-----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, MtrRRp6v4qf92gFFKu8W9KTl1VYt+bL+K6jhDdvK63OUwbe9/yxOHktq4Udtn5kO mvjbtEiFj6j/Y5ER3EHyzw== /in/edgar/work/20000821/0000936772-00-000244/0000936772-00-000244.txt : 20000922 0000936772-00-000244.hdr.sgml : 20000922 ACCESSION NUMBER: 0000936772-00-000244 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000821 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE VARIABLE PRODUCTS SERIES FUND INC CENTRAL INDEX KEY: 0000825316 STANDARD INDUSTRIAL CLASSIFICATION: [ ] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05398 FILM NUMBER: 706750 BUSINESS ADDRESS: STREET 1: 500 PLAZA DRIVE STREET 2: 1345 AVENUE OF THE AMERICAS 31ST FL CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 2013194105 MAIL ADDRESS: STREET 1: ALLIANCE CAPITAL MANGEMENT LP STREET 2: 1345 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 N-30D 1 0001.txt ALLIANCE ---------------------- VARIABLE PRODUCTS ---------------------- SERIES FUND ---------------------- CONSERVATIVE INVESTORS ---------------------- PORTFOLIO ---------------------- SEMI-ANNUAL REPORT JUNE 30, 2000 (UNAUDITED) Investment Products Offered --------------------------- > Are Not FDIC Insured > May Lose Value > Are Not Bank Guaranteed --------------------------- CONSERVATIVE INVESTORS PORTFOLIO TEN LARGEST HOLDINGS June 30, 2000 (unaudited) Alliance Variable Products Series Fund ================================================================================
- ------------------------------------------------------------------------------------------ COMPANY U.S. $ VALUE PERCENT OF NET ASSETS - ------------------------------------------------------------------------------------------ U.S. Treasury Notes $ 9,308,968 32.7% - ------------------------------------------------------------------------------------------ Federal Home Loan Mortgage Corp., 5.75%, 6/15/01 6,531,624 22.9 - ------------------------------------------------------------------------------------------ U.S. Treasury Bond, 5.50%, 8/15/28 5,319,702 18.7 - ------------------------------------------------------------------------------------------ BP Amoco Plc 216,803 0.8 - ------------------------------------------------------------------------------------------ Citigroup, Inc. 204,850 0.7 - ------------------------------------------------------------------------------------------ American International Group, Inc. 204,098 0.7 - ------------------------------------------------------------------------------------------ Nortel Networks Corp. 191,100 0.7 - ------------------------------------------------------------------------------------------ Pfizer, Inc. 184,800 0.6 - ------------------------------------------------------------------------------------------ Intel Corp. 173,794 0.6 - ------------------------------------------------------------------------------------------ Cisco Systems, Inc. 171,619 0.6 - ------------------------------------------------------------------------------------------ $22,507,358 79.0% - ------------------------------------------------------------------------------------------
1 CONSERVATIVE INVESTORS PORTFOLIO PORTFOLIO OF INVESTMENTS June 30, 2000 (unaudited) Alliance Variable Products Series Fund ================================================================================ Company Shares U.S. $ Value - -------------------------------------------------------------------------------- COMMON STOCKS-21.8% UNITED STATES INVESTMENTS-14.8% TECHNOLOGY-3.3% COMMUNICATIONS EQUIPMENT-0.4% Lucent Technologies, Inc. .................. 1,700 $ 100,725 ----------- COMPUTER HARDWARE-0.9% Dell Computer Corp. (a) .................... 2,700 133,144 Hewlett-Packard Co. ........................ 1,100 137,362 ----------- 270,506 ----------- COMPUTER SOFTWARE-0.4% Microsoft Corp. (a) ........................ 1,400 112,000 ----------- NETWORKING SOFTWARE-0.6% Cisco Systems, Inc. (a) .................... 2,700 171,619 ----------- SEMI-CONDUCTOR COMPONENTS-0.9% Applied Materials, Inc. (a) ................ 900 81,562 Intel Corp. ................................ 1,300 173,794 ----------- 255,356 ----------- MISCELLANEOUS-0.1% Agilent Technologies, Inc. (a) ............. 419 30,901 ----------- 941,107 ----------- FINANCE-2.1% BANKING - REGIONAL-0.4% BankAmerica Corp. .......................... 2,399 103,157 ----------- INSURANCE-0.7% American International Group, Inc. ............................. 1,737 204,098 ----------- MISCELLANEOUS-1.0% Citigroup, Inc. ............................ 3,400 204,850 MBNA Corp. ................................. 3,300 89,512 ----------- 294,362 ----------- 601,617 ----------- CONSUMER SERVICES-2.0% BROADCASTING & CABLE-0.3% AT&T Corp. - Liberty Media Group Series A (a) ...................... 3,700 89,725 ----------- RETAIL - GENERAL MERCHANDISE-1.7% Circuit City Stores-Circuit City Group .............................. 4,300 142,706 Home Depot, Inc. ........................... 2,150 107,366 Target Corp. ............................... 1,800 104,400 Wal-Mart Stores, Inc. ...................... 2,200 126,775 ----------- 481,247 ----------- 570,972 ----------- ENERGY-1.8% DOMESTIC INTEGRATED-0.3% Kerr-McGee Corp. ........................... 1,400 82,513 ----------- INTERNATIONAL-0.6% Chevron Corp. .............................. 1,100 93,294 Exxon Mobil Corp. .......................... 1,200 94,200 ----------- 187,494 ----------- OIL SERVICE-0.9% Halliburton Co. ............................ 2,600 122,687 Noble Drilling Corp. (a) ................... 3,200 131,800 ----------- 254,487 ----------- 524,494 ----------- HEALTH CARE-1.2% DRUGS-1.2% Pfizer, Inc. ............................... 3,850 184,800 Schering-Plough Corp. ...................... 2,900 146,450 ----------- 331,250 ----------- BASIC INDUSTRY-0.9% CHEMICALS-0.3% Union Carbide Corp. ........................ 2,000 99,000 ----------- MINING & METALS-0.4% Alcoa, Inc. ................................ 3,600 104,400 ----------- PAPER & FOREST PRODUCTS-0.2% International Paper Co. .................... 1,900 56,644 ----------- 260,044 ----------- CONSUMER STAPLES-0.8% RETAIL - FOOD & DRUG-0.4% Kroger Co. (a) ............................. 4,700 103,694 ----------- TOBACCO-0.4% Philip Morris Companies, Inc. .................................... 4,300 114,218 ----------- 217,912 ----------- CONSUMER MANUFACTURING-0.8% AUTO & RELATED-0.4% Harley-Davidson, Inc. ...................... 3,100 119,350 ----------- MISCELLANEOUS-0.4% Honeywell International, Inc. .............. 2,800 94,325 ----------- 213,675 ----------- UTILITIES-0.6% TELEPHONE-0.6% AT&T Corp. ................................. 1,300 41,112 WorldCom, Inc. (a) ......................... 2,800 128,450 ----------- 169,562 ----------- 2 Alliance Variable Products Series Fund ================================================================================ Company Shares U.S. $ Value - -------------------------------------------------------------------------------- MULTI INDUSTRY COMPANY-0.5% Minnesota Mining & Manufacturing Co. ....................... 1,800 $ 148,500 ----------- AEROSPACE & DEFENSE-0.5% AEROSPACE-0.5% United Technologies Corp. .................. 2,300 135,413 ----------- CAPITAL GOODS-0.3% MACHINERY-0.3% Caterpillar, Inc. .......................... 2,600 88,075 ----------- Total United States Investments (cost $4,026,606) ....................... 4,202,621 ----------- FOREIGN INVESTMENTS-7.0% CANADA-0.7% Nortel Networks Corp. ...................... 2,800 191,100 ----------- CHINA-0.2% China Mobile (Hong Kong), Ltd. (a) ................................ 5,300 46,742 ----------- FINLAND-0.3% Nokia AB Corp. (b) ......................... 1,600 81,646 ----------- FRANCE-1.1% Alcatel (a)(b) ............................. 500 32,794 Banque Nationale de Paris (b) .............. 760 73,138 Carrefour, SA (b) .......................... 300 20,507 Castorama Dubois Investissement, SA (b) .................. 160 39,563 France Telecom, SA (b) ..................... 170 23,760 Sanofi Synthelabo, SA (b) .................. 610 29,060 STMicroelectronics NV (b) .................. 1,070 67,421 Total Fina Elf (b) ......................... 210 32,198 ----------- 318,441 ----------- HONG KONG-0.0% Culturecom Holdings, Ltd. (a) .............. 61,000 8,842 Sunevision Holdings, Ltd. (a) .............. 1,000 815 ----------- 9,657 ----------- IRELAND-0.1% CRH Plc .................................... 1,800 32,565 ----------- JAPAN-1.3% Advantest Corp. (b) ........................ 100 22,289 Bank of Fukuoka, Ltd. (b) .................. 3,000 20,414 Banyu Pharmaceutical Co., Ltd. (b) ................................ 2,000 48,914 Canon, Inc. (b) ............................ 1,000 49,762 DDI Corp. (b) .............................. 1 9,613 Fast Retailing Co., Ltd. (b) ............... 100 41,845 Kao Corp. (b) .............................. 1,000 30,536 Kawasaki Steel Corp. (b) ................... 14,000 20,056 NTT Docomo, Inc. (b) ....................... 1 27,049 Omron Corp. (b) ............................ 1,000 27,143 Sankyo Co., Ltd. (b) ....................... 300 13,147 Santen Pharmaceutical Co., Ltd. (b) ................................ 1,000 24,127 Shohkoh Fund & Co., Ltd. (b) ............... 50 11,262 Sumitomo Trust & Banking Co., Ltd. (b) ........................... 5,000 35,578 ----------- 381,735 ----------- KOREA-0.3% Samsung Electronics (GDR) (c) ............................... 390 76,440 ----------- NETHERLANDS-0.5% Akzo Nobel NV (b) .......................... 400 16,993 Completel Europe NV (a)(b) ................ 395 4,902 ING Groep NV (b) ........................... 940 63,537 Koninklijke (Royal) Philips Elecronics NV (b) ....................... 1,100 51,879 Libertel NV (a)(b) ......................... 500 7,614 ----------- 144,925 ----------- SPAIN-0.1% Repsol, SA (b) ............................. 900 17,915 Telefonica, SA (a)(b) ...................... 1,000 21,481 ----------- 39,396 ----------- SWEDEN-0.2% Securitas AB Series B ...................... 1,300 27,562 Telefonaktiebolaget LM Ericsson AB Series B (a) ................ 2,100 41,548 ----------- 69,110 ----------- SWITZERLAND-0.2% ABB, Ltd. (a) .............................. 397 47,517 ----------- UNITED KINGDOM-2.0% BAE Systems Plc (b) ........................ 3,424 21,345 Bank of Scotland (b) ....................... 4,574 43,498 Billiton Plc (b) ........................... 4,100 16,688 BP Amoco Plc (b) ........................... 22,600 216,803 British Sky Broadcasting Group Plc (b) ........................... 450 8,797 CGNU Plc (b) ............................... 4,700 78,227 HSBC Holdings Plc (b) ...................... 42 480 Invensys Plc (b) ........................... 20 75 Reuters Group Plc (b) ...................... 1,350 23,021 Rio Tinto Plc (b) .......................... 1,000 16,342 Royal Bank of Scotland Group Plc (b) ........................... 1,091 18,258 Slough Estates Plc (b) ..................... 4,400 24,318 SmithKline Beecham Plc (b) ................ 2,800 36,647 Standard Chartered Plc (b) ................ 44 548 Vodafone AirTouch Plc (b) .................. 14,335 57,913 ----------- 562,960 ----------- Total Foreign Investments (cost $1,730,186) ....................... 2,002,234 ----------- Total Common Stocks (cost $5,756,792) ....................... 6,204,855 ----------- 3 CONSERVATIVE INVESTORS PORTFOLIO PORTFOLIO OF INVESTMENTS (continued) Alliance Variable Products Series Fund ================================================================================ Principal Amount (000) U.S. $ Value - -------------------------------------------------------------------------------- DEBT OBLIGATIONS-74.2% U.S. GOVERNMENT & AGENCY OBLIGATIONS-74.2% Federal Home Loan Mortgage Corp. 5.75%, 6/15/01 .......................... $ 6,600 $ 6,531,624 U.S. Treasury Bond 5.50%, 8/15/28 .......................... 5,800 5,319,702 U.S. Treasury Notes 3.875%, 1/15/09 (d) ..................... 1,775 1,747,461 4.75%, 2/15/04 .......................... 3,800 3,612,964 4.75%, 11/15/08 ......................... 1,900 1,725,428 6.875%, 5/15/06 ......................... 2,160 2,223,115 ----------- Total Debt Obligations (cost $21,192,820) ...................... 21,160,294 ----------- SHORT-TERM INVESTMENT- 2.5% TIME DEPOSIT-2.5% State Street Euro Dollar 6.00%, 7/03/00 (amortized cost $709,000) ............... 709 709,000 ----------- TOTAL INVESTMENTS-98.5% (cost $27,658,612) ...................... 28,074,149 Other assets less liabilities-1.5% ................... 421,360 ----------- NET ASSETS-100% ............................ $28,495,509 =========== - -------------------------------------------------------------------------------- (a) Non-income producing security. (b) Securities, or portion thereof, with an aggregate market value of $1,561,668 have been segregated to collateralize forward exchange currency contracts. (c) Security exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions exempt from registration normally applied to qualified buyers. At June 30, 2000, the aggregate market value of this security amounted to $76,440 or 0.3% of net assets. (d) Treasury Inflation Protection Securities. Glossary: GDR - Global Depositary Receipt See Notes to Financial Statements. 4 CONSERVATIVE INVESTORS PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES June 30, 2000 (unaudited) Alliance Variable Products Series Fund ================================================================================
ASSETS Investment in securities, at value (cost $27,658,612) ............................ $28,074,149 Cash ............................................................................. 486 Foreign cash, at value (cost $167,996) ........................................... 167,200 Dividends and interest receivable ................................................ 276,115 ----------- Total assets ..................................................................... 28,517,950 ----------- LIABILITIES Advisory fee payable ............................................................. 9,171 Unrealized depreciation of forward exchange currency contracts ................... 2,489 Accrued expenses ................................................................. 10,781 ----------- Total liabilities ................................................................ 22,441 ----------- NET ASSETS .......................................................................... $28,495,509 =========== COMPOSITION OF NET ASSETS Capital stock, at par ............................................................ $ 2,376 Additional paid-in capital ....................................................... 27,108,963 Undistributed net investment income .............................................. 640,898 Accumulated net realized gain on investments and foreign currency transactions ... 331,164 Net unrealized appreciation of investments and foreign currency denominated assets and liabilities ......................................................... 412,108 ----------- $28,495,509 =========== Class A Shares Net assets ....................................................................... $28,495,509 =========== Shares of capital stock outstanding .............................................. 2,376,429 =========== Net asset value per share ........................................................ $ 11.99 ===========
- -------------------------------------------------------------------------------- See Notes to Financial Statements. 5 CONSERVATIVE INVESTORS PORTFOLIO STATEMENT OF OPERATIONS Six Months Ended June 30, 2000 (unaudited) Alliance Variable Products Series Fund ================================================================================ INVESTMENT INCOME Interest ...................................................... $ 734,835 Dividends (net of foreign tax withheld of $2,363) ............. 34,917 --------- Total investment income ....................................... 769,752 --------- EXPENSES Advisory fee .................................................. 110,933 Custodian ..................................................... 49,242 Administrative ................................................ 31,500 Audit and legal ............................................... 1,817 Directors' fees ............................................... 582 Printing ...................................................... 563 Transfer agency ............................................... 546 Miscellaneous ................................................. 1,912 --------- Total expenses ................................................ 197,095 Less: expenses waived and reimbursed .......................... (56,580) --------- Net expenses .................................................. 140,515 --------- Net investment income ......................................... 629,237 --------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Net realized gain on investment transactions .................. 482,708 Net realized loss on foreign currency transactions ............ (117,674) Net change in unrealized appreciation/depreciation of: Investments ................................................. (417,172) Foreign currency denominated assets and liabilities ......... 46,968 --------- Net loss on investments and foreign currency transactions ..... (5,170) --------- NET INCREASE IN NET ASSETS FROM OPERATIONS ....................... $ 624,067 ========= - -------------------------------------------------------------------------------- See Notes to Financial Statements. 6 CONSERVATIVE INVESTORS PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS Alliance Variable Products Series Fund ================================================================================
Six Months Ended Year Ended June 30, 2000 December 31, (unaudited) 1999 ================ ============ INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income ............................................... $ 629,237 $ 1,355,255 Net realized gain on investments and foreign currency transactions .. 365,034 2,282,151 Net change in unrealized appreciation/depreciation of investments and foreign currency denominated assets and liabilities ............... (370,204) (1,957,517) ------------ ------------ Net increase in net assets from operations .......................... 624,067 1,679,889 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class A ........................................................... (1,303,934) (1,308,187) Net realized gain on investments Class A ........................................................... (2,307,441) (1,740,989) CAPITAL STOCK TRANSACTIONS Net decrease ........................................................ (202,900) (4,285,668) ------------ ------------ Total decrease ...................................................... (3,190,208) (5,654,955) NET ASSETS Beginning of period ................................................. 31,685,717 37,340,672 ------------ ------------ End of period (including undistributed net investment income of $640,898 and $1,315,595, respectively) ............................ $ 28,495,509 $ 31,685,717 ============ ============
- -------------------------------------------------------------------------------- See Notes to Financial Statements. 7 CONSERVATIVE INVESTORS PORTFOLIO NOTES TO FINANCIAL STATEMENTS June 30, 2000 (unaudited) Alliance Variable Products Series Fund ================================================================================ NOTE A: Significant Accounting Policies The Conservative Investors Portfolio (the "Portfolio") is a series of Alliance Variable Products Series Fund, Inc. (the "Fund"). The Portfolio's investment objective is to seek to achieve the highest total return without, in the view of Alliance, undue risk to principal. The Fund was incorporated in the State of Maryland on November 17, 1987, as an open-end series investment company. The Fund had no operations prior to November 28, 1990. The Fund offers nineteen separately managed pools of assets which have differing investment objectives and policies. The Fund currently issues shares of the Conservative Investors Portfolio, Growth Investors Portfolio, Total Return Portfolio, Growth and Income Portfolio, Growth Portfolio, International Portfolio, Premier Growth Portfolio, Quasar Portfolio, Real Estate Investment Portfolio, Technology Portfolio, Utility Income Portfolio, Worldwide Privatization Portfolio, Global Bond Portfolio, Global Dollar Government Portfolio, High-Yield Portfolio, North American Government Income Portfolio, Short-Term Multi-Market Portfolio, U.S. Government/High Grade Securities Portfolio and Money Market Portfolio (the "Portfolios"). On January 5, 1999, the creation of a second class of shares, Class B shares, was approved by the Board of Directors. The Fund offers Class A and Class B shares. Both classes of shares have identical voting, dividend, liquidating and other rights, except that Class B shares bear a distribution expense and have exclusive voting rights with respect to the Class B distribution plan. As of June 30, 2000, the following Portfolios had Class B shares issued and outstanding: Growth and Income Portfolio, Growth Portfolio, Premier Growth Portfolio, Technology Portfolio, Global Bond Portfolio, U.S. Government/High Grade Securities Portfolio and Money Market Portfolio. The Fund offers and sells its shares only to separate accounts of certain life insurance companies for the purpose of funding variable annuity contracts and variable life insurance policies. Sales are made without a sales charge at each Portfolio's net asset value per share. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States, 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 Fund. 1. Security Valuation Portfolio securities traded on a national securities exchange or on a foreign securities exchange (other than foreign securities exchanges whose operations are similar to those of the United States over-the-counter market) or on The Nasdaq Stock Market, Inc., are generally valued at the last reported sales price or if no sale occurred, at the mean of the closing bid and asked price on that day. Readily marketable securities traded in the over-the-counter market, securities listed on a foreign securities exchange whose operations are similar to the U.S. over-the-counter market, and securities listed on a national securities exchange whose primary market is believed to be over-the-counter (but excluding securities traded on The Nasdaq Stock Market, Inc.), are valued at the mean of the current bid and asked price. U.S. government and fixed income securities which mature in 60 days or less are valued at amortized cost, unless this method does not represent fair value. Securities for which current market quotations are not readily available are valued at their fair value as determined in good faith by, or in accordance with procedures adopted by, the Board of Directors. Fixed income securities may be valued on the basis of prices obtained from a pricing service when such prices are believed to reflect the fair market value of such securities. Securities in which the Money Market Portfolio invests are valued at amortized cost which approximates fair value, under which method a portfolio instrument is valued at cost and any premium or discount is amortized on a straight-line basis to maturity. 2. Currency Translation Assets and liabilities denominated in foreign currencies and commitments under forward exchange currency contracts are translated into U.S. dollars at the mean of the quoted bid and asked price of such currencies against the U.S. dollar. Purchases and sales of portfolio securities are translated at the rates of exchange prevailing when such securities were acquired or sold. Income and expenses are translated at rates of exchange prevailing when accrued. The Portfolios isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Net realized gains and losses on foreign currency transactions represent foreign exchange gains and losses from sales and maturities of securities and forward exchange currency contracts, holdings of foreign currencies, exchange gains and losses realized between the trade and 8 Alliance Variable Products Series Fund ================================================================================ settlement dates on investment transactions, and the difference between the amounts of interest, dividends and foreign witholding tax reclaims recorded on the Portfolio's books and the U.S. dollar equivalent amounts actually received or paid. Net 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 (depreciation) of investments and foreign currency denominated assets and liabilities. 3. Taxes It is the Fund'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. 4. Investment Income and Investment Transactions Dividend income is recorded on the ex-dividend date. Interest income is accrued daily. Investment transactions are accounted for on the date securities are purchased or sold. The Fund accretes discounts as adjustments to interest income and in the case of the Money Market Portfolio, amortizes premium as well. Investment gains and losses are determined on the identified cost basis. 5. Dividends and Distributions Each Portfolio declares and distributes dividends and distributions from net investment income and net realized gains, respectively, if any, at least annually, except for dividends on the Money Market Portfolio, which are declared daily and paid monthly. Income dividends and capital gains distributions to shareholders are recorded on the ex-dividend date. Income dividends and capital gains distributions are determined in accordance with federal tax regulations and may differ from those determined in accordance with accounting principles generally accepted in the United States. 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 an investment advisory agreement, the Portfolio pays Alliance Capital Management L.P. (the "Adviser"), an investment advisory fee at an annualized rate of .75% of the Portfolio's average daily net assets. During the six months ended June 30, 2000, the Adviser agreed to waive its fee and to reimburse the additional operating expenses to the extent necessary to limit total operating expenses on an annual basis to .95% and 1.20% of the average daily net assets for Class A and Class B shares, respectively. Expense waivers/reimbursements, if any, are accrued daily and paid monthly. For the six months ended June 30, 2000, the Portfolio received such waivers/reimbursements amounted to $56,580. Brokerage commissions paid on investment transactions for the six months ended June 30, 2000, amounted to $9,141, none of which was paid to brokers utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette Securities Corp. ("DLJ"), an affiliate of the Adviser, nor to DLJ directly. The Fund compensates Alliance Fund Services, Inc., a wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for providing personnel and facilities to perform transfer agency services for the Fund. For the six months ended June 30, 2000, the Fund paid a total of $9,000 which was allocated evenly among the Portfolios. - -------------------------------------------------------------------------------- NOTE C: Distribution Plan The Portfolios have each adopted a Plan for Class B shares of the Fund pursuant to Rule 12b-1 under the Investment Company Act of 1940 (each a "Plan" and collectively the "Plans"). Under the Plans, the Portfolios pay distribution and servicing fees to the Distributor at an annual rate of up to .50% of each portfolio's average daily net assets attributable to the Class B shares. The fees are accrued daily and paid monthly. The Board of Directors currently limit payments under the Plan to .25% of each Portfolio's average daily net assets attributable to Class B shares. The Plans provide that the Distributor will use such payments in their entirety for distribution assistance and promotional activities. The Portfolios 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 9 CONSERVATIVE INVESTORS PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) Alliance Variable Products Series Fund ================================================================================ its distribution services with respect to the sale of each Portfolio'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 Commission as being of the "compensation" variety. In the event that a Plan is terminated or not continued, no distribution services fees (other than current amounts accrued but not yet paid) would be owed by the Portfolios to the Distributor with respect to the relevant Plan. The Plan also provides that the Adviser may use its own resources to finance the distribution of each Portfolio's shares. NOTE D: Investment Transactions Purchases and sales of investment securities (excluding short-term investments) for the six months ended June 30, 2000, were as follows: Purchases: Stocks and debt obligations ..................................... $ 3,468,062 U.S. government and agencies .................................... 9,710,812 Sales: Stocks and debt obligations ..................................... $ 3,694,556 U.S. government and agencies .................................... 12,477,808 At June 30, 2000, 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 foreign currency transactions) are as follows: Gross unrealized appreciation ................................... $ 1,039,169 Gross unrealized depreciation ................................... (623,632) ----------- Net unrealized appreciation ..................................... $ 415,537 =========== 1. Forward Exchange Currency Contracts All Portfolios (except for the Global Dollar Government Portfolio, U.S. Government/High Grade Securities Portfolio and Money Market Portfolio) may enter into forward exchange currency contracts to hedge exposure to changes in foreign currency exchange rates on foreign portfolio holdings, to hedge certain firm purchase and sales commitments denominated in foreign currencies and for investment purposes. A forward exchange currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. The Portfolios may enter into contracts to deliver or receive foreign currency it will receive from or require for its normal investment activities. It may also use contracts in a manner intended to protect foreign currency denominated securities from declines in value due to unfavorable exchange rate movements. The gain or loss arising from the difference between the original contracts and the closing of such contracts is included in realized gains or losses from foreign currency transactions. Fluctuations in the value of forward exchange currency contracts are recorded for financial reporting purposes as unrealized gains or losses by the Portfolio. Each Portfolio's custodian will place and maintain cash not available for investment or other liquid assets in a separate account of the Portfolio having an approximate value equal to the aggregate amount of the respective portfolio's commitments under forward exchange currency contracts entered into with respect to position hedges. Risks may arise from the potential inability of a 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 each Portfolio has in that particular currency contract. 10 Alliance Variable Products Series Fund ================================================================================ At June 30, 2000, the Portfolio had outstanding forward exchange currency contracts as follows:
Contract U.S. $ Value on U.S. $ Unrealized Amount Origination Current Appreciation (000) Date Value (Depreciation) ======== =============== ======= ============== Forward Exchange Currency Sale Contracts Euro, settling 9/18/00 ................. 608 $586,142 $582,946 $ 3,196 Pound Sterling, settling 8/16/00 ....... 320 485,151 484,777 374 Japanese Yen, settling 8/16/00 ......... 44,161 413,729 419,788 (6,059) -------- $ (2,489) ========
2. Option Transactions For hedging and investment purposes, all Portfolios (except for the Money Market Portfolio) may purchase and write call options and purchase put options on U.S. securities that are traded on U.S. securities exchanges and over-the-counter markets. The risk associated with purchasing an option is that the Portfolio pays a premium whether or not the option is exercised. Additionally, the Portfolio bears the risk of loss of premium and change in market value should the counterparty not perform under the contract. Put and call options purchased are accounted for in the same manner as portfolio securities. The cost of securities acquired through the exercise of call options is increased by premiums paid. The proceeds from securities sold through the exercise of put options are decreased by the premiums paid. When the Portfolio writes an option, the premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from which written options expire unexercised are recorded by the Portfolio on the expiration date as realized gains from written options. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium received is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium received is added to the proceeds from the sale of the underlying security or currency in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the premium received reduces the cost basis of the security or currency purchased by the Portfolio. In writing an option, the Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by the Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value. The Portfolio had no transactions in options written for the six months ended June 30, 2000. - -------------------------------------------------------------------------------- NOTE E: Capital Stock There are 20,000,000,000 shares of capital stock, $.001 par value per share of the Fund authorized divided into two classes, designated Class A and Class B. Each class consists of 10,000,000,000 authorized shares. Transactions in capital stock were as follows:
--------------------------------- ---------------------------------- Shares Amount --------------------------------- ---------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended June 30, 2000 December 31, June 30, 2000 December 31, (unaudited) 1999 (unaudited) 1999 ================ ============= ================ ============ Class A Shares sold .................... 36,882 198,340 $ 480,733 $ 2,679,220 Shares issued in reinvestment of dividends and distributions . 301,450 237,845 3,611,375 3,049,175 Shares redeemed ................ (320,755) (739,222) (4,295,008) (10,014,063) ------------ ------------ ------------ ------------ Net increase (decrease) ........ 17,577 (303,037) $ (202,900) $ (4,285,668) ============ ============ ============ ============
11 CONSERVATIVE INVESTORS PORTFOLIO NOTES TO FINANCIAL STATEMENTS (continued) Alliance Variable Products Series Fund ================================================================================ NOTE F: Concentration of Risk Investing in securities of foreign companies or foreign governments involves special risks which include changes in foreign 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. - -------------------------------------------------------------------------------- NOTE G: Bank Borrowing A number of open-end mutual funds managed by the Adviser, including the Fund, participate in a $750 million revolving credit facility (the "Facility") intended to provide 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 the miscellaneous expenses in the statement of operations. The Fund did not utilize the Facility during the six months ended June 30, 2000. 12 CONSERVATIVE INVESTORS PORTFOLIO FINANCIAL HIGHLIGHTS Alliance Variable Products Series Fund ================================================================================ Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
----------------------------------------------------------------------------------------- Class A ----------------------------------------------------------------------------------------- Six Months Ended Year Ended December 31, June 30, 2000 ====================================================================== (unaudited) 1999 1998 1997 1996 1995 ========== ========== ========== ========== ========== ========== Net asset value, beginning of period .. $ 13.43 $ 14.03 $ 13.10 $ 12.07 $ 11.76 $ 10.07 ---------- ---------- ---------- ---------- ---------- ---------- Income From Investment Operations Net investment income (a)(b) .......... .28 .53 .50 .48 .45 .51 Net realized and unrealized gain (loss) on investments and foreign currency transactions ....................... .02 .12 1.31 .86 (.01) 1.20 ---------- ---------- ---------- ---------- ---------- ---------- Net increase in net asset value from operations ......................... .30 .65 1.81 1.34 .44 1.71 ---------- ---------- ---------- ---------- ---------- ---------- Less: Dividends and Distributions Dividends from net investment income .. (.63) (.54) (.38) (.31) (.09) (.02) Distributions from net realized gains . (1.11) (.71) (.50) -0- (.04) -0- ---------- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions ..... (1.74) (1.25) (.88) (.31) (.13) (.02) ---------- ---------- ---------- ---------- ---------- ---------- Net asset value, end of period ........ $ 11.99 $ 13.43 $ 14.03 $ 13.10 $ 12.07 $ 11.76 ========== ========== ========== ========== ========== ========== Total Return Total investment return based on net asset value (c) ................ 2.18% 5.04% 14.20% 11.22% 3.79% 16.99% Ratios/Supplemental Data Net assets, end of period (000's omitted) .................... $ 28,496 $ 31,686 $ 37,341 $ 30,196 $ 21,729 $ 7,420 Ratios to average net assets of: Expenses, net of waivers and reimbursements ................... .95%(d) .95% .90% .95% .95% .95% Expenses, before waivers and reimbursements ................... 1.33%(d) 1.18% 1.19% 1.33% 1.40% 4.25% Net investment income (a) .......... 4.25%(d) 3.92% 3.69% 3.85% 3.93% 4.65% Portfolio turnover rate ............... 47% 103% 123% 209% 211% 61%
- -------------------------------------------------------------------------------- (a) Net of expenses reimbursed or waived by the Adviser. (b) Based on average shares outstanding. (c) Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption on the last day of the period. Total investment return calculated for a period of less than one year is not annualized. (d) Annualized. 13 Alliance Variable Products Series Fund ================================================================================ BOARD OF DIRECTORS John D. Carifa, Chairman and President Ruth Block (1) David H. Dievler (1) John H. Dobkin (1) William H. Foulk, Jr. (1) Dr. James M. Hester (1) Clifford L. Michel (1) Donald J. Robinson (1) OFFICERS Andrew Aran, Senior Vice President Kathleen A. Corbet, Senior Vice President Gregory Dube, Senior Vice President Alfred L. Harrison, Senior Vice President Nelson Jantzen, Senior Vice President Wayne D. Lyski, Senior Vice President Raymond J. Papera, Senior Vice President Peter Anastos, Vice President Bruce K. Aronow, Vice President Edward Baker, Vice President Thomas J. Bardong, Vice President Matthew Bloom, Vice President Mark H. Breedon, Vice President Russell Brody, Vice President Nicholas D.P. Carn, Vice President Paul J. DeNoon, Vice President Joseph C. Dona, Vice President Vicki L. Fuller, Vice President F. Jeanne Goetz, Vice President Gerald T. Malone, Vice President Michael Mon, Vice President Douglas J. Peebles, Vice President Daniel G. Pine, Vice President Paul C. Rissman, Vice President Tyler J. Smith, Vice President Jean Van De Walle, Vice President Sandra Yeager, Vice President Edmund P. Bergan, Jr., Secretary Mark D. Gersten, Treasurer & Chief Financial Officer Thomas Manley, Controller CUSTODIAN State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110 DISTRIBUTOR Alliance Fund Distributors, Inc. 1345 Avenue of the Americas New York, NY 10105 INDEPENDENT AUDITORS Ernst & Young LLP 787 Seventh Avenue New York, NY 10019 LEGAL COUNSEL Seward & Kissel One Battery Park Plaza New York, NY 10004 TRANSFER AGENT Alliance Fund Services, Inc. P.O. Box 1520 Secaucus, NJ 07096-1520 Toll-free 1-(800) 221-5672 - -------------------------------------------------------------------------------- (1) Member of the Audit Committee. 14 (This page left intentionally blank.) (This page left intentionally blank.) (This page left intentionally blank.) -----END PRIVACY-ENHANCED MESSAGE-----