAL GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS February 28, 2007 (unaudited) Company Shares U.S. $ Value - ------------------------------------------------------------------------------- COMMON STOCKS-96.8% Finance-32.5% Banking-3.2% UBS AG (Swiss Virt-X) 595,015 $ 35,135,089 Banking - Money Center-12.9% Anglo Irish Bank Corp. PLC (Dublin) 1,010,764 21,530,233 Anglo Irish Bank Corp. PLC (London Exchange) 400,275 8,481,862 Banco Bilbao Vizcaya Argentaria SA 1,019,803 24,818,101 BNP Paribas SA 148,403 15,475,004 Credit Suisse Group 707,681 48,898,182 Mitsubishi UFJ Financial Group, Inc. 909 11,146,586 Standard Chartered PLC 431,358 12,047,229 ------------- 142,397,197 Banking - Regional-4.6% China Construction Bank Corp.-Class H 8,715,000 4,870,138 Macquarie Bank Ltd. 320,925 20,011,841 UniCredito Italiano SpA 2,731,076 25,222,655 ------------- 50,104,634 Brokerage & Money Management-5.5% Man Group PLC 2,560,978 27,533,343 Nomura Holdings, Inc. 1,546,300 33,486,821 ------------- 61,020,164 Insurance-3.4% QBE Insurance Group, Ltd. 883,336 22,378,915 Swiss Reinsurance 182,061 15,486,734 ------------- 37,865,649 Miscellaneous-2.9% 3i Group PLC 763,083 16,675,625 ORIX Corp. 56,840 15,658,114 ------------- 32,333,739 ------------- 358,856,472 Consumer Manufacturing-10.8% Auto & Related-5.7% Denso Corp. 442,000 17,220,100 Fiat SpA(a) 501,163 11,866,422 Honda Motor Co. Ltd. 151,700 5,637,935 Toyota Motor Corp. 413,800 27,793,302 ------------- 62,517,759 Building & Related-5.1% CRH PLC 371,360 15,451,533 Daiwa House Industry Co. Ltd. 751,000 13,470,384 Vinci, SA 200,471 27,708,464 ------------- 56,630,381 ------------- 119,148,140 92 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH PORTFOLIO Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Health Care-9.8% Drugs-6.5% Daiichi Sankyo Co. Ltd. 422,300 $13,632,894 Merck KGaA 95,457 11,879,860 Novartis AG 186,374 10,344,057 Roche Holding AG 205,682 36,600,921 ------------- 72,457,732 Medical Products-3.3% Alcon, Inc. 80,700 10,056,834 Essilor International, SA 124,883 14,235,457 Nobel Biocare Holding AG 35,711 11,828,484 ------------- 36,120,775 ------------- 108,578,507 Basic Industry-8.2% Chemicals-1.7% Bayer AG 335,790 19,330,803 Mining & Metals-6.5% China Shenhua Energy Co. Ltd.-Class H 4,703,500 11,894,839 Cia Vale do Rio Doce (ADR) 500,100 17,063,412 MMC Norilsk Nickel (ADR) 39,667 7,040,893 Rio Tinto PLC 151,514 8,162,052 Xstrata PLC 590,749 27,655,686 ------------- 71,816,882 ------------- 91,147,685 Consumer Services-8.2% Airlines-0.5% easyJet PLC(a) 415,377 5,369,713 Apparel-0.8% Inditex SA 152,260 8,848,638 Broadcasting & Cable-0.8% Grupo Televisa, SA (ADR) 329,500 8,992,055 Cellular Communications-2.2% America Movil SAB de CV Series L (ADR) 428,700 18,777,060 China Mobile Ltd. 642,000 5,959,923 ------------- 24,736,983 Entertainment & Leisure-0.2% Aristocrat Leisure Ltd. 172,067 2,286,737 Miscellaneous-1.9% Capita Group PLC 873,429 11,067,093 Li & Fung Ltd. 3,208,000 10,199,085 ------------- 21,266,178 Restaurants & Lodging-0.5% Accor, SA 61,791 5,447,311 ALLIANCEBERNSTEIN INTERNATIONAL GROWTH PORTFOLIO o 93 Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Retail - General Merchandise-1.3% Esprit Holdings Ltd. 1,327,500 $13,833,590 ------------- 90,781,205 Capital Goods-7.3% Electrical Equipment-1.1% Atlas Copco AB-Class A 370,434 11,608,902 Engineering & Construction-2.1% ABB Ltd. 1,394,510 23,255,427 Miscellaneous-4.1% NGK Insulators Ltd. 1,114,000 21,117,687 Nitto Denko Corp. 472,900 24,329,007 ------------- 45,446,694 ------------- 80,311,023 Technology-6.6% Communication Equipment-0.8% Nokia OYJ 416,720 9,095,672 Computer Services-1.9% CapGemini, SA 306,569 21,408,832 Miscellaneous-3.0% Canon, Inc. 601,300 32,568,828 Software-0.9% Infosys Technologies, Ltd. 216,330 10,117,287 ------------- 73,190,619 Consumer Staples-6.2% Beverages-0.5% Cia de Bebidas das Americas (ADR) 117,000 5,659,290 Food-3.7% Groupe Danone 64,263 10,162,928 Nestle, SA 83,181 30,944,654 ------------- 41,107,582 Household Products-1.2% Reckitt Benckiser PLC 250,714 12,587,866 Retail - Food & Drug-0.8% Tesco PLC 1,084,554 9,181,379 ------------- 68,536,117 Multi-Industry Companies-2.7% Multi-Industry Companies-2.7% Mitsui & Co. Ltd. 1,649,000 29,637,628 94 o ALLIANCEBERNSTEIN INTERNATIONAL GROWTH PORTFOLIO Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Energy-2.5% International-2.5% ENI SpA 334,690 $10,250,675 LUKOIL (ADR) 80,484 6,382,381 Royal Dutch Shell PLC-Class A 352,001 11,389,174 ------------- 28,022,230 Utilities-2.0% Electric & Gas Utility-1.0% International Power PLC 1,516,720 10,840,274 Telephone Utility-1.0% Telefonica SA 500,127 10,757,242 ------------- 21,597,516 Total Common Stocks (cost $923,597,742) 1,069,807,142 WARRANTS-0.4% Technology-0.4% Computer Peripherals-0.4% Foxconn Technology Co. Ltd., JPMorgan International, expiring 8/22/08(a)(b) (cost $2,039,827) 400,255 4,458,841 SHORT-TERM INVESTMENTS-1.5% Investment Companies-1.5% AllianceBernstein Fixed-Income Shares, Inc.- Government STIF Portfolio(c) (cost $16,291,666) 16,291,666 16,291,666 Total Investments-98.7% (cost $941,929,235) 1,090,557,649 Other assets less liabilities-1.3% 14,406,000 Net Assets-100.0% $1,104,963,649 (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 February 28, 2007, the aggregate market value of these securities amounted to $4,458,841 or 0.4% of net assets. (c) Investment in affiliated money market mutual fund. Glossary: ADR - American Depositary Receipt ALLIANCEBERNSTEIN INTERNATIONAL GROWTH PORTFOLIO o 95 SMALL-MID CAP VALUE PORTFOLIO PORTFOLIO OF INVESTMENTS February 28, 2007 (unaudited) Company Shares U.S. $ Value - ------------------------------------------------------------------------------- COMMON STOCKS-94.3% Financial-22.3% Major Regional Banks-4.9% Central Pacific Financial Corp. 169,900 $6,403,531 The South Financial Group, Inc. 31,075 832,188 Susquehanna Bancshares, Inc. 259,910 6,305,417 Trustmark Corp. 173,161 4,952,405 UnionBanCal Corp. 64,800 3,963,816 Whitney Holding Corp. 162,000 5,138,640 ------------- 27,595,997 Miscellaneous Financial-0.9% A.G. Edwards, Inc. 78,600 5,046,906 Multi-Line Insurance-3.5% Fidelity National Financial, Inc.-Class A 275,000 6,600,000 Radian Group, Inc. 110,600 6,353,970 StanCorp Financial Group, Inc. 141,700 6,829,940 ------------- 19,783,910 Property - Casualty Insurance-6.0% Arch Capital Group Ltd.(a) 141,300 9,112,437 Aspen Insurance Holdings, Ltd. 243,800 6,460,700 Old Republic International Corp. 343,375 7,664,130 PartnerRe, Ltd. 14,800 1,028,304 Platinum Underwriters Holdings, Ltd. 252,000 8,051,400 RenaissanceRe Holdings, Ltd. 35,000 1,794,800 ------------- 34,111,771 Real Estate Investment Trust-3.6% Digital Realty Trust, Inc. 138,025 5,471,311 FelCor Lodging Trust, Inc. 243,800 5,748,804 Highland Hospitality Corp. 177,000 2,904,570 Mid-America Apartment Communities, Inc. 74,000 4,087,020 Strategic Hotels & Resorts, Inc. 101,000 2,124,030 ------------- 20,335,735 Savings & Loan-3.4% Astoria Financial Corp. 204,900 5,792,523 Provident Financial Services, Inc. 322,000 5,654,320 Sovereign Bancorp, Inc. 55,400 1,399,958 Webster Financial Corp. 127,000 6,272,530 ------------- 19,119,331 ------------- 125,993,650 Capital Equipment-12.0% Aerospace & Defense-1.1% Goodrich Corp. 125,941 6,177,406 Auto Trucks - Parts-1.4% ArvinMeritor, Inc. 444,000 8,107,440 96 o ALLIANCEBERNSTEIN SMALL-MID CAP VALUE PORTFOLIO Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Electrical Equipment-3.3% Acuity Brands, Inc. 166,500 $ 9,224,100 Checkpoint Systems, Inc.(a) 171,100 3,346,716 Cooper Industries, Ltd.-Class A 63,600 5,834,664 ------------- 18,405,480 Machinery-3.3% Kennametal, Inc. 133,500 8,170,200 Regal-Beloit Corp. 97,700 4,419,948 Terex Corp.(a) 89,300 5,879,512 ------------- 18,469,660 Miscellaneous Capital Goods-2.9% Hanover Compressor Co.(a) 325,975 7,155,151 SPX Corp. 133,850 9,356,115 ------------- 16,511,266 ------------- 67,671,252 Industrial Resources-11.7% Aluminum-0.3% Mueller Industries, Inc. 63,000 1,877,400 Chemicals-6.5% Ashland, Inc. 108,000 7,082,640 Celanese Corp. Series A 266,800 7,625,144 Cytec Industries, Inc. 123,800 7,281,916 Lubrizol Corp. 141,000 7,332,000 Rockwood Holdings, Inc.(a) 263,300 7,174,925 ------------- 36,496,625 Containers - Metal/Glass/Paper-1.2% Owens-Illinois, Inc.(a) 294,200 6,990,192 Miscellaneous Metals-2.1% Commercial Metals Co. 96,000 2,643,840 Reliance Steel & Aluminum Co. 84,600 3,862,836 Silgan Holdings, Inc. 112,000 5,511,520 ------------- 12,018,196 Steel-1.6% Chaparral Steel Co. 62,000 3,089,460 Steel Dynamics, Inc. 155,400 5,864,796 ------------- 8,954,256 ------------- 66,336,669 Services-10.2% Air Transport-1.9% Alaska Air Group, Inc.(a) 145,000 5,945,000 Continental Airlines, Inc.-Class B(a) 122,700 4,858,920 ------------- 10,803,920 Business & Public Services-1.8% IKON Office Solutions, Inc. 524,000 7,325,520 United Stationers, Inc.(a) 51,700 2,843,500 ------------- 10,169,020 ALLIANCEBERNSTEIN SMALL-MID CAP VALUE PORTFOLIO o 97 Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Miscellaneous Industrial Transportation-1.5% GATX Corp. 178,000 $8,216,480 Truckers-5.0% Arkansas Best Corp. 107,500 4,243,025 Con-way, Inc. 119,000 5,842,900 Laidlaw International, Inc. 174,400 5,960,992 Ryder System, Inc. 128,000 6,584,320 Werner Enterprises, Inc. 286,500 5,523,720 ------------- 28,154,957 ------------- 57,344,377 Consumer Staples-9.4% Beverages - Soft, Lite & Hard-1.4% Molson Coors Brewing Co.-Class B 92,000 $ 7,768,480 Foods-2.2% Corn Products International, Inc. 170,900 5,463,673 Performance Food Group Co.(a) 233,700 6,887,139 ------------- 12,350,812 Restaurants-2.1% Jack in the Box, Inc.(a) 97,100 6,635,814 Papa John's International, Inc.(a) 174,364 5,148,969 ------------- 11,784,783 Retail Stores - Drugs-0.8% Longs Drug Stores Corp. 100,725 4,639,393 Retail Stores - Food-1.2% Ruddick Corp. 54,000 1,529,820 SUPERVALU, Inc. 148,200 5,477,472 ------------- 7,007,292 Tobacco-1.7% Universal Corp. 181,350 9,551,705 ------------- 53,102,465 Technology-8.6% Communication - Equipment Manufacturers-2.5% Andrew Corp.(a) 456,000 4,842,720 CommScope, Inc.(a) 248,000 9,540,560 ------------- 14,383,280 Computer Services/Software-0.8% CSG Systems International, Inc.(a) 176,100 4,342,626 Computer/Instrumentation-0.8% Celestica, Inc.(a) 333,800 2,096,264 Sanmina-SCI Corp.(a) 504,600 1,872,066 Solectron Corp.(a) 150,700 485,254 ------------- 4,453,584 98 o AllianceBernstein Small-Mid Cap Value Portfolio Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Miscellaneous Industrial Technology-1.2% Arrow Electronics, Inc.(a) 128,000 $ 4,904,960 Tech Data Corp.(a) 47,600 1,774,528 ------------- 6,679,488 Semiconductors-3.3% AVX Corp. 76,200 1,164,336 Siliconware Precision Industries Co. (ADR) 313,100 2,842,948 Teradyne, Inc.(a) 183,000 2,949,960 Vishay Intertechnology, Inc.(a) 450,000 6,412,500 Zoran Corp.(a) 336,000 5,533,920 ------------- 18,903,664 ------------- 48,762,642 Consumer Cyclicals-7.3% Autos & Auto Parts OEMS-1.5% Autoliv, Inc. 16,600 947,030 TRW Automotive Holdings Corp.(a) 239,000 7,279,940 ------------- 8,226,970 Home Furnishings-0.7% Furniture Brands International, Inc. 246,100 3,947,444 Household - Appliances/Durables-1.2% Briggs & Stratton Corp. 231,800 6,777,832 Retailers-2.6% AutoNation, Inc.(a) 119,138 2,616,271 Charming Shoppes, Inc.(a) 160,900 2,006,423 Office Depot, Inc.(a) 84,400 2,815,584 Saks, Inc. 379,400 7,330,008 ------------- 14,768,286 Textiles/Shoes - Apparel Manufacturing-1.3% Liz Claiborne, Inc. 89,000 4,005,000 VF Corp. 43,800 3,495,678 ------------- 7,500,678 ------------- 41,221,210 Utilities-6.4% Electric Companies-6.4% Allegheny Energy, Inc.(a) 119,000 5,621,560 Constellation Energy Group, Inc. 55,300 4,350,451 Northeast Utilities 267,000 7,759,020 Puget Energy, Inc. 196,000 4,835,320 Reliant Energy, Inc.(a) 430,300 7,276,373 Wisconsin Energy Corp. 135,500 6,497,225 ------------- 36,339,949 Consumer Growth-5.2% Drugs-0.7% Endo Pharmaceuticals Holdings, Inc.(a) 69,584 2,171,717 King Pharmaceuticals, Inc.(a) 93,350 1,740,977 ------------- 3,912,694 ALLIANCEBERNSTEIN SMALL-MID CAP VALUE PORTFOLIO o 99 Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Entertainment-0.5% Vail Resorts, Inc.(a) 55,300 $ 2,873,388 Hospital Management-1.8% Genesis HealthCare Corp.(a) 91,000 5,737,550 Universal Health Services, Inc.-Class B 74,405 4,305,073 ------------- 10,042,623 Other Medical-1.3% PerkinElmer, Inc. 300,000 7,110,000 Publishing-0.9% Quebecor World, Inc. 215,600 2,843,764 Reader's Digest Association, Inc. 150,500 2,553,985 ------------- 5,397,749 ------------- 29,336,454 Energy-1.2% Offshore Drilling-0.3% Rowan Cos., Inc. 63,600 1,948,068 Oil Well Equipment & Services-0.2% Todco-Class A(a) 26,700 909,936 Oils - Integrated Domestic-0.7% Hess Corp. 77,700 4,121,985 ------------- 6,979,989 Total Common Stocks (cost $471,427,125) 533,088,657 SHORT-TERM INVESTMENTS-6.3% Investment Companies-6.3% AllianceBernstein Fixed-Income Shares, Inc.- Government STIF Portfolio(b) (cost $35,828,662) 35,828,662 35,828,662 Total Investments-100.6% (cost $507,255,787) 568,917,319 Other assets less liabilities-(0.6)% (3,355,068) Net Assets-100.0% $565,562,251 (a) Non-income producing security. (b) Investment in affiliated money market mutual fund. Glossary: ADR - American Depositary Receipt 100 o AllianceBernstein Small-Mid Cap Value Portfolio SMALL-MID CAP GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS February 28, 2007 (unaudited) Company Shares U.S. $ Value - ------------------------------------------------------------------------------- COMMON STOCKS-99.4% Consumer Services-24.5% Advertising-1.2% aQuantive, Inc.(a) 274,000 $ 6,943,160 Apparel-1.3% Under Armour, Inc.-Class A(a) 155,600 7,149,820 Entertainment & Leisure-5.3% Activision, Inc.(a) 275,654 4,608,935 GameStop Corp.-Class A(a) 114,600 6,007,332 Gaylord Entertainment Co.(a) 204,200 11,020,674 National CineMedia, Inc.(a) 284,400 7,456,968 ------------- 29,093,909 Miscellaneous-8.5% CB Richard Ellis Group, Inc.-Class A(a) 286,500 9,546,180 Corporate Executive Board Co. 56,100 4,365,141 Iron Mountain, Inc.(a) 358,100 9,973,085 MSC Industrial Direct Co.-Class A 146,300 6,311,382 Robert Half International, Inc. 147,800 5,774,546 Strayer Education, Inc. 93,500 11,022,715 ------------- 46,993,049 Printing & Publishing-2.2% VistaPrint, Ltd.(a) 326,600 12,156,052 Restaurants & Lodging-2.8% Chipotle Mexican Grill, Inc.-Class A(a) 60,400 3,623,396 Orient-Express Hotels, Ltd.-Class A 231,400 11,947,182 ------------- 15,570,578 Retail - General Merchandise-3.2% Coldwater Creek, Inc.(a) 368,400 6,778,560 Dick's Sporting Goods, Inc.(a) 211,200 11,054,208 ------------- 17,832,768 ------------- 135,739,336 Technology-24.1% Communication Equipment-1.0% Ciena Corp.(a) 174,185 5,481,602 Communication Services-4.2% NeuStar, Inc.-Class A(a) 199,900 6,396,800 SBA Communications Corp.-Class A(a) 249,500 6,729,015 Time Warner Telecom, Inc.-Class A(a) 453,700 9,985,937 ------------- 23,111,752 ALLIANCEBERNSTEIN SMALL-MID CAP GROWTH PORTFOLIO o 101 Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Computer Services-5.4% Alliance Data Systems Corp.(a) 187,200 $ 11,185,200 Cognizant Technology Solutions Corp.- Class A(a) 48,500 4,374,700 Global Cash Access Holdings, Inc.(a) 357,300 5,495,274 Syntel, Inc. 253,600 9,099,168 ------------- 30,154,342 Internet Infrastructure-1.9% Digital River, Inc.(a) 189,700 10,507,483 Miscellaneous-2.0% Amphenol Corp.-Class A 168,740 10,890,480 Semiconductor Capital Equipment-0.1% Lam Research Corp.(a) 7,100 317,086 Semiconductor Components-5.7% Hittite Microwave Corp.(a) 200,200 8,396,388 Integrated Device Technology, Inc.(a) 345,100 5,597,522 International Rectifier Corp.(a) 110,900 4,759,828 Intersil Corp.-Class A 54,000 1,428,300 ON Semiconductor Corp.(a) 1,164,400 11,434,408 ------------- 31,616,446 Software-3.8% Parametric Technology Corp.(a) 403,800 7,700,466 Quest Software, Inc.(a) 428,500 6,993,120 TIBCO Software, Inc.(a) 732,100 6,625,505 ------------- 21,319,091 ------------- 133,398,282 Health Care-18.0% Biotechnology-4.4% Amylin Pharmaceuticals, Inc.(a) 50,000 1,945,500 Biomarin Pharmaceutical, Inc.(a) 316,200 5,384,886 Icon PLC (ADR)(a) 237,600 9,872,280 Nektar Therapeutics(a) 379,100 4,496,126 Vertex Pharmaceuticals, Inc.(a) 86,700 2,660,823 ------------- 24,359,615 Drugs-0.5% Alexion Pharmaceuticals, Inc.(a) 70,600 2,603,728 Medical Products-6.3% ArthroCare Corp.(a) 163,500 5,943,225 Kyphon, Inc.(a) 261,200 11,782,732 Resmed, Inc.(a) 101,900 4,868,782 Sirona Dental Systems, Inc. 144,000 5,359,680 Ventana Medical Systems, Inc.(a) 168,900 6,798,225 ------------- 34,752,644 102 o ALLIANCEBERNSTEIN SMALL-MID CAP GROWTH PORTFOLIO Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Medical Services-5.9% Psychiatric Solutions, Inc.(a) 284,200 $ 11,356,632 Stericycle, Inc.(a) 173,000 13,461,130 WellCare Health Plans, Inc.(a) 97,747 8,026,006 ------------- 32,843,768 Miscellaneous-0.9% HealthExtras, Inc.(a) 187,100 4,958,150 ------------- 99,517,905 Capital Goods-9.8% Electrical Equipment-5.3% Ametek, Inc. 292,500 10,003,500 Baldor Electric Co. 243,300 8,856,120 Lincoln Electric Holdings, Inc. 167,900 10,476,960 ------------- 29,336,580 Engineering & Construction-1.4% Granite Construction, Inc. 136,000 7,939,680 Machinery-1.3% Watts Water Technologies, Inc.-Class A 186,800 7,034,888 Miscellaneous-1.8% IDEX Corp. 190,250 9,894,902 ------------- 54,206,050 Energy-9.5% Domestic Producers-1.7% Newfield Exploration Co.(a) 213,000 9,205,860 Miscellaneous-1.7% Aventine Renewable Energy Holdings, Inc.(a) 127,500 2,037,450 Bill Barrett Corp.(a) 253,100 7,446,202 ------------- 9,483,652 Oil Service-4.0% Cameron International Corp.-Class W(a) 176,000 9,977,440 Complete Production Services, Inc.(a) 238,400 4,579,664 FMC Technologies, Inc.(a) 27,100 1,782,638 Superior Energy Services, Inc.(a) 195,000 5,976,750 ------------- 22,316,492 Pipelines-2.1% Grant Prideco, Inc.(a) 260,000 11,286,600 ------------- 52,292,604 Finance-6.1% Banking - Regional-1.4% First Republic Bank 146,300 7,841,680 ALLIANCEBERNSTEIN SMALL-MID CAP GROWTH PORTFOLIO o 103 Company Shares U.S. $ Value - ------------------------------------------------------------------------------- Brokerage & Money Management-4.2% Affiliated Managers Group, Inc.(a) 70,450 $ 7,996,075 Greenhill & Co., Inc. 24,400 1,644,072 Lazard Ltd.-Class A 151,700 7,811,033 optionsXpress Holdings, Inc. 252,800 5,867,488 ------------- 23,318,668 Miscellaneous-0.5% GFI Group, Inc.(a) 39,600 2,439,756 ------------- 33,600,104 Basic Industry-3.4% Mining & Metals-3.4% Allegheny Technologies, Inc. 77,380 7,927,581 Joy Global, Inc. 242,150 10,736,931 ------------- 18,664,512 Transportation-2.5% Air Freight-2.5% CH Robinson Worldwide, Inc. 97,500 4,968,600 UTI Worldwide, Inc. 301,000 9,072,140 ------------- 14,040,740 Aerospace & Defense-1.5% Aerospace-1.5% Precision Castparts Corp. 88,600 8,059,942 Total Common Stocks (cost $477,589,345) 549,519,475 SHORT-TERM INVESTMENTS-1.2% Investment Companies-1.2% AllianceBernstein Fixed-Income Shares, Inc.- Government STIF Portfolio(b) (cost $6,699,035) 6,699,035 6,699,035 Total Investments-100.6% (cost $484,288,380) 556,218,510 Other assets less liabilities-(0.6)% (3,493,761) Net Assets-100.0% $552,724,749 (a) Non-income producing security. (b) Investment in affiliated money market mutual fund. Glossary: ADR - American Depositary Receipt 104 o ALLIANCEBERNSTEIN SMALL-MID CAP GROWTH PORTFOLIO SHORT DURATION BOND PORTFOLIO PORTFOLIO OF INVESTMENTS February 28, 2007 (unaudited) Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- MORTGAGE PASS-THRUS-22.3% AGENCY ARMS-5.4% Federal Home Loan Mortgage Corp. 4.208%, 4/01/35(a) $ 8,076 $7,963,612 4.233%, 10/01/35(a) 2,446 2,451,062 5.944%, 11/01/36(a) 10,740 10,839,791 Federal National Mortgage Association 4.103%, 11/01/34(a) 1,859 1,863,907 4.41%, 8/01/34(a) 1,608 1,613,500 4.803%, 7/01/35(a) 1,763 1,761,963 5.487%, 5/01/36(a) 4,187 4,217,756 5.80%, 3/01/36(a) 7,874 7,972,172 5.867%, 11/01/36(a) 13,965 14,136,131 5.931%, 6/01/36(a) 5,166 5,203,588 6.897%, 1/01/36(a) 2,999 3,043,699 ------------- 61,067,181 FIXED RATE 15-YEAR-6.8% Federal Home Loan Mortgage Corp. 5.00%, 4/01/21 20,549 20,276,577 Federal National Mortgage Association 5.50%, TBA 54,740 54,859,771 6.00%, 12/01/09-6/01/20 1,301 1,320,690 ------------- 76,457,038 FIXED RATE 30-YEAR-5.3% Federal Home Loan Mortgage Corp. 7.00%, 5/01/35-2/01/37 30,185 31,014,981 Federal National Mortgage Association 5.50%, 5/01/36 28,060 27,875,393 7.00%, 2/01/31-12/01/34 1,284 1,328,189 ------------- 60,218,563 NON-AGENCY ARMS-4.8% Adjustable Rate Mortgage Trust Series 2005-4 Class 3A1 4.996%, 8/25/35(a) 4,576 4,517,323 Bear Stearns Alt-A Trust Series 2005-10 Class 24A1 5.928%, 1/25/36(a) 1,354 1,365,042 Series 2006-1 Class 22A1 5.398%, 2/25/36(a) 4,056 4,051,621 Series 2006-3 Class 22A1 6.228%, 5/25/36(a) 2,920 2,940,947 Series 2007-1 Class 21A1 5.75%, 1/25/47(a) 8,150 8,193,766 Citigroup Mortgage Loan Trust, Inc. Series 2005-2 Class 1A4 5.109%, 5/25/35(a) 3,337 3,301,692 ALLIANCEBERNSTEIN SHORT DURATION BOND PORTFOLIO o 105 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Countrywide Home Loans Series 2006-HYB4 Class 2A1 5.82%, 6/20/36(a) $ 2,837 $ 2,848,939 Indymac Inda Mortgage Loan Trust Series 2006-AR2 Class 1A1 6.019%, 9/25/36(a) 8,113 8,180,819 Indymac Index Mortgage Loan Trust Series 2006-AR7 Class 4A1 6.251%, 5/25/36(a) 1,853 1,877,879 JPMorgan Alternative Loan Trust Series 2006-A4 Class A1 5.95%, 9/25/36(a) 6,906 7,012,327 JPMorgan Mortgage Trust Series 2006-A4 Class 1A1 5.841%, 6/25/36(a) 3,445 3,474,991 Merrill Lynch Mortgage Investors, Inc. Series 2006-A1 Class 2A1 6.182%, 3/25/36(a) 3,908 3,966,687 Residential Funding Mortgage Securities I, Inc. Series 2005-SA3 Class 3A 5.236%, 8/25/35(a) 2,920 2,907,931 Structured Asset Securities Corp. Series 2002-11A Class 1A1 6.951%, 6/25/32(a) 12 11,608 ------------- 54,651,572 Total Mortgage Pass-Thrus (cost $251,071,442) 252,394,354 GOVERNMENT-RELATED- US AGENCIES-17.0% AGENCY CALLABLES-2.3% Federal Home Loan Mortgage Corp. 5.45%, 5/23/08 3,920 3,920,829 Federal National Mortgage Association 4.90%, 11/28/07 8,650 8,633,730 5.00%, 2/27/08 13,210 13,200,653 ------------- 25,755,212 AGENCY DEBENTURES-14.7% Federal Home Loan Bank 5.125%, 6/13/08 18,520 18,572,467 5.375%, 8/19/11 7,490 7,656,720 Federal Home Loan Mortgage Corp. 3.875%, 6/15/08 16,380 16,168,583 4.00%, 8/17/07 31,210 31,029,700 106 o ALLIANCEBERNSTEIN SHORT DURATION BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Federal National Mortgage Association 4.25%, 5/15/09 $ 24,175 $ 23,887,632 5.75%, 2/15/08 42,335 42,602,261 6.625%, 9/15/09 26,000 27,103,674 ------------- 167,021,037 Total Government-Related - US Agencies (cost $192,518,871) 192,776,249 MORTGAGE CMOS-15.4% AGENCY ADJUSTABLE RATE-0.7% Federal National Mortgage Association Series 2003-52 Class FV 6.32%, 5/25/31(a) 4,971 5,034,306 Series 2003-W13 Class AV2 5.46%, 10/25/33(a) 1,189 1,189,187 Freddie Mac Reference Remic Series R008 Class FK 5.72%, 7/15/23(a) 2,225 2,236,143 ------------- 8,459,636 AGENCY FIXED RATE-5.2% Federal Home Loan Mortgage Corp. Strips 5.00%, 12/01/34-8/01/35 28,816 6,815,598 Series R007 Class AC 5.875%, 5/15/16 35,004 35,246,384 Federal National Mortgage Association Strips 5.00%, 7/01/33-3/01/35 45,230 10,725,608 5.50%, 3/25/29 4,755 4,775,706 6.00%, 5/25/36 4,033 876,466 ------------- 58,439,762 NON-AGENCY ADJUSTABLE RATE-3.5% Adjustable Rate Mortgage Trust Series 2005-11 Class 5M1 5.79%, 2/25/36(a) 4,155 4,170,415 American Home Mortgage Investment Trust Series 2005-2 Class 2A1 6.89%, 9/25/45(a) 205 206,822 Countrywide Alternative Loan Trust Series 2005-62 Class 2A1 5.883%, 12/25/35(a) 2,022 2,021,824 Series 2006-0A10C Class M5 5.92%, 8/25/46(a) 2,250 2,238,750 Series 2006-0A14 Class 3A1 5.733%, 11/25/46(a) 2,422 2,414,559 Deutsche Alt-A Securities, Inc. Mortgage Loan Trust Series 2005-AR1 Class 1A1 5.63%, 8/25/35(a) 191 191,088 Homebanc Mortgage Trust Series 2005-4 Class A2 5.65%, 10/25/35(a) 5,030 5,037,667 ALLIANCEBERNSTEIN SHORT DURATION BOND PORTFOLIO o 107 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- MLCC Mortgage Investors, Inc. Series 2004-A Class A1 5.55%, 4/25/29(a) $ 208 $ 208,492 MortgageIT Trust Series 2005-4 Class M1 5.77%, 10/25/35(a) 1,966 1,966,092 Specialty Underwriting & Residential Finance Series 2005-AB2 Class M1 5.77%, 6/25/36(a) 2,000 2,008,240 Structured Adjustable Rate Mortgage Loan Series 2005-5 Class A3 5.55%, 5/25/35(a) 486 485,792 Series 2005-9 Class 2A1 6.227%, 5/25/35(a) 1,443 1,456,099 Structured Asset Mortgage Investment, Inc. Series 2004-AR5 Class 1A1 5.65%, 10/19/34(a) 1,310 1,311,510 Washington Mutual Series 2006-AR11 Class 1A 5.843%, 9/25/46(a) 2,554 2,554,669 Series 2006-AR11 Class 3A1A 5.803%, 9/25/46(a) 1,721 1,721,072 Series 2006-AR4 Class 1A1B 5.823%, 5/25/46(a) 2,570 2,570,243 Series 2006-AR9 Class 1AB2 5.54%, 8/25/46(a) 4,575 4,581,670 Washington Mutual Mortgage Pass-Thru Certificates Series 2007-0A1 Class A1A 5.633%, 2/25/47(a) 4,271 4,271,365 ------------- 39,416,369 NON-AGENCY FIXED RATE-6.0% Citigroup Mortgage Loan Trust, Inc. Series 2005-WF2 Class AF3 4.871%, 8/25/35 5,000 4,947,350 Countrywide Alternative Loan Trust Series 2006-J8 Class A2 6.00%, 2/25/37 10,443 10,536,193 Credit Suisse First Boston Mortgage Securities Corp. Series 2005-11 Class 3A6 5.50%, 12/25/35 5,821 5,827,039 Deutsche Alt-A Securities, Inc. Mortgage Loan Trust Series 2006-AB2 Class A7 5.961%, 6/25/36 3,988 3,982,008 Merrill Lynch Mortgage Investors, Inc. Series 2005-A8 Class A1C1 5.25%, 8/25/36 2,059 2,036,216 Series 2005-A9 Class 2A1A 5.155%, 12/25/35 5,148 5,104,513 108 o ALLIANCEBERNSTEIN SHORT DURATION BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Nomura Asset Acceptance Corp. Series 2006-WF1 Class A2 5.755%, 6/25/36 $ 6,125 $6,149,377 Residential Accredit Loans, Inc. Series 2007-QS1 Class 1A1 6.00%, 1/25/37 17,407 17,535,009 Series 2007-QS1 Class 2A10 6.00%, 1/25/37 6,702 6,751,475 Residential Asset Mortgage Products, Inc. Series 2004-SL4 Class A4 7.00%, 7/25/32 1,415 1,448,307 Wells Fargo Mortgage Backed Securities Trust Series 2006-AR11 Class A4 5.531%, 8/25/36 3,361 3,344,599 ------------- 67,662,086 Total Mortgage CMOS (cost $173,553,966) 173,977,853 U.S. TREASURIES-14.7% United States Treasury Inflation Indexed Note 3.50%, 1/15/11 15,872 16,718,016 United States Treasury Notes 3.50%, 8/15/09(b) 92,125 89,814,689 3.625%, 4/30/07 185 184,523 4.875%, 5/31/11(c) 24,720 25,069,565 5.00%, 7/31/08 35,200 35,319,610 Total U.S. Treasuries (cost $166,158,710) 167,106,403 COMMERCIAL MORTGAGE BACKED SECURITIES-11.6% NON-AGENCY ADJUSTABLE RATE CMBS-1.9% Banc of America Large Loan, Inc. Series 2005-MIB1 Class C 5.63%, 3/15/22(a)(d) 2,500 2,500,000 Commercial Mortgage Pass Through Certificates Series 2005-F10A Class A1 5.42%, 4/15/17(a)(d) 1,644 1,643,726 Series 2005-FL11 Class D 5.66%, 11/15/17(a)(d) 1,938 1,938,257 Credit Suisse First Boston Mortgage Securities Corp. Series 2005-TF2A Class F 5.82%, 9/15/20(a)(d) 1,435 1,435,000 Series 2005-TF2A Class G 5.87%, 9/15/20(a)(d) 1,435 1,435,000 Credit Suisse Mortgage Capital Certificates Series 2006-TF2A Class SVD 5.79%, 10/15/21(a)(d) 4,900 4,900,000 ALLIANCEBERNSTEIN SHORT DURATION BOND PORTFOLIO o 109 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Lehman Brothers Floating Rate Commercial Mortgage Trust Series 2004-LLFA Class C 5.63%, 10/15/17(a)(d) $ 2,400 $ 2,400,000 Morgan Stanley Capital I Series 2005-XLF Class G 5.69%, 8/15/19(a)(d) 2,000 2,000,000 Series 2005-XLF Class H 5.71%, 8/15/19(a)(d) 1,000 1,000,000 Wachovia Bank Commercial Mortgage Trust Series 2006-WL7A Class H 5.72%, 9/15/21(a)(d) 2,600 2,595,762 ------------- 21,847,745 NON-AGENCY FIXED RATE CMBS-9.7% Asset Securitization Corp. Series 1996-MD6 Class A1C 7.04%, 11/13/29 129 130,282 Banc of America Commercial Mortgage, Inc. Series 2006-6 Class A2 5.309%, 10/10/45 6,800 6,844,608 Series 2007-1 Class A2 5.381%, 1/15/49 8,000 8,084,720 Bear Stearns Commercial Mortgage Securities Series 2002-T0P6 Class A2 6.46%, 10/15/36 10,615 11,197,020 CW Capital Cobalt Series 2006-C1 Class A2 5.174%, 8/15/48 7,800 7,808,502 First Union Lehman Brothers Bank of America Series 1998-C2 Class A2 6.56%, 11/18/35 497 501,031 GE Capital Commercial Mortgage Corp. Series 2005-C3 Class A3FX 4.863%, 7/10/45 5,665 5,619,996 Greenwich Capital Commercial Funding Corp. Series 2007-GG9 Class A2 5.381%, 3/10/39 6,250 6,306,813 JPMorgan Chase Commercial Mortgage Securities Corp. Series 2005-LDP5 Class A2 5.198%, 12/15/44 5,847 5,856,405 Series 2007-CB18 Class A1 5.32%, 6/12/47 2,000 2,013,160 110 o ALLIANCEBERNSTEIN SHORT DURATION BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- LB-UBS Commercial Mortgage Trust Series 2002-C1 Class A4 6.462%, 3/15/31 $ 5,900 $6,237,444 Series 2003-C5 Class A3 4.254%, 7/15/27 7,435 7,213,120 Series 2004-C7, Class A2 3.992%, 10/15/29 9,155 8,899,944 Series 2006-C6 Class A2 5.262%, 9/15/39 10,000 10,064,400 Series 2007-C1 Class A2 5.318%, 2/15/40 8,300 8,329,548 Nomura Asset Securities Corp. Series 1998-D6 Class A1B 6.59%, 3/15/30 999 1,009,683 Wachovia Bank Commercial Mortgage Trust Series 2006-C29 Class A2 5.275%, 11/15/48 13,100 13,168,513 ------------- 109,285,189 Total Commercial Mortgage Backed Securities (cost $130,913,015) 131,132,934 CORPORATES - INVESTMENT GRADE-8.0% Financial Institutions-4.4% Banking-0.4% UBS Preferred Funding Trust I 8.622%, 10/29/49(a) 3,885 4,313,896 Finance-2.5% American General Finance Corp. 5.64%, 8/17/11(a) 9,500 9,531,882 Capital One Financial Corp. 5.633%, 9/10/09(a) 4,800 4,814,688 CIT Group, Inc. 5.48%, 8/17/09(a) 4,775 4,781,824 Senior Note 7.75%, 4/02/12 8,500 9,436,241 ------------- 28,564,635 Insurance-0.7% Marsh & McLennan Cos., Inc. 5.375%, 3/15/07 7,725 7,724,568 Real Estate Investment Trust-0.8% Simon Property Group LP 6.375%, 11/15/07 3,804 3,828,844 Vornado Realty LP 5.625%, 6/15/07 5,840 5,837,103 ------------- 9,665,947 ------------- 50,269,046 ALLIANCEBERNSTEIN SHORT DURATION BOND PORTFOLIO o 111 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Industrial-3.6% Basic-0.1% Weyerhaeuser Co. 6.125%, 3/15/07 $ 569 $ 568,931 Capital Goods-0.5% Waste Management, Inc. 6.50%, 11/15/08 5,623 5,732,367 Communications - Media-0.7% British Sky Broadcasting Group PLC 6.875%, 2/23/09 7,340 7,562,145 Communications - Telecommunication-0.6% Verizon Global Funding Corp. 6.125%, 6/15/07 6,705 6,721,917 Consumer Cyclical - Automotive-0.6% DaimlerChrysler North America Corp. 4.125%, 3/07/07 5,895 5,894,570 4.875%, 6/15/10 1,210 1,193,545 ------------- 7,088,115 Consumer Non-Cyclical-1.1% Safeway, Inc. 6.50%, 11/15/08 4,495 4,579,510 The Kroger Co. 7.80%, 8/15/07 8,420 8,505,564 ------------- 13,085,074 ------------- 40,758,549 Total Corporates - Investment Grade (cost $90,966,997) 91,027,595 ASSET-BACKED SECURITIES-6.6% AUTOS - FIXED RATE-0.0% Capital Auto Receivables Asset Trust Series 2005-SN1A Class A3A 4.10%, 6/15/08 158 157,881 CREDIT CARD - FIXED RATE-0.3% Providian Gateway Master Trust Series 2004-DA Class A 3.35%, 9/15/11(d) 2,900 2,870,956 HOME EQUITY LOANS - FIXED RATE-2.5% American General Mortgage Loan Trust Series 2003-1 Class A3 4.03%, 4/25/33 2,873 2,798,756 Citifinancial Mortgage Securities, Inc. Series 2004-1 Class AF2 2.645%, 4/25/34 684 668,118 112 o ALLIANCEBERNSTEIN SHORT DURATION BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Countrywide Asset-Backed Certificates Series 2007-S1 Class A3 5.81%, 11/25/36 $ 3,500 $3,514,175 Credit-Based Asset Servicing & Securities, Inc. Series 2003-CB1 Class AF 3.45%, 1/25/33 1,621 1,584,993 Series 2003-CB3 Class AF1 2.879%, 12/25/32 2,180 2,098,410 Series 2005-CB4 Class AF2 4.751%, 8/25/35 2,250 2,222,099 Series 2005-RP2 Class AF2 5.75%, 9/25/35(d) 1,800 1,802,250 Home Equity Mortgage Trust Series 2005-4 Class A3 4.742%, 1/25/36 3,480 3,451,657 Series 2006-1 Class A2 5.30%, 5/25/36 4,010 4,007,281 Series 2006-5 Class A1 5.50%, 1/25/37 4,000 3,999,883 Residential Asset Mortgage Products, Inc. Series 2004-RS4 Class AI4 4.911%, 4/25/34 25 24,817 Washington Mutual Asset-Backed Certificates Series 2007-WM1 Class N1 6.75%, 1/25/47(d) 2,497 2,492,466 ------------- 28,664,905 HOME EQUITY LOANS - FLOATING RATE-2.8% Ace Securities Corp. Series 2003-0P1 Class A2 5.68%, 12/25/33(a) 18 17,635 First Franklin Mortgage Loan Trust Series 2004-FF4 Class A2 5.61%, 6/25/34(a) 422 422,823 Home Equity Mortgage Trust Series 2005-3 Class M1 5.86%, 11/25/35(a) 800 800,864 Household Home Equity Loan Trust Series 2006-1 Class M1 5.60%, 1/20/36(a) 2,428 2,427,725 HSI Asset Securitization Corp. Trust Series 2006-OPT1 Class 2A1 5.40%, 12/25/35(a) 3,992 3,992,457 IXIS Real Estate Capital Trust Series 2004-HE4 Class A1 5.69%, 2/25/35(a) 361 361,520 ALLIANCEBERNSTEIN SHORT DURATION BOND PORTFOLIO o 113 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Lehman XS Trust Series 2005-2 Class 1M1 5.82%, 8/25/35(a) $ 5,000 $ 5,013,850 Series 2006-1 Class 1M1 5.77%, 2/25/36(a) 4,000 4,016,840 Series 2007-2N Class M1 5.66%, 2/25/37(a) 3,600 3,603,384 Long Beach Mortgage Loan Trust Series 2004-3 Class M2 5.92%, 7/25/34(a) 400 401,892 Master Asset Backed Securities Trust Series 2004-HE1 Class A1 5.72%, 9/25/34(a) 1,154 1,158,665 Series 2006-WMC1 Class A2 5.43%, 2/25/36(a) 2,000 2,000,196 Option One Mortgage Loan Trust Series 2006-2 Class 2A2 5.42%, 7/25/36(a) 4,215 4,213,685 Residential Asset Securities Corp. Series 2006-KS3 Class AI2 5.44%, 4/25/36(a) 1,800 1,800,000 Saxon Asset Securities Trust Series 2005-4 Class A2A 5.41%, 11/25/37(a) 196 196,146 Structured Asset Investment Loan Trust Series 2005-HE1 Class A4 5.48%, 7/25/35(a) 1,075 1,074,872 ------------- 31,502,554 OTHER - FIXED RATE-0.1% DB Master Finance, LLC Series 2006-1 Class A2 5.779%, 6/20/31(d) 1,600 1,632,880 OTHER - FLOATING RATE-0.9% GE Dealer Floorplan Master Note Trust Series 2006-2 Class A 5.39%, 4/20/13(a) 4,360 4,366,108 Mortgage Equity Conversion Asset Trust Series 2007-FF2 Class A 5.48%, 3/25/07(a)(d) 3,600 3,600,000 SLM Student Loan Trust Series 2005-10 Class A2 5.37%, 4/27/15(a) 2,203 2,203,251 ------------- 10,169,359 Total Asset-Backed Securities (cost $74,921,100) 74,998,535 114 o ALLIANCEBERNSTEIN SHORT DURATION BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- SHORT-TERM INVESTMENT-11.9% MUTUAL FUND-11.9% AllianceBernstein Fixed-Income Shares, Inc.- Government STIF Portfolio(e) (cost $135,323,301) $135,323,301 $135,323,301 Total Investments-107.5% (cost $1,215,427,402) 1,218,737,224 Other assets less liabilities-(7.5)% (84,939,397) Net Assets-100% $1,133,797,827 (a) Variable rate coupon, rate shown as of February 28, 2007. (b) Position with a market value of $731,192 has been segregated to collateralize margin requirements for open future contracts. (c) Represents entire or partial position segregated as collateral for swaps. (d) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities are considered liquid and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At February 28, 2007, the aggregate market value of these securities amounted to $34,246,297 or 3.0% of net assets. (e) Investment in affiliated money market mutual fund. Glossary of Terms: TBA - To Be Announced. ALLIANCEBERNSTEIN SHORT DURATION BOND PORTFOLIO o 115 INTERMEDIATE DURATION BOND PORTFOLIO PORTFOLIO OF INVESTMENTS February 28, 2007 (unaudited) Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- MORTGAGE PASS-THRUS-45.1% AGENCY ARMS-4.2% Federal Home Loan Mortgage Corp. 5.84%, 12/01/36(a)(b) $ 34,078 $34,389,380 Federal National Mortgage Association 4.41%, 8/01/34(a)(b) 4,272 4,285,292 5.487%, 5/01/36(a)(b) 1,368 1,378,065 5.785%, 1/01/37(a)(b) 7,546 7,636,637 5.80%, 3/01/36(a)(b) 4,797 4,856,611 5.931%, 6/01/36(a)(b) 3,527 3,553,111 ------------- 56,099,096 FIXED RATE 15-YEAR-5.5% Federal Home Loan Mortgage Corp. 5.00%, 4/01/21(a) 3,367 3,322,783 Federal National Mortgage Association 4.50%, 5/01/20-10/01/21(a) 35,662 34,565,620 4.50%, TBA 3,830 3,711,507 5.00%, 4/01/19-12/01/21(a) 29,103 28,756,596 5.00%, TBA 3,590 3,541,758 ------------- 73,898,264 FIXED RATE 30-YEAR-32.8% Federal Home Loan Mortgage Corp. 4.50%, 8/01/33-6/01/36(a) 25,231 23,828,950 7.00%, 2/01/37(a) 19,175 19,702,765 Federal National Mortgage Association 5.00%, 2/01/36-12/01/36(a) 32,393 31,472,360 5.00%, TBA 3,920 3,804,850 5.50%, 4/01/33-11/01/36(a) 202,913 201,554,812 5.50%, TBA 2,940 2,916,112 6.00%, TBA 76,285 76,928,693 6.50%, 8/01/32-1/01/37(a) 36,682 37,398,653 6.50%, TBA 7,725 7,874,672 Government National Mortgage Association 5.50%, TBA 15,705 15,648,559 6.00%, 4/15/36(a) 16,787 17,042,529 6.00%, TBA 1,575 1,598,625 NON-AGENCY ARMS-2.6% Bear Stearns Alt-A Trust Series 2005-10 Class 24A1 5.928%, 1/25/36(a)(b) 3,063 3,087,443 Series 2006-1 Class 22A1 5.398%, 2/25/36(a)(b) 4,313 4,308,542 Series 2006-3 Class 22A1 6.228%, 5/25/36(a)(b) 2,149 2,164,171 Series 2007-1 Class 21A1 5.75%, 1/25/47(a)(b) 2,785 2,799,955 116 o ALLIANCEBERNSTEIN INTERMEDIATE DURATION BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Citigroup Mortgage Loan Trust, Inc. Series 2005-2 Class 1A4 5.109%, 5/25/35(a)(b) $ 4,766 $4,716,703 Series 2006-AR1, Class 3A1 5.50%, 3/25/36(a)(b) 5,367 5,398,904 Indymac Index Mortgage Loan Trust Series 2006-AR7 Class 4A1 6.251%, 5/25/36(a)(b) 2,477 2,509,814 Merrill Lynch Mortgage Investors, Inc. Series 2006-A1 Class 2A1 6.182%, 3/25/36(a)(b) 3,596 3,649,678 Residential Funding Mortgage Securities I, Inc. Series 2005-SA3 Class 3A 5.236%, 8/25/35(a)(b) 3,048 3,035,616 Structured Adjustable Rate Mortgage Loan Trust Series 2006-3 Class 2A1 6.01%, 4/25/36(a)(b) 3,064 3,082,882 ------------- 34,753,708 Total Mortgage Pass-Thrus (cost $603,380,830) 604,522,648 CORPORATES - INVESTMENT GRADE-14.2% Financial Institutions-5.2% Banking-1.9% Bank of Tokyo-Mitsubishi UFJ NY 7.40%, 6/15/11(a) 170 184,480 Barclays Bank PLC 8.55%, 9/29/49(a)(c) 961 1,079,068 Citigroup, Inc. 4.625%, 8/03/10(a) 2,357 2,328,351 5.493%, 6/09/09(a)(b) 421 422,260 Credit Suisse First Boston USA, Inc. 5.50%, 8/15/13(a) 1,812 1,845,810 JPMorgan Chase & Co. 6.75%, 2/01/11(a) 2,530 2,669,985 MBNA Corp. 4.625%, 9/15/08(a) 1,362 1,350,194 Mitsubishi UFG Capital Finance 1, Ltd. 6.346%, 7/29/49(a) 770 798,813 RBS Capital Trust III 5.512%, 9/29/49(a) 562 560,945 Resona Bank, Ltd. 5.85%, 9/29/49(a)(c) 330 330,634 Resona Preferred Global Securities 7.191%, 12/29/49(a)(c) 619 666,484 Suntrust Bank 5.468%, 6/02/09(a)(b) 591 592,136 The Huntington National Bank 4.375%, 1/15/10(a) 517 504,338 ALLIANCEBERNSTEIN INTERMEDIATE DURATION BOND PORTFOLIO o 117 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- UBS Preferred Funding Trust I 8.622%, 10/29/49(a) $ 1,825 $2,026,476 UFJ Finance Aruba AEC 6.75%, 7/15/13(a) 1,913 2,057,227 Wachovia Corp. 5.35%, 3/15/11(a) 2,205 2,233,572 Washington Mutual, Inc. 4.00%, 1/15/09(a) 2,185 2,140,509 Wells Fargo & Co. 4.20%, 1/15/10(a) 1,808 1,772,934 Zions Bancorporation 5.50%, 11/16/15(a) 1,420 1,420,288 ------------- 24,984,504 Brokerage-0.1% The Goldman Sachs Group, Inc. 4.75%, 7/15/13(a) 1,016 987,890 Finance-2.2% American General Finance Corp. 4.625%, 5/15/09(a) 2,620 2,588,741 Capital One Financial Corp. 4.80%, 2/21/12(a) 665 650,730 CIT Group, Inc. 5.58%, 5/18/07(a)(b) 466 466,261 Senior Note 7.75%, 4/02/12(a) 2,318 2,573,318 Core Investment Grade Trust 4.642%, 11/30/07(a) 3,882 3,861,702 Countrywide Home Loans, Inc. 4.00%, 3/22/11(a) 1,427 1,359,474 4.25%, 12/19/07(a) 1,855 1,838,657 General Electric Capital Corp. 4.00%, 2/17/09(a) 4,160 4,081,796 4.375%, 11/21/11(a) 1,213 1,180,218 5.425%, 6/22/07(a)(b) 3,448 3,449,627 6.75%, 3/15/32(a) 1,429 1,661,583 HSBC Finance Corp. 6.50%, 11/15/08(a) 4,771 4,882,217 7.00%, 5/15/12(a) 440 477,105 iStar Financial, Inc. 5.15%, 3/01/12(a) 1,019 1,002,318 ------------- 30,073,747 Finance - Other-0.1% Berkshire Hathaway Finance Corp. 4.20%, 12/15/10(a) 1,656 1,614,002 Insurance-0.8% Assurant, Inc. 5.625%, 2/15/14(a) 1,028 1,037,842 118 o ALLIANCEBERNSTEIN INTERMEDIATE DURATION BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Humana, Inc. 6.30%, 8/01/18(a) $ 1,094 $ 1,123,479 Liberty Mutual Group(c) 5.75%, 3/15/14(a) 993 998,649 WellPoint, Inc. 3.50%, 9/01/07(a) 2,200 2,178,416 3.75%, 12/14/07(a) 412 406,958 4.25%, 12/15/09(a) 2,555 2,501,764 Zurich Capital Trust I 8.376%, 6/01/37(a)(c) 2,541 2,655,996 ------------- 10,903,104 Real Estate Investment Trust-0.1% Simon Property Group LP 6.375%, 11/15/07(a) 1,015 1,021,629 Industrial-7.7% Basic Industry-0.4% International Paper Co. 5.30%, 4/01/15(a) 2,625 2,552,736 Ispat Inland ULC 9.75%, 4/01/14(a) 602 677,487 Lubrizol Corp. 4.625%, 10/01/09(a) 805 794,871 Westvaco Corp. 8.20%, 1/15/30(a) 670 780,646 Weyerhaeuser Co. 5.95%, 11/01/08(a) 1,083 1,094,478 ------------- 5,900,218 Capital Goods-0.8% Boeing Capital Corp. 4.75%, 8/25/08(a) 1,615 1,607,190 6.50%, 2/15/12(a) 205 218,247 Hutchison Whampoa International, Ltd. 7.45%, 11/24/33(a)(c) 1,449 1,717,862 Raytheon Co. 6.75%, 8/15/07(a) 1,153 1,159,277 Textron Financial Corp. 4.125%, 3/03/08(a) 2,610 2,582,590 Textron, Inc. 6.375%, 11/15/08(a) 875 893,255 Tyco International Group, SA 6.00%, 11/15/13(a) 1,250 1,329,874 Waste Management, Inc. 6.875%, 5/15/09(a) 1,435 1,482,970 ------------- 10,991,265 Communications - Media-1.3% British Sky Broadcasting Group PLC 6.875%, 2/23/09(a) 489 503,800 BSKYB Finance United Kingdom PLC 5.625%, 10/15/15(a)(c) 2,325 2,339,501 ALLIANCEBERNSTEIN INTERMEDIATE DURATION BOND PORTFOLIO o 119 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Comcast Cable Communication, Inc. 6.875%, 6/15/09(a) $ 1,463 $1,519,173 Comcast Cable Communications Holdings, Inc. 8.375%, 3/15/13(a) 940 1,085,788 9.455%, 11/15/22(a) 1,731 2,307,544 Comcast Corp. 5.30%, 1/15/14(a) 1,263 1,259,181 5.50%, 3/15/11(a) 1,597 1,616,260 News America, Inc. 6.55%, 3/15/33(a) 1,383 1,465,506 R. R. Donnelley & Sons Co. 4.95%, 4/01/14(a) 710 669,821 Time Warner Entertainment Co. 8.375%, 3/15/23(a) 3,190 3,847,788 WPP Finance Corp. 5.875%, 6/15/14(a) 886 900,375 ------------- 17,514,737 Communications - Telecommunications-2.6% AT&T Corp. 8.00%, 11/15/31(a) 295 374,477 British Telecommunications PLC 8.625%, 12/15/10(a) 2,721 3,049,041 CenturyTel, Inc. 5.00%, 2/15/15(a) 2,462 2,293,092 6.875%, 1/15/28(a) 915 913,286 Embarq Corp. 6.738%, 6/01/13(a) 210 218,008 7.082%, 6/01/16(a) 3,705 3,831,196 New Cingular Wireless Services, Inc. 7.875%, 3/01/11(a) 2,435 2,674,811 8.75%, 3/01/31(a) 1,429 1,900,461 Pacific Bell 6.625%, 10/15/34(a) 3,900 3,935,662 Sprint Capital Corp. 8.375%, 3/15/12(a) 3,219 3,609,552 Telecom Italia Capital 4.00%, 11/15/08-1/15/10(a) 3,815 3,693,646 6.375%, 11/15/33(a) 375 366,220 TELUS Corp. 7.50%, 6/01/07(a) 3,444 3,459,908 Verizon Global Funding Corp. 4.90%, 9/15/15(a) 1,590 1,538,141 Verizon New Jersey, Inc. 5.875%, 1/17/12(a) 1,435 1,468,402 Vodafone Group PLC 5.50%, 6/15/11(a) 2,045 2,066,990 ------------- 35,392,893 Consumer Cyclical - Automotive-0.1% DaimlerChrysler North America Corp. 4.875%, 6/15/10(a) 698 688,508 120 o ALLIANCEBERNSTEIN INTERMEDIATE DURATION BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Consumer Cyclical - Other-0.5% Centex Corp. 5.45%, 8/15/12(a) $ 859 $ 858,354 Starwood Hotels & Resorts Worldwide, Inc. 7.375%, 11/15/15(a) 2,086 2,195,315 7.875%, 5/01/12(a) 2,181 2,352,383 Toll Brothers Finance Corp. 6.875%, 11/15/12(a) 1,055 1,113,769 ------------- 6,519,821 Consumer Non-Cyclical-1.1% Altria Group, Inc. 7.75%, 1/15/27(a) 2,120 2,610,354 ConAgra Foods, Inc. 7.875%, 9/15/10(a) 641 696,229 Fisher Scientific International, Inc. 6.125%, 7/01/15(a) 3,130 3,132,604 6.75%, 8/15/14(a) 560 579,899 Kraft Foods, Inc. 4.125%, 11/12/09(a) 3,245 3,164,803 Safeway, Inc. 4.125%, 11/01/08(a) 683 670,422 4.80%, 7/16/07(a) 620 618,084 6.50%, 3/01/11(a) 453 471,816 The Kroger Co. 7.80%, 8/15/07(a) 1,540 1,555,649 Wyeth 5.50%, 2/01/14(a) 1,267 1,287,495 ------------- 14,787,355 Energy-0.3% Amerada Hess Corp. 7.875%, 10/01/29(a) 2,273 2,716,487 Tengizchevroil Finance Co. 6.124%, 11/15/14(a)(c) 380 374,300 Valero Energy Corp. 6.875%, 4/15/12(a) 1,493 1,597,555 ------------- 4,688,342 Technology-0.6% Cisco Systems, Inc. 5.25%, 2/22/11(a) 780 786,647 Electronic Data Systems Corp. 6.50%, 8/01/13(a) 3,745 3,825,776 International Business Machines Corp. 4.375%, 6/01/09(a) 455 449,346 Motorola, Inc. 6.50%, 9/01/25(a) 1,800 1,856,703 7.50%, 5/15/25(a) 290 329,339 7.625%, 11/15/10(a) 146 157,268 ------------- 7,405,079 ALLIANCEBERNSTEIN INTERMEDIATE DURATION BOND PORTFOLIO o 121 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Utilities-1.3% Electric-1.2% Carolina Power & Light Co. 6.50%, 7/15/12(a) $ 1,805 $ 1,915,666 CE Electric UK Funding Co. 6.995%, 12/30/07(a)(c) 700 709,409 Consumers Energy Co. 4.25%, 4/15/08(a) 734 725,800 Exelon Corp. 6.75%, 5/01/11(a) 1,295 1,358,002 FirstEnergy Corp. 6.45%, 11/15/11(a) 1,300 1,366,022 7.375%, 11/15/31(a) 1,436 1,673,816 MidAmerican Energy Holdings Co. 5.875%, 10/01/12(a) 933 962,904 NiSource Finance Corp. 7.875%, 11/15/10(a) 856 931,100 Pacific Gas & Electric Co. 4.80%, 3/01/14(a) 1,700 1,652,618 Progress Energy, Inc. 7.10%, 3/01/11(a) 574 613,809 Public Service Co. of Colorado 7.875%, 10/01/12(a) 874 985,617 SPI Electricity & Gas Australia Holdings Pty, Ltd. 6.15%, 11/15/13(a)(c) 1,447 1,506,990 Xcel Energy, Inc. 7.00%, 12/01/10(a) 1,110 1,179,145 ------------- 15,580,898 Natural Gas-0.1% Duke Energy Field Services Corp. 7.875%, 8/16/10(a) 506 547,299 Enterprise Products Operating LP Series B 5.60%, 10/15/14(a) 1,278 1,282,918 Total Corporates - Investment Grade (cost $190,581,552) 190,884,209 NON-US DOLLAR-11.9% GOVERNMENT-RELATED - SOVEREIGNS-10.3% Japan Government 0.70%, 6/20/10(a) JPY 7,201,950 60,221,099 1.80%, 9/20/16(a) 2,659,150 22,892,899 Sweden (Kingdom of) 5.00%, 1/28/09(a) SEK 69,595 10,193,541 5.25%, 3/15/11(a) 85,655 12,913,251 United Mexican States 8.00%, 12/24/08-12/19/13(a) MXN 307,755 27,646,021 9.00%, 12/20/12(a) 51,780 4,865,303 ------------- 138,732,114 122 o ALLIANCEBERNSTEIN INTERMEDIATE DURATION BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- INFLATION-LINKED SECURITIES-1.6% Japan Government 0.80%, 9/10/15(a) JPY 2,552,700 $ 20,993,322 Total Non-US Dollar (cost $158,539,529) 159,725,436 COMMERCIAL MORTGAGE BACKED SECURITIES-7.4% NON-AGENCY FIXED RATE CMBS-7.4% Banc America Commercial Mortgage, Inc. Series 2001-PB1 Class A2 5.787%, 5/11/35(a) $ 875 894,988 Series 2004-4 Class A3 4.128%, 7/10/42(a) 1,035 1,011,004 Series 2004-6 Class A2 4.161%, 12/10/42(a) 3,865 3,771,253 Bear Stearns Commercial Mortgage Securities, Inc. Series 2005-PWR7 Class A3 5.116%, 2/11/41(a) 2,500 2,480,736 Series 2005-T18 Class A4 4.933%, 2/13/42(a) 4,235 4,150,347 Credit Suisse Mortgage Capital Certificates Series 2006-C3 Class A3 5.827%, 6/15/38(a) 4,380 4,576,721 Series 2006-C4 Class A3 5.467%, 9/15/39(a) 6,475 6,560,244 CS First Boston Mortgage Securities Corp. Series 2003-CK2 Class A2 3.861%, 3/15/36(a) 899 881,802 Series 2004-C1 Class A4 4.75%, 1/15/37(a) 1,815 1,767,234 Series 2005-C1 Class A4 5.014%, 2/15/38(a) 1,516 1,492,533 GE Capital Commercial Mortgage Corp. Series 2005-C3 Class A3FX 4.863%, 7/10/45(a) 3,265 3,239,062 Greenwich Capital Commercial Funding Corp. Series 2003-C1 Class A4 4.111%, 7/05/35(a) 1,102 1,041,958 Series 2005-GG3 Class A2 4.305%, 8/10/42(a) 1,823 1,784,423 JPMorgan Chase Commercial Mortgage Securities Series 2004-C1 Class A2 4.302%, 1/15/38(a) 1,720 1,666,428 Series 2005-LDP1 Class A4 5.038%, 3/15/46(a) 1,846 1,817,885 Series 2005-LDP3 Class A2 4.851%, 8/15/42(a) 2,810 2,783,936 ALLIANCEBERNSTEIN INTERMEDIATE DURATION BOND PORTFOLIO o 123 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Series 2005-LDP4 Class A2 4.79%, 10/15/42(a) $ 1,045 $ 1,033,380 Series 2006-CB14 Class A4 5.481%, 12/12/44(a) 1,720 1,745,437 Series 2006-CB15 Class A4 5.814%, 6/12/43(a) 3,110 3,229,051 LB-UBS Commercial Mortgage Trust Series 2003-C3 Class A4 4.166%, 5/15/32(a) 4,900 4,644,419 Series 2004-C2 Class A4 4.367%, 3/15/36(a) 2,570 2,446,278 Series 2004-C4 Class A4 5.133%, 6/15/29(a) 6,015 6,108,082 Series 2004-C8 Class A2 4.201%, 12/15/29(a) 1,084 1,058,881 Series 2005-C1 Class A4 4.742%, 2/15/30(a) 4,209 4,083,456 Series 2005-C7 Class A4 5.197%, 11/15/30(a) 2,380 2,371,180 Series 2006-C1 Class A4 5.156%, 2/15/31(a) 5,253 5,215,089 Series 2006-C6 Class A4 5.372%, 9/15/39(a) 6,005 6,052,920 Merrill Lynch Mortgage Trust Series 2005-CKI1 Class A6 5.244%, 11/12/37(a) 2,100 2,109,844 Series 2005-MKB2 Class A2 4.806%, 9/12/42(a) 2,230 2,209,721 Merrill Lynch/Countrywide Commercial Mortgage Trust Series 2006-1 Class A2 5.439%, 2/12/39(a) 1,695 1,713,611 Series 2006-2 Class A4 5.91%, 6/12/46(a) 3,075 3,231,698 Morgan Stanley Capital I Series 2004-HQ4 Class A5 4.59%, 4/14/40(a) 6,500 6,353,086 Series 2005-HQ5 Class A4 5.168%, 1/14/42(a) 5,186 5,163,811 Total Commercial Mortgage Backed Securities (cost $98,202,764) 98,690,498 U.S. TREASURIES-7.0% United States Treasury Bonds 4.50%, 2/15/36(a)(d) 49,730 48,230,342 8.75%, 5/15/17(a) 33,905 45,212,860 Total U.S. Treasuries (cost $90,722,139) 93,443,202 124 o ALLIANCEBERNSTEIN INTERMEDIATE DURATION BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- ASSET-BACKED SECURITIES-3.1% AUTOS - FIXED RATE-0.1% Capital Auto Receivables Asset Trust Series 2005-SN1A Class A3A 4.10%, 6/15/08(a) $ 869 $ 867,008 AUTOS - FLOATING RATE-0.0% Ford Credit Floorplan Master Owner Trust Series 2004-1 Class A 5.36%, 7/15/09(a)(b) 300 299,943 CREDIT CARDS - FLOATING RATE-0.4% American Express Credit Account Master Trust Series 2005-1 Class A 5.35%, 10/15/12(a)(b) 1,298 1,299,010 Bank One Issuance Trust Series 2004-A4 Class A4 5.36%, 2/16/10(a)(b) 2,158 2,158,337 Discover Card Master Trust I Series 2004-1 Class A 5.35%, 4/16/10(a)(b) 2,457 2,457,767 ------------- 5,915,114 HOME EQUITY LOANS - FIXED RATE-0.5% Citifinancial Mortgage Securities, Inc. Series 2003-1 Class AFPT 3.36%, 1/25/33(a) 818 741,396 Credit-Based Asset Servicing & Securities Trust Series 2005-CB7 Class AF2 5.15%, 11/25/35(a) 1,805 1,793,112 Home Equity Mortgage Trust Series 2005-4 Class A3 4.742%, 1/25/36(a) 2,070 2,053,141 Series 2006-1 Class A2 5.30%, 5/25/36(a) 1,040 1,039,295 Residential Funding Mortgage Securities II Series 2005-HI2 Class A3 4.46%, 5/25/35(a) 1,490 1,471,804 ------------- 7,098,748 HOME EQUITY LOANS - FLOATING RATE-1.9% Asset Backed Funding Certificates Series 2003-WF1 Class A2 6.07%, 12/25/32(a)(b) 870 870,670 Bear Stearns Asset Backed Securities, Inc. Series 2005-SD1 Class 1A1 5.47%, 4/25/22(a)(b) 235 234,629 GE-WMC Mortgage Securities LLC Series 2005-2 Class A2B 5.49%, 12/25/35(a)(b) 2,190 2,191,711 Home Equity Mortgage Trust Series 2005-2 Class A1 5.50%, 7/25/35(a)(b) 23 23,217 ALLIANCEBERNSTEIN INTERMEDIATE DURATION BOND PORTFOLIO o 125 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Household Home Equity Loan Trust Series 2005-3 Class A1 5.58%, 1/20/35(a)(b) $ 1,514 $ 1,517,458 HSI Asset Securitization Corp. Trust Series 2006-OPT2 Class 2A1 5.40%, 1/25/36(a)(b) 1,145 1,144,602 Lehman XS Trust Series 2005-4 Class 1M1 5.82%, 10/25/35(a)(b) 4,865 4,883,195 Master Asset Backed Securities Trust Series 2004-HE1 Class A1 5.72%, 9/25/34(a)(b) 1,167 1,171,153 RAAC Series Series 2006-SP3 Class A1 5.40%, 8/25/36(a)(b) 2,011 2,011,175 Residential Asset Mortgage Products, Inc. Series 2005-RS3 Class AIA2 5.49%, 3/25/35(a)(b) 1,723 1,722,943 Series 2005-RZ1 Class A2 5.52%, 4/25/35(a)(b) 2,985 2,987,295 Saxon Asset Securities Trust Series 2005-4 Class A2B 5.50%, 11/25/37(a)(b) 2,250 2,250,704 Specialty Underwriting & Residential Finance Series 2006-BC1 Class A2A 5.40%, 12/25/36(a)(b) 1,159 1,158,695 Structured Asset Investment Loan Trust Series 2006-1 Class A1 5.40%, 1/25/36(a)(b) 2,679 2,678,543 ------------- 24,845,990 OTHER - FIXED RATE-0.1% DB Master Finance, LLC Series 2006-1 Class A2 5.779%, 6/20/31(a)(c) 1,000 1,020,550 OTHER - FLOATING RATE-0.1% SLM Student Loan Trust Series 2003-C Class A1 5.46%, 9/15/16(a)(b) 965 966,157 Total Asset-Backed Securities (cost $41,057,976) 41,013,510 GOVERNMENT-RELATED - NON-US ISSUERS-2.6% AGENCIES-0.1% Korea Development Bank 4.625%, 9/16/10(a) 1,335 1,313,711 126 o ALLIANCEBERNSTEIN INTERMEDIATE DURATION BOND PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- SOVEREIGNS-2.5% Russian Federation 5.00%, 3/31/30(a) $ 19,561 $ 22,182,174 United Mexican States 5.625%, 1/15/17(a) 11,136 11,264,064 ------------- 33,446,238 Total Government-Related - Non-US Issuers (cost $33,866,197) 34,759,949 MORTGAGE CMOS-2.4% AGENCY ADJUSTABLE RATE-0.0% Fannie Mae Grantor Trust Series 2004-T5 Class AB4 5.963%, 5/28/35(a)(b) 525 525,676 AGENCY FIXED RATE-0.6% Federal Home Loan Mortgage Corp. Strips Series R007 Class AC 5.875%, 5/15/16(a) 7,341 7,392,086 NON-AGENCY ADJUSTABLE RATE-0.7% Countrywide Alternative Loan Trust Series 2005-62 Class 2A1 5.883%, 12/25/35(a)(b) 2,413 2,412,597 Series 2006-0A14 Class 3A1 5.733%, 11/25/46(a)(b) 5,542 5,523,920 JPMorgan Alternative Loan Trust Series 2006-S1 Class 3A1 5.43%, 3/25/36(a)(b) 1,193 1,193,438 Washington Mutual, Inc. Series 2005-AR2 Class 2A22 5.54%, 1/25/45(a)(b) 245 244,760 ------------- 9,374,715 NON-AGENCY FIXED RATE-1.1% Residential Accredit Loans, Inc. Series 2007-QS1 Class 1A1 6.00%, 1/25/37(a) 4,436 4,468,438 Series 2007-QS1 Class 2A10 6.00%, 1/25/37(a) 5,527 5,567,614 Wells Fargo Mortgage Backed Securities Trust Series 2006-AR11 Class A4 5.531%, 8/25/36(a) 5,288 5,262,882 ------------- 15,298,934 Total Mortgage CMOS (cost $32,526,245) 32,591,411 ALLIANCEBERNSTEIN INTERMEDIATE DURATION BOND PORTFOLIO o 127 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- CORPORATES-NON-INVESTMENT GRADE-0.1% Industrial-0.1% Basic Industry-0.1% Packaging Corp. of America 5.75%, 8/01/13(a) (cost $1,076,979) $ 1,099 $ 1,088,115 SHORT-TERM INVESTMENTS-16.4% AGENCY DISCOUNT NOTES-3.2% Federal Home Loan Mortgage Corp. Zero coupon, 5/07/07(e) 5,000 4,952,309 Federal National Mortgage Association Zero Coupon, 3/30/07-7/11/07 37,745 37,528,093 ------------- 42,480,402 INVESTMENT COMPANIES-13.2% AllianceBernstein Fixed Income Shares, Inc.- Government STIF Portfolio(f) 177,278,382 177,278,382 Total Short-Term Investments (cost $219,758,784) 219,758,784 Total Investments-110.2% (cost $1,469,712,995) 1,476,477,762 Other assets less liabilities-(10.2)% (136,903,902) Net Assets-100% $1,339,573,860 (a) Positions, or portion thereof, with an aggregate market value of $1,140,694,202 have been segregated to collateralize open forward currency exchange contracts. (b) Variable rate coupon, rate shown as of February 28, 2007. (c) 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 February 28, 2007, the aggregate market value of these securities amounted to $13,399,443 or 1.0% of net assets. (d) Position with a market value of $727,383 has been segregated to collateralize margin requirements for open future contracts. (e) Represents entire or partial position segregated as collateral for swaps. (f) Investment in affiliated money market mutual fund. Glossary: TBA - (To Be Announced) Currency Abbreviations: JPY - Japanese Yen MXN - Mexican Peso SEK - Swedish Krona 128 o ALLIANCEBERNSTEIN INTERMEDIATE DURATION BOND PORTFOLIO INFLATION PROTECTED SECURITIES PORTFOLIO PORTFOLIO OF INVESTMENTS February 28, 2007 (unaudited) Shares or Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- U.S. GOVERNMENT & GOVERNMENT SPONSORED AGENCY OBLIGATIONS-97.6% U.S. Treasury Notes-97.6% 0.875%, 4/15/10 (TIPS)(a) $ 26,629 $ 25,618,962 1.625%, 1/15/15 (TIPS)(a) 75,962 72,858,331 1.875%, 7/15/13-7/15/15 (TIPS)(a) 79,225 77,777,671 2.00%, 1/15/14-1/15/16 (TIPS)(a) 78,807 77,854,684 2.375%, 1/15/17 (TIPS)(a) 42,026 42,745,063 3.00%, 7/15/12 (TIPS)(a) 55,969 58,513,960 3.375%, 1/15/12 (TIPS)(a) 47,491 50,266,713 3.50%, 1/15/11 (TIPS)(a) 45,240 47,650,620 3.875%, 1/15/09 (TIPS)(a) 24,836 25,681,992 4.25%, 1/15/10 (TIPS)(a) 47,981 50,918,174 Total U.S. Government & Government Sponsored Agency Obligations (cost $531,541,805) 529,886,170 NON U.S. DOLLAR SOVEREIGN DEBT OBLIGATIONS-1.6% Sovereign-1.6% Government of Japan CPI Linked Bond Series 5 0.80%, 9/10/15 (a) (cost $8,916,330) JPY 1,055,250 8,678,342 SHORT-TERM INVESTMENTS-0.5% Investment Companies-0.5% AllianceBernstein Fixed-Income Shares, Inc.-Prime STIF Portfolio(b) (cost $2,681,145) 2,681,145 2,681,145 Total Investments-99.7% (cost $543,139,280) 541,245,657 Other assets less liabilities-0.3% 1,591,635 Net Assets-100.0% $ 542,837,292 ALLIANCEBERNSTEIN INFLATION PROTECTED SECURITIES PORTFOLIO o 129 FINANCIAL FUTURES CONTRACTS
Value at Unrealized Number of Expiration Original February 28, Appreciation/ Type Contracts Month Value 2007 (Depreciation) - ------------------------------------------------------------------------------------------ Sold Contracts Japan Government Bonds 10 Yr March Future 10 2007 $11,350,160 $11,402,753 $(52,593)
FORWARD CURRENCY EXCHANGE CONTRACTS U.S. $ Contract Value on U.S. $ Value at Unrealized Amount Origination February 28, Appreciation/ (000) Date 2007 (Depreciation) - ------------------------------------------------------------------------------- Sale Contracts: Japanese Yen settling 3/27/07 1,046,865 $8,680,761 $8,871,454 $(190,693) (a) Position, or a portion thereof, has been segregated to collateralize forward currency exchange contracts. The aggregate market value of these securities amounted to $538,564,512. (b) Investment in affiliated money market mutual fund. Currency Abbreviations: JPY - Japanese Yen Glossary: CPI - Consumer Price Index TIPS - Treasury Inflation Protected Security 130 o ALLIANCEBERNSTEIN INFLATION PROTECTED SECURITIES PORTFOLIO HIGH-YIELD PORTFOLIO PORTFOLIO OF INVESTMENTS February 28, 2007 (unaudited) Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- CORPORATES - NON-INVESTMENT GRADE-91.4% Financial Institutions-1.6% Banking-0.1% Kyivstar 7.75%, 4/27/12(a)(b) $ 375 $ 389,063 Brokerage-1.1% E*Trade Financial Corp. 7.375%, 9/15/13(a) 870 904,800 7.875%, 12/01/15(a) 2,574 2,760,614 8.00%, 6/15/11(a) 810 848,475 ------------- 4,513,889 Insurance-0.4% Crum & Forster Holdings Corp. 10.375%, 6/15/13(a) 675 727,312 Liberty Mutual Group 7.80%, 3/15/37(b) 770 768,468 ------------- 1,495,780 ------------- 6,398,732 Index-4.5% DJ CDX NA HY 8.375%, 12/29/11(a)(b) 13,320 13,840,319 Series 5-T2 7.25%, 12/29/10(a)(b) 4,312 4,436,172 ------------- 18,276,491 Industrial-70.4% Basic Industry-7.1% AK Steel Corp. 7.875%, 2/15/09(a) 1,310 1,306,725 Arch Western Finance LLC 6.75%, 7/01/13(a) 670 658,275 Equistar Chemical Funding LP 10.125%, 9/01/08(a) 1,377 1,456,178 10.625%, 5/01/11(a) 623 658,823 Evraz Group, SA 8.25%, 11/10/15(a)(b) 1,369 1,401,582 Freeport-McMoRan Copper & Gold, Inc. 10.125%, 2/01/10(a) 961 1,001,843 Georgia-Pacific Corp. 7.00%, 1/15/15(a)(b) 905 905,000 7.125%, 1/15/17(a)(b) 1,095 1,095,000 Hexion US Finance Corp. 9.75%, 11/15/14(a)(b) 525 556,500 9.86%, 11/15/14(a)(b)(c) 525 540,750 ALLIANCEBERNSTEIN HIGH-YIELD PORTFOLIO o 131 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Huntsman International LLC 7.875%, 11/15/14(a)(b)(c) $ 1,130 $ 1,169,550 9.875%, 3/01/09(a) 215 220,306 Huntsman LLC 11.50%, 7/15/12(a) 801 897,120 Ineos Group Holdings PLC 8.50%, 2/15/16(a)(b) 1,575 1,531,687 Jefferson Smurfit Corp. 8.25%, 10/01/12(a) 630 642,600 JSC Severstal 9.25%, 4/19/14(a) 1,938 2,093,234 Lyondell Chemical Co. 8.00%, 9/15/14(a) 790 831,475 8.25%, 9/15/16(a) 615 661,125 Massey Energy Co. 6.875%, 12/15/13(a) 705 676,800 Momentive Performance 10.125%, 12/01/14(a)(b)(d) 720 757,800 Nell AF S.a.r.l. 8.375%, 8/15/15(a)(b) 1,445 1,524,475 NewMarket Corp. 7.125%, 12/15/16(a)(b) 1,285 1,288,213 Newpage Corp. 10.00%, 5/01/12(a) 797 868,730 Peabody Energy Corp. 5.875%, 4/15/16(a) 900 857,250 6.875%, 3/15/13(a) 1,815 1,837,687 Quality Distribution LLC 9.00%, 11/15/10(a) 1,353 1,312,410 Rhodia, SA 8.875%, 6/01/11(a) 1,763 1,846,742 ------------- 28,597,880 Capital Goods-6.3% Alion Science and Technology Corp. 10.25%, 2/01/15(a)(b) 270 280,800 Allied Waste North America, Inc. 6.375%, 4/15/11(a) 1,603 1,607,008 6.875%, 6/01/17(a) 1,430 1,419,275 7.125%, 5/15/16(a) 2,053 2,086,361 7.375%, 4/15/14(a) 820 824,100 Associated Materials, Inc. 11.25%, 3/01/14(a)(e) 1,635 1,218,075 Berry Plastics Holding Corp. 8.875%, 9/15/14(a) 1,330 1,376,550 Bombardier, Inc. 8.00%, 11/15/14(a)(b) 2,120 2,226,000 Case New Holland, Inc. 9.25%, 8/01/11(a) 930 981,150 132 o ALLIANCEBERNSTEIN HIGH-YIELD PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Covalence Specialty Materials 10.25%, 3/01/16(a)(b) $ 555 $ 528,638 Crown Americas 7.625%, 11/15/13(a) 1,500 1,548,750 Goodman Global Holding Co., Inc. 7.875%, 12/15/12(a) 992 1,011,840 Invensys PLC 9.875%, 3/15/11(a)(b) 183 196,725 L-3 Communications Corp. 5.875%, 1/15/15(a) 1,828 1,782,300 Owens Brockway Glass Container 8.875%, 2/15/09(a) 1,715 1,753,587 Plastipak Holdings, Inc. 8.50%, 12/15/15(a)(b) 640 667,200 Russell Stanley Holdings, Inc. 9.00%, 11/30/08(a)(b)(f) 1,134 56,700 Sequa Corp. 9.00%, 8/01/09(a) 601 634,055 Trinity Industries, Inc. 6.50%, 3/15/14(a) 2,100 2,063,250 United Rentals North America, Inc. 6.50%, 2/15/12(a) 640 643,200 7.00%, 2/15/14(a) 485 487,425 7.75%, 11/15/13(a) 2,075 2,121,687 25,514,676 Communications - Media-11.0% Allbritton Communications Co. 7.75%, 12/15/12(a) 1,351 1,384,775 Cablevision Systems Corp. Series B 8.00%, 4/15/12(a) 1,637 1,661,555 CCH I Holdings LLC 11.75%, 5/15/14(a) 6,007 5,871,842 Central European Media Enterprises, Ltd. 8.25%, 5/15/12(a) EUR 398 574,622 Clear Channel Communications, Inc. 5.75%, 1/15/13(a) US$ 1,641 1,547,196 5.50%, 9/15/14(a) 2,519 2,232,844 CSC Holdings, Inc. 6.75%, 4/15/12(a)(b) 2,565 2,539,350 7.625%, 7/15/18(a) 1,535 1,554,187 Dex Media East LLC 12.125%, 11/15/12(a) 641 702,696 Dex Media West LLC 8.50%, 8/15/10(a) 444 465,090 DirecTV Holdings LLC 6.375%, 6/15/15(a) 2,961 2,846,261 EchoStar DBS Corp. 6.375%, 10/01/11(a) 1,080 1,085,400 7.125%, 2/01/16(a) 850 878,688 ALLIANCEBERNSTEIN HIGH-YIELD PORTFOLIO o 133 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Insight Communications Co., Inc. 12.25%, 2/15/11(a) $ 1,612 $ 1,682,525 Insight Midwest LP 9.75%, 10/01/09(a) 552 561,661 Intelsat Bermuda, Ltd. 8.625%, 1/15/15(a) 1,274 1,369,550 11.25%, 6/15/16(a)(b) 2,812 3,184,590 Lamar Media Corp. 6.625%, 8/15/15(a) 475 467,875 Liberty Media Corp. 5.70%, 5/15/13(a) 545 522,087 7.875%, 7/15/09(a) 350 367,385 8.25%, 2/01/30(a) 530 541,446 LIN Television Corp. 6.50%, 5/15/13(a) 725 706,875 Quebecor Media, Inc. 7.75%, 3/15/16(a) 2,755 2,823,875 R.H. Donnelley Corp. 6.875%, 1/15/13(a) 1,453 1,416,675 Rainbow National Services LLC 8.75%, 9/01/12(a)(b) 764 811,750 10.375%, 9/01/14(a)(b) 729 816,480 Sirius Satellite Radio, Inc. 9.625%, 8/01/13(a) 545 550,450 Univision Communications, Inc. 7.85%, 7/15/11(a) 1,190 1,246,525 WDAC Subsidiary Corp. 8.375%, 12/01/14(a)(b) 982 1,028,645 WMG Holdings Corp. 9.50%, 12/15/14(a)(e) 3,196 2,508,860 XM Satellite Radio, Inc. 9.75%, 5/01/14(a) 840 848,400 ------------- 44,800,160 Communications - Telecommunications-8.8% American Tower Corp. 7.125%, 10/15/12(a) 2,430 2,512,012 Citizens Communications Co. 6.25%, 1/15/13(a) 1,977 1,977,000 Cricket Communications, Inc. 9.375%, 11/01/14(a)(b) 2,470 2,605,850 Digicel, Ltd. 9.25%, 9/01/12(a)(b) 1,727 1,839,255 Dobson Cellular Systems, Inc. 8.375%, 11/01/11(a) 620 658,750 Dobson Communications Corp. 8.875%, 10/01/13(a) 665 685,781 Idearc, Inc. 8.00%, 11/15/16(a)(b) 1,710 1,744,200 Inmarsat Finance PLC 10.375%, 11/15/12(a)(e) 1,037 972,188 7.625%, 6/30/12(a) 1,835 1,903,812 134 o ALLIANCEBERNSTEIN HIGH-YIELD PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Level 3 communications, Inc. 11.50%, 3/01/10(a) $ 655 $ 727,050 Level 3 Financing, Inc. 12.25%, 3/15/13(a) 1,853 2,163,377 8.75%, 2/15/17(a)(b) 835 838,131 9.25%, 11/01/14(a)(b) 2,845 2,919,681 Mobile Telesystems Finance, SA 8.00%, 1/28/12(a)(b) 1,858 1,951,000 PanAmSat Corp. 9.00%, 8/15/14(a) 1,171 1,264,680 Qwest Capital Funding, Inc. 7.25%, 2/15/11(a) 4,029 4,124,689 Qwest Communications International, Inc. 7.50%, 2/15/14(a) 350 362,688 Qwest Corp. 6.875%, 9/15/33(a) 2,240 2,170,000 8.875%, 3/15/12(a) 355 392,275 Rural Cellular Corp. 9.75%, 1/15/10(a) 1,191 1,222,264 Time Warner Telecom Holdings, Inc. 9.25%, 2/15/14(a) 740 793,650 Windstream Corp. 8.125%, 8/01/13(a) 714 770,228 8.625%, 8/01/16(a) 810 886,950 ------------- 35,485,511 Consumer Cyclical - Automotive-6.9% Affinia Group, Inc. 9.00%, 11/30/14(a) 45 45,225 Ford Motor Co. 7.45%, 7/16/31(a) 3,870 3,105,675 Ford Motor Credit Co. 4.95%, 1/15/08(a) 1,298 1,284,371 7.00%, 10/01/13(a) 2,524 2,421,256 8.11%, 1/13/12(a)(c) 2,785 2,800,028 General Motors Acceptance Corp. 6.875%, 9/15/11(a) 3,570 3,612,851 General Motors Corp. 8.25%, 7/15/23(a) 4,155 3,864,150 8.375%, 7/15/33(a) 2,985 2,768,587 Goodyear Tire & Rubber Co. 8.625%, 12/01/11(a)(b) 445 472,813 9.00%, 7/01/15(a) 2,010 2,183,362 Keystone Automotive Operations, Inc. 9.75%, 11/01/13(a) 1,436 1,428,820 Lear Corp. 8.50%, 12/01/13(a) 370 361,675 8.75%, 12/01/16(a) 530 510,787 Tenneco, Inc. 8.625%, 11/15/14(a) 465 484,763 ALLIANCEBERNSTEIN HIGH-YIELD PORTFOLIO o 135 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- TRW Automotive, Inc. 9.375%, 2/15/13(a) $ 667 $ 716,191 11.00%, 2/15/13(a) 490 537,162 Visteon Corp. 7.00%, 3/10/14(a) 1,795 1,561,650 ------------- 28,159,366 Consumer Cyclical - Other-8.8% Boyd Gaming Corp. 7.75%, 12/15/12(a) 737 759,110 Broder Brothers Co. 11.25%, 10/15/10(a) 642 650,025 Caesars Entertainment, Inc. 7.875%, 3/15/10(a) 1,570 1,656,350 Gaylord Entertainment Co. 8.00%, 11/15/13(a) 1,307 1,352,745 Greektown Holdings 10.75%, 12/01/13(a)(b) 550 588,500 Harrah's Operating Co., Inc. 5.625%, 6/01/15(a) 3,460 2,992,900 Host Hotels & Resorts LP 6.875%, 11/01/14(a) 385 391,738 Host Marriott LP 6.75%, 6/01/16(a) 2,935 2,949,675 K2, Inc. 7.375%, 7/01/14(a) 800 808,000 KB HOME 6.375%, 8/15/11(a) 600 602,290 7.75%, 2/01/10(a) 410 418,713 Levi Strauss & Co. 8.875%, 4/01/16(a) 742 799,505 10.11%, 4/01/12(a)(c) 173 176,676 Mandalay Resort Group 10.25%, 8/01/07(a) 915 931,013 MGM MIRAGE 6.625%, 7/15/15(a) 3,952 3,798,860 7.625%, 1/15/17(a) 905 916,313 8.375%, 2/01/11(a) 2,179 2,287,950 Mohegan Tribal Gaming Authority 7.125%, 8/15/14(a) 1,245 1,266,787 NCL Corp. 10.625%, 7/15/14(a) 957 973,747 Penn National Gaming, Inc. 6.875%, 12/01/11(a) 1,496 1,496,000 Riviera Holdings Corp. 11.00%, 6/15/10(a) 1,416 1,486,800 Six Flags, Inc. 9.625%, 6/01/14(a) 1,250 1,209,375 Station Casinos, Inc. 6.625%, 3/15/18(a) 395 357,969 Turning Stone Casino Resort Enterprise 9.125%, 12/15/10(a)(b) 1,097 1,127,167 136 o ALLIANCEBERNSTEIN HIGH-YIELD PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Universal City Development Partners 11.75%, 4/01/10(a) $ 913 $ 970,063 Universal City Florida Holding Co. 8.375%, 5/01/10(a) 630 653,625 William Lyon Homes, Inc. 10.75%, 4/01/13(a) 1,107 1,104,232 Wynn Las Vegas LLC 6.625%, 12/01/14(a) 2,935 2,905,650 ------------- 35,631,778 Consumer Cyclical - Restaurants-0.3% Domino's, Inc. 8.25%, 7/01/11(a) 869 911,146 Sbarro, Inc. 10.375%, 2/01/15(a)(b) 415 432,638 ------------- 1,343,784 Consumer Cyclical - Retailers-2.0% AutoNation, Inc. 7.36%, 4/15/13(a)(c) 175 177,625 Bon-Ton Department Stores, Inc. 10.25%, 3/15/14(a) 1,130 1,197,800 Burlington Coat Factory Warehouse Corp. 11.125%, 4/15/14(a) 555 570,956 Couche-Tard 7.50%, 12/15/13(a) 1,006 1,031,150 GSC Holdings Corp 8.00%, 10/01/12(a) 2,070 2,199,375 Rite Aid Corp. 6.875%, 8/15/13(a) 1,100 987,250 9.25%, 6/01/13(a) 870 876,525 United Auto Group, Inc. 9.625%, 3/15/12(a) 1,097 1,149,799 ------------- 8,190,480 Consumer Non-Cyclical-7.9% Aramark Corp. 8.50%, 2/01/15(a)(b) 2,265 2,352,769 Concentra Operating Corp. 9.125%, 6/01/12(a) 409 435,585 9.50%, 8/15/10(a) 553 584,797 Coventry Health Care, Inc. 5.875%, 1/15/12(a) 683 686,415 DaVita, Inc. 7.25%, 3/15/15(a) 1,219 1,231,190 Dean Foods Co. 7.00%, 6/01/16(a) 921 950,932 Del Monte Corp. 6.75%, 2/15/15(a) 395 389,075 Dole Food Co., Inc. 8.625%, 5/01/09(a) 420 421,050 8.875%, 3/15/11(a) 718 714,410 ALLIANCEBERNSTEIN HIGH-YIELD PORTFOLIO o 137 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Elan Finance Corp. 7.75%, 11/15/11(a) $ 2,825 $ 2,782,625 Hanger Orthopedic Group, Inc. 10.25%, 6/01/14(a) 670 716,900 HCA, Inc. 6.375%, 1/15/15(a) 2,008 1,731,900 6.50%, 2/15/16(a) 1,520 1,303,400 6.75%, 7/15/13(a) 1,650 1,513,875 9.625%, 11/15/16(a)(b)(d) 2,165 2,338,200 HEALTHSOUTH Corp. 10.75%, 6/15/16(a)(b) 1,010 1,128,675 Iasis Healthcare LLC 8.75%, 6/15/14(a) 1,174 1,218,025 Reynolds American, Inc. 7.25%, 6/01/12-6/01/13(a) 3,395 3,577,560 7.625%, 6/01/16(a) 1,800 1,955,020 Select Medical Corp. 7.625%, 2/01/15(a) 1,145 1,007,600 Stater Brothers Holdings 8.125%, 6/15/12(a) 594 606,622 Tenet Healthcare Corp. 7.375%, 2/01/13(a) 1,175 1,098,625 9.875%, 7/01/14(a) 700 712,250 Universal Hospital Services, Inc. 10.125%, 11/01/11(a) 744 790,500 Ventas Realty LP 6.75%, 4/01/17(a) 832 854,880 Visant Corp. 7.625%, 10/01/12(a) 883 905,075 ------------- 32,007,955 Energy-2.4% Chesapeake Energy Corp. 6.625%, 1/15/16(a) 220 221,100 6.875%, 1/15/16(a) 270 273,375 7.50%, 9/15/13(a) 805 839,213 7.75%, 1/15/15(a) 1,895 1,975,537 Compagnie Generale de Geophysique-Veritas 7.50%, 5/15/15(a) 70 71,400 7.75%, 5/15/17(a) 195 201,825 Complete Production Services, Inc. 8.00%, 12/15/16(a)(b) 650 664,625 Grant Prideco, Inc. 6.125%, 8/15/15(a) 856 834,600 Hilcorp Energy 7.75%, 11/01/15(a)(b) 760 760,000 OPTI Canada, Inc. 8.25%, 12/15/14(a)(b) 313 322,390 PetroHawk Energy Corp. 9.125%, 7/15/13(a) 776 824,500 Pride International, Inc. 7.375%, 7/15/14(a) 634 649,850 138 o ALLIANCEBERNSTEIN HIGH-YIELD PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Range Resources Corp. 7.50%, 5/15/16(a) $ 940 $ 965,850 Tesoro Corp. 6.25%, 11/01/12(a) 1,180 1,185,900 ------------- 9,790,165 Other Industrial-1.2% AMSTED Industries, Inc. 10.25%, 10/15/11(a)(b) 910 974,838 Central European Distribution Corp. 8.00%, 7/25/12(a) 216 311,427 FastenTech, Inc. 11.50%, 5/01/11(a) 560 595,000 Mueller Group, Inc. 10.00%, 5/01/12(a) 556 601,870 RBS Global & Rexnord Corp. 9.50%, 8/01/14(a)(b) 1,045 1,099,862 11.75%, 8/01/16(a)(b) 475 515,375 Sensus Metering Systems, Inc. 8.625%, 12/15/13(a) 655 661,550 ------------- 4,759,922 Services-1.3% Avis Budget Car Rental 7.75%, 5/15/16(a)(b) 1,410 1,431,150 Horizon Lines LLC 9.00%, 11/01/12(a) 434 454,615 Service Corp. International 6.50%, 3/15/08(a) 1,029 1,034,145 6.75%, 4/01/16(a) 1,000 997,500 7.70%, 4/15/09(a) 980 1,016,750 West Corp. 9.50%, 10/15/14(a)(b) 350 368,375 ------------- 5,302,535 Technology-5.0% Amkor Technology, Inc. 9.25%, 6/01/16(a) 2,055 2,096,100 Avago Technologies Finance 10.125%, 12/01/13(a) 755 807,850 Computer Associates, Inc. 4.75%, 12/01/09(a)(b) 965 946,874 Flextronics International, Ltd. 6.50%, 5/15/13(a) 1,418 1,403,820 Freescale Semiconductor, Inc. 9.125%, 12/15/14(a)(b)(d) 2,780 2,818,225 10.125%, 12/15/16(a)(b) 660 675,675 Iron Mountain, Inc. 6.625%, 1/01/16(a) 1,360 1,305,600 Nortel Networks Corp. 6.875%, 9/01/23(a) 1,266 1,171,050 Nortel Networks, Ltd. 10.125%, 7/15/13(a)(b) 1,025 1,127,500 ALLIANCEBERNSTEIN HIGH-YIELD PORTFOLIO o 139 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- NXP BV 8.11%, 10/15/13(a)(b)(c) $ 750 $ 766,875 9.50%, 10/15/15(a)(b) 445 459,463 Seagate Technology HDD Holdings 6.375%, 10/01/11(a) 2,143 2,153,715 6.80%, 10/01/16(a) 953 960,147 SERENA Software, Inc. 10.375%, 3/15/16(a) 875 947,188 SunGard Data Systems, Inc. 9.125%, 8/15/13(a) 2,472 2,638,860 ------------- 20,278,942 Transportation - Airlines-0.9% AMR Corp. 9.00%, 8/01/12(a) 1,675 1,771,313 Continental Airlines, Inc. 8.75%, 12/01/11(a) 1,330 1,336,650 7.875%, 7/02/18(a) 611 635,314 ------------- 3,743,277 Transportation - Services-0.5% Hertz Corp. 10.50%, 1/01/16(a) 925 1,054,500 8.875%, 1/01/14(a) 795 856,612 ------------- 1,911,112 ------------- 285,517,543 Non Corporates-4.9% Derivative-4.9% Racers SER Series 06-6-T 5.30%, 5/01/07(a)(b)(c) 18,550 19,671,904 Utilities-10.0% Electric-7.0% AES Corp. 7.75%, 3/01/14(a) 2,430 2,545,425 8.75%, 5/15/13(a)(b) 225 240,188 9.00%, 5/15/15(a)(b) 1,080 1,156,950 Allegheny Energy Supply Co. LLC 7.80%, 3/15/11(a) 1,070 1,139,550 8.25%, 4/15/12(a)(b) 1,830 2,003,850 Aquila, Inc. 14.875%, 7/01/12(a) 1,096 1,430,280 CMS Energy Corp. 8.50%, 4/15/11(a) 835 905,975 Dynegy Holdings, Inc. 8.375%, 5/01/16(a) 2,230 2,386,100 Dynegy-Roseton Danskammer 7.67%, 11/08/16(a) 1,222 1,295,320 7.27%, 11/08/10(a) 385 392,700 140 o ALLIANCEBERNSTEIN HIGH-YIELD PORTFOLIO Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Edison Mission Energy 7.50%, 6/15/13(a) $ 1,860 $ 1,943,700 7.75%, 6/15/16(a) 695 736,700 NRG Energy, Inc. 7.25%, 2/01/14(a) 420 428,400 7.375%, 2/01/16-1/15/17(a) 3,110 3,168,600 Reliant Energy, Inc. 6.75%, 12/15/14(a) 898 931,675 9.50%, 7/15/13(a) 1,226 1,328,677 Sierra Pacific Power Co. 6.00%, 5/15/16(a) 440 450,819 Sierra Pacific Resources 8.625%, 3/15/14(a) 960 1,039,621 TECO Energy, Inc. 7.00%, 5/01/12(a) 1,222 1,283,100 TXU Corp. 4.80%, 11/15/09(a) 125 122,674 5.55%, 11/15/14(a) 2,104 1,924,384 6.50%, 11/15/24(a) 1,856 1,682,080 ------------- 28,536,768 Natural Gas-3.0% El Paso Corp. 7.375%, 12/15/12(a) 1,245 1,325,925 El Paso Production Holding Co. 7.75%, 6/01/13(a) 1,575 1,645,875 Northwest Pipeline Corp. 8.125%, 3/01/10(a) 974 1,010,525 Regency Energy Partners LP 8.375%, 12/15/13(a)(b) 1,675 1,712,688 Southern Natural Gas Co. 8.875%, 3/15/10(a) 967 1,009,915 The Williams Cos., Inc. 7.875%, 9/01/21(a) 2,214 2,424,330 7.625%, 7/15/19(a) 2,649 2,874,165 ------------- 12,003,423 ------------- 40,540,191 Total Corporates - Non-Investment Grade (cost $362,291,625) 370,404,861 CORPORATES-INVESTMENT GRADE-4.4% Financial Institutions-0.3% Insurance-0.3% Liberty Mutual Group 5.75%, 3/15/14(a)(b) 950 955,404 ALLIANCEBERNSTEIN HIGH-YIELD PORTFOLIO o 141 Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Industrial-4.1% Basic Industry-1.5% International Steel Group, Inc. 6.50%, 4/15/14(a) $ 2,766 $ 2,869,725 Ispat Inland ULC 9.75%, 4/01/14(a) 1,360 1,530,536 Tennessee Gas Pipeline Co. 7.00%, 10/15/28(a) 1,315 1,439,043 ------------- 5,839,304 Communications - Media-0.5% Rogers Cable, Inc. 6.75%, 3/15/15(a) 1,847 1,934,733 Communications - Telecommunications-1.6% Mobifon Holdings BV 12.50%, 7/31/10(a) 2,559 2,786,111 Rogers Wireless Communications, Inc. 7.25%, 12/15/12(a) 1,346 1,445,268 7.50%, 3/15/15(a) 2,175 2,387,062 ------------- 6,618,441 Consumer Cyclical - Other-0.2% D.R. Horton, Inc. 4.875%, 1/15/10(a) 250 246,469 Starwood Hotels & Resorts Worldwide, Inc. 7.875%, 5/01/12(a) 539 581,355 ------------- 827,824 Energy-0.2% Kerr-Mcgee Corp. 6.875%, 9/15/11(a) 894 949,636 Technology-0.1% Xerox Corp. 6.40%, 3/15/16(a) 535 554,753 ------------- 16,724,691 Total Corporates - Investment Grade (cost $17,498,176) 17,680,095 EMERGING MARKETS - NON-INVESTMENT GRADE-0.8% Industrial-0.8% Communications - Telecommunication-0.4% Kyivstar 10.375%, 8/17/09(a)(b) 1,467 1,586,194 Consumer Cyclical - Other-0.2% Royal Caribbean Cruises, Ltd. 8.75%, 2/02/11(a) 846 930,756 142 o ALLIANCEBERNSTEIN HIGH-YIELD PORTFOLIO Shares or Principal Amount (000) U.S. $ Value - ------------------------------------------------------------------------------- Consumer Non-Cyclical-0.2% Foodcorp, Ltd. 8.875%, 6/15/12(a) EUR 628 $ 889,238 Total Emerging Markets - Non-Investment Grade (cost $3,307,643) 3,406,188 PREFERRED STOCK-0.2% Financial Institutions-0.2% Real Estate Investment Trust-0.2% Sovereign REIT 12.00%(a)(b) (cost $904,800) $ 624 965,250 COMMON STOCKS-0.0% Phase Metrics(a)(g)-% (cost $904) 90,400 904 SHORT-TERM INVESTMENT-1.8% INVESTMENT COMPANIES-1.8% AllianceBernstein Fixed Income Shares, Inc.- Government STIF Portfolio(h) 7,316,585 7,316,585 Total Investments-98.6% (cost $391,319,733) 399,773,883 Other assets less liabilities-1.4% 5,625,493 Net Assets-100% $ 405,399,376 (a) Positions, or portion thereof, with an aggregate market value of $391,688,830 have been segregated to collateralize open forward currency exchange contracts. (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 February 28, 2007, the aggregate market value of these securities amounted to $105,816,678 or 26.1% of net assets. (c) Variable rate coupon, rate shown as of February 28, 2007. (d) Pay-In-Kind Payments (PIK). (e) Indicates a security that has a zero coupon that remains in effect until a predetermined date at which time the stated coupon rate becomes effective until final maturity. (f) Security is in default and is non-income producing. (g) Non-income producing security. (h) Investment in affiliated money market mutual fund. ALLIANCEBERNSTEIN HIGH-YIELD PORTFOLIO o 143 THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS SUMMARY OF SENIOR OFFICER'S EVALUATION OF INVESTMENT ADVISORY AGREEMENT(1) The following is a summary of the evaluation of the Investment Advisory Agreement between AllianceBernstein L.P. (the "Adviser") and The AllianceBernstein Portfolios (the "Trust") in respect of AllianceBernstein Balanced Wealth Strategy, AllianceBernstein Wealth Appreciation Strategy and AllianceBernstein Wealth Preservation Strategy (each a "Strategy" and collectively the "Strategies"), prepared by Philip L. Kirstein, the Senior Officer of the Trust for the Trustees of the Trust, as required by an August 2004 agreement between the Adviser and the New York State Attorney General (the "NYAG").(2) It should be noted that on or around May 23, 2005, the Strategies began allocating its assets among the appropriate underlying portfolios of the AllianceBernstein Pooling Portfolios (the "Pooling Portfolios"), rather than making direct investments in portfolio securities. This approach was undertaken to enhance portfolio management efficiencies and reduce costs. The advisory fee paid by the Strategies, which invests substantially all of its assets in the Pooling Portfolios, is deemed to be paid in part in return for the Adviser's management of the relevant portion of the underlying Pooling Portfolios.(3) The Senior Officer's evaluation of the Investment Advisory Agreement is not meant to diminish the responsibility or authority of the Board of Trustees to perform its duties pursuant to Section 15 of the Investment Company Act of 1940 (the "40 Act") and applicable state law. The purpose of the summary is to provide shareholders with a synopsis of the independent evaluation of the reasonableness of the advisory fees proposed to be paid by the Strategies which was provided to the Trustees in connection with their review of the proposed approval of the continuance of the Investment Advisory Agreement. The Senior Officer's evaluation considered the following factors: 1. Advisory fees charged to institutional and other clients of the Adviser for like services; 2. Advisory fees charged by other mutual fund companies for like services; 3. Costs to the Adviser and its affiliates of supplying services pursuant to the advisory agreement, excluding any intra-corporate profit; (1) It should be noted that the information in the fee summary was completed on June 24, 2006 and presented to the Board of Trustees on August 1, 2006 in accordance with the September 1, 2004 Assurance of Discontinuance between the NYAG and the Adviser. (2) It also should be noted that references in the fee summary pertaining to performance and expense ratios refer to Class A shares of the Strategies. Future references to the Strategies do not include "AllianceBernstein." (3) No investment advisory fees are paid by the Pooling Portfolios. 144 o ALLIANCEBERNSTEIN WEALTH STRATEGIES 4. Profit margins of the Adviser and its affiliates from supplying such services; 5. Possible economies of scale as the Strategies grow larger; and 6. Nature and quality of the Adviser's services including the performance of the Strategies. STRATEGY ADVISORY FEES, EXPENSE CAPS & RATIOS The Adviser proposed that each Strategy pay the advisory fee set forth in the table below for receiving the services to be provided pursuant to the Investment Advisory Agreement. The fee schedule below, implemented in January 2004 in connection with the Adviser's settlement with the NYAG in December 2003, is based on a master schedule that contemplates eight categories of funds with almost all funds in each category having the same advisory fee schedule.(4) Category Net Assets Advisory Fees Strategy - ------------------------------------------------------------------------------- Balanced $1,776.1 55 bp on 1st $2.5 billion Balanced Wealth Strategy 45 bp on next $2.5 billion 40 bp on the balance Blend $1,257.2 65 bp on 1st $2.5 billion Wealth Appreciation Strategy 55 bp on next $2.5 billion 50 bp on the balance Balanced $ 514.2 55 bp on 1st $2.5 billion Wealth Preservation Strategy 45 bp on next $2.5 billion 40 bp on the balance The Adviser agreed to waive that portion of its management fees and/or reimburse each Strategy for that portion of its total operating expenses to the degree necessary to limit the Strategy's expense ratios to the amounts set forth below for the Strategy's fiscal year. The waiver is terminable by the Adviser at the end of each Strategy's fiscal year upon at least 60 days written notice prior to the termination date of the undertaking. It should be noted that Balanced Wealth Strategy, Wealth Appreciation Strategy and Wealth Preservation Strategy (with the exception of the Class R shares of the Strategy) were operating below their expense caps in the latest fiscal year; accordingly, the expense limitation undertakings of these Strategies were of no effect (except for the Class R shares of the (4) Most of the AllianceBernstein Mutual Funds, which the Adviser manages, were affected by the Adviser's settlement with the NYAG. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 145 Wealth Preservation Strategy). In addition, set forth below are the gross expense ratios of each Strategy during the most recently completed fiscal year: Expense Cap Pursuant to Gross Expense Limitation Expense Fiscal Strategy Undertaking Ratio Year End - ------------------------------------------------------------------------------- Balanced Wealth Strategy Class A 1.20% 1.00% August 31 Class B 1.90% 1.71% (ratios as of Class C 1.90% 1.70% February 28, Class R 1.40% 1.34% 2006) Class K 1.15% 1.06% Class I 0.90% 0.73% Advisor 0.90% 0.70% Wealth Appreciation Strategy Class A 1.50% 1.15% August 31 Class B 2.20% 1.88% (ratios as of Class C 2.20% 1.86% February 28, Class R 1.70% 1.40% 2006) Class K 1.45% 1.11% Class I 1.20% 1.84% Advisor 1.20% 1.85% Wealth Preservation Strategy Class A 1.20% 1.04% August 31 Class B 1.90% 1.75% (ratios as of Class C 1.90% 1.74% February 28, Class R 1.40% 1.44% 2006) Class K 1.15% 1.12% Class I 0.90% 0.78% Advisor 0.90% 0.757% I. ADVISORY FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS The advisory fees charged to investment companies which the Adviser manages and sponsors are normally higher than those charged to similar sized institutional accounts, including pension plans and sub-advised investment companies. The fee differential reflects, among other things, different services provided to such clients, and different liabilities assumed. Services provided by the Adviser to the Strategies that are not provided to non-investment company clients include providing office space and personnel to serve as Fund Officers, who among other responsibilities make the certifications required under the Sarbanes-Oxley Act of 2002, and coordinating with and monitoring the Strategies' third party service providers such as Fund counsel, auditors, custodians, transfer agents and pricing services. The accounting, administrative, legal and compliance requirements for the Strategies are more costly than those for institutional assets due to the greater complexities and time required for investment companies. Also, retail mutual funds managed by the Adviser are widely held. Servicing the Strategies' investors is more time consuming and labor intensive compared to institutional clients since the Adviser needs to communicate with a more extensive network of finan- 146 o ALLIANCEBERNSTEIN WEALTH STRATEGIES cial intermediaries and shareholders. In addition, managing the cash flow of an investment company may be more difficult than that of a stable pool of assets, such as an institutional account with little cash movement in either direction, particularly, if the Strategy is in net redemption and the Adviser is frequently forced to sell securities to raise cash for redemptions. However, managing a fund with positive cash flow may be easier at times than managing a stable pool of assets. This factor is less significant for the Strategies, which now invest almost all of its assets in shares of the Pooling Portfolios. Finally, in recent years, investment advisers have been sued by institutional clients and have suffered reputational damage both by the attendant publicity and outcomes other than complete victories. Accordingly, the legal and reputational risks associated with institutional accounts are greater than previously thought, although still not equal to those related to the mutual fund industry. Notwithstanding the Adviser's view that managing an investment company is not comparable to managing other institutional accounts because the services provided are different, it is worth considering information regarding the advisory fees charged to institutional accounts with substantially similar investment styles as the Strategies. It should be noted that the Adviser has indicated that with respect to institutional accounts with assets greater than $300 million, it will negotiate a fee schedule. Discounts that are negotiated vary based upon each client relationship. However, with respect to the Strategies, the Adviser represented that there are no institutional products that have substantially similar investment styles as the Strategies. The AllianceBernstein Variable Products Series Fund, Inc. ("AVPS"), which is managed by the Adviser and is available through variable annuity and variable life contracts offered by other financial institutions, offers policyholders the option to utilize the AVPS portfolios as the investment option underlying their insurance contracts. The following table shows the fee schedule of the AVPS portfolios that have a similar investment style as certain of the Strategies:
Strategy AVPS Portfolio Fee Schedule - --------------------------------------------------------------------------------------- Balanced Wealth Strategy Balanced Wealth 0.55% on first $2.5 billion Strategy Portfolio 0.45% on next $2.5 billion 0.40% on the balance Wealth Appreciation Strategy Wealth Appreciation 0.65% on first $2.5 billion Strategy Portfolio 0.55% on next $2.5 billion 0.50% on the balance
The Adviser also manages and sponsors retail mutual funds, including the Global Wealth Strategies, which are organized in jurisdictions outside the United States, generally Luxembourg and Japan, and sold to non-United States resident ALLIANCEBERNSTEIN WEALTH STRATEGIES o 147 investors. The Adviser charges the following "all-in" fee(5) for each of the Global Wealth Strategies: Fund Fee - ------------------------------------------------------------------------------- Global Equity Blend 1.60% Global Balanced 1.40% Global Conservative 1.15% The Adviser represented that it does not sub-advise any registered investment company with a substantially similar investment style as any of the Strategies. II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES. Lipper, Inc. ("Lipper"), an analytical service that is not affiliated with the Adviser, compared the fees charged to each Strategy with fees charged to other investment companies for similar services by other investment advisers. Lipper's analysis included each Strategy's ranking with respect to the proposed management fee relative to the Lipper group median at the approximate current asset level of the Strategy.(6) Effective Lipper Management Group Strategy Fee(7) Median Rank - ------------------------------------------------------------------------------- Balanced Wealth Strategy 0.550 0.673 5/17 Wealth Appreciation Strategy(8) 0.650 0.795 1/12 Wealth Preservation Strategy(9) 0.550 0.725 1/12 (5) The "all-in" fee shown is for the Class A shares of each of the Global Wealth Strategies. This includes a fee for investment advisory services and a separate fee for distribution related services. (6) The effective management fee is calculated by Lipper using each Strategy's contractual management fee rate at a hypothetical asset level. The hypothetical asset level is based on the combined net assets of all classes of the Strategy, rounded up to the next $25 million. Lipper's total expense ratio information is based on the most recent annual report except as otherwise noted. A ranking of "1" means that the Strategy has the lowest effective fee rate in the Lipper peer group. (7) The effective management fee does not reflect any waivers or expense reimbursements for expense caps that effectively reduce the contractual fee rate. (8) The Strategy's Lipper Expense Group and Lipper Expense Universe include funds of similar (but not the same) Lipper investment classification. The Strategy's Lipper Expense Group, including the Strategy itself, consists of 5 peers of Global Multi-Cap Growth Fund ("GMLG"), 4 peers of Global Large-Cap Core Fund ("GLCG"), and 3 peers of Global Multi-Cap Value Fund ("GMLV"). The Strategy's Lipper Expense Universe consists of the Strategy, the Expense Group, and all other retail front-end load peers of GMLG, GLCG and GMLV, excluding outliers. (9) The Strategy's Lipper Expense Group and Lipper Expense Universe include funds of similar (but not the same) Lipper investment classification. The Strategy's Expense Group, including the Strategy itself, consists of 4 peers of Mixed-Asset Target Allocation Conservative Fund ("MTAC") and 8 peers of Mixed-Asset Target Allocation Moderate Fund ("MTAM"). The Strategy's Lipper Expense Universe consists of the Strategy, the Expense Group, and all other retail front-end load peers of MTAC and MTAM, excluding outliers. 148 o ALLIANCEBERNSTEIN WEALTH STRATEGIES Lipper also analyzed the total expense ratio, which includes an underlying expense ratio,(10) of each Strategy in comparison to its Lipper Expense Group(11) and Lipper Expense Universe.(12) Lipper describes a Lipper Expense Group as a representative sample of comparable funds and a Lipper Expense Universe as a broader group, consisting of all funds in the same investment classification/objective with a similar load type as the subject Strategy. However, at the request of the Senior Officer and the Adviser, because of the limited number of peers in the expense groups and universes, Lipper expanded the expense groups and universes of Wealth Appreciation Strategy and Wealth Preservation Strategy to include funds of similar (but not the same) investment classifications/objectives as the Strategies. The result of that analysis is set forth below:
Expense Lipper Lipper Lipper Lipper Ratio Group Group Universe Universe Strategy (%)(13) Median (%) Rank Median (%) Rank - ----------------------------------------------------------------------------------------- Balanced Wealth Strategy 1.211 1.152 11/17 1.240 30/67 Wealth Appreciation Strategy(14) 1.401 1.435 6/12 1.485 13/30 Wealth Preservation Strategy(15) 1.270 1.271 6/12 1.258 31/57
Based on this analysis, the Strategies have a more favorable ranking on a management fee basis than they do on a total expense ratio basis. III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO THE MANAGEMENT FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT. A consultant was retained by the Senior Officer to work with the Adviser's personnel to align the Adviser's two profitability reporting systems. The alignment, which now has been completed, allows the Adviser's management and the Trustees to receive consistent presentations of the financial results and prof- (10) The underlying expense ratio is an annualized weighted average total expense ratio estimate of each Strategy's underlying portfolios. The period in which the Strategies' underlying expense ratio is based on is from the Strategies' most recent fiscal year end through February 28, 2006. For Balanced Wealth Strategy, Wealth Appreciation Strategy and Wealth Preservation Strategy the underlying expense ratios are 0.08%, 0.08% and 0.07% respectively. (11) Lipper uses the following criteria in screening funds to be included in each Strategy's expense group: fund type, investment classification/objective, load type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, and expense components and attributes. A Lipper Expense Group will typically consist of seven to twenty funds. (12) Except for asset (size) comparability, Lipper uses the same criteria for selecting a Lipper Expense Group when selecting a Lipper Expense Universe. Unlike the Lipper Expense Group, the Lipper Expense Universe allows for the same adviser to be represented by more than just one fund. (13) The total expense ratios shown are for the Strategies' Class A shares. (14) See footnote 7. (15) See footnote 8. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 149 itability although the two profitability reporting systems operate independently. See Section IV for additional discussion. IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES. The profitability information for the Strategies prepared by the Adviser for the Board of Trustees was reviewed by the Senior Officer. The Adviser's profitability from providing investment advisory services to each Strategy increased during calendar year 2005 relative to 2004. In addition to the Adviser's direct profits from managing the Strategies, certain of the Adviser's affiliates have business relationships with the Strategies and may earn a profit from providing other services to the Strategies. The courts have referred to this type of business opportunity as "fall-out benefits" to the Adviser and indicated that they should be factored into the evaluation of the total relationship between the Strategies and the Adviser. Neither case law nor common business practice precludes the Adviser's affiliates from earning a reasonable profit on this type of relationship. These affiliates provide transfer agent and distribution related services to the Strategies and brokerage related services to the Pooling Portfolios and receive transfer agent fees, Rule 12b-1 payments, front-end sales loads, contingent deferred sales charges ("CDSC") and commissions for providing brokerage services. In addition, the Adviser benefits from soft dollar arrangements which offset expenses the Adviser would otherwise incur. Additional information regarding distribution related fees can be found in the prospectus of the Strategies. AllianceBernstein Investments, Inc. ("ABI"), an affiliate of the Adviser, is the Strategies' principal underwriter. ABI and the Adviser have disclosed in the Strategies' prospectus that they may make revenue sharing payments from their own resources, in addition to resources derived from sales loads and Rule 12b-1 fees, to firms that sell shares of the Strategies. In 2005, ABI paid approximately 0.042% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $18.0 million for distribution services and educational support (revenue sharing payments). For 2006, it is anticipated, ABI will pay approximately 0.04% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $17.5 million.(16) (16) ABI currently inserts the "Advance" in quarterly account statements and pays the incremental costs associated with the mailing. The incremental cost is less than what an "independent mailing" would cost. 150 o ALLIANCEBERNSTEIN WEALTH STRATEGIES After payments to third party intermediaries, ABI retained the following amounts for Class A front-end load sales charges from sales of the Strategies' Class A shares during the Strategies' most recently completed fiscal year: Strategy Amount Received - ------------------------------------------------------------------------------- Balanced Wealth Strategy $488,963 Wealth Appreciation Strategy $201,243 Wealth Preservation Strategy $167,146 ABI received the amounts set forth below in Rule 12b-1 fees and CDSC for the Strategies during the Strategies' most recent fiscal year: 12b-1 Fees CDSC Strategy Received Received - ------------------------------------------------------------------------------- Balanced Wealth Strategy $4,406,256 $470,769 Wealth Appreciation Strategy $2,489,745 $279,073 Wealth Preservation Strategy $1,572,500 $202,428 Fees and reimbursements for out of pocket expenses charged by AllianceBernstein Investor Services, Inc. ("ABIS"), the affiliated transfer agent, are based on the level of the network account and the class of share held by the account. ABIS also receives a fee per shareholder sub-account for each account maintained by an intermediary on an omnibus basis. ABIS' after-tax profitability increased in 2005 in comparison to 2004. ABIS received the following fee from the Strategies in the most recent fiscal year: Strategy ABIS Fee(17) - ------------------------------------------------------------------------------- Balanced Wealth Strategy $359,899 Wealth Appreciation Strategy $308,014 Wealth Preservation Strategy $102,501 The Strategies and the Pooling Portfolios effected brokerage transactions through the Adviser's affiliate, Sanford C. Bernstein & Co. LLC ("SCB & Co.") and/or its U.K. affiliate, Sanford C. Bernstein Limited ("SCB Ltd."), collectively "SCB," and paid commissions for such transactions during the Strategies' most recently completed fiscal year.(18) The Adviser represented that SCB's profitability from business conducted with the Strategies and the Pooling Portfolios is comparable to the profitability of SCB's dealings with other similar third party clients. In the ordinary course of business, SCB receives and pays liquidity rebates from electronic communications networks ("ECNs") derived from trading for its (17) The fee disclosed is net of any waivers or any other expense offset arrangement with ABIS. An expense offset is created by the interest earned on the positive cash balance that occurs within the transfer agent account as there is a one day lag with regards to money movement from the shareholder's account to the transfer agent's account and then from the transfer agent's account to the Strategy's account. (18) As previously mentioned, the Strategies now pursue their investment objectives through investing almost of all of its assets in shares of the Pooling Portfolios. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 151 clients. These credits and charges are not being passed on to any SCB client. The Adviser also receives certain soft dollar benefits from brokers that execute agency trades for its clients. These soft dollar benefits reduce the Adviser's cost of doing business and increase its profitability. V. POSSIBLE ECONOMIES OF SCALE The Adviser has indicated that the breakpoints in the fee schedule in the Investment Advisory Agreement reflect a sharing of economies of scale to the extent the breakpoints are reached. Based on some of the professional literature that has considered economies of scale in the mutual fund industry it is thought that to the extent economies of scale exist, they may more often exist across a fund family as opposed to a specific fund. This is because the costs incurred by the Adviser, such as investment research or technology for trading or compliance systems can be spread across a greater asset base as the fund family increases in size. It is also possible that as the level of services required to operate a successful investment company has increased over time, and advisory firms have made such investments in their business to provide improved services, there may be a sharing of economies of scale without a reduction in advisory fees. An independent consultant made a presentation to the Board of Trustees and the Senior Officer regarding possible economies of scale or scope in the mutual fund industry. Based on the presentation, it was evident that fund management companies benefit from economies of scale. However, due to lack of cost data, researchers had to infer facts about the costs from the behavior of fund expenses; there was a lack of consensus among researchers as to whether economies of scale were being passed on to the shareholders. It is contemplated that additional work will be performed to determine if the benefits of economies of scale or scope are being passed to shareholders by the Adviser. In the meantime, it is clear that to the extent a fund's assets exceeds its initial breakpoint its shareholders benefit from a lower fee rate. VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING THE PERFORMANCE OF THE STRATEGY. With assets under management of $625 billion as of June 30, 2006, the Adviser has the investment experience to manage and provide non-investment services (described in Section I) to the Strategies. 152 o ALLIANCEBERNSTEIN WEALTH STRATEGIES The information below, which was prepared by Lipper, shows the 1 year performance rankings of the Strategies relative to their Lipper Performance Groups(19) and Lipper Performance Universes(20) for the periods ended April 30, 2006: Balanced Wealth Strategy Group Universe - ------------------------------------------------------------------------------- 1 year 3/17 17/113 Wealth Appreciation Strategy Group Universe - ------------------------------------------------------------------------------- 1 year 4/5 9/15 Wealth Preservation Strategy Group Universe - ------------------------------------------------------------------------------- 1 year 1/4 7/65 Set forth below are the 1 year and since inception performance returns of the Strategies (in bold)(21) versus their benchmarks:(22) Periods Ending April 30, 2006 Annualized Performance - ------------------------------------------------------------------------------- 1 Since Strategy Year Inception - ------------------------------------------------------------------------------- Balanced Wealth Strategy 17.58 12.43 S&P 500 Stock Index 15.41 13.21 60% S&P 500 Stock Index / 9.53 8.89 40% Lehman Brothers Aggregate Bond Index Wealth Appreciation Strategy 27.25 17.59 S&P 500 Stock Index 15.41 13.21 70% S&P 500 Stock Index / 30% MSCI EAFE 20.83 17.17 Index (Net) Wealth Preservation Strategy 9.33 7.45 Lehman Brothers Aggregate Bond Index 0.71 2.40 70% Lehman Brothers Aggregate Bond Index / 5.12 5.64 30% S&P 500 Stock Index (19) The Lipper Performance Group is identical to the Lipper Expense Group. (20) The Strategies' Lipper Performance Groups/Universes may not be identical to the corresponding Lipper Expense Group/Universe since the Strategies' Lipper Expense Groups/Universes may exclude funds with negative management fees and funds with a different expense structure. In addition, each Strategy's Lipper Performance Group/Universe only includes funds of the same Lipper investment classification/objective as the Strategy, in contrast to each Strategy's Lipper Expense Group/Universe, which may include funds of similar but not the same investment classification/objective. (21) The performance returns shown are for the Class A shares of the Strategies. (22) The Adviser provided Strategy and benchmark performance return information for periods through April 30, 2006 in order to maintain consistency with Lipper's performance rankings in the analysis. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 153 CONCLUSION: Based on the factors discussed above the Senior Officer's conclusion is that the proposed fee for each Strategy is reasonable and within the range of what would have been negotiated at arms-length in light of all the surrounding circumstances. This conclusion in respect of each Strategy is based on an evaluation of all of these factors and no single factor was dispositive. Dated: September 7, 2006 154 o ALLIANCEBERNSTEIN WEALTH STRATEGIES THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS ALLIANCEBERNSTEIN FAMILY OF FUNDS - -------------------------------------------------- Wealth Strategies Funds - -------------------------------------------------- Balanced Wealth Strategy Wealth Appreciation Strategy Wealth Preservation Strategy Tax-Managed Balanced Wealth Strategy Tax-Managed Wealth Appreciation Strategy Tax-Managed Wealth Preservation Strategy - -------------------------------------------------- Blended Style Funds - -------------------------------------------------- U.S. Large Cap Portfolio International Portfolio Tax-Managed International Portfolio - -------------------------------------------------- Growth Funds - -------------------------------------------------- Domestic Growth Fund Mid-Cap Growth Fund Large Cap Growth Fund Small Cap Growth Portfolio Global & International Global Health Care Fund Global Research Growth Fund Global Technology Fund Greater China '97 Fund International Growth Fund International Research Growth Fund - -------------------------------------------------- Value Funds - -------------------------------------------------- Domestic Balanced Shares Focused Growth & Income Fund Growth & Income Fund Small/Mid Cap Value Fund Utility Income Fund Value Fund Global & International Global Real Estate Investment Fund* Global Value Fund International Value Fund - -------------------------------------------------- Taxable Bond Funds - -------------------------------------------------- Global Government Income Trust Corporate Bond Portfolio Emerging Market Debt Fund Global Strategic Income Trust High Yield Fund Intermediate Bond Portfolio Short Duration Portfolio U.S. Government Portfolio - -------------------------------------------------- Municipal Bond Funds - -------------------------------------------------- National Michigan Insured National Minnesota Arizona New Jersey California New York Insured California Ohio Florida Pennsylvania Massachusetts Virginia - -------------------------------------------------- Intermediate Municipal Bond Funds - -------------------------------------------------- Intermediate California Intermediate Diversified Intermediate New York - -------------------------------------------------- Closed-End Funds - -------------------------------------------------- All-Market Advantage Fund AllianceBernstein Global High Income Fund* AllianceBernstein Income Fund* ACM Managed Dollar Income Fund ACM Managed Income Fund ACM Municipal Securities Income Fund California Municipal Income Fund National Municipal Income Fund New York Municipal Income Fund The Spain Fund World Dollar Government Fund - -------------------------------------------------- Retirement Strategies Funds - -------------------------------------------------- 2000 Retirement Strategy 2005 Retirement Strategy 2010 Retirement Strategy 2015 Retirement Strategy 2020 Retirement Strategy 2025 Retirement Strategy 2030 Retirement Strategy 2035 Retirement Strategy 2040 Retirement Strategy 2045 Retirement Strategy We also offer Exchange Reserves,** which serves as the money market fund exchange vehicle for the AllianceBernstein mutual funds. You should consider the investment objectives, risks, charges and expenses of any AllianceBernstein fund/portfolio carefully before investing. For free copies of our prospectuses, which contain this and other information, visit us online at www.alliancebernstein.com or contact your financial advisor. Please read the prospectus carefully before investing. * Prior to January 26, 2007, AllianceBernstein Global High Income Fund was named Alliance World Dollar Government Fund II and AllianceBernstein Income Fund was named ACM Income Fund. Prior to March 1, 2007, Global Real Estate Investment Fund was named Real Estate Investment Fund. ** An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. ALLIANCEBERNSTEIN WEALTH STRATEGIES o 155 NOTES 156 o ALLIANCEBERNSTEIN WEALTH STRATEGIES ALLIANCEBERNSTEIN WEALTH STRATEGIES 1345 Avenue of the Americas New York, NY 10105 (800) 221-5672 [LOGO] ALLIANCEBERNSTEIN INVESTMENTS WS-0152-0207 - ------------------------------------------------------------------------------- SEMI-ANNUAL REPORT - ------------------------------------------------------------------------------- AllianceBernstein Tax-Managed Wealth Strategies Wealth Appreciation Strategy Balanced Wealth Strategy Wealth Preservation Strategy Semi-Annual Report February 28, 2007 [LOGO] ALLIANCEBERNSTEIN INVESTMENTS Investment Products Offered =========================== o Are Not FDIC Insured o May Lose Value o Are Not Bank Guaranteed The investment return and principal value of an investment in the Fund will fluctuate as the prices of the individual securities in which it invests fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. For a free copy of the Fund's prospectus, which contains this and other information, visit our web site at www.alliancebernstein.com or call your financial advisor or AllianceBernstein(R) at (800) 227-4618. Please read the prospectus carefully before you invest. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com. This shareholder report must be preceded or accompanied by the Fund's prospectus for individuals who are not current shareholders of the Fund. You may obtain a description of the Fund's proxy voting policies and procedures, and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, without charge. Simply visit AllianceBernstein's web site at www.alliancebernstein.com, or go to the Securities and Exchange Commission's (the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800) 227-4618. The Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the Commission's Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. AllianceBernstein publishes full portfolio holdings for the Fund monthly at www.alliancebernstein.com. AllianceBernstein Investments, Inc. is an affiliate of AllianceBernstein L.P., the manager of the AllianceBernstein funds, and is a member of the NASD. AllianceBernstein(R) and the AB Logo are registered trademarks and service marks used by permission of the owner, AllianceBernstein L.P. April 17, 2007 SEMI-ANNUAL REPORT This report provides management's discussion of fund performance for the portfolios of AllianceBernstein Tax-Managed Wealth Strategies (the "Strategies") for the semi-annual reporting period ended February 28, 2007. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH APPRECIATION STRATEGY INVESTMENT OBJECTIVE AND POLICIES AllianceBernstein Tax-Managed Wealth Appreciation Strategy's investment objective is long-term growth of capital. The Strategy invests in a portfolio of equity securities that is designed as a solution for investors who seek tax-efficient equity returns but also want broad diversification of the related risks across styles, capitalization ranges and geographic regions. In managing the Strategy, the Adviser efficiently diversifies between growth and value equity investment styles, and between U.S. and non-U.S. markets. Normally, the Strategy targets an equal weighting of growth and value style stocks (50% each), with approximately 70% of each equity style invested in U.S. companies and the remaining 30% in non-U.S. companies. The Adviser will allow the relative weightings of the Strategies' growth and value components, and U.S. and non-U.S. companies (and the subcomponents defined by capitalization ranges) to change in response to markets, but ordinarily only by +/- 5% of the portfolio. Beyond those ranges, the Adviser will rebalance the portfolio toward the targeted blends. However, under extraordinary circumstances, such as when the Adviser believes that conditions favoring one investment style are compelling, the range may expand to 10% of the portfolio. The Strategy may invest without limit in non-U.S. securities, although it generally will not invest more than 35% of its total assets in such securities. The Strategy also may enter into forward commitments, make short sales of securities or maintain a short position, invest in rights or warrants, and invest up to 10% of its total assets in the securities of companies in emerging markets. ALLIANCEBERNSTEIN TAX-MANAGED BALANCED WEALTH STRATEGY INVESTMENT OBJECTIVE AND POLICIES AllianceBernstein Tax-Managed Balanced Wealth Strategy's investment objective is to achieve the highest total return consistent with the Adviser's determination of reasonable risk. The Strategy invests in a portfolio of equity and debt securities that is designed as a solution for investors who seek a moderate tilt toward tax-efficient equity returns but also want the risk diversification offered by tax-exempt debt securities and the broad diversification of their equity risk across styles, capitalization ranges and geographic regions. In managing the Strategy, the Adviser efficiently diversifies between the debt and equity components to produce the desired risk/return profile of the Strategy. The Strategy targets a weighting of 50% equities and 50% tax-exempt debt securities with a goal of providing moderate upside potential without excessive volatility. Within the Strategy's equity component, the targeted blend is an equal weighting of growth and value style stocks (50% each), with approximately 70% of each equity style invested in U.S. companies and the remaining 30% in non-U.S. companies. The Adviser will allow the relative weight- ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 1 ings of the Strategy's debt and equity components, the equity component's growth and value and U.S. and non-U.S. companies weightings (and the equity sub-components defined by capitalization ranges) to change in response to markets, but ordinarily only by +/-5% of the portfolio. However, under extraordinary circumstances, such as when conditions favoring one investment style are compelling, the range may expand to 10% of the portfolio. The Strategy intends to meet the tax requirement for passing municipal bond interest through to Strategy shareholders as tax exempt interest dividends (currently requires that at least 50% of the Strategy's assets be invested in tax-exempt debt securities). In the event that the Code or the related rules, regulations and interpretations of the IRS should, in the future, change so as to permit the Strategy to pass through tax-exempt dividends when the Strategy invests less than 50% of its assets in tax-exempt debt securities, the targeted blend for the Strategy will become 60% equity securities and 40% debt securities. The Strategy's fixed-income securities will primarily be investment grade debt securities, but may also include lower-rated securities ("junk bonds"). The Strategy will not invest more than 25% of its total assets in securities rated at the time of purchase below investment grade. The Strategy will at all times hold at least 40% but not more than 90% of its net assets in equity securities, including common stocks and securities convertible into common stocks, such as convertible bonds, convertible preferred stocks and warrants. The Strategy's fixed-income asset investments will always comprise at least 10%, but never more than 60%, of its net assets. The Strategy may invest without limit in non-U.S. securities, although it generally will not invest more than 25% of its total assets in such securities. The Strategy also may enter into forward commitments, make short sales of securities or maintain a short position, invest in rights and warrants, and invest up to 10% of its total assets in the securities of companies in emerging markets. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH PRESERVATION STRATEGY INVESTMENT OBJECTIVE AND POLICIES AllianceBernstein Tax-Managed Wealth Preservation Strategy's investment objective is to achieve a high total return without, in the opinion of the Adviser, undue risk to principal. The Strategy invests in a portfolio of equity and debt securities that is designed as a solution for investors who seek some opportunity for tax-efficient equity returns if the related risks are broadly diversified and overall portfolio volatility reflects a preponderance of debt securities. The Strategy targets a weighting of 30% equity securities and 70% tax-exempt debt securities with a goal of providing reduced volatility and modest upside potential. Within the equity component, the Strategy's targeted blend is an equal weighting of growth and value style stocks (50% each), with approximately 70% of each equity style invested in U.S. companies and the remaining 30% in non-U.S. companies. The Adviser will allow the relative weightings of the Strategy's debt and equity components, the equity component's growth and value weightings and U.S. and 2 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES non-U.S. companies to change in response to markets, but ordinarily only by +/-5% of the portfolio. However, under extraordinary circumstances, such as when conditions favoring one investment style are compelling, the range may expand to 10% of the portfolio. All fixed-income securities held by the Strategy will be of investment grade at the time of purchase. In the event that the rating of any security held by the Strategy falls below investment grade, the Strategy will not be obligated to dispose of such security and may continue to hold the obligation if, in the opinion of the Adviser, such investment is appropriate under the circumstances. The Strategy may invest without limit in non-U.S. securities, although it generally will not invest more than 25% of its total assets in such securities. The Strategy also may enter into forward commitments, make short sales of securities or maintain a short position, invest in rights or warrants, and invest up to 10% of its total assets in the securities of companies in emerging markets. INVESTMENT RESULTS The tables on pages 7-9 show performance for each Strategy compared to their respective balanced benchmarks for the six- and 12-month periods ended February 28, 2007. Each Strategy's balanced benchmark is as follows: AllianceBernstein Tax-Managed Wealth Appreciation Strategy, 70% Standard & Poor's (S&P) 500 Stock Index and 30% Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index; AllianceBernstein Tax-Managed Balanced Wealth Strategy, 50% S&P 500 Stock Index and 50% Lehman Brothers (LB) 5-Year General Obligation Municipal Index; and AllianceBernstein Tax-Managed Wealth Preservation Strategy, 30% S&P 500 Stock Index and 70% LB 5-Year General Obligation Municipal Index. The Strategies underperformed their respective balanced benchmarks for both the six- and 12-month periods ended February 28, 2007. In both U.S. and developed international markets, growth stocks underperformed value stocks by a significant margin and detracted from the Strategies' overall returns. The Strategies' approach of seeking return in not only the U.S. but also in the international equity markets contributed to overall performance for the Strategies as international stocks outperformed U.S. stocks during the review period. International stocks, as represented by the MSCI EAFE Index, returned 12.17% and 21.07% for the six- and 12-month periods ended February 28, 2007, respectively, while U.S. stocks, as represented by the S&P 500 Stock Index, returned 8.93% and 11.96% for the same periods, respectively. The U.S. municipal bond market, as represented by the LB 5-Year General Obligation Municipal Index, performed in line with market yields, returning 1.83% and 3.60% for the six-and 12-month periods, respectively. Given its higher exposure to equities, AllianceBernstein Tax-Managed Wealth Appreciation Strategy delivered higher absolute returns than AllianceBernstein Tax-Managed Balanced Wealth Strategy, which in turn out-performed AllianceBernstein Tax-Managed Wealth Preservation Strategy. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 3 MARKET REVIEW AND INVESTMENT STRATEGY The six- and 12-month periods ended February 28, 2007 were strong for the global capital markets. Stocks continued to produce sizable returns. Several factors provided fuel to the equity markets around the world, including solid economic growth, robust corporate earnings and booming merger and acquisition activity. As previously noted, international stocks outperformed U.S. stocks. As in the U.S. market, a strong fundamental picture provided support, aided by most major currencies strengthening against the dollar; therefore, non-U.S. stocks produced higher returns when translated into U.S. dollars. Emerging-market stocks, meanwhile, led both the U.S. and major developed markets thanks to robust country fundamentals. Global equity valuations between attractively priced and expensive stocks remain unusually compressed. With many companies posting strong earnings growth, investors have not felt the need to pay a premium for growth stocks. As value stocks continue to outperform, the value opportunity has declined and growth stocks have become more and more attractive. The Strategies' equity holdings remained positioned to take advantage of the opportunity presented in companies with strong growth prospects that are trading at unusually low premiums. While bonds posted modest returns globally, bonds of lower credit quality outperformed, as investors continued to search for additional yield. Overall, credit spreads remain historically low, and the Strategies' fixed-income positions are cautious in accordance with the diminished opportunity. The fixed-income positions continue to serve as portfolio stabilizers and complements to the Strategies' equity exposures. As always, the Strategies' Blend Investment Policy Team remains focused on its strategy of combining low correlation asset classes, blending growth and value investment styles, globalizing the Strategies' portfolios and ensuring each portfolio is aligned with its strategic asset allocation targets over time through a disciplined rebalancing process. 4 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES HISTORICAL PERFORMANCE AN IMPORTANT NOTE ABOUT THE VALUE OF HISTORICAL PERFORMANCE The performance shown on the following pages represents past performance and does not guarantee future results. Tax-Managed Balanced Wealth Strategy was formerly called Alliance Growth Investors Fund and Tax-Managed Wealth Preservation Strategy was formerly called Alliance Conservative Investors Fund. Until September 2, 2003, Alliance Growth Investors Fund and Alliance Conservative Investors Fund were managed using different investment strategies, most notably, the Funds were not tax-managed funds. As a result, the long-term returns shown are not reflective of returns that would have occurred using the Strategies' new tax-managed strategies. In all likelihood, returns would have been lower than those shown if the Strategies had been using their tax-managed strategies. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting www.alliancebernstein.com. The investment return and principal value of an investment in the Strategies will fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. You should consider the investment objectives, risks, charges and expenses of the Strategies carefully before investing. For a free copy of the Strategies' prospectus, which contains this and other information, visit our website at www.alliancebernstein.com or call your financial advisor or AllianceBernstein Investments at 800.227.4618. You should read the prospectus carefully before you invest. All fees and expenses related to the operation of the Strategies have been deducted. NAV returns do not reflect sales charges; if sales charges were reflected, the Strategies' quoted performance would be lower. SEC Returns, Returns After Taxes on Distributions and Returns After Taxes on Distributions and Sale of Fund Shares reflect the applicable sales charges for each share class: a 4.25% maximum front-end sales charge for Class A shares; the applicable contingent deferred sales charge for Class B shares (4% year 1, 3% year 2, 2% year 3, 1% year 4); a 1% 1 year contingent deferred sales charge for Class C shares. Returns for the different share classes will vary due to different expenses associated with each class. Performance assumes reinvestment of distributions. NAV and SEC returns do not account for taxes. During the reporting period, the Adviser waived a portion of its advisory fee or reimbursed the Strategy for a portion of its expenses to the extent necessary to limit Tax-Managed Wealth Preservation Strategy's expenses on an annual basis to 1.20%, 1.90%, 1.90% and 0.90% of the average daily net assets of Class A, Class B, Class C and Advisor Class shares, respectively. These waivers extend through the Strategy's current fiscal year and may be extended by the Adviser for additional one-year terms. Without the waivers, the Strategy's expenses would have been higher and each Class' performance would have been lower than that shown. BENCHMARK DISCLOSURE The unmanaged Standard & Poor's (S&P) 500 Stock Index, the unmanaged Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index and the unmanaged Lehman Brothers (LB) 5-Year General Obligation Municipal Index do not reflect fees and expenses associated with the active management of a mutual fund portfolio. The S&P 500 Stock Index includes 500 U.S. stocks and is a common measure of the performance of the overall U.S. stock market. The MSCI EAFE Index is a market capitalization weighted index that measures stock performance in 21 countries in Europe, Australasia and the Far East. The LB 5-Year General Obligation Municipal Index is a total return performance benchmark for the long-term, investment-grade tax-exempt bond market with maturities ranging from four to six years. An investor cannot invest directly in an index, and its results are not indicative of the performance for any specific investment, including the Strategies. (Historical Performance continued on next page) ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 5 HISTORICAL PERFORMANCE (continued from previous page) The MSCI EAFE Index values are calculated using net returns. Net returns approximate the minimum possible dividend reinvestment (the dividend is reinvested after deduction of withholding tax, applying the highest rate applicable to non-resident individuals (Luxembourg holding companies) who do not benefit from double taxation treaties). A WORD ABOUT RISK The Strategies allocate their investments among multiple asset classes which will include U.S. and foreign securities. AllianceBernstein Tax-Managed Balanced Wealth Strategy and AllianceBernstein Tax-Managed Wealth Preservation Strategy will include both equity and fixed-income securities. Price fluctuation may be caused by changes in the general level of interest rates or changes in bond credit quality ratings. Please note, as interest rates rise, existing bond prices fall and can cause the value of your investment to decline. Changes in interest rates have a greater effect on bonds with longer maturities than on those with shorter maturities. Investments in the Strategies are not guaranteed because of fluctuation in the net asset value of the underlying fixed-income related investments. High yield bonds (i.e., "junk bonds") involve a greater risk of default and price volatility than other bonds. Investing in non-investment grade securities presents special risks, including credit risk. Within each of these, the Strategies will also allocate their investments in different types of securities, such as growth and value stocks. AllianceBernstein Tax-Managed Balanced Wealth Strategy and AllianceBernstein Tax-Managed Wealth Preservation Strategy will also allocate their investments to tax-exempt debt securities. International investing involves risks not associated with U.S. investments, including currency fluctuations and political and economic changes. Each of the Strategies can invest in small- to mid-capitalization companies. Investments in small- and mid-cap companies may be more volatile than investments in large-cap companies. Investments in small-cap companies tend to be more volatile than investments in mid- or large-cap companies. A Strategy's investments in smaller capitalization companies may have additional risks because these companies often have limited product lines, markets or financial resources. The Strategies may at times use certain types of investment derivatives such as options, futures, forwards and swaps. The use of derivatives involves specific risks and is not suitable for all investors. The Strategies systematically rebalance their allocations in these asset classes to maintain their target weighting. There can be no assurance that rebalancing will achieve its intended result, and the costs of rebalancing may be significant over time. The Strategies may employ strategies that take into account the tax impact of buy and sell decisions on the Strategies' shareholders. While the Strategies seek to maximize after-tax returns, there can be no assurance that the strategies will be effective, and the use of these strategies may affect the gross returns of the Strategies. The Strategies may not be suitable for tax-advantaged accounts, such as qualified retirement plans. The risks associated with an investment in the Strategies are more fully discussed in the prospectus. (Historical Performance continued on next page) 6 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES TAX-MANAGED WEALTH APPRECIATION STRATEGY HISTORICAL PERFORMANCE (continued from previous page) Returns THE STRATEGY VS. ITS BENCHMARK ====================== PERIODS ENDED FEBRUARY 28, 2007 6 Months 12 Months - ----------------------------------------------------------------------------- AllianceBernstein Tax-Managed Wealth Appreciation Strategy Class A 8.64% 9.58% Class B 8.25% 8.89% Class C 8.33% 8.88% Advisor Class* 8.85% 9.95% 70% S&P 500 Stock Index/30% MSCI EAFE Index 9.90% 14.69% S&P 500 Stock Index 8.93% 11.96% MSCI EAFE Index 12.17% 21.07% * Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. See Historical Performance and Benchmark disclosures on pages 5-6. (Historical Performance continued on next page) ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 7 TAX-MANAGED BALANCED WEALTH STRATEGY HISTORICAL PERFORMANCE (continued from previous page) Returns THE STRATEGY VS. ITS BENCHMARK ====================== PERIODS ENDED FEBRUARY 28, 2007 6 Months 12 Months - ----------------------------------------------------------------------------- AllianceBernstein Tax-Managed Balanced Wealth Strategy Class A 5.13% 6.39% Class B 4.67% 5.58% Class C 4.66% 5.65% Advisor Class* 5.18% 6.69% 50% S&P 500 Stock Index/50% LB 5-Year General Obligation Municipal Index 5.38% 7.78% S&P 500 Stock Index 8.93% 11.96% LB 5-Year General Obligation Municipal Index 1.83% 3.60% * Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. See Historical Performance and Benchmark disclosures on pages 5-6. (Historical Performance continued on next page) 8 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES TAX-MANAGED WEALTH PRESERVATION STRATEGY HISTORICAL PERFORMANCE (continued from previous page) Returns THE STRATEGY VS. ITS BENCHMARK ====================== PERIODS ENDED FEBRUARY 28, 2007 6 Months 12 Months - ----------------------------------------------------------------------------- AllianceBernstein Tax-Managed Wealth Preservation Strategy Class A 3.50% 4.73% Class B 3.14% 4.04% Class C 3.14% 3.95% Advisor Class* 3.74% 5.13% 30% S&P 500 Stock Index/70% LB 5-Year General Obligation Municipal Index 3.96% 6.11% S&P 500 Stock Index 8.93% 11.96% LB 5-Year General Obligation Municipal Index 1.83% 3.60% * Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. See Historical Performance and Benchmark disclosures on pages 5-6. (Historical Performance continued on next page) ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 9 TAX-MANAGED WEALTH APPRECIATION STRATEGY HISTORICAL PERFORMANCE (continued from previous page) AVERAGE ANNUAL RETURNS AS OF FEBRUARY 28, 2007 =============================================================================== NAV Returns SEC Returns CLASS A SHARES 1 Year 9.58% 4.90% Since Inception* 13.18% 11.79% CLASS B SHARES 1 Year 8.89% 4.89% Since Inception* 12.42% 12.20% CLASS C SHARES 1 Year 8.88% 7.88% Since Inception* 12.44% 12.44% ADVISOR CLASS SHARES+ 1 Year 9.95% 9.95% Since Inception* 13.56% 13.56% * Inception Dates: 9/2/03 for Class A, Class B, Class C and Advisor Class shares. + This share class is offered at net asset value (NAV) to eligible investors and its SEC returns are the same as the NAV returns. Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception date for this share class is listed above. See Historical Performance disclosures on pages 5-6. (Historical Performance continued on next page) 10 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES TAX-MANAGED WEALTH APPRECIATION STRATEGY HISTORICAL PERFORMANCE (continued from previous page) SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007) =============================================================================== SEC Returns CLASS A SHARES 1 Year 5.33% Since Inception* 12.00% CLASS B SHARES 1 Year 5.21% Since Inception* 12.37% CLASS C SHARES 1 Year 8.21% Since Inception* 12.60% ADVISOR CLASS SHARES+ 1 Year 10.33% Since Inception* 13.72% * Inception Dates: 9/2/03 for Class A, Class B, Class C and Advisor Class shares. + Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception date for this share class is listed above. See Historical Performance disclosures on pages 5-6. (Historical Performance continued on next page) ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 11 TAX-MANAGED WEALTH APPRECIATION STRATEGY HISTORICAL PERFORMANCE (continued from previous page) RETURNS AFTER TAXES ON DISTRIBUTIONS AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007) =============================================================================== Returns CLASS A SHARES 1 Year 5.21% Since Inception* 11.91% CLASS B SHARES 1 Year 5.17% Since Inception* 12.31% CLASS C SHARES 1 Year 8.16% Since Inception* 12.53% ADVISOR CLASS SHARES+ 1 Year 10.16% Since Inception* 13.60% RETURNS AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007) =============================================================================== CLASS A SHARES 1 Year 3.63% Since Inception* 10.40% CLASS B SHARES 1 Year 3.46% Since Inception* 10.73% CLASS C SHARES 1 Year 5.40% Since Inception* 10.93% ADVISOR CLASS SHARES+ 1 Year 6.94% Since Inception* 11.92% * Inception Dates: 9/2/03 for Class A, Class B, Class C and Advisor Class shares. + Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception date for this share class is listed above. See Historical Performance disclosures on pages 5-6. (Historical Performance continued on next page) 12 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES TAX-MANAGED BALANCED WEALTH STRATEGY HISTORICAL PERFORMANCE (continued from previous page) AVERAGE ANNUAL RETURNS AS OF FEBRUARY 28, 2007 =============================================================================== NAV Returns SEC Returns CLASS A SHARES 1 Year 6.39% 1.91% 5 Years 4.99% 4.09% 10 Years 5.40% 4.94% CLASS B SHARES 1 Year 5.58% 1.58% 5 Years 4.20% 4.20% 10 Years(a) 4.78% 4.78% CLASS C SHARES 1 Year 5.65% 4.65% 5 Years 4.23% 4.23% 10 Years 4.64% 4.64% ADVISOR CLASS SHARES+ 1 Year 6.69% 6.69% Since Inception* 8.04% 8.04% (a) Assumes conversion of Class B shares into Class A shares after eight years. * Inception Date: 9/2/03 for Advisor Class shares. + This share class is offered at net asset value (NAV) to eligible investors and its SEC returns are the same as the NAV returns. Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for this share class is listed above. See Historical Performance disclosures on pages 5-6. (Historical Performance continued on next page) ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 13 TAX-MANAGED BALANCED WEALTH STRATEGY HISTORICAL PERFORMANCE (continued from previous page) SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007) =============================================================================== SEC Returns CLASS A SHARES 1 Year 2.43% 5 Years 4.00% 10 Years 5.32% CLASS B SHARES 1 Year 2.18% 5 Years 4.13% 10 Years(a) 5.14% CLASS C SHARES 1 Year 5.25% 5 Years 4.16% 10 Years 5.01% ADVISOR CLASS SHARES+ 1 Year 7.25% Since Inception* 8.11% (a) Assumes conversion of Class B shares into Class A shares after eight years. * Inception Date: 9/2/03 for Advisor Class shares. + Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception date for this share class is listed above. See Historical Performance disclosures on pages 5-6. (Historical Performance continued on next page) 14 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES TAX-MANAGED BALANCED WEALTH STRATEGY HISTORICAL PERFORMANCE (continued from previous page) RETURNS AFTER TAXES ON DISTRIBUTIONS AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007) =============================================================================== Returns CLASS A SHARES 1 Year 2.22% 5 Years 3.82% 10 Years 3.88% CLASS B SHARES 1 Year 2.06% 5 Years 4.07% 10 Years(a) 3.91% CLASS C SHARES 1 Year 5.13% 5 Years 4.10% 10 Years 3.78% ADVISOR CLASS SHARES+ 1 Year 6.99% Since Inception* 7.97% RETURNS AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007) =============================================================================== CLASS A SHARES 1 Year 1.95% 5 Years 3.42% 10 Years 3.96% CLASS B SHARES 1 Year 1.65% 5 Years 3.56% 10 Years(a) 3.95% CLASS C SHARES 1 Year 3.64% 5 Years 3.59% 10 Years 3.83% ADVISOR CLASS SHARES+ 1 Year 5.16% Since Inception* 7.08% (a) Assumes conversion of Class B shares into Class A shares after eight years. * Inception Date: 9/2/03 for Advisor Class shares. + Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception date for this share class is listed above. See Historical Performance disclosures on pages 5-6. (Historical Performance continued on next page) ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 15 TAX-MANAGED WEALTH PRESERVATION STRATEGY HISTORICAL PERFORMANCE (continued from previous page) AVERAGE ANNUAL RETURNS AS OF FEBRUARY 28, 2007 =============================================================================== NAV Returns SEC Returns CLASS A SHARES 1 Year 4.73% 0.27% 5 Years 4.61% 3.71% 10 Years 5.28% 4.83% CLASS B SHARES 1 Year 4.04% 0.04% 5 Years 3.86% 3.86% 10 Years(a) 4.71% 4.71% CLASS C SHARES 1 Year 3.95% 2.95% 5 Years 3.88% 3.88% 10 Years 4.55% 4.55% ADVISOR CLASS SHARES+ 1 Year 5.13% 5.13% Since Inception* 5.51% 5.51% (a) Assumes conversion of Class B shares into Class A shares after eight years. * Inception Date: 9/2/03 for Advisor Class shares. + This share class is offered at net asset value (NAV) to eligible investors and its SEC returns are the same as the NAV returns. Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception dates for this share class is listed above. See Historical Performance disclosures on pages 5-6. (Historical Performance continued on next page) 16 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES TAX-MANAGED WEALTH PRESERVATION STRATEGY HISTORICAL PERFORMANCE (continued from previous page) SEC AVERAGE ANNUAL RETURNS (WITH ANY APPLICABLE SALES CHARGES) AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007) =============================================================================== SEC Returns CLASS A SHARES 1 Year 0.64% 5 Years 4.07% 10 Years 5.07% CLASS B SHARES 1 Year 0.42% 5 Years 4.26% 10 Years(a) 4.94% CLASS C SHARES 1 Year 3.42% 5 Years 4.26% 10 Years 4.80% ADVISOR CLASS SHARES+ 1 Year 5.43% Since Inception* 5.56% (a) Assumes conversion of Class B shares into Class A shares after eight years. * Inception Date: 9/2/03 for Advisor Class shares. + Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception date for this share class is listed above. See Historical Performance disclosures on pages 5-6. (Historical Performance continued on next page) ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 17 TAX-MANAGED WEALTH PRESERVATION STRATEGY HISTORICAL PERFORMANCE (continued from previous page) RETURNS AFTER TAXES ON DISTRIBUTIONS AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007) =============================================================================== Returns CLASS A SHARES 1 Year 0.23% 5 Years 3.71% 10 Years 3.57% CLASS B SHARES 1 Year 0.10% 5 Years 4.00% 10 Years(a) 3.65% CLASS C SHARES 1 Year 3.10% 5 Years 4.00% 10 Years 3.52% ADVISOR CLASS SHARES+ 1 Year 4.97% Since Inception* 5.39% RETURNS AFTER TAXES ON DISTRIBUTIONS AND SALE OF FUND SHARES AS OF THE MOST RECENT CALENDAR QUARTER-END (MARCH 31, 2007) =============================================================================== CLASS A SHARES 1 Year 1.10% 5 Years 3.40% 10 Years 3.55% CLASS B SHARES 1 Year 0.81% 5 Years 3.58% 10 Years(a) 3.57% CLASS C SHARES 1 Year 2.75% 5 Years 3.57% 10 Years 3.44% ADVISOR CLASS SHARES+ 1 Year 4.32% Since Inception* 4.88% (a) Assumes conversion of Class B shares into Class A shares after eight years. * Inception Date: 9/2/03 for Advisor Class shares. + Please note that this share class is for investors purchasing shares through accounts established under certain fee-based programs sponsored and maintained by certain broker-dealers and financial intermediaries, institutional pension plans and/or investment advisory clients of, and certain other persons associated with, the Adviser and its affiliates or the Funds. The inception date for this share class is listed above. See Historical Performance disclosures on pages 5-6. 18 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES FUND EXPENSES As a shareholder of the Strategy, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions and (2) ongoing costs, including management fees; distribution (12b-1) fees; and other Strategy expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Strategy and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below. ACTUAL EXPENSES The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Strategy's actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Strategy's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Strategy and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or contingent deferred sales charges on redemptions. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. TAX-MANAGED WEALTH APPRECIATION STRATEGY
Beginning Ending Account Value Account Value Expenses Paid September 1, 2006 February 28, 2007 During Period* ====================================================================================================== CLASS A Actual $ 1,000 $ 1,086.43 $ 6.00 Hypothetical (5% return before expenses) $ 1,000 $ 1,019.04 $ 5.81 CLASS B Actual $ 1,000 $ 1,082.52 $ 9.71 Hypothetical (5% return before expenses) $ 1,000 $ 1,015.47 $ 9.39 CLASS C Actual $ 1,000 $ 1,083.25 $ 9.66 Hypothetical (5% return before expenses) $ 1,000 $ 1,015.52 $ 9.35 ADVISOR CLASS Actual $ 1,000 $ 1,088.51 $ 4.45 Hypothetical (5% return before expenses) $ 1,000 $ 1,020.53 $ 4.31
ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 19 FUND EXPENSES TAX-MANAGED BALANCED WEALTH STRATEGY
Beginning Ending Account Value Account Value Expenses Paid September 1, 2006 February 28, 2007 During Period* ====================================================================================================== CLASS A Actual $ 1,000 $ 1,051.32 $ 5.70 Hypothetical (5% return before expenses) $ 1,000 $ 1,019.24 $ 5.61 CLASS B Actual $ 1,000 $ 1,046.71 $ 9.34 Hypothetical (5% return before expenses) $ 1,000 $ 1,015.67 $ 9.20 CLASS C Actual $ 1,000 $ 1,046.58 $ 9.29 Hypothetical (5% return before expenses) $ 1,000 $ 1,015.72 $ 9.15 ADVISOR CLASS Actual $ 1,000 $ 1,051.84 $ 4.17 Hypothetical (5% return before expenses) $ 1,000 $ 1,020.73 $ 4.11
TAX-MANAGED WEALTH PRESERVATION STRATEGY
Beginning Ending Account Value Account Value Expenses Paid September 1, 2006 February 28, 2007 During Period* ====================================================================================================== CLASS A Actual $ 1,000 $ 1,035.00 $ 6.05 Hypothetical (5% return before expenses) $ 1,000 $ 1,018.84 $ 6.01 CLASS B Actual $ 1,000 $ 1,031.43 $ 9.57 Hypothetical (5% return before expenses) $ 1,000 $ 1,015.37 $ 9.49 CLASS C Actual $ 1,000 $ 1,031.40 $ 9.57 Hypothetical (5% return before expenses) $ 1,000 $ 1,015.37 $ 9.49 ADVISOR CLASS Actual $ 1,000 $ 1,037.41 $ 4.55 Hypothetical (5% return before expenses) $ 1,000 $ 1,020.33 $ 4.51
* Expenses are equal to each Class' annualized expense ratio, shown in the table below, multiplied by the average account value over the period, multiplied by the 181/365 (to reflect the one-half year period). Annualized Expense Ratio ======================================== Tax-Managed Tax-Managed Tax-Managed Wealth Balanced Wealth Appreciation Wealth Preservation Strategy Balanced Strategy =================================================================== CLASS A 1.16% 1.12% 1.20% CLASS B 1.88% 1.84% 1.90% CLASS C 1.87% 1.83% 1.90% ADVISOR CLASS 0.86% 0.82% 0.90% 20 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES TAX-MANAGED WEALTH APPRECIATION STRATEGY PORTFOLIO SUMMARY February 28, 2007 (unaudited) SECURITY TYPE BREAKDOWN* [ ] 96.1% Common Stocks [PIE CHART OMITTED] [ ] 0.1% Non-Convertible Preferred Stocks [ ] 3.8% Short-Term SECTOR BREAKDOWN* [ ] 30.6% Financial [PIE CHART OMITTED] [ ] 11.6% Technology [ ] 10.9% Consumer Cyclical [ ] 8.7% Capital Equipment [ ] 7.2% Energy [ ] 7.1% Medical [ ] 6.8% Consumer Staples [ ] 5.3% Industrial Commodities [ ] 3.8% Telecommunications [ ] 1.9% Utilities [ ] 1.4% Construction & Housing [ ] 0.8% Transportation [ ] 0.1% Non-Convertible Preferred Stocks [ ] 3.8% Short-Term * All data are as of February 28, 2007. The Strategy's security type and sector breakdowns are expressed as a percentage of total investments and may vary over time. Please note: The sector classifications presented herein are based on the sector categorization methodology of the Adviser. These sector classifications are broadly defined. The "Portfolio of Investments" section of this report reflects more specific industry information and is consistent with investment restrictions discussed in the Strategy's prospectus. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 21 TAX-MANAGED BALANCED WEALTH STRATEGY PORTFOLIO SUMMARY February 28, 2007 (unaudited) SECURITY TYPE BREAKDOWN* [ ] 51.4% Municipal Bonds [PIE CHART OMITTED] [ ] 45.7% Common Stocks [ ] 2.9% Short-Term SECTOR BREAKDOWN* [ ] 51.4% Municipal Bonds [PIE CHART OMITTED] [ ] 14.7% Financial [ ] 5.4% Technology [ ] 5.0% Consumer Cyclical [ ] 4.2% Capital Equipment [ ] 3.3% Energy [ ] 3.1% Consumer Staples [ ] 3.0% Medical [ ] 2.8% Industrial Commodities [ ] 1.9% Telecommunications [ ] 1.0% Utilities [ ] 0.7% Construction & Housing [ ] 0.5% Transportation [ ] 0.1% Consumer Services [ ] 2.9% Short-Term BOND QUALITY RATING BREAKDOWN+ [ ] 66.1% AAA [PIE CHART OMITTED] [ ] 21.7% AA [ ] 2.2% A [ ] 4.0% BBB [ ] 5.1% BB [ ] 0.2% B [ ] 0.7% CCC * All data are as of February 28, 2007. The Strategy's security type and sector breakdowns are expressed as percentages of total investments and may vary over time. + The Strategy's bond quality rating breakdown is expressed as a percentage of total municipal bond investments rated in particular ratings categories by Standard & Poor's Rating Services and Moody's Investors Service. The distributions may vary over time. If ratings are not available, the Strategy's Adviser will assign ratings that are considered to be of equivalent quality to such ratings. Please Note: The sector classifications presented herein are based on the sector categorization methodology of the Adviser. These sector classifications are broadly defined. The "Portfolio of Investments" section of this report reflects more specific industry information and is consistent with the investment restrictions discussed in the Strategy's prospectus. 22 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES TAX-MANAGED WEALTH PRESERVATION STRATEGY PORTFOLIO SUMMARY February 28, 2007 (unaudited) SECURITY TYPE BREAKDOWN* [ ] 69.0% Municipal Bonds [PIE CHART OMITTED] [ ] 29.2% Common Stocks [ ] 1.8% Short-Term SECTOR BREAKDOWN* [ ] 69.0% Municipal Bonds [PIE CHART OMITTED] [ ] 9.3% Financial [ ] 3.5% Technology [ ] 3.2% Consumer Cyclical [ ] 2.8% Capital Equipment [ ] 2.2% Energy [ ] 2.1% Medical [ ] 2.0% Consumer Staples [ ] 1.4% Industrial Commodities [ ] 1.3% Telecommunications [ ] 0.6% Utilities [ ] 0.5% Construction & Housing [ ] 0.3% Transportation [ ] 1.8% Short-Term BOND QUALITY RATING BREAKDOWN+ [ ] 74.5% AAA [PIE CHART OMITTED] [ ] 17.4% AA [ ] 5.6% A [ ] 2.5% BBB * All data are as of February 28, 2007. The Strategy's security type and sector breakdowns are expressed as percentages of total investments and may vary over time. + The Strategy's bond quality rating breakdown is expressed as a percentage of total municipal bond investments rated in particular ratings categories by Standard & Poor's Rating Services and Moody's Investors Service. The distributions may vary over time. If ratings are not available, the Strategy's Adviser will assign ratings that are considered to be of equivalent quality to such ratings. Please Note: The sector classifications presented herein are based on the sector categorization methodology of the Adviser. These sector classifications are broadly defined. The "Portfolio of Investments" section of this report reflects more specific industry information and is consistent with the investment restrictions discussed in the Strategy's prospectus. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 23 WEALTH APPRECIATION STRATEGY PORTFOLIO OF INVESTMENTS February 28, 2007 (unaudited) Company Shares U.S. $ Value ========================================================================= COMMON STOCKS-96.8% FINANCIAL-30.8% BANKING-14.5% Anglo Irish Bank Corp. PLC (Dublin) 32,982 $ 702,548 Anglo Irish Bank Corp. PLC (London Exchange) 40,911 866,908 Banco Bilbao Vizcaya Argentaria SA 54,894 1,335,910 Bank Hapoalim BM 36,000 166,599 Bank of America Corp. 85,800 4,364,646 The Bank of New York Co., Inc 28,300 1,149,546 Barclays PLC 83,400 1,209,368 BNP Paribas SA 25,665 2,676,267 China Construction Bank Corp.-Class H 416,000 232,470 Citigroup, Inc. 113,800 5,735,520 Comerica, Inc. 10,600 640,134 Credit Agricole SA 24,295 967,835 Credit Suisse Group 55,317 3,822,203 Credit Suisse Group (New York Exchange) (ADR) 47,800 3,310,150 Federal Home Loan Mortgage Corp. 16,800 1,078,224 Federal National Mortgage Association 29,600 1,679,208 Fifth Third Bancorp 14,500 584,060 Fortis (Euronext Amsterdam) 3,500 150,384 Fortis (Euronext Brussels) 17,900 769,093 HBOS PLC 49,900 1,056,150 Industrial & Commercial Bank of China-Class H(a) 262,000 144,531 JPMorgan Chase & Co. 129,850 6,414,590 Keycorp 12,900 486,846 Kookmin Bank 5,700 511,956 Macquarie Bank Ltd. 17,569 1,095,546 Mellon Financial Corp. 14,600 634,078 Mitsubishi UFJ Financial Group, Inc. 49 600,861 National City Corp. 30,900 1,169,565 Regions Financial Corp. 16,400 587,448 Royal Bank of Scotland Group PLC 35,600 1,399,700 Societe Generale 7,185 1,208,314 Standard Chartered PLC 22,672 633,197 Sumitomo Mitsui Financial Group, Inc. 161 1,566,296 SunTrust Banks, Inc. 12,000 1,011,720 U.S. Bancorp 26,800 955,688 UBS AG (Swiss Virt-X) 37,034 2,186,824 UniCredito Italiano SpA 140,405 1,296,700 Wachovia Corp. 26,300 1,456,231 Washington Mutual, Inc. 35,800 1,542,264 Wells Fargo & Co. 27,800 964,660 -------------- 58,364,238 24 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Company Shares U.S. $ Value ========================================================================= FINANCIAL SERVICES-8.3% 3i Group PLC 41,774 $ 912,886 Ameriprise Financial, Inc. 13,800 806,748 Astoria Financial Corp. 14,600 412,742 The Charles Schwab Corp. 85,000 1,570,800 Chicago Mercantile Exchange Holdings, Inc.- Class A 2,650 1,428,695 CIT Group, Inc. 12,700 717,169 Countrywide Financial Corp. 30,600 1,171,368 Franklin Resources, Inc. 35,000 4,108,650 Goldman Sachs Group, Inc. 11,450 2,308,320 Janus Capital Group, Inc. 23,800 505,750 Lazard Ltd.-Class A 11,600 597,284 Legg Mason, Inc. 27,000 2,773,980 Lehman Brothers Holdings, Inc. 10,600 776,980 Man Group PLC 140,688 1,512,551 MBIA, Inc. 11,200 744,464 Merrill Lynch & Co., Inc. 59,200 4,953,856 MGIC Investment Corp. 10,800 651,780 Morgan Stanley 10,600 794,152 Nomura Holdings, Inc. 83,900 1,816,946 NYSE Group, Inc.(a) 22,500 1,910,250 ORIX Corp. 9,530 2,625,296 Prudential Financial, Inc. 600 54,564 Waddell & Reed Financial, Inc.-Class A 6,900 168,222 -------------- 33,323,453 INSURANCE-7.5% Allianz SE 7,400 1,592,138 Allstate Corp. 7,600 456,456 American International Group, Inc. 89,500 6,005,450 AON Corp. 19,200 722,880 Aviva PLC 76,559 1,225,883 Chubb Corp. 15,700 801,485 Fidelity National Financial, Inc.-Class A 20,700 496,800 Fondiaria-Sai SpA (ordinary shares) 7,300 332,698 Fondiaria-Sai SpA (saving shares) 3,200 112,285 Friends Provident PLC 31,270 126,046 Genworth Financial, Inc.-Class A 27,200 962,064 Hartford Financial Services Group, Inc. 13,100 1,238,736 ING Groep NV 43,053 1,836,634 MetLife, Inc. 19,300 1,218,795 Muenchener Rueckversicherungs AG 10,700 1,705,023 Old Republic International Corp. 30,600 682,992 QBE Insurance Group, Ltd. 46,745 1,184,263 Swiss Reinsurance 9,054 770,164 Torchmark Corp. 7,700 492,184 The Travelers Cos, Inc. 23,900 1,213,164 WellPoint, Inc.(a) 91,700 7,280,063 -------------- 30,456,203 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 25 Company Shares U.S. $ Value ========================================================================= WHOLESALE & INTERNATIONAL TRADE-0.5% Li & Fung Ltd. 206,000 $ 654,929 Mitsui & Co. Ltd. 83,000 1,491,766 -------------- 2,146,695 -------------- 124,290,589 TECHNOLOGY/ELECTRONICS-11.4% DATA PROCESSING-7.0% Adobe Systems, Inc.(a) 33,100 1,299,175 Agere Systems, Inc.-Class A(a) 14,400 315,504 Akamai Technologies, Inc.(a) 27,800 1,433,646 Apple, Inc.(a) 81,550 6,899,945 Canon, Inc. 32,800 1,776,580 CapGemini, SA 23,489 1,640,323 Capita Group PLC 47,567 602,715 Electronic Data Systems Corp. 17,400 487,548 EMC Corp.(a) 9,300 129,735 Hewlett-Packard Co. 110,800 4,363,304 Infosys Technologies, Ltd. 10,666 498,826 International Business Machines Corp. 10,200 948,702 Lexmark International, Inc.-Class A(a) 11,600 702,496 Microsoft Corp. 133,100 3,749,427 Network Appliance, Inc.(a) 59,200 2,289,264 Sanmina-SCI Corp.(a) 37,000 137,270 Solectron Corp.(a) 62,400 200,928 Sun Microsystems, Inc.(a) 161,300 988,769 -------------- 28,464,157 ELECTRICAL & ELECTRONICS-3.1% ADC Telecommunications, Inc.(a) 4,928 80,918 Arrow Electronics, Inc.(a) 3,100 118,792 Avnet, Inc.(a) 10,100 369,357 Broadcom Corp.-Class A(a) 95,100 3,241,959 Cisco Systems, Inc.(a) 212,400 5,509,656 Compal Electronics, Inc. (GDR)(b) 103,623 445,579 Foxconn Technology Co., Ltd. 37,950 407,616 Ingram Micro, Inc.-Class A(a) 11,800 229,274 Nokia OYJ 22,389 488,681 QUALCOMM, Inc. 30,350 1,222,498 Siliconware Precision Industries Co. 96,000 168,733 Tech Data Corp.(a) 4,000 149,120 -------------- 12,432,183 ELECTRONIC COMPONENTS & INSTRUMENTS-1.3% AU Optronics Corp. 300,960 423,496 Flextronics International Ltd.(a) 6,400 69,952 NVIDIA Corp.(a) 61,800 1,915,800 Samsung Electronics Co. Ltd. 600 362,385 Sharp Corp. 54,000 1,006,154 26 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Company Shares U.S. $ Value ========================================================================= Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) 47,868 $ 531,335 United Microelectronics Corp. 1,378,016 818,575 -------------- 5,127,697 -------------- 46,024,037 CONSUMER CYCLICAL-11.0% APPLIANCES & HOUSEHOLD DURABLES-0.2% Black & Decker Corp. 6,700 564,609 Newell Rubbermaid, Inc. 5,800 177,596 -------------- 742,205 BROADCASTING & PUBLISHING-4.7% CBS Corp.-Class B 33,300 1,010,655 Comcast Corp.-Class A(a) 23,550 605,706 Comcast Corp.-Special-Class A(a) 153,850 3,915,482 Gannett Co. Inc. 5,800 355,308 Google, Inc.-Class A(a) 16,180 7,272,101 Grupo Televisa, SA (ADR) 15,500 422,995 Idearc, Inc. 3,265 111,010 Time Warner, Inc. 185,400 3,772,890 Tribune Co. 10,800 324,324 Viacom, Inc.-Class B(a) 6,550 255,712 The Walt Disney Co. 30,500 1,044,930 -------------- 19,091,113 BUSINESS & PUBLIC SERVICES-0.3% Lamar Advertising Co.-Class A(a) 10,000 640,500 Monster Worldwide, Inc.(a) 13,200 658,152 -------------- 1,298,652 LEISURE & TOURISM-2.2% Accor, SA 3,329 293,475 Hilton Hotels Corp. 35,100 1,239,030 Las Vegas Sands Corp.(a) 6,500 560,820 McDonald's Corp. 94,550 4,133,726 Starwood Hotels & Resorts Worldwide, Inc. 34,400 2,263,520 Wynn Resorts Ltd. 3,900 382,278 -------------- 8,872,849 MERCHANDISING-2.9% eBay, Inc.(a) 21,600 692,496 Esprit Holdings Ltd. 67,000 698,192 Family Dollar Stores, Inc. 12,300 356,331 Federated Department Stores, Inc. 18,300 817,278 The Gap, Inc. 39,700 761,843 Kohl's Corp.(a) 43,500 3,001,065 Limited Brands Inc. 18,200 503,776 Marks & Spencer Group PLC 61,183 808,951 Office Depot, Inc.(a) 11,600 386,976 Saks, Inc. 15,400 297,528 Target Corp. 52,300 3,218,019 -------------- 11,542,455 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 27 Company Shares U.S. $ Value ========================================================================= RECREATION & OTHER CONSUMER-0.1% Mattel, Inc. 11,300 $ 293,913 -------------- TEXTILES & APPAREL-0.6% Inditex SA 7,941 461,494 Jones Apparel Group, Inc. 15,000 493,800 Liz Claiborne, Inc. 3,100 139,500 Nike, Inc.-Class B 6,600 689,502 VF Corp. 9,200 734,252 -------------- 2,518,548 -------------- 44,359,735 CAPITAL EQUIPMENT-8.8% AEROSPACE & DEFENSE-2.7% BAE Systems PLC 71,500 608,957 Boeing Co. 69,300 6,047,811 European Aeronautic Defence & Space Co., NV 29,010 991,509 Lockheed Martin Corp. 3,000 291,840 Northrop Grumman Corp. 10,100 725,685 Rockwell Collins, Inc. 18,400 1,204,832 Spirit Aerosystems Holdings, Inc.-Class A(a) 38,400 1,133,184 -------------- 11,003,818 AUTOMOBILES-2.7% Autoliv, Inc. 11,900 678,895 BorgWarner, Inc. 7,000 515,480 Compagnie Generale des Etablissements Michelin-Class B 11,100 1,153,074 Continental AG 2,500 311,801 Denso Corp. 24,100 938,924 Fiat SpA(a) 21,255 503,271 Honda Motor Co. Ltd. 11,100 412,532 Hyundai Mobis 6,870 573,135 Johnson Controls, Inc. 2,600 243,880 Renault SA 16,100 1,911,642 Toyota Motor Corp. (ADR) 6,709 895,651 Toyota Motor Corp. 39,000 2,619,475 -------------- 10,757,760 INDUSTRIAL COMPONENTS-0.4% Eaton Corp. 9,100 737,191 NGK Insulators Ltd. 55,000 1,042,615 -------------- 1,779,806 MACHINERY & ENGINEERING-0.8% ABB Ltd. 75,686 1,262,171 Atlas Copco AB-Class A 19,836 621,633 Cummins, Inc. 4,900 659,932 Sumitomo Heavy Industries Ltd. 58,000 597,537 -------------- 3,141,273 28 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Company Shares U.S. $ Value ========================================================================= MULTI-INDUSTRY-2.2% Fluor Corp. 18,300 $1,545,801 General Electric Co. 187,600 6,550,992 SPX Corp. 6,700 468,330 Textron, Inc. 2,700 249,183 -------------- 8,814,306 -------------- 35,496,963 ENERGY-7.2% ENERGY EQUIPMENT & SERVICES-1.6% ENSCO International, Inc. 4,500 225,495 GlobalSantaFe Corp. 14,700 847,161 Halliburton Co. 126,000 3,890,880 Schlumberger, Ltd. 25,300 1,588,840 -------------- 6,552,376 ENERGY SOURCES-5.6% BP PLC 26,400 270,641 Chevron Corp. 54,900 3,766,689 China Petroleum & Chemical Corp.-Class H 393,000 313,411 China Shenhua Energy Co. Ltd.-Class H 253,000 639,820 ConocoPhillips 29,600 1,936,432 ENI SpA 66,794 2,045,725 Exxon Mobil Corp. 105,600 7,569,408 Marathon Oil Corp. 14,600 1,324,804 MOL Hungarian Oil and Gas NyRt 4,000 428,759 Occidental Petroleum Corp. 8,600 397,148 PetroChina Co., Ltd.-Class H 130,000 152,087 Petroleo Brasileiro SA (ADR) 14,700 1,199,226 Repsol YPF SA 18,200 576,047 Royal Dutch Shell PLC-a Shs(a) 13,960 451,683 Total SA 22,400 1,508,699 -------------- 22,580,579 -------------- 29,132,955 MEDICAL-7.1% HEALTH & PERSONAL CARE-7.1% Abbott Laboratories 26,500 1,447,430 Alcon, Inc. 37,150 4,629,633 AmerisourceBergen Corp.-Class A 7,500 395,025 AstraZeneca PLC 14,500 813,117 Daiichi Sankyo Co. Ltd. 22,300 719,899 Eli Lilly & Co. 3,900 205,296 Genentech, Inc.(a) 35,250 2,974,043 Gilead Sciences, Inc.(a) 64,450 4,612,042 GlaxoSmithKline PLC 6,400 179,572 International Flavors & Fragrances, Inc. 9,000 421,200 McKesson Corp. 6,400 356,864 Medtronic, Inc. 12,700 639,572 Merck & Co. Inc. 47,400 2,093,184 Merck KGaA 5,100 634,708 Nobel Biocare Holding AG 1,866 618,072 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 29 Company Shares U.S. $ Value ========================================================================= Novartis AG 10,135 $ 562,509 Pfizer, Inc. 144,700 3,611,712 Roche Holding AG 10,775 1,917,401 Sanofi-Aventis 13,138 1,115,576 Schering-Plough Corp. 26,500 622,220 Tenet Healthcare Corp.(a) 33,400 228,122 -------------- 28,797,197 CONSUMER STAPLES-6.8% BEVERAGES & TOBACCO-1.8% Altria Group, Inc. 30,300 2,553,684 British American Tobacco PLC 3,700 112,272 Cia de Bebidas das Americas (ADR) 6,100 295,057 The Coca-Cola Co. 12,400 578,832 Coca-Cola Enterprises, Inc. 24,200 486,178 Japan Tobacco, Inc. 255 1,166,192 Kraft Foods, Inc.-Class A 16,900 539,448 Molson Coors Brewing Co.-Class B 9,400 793,736 PepsiCo, Inc. 5,900 372,585 UST, Inc. 4,200 243,852 -------------- 7,141,836 FOOD & HOUSEHOLD PRODUCTS-5.0% Clorox Co. 13,600 861,696 Colgate-Palmolive Co. 8,400 565,824 ConAgra Foods, Inc. 12,300 310,329 Essilor International, SA 6,740 768,295 General Mills, Inc. 10,600 597,416 Groupe Danone 2,903 459,097 J Sainsbury PLC 97,400 974,891 Kellogg Co. 13,500 673,920 Kimberly-Clark Corp. 10,900 742,399 Kroger Co. 15,300 392,751 Nestle, SA 4,237 1,576,231 Procter & Gamble Co. 124,450 7,901,331 Reckitt Benckiser PLC 13,126 659,031 Safeway, Inc. 28,000 967,960 Sara Lee Corp. 47,900 788,434 Tesco PLC 53,085 449,395 WM Wrigley Jr Co. 33,000 1,643,400 -------------- 20,332,400 -------------- 27,474,236 INDUSTRIAL COMMODITIES-5.4% CHEMICALS-2.0% BASF AG 12,600 1,281,558 Bayer AG 17,706 1,019,301 Dow Chemical Co. 23,900 1,046,820 E.I. Du Pont de Nemours & Co. 15,200 771,400 Hercules, Inc.(a) 3,000 60,480 Lubrizol Corp. 6,600 343,200 Mitsui Chemicals, Inc. 60,000 521,604 30 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Company Shares U.S. $ Value ========================================================================= Monsanto Co. 47,500 $ 2,502,775 PPG Industries, Inc. 6,100 404,125 -------------- 7,951,263 FOREST & PAPER-0.3% Smurfit-Stone Container Corp.(a) 32,600 402,284 Temple-Inland, Inc. 14,400 861,120 -------------- 1,263,404 METAL - NONFERROUS-0.9% MMC Norilsk Nickel (ADR) 3,600 639,000 Rio Tinto PLC 7,813 420,886 Xstrata PLC 51,720 2,421,252 -------------- 3,481,138 METAL - STEEL-1.2% JFE Holdings, Inc. 33,400 2,065,960 Mittal Steel Co. NV (Euronext Amsterdam) 12,200 618,514 Mittal Steel Co. NV (Euronext Paris) 10,287 519,717 POSCO 3,100 1,163,488 United States Steel Corp. 5,400 478,548 -------------- 4,846,227 MISCELLANEOUS MATERIALS-1.0% Avery Dennison Corp. 7,600 505,096 Bemis, Inc. 12,200 404,186 Cia Vale do Rio Doce (ADR) 22,800 777,936 Crown Holdings, Inc.(a) 21,400 488,776 Nitto Denko Corp. 25,500 1,311,883 Owens-Illinois, Inc.(a) 10,100 239,976 Sonoco Products Co. 9,500 351,690 -------------- 4,079,543 -------------- 21,621,575 TELECOMMUNICATIONS-3.9% TELECOMMUNICATIONS-3.9% America Movil SAB de CV Series L (ADR) 57,850 2,533,830 American Tower Corp.-Class A(a) 4,000 154,960 AT&T, Inc. 124,100 4,566,880 China Mobile Ltd. 34,500 320,276 China Netcom Group Corp Ltd. 283,000 668,161 Crown Castle International Corp.(a) 13,100 429,156 Embarq Corp.-Class W 4,500 249,075 Nippon Telegraph & Telephone Corp. 112 593,309 Sprint Nextel Corp. 81,700 1,575,176 Telefonica SA 26,181 563,128 Verizon Communications, Inc. 77,700 2,908,311 Vodafone Group PLC 388,600 1,076,559 -------------- 15,638,821 UTILITIES-1.9% UTILITY (ELECTRIC & GAS)-1.9% Allegheny Energy, Inc.(a) 14,300 675,532 American Electric Power Co., Inc. 17,100 767,106 Constellation Energy Group, Inc. 3,500 275,345 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 31 Company Shares U.S. $ Value ========================================================================= Dominion Resources, Inc./VA 9,700 $ 829,641 E.ON AG 9,700 1,271,552 Entergy Corp. 7,300 720,510 International Power PLC 72,345 517,063 Northeast Utilities 6,600 191,796 Pinnacle West Capital Corp. 9,400 445,748 RWE AG 7,950 810,681 TXU Corp. 11,700 773,955 Wisconsin Energy Corp. 10,800 517,860 -------------- 7,796,789 CONSTRUCTION & HOUSING-1.4% BUILDING MATERIALS-0.6% American Standard Cos, Inc. 13,200 699,468 Buzzi Unicem SpA 11,700 342,276 CRH PLC 24,012 999,090 Italcementi SpA 9,700 290,734 Masco Corp. 5,700 170,145 -------------- 2,501,713 CONSTRUCTION & HOUSING-0.6% Daiwa House Industry Co. Ltd. 37,000 663,654 George Wimpey PLC 9,100 101,193 Leopalace21 Corp. 1,200 37,967 Taylor Woodrow PLC 21,200 168,809 Vinci, SA 10,516 1,453,488 -------------- 2,425,111 REAL ESTATE-0.2% Sino Land Co. 288,609 664,620 -------------- 5,591,444 TRANSPORTATION-0.9% TRANSPORTATION - AIRLINES-0.4% Air France-KLM 14,700 637,158 Deutsche Lufthansa AG 24,600 666,236 easyJet PLC(a) 22,007 284,492 -------------- 1,587,886 TRANSPORTATION - ROAD & RAIL-0.2% CSX Corp. 10,600 399,302 Norfolk Southern Corp. 7,800 369,720 -------------- 769,022 TRANSPORTATION - SHIPPING-0.3% Mitsui OSK Lines Ltd. 91,000 1,031,958 -------------- 3,388,866 TECHNOLOGY-0.2% COMPUTERS-0.1% Dell, Inc.(a) 20,000 457,000 -------------- DATA PROCESSING-0.1% Ceridian Corp.(a) 14,300 466,466 -------------- 923,466 32 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Company Shares U.S. $ Value ========================================================================= Total Common Stocks (cost $339,065,843) $ 390,536,673 NON-CONVERTIBLE-PREFERRED STOCKS-0.0% ELECTRONIC COMPONENTS & INSTRUMENTS-0.0% Samsung Electronics Co. Ltd. (cost $246,701) 500 231,473 SHORT-TERM INVESTMENTS-3.9% Investment Companies-3.9% AllianceBernstein Fixed-Income Shares, Inc.- Government STIF Portfolio(c) (cost $15,603,387) 15,603,387 15,603,387 TOTAL INVESTMENTS-100.7% (cost $354,915,931) 406,371,533 Other assets less liabilities-(0.7)% (2,878,052) NET ASSETS-100.0% $ 403,493,481 FINANCIAL FUTURES CONTRACTS (see Note D) Value at Unrealized Number of Expiration Original February 28, Appreciation/ Type Contracts Month Value 2007 (Depreciation) =============================================================================== Purchased Contracts EURO STOXX 50 24 March 2007 $1,295,189 $1,300,271 $5,082 (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 February 28, 2007, the aggregate market value of these securities amounted to $445,579 or 0.1% of net assets. (c) Investment in affiliated money market mutual fund. Glossary: ADR - American Depositary Receipt GDR - Global Depositary Receipt See notes to financial statements. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 33 BALANCED WEALTH STRATEGY PORTFOLIO OF INVESTMENTS February 28, 2007 (unaudited) Principal Amount (000) U.S. $ Value ========================================================================= MUNICIPAL OBLIGATIONS-51.7% ALABAMA-3.1% Alabama Pub Sch & College Auth FGIC 5.00%, 12/01/21 $ 1,700 $ 1,808,749 County of Jefferson AL FGIC 5.00%, 2/01/38 2,710 2,889,294 5.125%, 2/01/42 1,650 1,769,196 5.25%, 2/01/24 3,200 3,450,624 Jefferson Cnty Swr Rev (Capital Improvement Warrants) FGIC Series Ser 02 5.00%, 2/01/41 1,100 1,171,665 -------------- 11,089,528 ARIZONA-0.9% Arizona Health Fac Auth Hosp 4.65%, 2/01/42 785 797,505 Gilbert Wtr Res Muni Ppty Corp (Wastewater Sys & Util Rev) Series Ser 04 4.90%, 4/01/19 710 721,978 Mesa AZ FGIC 6.125%, 7/01/13 1,100 1,119,767 Pima County IDA (Horizon Cmnty Learning Center) 4.45%, 6/01/14 90 88,564 Pima County Industrial Development Authority 5.45%, 12/01/17 450 451,782 -------------- 3,179,596 ARKANSAS-0.9% City of Springdale AR MBIA 4.00%, 7/01/16 1,750 1,748,932 Hot Springs AR 4.125%, 7/01/08 1,275 1,283,020 -------------- 3,031,952 CALIFORNIA-2.1% California Econ Rec Bds Series Ser A 5.00%, 7/01/09 700 722,085 5.25%, 1/01/10-7/01/12 3,765 3,964,976 California State GO 5.00%, 6/01/10-6/01/11 1,650 1,730,569 California State GO (Various Purposes) 5.00%, 3/01/14 25 26,922 34 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Principal Amount (000) U.S. $ Value ========================================================================= California Statewide CDA Rev (Kaiser Permanente) Series Ser E 3.875%, 4/01/32 (a) $ 280 $ 280,518 Series Ser F 2.30%, 4/01/33 (a) 500 499,010 Upland Cmnty Redev Agy Tax Alloc Notes (Magnolia Redev Proj) 3.90%, 11/01/09 235 236,713 -------------- 7,460,793 COLORADO-1.2% Mesa County Valley School District No 51 Grand Junction. MBIA ST AID WITHHLDG 5.00%, 12/01/23 1,000 1,076,970 PV Wtr & San Met Dist Cap Appreciation Series Ser 06 Zero Coupon, 12/15/17 962 515,795 Regional Transp Dist COP AMBAC Series Ser 2A 2.30%, 12/01/22 (a) 2,400 2,391,336 Todd Creek Farms Metro Dist No. 1 5.60%, 12/01/14 260 271,786 -------------- 4,255,887 CONNECTICUT-0.5% Connecticut State Dev Auth AMBAC 3.35%, 5/01/31 (a) 1,730 1,717,665 FLORIDA-6.1% Arborwood CDD (Centex Homes Proj) 5.25%, 5/01/16 275 278,891 Bartram Park CDD (Spl Assmt) 4.875%, 5/01/15 100 98,981 Citizens Property Insurance Corp. MBIA 5.00%, 3/01/15-3/01/16 4,000 4,350,630 County of Orange FL AMBAC 5.50%, 10/01/32 7,000 7,597,870 Dade Cnty Sch Dist MBIA Series Ser 94 5.00%, 8/01/12 1,100 1,171,665 Fishhawk CDD II (Spl Assmt) Series Ser B 5.125%, 11/01/09 110 110,150 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 35 Principal Amount (000) U.S. $ Value ========================================================================= Hammock Bay CDD (Spl Assmt) Series Ser B 5.375%, 5/01/11 $ 70 $ 70,786 Heritage Isle at Viera CDD Series Ser 4B 5.00%, 11/01/09 100 99,846 Heritage Plantation CDD 5.10%, 11/01/13 110 110,272 Huntington CDD Series Ser 4B 5.00%, 5/01/09 100 99,751 Lake Ashton II CDD (Capital Impt Rev) Series Ser B 4.875%, 11/01/10 100 100,133 Live Oak CDD No. 001, Spl Assmt ETM Series Ser B 5.30%, 5/01/08 45 45,097 Meadow Pointe III CDD Series Ser 4B 5.00%, 5/01/09 100 99,919 Meadow Woods CDD Series Ser 4B 5.25%, 5/01/11 75 75,112 Midtown Miami CDD Series Ser 04A 6.00%, 5/01/24 280 304,018 Monterra CDD (Spl Assmt) Series Ser B 5.00%, 11/01/10 340 338,688 5.125%, 11/01/14 170 168,618 Overoaks CDD (Capital Impt Rev) Series Ser 4B 5.125%, 5/01/09 200 200,816 Palm Beach County School Board FGIC 5.00%, 8/01/13 1,030 1,102,677 Parkway Center CDD (Spl Assmt Ref) Series Ser B 5.625%, 5/01/14 200 204,738 Paseo CDD 5.00%, 2/01/11 540 538,877 Paseo CDD (Capital Impt Rev) Series Ser B 4.875%, 5/01/10 550 549,345 36 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Principal Amount (000) U.S. $ Value ========================================================================= Quarry CDD (Spl Assmt) 5.25%, 5/01/16 $ 285 $ 291,449 Rolling Hills CDD 5.125%, 11/01/13 435 436,122 Seacoast Utility Auth FGIC 5.25%, 3/01/10 1,210 1,264,341 Shingle Creek CDD 5.75%, 5/01/15 415 430,903 South Bay CDD Series Ser 5B-2 5.375%, 5/01/13 100 100,833 Tern Bay CDD (Capital Impt Rev) Series Ser B 5.00%, 5/01/15 440 440,040 Verano Ctr CDD (Infrastructure Proj) Series Ser B 5.00%, 11/01/13 775 774,752 Villages of Westport CDD Series Ser 05A 5.125%, 5/01/15 245 248,572 -------------- 21,703,892 GEORGIA-0.0% Cobb Cnty Dev Auth SWDR (Georgia Waste Mgmt Project) Series Ser 4A 3.10%, 4/01/33 (a) 185 184,848 GUAM-0.1% Guam Govt Wtrwrks Auth Cops Prerefunded 5.18%, 7/01/15 292 301,915 Guam Govt Wtrwrks Auth Wtr & Wastewtr Sys Rev Series Ser 05 5.00%, 7/01/13 225 231,917 -------------- 533,832 HAWAII-1.7% Hawaii State AMBAC 5.00%, 7/01/13 5,540 5,939,157 ILLINOIS-2.0% City of Chicago IL FGIC 5.00%, 1/01/09 1,135 1,161,116 Hodgkins IL 5.00%, 1/01/11 1,000 1,037,220 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 37 Principal Amount (000) U.S. $ Value ========================================================================= Pingree Grove Village II (CamBrdg Lakes Proj) Series Ser 5-1 5.25%, 3/01/15 $ 100 $ 100,685 State of Illinois 5.00%, 1/01/10 4,615 4,772,879 -------------- 7,071,900 INDIANA-0.4% Elkhart County IN MBIA 5.25%, 12/01/21 1,215 1,336,002 KANSAS-0.2% Wyandotte Cnty-Kansas City Unified Govt Spl Oblg (Sales Tax) Series Ser B 4.75%, 12/01/16 610 631,686 KENTUCKY-0.4% Kentucky State Prop & Bldgs Commn FSA 5.375%, 2/01/08 1,265 1,283,874 MARYLAND-0.2% Tax Exempt Muni Infrastructure Series Ser 04A 3.80%, 5/01/08 (b) 615 611,132 MASSACHUSETTS-1.8% Massachusetts GO (Consolidated Loan) Series Ser B 5.00%, 8/01/12 3,150 3,348,860 Massachusetts State (Consolidated Loan) Series Ser B 5.70%, 6/01/19 800 850,376 Route 3 North Transit Improvement Assoc MBIA 5.375%, 6/15/33 1,925 2,028,430 -------------- 6,227,666 MICHIGAN-3.0% Michigan Municipal Bond Authority 5.50%, 10/01/13 6,085 6,726,116 Michigan State (Trunk Line Fund) FSA Series 05B 5.00%, 9/01/12 2,510 2,679,726 38 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Principal Amount (000) U.S. $ Value ========================================================================= Michigan State (Trunk Line) FSA Series Ser 05B 5.00%, 9/01/11 $ 1,000 $ 1,057,120 -------------- 10,462,962 MINNESOTA-0.1% St. Paul Minnesota Hsg & Redevt Auth Hosp Rev (Healtheast Proj.) 5.15%, 11/15/20 310 328,845 MISSOURI-1.2% St. Louis Airport Revenue (Airport Development Program) MBIA Series Ser A 5.625%, 7/01/19 4,000 4,316,320 -------------- NEVADA-1.6% Clark County Improvement Dist 4.05%, 8/01/10 670 662,013 Clark County PCR (Southern California) AMT Series Ser C 3.25%, 6/01/31 (a) 335 330,109 Henderson Local Impt Dists No. T-16 4.75%, 3/01/13 35 35,441 Las Vegas Spl Impt Dist No. 607 Local Impt Bonds 5.35%, 6/01/12 250 255,775 Nevada GO 5.00%, 2/01/12 (c) 4,100 4,336,980 -------------- 5,620,318 NEW JERSEY-3.4% New Jersey Eco Dev Auth MBIA Series Ser 1A 5.00%, 7/01/11 1,645 1,734,323 New Jersey Eco Dev Auth Rev (Cigarette Tax) 5.00%, 6/15/07 600 601,860 Series Ser 4 5.00%, 6/15/10 830 863,756 New Jersey State Transp Trust Fund Auth FSA Series Ser C 5.50%, 12/15/11 1,000 1,079,010 New Jersey State Transp Trust Fund Auth (Transp Sys) Series Ser C 5.50%, 6/15/21 1,465 1,615,749 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 39 Principal Amount (000) U.S. $ Value ========================================================================= New Jersey Transp Trust Fund Auth FGIC 5.00%, 6/15/12 $ 3,775 $ 4,000,707 Series Ser A 5.50%, 12/15/13 1,775 1,964,872 -------------- 11,860,277 NEW YORK-3.7% New York City 5.00%, 8/01/08 565 575,108 Series Ser H 5.00%, 8/01/11 1,645 1,729,092 New York City GO Series Ser 4G 5.00%, 8/01/12 1,315 1,394,702 New York State Dormitory Authority 5.00%, 7/01/11 515 521,340 New York State Thruway Auth Series 63A 5.00%, 3/15/09 850 872,389 New York State Thruway Auth Hwy & Brdg Tr Fd FSA Series Ser 5B 5.00%, 4/01/14 6,505 7,047,842 Tobacco Settlement Fin Auth 5.25%, 6/01/13 815 831,007 -------------- 12,971,480 NORTH CAROLINA-0.9% Mecklenburg County NC 5.00%, 2/01/14 2,575 2,793,592 North Carolina Municipal Power Agency No 1 Catawba ACA-CBI 5.50%, 1/01/10 385 402,864 -------------- 3,196,456 OHIO-0.9% Cleveland Muni Sch Dist FSA 5.25%, 12/01/19 1,000 1,096,260 Ohio State (Highway Capital Improvements) Series 02G 5.00%, 5/01/11 1,740 1,829,732 Port Auth Columbiana Cnty SWFR (Liberty Waste Trans LLC Proj) AMT Series Ser A 7.00%, 8/01/21 300 306,060 -------------- 3,232,052 OREGON-0.4% Oregon State Department of Transportation AMBAC 5.00%, 6/01/09 1,515 1,560,814 40 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Principal Amount (000) U.S. $ Value ========================================================================= PENNSYLVANIA-3.8% Allegheny Cnty Redev Auth Rev (Pittsburgh Mills Proj) 5.10%, 7/01/14 $ 280 $ 289,195 Beaver Cnty IDA PCR (Cleveland Electric Proj) Series Ser 98 3.75%, 10/01/30 (a) 280 278,978 City of Philadelphia PA XLCA 5.00%, 2/15/11 2,000 2,093,820 Commonwealth of Pennsylvania MBIA 5.00%, 1/01/13 1,420 1,521,970 5.25%, 1/01/09 3,350 3,444,068 Delaware Valley Regional Fin Auth AMBAC Series Ser A 0.892%, 7/01/27 (a) 665 656,462 Montgomery Cnty IDA Rev (Whitemarsh Continuing Care Ret Comm) 6.00%, 2/01/21 265 281,989 Pennsylvania GO MBIA Series 03 5.00%, 7/01/11 4,310 4,549,334 Philadelphia Auth for IDR (Leadership Learning Partners) Series Ser 05A 4.60%, 7/01/15 300 301,518 -------------- 13,417,334 PUERTO RICO-0.7% Government Development Bank for Puerto Rico 5.00%, 12/01/07 2,510 2,530,858 SOUTH CAROLINA-2.5% South Carolina Pub Ser Auth Rev MBIA Series Ser B 5.00%, 1/01/11 3,515 3,687,797 South Carolina State Public Service Authority FSA 5.00%, 1/01/14 2,450 2,643,427 Western Carolina Regional Swr Auth FSA 5.00%, 3/01/12 1,000 1,059,660 York County School District No 3 SCSDE Series 03 5.00%, 3/01/10 1,335 1,386,745 -------------- 8,777,629 TEXAS-5.0% Arlington Ind Sch Dist PSF-GTD 5.00%, 2/15/14 1,000 1,075,780 City of Dallas TX 5.00%, 2/15/12 3,350 3,548,186 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 41 Shares or Principal Amount Company (000) U.S. $ Value ========================================================================= Katy Dev Auth (Metro Contract) Series Ser A 5.75%, 6/01/09 $ 305 $ 310,258 Lower Neches Valley Authority Industrial Development Corp./TX 3.60%, 12/01/39 (a) 1,000 1,000,000 Red River Education Finance Revenue (Parish Day School Proj.) Series Ser 1A 3.10%, 12/01/31 (a) 1,400 1,394,036 San Antonio Elec & Gas Rev Series Ser 01 5.25%, 2/01/09 1,600 1,646,064 State of Texas 5.00%, 10/01/12-10/01/13 6,655 7,106,778 Texas Public Finance Authority AMBAC 5.00%, 2/01/16 1,640 1,765,936 -------------- 17,847,038 WASHINGTON-1.2% Seattle Mun Light & Pwr Rev FSA Series Ser 01 5.50%, 3/01/09 1,000 1,034,980 State of Washington FSA 5.00%, 1/01/12 2,000 2,116,480 Washington Pub Pwr Supp Sys 5.75%, 7/01/09 1,100 1,148,928 -------------- 4,300,388 WISCONSIN-1.7% State of Wisconsin AMBAC 5.00%, 5/01/16 2,000 2,188,880 5.25%, 7/01/14 3,500 3,837,960 -------------- 6,026,840 Total Municipal Obligations (cost $182,421,389) 182,709,021 COMMON STOCKS-45.9% FINANCIAL-14.6% BANKING-7.1% Anglo Irish Bank Corp. PLC (Dublin) 22,867 487,089 Banco Bilbao Vizcaya Argentaria SA 24,515 596,601 Bank Hapoalim BM 52,400 242,494 Bank of America Corp. 35,100 1,785,537 The Bank of New York Co., Inc 8,000 324,960 Barclays PLC 40,200 582,933 BNP Paribas SA 11,482 1,197,307 China Construction Bank Corp.-Class H 218,000 121,823 Citigroup, Inc. 48,200 2,429,280 Comerica, Inc. 5,300 320,067 42 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Company Shares U.S. $ Value ========================================================================= Credit Agricole SA 8,250 $ 328,654 Credit Suisse Group 24,550 1,696,316 Credit Suisse Group (New York Exchange) (ADR) 20,500 1,419,625 Federal Home Loan Mortgage Corp. 9,100 584,038 Federal National Mortgage Association 13,600 771,528 Fifth Third Bancorp 9,900 398,772 Fortis (Euronext Amsterdam) 3,400 146,087 Fortis (Euronext Brussels) 3,300 141,788 HBOS PLC 25,570 541,197 Industrial & Commercial Bank of China-Class H (d) 137,000 75,575 JPMorgan Chase & Co. 54,900 2,712,060 Keycorp 2,600 98,124 Kookmin Bank 4,500 404,176 Macquarie Bank Ltd. 6,060 377,882 Mellon Financial Corp. 9,400 408,242 Mitsubishi UFJ Financial Group, Inc. 22 269,774 National City Corp. 13,300 503,405 Royal Bank of Scotland Group PLC 14,400 566,171 Societe Generale 2,625 441,451 Standard Chartered PLC (d) 9,327 260,490 Sumitomo Mitsui Financial Group, Inc. 63 612,899 SunTrust Banks, Inc. 5,600 472,136 U.S. Bancorp 9,400 335,204 UBS AG (Swiss Virt-X) 17,176 1,014,227 UniCredito Italiano SpA 78,364 723,725 Wachovia Corp. 9,600 531,552 Washington Mutual, Inc. 14,600 628,968 Wells Fargo & Co. 13,400 464,980 ------------ 25,017,137 FINANCIAL SERVICES-3.7% The Charles Schwab Corp. 35,300 652,344 Chicago Mercantile Exchange Holdings, Inc.-Class A 1,020 549,912 CIT Group, Inc. 6,000 338,820 Countrywide Financial Corp. 12,200 467,016 Franklin Resources, Inc. 14,800 1,737,372 Goldman Sachs Group, Inc. 4,550 917,280 Lazard Ltd.-Class A 5,100 262,599 Legg Mason, Inc. 12,250 1,258,565 Lehman Brothers Holdings, Inc. 5,800 425,140 Man Group PLC 48,048 516,569 MBIA, Inc. 5,900 392,173 Merrill Lynch & Co., Inc. 28,200 2,359,776 MGIC Investment Corp. 1,500 90,525 Morgan Stanley 7,600 569,392 Nomura Holdings, Inc. 30,200 654,014 NYSE Group, Inc. (d) 9,300 789,570 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 43 Company Shares U.S. $ Value ========================================================================= ORIX Corp. 3,890 $ 1,071,606 Waddell & Reed Financial, Inc.-Class A 4,700 114,586 ------------ 13,167,259 INSURANCE-3.5% Allianz SE 2,000 430,308 Allstate Corp. 4,300 258,258 American International Group, Inc. 39,950 2,680,645 Aviva PLC 29,229 468,022 Chubb Corp. 7,200 367,560 Fondiaria-Sai SpA (ordinary shares) 4,300 195,973 Fondiaria-Sai SpA (saving shares) 1,900 66,669 Friends Provident PLC 24,975 100,671 Genworth Financial, Inc.-Class A 12,100 427,977 Hartford Financial Services Group, Inc. 5,600 529,536 ING Groep NV 20,456 872,650 MetLife, Inc. 8,300 524,145 Muenchener Rueckversicherungs AG 4,100 653,326 Old Republic International Corp. 14,700 328,104 QBE Insurance Group, Ltd. 23,132 586,039 Swiss Reinsurance 3,852 327,664 Torchmark Corp. 4,900 313,208 WellPoint, Inc. (d) 39,600 3,143,844 ------------ 12,274,599 WHOLESALE & INTERNATIONAL TRADE-0.3% Li & Fung Ltd. 106,000 337,002 Mitsui & Co. Ltd. 40,000 718,924 ------------ 1,055,926 ------------ 51,514,921 TECHNOLOGY/ELECTRONICS-5.2% DATA PROCESSING-3.1% Adobe Systems, Inc. (d) 12,800 502,400 Akamai Technologies, Inc. (d) 11,500 593,055 Apple, Inc. (d) 35,150 2,974,041 Canon, Inc. 10,900 590,388 CapGemini, SA 10,490 732,555 Electronic Data Systems Corp. 12,200 341,844 Hewlett-Packard Co. 44,300 1,744,534 Infosys Technologies, Ltd. 5,256 245,812 International Business Machines Corp. 3,900 362,739 Microsoft Corp. 60,100 1,693,017 Network Appliance, Inc. (d) 25,100 970,617 Sanmina-SCI Corp. (d) 47,600 176,596 Solectron Corp. (d) 45,400 146,188 ------------ 11,073,786 ELECTRICAL & ELECTRONICS-1.5% Arrow Electronics, Inc. (d) 6,500 249,080 Broadcom Corp.-Class A (d) 42,100 1,435,189 Cisco Systems, Inc. (d) 86,400 2,241,216 Compal Electronics, Inc. (GDR) (b) 66,831 287,373 44 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Company Shares U.S. $ Value ========================================================================= Foxconn Technology Co., Ltd. 21,850 $ 234,688 Nokia OYJ 9,998 218,225 QUALCOMM, Inc. 11,000 443,080 Tech Data Corp. (d) 3,000 111,840 ------------ 5,220,691 ELECTRONIC COMPONENTS & INSTRUMENTS-0.6% AU Optronics Corp. 158,000 222,330 NVIDIA Corp. (d) 25,100 778,100 Samsung Electronics Co. Ltd. 360 217,431 Sharp Corp. 21,000 391,282 Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) 23,215 257,687 United Microelectronics Corp. 363,682 216,036 ------------ 2,082,866 ------------ 18,377,343 CONSUMER CYCLICAL-5.0% APPLIANCES & HOUSEHOLD DURABLES-0.1% Newell Rubbermaid, Inc. 6,600 202,092 BROADCASTING & PUBLISHING-2.2% CBS Corp.-Class B 15,150 459,802 Comcast Corp.-Class A (d) 4,500 115,740 Comcast Corp.-Special-Class A (d) 73,050 1,859,123 Google, Inc.-Class A (d) 6,950 3,123,677 Grupo Televisa, SA (ADR) 8,100 221,049 Idearc, Inc. 1,625 55,250 Time Warner, Inc. 84,500 1,719,575 Viacom, Inc.-Class B (d) 3,800 148,352 The Walt Disney Co. 6,600 226,116 ------------ 7,928,684 BUSINESS & PUBLIC SERVICES-0.1% Interpublic Group of Cos., Inc. (d) 15,900 200,181 Lamar Advertising Co.-Class A (d) 3,500 224,175 ------------ 424,356 LEISURE & TOURISM-0.9% Hilton Hotels Corp. 14,200 501,260 McDonald's Corp. 43,150 1,886,518 Starwood Hotels & Resorts Worldwide, Inc. 13,300 875,140 Wynn Resorts Ltd. 1,100 107,822 ------------ 3,370,740 MERCHANDISING-1.3% eBay, Inc. (d) 5,500 176,330 Esprit Holdings Ltd. 26,500 276,151 The Gap, Inc. 16,900 324,311 Kohl's Corp. (d) 19,200 1,324,608 Limited Brands Inc. 9,200 254,656 Marks & Spencer Group PLC 38,833 513,443 Office Depot, Inc. (d) 7,700 256,872 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 45 Company Shares U.S. $ Value ========================================================================= Saks, Inc. 9,500 $ 183,540 Target Corp. 22,200 1,365,966 ------------ 4,675,877 RECREATION & OTHER CONSUMER-0.1% Mattel, Inc. 9,600 249,696 TEXTILES & APPAREL-0.3% Inditex SA 1,881 109,315 Jones Apparel Group, Inc. 7,500 246,900 Nike, Inc.-Class B 3,000 313,410 VF Corp. 3,300 263,373 ------------ 932,998 ------------ 17,784,443 CAPITAL EQUIPMENT-4.2% AEROSPACE & DEFENSE-1.4% BAE Systems PLC 39,400 335,565 Boeing Co. 30,800 2,687,916 European Aeronautic Defence & Space Co., NV 11,020 376,644 Lockheed Martin Corp. 3,200 311,296 Northrop Grumman Corp. 6,400 459,840 Rockwell Collins, Inc. 7,000 458,360 Spirit Aerosystems Holdings, Inc.-Class A (d) 10,900 321,659 ------------ 4,951,280 AUTOMOBILES-1.2% Autoliv, Inc. 4,900 279,545 BorgWarner, Inc. 3,300 243,012 Compagnie Generale des Etablissements Michelin-Class B 2,100 218,149 Continental AG 1,100 137,192 Denso Corp. 6,500 253,237 Fiat SpA (d) 9,494 224,797 Honda Motor Co. Ltd. 6,000 222,990 Hyundai Mobis 3,100 258,620 Renault SA 6,400 759,907 Toyota Motor Corp. (ADR) 3,900 520,650 Toyota Motor Corp. 17,600 1,182,122 ------------ 4,300,221 INDUSTRIAL COMPONENTS-0.2% Eaton Corp. 4,000 324,040 NGK Insulators Ltd. 24,000 454,959 ------------ 778,999 MACHINERY & ENGINEERING-0.3% ABB Ltd. 33,276 554,925 Atlas Copco AB-Class A 5,915 185,368 Sumitomo Heavy Industries Ltd. 26,000 267,861 ------------ 1,008,154 46 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Company Shares U.S. $ Value ========================================================================= MULTI-INDUSTRY-1.1% Fluor Corp. 7,200 $ 608,184 General Electric Co. 77,800 2,716,776 SPX Corp. 4,200 293,580 Textron, Inc. 1,800 166,122 ------------ 3,784,662 ------------ 14,823,316 ENERGY-3.3% ENERGY EQUIPMENT & SERVICES-0.6% GlobalSantaFe Corp. 6,600 380,358 Halliburton Co. 33,500 1,034,480 Schlumberger, Ltd. 11,300 709,640 ------------ 2,124,478 ENERGY SOURCES-2.7% BP PLC 19,300 197,855 Chevron Corp. 23,500 1,612,335 China Petroleum & Chemical Corp.-Class H 368,000 293,473 China Shenhua Energy Co. Ltd.-Class H 113,000 285,769 ConocoPhillips 10,300 673,826 ENI SpA 25,137 769,880 Exxon Mobil Corp. 49,300 3,533,824 Marathon Oil Corp. 4,900 444,626 MOL Hungarian Oil and Gas NyRt 1,700 182,223 Occidental Petroleum Corp. 1,300 60,034 PetroChina Co., Ltd.-Class H 130,000 152,087 Petroleo Brasileiro SA (ADR) 5,400 440,532 Repsol YPF SA 6,900 218,392 Royal Dutch Shell PLC-a Shs (d) 6,606 213,741 Total SA 8,700 585,968 ------------ 9,664,565 ------------ 11,789,043 CONSUMER STAPLES-3.1% BEVERAGES & TOBACCO-0.6% Altria Group, Inc. 13,600 1,146,208 Cia de Bebidas das Americas (ADR) 3,600 174,132 Japan Tobacco, Inc. 114 521,357 Molson Coors Brewing Co.-Class B 4,400 371,536 ------------ 2,213,233 FOOD & HOUSEHOLD PRODUCTS-2.5% Clorox Co. 5,800 367,488 Colgate-Palmolive Co. 5,900 397,424 ConAgra Foods, Inc. 13,300 335,559 Essilor International, SA 3,010 343,111 General Mills, Inc. 5,800 326,888 Groupe Danone 1,634 258,410 J Sainsbury PLC 57,100 571,522 Kellogg Co. 6,800 339,456 Kimberly-Clark Corp. 3,400 231,574 Kroger Co. 14,500 372,215 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 47 Company Shares U.S. $ Value ========================================================================= Nestle, SA 2,093 $ 778,629 Procter & Gamble Co. 55,650 3,533,219 Reckitt Benckiser PLC 1,386 69,588 Safeway, Inc. 13,000 449,410 Sara Lee Corp. 19,700 324,262 Tesco PLC 16,609 140,605 ------------ 8,839,360 ------------ 11,052,593 MEDICAL - 3.0% HEALTH & PERSONAL CARE-3.0% Alcon, Inc. 15,100 1,881,762 AmerisourceBergen Corp.-Class A 4,900 258,083 AstraZeneca PLC 4,900 274,777 Becton Dickinson & Co. 1,500 113,985 Daiichi Sankyo Co. Ltd. 6,800 219,521 Genentech, Inc. (d) 14,850 1,252,895 Gilead Sciences, Inc. (d) 24,600 1,760,376 GlaxoSmithKline PLC 6,300 176,766 Medtronic, Inc. 5,700 287,052 Merck & Co. Inc. 21,800 962,688 Merck KGaA 2,257 280,889 Nobel Biocare Holding AG 831 275,251 Novartis AG 4,527 251,256 Pfizer, Inc. 49,200 1,228,032 Roche Holding AG 5,119 910,921 Sanofi-Aventis 4,661 395,776 Tenet Healthcare Corp. (d) 11,000 75,130 ------------ 10,605,160 INDUSTRIAL COMMODITIES-2.8% CHEMICALS-1.0% BASF AG 5,500 559,410 Bayer AG 9,103 524,043 Dow Chemical Co. 8,800 385,440 E.I. Du Pont de Nemours & Co. 3,400 172,550 Hercules, Inc. (d) 7,600 153,216 Lubrizol Corp. 4,000 208,000 Mitsui Chemicals, Inc. 33,000 286,882 Monsanto Co. 19,700 1,037,993 PPG Industries, Inc. 1,500 99,375 ------------ 3,426,909 FOREST & PAPER-0.2% Smurfit-Stone Container Corp. (d) 13,200 162,888 Temple-Inland, Inc. 7,000 418,600 ------------ 581,488 METAL - NONFERROUS-0.4% MMC Norilsk Nickel (ADR) 1,626 288,615 Rio Tinto PLC (d) 3,490 188,006 Xstrata PLC 23,525 1,101,314 ------------ 1,577,935 48 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Company Shares U.S. $ Value ========================================================================= METAL - STEEL-0.6% JFE Holdings, Inc. 14,100 $ 872,157 Mittal Steel Co. NV (Euronext Paris) 6,237 315,104 POSCO 1,200 450,383 United States Steel Corp. 6,300 558,306 ------------ 2,195,950 MINING & METALS-0.1% Mittal Steel Co. NV (Euronext Amsterdam) 4,500 228,140 MISCELLANEOUS MATERIALS-0.5% Avery Dennison Corp. 4,300 285,778 Cia Vale do Rio Doce (ADR) 11,300 385,556 Crown Holdings, Inc. (d) 10,600 242,104 Nitto Denko Corp. 10,000 514,464 Owens-Illinois, Inc. (d) 8,400 199,584 Sonoco Products Co. 6,600 244,332 ------------ 1,871,818 ------------ 9,882,240 TELECOMMUNICATIONS-1.9% America Movil SAB de CV Series L (ADR) 26,100 1,143,180 American Tower Corp.-Class A (d) 3,000 116,220 AT&T, Inc. 64,402 2,369,994 China Mobile Ltd. 15,500 143,892 China Netcom Group Corp Ltd. 134,000 316,373 Embarq Corp.-Class W 1,265 70,018 Nippon Telegraph & Telephone Corp. 25 132,435 Sprint Nextel Corp. 29,800 574,544 Telefonica SA 5,996 128,968 Verizon Communications, Inc. 32,500 1,216,475 Vodafone Group PLC 224,787 622,739 ------------ 6,834,838 UTILITIES-1.0% UTILITY (ELECTRIC & GAS)-1.0% Allegheny Energy, Inc. (d) 3,800 179,512 American Electric Power Co., Inc. 6,500 291,590 Constellation Energy Group, Inc. 4,600 361,882 Dominion Resources, Inc./VA 6,100 521,733 E.ON AG 4,000 524,351 Entergy Corp. 4,900 483,630 International Power PLC 16,121 115,220 RWE AG 4,110 419,107 TXU Corp. 5,600 370,440 Wisconsin Energy Corp. 6,000 287,700 ------------ 3,555,165 CONSTRUCTION & HOUSING-0.7% BUILDING MATERIALS-0.3% American Standard Cos, Inc. 4,300 227,857 Buzzi Unicem SpA 9,300 272,066 CRH PLC 9,057 376,843 ------------ 876,766 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 49 Company Shares U.S. $ Value ========================================================================= Construction & Housing-0.4% Daiwa House Industry Co. Ltd. 18,000 $ 322,859 George Wimpey PLC 16,200 180,145 Taylor Woodrow PLC 21,700 172,790 Vinci, SA 4,998 690,808 ------------ 1,366,602 REAL ESTATE-0.0% Sino Land Co. 59,550 137,134 ------------ 2,380,502 TRANSPORTATION-0.5% TRANSPORTATION - AIRLINES-0.2% Air France-KLM 8,000 346,753 Deutsche Lufthansa AG 12,100 327,701 ------------ 674,454 TRANSPORTATION - ROAD & RAIL-0.1% CSX Corp. 10,000 376,700 TRANSPORTATION - SHIPPING-0.2% Mitsui OSK Lines Ltd. 52,000 589,691 ------------ 1,640,845 FINANCE-0.2% BANKING-0.0% Anglo Irish Bank Corp. PLC (London Exchange) 7,544 159,858 INSURANCE-0.2% The Travelers Cos, Inc. 11,033 560,035 ------------ 719,893 TECHNOLOGY-0.2% COMMUNICATION SERVICES-0.1% Monster Worldwide, Inc. (d) 5,800 289,188 Computer Hardware/Storage-0.1% Sun Microsystems, Inc. (d) 62,700 384,351 ------------ 673,539 Consumer Services-0.2% Retail - General Merchandise-0.2% Federated Department Stores, Inc. 11,500 513,590 ------------ Total Common Stocks (cost $128,697,869) 162,147,431 50 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Shares or Principal Amount Company (000) U.S. $ Value ========================================================================= SHORT-TERM INVESTMENTS-2.9% MUNICIPAL OBLIGATIONS-1.7% Louisville & Jefferson Cnty Regional Arpt Auth, Spl Facs Rev (UPS Worldwide Forwarding) Series Ser A 3.66%, 1/01/29 (e) $ 1,000 $ 1,000,000 Valdez Marine Term Rev (BP Pipelines, Inc. Proj) Series Ser 03A 3.63%, 6/01/37 (e) 5,100 5,100,000 ------------- Total Municipal Obligations (cost $6,100,000) 6,100,000 INVESTMENT COMPANIES-1.2% AllianceBernstein Fixed-Income Shares, Inc.- Government STIF Portfolio (f) (cost $ 4,196,374) 4,196,374 4,196,374 Total Short-Term Investments (cost $10,296,374) 10,296,374 TOTAL INVESTMENTS-100.5% (cost $321,415,632) 355,152,826 Other assets less liabilities-(0.5)% (1,623,752) NET ASSETS-100.0% $353,529,074 INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type ================================ Notional Payments Payments Unrealized Swap Amount Termination made by received by Appreciation/ Counterparty (000) Date the Portfolio the Portfolio (Depreciation) - ----------------------------------------------------------------------------------------------- Citigroup $ 1,200 6/22/07 BMA 2.962% $ (3,590) Citigroup 1,700 11/10/26 3.884% BMA (14,733) JP Morgan Chase 1,100 4/05/07 BMA 2.988% (1,380) JP Morgan Chase 800 10/01/07 BMA 3.635% 551 JP Morgan Chase 4,700 11/10/11 BMA 3.482% 14,888 Merrill Lynch 900 7/12/08 BMA 3.815% 4,587 Merrill Lynch 970 2/12/12 BMA 3.548% 6,777
ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 51 FINANCIAL FUTURES CONTRACTS (see Note D) Value at Unrealized Number of Expiration Original February 28, Appreciation/ Type Contracts Month Value 2007 (Depreciation) =============================================================================== Purchased Contracts EURO STOXX 50 2 March 2007 $111,697 $ 108,356 $ (3,341) (a) Variable rate coupon, rate shown as of February 28, 2007. (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 February 28, 2007, the aggregate market value of these securities amounted to $898,505 or 0.3% of net assets. (c) Position, or a portion thereof, has been segregated to collateralize interest rate swaps. (d) Non-income producing security. (e) Variable Rate Demand Notes (VRDN) are instruments whose interest rates change on a specific date (such as coupon date or interest payment date) or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). This instrument is payable on demand and is secured by letters of credit or other credit support agreements from major banks. (f) Investment in affiliated money market mutual fund. Glossary: ACA - American Capital Access Financial Guaranty Corporation ADR - American Depositary Receipt AMBAC - American Bond Assurance Corporation AMT - Alternative Minimum Tax (subject to) BMA - Bond Market Association CBI - Certificate of Beneficiary Insurance CDA - Community Development Administration CDD - Community Development District COP - Certificate of Participation ETM - Escrow to Maturity FGIC - Financial Guaranty Insurance Company FSA - Financial Security Assurance Inc. GDR - Global Depositary Receipt GO - General Obligation IDA - Industrial Development Authority/Agency IDR - Industrial Development Revenue MBIA - Municipal Bond Investors Assurance PCR - Pollution Control Revenue PSF-GTD - (Texas) Permanent Schools Fund Guaranteed SCSDE - South Carolina State Department of Education SWDR - Solid Waste Disposal Revenue SWFR - Solid Waste Facility Revenue WI - When Issues Securities XLCA - XL Capital Assurance Inc. See notes to financial statements. 52 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES WEALTH PRESERVATION STRATEGY PORTFOLIO OF INVESTMENTS February 28, 2007 (unaudited) Principal Amount (000) U.S. $ Value ========================================================================= MUNICIPAL OBLIGATIONS-67.8% ALABAMA-4.7% Alabama Pub Sch & College Auth FGIC 5.00%, 12/01/21 $ 400 $ 425,588 County of Jefferson AL FGIC 5.00%, 1/01/10-2/01/38 2,000 2,099,290 5.125%, 2/01/42 1,260 1,351,022 5.25%, 2/01/24 1,000 1,078,320 Jefferson Cnty Swr Rev (Capital Improvement Warrants) FGIC Series Ser 02 5.00%, 2/01/41(a) 1,000 1,065,150 Jefferson Cnty, Swr Prerefunded FGIC Series Ser A 5.75%, 2/01/38 1,325 1,389,342 ------------- 7,408,712 ALASKA-0.9% Alaska Student Loan Corp. FSA 5.00%, 7/01/07 1,430 1,436,092 ARIZONA-1.2% Arizona Health Fac Auth Hosp 4.65%, 2/01/42 235 238,744 Arizona School Facilities Board MBIA 5.25%, 9/01/15 1,500 1,628,055 ------------- 1,866,799 ARKANSAS-0.6% Hot Springs AR 4.125%, 7/01/08 965 971,070 CALIFORNIA-3.3% California Dept of Wtr Res Pwr Supply Rev MBIA-IBC Series Ser 2A 5.50%, 5/01/10 325 344,143 California Econ Rec Bds Series Ser A 5.00%, 7/01/09 1,000 1,031,550 California State GO 5.00%, 3/01/08-6/01/10 575 589,349 Series Ser 3 5.00%, 3/01/08 750 760,762 California Statewide CDA Rev (Kaiser Permanente) Series Ser F 2.30%, 4/01/33(b) 240 239,525 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 53 Principal Amount (000) U.S. $ Value ========================================================================= Golden State Tobacco Securitization Corp./CA 5.375%, 6/01/28 $ 1,815 $ 1,910,287 Tax Exempt Muni Infrastructure Series Ser 04A 3.80%, 5/01/08(c) 300 298,113 ------------- 5,173,729 COLORADO-1.6% Adonea Metropolitan District No 2 4.375%, 12/01/15 555 559,989 Denver GO (Auditorium Theatre & Zoo) Series 03A 5.50%, 8/01/08 1,900 1,948,450 ------------- 2,508,439 CONNECTICUT-2.8% Connecticut State Dev Auth AMBAC 3.35%, 5/01/31(b) 1,300 1,290,731 State of Connecticut FSA 5.00%, 8/01/09 2,160 2,228,515 5.50%, 11/15/12 845 926,492 ------------- 4,445,738 FLORIDA-4.7% County of Broward FL 5.00%, 1/01/09 1,200 1,228,884 Dade Cnty Sch Dist MBIA Series Ser 94 5.00%, 8/01/12 1,000 1,065,150 Florida Hurricane Catastrophe Fund 5.00%, 7/01/08 2,145 2,182,495 Florida State Department of Environmental Protection FGIC 5.75%, 7/01/09 2,100 2,197,692 JEA Elec Sys Rev XLCA Series Ser 02-03A 5.375%, 10/01/32 700 707,154 ------------- 7,381,375 GEORGIA-1.0% Fulton Dekalb Hospital Authority FSA 5.00%, 1/01/13 1,500 1,598,790 HAWAII-1.2% Hawaii State AMBAC 5.00%, 7/01/13 1,800 1,929,690 54 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Principal Amount (000) U.S. $ Value ========================================================================= INDIANA-2.9% City of Indianapolis IN AMBAC 5.25%, 8/15/09 $ 2,100 $ 2,145,318 East Chicago Industry PCR (Inland Steel Compony Project No. 11) Series 94 7.125%, 6/01/07 235 236,128 Indiana Fin Auth Rev 5.00%, 2/01/12 1,165 1,231,801 Indiana Hlth Fac Fin Auth (Ascension Health Subordinated Credit) Series Ser 5A 5.00%, 5/01/07 900 901,764 Indiana Transp Fin Auth FSA 5.00%, 6/01/09 25 25,745 ------------- 4,540,756 KENTUCKY-0.6% Kentucky State Prop & Bldgs Commn FSA 5.375%, 2/01/08 985 999,696 LOUISIANA-0.8% New Orleans GO MBIA 5.25%, 12/01/20 450 491,459 New Orleans GO (Certificates Indebtedness) FSA Series 00 5.50%, 12/01/08 110 113,411 State of Louisiana FSA 5.00%, 5/01/15 655 711,081 ------------- 1,315,951 MASSACHUSETTS-3.2% Commonwealth of Massachusetts FGIC 5.00%, 1/01/09 2,190 2,243,107 Series Ser A 5.50%, 2/01/10 500 525,545 Massachusetts Dev Fin Agy MBIA 5.50%, 1/01/11 1,000 1,063,190 Massachusetts GO (Consolidated Loan) Series Ser B 5.00%, 8/01/12 1,050 1,116,287 ------------- 4,948,129 MICHIGAN-5.0% Detroit City School District (School Buillding & Site Improvement) FGIC Series Ser 2A 5.00%, 5/01/32 1,500 1,610,670 Detroit MI FGIC 5.75%, 7/01/26 1,520 1,619,773 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 55 Principal Amount (000) U.S. $ Value ========================================================================= Detroit Michigan Sew Disp Rev FSA 4.191%, 7/01/32(b) $ 420 $ 421,457 Michigan Municipal Bond Authority 4.50%, 8/20/07 2,125 2,132,374 5.50%, 10/01/13 1,800 1,989,648 ------------- 7,773,922 MINNESOTA-1.7% Minnesota Pub Facs Auth Wtr PCR Series Ser 4D 5.00%, 3/01/11 400 420,484 State of Minnesota 5.00%, 6/01/07 2,170 2,176,944 ------------- 2,597,428 NEBRASKA-2.7% Lancaster County School District No 1 4.00%, 1/15/08 2,000 2,005,800 Nebraska Public Power District FGIC 5.00%, 1/01/09 2,220 2,271,859 ------------- 4,277,659 NEVADA-1.3% Clark County PCR (Southern California) AMT Series Ser C 3.25%, 6/01/31(b) 170 167,518 Nevada GO 5.00%, 2/01/12 1,800 1,904,040 ------------- 2,071,558 NEW JERSEY-4.9% New Jersey Eco Dev Auth Rev (Cigarette Tax) 5.00%, 6/15/07 315 315,976 Series Ser 4 5.00%, 6/15/10-6/15/11 800 836,968 New Jersey State Tpk Auth MBIA 5.50%, 1/01/30 1,850 1,942,408 New Jersey State Transp Trust Fund Auth FSA Series Ser C 5.50%, 12/15/11 1,000 1,079,010 New Jersey State Transp Trust Fund Auth (Transp Sys) MBIA 5.25%, 12/15/08 625 642,463 Series Ser A 5.25%, 12/15/12 1,100 1,188,495 Series Ser C 5.50%, 12/15/10-6/15/21 975 1,059,747 56 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Principal Amount (000) U.S. $ Value ========================================================================= New Jersey Transportation Trust Fund Authority AMBAC 5.25%, 12/15/09 $ 500 $ 520,655 ------------- 7,585,722 NEW YORK-4.9% County of Rockland NY 4.50%, 3/22/07 2,000 2,000,740 New York City Series Ser 4B 5.00%, 8/01/10 175 182,210 New York City GO Series Ser 4G 5.00%, 8/01/12 685 726,518 New York City Muni Wtr Fin Auth (Prerefunded) AMBAC 5.75%, 6/15/26 1,410 1,432,517 New York State Thruway Auth Series 63A 5.00%, 3/15/09 585 600,409 New York State Thruway Auth Hwy & Brdg Tr Fd FSA Series Ser 5B 5.00%, 4/01/14 1,900 2,058,555 Tobacco Settlement Fin Auth 5.25%, 6/01/13 650 662,766 ------------- 7,663,715 NORTH CAROLINA-0.2% North Carolina Municipal Power Agency No 1 Catawba ACA-CBI 5.50%, 1/01/10 300 313,920 OHIO-0.4% Cleveland Muni Sch Dist FSA 5.25%, 12/01/19 585 641,312 OREGON-1.3% Tri-County Metropolitan Transportation District MBIA 5.00%, 5/01/12 1,890 2,010,658 PENNSYLVANIA-4.1% Allegheny County Industrial Development Authority 4.30%, 9/01/08 130 130,133 Beaver Cnty IDA PCR (Cleveland Electric Proj) Series Ser 98 3.75%, 10/01/30(b) 160 159,416 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 57 Principal Amount (000) U.S. $ Value ========================================================================= Commonwealth of Pennsylvania 5.00%, 10/01/07 $ 1,000 $ 1,007,610 5.25%, 2/01/14 1,000 1,096,850 5.75%, 10/01/15 2,665 2,828,791 Delaware Valley Regional Fin Auth AMBAC Series Ser A 0.892%, 7/01/27(b) 445 439,286 Pennsylvania Eco Dev Fin Auth (Amtrak Projects) Series 01A 6.00%, 11/01/07 315 317,611 Pennsylvania GO MBIA Series 03 5.00%, 7/01/11 450 474,989 ------------- 6,454,686 PUERTO RICO-2.2% Commonwealth of Puerto Rico FSA Series Ser C 5.00%, 7/01/18-7/01/21(b) 2,495 2,540,009 Government Development Bank for Puerto Rico 5.00%, 12/01/07 830 836,897 ------------- 3,376,906 SOUTH CAROLINA-3.1% South Carolina Pub Ser Auth Rev MBIA Series Ser B 5.00%, 1/01/11 1,740 1,825,538 South Carolina Trans Infrastructure Bk AMBAC 5.50%, 10/01/11 1,865 1,968,265 York County School District No 3 SCSDE Series 03 5.00%, 3/01/10 1,050 1,090,698 ------------- 4,884,501 TENNESSEE-2.0% Clarksville Natural Gas Acquisition Corp. 5.00%, 12/15/08 1,600 1,635,664 Metropolitan Govt Nashville & Davidson Cnty Series Ser C 5.00%, 2/01/08 1,400 1,416,632 ------------- 3,052,296 TEXAS-4.1% Carrollton-Farmers Branch Independent Sch Dist PSF-GTD 5.00%, 2/15/09 1,325 1,356,999 City of Houston TX AMBAC 5.00%, 12/15/08 2,000 2,043,880 58 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Shares or Principal Amount (000) U.S. $ Value ========================================================================= City of San Antonio TX FGIC 5.50%, 5/15/16 $ 1,540 $ 1,741,463 Houston Independent Sch Dist PSF-GTD Series 03 5.00%, 2/15/11 1,200 1,257,192 ------------- 6,399,534 WASHINGTON-0.4% County of King WA FSA 5.25%, 1/01/10 520 542,235 Total Municipal Obligations (cost $106,374,226) 106,171,018 COMMON STOCKS-28.6% FINANCIAL-9.1% BANKING-4.4% Anglo Irish Bank Corp. PLC (Dublin) 5,134 109,359 Anglo Irish Bank Corp. PLC (London) 1,108 23,479 Banco Bilbao Vizcaya Argentaria SA 6,602 160,667 Bank Hapoalim BM 15,100 69,879 Bank of America Corp. 11,900 605,353 The Bank of New York Co., Inc 1,900 77,178 Barclays PLC 9,900 143,558 BNP Paribas SA 2,623 273,518 China Construction Bank Corp.-Class H 64,000 35,765 Citigroup, Inc. 14,000 705,600 Comerica, Inc. 1,850 111,722 Credit Agricole SA 2,970 118,315 Credit Suisse Group 6,961 480,980 Credit Suisse Group (ADR) 5,650 391,263 Federal Home Loan Mortgage Corp. 2,200 141,196 Federal National Mortgage Association 4,075 231,175 Fortis (Euronext Brussels) 3,000 128,898 HBOS PLC 7,600 160,856 Huntington Bancshares, Inc. 1,000 23,150 Industrial & Commercial Bank of China- Class H(d) 40,000 22,066 JPMorgan Chase & Co. 15,650 773,110 Keycorp 1,000 37,740 Kookmin Bank 1,200 107,780 Mellon Financial Corp. 3,500 152,005 Mitsubishi UFJ Financial Group, Inc. 6 73,575 National City Corp. 3,500 132,475 Royal Bank of Scotland Group PLC 4,100 161,201 Societe Generale 840 141,264 Standard Chartered PLC 3,416 95,404 Sumitomo Mitsui Financial Group, Inc. 17 165,385 SunTrust Banks, Inc. 900 75,879 U.S. Bancorp 3,200 114,112 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 59 Company Shares U.S. $ Value ========================================================================= UBS AG (Swiss Virt-X) 4,656 $ 274,933 UniCredito Italiano SpA 19,828 183,120 Wachovia Corp. 2,500 138,425 Wells Fargo & Co. 5,000 173,500 ------------ 6,813,885 FINANCIAL SERVICES-2.3% 3i Group PLC 208 4,545 The Charles Schwab Corp. 9,700 179,256 Chicago Mercantile Exchange Holdings, Inc.- Class A 285 153,652 CIT Group, Inc. 2,500 141,175 Countrywide Financial Corp. 3,600 137,808 Franklin Resources, Inc. 3,950 463,690 Goldman Sachs Group, Inc. 1,250 252,000 Lazard Ltd.-Class A 1,400 72,086 Legg Mason, Inc. 3,100 318,494 Lehman Brothers Holdings, Inc. 1,175 86,127 Man Group PLC 16,438 176,727 MBIA, Inc. 1,700 112,999 Merrill Lynch & Co., Inc. 7,350 615,048 MGIC Investment Corp. 1,600 96,560 Morgan Stanley 1,500 112,380 Nomura Holdings, Inc. 8,000 173,249 NYSE Group, Inc.(d) 2,400 203,760 ORIX Corp. 1,240 341,592 Waddell & Reed Financial, Inc.-Class A 1,700 41,446 ------------ 3,682,594 INSURANCE-2.2% Allianz SE 500 107,577 Allstate Corp. 1,100 66,066 American International Group, Inc. 11,100 744,810 Aviva PLC 10,428 166,976 Chubb Corp. 900 45,945 Fondiaria-Sai SpA (ordinary shares) 900 41,018 Genworth Financial, Inc.-Class A 3,000 106,110 Hartford Financial Services Group, Inc. 1,700 160,752 ING Groep NV 5,700 243,161 MetLife, Inc. 2,600 164,190 Muenchener Rueckversicherungs AG 1,100 175,283 Old Republic International Corp. 2,500 55,800 QBE Insurance Group, Ltd. 6,330 160,368 Swiss Reinsurance 1,108 94,250 Torchmark Corp. 1,700 108,664 The Travelers Cos, Inc. 3,536 179,487 WellPoint, Inc.(d) 10,500 833,595 ------------ 3,454,052 60 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Company Shares U.S. $ Value ========================================================================= WHOLESALE & INTERNATIONAL TRADE-0.2% Li & Fung Ltd. 34,000 $ 108,095 Mitsui & Co. Ltd. 10,000 179,731 ------------ 287,826 ------------ 14,238,357 TECHNOLOGY/ELECTRONICS-3.4% DATA PROCESSING-2.1% Adobe Systems, Inc.(d) 3,400 133,450 Akamai Technologies, Inc.(d) 3,200 165,024 Apple, Inc.(d) 9,500 803,795 Canon, Inc. 2,700 146,243 CapGemini, SA 2,825 197,280 Capita Group PLC 5,442 68,955 Ceridian Corp.(d) 1,800 58,716 Electronic Data Systems Corp. 2,000 56,040 EMC Corp.(d) 1,100 15,345 Hewlett-Packard Co. 12,300 484,374 Infosys Technologies, Ltd. 699 32,691 International Business Machines Corp. 1,550 144,165 Microsoft Corp. 16,600 467,622 Network Appliance, Inc.(d) 6,900 266,823 Sanmina-SCI Corp.(d) 13,900 51,569 Solectron Corp.(d) 21,700 69,874 Sun Microsystems, Inc.(d) 18,400 112,792 ------------ 3,274,758 ELECTRICAL & ELECTRONICS-0.9% ADC Telecommunications, Inc.(d) 2,985 49,013 Arrow Electronics, Inc.(d) 1,400 53,648 Broadcom Corp.-Class A(d) 10,700 364,763 Cisco Systems, Inc.(d) 21,100 547,334 Compal Electronics, Inc. (GDR) 17,806 76,566 Foxconn Technology Co., Ltd. 6,900 74,112 Nokia OYJ 1,282 27,982 QUALCOMM, Inc. 3,500 140,980 Siliconware Precision Industries Co. 23,000 40,426 Tellabs, Inc.(d) 2,300 24,104 ------------ 1,398,928 ELECTRONIC COMPONENTS & INSTRUMENTS-0.4% AU Optronics Corp. 50,470 71,019 Flextronics International Ltd.(d) 3,400 37,162 NVIDIA Corp.(d) 7,000 217,000 Samsung Electronics Co. Ltd. 130 78,517 Sharp Corp. 7,000 130,427 Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) 7,408 82,229 United Microelectronics Corp. 117,186 69,611 ------------ 685,965 ------------ 5,359,651 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 61 Company Shares U.S. $ Value ========================================================================= CONSUMER CYCLICAL-3.2% APPLIANCES & HOUSEHOLD DURABLES-0.1% Black & Decker Corp. 1,200 $ 101,124 Newell Rubbermaid, Inc. 600 18,372 ------------ 119,496 BROADCASTING & PUBLISHING-1.4% CBS Corp.-Class B 4,900 148,715 Comcast Corp.-Special-Class A(d) 23,200 590,440 Google, Inc.-Class A(d) 1,865 838,224 Grupo Televisa, SA (ADR) 2,400 65,496 Idearc, Inc. 490 16,660 Time Warner, Inc. 23,000 468,050 The Walt Disney Co. 1,600 54,816 ------------ 2,182,401 BUSINESS & PUBLIC SERVICES-0.1% Lamar Advertising Co.-Class A(d) 1,300 83,265 Monster Worldwide, Inc.(d) 1,600 79,776 ------------ 163,041 LEISURE & TOURISM-0.7% Accor, SA 381 33,588 Hilton Hotels Corp. 3,900 137,670 Las Vegas Sands Corp.(d) 800 69,024 McDonald's Corp. 12,400 542,128 Starwood Hotels & Resorts Worldwide, Inc. 3,700 243,460 Wynn Resorts Ltd. 300 29,406 ------------ 1,055,276 MERCHANDISING-0.8% eBay, Inc.(d) 2,400 76,944 Esprit Holdings Ltd. 8,000 83,366 The Gap, Inc. 1,300 24,947 Kohl's Corp.(d) 5,300 365,647 Limited Brands Inc. 1,400 38,752 Marks & Spencer Group PLC 10,404 137,560 Office Depot, Inc.(d) 2,900 96,744 Saks, Inc. 2,900 56,028 Target Corp. 5,950 366,104 ------------ 1,246,092 ------------ RECREATION & OTHER CONSUMER-0.0% Mattel, Inc. 2,200 57,222 TEXTILES & APPAREL-0.1% Inditex SA 507 29,464 Jones Apparel Group, Inc. 1,700 55,964 Nike, Inc.-Class B 800 83,576 ------------ 169,004 ------------ 4,992,532 62 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Company Shares U.S. $ Value ========================================================================= CAPITAL EQUIPMENT-2.7% AEROSPACE & DEFENSE-0.9% BAE Systems PLC 10,700 $ 91,131 Boeing Co. 8,550 746,158 European Aeronautic Defence & Space Co., NV 3,030 103,560 Lockheed Martin Corp. 1,200 116,736 Northrop Grumman Corp. 1,900 136,515 Rockwell Collins, Inc. 2,000 130,960 Spirit Aerosystems Holdings, Inc.-Class A(d) 4,200 123,942 ------------ 1,449,002 AUTOMOBILES-0.8% Autoliv, Inc. 1,900 108,395 BorgWarner, Inc. 1,500 110,460 Continental AG 300 37,416 Denso Corp. 1,900 74,023 Fiat SpA(d) 2,548 60,331 Honda Motor Co. Ltd. 1,800 66,897 Hyundai Mobis 710 59,232 Renault SA 1,900 225,598 Toyota Motor Corp. (ADR) 751 100,259 Toyota Motor Corp. 5,500 369,413 ------------ 1,212,024 INDUSTRIAL COMPONENTS-0.1% Eaton Corp. 1,500 121,515 NGK Insulators Ltd. 7,000 132,696 ------------ 254,211 MACHINERY & ENGINEERING-0.2% ABB Ltd. 8,660 144,418 Atlas Copco AB-Class A 2,063 64,651 Sumitomo Heavy Industries Ltd. 8,000 82,419 ------------ 291,488 MULTI-INDUSTRY-0.7% Crane Co. 600 22,854 Fluor Corp. 1,900 160,493 General Electric Co. 21,300 743,796 SPX Corp. 1,600 111,840 Textron, Inc. 350 32,302 ------------ 1,071,285 ------------ 4,278,010 ENERGY-2.2% ENERGY EQUIPMENT & SERVICES-0.5% ENSCO International, Inc. 400 20,044 GlobalSantaFe Corp. 1,450 83,564 Halliburton Co. 15,000 463,200 Schlumberger, Ltd. 3,100 194,680 ------------ 761,488 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 63 Company Shares U.S. $ Value ========================================================================= ENERGY SOURCES-1.7% BP PLC 6,100 $ 62,534 Chevron Corp. 5,300 363,633 China Petroleum & Chemical Corp.-Class H 108,000 86,128 China Shenhua Energy Co. Ltd.-Class H 27,500 69,546 ConocoPhillips 3,500 228,970 ENI SpA 7,209 220,793 Exxon Mobil Corp. 14,600 1,046,528 Marathon Oil Corp. 1,200 108,888 MOL Hungarian Oil and Gas Nyrt (ADR) 540 57,510 Occidental Petroleum Corp. 400 18,472 Petroleo Brasileiro SA (NY) (ADR) 1,950 159,081 Repsol YPF SA 2,100 66,467 Royal Dutch Shell PLC-a Shs(d) 1,839 59,502 Total SA 1,700 114,499 ------------ 2,662,551 ------------ 3,424,039 MEDICAL-2.0% HEALTH & PERSONAL CARE-2.0% Abbott Laboratories 3,000 163,860 Alcon, Inc. 4,100 510,942 AmerisourceBergen Corp.-Class A 1,500 79,005 AstraZeneca PLC 800 44,862 Daiichi Sankyo Co. Ltd. 1,200 38,739 Genentech, Inc.(d) 3,900 329,043 Gilead Sciences, Inc.(d) 7,250 518,810 GlaxoSmithKline PLC 2,100 58,922 Medtronic, Inc. 1,600 80,576 Merck & Co. Inc. 6,500 287,040 Merck KGaA 551 68,573 Nobel Biocare Holding AG 264 87,444 Novartis AG 1,215 67,434 Pfizer, Inc. 16,400 409,344 Roche Holding AG 1,570 279,380 Sanofi-Aventis 1,574 133,652 ------------ 3,157,626 CONSUMER STAPLES-1.9% Beverages & Tobacco-0.2% Altria Group, Inc. 4,200 353,976 Cia de Bebidas das Americas (ADR) 800 38,696 The Coca-Cola Co. 400 18,672 ------------ 411,344 FOOD & HOUSEHOLD PRODUCTS-1.7% Clorox Co. 1,700 107,712 Colgate-Palmolive Co. 1,800 121,248 Essilor International, SA 786 89,596 General Mills, Inc. 2,100 118,356 Groupe Danone 484 76,543 J Sainsbury PLC 12,800 128,117 Kellogg Co. 1,700 84,864 64 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Company Shares U.S. $ Value ========================================================================= Kimberly-Clark Corp. 600 $ 40,866 Kroger Co. 5,500 141,185 Nestle, SA 567 210,933 Procter & Gamble Co. 14,950 949,176 Reckitt Benckiser PLC 386 19,380 Safeway, Inc. 4,900 169,393 Sara Lee Corp. 6,800 111,928 Tesco PLC 7,267 61,519 WM Wrigley Jr Co. 3,800 189,240 ------------ 2,620,056 ------------ 3,031,400 INDUSTRIAL COMMODITIES-1.4% CHEMICALS-0.4% BASF AG 700 71,198 Bayer AG 2,246 129,298 Hercules, Inc.(d) 2,300 46,368 Lubrizol Corp. 1,400 72,800 Monsanto Co. 5,200 273,988 PPG Industries, Inc. 800 53,000 ------------ 646,652 FOREST & PAPER-0.1% Smurfit-Stone Container Corp.(d) 5,100 62,934 Svenska Cellulosa AB-Class B 1,900 98,237 ------------ 161,171 METAL - NONFERROUS-0.2% MMC Norilsk Nickel (ADR) 234 41,535 Xstrata PLC 6,040 282,760 ------------ 324,295 METAL - STEEL-0.4% JFE Holdings, Inc. 3,900 241,235 Mittal Steel Co. NV (Euronext Paris) 2,105 106,348 POSCO 300 112,596 United States Steel Corp. 1,800 159,516 ------------ 619,695 MISCELLANEOUS MATERIALS-0.3% Cia Vale do Rio Doce (ADR) 3,400 116,008 Crown Holdings, Inc.(d) 3,300 75,372 Nitto Denko Corp. 2,900 149,194 Owens-Illinois, Inc.(d) 3,100 73,656 Sonoco Products Co. 2,000 74,040 ------------ 488,270 ------------ 2,240,083 TELECOMMUNICATIONS-1.3% TELECOMMUNICATIONS-1.3% America Movil SAB de CV Series L (ADR) 7,500 328,500 American Tower Corp.-Class A(d) 1,100 42,614 AT&T, Inc. 17,500 644,000 ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 65 Company Shares U.S. $ Value ========================================================================= China Mobile Ltd. 2,500 $ 23,208 China Netcom Group Corp Ltd. 45,000 106,245 Crown Castle International Corp.(d) 1,300 42,588 Embarq Corp.-Class W 380 21,033 Nippon Telegraph & Telephone Corp. 11 58,271 Sprint Nextel Corp. 6,700 129,176 Telefonica SA 3,121 67,130 Verizon Communications, Inc. 9,800 366,814 Vodafone Group PLC 69,325 192,055 ------------ 2,021,634 UTILITIES-0.6% UTILITY (ELECTRIC & GAS)-0.6% Allegheny Energy, Inc.(d) 1,600 75,584 Dominion Resources, Inc./VA 2,075 177,475 E.ON AG 1,400 183,523 Entergy Corp. 1,800 177,660 International Power PLC 4,811 34,385 RWE AG 480 48,947 TXU Corp. 1,500 99,225 Wisconsin Energy Corp. 2,200 105,490 ------------ 902,289 CONSTRUCTION & HOUSING-0.5% BUILDING MATERIALS-0.1% Buzzi Unicem SpA 3,100 90,689 CRH PLC 2,468 102,688 ------------ 193,377 CONSTRUCTION & HOUSING-0.3% Daiwa House Industry Co. Ltd. 6,000 107,620 George Wimpey PLC 5,800 64,496 Persimmon PLC 2,400 65,599 Vinci, SA 1,502 207,602 ------------ 445,317 REAL ESTATE-0.1% Sino Land Co. 31,751 73,117 ------------ 711,811 TRANSPORTATION-0.3% TRANSPORTATION - AIRLINES-0.1% Deutsche Lufthansa AG 4,000 108,331 TRANSPORTATION - ROAD & RAIL-0.1% CSX Corp. 4,000 150,680 Norfolk Southern Corp. 400 18,960 ------------ 169,640 TRANSPORTATION - SHIPPING-0.1% Mitsui OSK Lines Ltd. 14,000 158,763 ------------ 436,734 Total Common Stocks (cost $34,190,262) 44,794,166 66 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Shares or Principal Amount Company (000) U.S. $ Value ========================================================================= SHORT-TERM INVESTMENTS-1.8% INVESTMENT COMPANIES-1.2% AllianceBernstein Fixed-Income Shares, Inc.- Government STIF Portfolio (e) (cost 1,812,967) 1,812,967 1,812,967 MUNICIPAL OBLIGATIONS-0.6% Hurley PCR (Kennecott Santa Fe) 3.63%, 12/01/15(f) $ 1,000 1,000,000 Total Short-Term Investments (cost $2,812,967) 2,812,967 TOTAL INVESTMENTS-98.2% (cost $143,377,455) 153,778,151 Other assets less liabilities-1.8% 2,762,724 NET ASSETS-100.0% $156,540,875 INTEREST RATE SWAP TRANSACTIONS (see Note D)
Rate Type ================================ Notional Payments Payments Unrealized Swap Amount Termination made by received by Appreciation/ Counterparty (000) Date the Portfolio the Portfolio (Depreciation) - ----------------------------------------------------------------------------------------------- Citigroup $ 1,000 6/22/07 BMA 2.962% $ (2,992) Citigroup 1,000 11/10/26 3.884% BMA (8,474) JP Morgan Chase 1,000 4/05/07 BMA 2.988% (1,254) JP Morgan Chase 600 10/01/07 BMA 3.635% 413 JP Morgan Chase 2,800 11/10/11 BMA 3.482% 8,737 Merrill Lynch 600 7/12/08 BMA 3.815% 3,058 Merrill Lynch 110 2/12/12 BMA 3.548% 795
(a) Position, or a portion thereof, has been segregated to collateralize interest rate swaps. (b) Variable rate coupon, rate shown as of February 28, 2007. (c) 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 February 28, 2007, the aggregate market value of these securities amounted to $298,113 or 0.2% of net assets. (d) Non-income producing security. (e) Investment in affiliated money market fund. (f) Variable Rate Demand Notes (VRDN) are instruments whose interest rates change on a specific date (such as coupon date or interest payment date) or whose interest rates vary with changes in a designated base rate (such as the prime interest rate). This instrument is payable on demand and is secured by letters of credit or other credit support agreements from major banks. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 67 Glossary: ACA - American Capital Access Financial Guaranty Corporation ADR - American Depositary Receipt AMBAC - American Bond Assurance Corporation AMT - Alternative Minimum Tax (subject to) BMA - Bond Market Association CBI - Certificate of Beneficiary Insurance CDA - Community Development Administration FGIC - Financial Guaranty Insurance Company FSA - Financial Security Assurance Inc. GDR - Global Depositary Receipt GO - General Obligation IDA - Industrial Development Authority/Agency MBIA - Municipal Bond Investors Assurance PCR - Pollution Control Revenue PSF-GTD - (Texas) Permanent Schools Fund Guaranteed SCSDE - South Carolina State Department of Education XLCA - XL Capital Assurance Inc. See notes to financial statements. 68 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES STATEMENT OF ASSETS & LIABILITIES February 28, 2007 (unaudited)
Wealth Balanced Wealth Appreciation Wealth Preservation Strategy Strategy Strategy ------------ ------------ ------------- Assets Investments in securities, at value Unaffiliated issuers (cost $339,312,544, $317,219,259 and $141,564,488, respectively) $390,768,146 $350,956,452 $151,965,184 Affiliated issuers (cost $15,603,387, $4,196,374, and $1,812,967, respectively) 15,603,387 4,196,374 1,812,967 Foreign cash, at value (cost $1,256,534, $179,481 and $38,392, respectively)(a) 1,262,417 179,507 38,367 Receivable for shares of beneficial interest sold 3,464,832 1,604,995 3,030,807 Receivable for investment securities sold and foreign currency transactions 936,234 99 92,540 Dividends and interest receivable 604,354 2,156,328 1,299,179 Unrealized appreciation of swap contracts -0- 26,803 13,003 Total assets 412,639,370 359,120,558 158,252,047 Liabilities Due to custodian -0- 3,041,197 -0- Payable for investment securities purchased and foreign currency transactions 7,334,791 1,085,747 131,275 Payable for shares of beneficial interest redeemed 1,377,811 956,750 1,303,874 Advisory fee payable 201,330 151,120 57,678 Distribution fee payable 100,667 152,368 70,754 Payable for variation margin on futures contracts 22,236 1,852 -0- Transfer Agent fee payable 11,785 16,141 7,513 Unrealized depreciation of swap contracts -0- 19,703 12,720 Accrued expenses and other liabilities 97,269 166,606 127,358 Total liabilities 9,145,889 5,591,484 1,711,172 Net Assets $403,493,481 $353,529,074 $156,540,875 Composition of Net Assets Shares of beneficial interest, at par $268 $280 $133 Additional paid-in capital 352,366,384 333,555,976 144,118,823 Undistributed/distributions in excess of) net investment income (302,203) 567,522 366,873 Accumulated net realized gain (loss) on investment and foreign currency transactions (36,447) (14,331,344) 1,657,451 Net unrealized appreciation of investments and foreign currency denominated assets and liabilities 51,465,479 33,736,640 10,397,595 ------------- ------------- ------------- $403,493,481 $353,529,074 $156,540,875
See notes to financial statements. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 69 Net Asset Value Per Share--unlimited shares authorized, $.00001 par value Shares Net Asset Wealth Appreciation Strategy Net Assets Outstanding Value - ------------------------------------------------------------------------------- Class A $124,127,212 8,223,801 $15.09* Class B $30,060,124 2,025,662 $14.84 Class C $60,915,706 4,102,796 $14.85 Advisor Class $188,390,439 12,413,064 $15.18 Balanced Wealth Strategy Class A $209,322,397 16,618,883 $12.60* Class B $60,618,895 4,810,461 $12.60 Class C $72,978,671 5,779,065 $12.63 Advisor Class $10,609,111 841,347 $12.61 Wealth Preservation Strategy Class A $83,461,613 7,161,021 $11.65* Class B $34,957,912 2,934,666 $11.91 Class C $31,165,583 2,613,518 $11.92 Advisor Class $6,955,767 595,626 $11.68 * The maximum offering price per share for Class A shares of Wealth Appreciation Strategy, Balanced Wealth Strategy and Wealth Preservation Strategy were $15.76, $13.16, and $12.17, respectively, which reflects a sales charge of 4.25%. (a) Amounts equivalent to U.S. $107,059, $8,337 and $0, respectively, have been segregated as collateral for the financial futures contracts outstanding at February 28, 2007. See notes to financial statements. 70 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES STATEMENT OF OPERATIONS Six Months Ended February 28, 2007 (unaudited)
Wealth Balanced Wealth Appreciation Wealth Preservation Strategy Strategy Strategy ------------ ------------ ------------- Investment Income Dividends (net of foreign taxes withheld of $34,880, $19,359 and $5,632, respectively) $2,344,980 $1,185,544 $338,090 Interest Unaffiliated issuers 243,794 3,326,566 2,071,991 Affiliated issuers 31,945 7,522 4,069 Total income 2,620,719 4,519,632 2,414,150 Expenses Advisory fee 1,101,954 943,255 440,647 Distribution fee--Class A 169,955 307,993 129,290 Distribution fee--Class B 145,001 303,358 183,209 Distribution fee--Class C 273,283 339,033 154,558 Transfer agency--Class A 26,070 99,191 40,992 Transfer agency--Class B 9,062 35,770 21,566 Transfer agency--Class C 13,705 34,407 15,566 Transfer agency--Advisor Class 32,483 4,448 3,088 Custodian 148,359 142,834 113,283 Registration 40,980 37,684 35,665 Legal 30,534 32,145 34,116 Audit 27,875 29,745 26,851 Trustees' fees 16,547 20,032 18,755 Printing 11,617 35,478 24,264 Miscellaneous 11,494 12,041 9,422 Total expenses 2,058,919 2,377,414 1,251,272 Less: expenses waived and reimbursed by the Adviser (see Note B) -0- -0- (53,925) Less: expense offset arrangement (see Note B) (2,141) (12,496) (6,003) Net expenses 2,056,778 2,364,918 1,191,344 Net investment income 563,941 2,154,714 1,222,806 Realized and Unrealized Gain (Loss) on Investment and Foreign Currency Transactions Net realized gain (loss) on: Investment transactions 898,123 5,063,208 2,477,013 Futures contracts 167,105 35,895 2,590 Swap contracts -0- (10,291) (8,135) Foreign currency transactions (3,721) 21,160 526 Net change in unrealized appreciation/depreciation of: Investments(a) 24,165,533 9,142,304 1,726,165 Futures contracts (92,365) (18,624) -0- Swap contracts -0- 16,233 8,925 Foreign currency denominated assets and liabilities 1,516 (227) 1,181 Net gain on investment and foreign currency transactions 25,136,191 14,249,658 4,208,265 Net Increase in Net Assets from Operations $25,700,132 $16,404,372 $5,431,071
(a) Net of change in accrued foreign capital gains taxes of $1,105, $399 and $118, respectively. See notes to financial statements. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 71 STATEMENT OF CHANGES IN NET ASSETS Wealth Appreciation Strategy --------------------------------- Six Months Ended Year Ended February 28, 2007 August 31, (unaudited) 2006 ----------------- ------------- Increase in Net Assets from Operations Net investment income $563,941 $931,490 Net realized gain on investment and foreign currency transactions 1,061,507 1,219,187 Net change in unrealized appreciation/depreciation of investments and foreign currency denominated assets and liabilities 24,074,684 13,626,395 Net increase in net assets from operations 25,700,132 15,777,072 Dividends and Distributions to Shareholders from Net investment income Class A (584,666) (68,449) Advisor Class (1,090,858) (12,852) Net realized gain on investment transactions Class A (346,184) (827,126) Class B (90,032) (259,937) Class C (174,184) (336,345) Advisor Class (434,413) (54,820) Transactions in Shares of Beneficial Interest Net increase 98,162,720 161,684,896 Total increase 121,142,515 175,902,439 Net Assets Beginning of period 282,350,966 106,448,527 End of period (including undistributed (distributions in excess of) net investment income of ($302,203) and $809,380, respectively) $403,493,481 $282,350,966 See notes to financial statements. 72 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Balanced Wealth Strategy --------------------------------- Six Months Ended Year Ended February 28, 2007 August 31, (unaudited) 2006 ----------------- ------------- Increase in Net Assets from Operations Net investment income $2,154,714 $3,936,621 Net realized gain on investment and foreign currency transactions 5,109,972 8,032,558 Net change in unrealized appreciation/depreciation of investments and foreign currency denominated assets and liabilities 9,139,686 5,995,146 Net increase in net assets from operations 16,404,372 17,964,325 Dividends to Shareholders from Net investment income Class A (1,795,058) (2,464,624) Class B (315,383) (422,952) Class C (343,632) (389,405) Advisor Class (92,607) (106,947) Transactions in Shares of Beneficial Interest Net increase 9,377,307 62,766,973 Total increase 23,234,999 77,347,370 Net Assets Beginning of period 330,294,075 252,946,705 End of period (including undistributed net investment income of $567,522 and $959,488 respectively) $353,529,074 $330,294,075 See notes to financial statements. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 73 Wealth Preservation Strategy --------------------------------- Six Months Ended Year Ended February 28, 2007 August 31, (unaudited) 2006 ----------------- ------------- Increase in Net Assets from Operations Net investment income $1,222,806 $2,207,002 Net realized gain on investment and foreign currency transactions 2,471,994 3,340,751 Net change in unrealized appreciation/depreciation of investments and foreign currency denominated assets and liabilities 1,736,271 1,172,821 Net increase in net assets from operations 5,431,071 6,720,574 Dividends and Distributions to Shareholders from Net investment income Class A (841,643) (1,302,786) Class B (217,611) (329,746) Class C (182,103) (228,422) Advisor Class (72,900) (94,449) Net realized gain on investment transactions Class A (1,109,477) -0- Class B (453,869) -0- Class C (392,078) -0- Advisor Class (92,409) -0- Transactions in Shares of Beneficial Interest Net increase (decrease) (6,802,212) 12,964,359 Total increase (decrease) (4,733,231) 17,729,530 Net Assets Beginning of period 161,274,106 143,544,576 End of period (including undistributed net investment income of $366,873 and $458,324, respectively) $156,540,875 $161,274,106 See notes to financial statements. 74 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES NOTES TO FINANCIAL STATEMENTS February 28, 2007 (unaudited) NOTE A Significant Accounting Policies The AllianceBernstein Portfolios (the "Trust") was organized as a Massachusetts Business Trust on March 26, 1987 and is registered under the Investment Company Act of 1940 as a diversified, open end management investment company. The Trust operates as a series company currently comprised of seven series: the AllianceBernstein Growth Fund, the Wealth Appreciation Strategy, the Balanced Wealth Strategy, the Wealth Preservation Strategy, the Tax-Managed Wealth Appreciation Strategy, the Tax-Managed Balanced Wealth Strategy and the Tax-Managed Wealth Preservation Strategy. Each series is considered to be a separate entity for financial reporting and tax purposes. This report relates only to the Tax-Managed Wealth Appreciation Strategy, the Tax-Managed Balanced Wealth Strategy and the Tax-Managed Wealth Preservation Strategy (the "Strategies"). The Strategies offer Class A, Class B, Class C and Advisor Class shares. Class A shares are sold with a front-end sales charge of up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A shares redeemed within one year of purchase may be subject to a contingent deferred sales charge of 1%. Class B shares are currently sold with a contingent deferred sales charge which declines from 4% to zero depending on the period of time the shares are held. Class B shares held for a period ending eight years after the end of the calendar month of purchase will convert to Class A shares. Class C shares are subject to a contingent deferred sales charge of 1% on redemptions made within the first year after purchase. Advisor Class shares are sold without any initial or contingent deferred sales charge and are not subject to ongoing distribution expenses. All four classes of shares have identical voting, dividend, liquidation and other rights, except that the classes bear different distribution and transfer agency expenses. Each class has exclusive voting rights with respect to its distribution plan. The 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. The following is a summary of significant accounting policies followed by the Strategies. 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 Strategies' Board of Trustees. 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. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 75 ("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 Strategies may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Strategies value their 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 Strategies may frequently value many of their 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. 76 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES 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 Strategies books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains and losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of net unrealized appreciation or depreciation of investments and foreign currency denominated assets and liabilities. 3. Taxes It is each Strategy's policy 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 Strategies 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 Strategy 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 Strategies amortize premiums and accrete discounts as adjustments to interest income. 5. Class Allocations All income earned and expenses incurred by the Strategies are borne on a pro-rata basis by each outstanding class of shares, based on the proportionate interest in each Strategy represented by the net assets of such class, except for class specific expenses which are allocated to the respective class. Expenses of the Trust are charged to each Strategy in proportion to net assets. Realized and unrealized gains and losses are allocated among the various share classes based on respective net assets. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 77 6. Dividends and Distributions Dividends and distributions to shareholders, if any, are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with U.S. generally accepted accounting principles. To the extent these differences are permanent, such amounts are reclassified within the capital accounts based on their federal tax basis treatment; temporary differences do not require such reclassification. NOTE B Advisory Fee and Other Transactions With Affiliates Under the terms of the investment advisory agreement, the Strategies pay the Adviser at the annual rates as follows: Average Daily Net Assets ------------------------------------------- First Next In Excess of Tax-Managed Strategy $2.5 Billion $2.5 Billion $5 Billion - ----------------------------------------------------------------------------- Wealth Appreciation .65% .55% .50% Balanced Wealth .55% .45% .40% Wealth Preservation .55% .45% .40% Prior to September 7, 2004, the Strategies paid the Adviser an advisory fee at the annual rates as follows: Average Daily Net Assets ------------------------------------------------------ First Next Next In Excess of Tax-Managed Strategy $5 Billion $2.5 Billion $2.5 Billion $10 Billion - ------------------------------------------------------------------------------ Wealth Appreciation .95% .90% .85% .80% Balanced Wealth .75% .70% .65% .60% Wealth Preservation .75% .70% .65% .60% Such fees are accrued daily and paid monthly. The Adviser has agreed to waive its fees and bear certain expenses to the extent necessary to limit the total operating expenses on an annual basis as follows: Tax-Managed Strategy Class A Class B Class C Advisor Class - ----------------------------------------------------------------------------- Wealth Appreciation 1.50% 2.20% 2.20% 1.20% Balanced Wealth 1.20% 1.90% 1.90% .90% Wealth Preservation 1.20% 1.90% 1.90% .90% For the six months ended February 28, 2007, such reimbursement amounted to $0, $0 and $53,925, for the Wealth Appreciation Strategy, Balanced Wealth Strategy and Wealth Preservation Strategy, respectively. The Strategies compensate AllianceBernstein Investor Services, Inc. ("ABIS"), a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for 78 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES providing personnel and facilities to perform transfer agency services for the Strategies. ABIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. Such compensation retained by ABIS amounted to $45,738, $91,459 and $39,313 for the Wealth Appreciation Strategy, Balanced Wealth Strategy and Wealth Preservation Strategy, respectively, for the six months ended February 28, 2007. For the the six months ended February 28, 2007, the Strategies' expenses were reduced by $2,141, $12,496 and $6,003 for the Wealth Appreciation Strategy, Balanced Wealth Strategy and Wealth Preservation Strategy, respectively, under an expense offset arrangement with ABIS. The Strategies may invest in the AllianceBernstein Fixed-Income Shares, Inc.--Prime STIF Portfolio and the AllianceBernstein Fixed-Income Shares, Inc.--Government STIF Portfolio (collectively, the "STIF Portfolios"), open-end management investment companies managed by the Adviser. The STIF Portfolios are offered as cash management options to mutual funds, trusts, and other accounts managed by the Adviser, and are not available for direct purchase by members of the public. The STIF Portfolios pay no investment management fees. AllianceBernstein Investments, Inc. (the "Distributor"), a wholly-owned subsidiary of the Adviser, serves as the distributor of the Strategies' shares. The Distributor has advised the Strategies that is has retained front-end sales charges from the sales of Class A shares and received contingent deferred sales charges imposed upon redemptions by shareholders of Class A, Class B and Class C shares for each Strategy for the six months ended February 28, 2007 as follows: Front End Sales Charges Contingent Deferred Sales Charges ------------------------------------------------------- Tax-Managed Strategy Class A Class A Class B Class C ------------------------------------------------------- Wealth Appreciation $29,190 $ -0- $16,472 $ 3,087 Balanced Wealth 43,514 1,752 41,520 10,921 Wealth Preservation 17,399 145 16,036 3,633 Brokerage commissions paid on investment transactions for the six months ended February 28, 2007 amounted to $201,902, $85,127 and $25,148 for the Wealth Appreciation Strategy, Balanced Wealth Strategy, and Wealth Preservation Strategy, respectively, of which $0 and $0; $0 and $314; and $0 and $60 were paid by the Wealth Appreciation Strategy, Balanced Wealth Strategy, and Wealth Preservation Strategy, respectively, to Sanford C. Bernstein & Co. LLC and Sanford C. Bernstein Limited, respectively, affiliates of the Adviser. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 79 Accrued expenses include amounts owed to one of the Trustees under a deferred compensation plan of $8,633 and $8,508 for the Balanced Wealth Strategy and Wealth Preservation Strategy, respectively, for the six months ended February 28, 2007. NOTE C Distribution Plans The Strategies have adopted a Plan for each class of shares of the Strategies pursuant to Rule 12b-1 under the Investment Company Act of 1940 (each a "Plan" and collectively the "Plans"). Under the Plans, the Strategies pay distribution and servicing fees to the Distributor at an annual rate of up to .50 of 1% of each Strategy's average daily net assets attributable to the Class A shares and 1% of the average daily net assets attributable to both Class B and Class C shares. There are no distribution and servicing fees on the Advisor Class shares. The fees are accrued daily and paid monthly. The Trustees currently limit payments under the Class A plan to .30 of 1% of each Strategy's average daily net assets attributable to Class A shares. The Plans provide that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Strategies are not obligated under the Plans to pay any distribution services fee in excess of the amounts set forth above. The purpose of the payments to the Distributor under the Plans is to compensate the Distributor for its distribution services with respect to the sale of each Strategy's shares. Since the Distributor's compensation is not directly tied to its expenses, the amount of compensation received by it under the Plan during any year may be more or less than its actual expenses. For this reason, the Plans are characterized by the staff of the Securities and Exchange Commission as being of the "compensation" variety. In the event that a Plan is terminated or not continued, no distribution service fees (other than current amounts accrued but not yet paid) would be owed by the Strategies to the Distributor with respect to the relevant class. The Plans also provide that the Adviser may use its own resources to finance the distribution of each Strategy's shares. NOTE D Investment Transactions Purchases and sales of investment securities (excluding short-term investments) for the the six months ended February 28, 2007, were as follows: Wealth Appreciation Purchases Sales - ------------------- --------------- -------------- Investment securities (excluding U.S. government securities) $ 173,664,502 $ 76,435,259 U.S. government securities -0- -0- 80 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Balanced Wealth Purchases Sales - --------------- --------------- -------------- Investment securities (excluding U.S. government securities) $ 90,738,320 $ 79,227,808 U.S. government securities -0- -0- Wealth Preservation Purchases Sales - ------------------- --------------- -------------- Investment securities (excluding U.S. government securities) $ 45,925,809 $ 55,060,071 U.S. government securities -0- -0- The cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes. Accordingly, gross unrealized appreciation and unrealized depreciation (excluding futures, swaps, accrued foreign capital gains taxes and foreign currency transactions) are as follows: Gross Gross Unrealized Unrealized Net Unrealized Tax-Managed Strategy Appreciation Depreciation Appreciation - -------------------------------------------------------------------- Wealth Appreciation $ 53,417,387 $ (1,961,785) $ 51,455,602 Balanced Wealth 35,466,780 (1,729,587) 33,737,193 Wealth Preservation 11,055,816 (655,120) 10,400,696 1. Forward Currency Exchange Contracts The Strategies may enter into forward currency exchange contracts in order to hedge exposure to changes in foreign currency exchange rates on foreign portfolio holdings. A forward currency exchange contract is a commitment to purchase or sell a foreign currency on a future date at a negotiated forward rate. The gain or loss arising from the difference between the original contract and the closing of such contract would be included in net realized gain or loss on foreign currency transactions. Fluctuations in the value of open forward currency exchange contracts are recorded for financial reporting purposes as unrealized appreciation and depreciation by the Strategies. The Strategies' custodian will place and maintain cash not available for investment or other liquid assets in a separate account of the Strategies having a value at least equal to the aggregate amount of the Strategies' commitments under forward currency exchange contracts entered into with respect to position hedges. Risks may arise from the potential inability of the counterparty to meet the terms of a contract and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. The face or contract amount, in U.S. dollars, reflects the total exposure the Strategies have in that particular currency contract. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 81 2. Financial Futures Contracts The Strategies may buy or sell financial futures contracts for the purpose of hedging their portfolios against adverse effects of anticipated movements in the market. The Strategies bear the market risk that arises from changes in the value of these financial instruments and the imperfect correlation between movements in the price of the futures contracts and movements in the price of the securities hedged or used for cover. At the time the Strategies enter into a futures contract, each Strategy deposits and maintains as collateral an initial margin with the broker, as required by the exchange on which the transaction is effected. Pursuant to the contract, the Strategies agree to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as variation margin and are recorded by the Strategies as unrealized gains or losses. Risks may arise from the potential inability of the counterparty to meet the terms of the contract. When the contract is closed, the Strategies record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the time it was closed. 3. Swap Agreements The Strategies may enter into swaps to hedge their exposure to interest rates and credit risk and for investment purposes. A swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified prices or rates for a specified amount of an underlying asset. The payment flows are usually netted against each other, with the difference being paid by one party to the other. Risks may arise as a result of the failure of the counterparty to the swap contract to comply with the terms of the swap contract. The loss incurred by the failure of a counterparty is generally limited to the net interim payment to be received by the Strategies, and/or the termination value at the end of the contract. Therefore, the Strategies consider the creditworthiness of each counterparty to a swap contract in evaluating potential credit risk. Additionally, risks may arise from unanticipated movements in interest rates or in the value of the underlying securities. The Strategies accrue for the interim payments on swap contracts on a daily basis, with the net amount recorded within unrealized appreciation/depreciation of swap contracts on the statement of assets and liabilities. Once the interim payments are settled in cash, the net amount is recorded as realized gain/loss on swaps, in addition to realized gain/loss recorded upon the termination of swap contracts on the statement of operations. Fluctuations in the value of swap contracts are recorded as a component of net change in unrealized appreciation/depreciation of investments. 82 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES NOTE E Shares of Beneficial Interest Transactions in shares of beneficial interest for each class were as follows:
Wealth Appreciation Strategy Shares Amount ----------------------------------- ------------------------------------ Six Months Ended Year Ended Six Months Ended Year Ended February 28, 2007 August 31, February 28, 2007 August 31, (unaudited) 2006 (unaudited) 2006 ----------------- ------------ ----------------- ------------- Class A Shares sold 1,337,332 4,898,208 $ 19,964,633 $ 66,729,377 Shares issued in reinvestment of dividends and distributions 54,854 61,635 833,239 834,532 Shares converted from Class B 27,098 20,844 406,312 282,384 Shares redeemed (526,234) (2,048,099) (7,809,576) (28,378,847) Net increase 893,050 2,932,588 $ 13,394,608 $ 39,467,446 Class B Shares sold 191,137 547,010 $ 2,792,108 $ 7,377,346 Shares issued in reinvestment of distributions 5,407 17,447 80,843 233,100 Shares converted to Class A (27,576) (21,175) (406,312) (282,384) Shares redeemed (129,847) (268,346) (1,890,954) (3,605,228) Net increase 39,121 274,936 $ 575,685 $ 3,722,834 Class C Shares sold 848,089 1,785,144 $ 12,450,327 $ 24,023,741 Shares issued in reinvestment of distributions 8,203 17,643 122,712 235,712 Shares redeemed (220,651) (393,216) (3,269,726) (5,284,851) Net increase 635,641 1,409,571 $ 9,303,313 $ 18,974,602 Advisor Class Shares sold 5,649,990 7,608,606 $ 84,901,103 $105,921,806 Shares issued in reinvestment of dividends and distributions 97,175 3,303 1,482,885 44,912 Shares redeemed (763,613) (464,888) (11,494,874) (6,446,704) Net increase 4,983,552 7,147,021 $ 74,889,114 $ 99,520,014
ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 83
Balanced Wealth Strategy Shares Amount ----------------------------------- ------------------------------------ Six Months Ended Year Ended Six Months Ended Year Ended February 28, 2007 August 31, February 28, 2007 August 31, (unaudited) 2006 (unaudited) 2006 ----------------- ------------ ----------------- ------------- Class A Shares sold 2,190,037 6,610,145 $ 27,235,121 $ 78,389,174 Shares issued in reinvestment of dividends 132,646 195,756 1,640,339 2,301,152 Shares converted from Class B 108,349 198,998 1,361,017 2,359,347 Shares redeemed (2,216,754) (3,220,987) (27,671,817) (38,244,733) Net increase 214,278 3,783,912 $ 2,564,660 $ 44,804,940 Class B Shares sold 346,670 1,063,614 $ 4,318,826 $ 12,642,353 Shares issued in reinvestment of dividends 22,966 32,401 284,638 381,374 Shares converted to Class A (108,467) (199,279) (1,361,017) (2,359,347) Shares redeemed (436,296) (941,601) (5,421,635) (11,181,285) Net decrease (175,127) (44,865) $ (2,179,188) $ (516,905) Class C Shares sold 1,035,333 2,218,453 $ 12,942,224 $ 26,450,391 Shares issued in reinvestment of dividends 20,756 24,442 257,945 288,375 Shares redeemed (546,122) (912,637) (6,812,815) (10,854,129) Net increase 509,967 1,330,258 $ 6,387,354 $ 15,884,637 Advisor Class Shares sold 307,671 282,241 $ 3,858,613 $ 3,359,217 Shares issued in reinvestment of dividends 6,467 8,516 80,133 100,143 Shares redeemed (106,391) (72,323) (1,334,265) (865,059) Net increase 207,747 218,434 $ 2,604,481 $ 2,594,301
84 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES
Wealth Preservation Strategy Shares Amount ----------------------------------- ------------------------------------ Six Months Ended Year Ended Six Months Ended Year Ended February 28, 2007 August 31, February 28, 2007 August 31, (unaudited) 2006 (unaudited) 2006 ----------------- ------------ ----------------- ------------- Class A Shares sold 1,029,270 3,409,909 $ 11,966,526 $ 38,723,456 Shares issued in reinvestment of dividends and distributions 142,825 103,340 1,681,383 1,168,207 Shares converted from Class B 90,871 94,196 1,059,363 1,073,910 Shares redeemed (1,721,483) (2,270,441) (20,063,529) (25,863,311) Net increase (decrease) (458,517) 1,337,004 $ (5,356,257) $ 15,102,262 Class B Shares sold 109,623 395,053 $ 1,306,536 $ 4,594,430 Shares issued in reinvestment of dividends and distributions 46,830 23,488 557,106 271,189 Shares converted to Class A (88,892) (91,996) (1,059,363) (1,073,910) Shares redeemed (356,739) (861,005) (4,248,883) (9,989,678) Net decrease (289,178) (534,460) $ (3,444,604) $ (6,197,969) Class C Shares sold 392,147 926,841 $ 4,671,343 $ 10,776,195 Shares issued in reinvestment of dividends and distributions 34,684 13,997 413,059 161,861 Shares redeemed (357,966) (681,523) (4,267,063) (7,925,916) Net increase 68,865 259,315 $ 817,339 $ 3,012,140 Advisor Class Shares sold 222,931 168,799 $ 2,593,532 $ 1,926,985 Shares issued in reinvestment of dividends and distributions 13,540 8,167 157,501 92,337 Shares redeemed (134,393) (85,162) (1,569,723) (971,396) Net increase 102,078 91,804 $ 1,181,310 $ 1,047,926
ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 85 NOTE F Risks Involved in Investing in the Strategies Interest Rate Risk and Credit Risk--Interest rate risk is the risk that changes in interest rates will affect the value of the Strategies' investments in fixed-income debt securities such as bonds or notes. Increases in interest rates may cause the value of the Strategies' investments to decline. Credit risk is the risk that the issuer or guarantor of a debt security, or the counterparty to a derivative contract, will be unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The degree of risk for a particular security may be reflected in its credit risk rating. Credit risk is greater for medium quality and lower-rated securities. Lower-rated debt securities and similar unrated securities (commonly known as "junk bonds") have speculative elements or are predominantly speculative risks. Foreign Securities Risk--Investing in securities of foreign companies or foreign governments involves special risks which include changes in foreign currency exchange rates and the possibility of future political and economic developments which could adversely affect the value of such securities. Moreover, securities of many foreign companies or foreign governments and their markets may be less liquid and their prices more volatile than those of comparable United States companies or of the United States government. Indemnification Risk--In the ordinary course of business, the Strategies enter into contracts that contain a variety of indemnifications. The Strategies' maximum exposure under these arrangements is unknown. However, the Strategies have not had prior claims or losses pursuant to these indemnification provisions and expect the risk of loss thereunder to be remote. NOTE G Joint Credit Facility A number of open-end mutual funds managed by the Adviser, including the Strategies, participate in a $250 million revolving credit facility (the "Facility") intended to provide for short-term financing, if necessary, subject to certain restrictions in connection with abnormal redemption activity. Commitment fees related to the Facility are paid by the participating funds and are included in miscellaneous expenses in the statement of operations. The Strategies did not utilize the Facility during the the six months ended February 28, 2007. 86 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES NOTE H Distributions to Shareholders The tax character of distributions to be paid for the year ending August 31, 2007 will be determined at the end of the current fiscal year. The tax character of distributions paid during the fiscal periods ended August 31, 2006 and August 31, 2005 were as follows: August 31, August 31, 2006 2005 ============== ============== Wealth Appreciation Strategy Distributions paid from: Ordinary income 81,301 $ 36,389 Long-term capital gains 1,478,228 -0- ---------- ---------- Total taxable distributions 1,559,529 36,389 ---------- ---------- Total distributions paid 1,559,529 $ 36,389 ---------- ---------- Balanced Wealth Strategy Distributions paid from: Ordinary income $1,111,732 $ 696,030 ---------- ---------- Total taxable distributions paid 1,111,732 696,030 Tax exempt distributions 2,272,196 1,308,732 ---------- ---------- Total distributions paid $3,383,928 $2,004,762 ---------- ---------- Wealth Preservation Strategy Distributions paid from: Ordinary income $ 359,136 $ 224,474 ---------- ---------- Total taxable distributions paid 359,136 224,474 Tax exempt distributions 1,596,267 756,156 ---------- ---------- Total distributions paid $1,955,403 $ 980,630 ---------- ---------- ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 87 As of August 31, 2006, the components of accumulated earnings/(deficit) on a tax basis were as follows:
Wealth Balanced Wealth Appreciation Wealth Preservation Strategy Strategy Strategy ============ ============ ============ Undistributed ordinary income(a) $ 1,109,511 $ 1,184,006 $ 539,529 Undistributed long-term capital gains 977,744 -0- 1,355,569 Accumulated capital and other gains/(losses)(b) -0- (19,180,833) -0- Unrealized appreciation(c) 26,059,779 24,125,279 8,471,541 ------------ ------------ ------------ Total accumulated earnings/(deficit)(d) $ 28,147,034 $ 6,128,452 $ 10,366,639 ------------ ------------ ------------
(a) Includes tax exempt income of $0, $438,953 and $248,062, respectively. (b) During the fiscal year ended August 31, 2006, the Balanced Wealth Strategy had a net capital loss carryforward of $19,180,833, of which $17,737,620 expires in the year 2010 and $1,443,213 expires in the year 2011. The Balanced Wealth Strategy utilized $8,091,457 of prior year capital loss carryforwards. The Wealth Preservation Strategy had a net capital loss carryforward of $1,980,662, all of which expires in the year 2010. The Wealth Preservation Strategy utilized $1,980,662 of prior capital loss carryforwards. To the extent future capital gains are offset by capital loss carryforwards, such gains will not be distributed. Net capital and currency losses incurred after October 31, and within the taxable year are deemed to arise on the first business day of the Strategy's next taxable year. (c) The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is attributable primarily to the tax deferral of losses on wash sales, swap income(loss) accrual and mark-to-market on passive foreign investment companies and futures contracts. (d) The difference between book-basis and tax-basis components of accumulated earnings/(deficit) is attributable primarily to deferred compensation and accrual of swap income. NOTE I Legal Proceedings As has been previously reported, the staff of the U.S. Securities and Exchange Commission ("SEC") and the Office of New York Attorney General ("NYAG") have been investigating practices in the mutual fund industry identified as "market timing" and "late trading" of mutual fund shares. Certain other regulatory authorities have also been conducting investigations into these practices within the industry and have requested that the Adviser provide information to them. The Adviser has been cooperating and will continue to cooperate with all of these authorities. On December 18, 2003, the Adviser confirmed that it had reached terms with the SEC and the NYAG for the resolution of regulatory claims relating to the practice of "market timing" mutual fund shares in some of the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in an Order of the Commission ("SEC Order"). The agreement with the NYAG is memorialized 88 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES in an Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the key provisions of these agreements are the following: (i) The Adviser agreed to establish a $250 million fund (the "Reimbursement Fund") to compensate mutual fund shareholders for the adverse effects of market timing attributable to market timing relationships described in the SEC Order. According to the SEC Order, the Reimbursement Fund is to be paid, in order of priority, to fund investors based on (i) their aliquot share of losses suffered by the fund due to market timing, and (ii) a proportionate share of advisory fees paid by such fund during the period of such market timing; (ii) The Adviser agreed to reduce the advisory fees it receives from some of the AllianceBernstein long-term, open-end retail funds until December 31, 2008; and (iii) The Adviser agreed to implement changes to its governance and compliance procedures. Additionally, the SEC Order and the NYAG Order contemplate that the Adviser's registered investment company clients, including the Fund, will introduce governance and compliance changes. In anticipation of final, definitive documentation of the NYAG Order and effective January 1, 2004, the Adviser began waiving a portion of its advisory fee. On September 7, 2004, the Fund's investment advisory agreement was amended to reflect the reduced advisory fee. For more information on this waiver and amendment to the Fund's investment advisory agreement, please see "Advisory Fee and Other Transactions with Affiliates" above. A special committee of the Adviser's Board of Directors, comprised of the members of the Adviser's Audit Committee and the other independent member of the Adviser's Board, directed and oversaw an internal investigation and a comprehensive review of the facts and circumstances relevant to the SEC's and the NYAG's investigations. In addition, the Independent Trustees of the Trust ("the Independent Trustees") have conducted an investigation of the above-mentioned matters with the advice of an independent economic consultant and independent counsel. 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, Alliance Capital Management Holding L.P. ("Alliance Holding"), Alliance Capital Management Corporation, AXA Financial, Inc., the AllianceBernstein Funds, certain officers of the Adviser ("Alliance defendants"), and certain other defendants not affiliated with the Adviser, as well as unnamed ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 89 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 Funds. The Hindo Complaint alleges that certain of the Alliance 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 Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act and Sections 206 and 215 of the Advisers Act. 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. Since October 2, 2003, 43 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. The plaintiffs in such lawsuits have asserted a variety of theories for recovery including, but not limited to, violations of the Securities Act, the Exchange Act, the Advisers Act, the Investment Company Act, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), certain state securities laws and common law. 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 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 Alliance 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 SEC Order and 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 derivative claims brought on behalf of Alliance Holding remain pending. On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the Office of the Attorney General of the State of West Virginia and (ii) a request for information from West Virginia's Office of the State Auditor, Securities Commission (the "West Virginia Securities Commissioner") (together, the "Information Requests"). Both Information Requests require the Adviser to produce documents concerning, among other things, any market timing or late 90 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES trading in the Adviser's sponsored mutual funds. The Adviser responded to the Information Requests and has been cooperating fully with the investigation. On April 11, 2005, a complaint entitled The Attorney General of the State of West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed against the Adviser, Alliance Holding, and various other defendants not affiliated with the Adviser. The WVAG Complaint was filed in the Circuit Court of Marshall County, West Virginia by the Attorney General of the State of West Virginia. The WVAG Complaint makes factual allegations generally similar to those in the Hindo Complaint. On October 19, 2005, the WVAG Complaint was transferred to the Mutual Fund MDL. On August 30, 2005, the West Virginia Securities Commissioner signed a Summary Order to Cease and Desist, and Notice of Right to Hearing addressed to the Adviser and Alliance Holding. The Summary Order claims that the Adviser and Alliance Holding violated the West Virginia Uniform Securities Act, and makes factual allegations generally similar to those in the Commission Order and the NYAG Order. On January 26, 2006, the Adviser, Alliance Holding, and various unaffiliated defendants filed a Petition for Writ of Prohibition and Order Suspending Proceedings in West Virginia state court seeking to vacate the Summary Order and for other relief. The court denied the writ and in September 2006 the Supreme Court of Appeals declined the defendants' petition for appeal. On September 22, 2006, Alliance and Alliance Holding filed an answer and motion to dismiss the Summary Order with the Securities Commissioner. On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v. Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against the Adviser, Alliance Holding, Alliance Capital Management Corporation, AXA Financial, Inc., AllianceBernstein Investment Research & Management, Inc., certain current and former directors of the AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin Complaint names certain of the AllianceBernstein mutual funds as nominal defendants. The Aucoin Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of an AllianceBernstein mutual fund. The Aucoin Complaint alleges, among other things, (i) that certain of the defendants improperly authorized the payment of excessive commissions and other fees from fund assets to broker-dealers in exchange for preferential marketing services, (ii) that certain of the defendants misrepresented and omitted from registration statements and other reports material facts concerning such payments, and (iii) that certain defendants caused such conduct as control persons of other defendants. The Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and 48(a) of the Investment Company Act, Sections 206 and 215 of the Advisers Act, breach of common law fiduciary duties, and aiding and abetting breaches of common law fiduciary duties. Plaintiffs seek an unspecified amount ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 91 of compensatory damages and punitive damages, rescission of their contracts with the Adviser, including recovery of all fees paid to the Adviser pursuant to such contracts, an accounting of all fund-related fees, commissions and soft dollar payments, and restitution of all unlawfully or discriminatorily obtained fees and expenses. Since June 22, 2004, nine additional lawsuits making factual allegations substantially similar to those in the Aucoin Complaint were filed against the Adviser and certain other defendants. All nine of the lawsuits (i) were brought as class actions filed in the United States District Court for the Southern District of New York, (ii) assert claims substantially identical to the Aucoin Complaint, and (iii) are brought on behalf of shareholders of the Funds. On February 2, 2005, plaintiffs filed a consolidated amended class action complaint ("Aucoin Consolidated Amended Complaint") that asserts claims substantially similar to the Aucoin Complaint and the nine additional lawsuits referenced above. On October 19, 2005, the District Court dismissed each of the claims set forth in the Aucoin Consolidated Amended Complaint, except for plaintiffs' claim under Section 36(b) of the Investment Company Act. On January 11, 2006, the District Court granted defendants' motion for reconsideration and dismissed the remaining Section 36(b) claim. On May 31, 2006 the District Court denied plaintiffs' motion for leave to file an amended complaint. On July 5, 2006, plaintiffs filed a notice of appeal. On October 4, 2006 the appeal was withdrawn by stipulation, with plaintiffs reserving the right to reinstate it at a later date. It is possible that these matters and/or other developments resulting from these matters could result in increased redemptions of the AllianceBernstein Mutual Funds' shares or other adverse consequences to the AllianceBernstein Mutual Funds. This may require the AllianceBernstein Mutual Funds to sell investments held by those funds to provide for sufficient liquidity and could also have an adverse effect on the investment performance of the AllianceBernstein Mutual Funds. However, the Adviser believes that these matters are not likely to have a material adverse effect on its ability to perform advisory services relating to the AllianceBernstein Mutual Funds. NOTE J Recent Accounting Pronouncements On July 13, 2006, the Financial Accounting Standards Board ("FASB") released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing a fund's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. 92 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Tax positions not deemed to meet the more-likely-than-not threshold would be recorded in the current period. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. On December 22, 2006, the Securities and Exchange Commission notified the industry that the implementation of FIN 48 by registered investment companies could be delayed until the last business day of the first required financial statement reporting period for fiscal years beginning after December 15, 2006. At this time, management is evaluating the implications of FIN 48 and its impact on the financial statements has not yet been determined. On September 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" ("FAS 157"). FAS 157 establishes an authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair-value measurements. The application of FAS 157 is required for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 157 and its impact on the financial statements has not yet been determined. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 93 FINANCIAL HIGHLIGHTS Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Appreciation Strategy Class A Six Months Ended Year Ended September 2, February 28, August 31, 2003(a) to 2007 ------------------------ August 31, (unaudited) 2006 2005 2004 --------------------------------------------------- Net asset value, beginning of period $ 14.00 $ 12.66 $ 10.77 $ 10.00 Income From Investment Operations Net investment income(b) $ .03 .08 .04(c) .01(c)(d) Net realized and unrealized gain on investment and foreign currency transactions 1.19 1.42 1.86 .77 Net increase in net asset value from operations 1.22 1.50 1.90 .78 Less: Dividends and Distributions Dividends from net investment income (.08) (.01) (.01) (.01) Distributions from net realized gain on investment transactions (.05) (.15) -0- -0- Total dividends and distributions (.13) (.16) (.01) (.01) Net asset value, end of period $ 15.09 $ 14.00 $ 12.66 $ 10.77 Total Return Total investment return based on net asset value(e) 8.64% 11.87% 17.65% 7.75% Ratios/Supplemental Data Net assets, end of period (000's omitted) $124,127 $102,651 $55,691 $29,431 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.16%(f) 1.36%(g) 1.50% 1.55%(f) Expenses, before waivers/reimbursements 1.16%(f) 1.36%(g) 1.63% 2.28%(f) Net investment income .38%(f) .59%(g) .34%(c) .10%(c)(d)(f) Portfolio turnover rate 23% 40% 51% 21%
See footnote summary on page 106. 94 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Appreciation Strategy Class B Six Months Ended Year Ended September 2, February 28, August 31, 2003(a) to 2007 ------------------------ August 31, (unaudited) 2006 2005 2004 --------------------------------------------------- Net asset value, beginning of period $ 13.75 $ 12.51 $ 10.71 $ 10.00 Income From Investment Operations Net investment loss(b) (.02) (.02) (.04)(c) (.06)(c)(d) Net realized and unrealized gain on investment and foreign currency transactions 1.16 1.41 1.84 .77 Net increase in net asset value from operations 1.14 1.39 1.80 .71 Less: Distributions Distributions from net realized gain on investment transactions (.05) (.15) -0- -0- Net asset value, end of period $ 14.84 $ 13.75 $ 12.51 $ 10.71 Total Return Total investment return based on net asset value(e) 8.25% 11.11% 16.81% 7.10% Ratios/Supplemental Data Net assets, end of period (000's omitted) $30,060 $27,310 $21,413 $14,481 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.88%(f) 2.09%(g) 2.20% 2.25%(f) Expenses, before waivers/reimbursements 1.88%(f) 2.09%(g) 2.33% 2.95%(f) Net investment loss (.35)%(f) (.16)%(g) (.37)%(c) (.57)%(c)(d)(f) Portfolio turnover rate 23% 40% 51% 21%
See footnote summary on page 106. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 95 Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Appreciation Strategy Class C Six Months Ended Year Ended September 2, February 28, August 31, 2003(a) to 2007 ------------------------ August 31, (unaudited) 2006 2005 2004 --------------------------------------------------- Net asset value, beginning of period $ 13.75 $ 12.52 $ 10.71 $ 10.00 Income From Investment Operations Net investment loss(b) (.02) (.01) (.04)(c) (.06)(c)(d) Net realized and unrealized gain on investment and foreign currency transactions 1.17 1.39 1.85 .77 Net increase in net asset value from operations 1.15 1.38 1.81 .71 Less: Distributions Distributions from net realized gain on investment transactions (.05) (.15) -0- -0- Net asset value, end of period $ 14.85 $ 13.75 $ 12.52 $ 10.71 Total Return Total investment return based on net asset value(e) 8.33% 11.02% 16.90% 7.10% Ratios/Supplemental Data Net assets, end of period (000's omitted) $60,916 $47,689 $25,751 $14,558 Ratio to average net assets of: Expenses, net of waivers/reimbursements 1.87%(f) 2.06%(g) 2.20% 2.25%(f) Expenses, before waivers/reimbursements 1.87%(f) 2.06%(g) 2.33% 2.98%(f) Net investment loss (.33)%(f) (.09)%(g) (.36)%(c) (.59)%(c)(d)(f) Portfolio turnover rate 23% 40% 51% 21%
See footnote summary on page 106. 96 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Appreciation Strategy Advisor Class Six Months Ended Year Ended September 2, February 28, August 31, 2003(a) to 2007 ------------------------ August 31, (unaudited) 2006 2005 2004 --------------------------------------------------- Net asset value, beginning of period $ 14.09 $ 12.72 $ 10.80 $ 10.00 Income From Investment Operations Net investment income(b) .05 .17 .08(c) .01(c)(d) Net realized and unrealized gain on investment and foreign currency transactions 1.20 1.38 1.87 .80 Net increase in net asset value from operations 1.25 1.55 1.95 .81 Less: Dividends and Distributions Dividends from net investment income (.11) (.03) (.03) (.01) Distributions from net realized gain on investment transactions (.05) (.15) -0- -0- Total dividends and distributions (.16) (.18) -0- -0- Net asset value, end of period $ 15.18 $ 14.09 $ 12.72 $ 10.80 Total Return Total investment return based on net asset value(e) 8.85% 12.23% 18.02% 8.10% Ratios/Supplemental Data Net assets, end of period (000's omitted) $188,390 $104,701 $3,594 $1,771 Ratio to average net assets of: Expenses, net of waivers/reimbursements .86%(f) 1.01%(g) 1.20% 1.36%(f) Expenses, before waivers/reimbursements .86%(f) 1.01%(g) 1.34% 2.65%(f) Net investment income .69%(f) 1.26%(g) .64%(c) .13%(c)(d)(f) Portfolio turnover rate 23% 40% 51% 21%
See footnote summary on page 106. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 97 Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Balanced Wealth Strategy Class A Six Months Ended May 1, February 28, Year Ended August 31, 2003 to Year Ended April 30, 2007 ---------------------------------- August 31, ----------------------- (unaudited) 2006 2005 2004 2003(h) 2003 2002(i) ---------------------------------------------------------------------------------------- Net asset value, beginning of period $ 12.09 $ 11.49 $ 10.61 $ 10.04 $ 9.41 $ 10.30 $ 11.70 Income From Investment Operations Net investment income(b) .09 .19 .15(c) .10(c)(d) .00(j) .05 .06 Net realized and unrealized gain (loss) on investment and foreign currency transactions .53 .58 .87 .54 .63 (.82) (1.46) Net increase (decrease) in net asset value from operations .62 .77 1.02 .64 .63 (.77) (1.40) Less: Dividends Dividends from net investment income (.11) (.17) (.14) (.07) -0- (.12) -0- Net asset value, end of period $ 12.60 $ 12.09 $ 11.49 $ 10.61 $ 10.04 $ 9.41 $ 10.30 Total Return Total investment return based on net asset value(e) 5.13% 6.72% 9.65% 6.36% 6.70% (7.45)% (11.97)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $209,322 $198,406 $144,983 $97,552 $46,013 $43,743 $52,602 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.12%(f) 1.18%(g) 1.20% 1.31% 1.97%(f) 1.82% 1.58% Expenses, before waivers/ reimbursements 1.12%(f) 1.18%(g) 1.29% 1.80% 1.97%(f) 1.82% 1.58% Net investment Income 1.51%(f) 1.60%(g) 1.35%(c) .91%(c)(d) .10%(f) .57% .59% Portfolio turnover rat 23% 57% 51% 129% 20% 78% 116%
See footnote summary on page 106. 98 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period Financial Highlights
Balanced Wealth Strategy Class B Six Months Ended May 1, February 28, Year Ended August 31, 2003 to Year Ended April 30, 2007 ---------------------------------- August 31, ----------------------- (unaudited) 2006 2005 2004 2003(h) 2003 2002(i) ---------------------------------------------------------------------------------------- Net asset value, beginning of period $ 12.10 $ 11.50 $ 10.62 $ 10.08 $ 9.47 $ 10.34 $ 11.83 Income From Investment Operations Net investment income (loss)(b) .05 .10(c) .07(c) .02(c)(d) (.02) (.01) (.02) Net realized and unrealized gain (loss) on investment and foreign currency transactions .51 .58 .87 .53 .63 (.83) (1.47) Net increase (decrease) in net asset value from operations .56 .68 .94 .55 .61 (.84) (1.49) Less: Dividends Dividends from net investment income (.06) (.08) (.06) (.01) -0- (.03) -0- Net asset value, end of period $ 12.60 $ 12.10 $ 11.50 $ 10.62 $ 10.08 $ 9.47 $ 10.34 Total Return Total investment return based on net asset value(e) 4.67% 5.97% 8.89% 5.50% 6.44% (8.12)% (12.60)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $60,619 $60,329 $57,826 $50,135 $32,081 $31,781 $49,484 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.84%(f) 1.90%(g) 1.90% 2.03% 2.72%(f) 2.57% 2.32% Expenses, before waivers/ reimbursements 1.84%(f) 1.91%(g) 2.02% 2.53% 2.72%(f) 2.57% 2.32% Net investment income (loss) .79%(f) .86%(c)(g) .64%(c) .18%(c)(d) (.66)%(f) (.13)% (.18)% Portfolio turnover rate 23% 57% 51% 129% 20% 78% 116%
See footnote summary on page 106. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 99 Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Balanced Wealth Strategy Class C Six Months Ended May 1, February 28, Year Ended August 31, 2003 to Year Ended April 30, 2007 ---------------------------------- August 31, ----------------------- (unaudited) 2006 2005 2004 2003(h) 2003 2002(i) ---------------------------------------------------------------------------------------- Net asset value, beginning of period $ 12.13 $ 11.52 $ 10.64 $ 10.09 $ 9.48 $ 10.35 $ 11.85 Income From Investment Operations Net investment income (loss)(b) .05 .11 .07(c) .03(c)(d) (.02) (.01) (.02) Net realized and unrealized gain (loss) on investment and foreign currency transactions .51 .58 .87 .53 .63 (.83) (1.48) Net increase (decrease) in net asset value from operations .56 .69 .94 .56 .61 (.84) (1.50) Less: Dividends Dividends from net investment income (.06) (.08) (.06) (.01) -0- (.03) -0- Net asset value, end of period $ 12.63 $ 12.13 $ 11.52 $ 10.64 $ 10.09 $ 9.48 $ 10.35 Total Return Total investment return based on net asset value(e) 4.66% 6.05% 8.87% 5.59% 6.43% (8.11)% (12.66)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $72,979 $63,889 $45,364 $26,766 $5,920 $6,011 $9,134 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.83%(f) 1.89%(g) 1.90% 1.99% 2.69%(f) 2.54% 2.30% Expenses, before waivers/ reimbursements 1.83%(f) 1.89%(g) 2.00% 2.52% 2.69%(f) 2.54% 2.30% Net investment income (loss) .81%(f) .89%(g) .65%(c) .26%(c)(d) (.63)%(f) (.09)% (.15)% Portfolio turnover rate 23% 57% 51% 129% 20% 78% 116%
See footnote summary on page 106. 100 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Balanced Wealth Strategy Advisor Class Six Months Ended Year Ended September 2, February 28, August 31, 2003(k) to 2007 ------------------------- August 31, (unaudited) 2006 2005 2004 --------------------------------------------------------- Net asset value, beginning of period $ 12.11 $ 11.50 $ 10.62 $ 10.13 Income From Investment Operations Net investment income(b) .11 .23 .18(c) .12(c)(d) Net realized and unrealized gain on investment and foreign currency transactions .52 .58 .87 .46 Net increase in net asset value from operations .63 .81 1.05 .58 Less: Dividends Dividends from net investment income (.13) (.20) (.17) (.09) Net asset value, end of period $ 12.61 $ 12.11 $ 11.50 $ 10.62 Total Return Total investment return based on net asset value(e) 5.18% 7.11% 9.95% 5.73% Ratios/Supplemental Data Net assets, end of period (000's omitted) $10,609 $7,670 $4,774 $1,988 Ratio to average net assets of: Expenses, net of waivers/reimbursements .82%(f) .88%(g) .90% 1.00%(f) Expenses, before waivers/reimbursements .82%(f) .88%(g) 1.00% 1.48%(f) Net investment income 1.82%(f) 1.91%(g) 1.66%(c) 1.24%(c)(d)(f) Portfolio turnover rate 23% 57% 51% 129%
See footnote summary on page 106. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 101 Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Preservation Strategy Class A Six Months Ended May 1, February 28, Year Ended August 31, 2003 to Year Ended April 30, 2007 ---------------------------------- August 31, ----------------------- (unaudited) 2006 2005 2004 2003(h) 2003 2002(i) ---------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.51 $ 11.16 $ 10.65 $ 10.28 $ 10.11 $ 10.07 $ 10.65 Income From Investment Operations Net investment income(b)(c) .10 .20 .13 .07(d) .05 .23 .25 Net realized and unrealized gain (loss) on investment and foreign currency transactions .30 .33 .50 .34 .19 .10 (.55) Net increase (decrease) in net asset value from operations .40 .53 .63 .41 .24 .33 (.30) Less: Dividends and Distributions Dividends from net investment income (.11) (.18) (.12) (.04) (.07) (.29) (.28) Distributions from net realized gain on investment transactions (.15) -0- -0- -0- -0- -0- -0- Total dividends and Distributions (.26) (.18) (.12) (.04) (.07) (.29) (.28) Net asset value, end of period $ 11.65 $ 11.51 $ 11.16 $ 10.65 $ 10.28 $ 10.11 $ 10.07 Total Return Total investment return based on net asset value(e) 3.50% 4.79% 5.95% 3.94% 2.36% 3.37% (2.80)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $83,462 $87,717 $70,145 $55,937 $36,857 $36,133 $31,857 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.20%(f) 1.20%(g) 1.20% 1.33% 1.55%(f) 1.40% 1.40% Expenses, before waivers/ reimbursements 1.27%(f) 1.33%(g) 1.37% 1.79% 1.82%(f) 1.69% 1.70% Net investment income(c) 1.81%(f) 1.73%(g) 1.23% .68%(d) 1.57%(f) 2.36% 2.46% Portfolio turnover rate 27% 75% 63% 173% 37% 94% 72%
See footnote summary on page 106. 102 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Preservation Strategy Class B Six Months Ended May 1, February 28, Year Ended August 31, 2003 to Year Ended April 30, 2007 ---------------------------------- August 31, ----------------------- (unaudited) 2006 2005 2004 2003(h) 2003 2002(i) ---------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.76 $ 11.40 $ 10.87 $ 10.54 $ 10.37 $ 10.31 $ 10.90 Income From Investment Operations Net investment income (loss)(b)(c) .07 .12 .06 (.01)(d) .03 .17 .18 Net realized and unrealized gain (loss) on investment and foreign currency transactions .30 .34 .51 .35 .19 .10 (.57) Net increase (decrease) in net asset value from operations .37 .46 .57 .34 .22 .27 (.39) Less: Dividends and Distributions Dividends from net investment income (.07) (.10) (.04) (.01) (.05) (.21) (.20) Distributions from net realized gain on investment transactions (.15) -0- -0- -0- -0- -0- -0- Total dividends and Distributions (.22) (.10) (.04) (.01) (.05) (.21) (.20) Net asset value, end of period $ 11.91 $ 11.76 $ 11.40 $ 10.87 $ 10.54 $ 10.37 $ 10.31 Total Return Total investment return based on net asset value(e) 3.14% 4.01% 5.25% 3.22% 2.12% 2.70% (3.54)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $34,958 $37,910 $42,831 $46,781 $48,199 $47,156 $41,984 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.90%(f) 1.90%(g) 1.90% 2.05% 2.25%(f) 2.10% 2.10% Expenses, before waivers/ reimbursements 1.99%(f) 2.06%(g) 2.10% 2.52% 2.55%(f) 2.42% 2.38% Net investment income (loss)(c) 1.11%(f) 1.00%(g) .51% (.06)%(d) .87%(f) 1.65% 1.74% Portfolio turnover rate 27% 75% 63% 173% 37% 94% 72%
See footnote summary on page 106. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 103 Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Preservation Strategy Class C Six Months Ended May 1, February 28, Year Ended August 31, 2003 to Year Ended April 30, 2007 ---------------------------------- August 31, ----------------------- (unaudited) 2006 2005 2004 2003(h) 2003 2002(i) ---------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.77 $ 11.41 $ 10.88 $ 10.55 $ 10.38 $ 10.32 $ 10.91 Income From Investment Operations Net investment income(loss)(b)(c) .07 .12 .06 .00(d)(j) .03 .17 .19 Net realized and unrealized gain (loss) on investment and foreign currency transactions .30 .34 .51 .34 .19 .10 (.58) Net increase (decrease) in net asset value from operations .37 .46 .57 .34 .22 .27 (.39) Less: Dividends and Distributions Dividends from net investment income (.07) (.10) (.04) (.01) (.05) (.21) (.20) Distributions from net realized gain on investment transactions (.15) -0- -0- -0- -0- -0- -0- Total dividends and Distributions (.22) (.10) (.04) (.01) (.05) (.21) (.20) Net asset value, end of period $ 11.92 $ 11.77 $ 11.41 $ 10.88 $ 10.55 $ 10.38 $ 10.32 Total Return Total investment return based on net asset value(e) 3.14% 4.00% 5.25% 3.21% 2.12% 2.70% (3.54)% Ratios/Supplemental Data Net assets, end of period (000's omitted) $31,165 $29,954 $26,075 $22,284 $9,091 $8,398 $7,466 Ratio to average net assets of: Expenses, net of waivers/ reimbursements 1.90%(f) 1.90%(g) 1.90% 2.01% 2.25%(f) 2.10% 2.10% Expenses, before waivers/ reimbursements 1.97%(f) 2.04%(g) 2.08% 2.50% 2.54%(f) 2.41% 2.39% Net investment income (loss)(c) 1.11%(f) 1.02%(g) .53% (.01)%(d) .87%(f) 1.64% 1.74% Portfolio turnover rate 27% 75% 63% 173% 37% 94% 72%
See footnote summary on page 106. 104 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Selected Data For A Share Of Beneficial Interest Outstanding Throughout Each Period
Wealth Preservation Strategy Advisor Class Six Months Ended Year Ended September 2, February 28, August 31, 2003(k) to 2007 ------------------------- August 31, (unaudited) 2006 2005 2004 --------------------------------------------------------- Net asset value, beginning of period $ 11.53 $ 11.19 $ 10.67 $ 10.29 Income From Investment Operations Net investment income(b)(c) .12 .23 .18 .09(d) Net realized and unrealized gain on investment and foreign currency transactions .31 .32 .49 .34 Net increase in net asset value from operations .43 .55 .67 .43 Less: Dividends and Distributions Dividends from net investment income (.13) (.21) (.15) (.05) Distributions from net realized gain on investment transactions (.15) -0- -0- -0- Total dividends and distributions (.28) (.21) (.15) (.05) Net asset value, end of period $ 11.68 $ 11.53 $ 11.19 $ 10.67 Total Return Total investment return based on net asset value(e) 3.74% 4.99% 6.33% 4.14% Ratios/Supplemental Data Net assets, end of period (000's omitted) $6,956 $5,693 $4,494 $297 Ratio to average net assets of: Expenses, net of waivers/reimbursements .90%(f) .90%(g) .90% .99%(f) Expenses, before waivers/reimbursements .97%(f) 1.03%(g) 1.10% 1.48%(f) Net investment income(c) 2.12%(f) 2.02%(g) 1.67% .98%(d)(f) Portfolio turnover rate 27% 75% 63% 173%
See footnote summary on page 106. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 105 (a) Commencement of operations. (b) Based on average shares outstanding. (c) Net of expenses waived and reimbursed by the Adviser. (d) Net of expense waived and reimbursed by the Transfer Agent. (e) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Initial sales charges or contingent deferred sales charges are not reflected in the calculation of total investment return. Total return does not reflect the deduction of taxes that a shareholder would pay on strategy distributions or the redemption of strategy shares. Total investment return calculated for a period of less than one year is not annualized. (f) Annualized. (g) The ratio includes expenses attributable to costs of proxy solicitation. (h) The Strategy changed its fiscal year end from April 30 to August 31. (i) As required, effective May 1, 2001, the Balanced Wealth Strategy and Wealth Preservation Strategy have adopted the provisions of the AICPA Audit and Accounting Guide, Audits of Investment Companies, and began amortizing premium on debt securities for financial reporting purposes only. The effect of this change for the year ended April 30, 2002 for the Balanced Wealth Strategy was to decrease net investment income per share by $.02 for Class A and Class C and $.01 for Class B, decrease net realized and unrealized loss on investments per share by $.02 for Class A and Class C and $.01 for Class B, and decrease the ratio of net investment income to average net assets from .70% to .59% for Class A, from (.07)% to (.18)% for Class B and from (.04)% to (.15)% for Class C. The effect of this change for the year ended April 30, 2002 for the Wealth Preservation Strategy was to decrease net investment income per share by $.02 for Class A and Class C and $.03 for Class B, decrease net realized and unrealized loss on investments per share by $.02 for Class A and Class C and $.03 for Class B, and decrease the ratio of net investment income to average net assets from 2.67% to 2.46% for Class A and from 1.95% to 1.74% for Class B and Class C. Per share, ratios and supplemental data for periods prior to May 1, 2001 have not been restated to reflect this change in presentation. (j) Amount is less than $.005. (k) Commencement of distribution. 106 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES TRUSTEES William H. Foulk, Jr.(1), Chairman Marc O. Mayer, President David H. Dievler(1) John H. Dobkin(1) Michael J. Downey(1) D. James Guzy(1) Nancy P. Jacklin(1) Marshall C. Turner, Jr.(1) Earl D. Weiner(1) OFFICERS Philip L. Kirstein, Senior Vice President and Independent Compliance Officer Stephen Beinhacker, Vice President Michael P. Curcio, Vice President Henry S. D'Auria, Vice President Robert B. (Guy) Davidson III, Vice President Gershon Distenfeld, Vice President Sharon E. Fay, Vice President Marilyn Fedak, Vice President Thomas J. Fontaine(2), Vice President Eric J. Franco, Vice President Mark A. Hamilton(2), Vice President David P. Handke, Jr., Vice President Joshua Lisser(2), Vice President John Mahedy, Vice President Christopher Marx, Vice President Teresa L. Marziano, Vice President Seth J. Masters(2), Vice President Melanie A. May, Vice President Christopher Nikolich(2), Vice President Jimmy K. Pang, Vice President Joseph G. Paul, Vice President John D. Phillips, Vice President James G. Reilly, Vice President Paul Rissman, Vice President Kevin F. Simms, Vice President Christopher M. Toub, Vice President P. Scott Wallace, Vice President Greg J. Wilensky, Vice President Kewjin Yuoh, Vice President Emilie D. Wrapp, Clerk Joseph J. Mantineo, Treasurer and Chief Financial Officer Vincent S. Noto, Controller and Chief Accounting Officer Custodian State Street Bank & Trust Company One Lincoln Street Boston, MA 02111 Principal Underwriter AllianceBernstein Investments, Inc. 1345 Avenue of the Americas New York, NY 10105 Legal Counsel Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 Transfer Agent AllianceBernstein Investor Services, Inc. P.O. Box 786003 San Antonio, TX 78278-6003 Toll-Free (800) 221-5672 Independent Registered Public Accounting Firm KPMG LLP 345 Park Avenue New York, NY 10154 (1) Member of the Audit Committee, the Governance and Nominating Committee and the Independent Directors Committee. (2) The day-to-day management of and investment decisions for each Strategy's portfolio are made by the Blend Investment Team. Messrs. Fontaine, Hamilton, Lisser, Masters and Nikolich are the investment professionals with the most significant responsibility for the day-to-day management of each Strategy's portfolio. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 107 THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS SUMMARY OF SENIOR OFFICER'S EVALUATION OF INVESTMENT ADVISORY AGREEMENT(1) The following is a summary of the evaluation of the Investment Advisory Agreement between AllianceBernstein L.P. (the "Adviser") and The AllianceBernstein Portfolios (the "Trust") in respect of AllianceBernstein Tax-Managed Balanced Wealth Strategy, AllianceBernstein Tax-Managed Wealth Appreciation Strategy and AllianceBernstein Tax-Managed Wealth Preservation Strategy (each a "Strategy" and collectively the "Strategies"), prepared by Philip L. Kirstein, the Senior Officer of the Trust for the Trustees of the Trust, as required by an August 2004 agreement between the Adviser and the New York State Attorney General (the "NYAG").(2) The Senior Officer's evaluation of the Investment Advisory Agreement is not meant to diminish the responsibility or authority of the Board of Trustees to perform its duties pursuant to Section 15 of the Investment Company Act of 1940 (the "40 Act") and applicable state law. The purpose of the summary is to provide shareholders with a synopsis of the independent evaluation of the reasonableness of the advisory fees proposed to be paid by the Strategies which was provided to the Trustees in connection with their review of the proposed approval of the continuance of the Investment Advisory Agreement. The Senior Officer's evaluation considered the following factors: 1. Advisory fees charged to institutional and other clients of the Adviser for like services; 2. Advisory fees charged by other mutual fund companies for like services; 3. Costs to the Adviser and its affiliates of supplying services pursuant to the advisory agreement, excluding any intra-corporate profit; 4. Profit margins of the Adviser and its affiliates from supplying such services; 5. Possible economies of scale as the Strategies grow larger; and 6. Nature and quality of the Adviser's services including the performance of the Strategies. STRATEGY ADVISORY FEES, EXPENSE CAPS & RATIOS The Adviser proposed that each Strategy pay the advisory fee set forth in the table below for receiving the services to be provided pursuant to the Investment Advisory Agreement. The fee schedule below, implemented in January 2004 in (1) It should be noted that the information in the fee summary was completed on July 24, 2006 and presented to the Board of Trustees on August 1, 2006 in accordance with the September 1, 2004 Assurance of Discontinuance between the NYAG and the Adviser. (2) It also should be noted that references in the fee summary pertaining to performance and expense ratios refer to Class A shares of the Strategies. Future references to the Strategies do not include "AllianceBernstein." 108 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES connection with the Adviser's settlement with the NYAG in December 2003, is based on a master schedule that contemplates eight categories of funds with almost all funds in each category having the same advisory fee schedule.(3) Category Advisory Fees Net Assets Strategy - ------------------------------------------------------------------------------- Balanced 55 bp on 1st $2.5 billion $329.0 Tax-Managed Balanced 45 bp on next $2.5 billion Wealth Strategy 40 bp on the balance Blend 65 bp on 1st $2.5 billion $252.7 Tax-Managed Wealth 55 bp on next $2.5 billion Appreciation Strategy 50 bp on the balance Balanced 55 bp on 1st $2.5 billion $158.5 Tax-Managed Wealth 45 bp on next $2.5 billion Preservation Strategy 40 bp on the balance The Adviser agreed to waive that portion of its management fees and/or reimburse each Strategy for that portion of its total operating expenses to the degree necessary to limit the Strategy's expense ratios to the amounts set forth below for the Strategy's current fiscal year. The waiver is terminable by the Adviser at the end of each Strategy's fiscal year upon at least 60 days written notice. It should be noted that Tax-Managed Wealth Appreciation Strategy was operating below its expense caps as of the Strategy's most recent semi-annual period; accordingly, the expense limitation undertaking of that Strategy was of no effect. In addition, set forth below are the gross expense ratios of each Strategy during the most recent semi-annual period: Expense Cap Pursuant to Gross Expense Limitation Expense Strategy Undertaking Ratio(4) Fiscal Year End - ------------------------------------------------------------------------------- Tax-Managed Balanced Class A 1.20% 1.25% August 31 Wealth Strategy Class B 1.90% 1.97% (ratios as of Class C 1.90% 1.95% February 28, Advisor 0.90% 0.95% 2006) Tax-Managed Wealth Class A 1.50% 1.46% August 31 Appreciation Strategy Class B 2.20% 2.19% (ratios as of Class C 2.20% 2.17% February 28, Advisor 1.20% 1.18% 2006) Tax-Managed Wealth Class A 1.20% 1.40% August 31 Preservation Strategy Class B 1.90% 2.12% (ratios as of Class C 1.90% 2.11% February 28, Advisor 0.90% 1.10% 2006) (3) Most of the AllianceBernstein Mutual Funds, which the Adviser manages, were affected by the Adviser's settlement with the NYAG. (4) Annualized. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 109 I. ADVISORY FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS The advisory fees charged to investment companies which the Adviser manages and sponsors are normally higher than those charged to similar sized institutional accounts, including pension plans and sub-advised investment companies. The fee differential reflects, among other things, different services provided to such clients, and different liabilities assumed. Services provided by the Adviser to the Strategies that are not provided to non-investment company clients include providing office space and personnel to serve as Fund Officers, who among other responsibilities make the certifications required under the Sarbanes-Oxley Act of 2002, and coordinating with and monitoring the Strategies' third party service providers such as Fund counsel, auditors, custodians, transfer agents and pricing services. The accounting, administrative, legal and compliance requirements for the Strategies are more costly than those for institutional assets due to the greater complexities and time required for investment companies. Also, retail mutual funds managed by the Adviser are widely held. Servicing the Strategies' investors is more time consuming and labor intensive compared to institutional clients since the Adviser needs to communicate with a more extensive network of financial intermediaries and shareholders. In addition, managing the cash flow of an investment company may be more difficult than that of a stable pool of assets, such as an institutional account with little cash movement in either direction, particularly, if the Strategy is in net redemption and the Adviser is frequently forced to sell securities to raise cash for redemptions. However, managing a fund with positive cash flow may be easier at times than managing a stable pool of assets. Finally, in recent years, investment advisers have been sued by institutional clients and have suffered reputational damage both by the attendant publicity and outcomes other than complete victories. Accordingly, the legal and reputational risks associated with institutional accounts are greater than previously thought, although still not equal to those related to the mutual fund industry. Notwithstanding the Adviser's view that managing an investment company is not comparable to managing other institutional accounts because the services provided are different, it is worth considering information regarding the advisory fees charged to institutional accounts with substantially similar investment styles as the Strategies. However, with respect to the Strategies, the Adviser represented that there are no institutional products that have substantially similar investment styles as the Strategies. The AllianceBernstein Variable Products Series Fund, Inc. ("AVPS"), which is managed by the Adviser and is available through variable annuity and variable life contracts offered by other financial institutions, offers policyholders the option to utilize the AVPS portfolios as the investment option underlying their insurance contracts. In contrast to the Strategies, such AVPS portfolios are managed 110 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES without regard to taxes. The following table shows the fee schedules of the AVPS portfolios that have somewhat similar investment styles as certain of the Strategies: Strategy AVPS Portfolio Fee Schedule - ------------------------------------------------------------------------------- Tax-Managed Balanced Balanced Wealth 0.55% on first $2.5 billion Wealth Strategy Strategy Portfolio 0.45% on next $2.5 billion 0.40% on the balance Tax-Managed Wealth Wealth Appreciation 0.65% on first $2.5 billion Appreciation Strategy Strategy Portfolio 0.55% on next $2.5 billion 0.50% on the balance The Adviser also manages and sponsors retail mutual funds, including the Global Wealth Strategies, which are organized in jurisdictions outside the United States, generally Luxembourg and Japan, and sold to non-United States resident investors. The Adviser charges the following "all-in" fee(5) for each of the Global Wealth Strategies: Fund Fee - ------------------------------------------------------------------------------- Global Equity Blend 1.60% Global Balanced 1.40% Global Conservative 1.15% The Adviser represented that it does not sub-advise any registered investment company with a substantially similar investment style as any of the Strategies. II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES. Lipper, Inc. ("Lipper"), an analytical service that is not affiliated with the Adviser, compared the fees charged to each Strategy with fees charged to other investment companies for similar services by other investment advisers. Lipper's analysis included each Strategy's ranking with respect to the proposed manage- (5) The "all-in" fee shown is for the Class A shares of each of the Global Wealth Strategies. This includes a fee for investment advisory services and a separate fee for distribution related services. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 111 ment fee relative to the Lipper group median at the approximate current asset level of the Strategy.(6) Effective Lipper Management Group Strategy Fee(7) Median Rank - ------------------------------------------------------------------------------- Tax-Managed Balanced Wealth Strategy 0.550 0.750 1/15 Tax-Managed Wealth Appreciation Strategy(8) 0.650 0.825 1/15 Tax-Managed Wealth Preservation Strategy(9) 0.550 0.700 1/13 Lipper also analyzed the total expense ratio of each Strategy in comparison to its Lipper Expense Group(10) and Lipper Expense Universe.(11) Lipper describes a Lipper Expense Group as a representative sample of comparable funds and a Lipper Expense Universe as a broader group, consisting of all funds in the same investment classification/objective with a similar load type as the subject Strategy. It should be noted that at the request of the Senior Officer and the (6) The effective management fee is calculated by Lipper using each Strategy's contractual management fee rate at a hypothetical asset level. The hypothetical asset level is based on the combined net assets of all classes of the Strategy, rounded up to the next $25 million. Lipper's total expense ratio information is based on the most recent annual report except as otherwise noted. A ranking of "1" means that the Strategy has the lowest effective fee rate in the Lipper peer group. (7) The effective management fee does not reflect any waivers or expense reimbursements for expense caps that effectively reduce the contractual fee rate. (8) The Strategy's Lipper Expense Group and Lipper Expense Universe include funds of similar (but not the same) Lipper investment classification. The Strategy's Expense Group, including the Strategy itself, consists of 5 peers of Global Large-Cap Growth Fund ("GLCG"), 5 peers of Global Large-Cap Core Fund ("GLCC"), and 5 peers of Global Multi-Cap Growth Fund ("GMLG"). The Strategy's Lipper Expense Universe consists of the Strategy, the Expense Group, and all other retail front-end load peers of GLCG, GLCC and GMLG, excluding outliers. (9) The Strategy's Lipper Expense Group and Lipper Expense Universe include funds of similar (but not the same) Lipper investment classification. The Strategy's Lipper Expense Group, including the Strategy itself, consists of 4 peers of Mixed-Asset Target Allocation Conservative Funds ("MTAC") and 9 peers of Mixed-Asset Target Allocation Moderate Funds ("MTAM"). The Strategy's Lipper Expense Universe consists of the Strategy, the Expense Group, and all other retail front-end load peers of MTAC and MTAM, excluding outliers. (10) Lipper uses the following criteria in screening funds to be included in each Strategy's expense group: fund type, investment classification/objective, load type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, and expense components and attributes. A Lipper Expense Group will typically consist of seven to twenty funds. (11) Except for asset (size) comparability and load type, Lipper uses the same criteria for selecting a Lipper Expense Group when selecting a Lipper Expense Universe. Unlike the Lipper Expense Group, the Lipper Expense Universe allows for the same adviser to be represented by more than just one fund. 112 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Adviser, because of the limited number of peers in the expense groups and universes, Lipper expanded the expense groups and universes of Tax-Managed Wealth Appreciation Strategy and Tax-Managed Wealth Preservation Strategy to include funds of similar (but not the same) investment classifications/objectives of such Strategies. The result of that analysis is set forth below: Expense Lipper Lipper Lipper Lipper Ratio Group Group Universe Universe Strategy (%)(12) Median (%) Rank Median (%) Rank - ------------------------------------------------------------------------------- Tax-Managed Balanced Wealth Strategy 1.196 1.260 5/15 1.196 16/31 Tax-Managed Wealth Appreciation Strategy(13) 1.500 1.500 8/15 1.519 16/34 Tax-Managed Wealth Preservation Strategy(14) 1.200 1.258 5/13 1.258 23/55 Based on this analysis, the Strategies have a more favorable ranking on a management fee basis than they do on a total expense ratio basis. III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO THE ADVISORY FEE ARRANGEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT. A consultant was retained by the Senior Officer to work with the Adviser's personnel to align the Adviser's two profitability reporting systems. The alignment, which now has been completed, allows the Adviser's management and the Trustees to receive consistent presentations of the financial results and profitability although the two profitability reporting systems operate independently. See Section IV for additional discussion. IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH SERVICES. The profitability information for the Strategies prepared by the Adviser for the Board of Trustees was reviewed by the Senior Officer. The Adviser's profitability from providing investment advisory services to each Strategy increased during calendar year 2005 relative to 2004. In addition to the Adviser's direct profits from managing the Strategies, certain of the Adviser's affiliates have business relationships with the Strategies and may earn a profit from providing other services to the Strategies. The courts have (12) The total expense ratios shown are for the Strategies' Class A shares. (13) See footnote 8. (14) See footnote 9. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 113 referred to this type of business opportunity as "fall-out benefits" to the Adviser and indicated that they should be factored into the evaluation of the total relationship between the Strategies and the Adviser. Neither case law nor common business practice precludes the Adviser's affiliates from earning a reasonable profit on this type of relationship. These affiliates provide transfer agent, distribution and brokerage related services to the Strategies and receive transfer agent fees, Rule 12b-1 payments, front-end sales loads, contingent deferred sales charges ("CDSC") and commissions for providing brokerage services. In addition, the Adviser benefits from soft dollar arrangements which offset expenses the Adviser would otherwise incur. Additional information regarding distribution related fees can be found in the prospectus of the Strategies. AllianceBernstein Investments, Inc. ("ABI"), an affiliate of the Adviser, is the Strategies' principal underwriter. ABI and the Adviser have disclosed in the Strategies' prospectus that they may make revenue sharing payments from their own resources, in addition to resources derived from sales loads and Rule 12b-1 fees, to firms that sell shares of the Strategies. In 2005, ABI paid approximately 0.042% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $18.0 million for distribution services and educational support (revenue sharing payments). For 2006, it is anticipated, ABI will pay approximately 0.04% of the average monthly assets of the AllianceBernstein Mutual Funds or approximately $17.5 million.(15) After payments to third party intermediaries, ABI retained the following amounts for Class A front-end load sales charges from sales of the Strategies' Class A shares during the Strategies' most recently completed fiscal year: Strategy Amount Received - ------------------------------------------------------------------------------- Tax-Managed Balanced Wealth Strategy $94,378 Tax-Managed Wealth Appreciation Strategy $45,546 Tax-Managed Wealth Preservation Strategy $46,201 ABI received the amounts set forth below in Rule 12b-1 fees and CDSC for the Strategies during the Strategies' most recent fiscal year: Strategy 12b-1 Fees Received CDSC Received - ------------------------------------------------------------------------------- Tax-Managed Balanced Wealth Strategy $1,271,290 $135,519 Tax-Managed Wealth Appreciation Strategy $ 514,989 $ 73,189 Tax-Managed Wealth Preservation Strategy $ 889,466 $150,738 Fees and reimbursements for out of pocket expenses charged by AllianceBernstein Investor Services, Inc. ("ABIS"), the affiliated transfer agent, (15) ABI currently inserts the "Advance" in quarterly account statements and pays the incremental costs associated with the mailing. The incremental cost is less than what an "independent mailing" would cost. 114 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES are based on the level of the network account and the class of share held by the account. ABIS also receives a fee per shareholder sub-account for each account maintained by an intermediary on an omnibus basis. ABIS' after-tax profitability increased in 2005 in comparison to 2004. ABIS received the following fee from the Strategies in the most recent fiscal year: Strategy ABIS Fee(16) - ------------------------------------------------------------------------------- Tax-Managed Balanced Wealth Strategy $ 207,283 Tax-Managed Wealth Appreciation Strategy $ 36,225 Tax-Managed Wealth Preservation Strategy $ 104,658 The Strategies effected brokerage transactions through the Adviser's affiliate, Sanford C. Bernstein & Co. LLC ("SCB & Co.") and/or its U.K. affiliate, Sanford C. Bernstein Limited ("SCB Ltd."), collectively "SCB," and paid commissions for such transactions during the Strategies' most recently completed fiscal year. The Adviser represented that SCB's profitability from business conducted with the Strategies is comparable to the profitability of SCB's dealings with other similar third party clients. In the ordinary course of business, SCB receives and pays liquidity rebates from electronic communications networks ("ECNs") derived from trading for its clients, including the Strategies. These credits and charges are not being passed on to any SCB client. The Adviser also receives certain soft dollar benefits from brokers that execute agency trades for the Strategies and other clients. These soft dollar benefits reduce the Adviser's cost of doing business and increase its profitability. V. POSSIBLE ECONOMIES OF SCALE The Adviser has indicated that the breakpoints in the fee schedule in the Investment Advisory Agreement reflect a sharing of economies of scale to the extent the breakpoints are reached. Based on some of the professional literature that has considered economies of scale in the mutual fund industry it is thought that to the extent economies of scale exist, they may more often exist across a fund family as opposed to a specific fund. This is because the costs incurred by the Adviser, such as investment research or technology for trading or compliance systems can be spread across a greater asset base as the fund family increases in size. It is also possible that as the level of services required to operate a successful investment company has increased over time, and advisory firms have made such investments in their business to provide improved services, there may be a sharing of economies of scale without a reduction in advisory fees. (16) The fee disclosed is net of any waivers or any other expense offset arrangement with ABIS. An expense offset is created by the interest earned on the positive cash balance that occurs within the transfer agent account as there is a one day lag with regards to money movement from the shareholder's account to the transfer agent's account and then from the transfer agent's account to the Strategy's account. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 115 An independent consultant made a presentation to the Board of Trustees and the Senior Officer regarding possible economies of scale or scope in the mutual fund industry. Based on the presentation, it was evident that fund management companies benefit from economies of scale. However, due to lack of cost data, researchers had to infer facts about the costs from the behavior of fund expenses; there was a lack of consensus among researchers as to whether economies of scale were being passed on to the shareholders. In the meantime, it is clear that to the extent a fund's assets exceeds its initial breakpoint its shareholders benefit from a lower fee rate. VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING THE PERFORMANCE OF THE STRATEGY. With assets under management of $625 billion as of June 30, 2006, the Adviser has the investment experience to manage and provide non-investment services (described in Section I) to the Strategies. The information below, which was prepared by Lipper, shows the 1, 3, 5 and 10 year performance rankings of the Strategies relative to their Lipper Performance Groups and Lipper Performance Universes(17) for the periods ended April 30, 2006:(18) Tax-Managed Balanced Wealth Strategy Group Universe - ------------------------------------------------------------------------------- 1 year 4/15 28/78 3 year 8/14 32/55 5 year 10/12 38/42 10 year 8/9 21/24 Tax-Managed Wealth Appreciation Strategy Group Universe - ------------------------------------------------------------------------------- 1 year 4/5 8/12 (17) The Strategies' Lipper Performance Groups/Universes may not be identical to the corresponding Lipper Expense Group/Universe since the Strategies' Lipper Expense Groups/Universes may exclude funds with negative management fees and funds with a different expense structure. In addition, each Strategy's Lipper Performance Group/Universe only includes funds of the same Lipper investment classification/objective as the Strategy, in contrast to each Strategy's Lipper Expense Group/Universe, which may include funds of similar but not the same investment classification/objective. (18) It should be noted that until September 2, 2003, Tax-Managed Balanced Wealth Strategy, which was formerly called Alliance Growth Investors Fund, and Tax-Managed Wealth Preservation Strategy, which was formerly called Alliance Conservative Investors Fund, were using different investment strategies, most notably, the Strategies were not-taxed managed funds. As a result, the long-term returns are not reflective of returns that would have occurred using the Strategies' new tax-managed strategies. In all likelihood, returns would have been lower than those shown if the Strategies had been using their tax-managed strategies. Tax-Managed Wealth Appreciation Strategy is relatively new compared to Tax-Managed Balanced Wealth Strategy and Tax-Managed Wealth Preservation Strategy. 116 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES Tax-Managed Wealth Preservation Strategy Group Universe - ------------------------------------------------------------------------------- 1 year 1/4 15/64 3 year 3/3 17/33 5 year 1/2 13/17 10 year 1/1 3/6 Set forth below are the 1, 3, 5, 10 year and since inception performance returns of the Strategies (in bold)(19) versus their benchmarks:(20) Periods Ending April 30, 2006 Annualized Performance - ------------------------------------------------------------------------------- 1 3 5 10 Since Strategy Year Year Year Year Inception - ------------------------------------------------------------------------------- Tax-Managed Balanced Wealth Strategy 12.54 10.02 1.65 5.69 7.50 S&P 500 Stock Index 15.41 14.67 2.70 8.94 10.71 Lehman Brothers 5 year GO Muni Bond Index 1.21 2.25 4.19 4.83 5.20 50% S&P 500 Stock Index / 50% Lehman Brothers 5 year GO Muni Index 8.31 8.46 3.45 6.89 7.96 Tax-Managed Wealth Appreciation Strategy 25.84 N/A N/A N/A 16.49 S&P 500 Stock Index 15.41 N/A N/A N/A 13.21 70% S&P 500 Stock Index / 30% MSCI EAFE Index (Net) 20.83 N/A N/A N/A 17.17 Tax-Managed Wealth Preservation Strategy 8.12 5.66 3.46 5.70 6.10 Lehman Brothers Aggregate Bond Index 0.71 2.58 5.16 6.33 6.54 Lehman Brothers 5 year GO Muni Bond Index 1.21 2.25 4.19 4.83 5.20 70% Lehman Brothers 5 year GO Muni Bond Index / 30% S&P 500 Stock Index 5.47 5.98 3.74 6.06 6.85 CONCLUSION: Based on the factors discussed above the Senior Officer's conclusion is that the proposed fee for each Strategy is reasonable and within the range of what would have been negotiated at arms-length in light of all the surrounding circumstances. This conclusion in respect of each Strategy is based on an evaluation of all of these factors and no single factor was dispositive. Dated: September 7, 2006 (19) The performance returns shown are for the Class A shares of the Strategies. (20) The Adviser provided Strategy and benchmark performance return information for periods through April 30, 2006 in order to maintain consistency with Lipper's performance rankings in the analysis. ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 117 THE FOLLOWING IS NOT PART OF THE SHAREHOLDER REPORT OR THE FINANCIAL STATEMENTS ALLIANCEBERNSTEIN FAMILY OF FUNDS - -------------------------------------------------- Wealth Strategies Funds - -------------------------------------------------- Balanced Wealth Strategy Wealth Appreciation Strategy Wealth Preservation Strategy Tax-Managed Balanced Wealth Strategy Tax-Managed Wealth Appreciation Strategy Tax-Managed Wealth Preservation Strategy - -------------------------------------------------- Blended Style Funds - -------------------------------------------------- U.S. Large Cap Portfolio International Portfolio Tax-Managed International Portfolio - -------------------------------------------------- Growth Funds - -------------------------------------------------- Domestic Growth Fund Mid-Cap Growth Fund Large Cap Growth Fund Small Cap Growth Portfolio Global & International Global Health Care Fund Global Research Growth Fund Global Technology Fund Greater China '97 Fund International Growth Fund International Research Growth Fund - -------------------------------------------------- Value Funds - -------------------------------------------------- Domestic Balanced Shares Focused Growth & Income Fund Growth & Income Fund Small/Mid Cap Value Fund Utility Income Fund Value Fund Global & International Global Real Estate Investment Fund* Global Value Fund International Value Fund - -------------------------------------------------- Taxable Bond Funds - -------------------------------------------------- Global Government Income Trust Corporate Bond Portfolio Emerging Market Debt Fund Global Strategic Income Trust High Yield Fund Intermediate Bond Portfolio Short Duration Portfolio U.S. Government Portfolio - -------------------------------------------------- Municipal Bond Funds - -------------------------------------------------- National Michigan Insured National Minnesota Arizona New Jersey California New York Insured California Ohio Florida Pennsylvania Massachusetts Virginia - -------------------------------------------------- Intermediate Municipal Bond Funds - -------------------------------------------------- Intermediate California Intermediate Diversified Intermediate New York - -------------------------------------------------- Closed-End Funds - -------------------------------------------------- All-Market Advantage Fund AllianceBernstein Global High Income Fund* AllianceBernstein Income Fund* ACM Managed Dollar Income Fund ACM Managed Income Fund ACM Municipal Securities Income Fund California Municipal Income Fund National Municipal Income Fund New York Municipal Income Fund The Spain Fund World Dollar Government Fund - -------------------------------------------------- Retirement Strategies Funds - -------------------------------------------------- 2000 Retirement Strategy 2005 Retirement Strategy 2010 Retirement Strategy 2015 Retirement Strategy 2020 Retirement Strategy 2025 Retirement Strategy 2030 Retirement Strategy 2035 Retirement Strategy 2040 Retirement Strategy 2045 Retirement Strategy We also offer Exchange Reserves,** which serves as the money market fund exchange vehicle for the AllianceBernstein mutual funds. You should consider the investment objectives, risks, charges and expenses of any AllianceBernstein fund/portfolio carefully before investing. For free copies of our prospectuses, which contain this and other information, visit us online at www.alliancebernstein.com or contact your financial advisor. Please read the prospectus carefully before investing. * Prior to January 26, 2007, AllianceBernstein Global High Income Fund was named Alliance World Dollar Government Fund II and AllianceBernstein Income Fund was named ACM Income Fund. Prior to March 1, 2007, Global Real Estate Investment Fund was named Real Estate Investment Fund. ** An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. 118 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES NOTES ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES o 119 NOTES 120 o ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES ALLIANCEBERNSTEIN TAX-MANAGED WEALTH STRATEGIES 1345 Avenue of the Americas New York, NY 10105 (800) 221-5672 [LOGO] ALLIANCEBERNSTEIN INVESTMENTS TMW-0152-0207 ITEM 2. CODE OF ETHICS. Not applicable when filing a semi-annual report to shareholders. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable when filing a semi-annual report to shareholders. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable when filing a semi-annual report to shareholders. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to the registrant. ITEM 6. SCHEDULE OF INVESTMENTS. Please see Schedule of Investments contained in the Report to Shareholders included under Item 1 of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the registrant. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to the registrant. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to the registrant. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which shareholders may recommend nominees to the Fund's Board of Directors since the Fund last provided disclosure in response to this item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document. (b) There were no changes in the registrant's internal controls over financial reporting that occurred during the second fiscal quarter of the period that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. The following exhibits are attached to this Form N-CSR: EXHIBIT NO. DESCRIPTION OF EXHIBIT ----------- ---------------------- 12 (b) (1) Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12 (b) (2) Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12 (c) Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant): The AllianceBernstein Portfolios By: /s/ Marc O. Mayer ---------------------- Marc O. Mayer President Date: April 27, 2007 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Marc O. Mayer ---------------------- Marc O. Mayer President Date: April 27, 2007 By: /s/ Joseph J. Mantineo ---------------------- Joseph J. Mantineo Treasurer and Chief Financial Officer Date: April 27, 2007 EX-99.CERT 2 edg150856_ex302b.txt Exhibit 12(b)(1) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER I, Marc O. Mayer, President of The AllianceBernstein Portfolios., certify that: 1. I have reviewed this report on Form N-CSR of The AllianceBernstein Portfolios; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: April 27, 2007 /s/ Marc O. Mayer ---------------------- Marc O. Mayer President Exhibit 12(b)(2) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER I, Joseph J. Mantineo, Treasurer and Chief Financial Officer of The AllianceBernstein Portfolios, certify that: 1. I have reviewed this report on Form N-CSR of The AllianceBernstein Portfolios; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: April 27, 2007 /s/ Joseph J. Mantineo ---------------------- Joseph J. Mantineo Treasurer and Chief Financial Officer EX-99.906 CERT 3 edg150856_ex906c.txt EXHIBIT 12(c) CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to 18 U.S.C. 1350, each of the undersigned, being the Principal Executive Officer and Principal Financial Officer of The AllianceBernstein Portfolios (the "Registrant"), hereby certifies that the Registrant's report on Form N-CSR for the period ended February 28, 2007 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: April 27, 2007 By: /s/ Marc O. Mayer ---------------------- Marc O. Mayer President By: /s/ Joseph J. Mantineo ---------------------- Joseph J. Mantineo Treasurer and Chief Financial Officer This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----